GAAP Revenue Increases 16%; Underlying Revenue Rises 13% Growth in GAAP Operating Income of 37% and Adjusted Operating Income of 19% Third Quarter EPS Rises to $1.05 from $0.62 and Adjusted EPS Increases 32% to $1.08 Nine Months EPS Rises to $4.56 from $3.21 and Adjusted EPS Increases 28% to $4.82

Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, today reported financial results for the third quarter ended September 30, 2021.

Dan Glaser, President and CEO, said: "We delivered another quarter of excellent results. For the second consecutive quarter, underlying growth was at the highest level in over two decades. We grew underlying revenue by 13%, adjusted operating income by 19%, and adjusted EPS by 32%. For the first nine months of 2021, we achieved 10% underlying revenue growth, 21% adjusted operating income growth, and 28% adjusted EPS growth."

"Given the outstanding quarter and year-to-date performance, we are on track for a terrific year."

Consolidated Results

Consolidated revenue in the third quarter of 2021 was $4.6 billion, an increase of 16% compared with the third quarter of 2020. On an underlying basis, revenue increased 13%. Operating income was $740 million, an increase of 37% from the prior year. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 19% to $759 million. Net income attributable to the Company was $537 million, or $1.05 per diluted share, compared with $0.62 in the third quarter of 2020. Adjusted earnings per share rose 32% to $1.08 per diluted share compared with $0.82 for the prior year period.

For the nine months ended September 30, 2021, consolidated revenue was $14.7 billion, an increase of 15%, or 10% on an underlying basis compared to the prior period. Operating income was $3.3 billion, an increase of 33% from the prior year period. Adjusted operating income rose 21% to $3.4 billion. Net income attributable to the Company was $2.3 billion. Fully diluted earnings per share was $4.56 compared with $3.21 in the first nine months of 2020. Adjusted earnings per share increased 28% to $4.82 compared with $3.77 for the comparable period in 2020.

Risk & Insurance Services

Risk & Insurance Services revenue was $2.7 billion in the third quarter of 2021, an increase of 17%, or 13% on an underlying basis. Operating income rose 21% to $403 million, and adjusted operating income was $469 million, an increase of 21% from the prior year period. For the nine months ended September 30, 2021, revenue was $9.0 billion, an increase of 16%, or 11% on an underlying basis. Operating income rose 28% to $2.4 billion, and adjusted operating income was $2.5 billion, an increase of 20% from the prior year period.

Marsh's revenue in the third quarter was $2.4 billion, an increase of 13% on an underlying basis. In U.S./Canada, underlying revenue rose 16%. International operations produced underlying revenue growth of 9%, reflecting 12% growth in Latin America, 9% growth in Asia Pacific, and 8% growth in EMEA. For the nine months ended September 30, 2021, Marsh’s underlying revenue growth was 12% compared to the prior period a year ago.

Guy Carpenter's revenue in the third quarter was $314 million, an increase of 15% on an underlying basis. For the nine months ended September 30, 2021, Guy Carpenter’s underlying revenue growth was 10%.

Consulting

Consulting revenue in the third quarter was $1.9 billion, an increase of 13% or 12% on an underlying basis compared to the same period a year ago. Operating income increased 45% to $404 million, and adjusted operating income increased 15% to $350 million. For the first nine months of 2021, revenue was $5.7 billion, an increase of 12%, or an increase of 9% on an underlying basis. Operating income of $1.1 billion increased 36% and adjusted operating income increased 25% to $1.1 billion.

Mercer's revenue was $1.3 billion in the third quarter, an increase of 7% on an underlying basis. Career revenue of $253 million was up 13% on an underlying basis. Wealth revenue of $613 million increased 6% on an underlying basis, and Health revenue of $449 million increased 4% on an underlying basis. For the nine months ended September 30, 2021, Mercer’s revenue was $3.9 billion, an increase of 4% on an underlying basis compared to the same period a year ago.

Oliver Wyman’s revenue was $610 million in the third quarter, an increase of 25% on an underlying basis. For the first nine months ended September 30, 2021, Oliver Wyman’s revenue was $1.8 billion, an increase of 21% on an underlying basis.

Other Items

The Company repurchased 1.9 million shares of stock for $300 million in the third quarter. Through nine months, the Company has repurchased 5.3 million shares for $734 million.

Conference Call

A conference call to discuss third quarter 2021 results will be held today at 8:30 a.m. Eastern time. To participate in the teleconference, please dial +1 866 437 7574. Callers from outside the United States should dial +1 409 220 9376. The access code for both numbers is 4336169. The live audio webcast may be accessed at marshmclennan.com. A replay of the webcast will be available approximately two hours after the event.

About Marsh McLennan

Marsh McLennan (NYSE: MMC) is the world’s leading professional services firm in the areas of risk, strategy and people. The Company’s 81,000 colleagues advise clients in 130 countries. With annual revenue over $19 billion, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses. Marsh provides data-driven risk advisory services and insurance solutions to commercial and consumer clients. Guy Carpenter develops advanced risk, reinsurance and capital strategies that help clients grow profitably and pursue emerging opportunities. Mercer delivers advice and technology-driven solutions that help organizations redefine the world of work, reshape retirement and investment outcomes, and unlock health and well being for a changing workforce. Oliver Wyman serves as a critical strategic, economic and brand advisor to private sector and governmental clients. For more information, visit marshmclennan.com, follow us on LinkedIn and Twitter or subscribe to BRINK.

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains "forward-looking statements," as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management's current views concerning future events or results, use words like "anticipate," "assume," "believe," "continue," "estimate," "expect," "intend," "plan," "project" and similar terms, and future or conditional tense verbs like "could," "may," "might," "should," "will" and "would".

Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. Factors that could materially affect our future results include, among other things:

  • the increasing prevalence of ransomware, supply chain and other forms of cyber attacks, and their potential to disrupt our operations and result in the disclosure of confidential client or company information;
  • the impact from lawsuits or investigations arising from errors and omissions, breaches of fiduciary duty or other claims against us in our capacity as a broker or investment advisor;
  • increased regulatory activity and scrutiny by regulatory or law enforcement authorities;
  • the financial and operational impact of complying with laws and regulations where we operate and the risks of noncompliance with such laws by us or third-party providers, including anti-corruption laws such as the U.S. Foreign Corrupt Practices Act, U.K. Anti-Bribery Act and cybersecurity and data privacy regulations such as the E.U.’s General Data Protection Regulation;
  • the impact of COVID-19, including emerging vaccine mandates, on our business operations, results of operations, cash flows and financial position;
  • our ability to compete effectively and adapt to changes in the competitive environment, including to respond to technological change, disintermediation, digital disruption and other types of innovation;
  • our ability to manage risks associated with our investment management and related services business, particularly in the context of uncertain equity markets, including our ability to execute timely trades in light of increased trading volume and to manage potential conflicts of interest;
  • our ability to attract and retain industry leading talent;
  • the impact of changes in tax laws, guidance and interpretations, or disagreements with tax authorities; and
  • the regulatory, contractual and reputational risks that arise based on insurance placement activities and insurer revenue streams.

The factors identified above are not exhaustive. Marsh McLennan and its subsidiaries operate in a dynamic business environment in which new risks emerge frequently. Accordingly, we caution readers not to place undue reliance on any forward-looking statements, which are based only on information currently available to us and speak only as of the dates on which they are made. The Company undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date on which it is made.

Further information concerning Marsh McLennan and its businesses, including information about factors that could materially affect our results of operations and financial condition, is contained in the Company's filings with the Securities and Exchange Commission, including the "Risk Factors" section and the "Management’s Discussion and Analysis of Financial Condition and Results of Operations" section of our most recently filed Annual Report on Form 10-K.

Marsh & McLennan Companies, Inc. Consolidated Statements of Income (In millions, except per share data) (Unaudited)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2021

 

2020

 

2021

2020

Revenue

 

$

4,583

 

 

 

$

3,968

 

 

 

$

14,683

 

 

 

$

12,808

 

 

Expense:

 

 

 

 

 

 

 

 

Compensation and benefits

 

2,853

 

 

 

2,495

 

 

 

8,520

 

 

 

7,479

 

 

Other operating expenses

 

990

 

 

 

933

 

 

 

2,837

 

 

 

2,834

 

 

Operating expenses

 

3,843

 

 

 

3,428

 

 

 

11,357

 

 

 

10,313

 

 

Operating income

 

740

 

 

 

540

 

 

 

3,326

 

 

 

2,495

 

 

Other net benefit credits

 

69

 

 

 

60

 

 

 

211

 

 

 

187

 

 

Interest income

 

1

 

 

 

1

 

 

 

2

 

 

 

5

 

 

Interest expense

 

(107

)

 

 

(128

)

 

 

(335

)

 

 

(387

)

 

Investment income (loss)

 

13

 

 

 

(14

)

 

 

43

 

 

 

(47

)

 

Income before income taxes

 

716

 

 

 

459

 

 

 

3,247

 

 

 

2,253

 

 

Income tax expense

 

174

 

 

 

139

 

 

 

880

 

 

 

586

 

 

Net income before non-controlling interests

 

542

 

 

 

320

 

 

 

2,367

 

 

 

1,667

 

 

Less: Net income attributable to non-controlling interests

 

5

 

 

 

4

 

 

 

27

 

 

 

25

 

 

Net income attributable to the Company

 

$

537

 

 

 

$

316

 

 

 

$

2,340

 

 

 

$

1,642

 

 

Net income per share attributable to the Company:

 

 

 

 

 

 

 

 

- Basic

 

$

1.06

 

 

 

$

0.62

 

 

 

$

4.61

 

 

 

$

3.25

 

 

- Diluted

 

$

1.05

 

 

 

$

0.62

 

 

 

$

4.56

 

 

 

$

3.21

 

 

Average number of shares outstanding

 

 

 

 

 

 

 

 

- Basic

 

506

 

 

 

507

 

 

 

508

 

 

 

506

 

 

- Diluted

 

513

 

 

 

512

 

 

 

513

 

 

 

511

 

 

Shares outstanding at September 30

 

505

 

 

 

507

 

 

 

505

 

 

 

507

 

 

 

Marsh & McLennan Companies, Inc. Supplemental Information - Revenue Analysis Three Months Ended September 30 (Millions) (Unaudited)

The Company conducts business in 130 countries. As a result, foreign exchange rate movements may impact period-to-period comparisons of revenue. Similarly, certain other items such as acquisitions and dispositions, including transfers among businesses, may impact period-to-period comparisons of revenue. Underlying revenue measures the change in revenue from one period to the next by isolating these impacts.

 

 

 

 

 

 

Components of Revenue Change*

 

 

Three Months Ended September 30,

 

% Change GAAP Revenue

 

Currency Impact

 

Acquisitions/ Dispositions/ Other Impact

 

Underlying Revenue

 

 

2021

2020

 

Risk and Insurance Services

 

 

 

 

 

 

 

 

 

 

 

 

Marsh

 

$

2,352

 

 

$

2,009

 

 

 

17

%

 

2

%

 

3

%

 

13

%

Guy Carpenter

 

314

 

 

274

 

 

 

15

%

 

 

 

 

 

15

%

Subtotal

 

2,666

 

 

2,283

 

 

 

17

%

 

1

%

 

2

%

 

13

%

Fiduciary interest income

 

4

 

 

8

 

 

 

 

 

 

 

 

 

 

Total Risk and Insurance Services

 

2,670

 

 

2,291

 

 

 

17

%

 

1

%

 

2

%

 

13

%

Consulting

 

 

 

 

 

 

 

 

 

 

 

 

Mercer

 

1,315

 

 

1,216

 

 

 

8

%

 

2

%

 

(1

)%

 

7

%

Oliver Wyman Group

 

610

 

 

480

 

 

 

27

%

 

1

%

 

 

 

25

%

Total Consulting

 

1,925

 

 

1,696

 

 

 

13

%

 

2

%

 

 

 

12

%

Corporate Eliminations

 

(12

)

 

(19

)

 

 

 

 

 

 

 

 

 

Total Revenue

 

$

4,583

 

 

$

3,968

 

 

 

16

%

 

2

%

 

1

%

 

13

%

Revenue Details

The following table provides more detailed revenue information for certain of the components presented above:

 

 

 

 

 

 

Components of Revenue Change*

 

 

Three Months Ended September 30,

 

% Change GAAP Revenue

 

Currency Impact

 

Acquisitions/ Dispositions/ Other Impact

 

Underlying Revenue

 

 

2021

2020

 

Marsh:

 

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

$

600

 

 

$

536

 

 

12

%

 

4

%

 

 

 

8

%

Asia Pacific

 

281

 

 

254

 

 

10

%

 

2

%

 

 

 

9

%

Latin America

 

105

 

 

93

 

 

13

%

 

1

%

 

 

 

12

%

Total International

 

986

 

 

883

 

 

12

%

 

3

%

 

 

 

9

%

U.S./Canada

 

1,366

 

 

1,126

 

 

21

%

 

 

 

4

%

 

16

%

Total Marsh

 

$

2,352

 

 

$

2,009

 

 

17

%

 

2

%

 

3

%

 

13

%

Mercer:

 

 

 

 

 

 

 

 

 

 

 

 

Wealth

 

$

613

 

 

$

566

 

 

9

%

 

3

%

 

(1)

%

 

6

%

Health

 

449

 

 

430

 

 

4

%

 

1

%

 

(1)

%

 

4

%

Career

 

253

 

 

220

 

 

15

%

 

1

%

 

 

 

13

%

Total Mercer

 

$

1,315

 

 

$

1,216

 

 

8

%

 

2

%

 

(1)

%

 

7

%

* Components of revenue change may not add due to rounding.

 

Marsh & McLennan Companies, Inc. Supplemental Information - Revenue Analysis Nine Months Ended September 30 (Millions) (Unaudited)

The Company conducts business in 130 countries. As a result, foreign exchange rate movements may impact period-to-period comparisons of revenue. Similarly, certain other items such as acquisitions and dispositions, including transfers among businesses, may impact period-to-period comparisons of revenue. Underlying revenue measures the change in revenue from one period to the next by isolating these impacts.

 

 

 

 

 

 

Components of Revenue Change*

 

 

Nine Months Ended September 30,

 

% Change GAAP Revenue

 

Currency Impact

 

Acquisitions/ Dispositions/ Other Impact

 

Underlying Revenue

 

 

2021

2020

 

Risk and Insurance Services

 

 

 

 

 

 

 

 

 

 

 

 

Marsh

 

$

7,327

 

 

 

$

6,231

 

 

 

18

%

 

3

%

 

3

%

 

12

%

Guy Carpenter

 

1,697

 

 

 

1,534

 

 

 

11

%

 

1

%

 

 

 

10

%

Subtotal

 

9,024

 

 

 

7,765

 

 

 

16

%

 

3

%

 

2

%

 

11

%

Fiduciary interest income

 

12

 

 

 

40

 

 

 

 

 

 

 

 

 

 

Total Risk and Insurance Services

 

9,036

 

 

 

7,805

 

 

 

16

%

 

3

%

 

2

%

 

11

%

Consulting

 

 

 

 

 

 

 

 

 

 

 

 

Mercer

 

3,877

 

 

 

3,616

 

 

 

7

%

 

4

%

 

(1

)%

 

4

%

Oliver Wyman Group

 

1,813

 

 

 

1,458

 

 

 

24

%

 

3

%

 

 

 

21

%

Total Consulting

 

5,690

 

 

 

5,074

 

 

 

12

%

 

4

%

 

(1

)%

 

9

%

Corporate Eliminations

 

(43

)

 

 

(71

)

 

 

 

 

 

 

 

 

 

Total Revenue

 

$

14,683

 

 

 

$

12,808

 

 

 

15

%

 

3

%

 

1

%

 

10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue Details

The following table provides more detailed revenue information for certain of the components presented above:

 

 

 

 

 

 

Components of Revenue Change*

 

 

Nine Months Ended September 30,

 

% Change GAAP Revenue

 

Currency Impact

 

Acquisitions/ Dispositions/ Other Impact

 

Underlying Revenue

 

 

2021

 

2020

 

Marsh:

 

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

$

2,233

 

 

$

1,887

 

 

18

%

 

6

%

 

2

%

 

10

%

Asia Pacific

 

902

 

 

790

 

 

14

%

 

6

%

 

 

 

9

%

Latin America

 

298

 

 

283

 

 

5

%

 

(1)

%

 

 

 

6

%

Total International

 

3,433

 

 

2,960

 

 

16

%

 

5

%

 

1

%

 

9

%

U.S./Canada

 

3,894

 

 

3,271

 

 

19

%

 

1

%

 

5

%

 

14

%

Total Marsh

 

$

7,327

 

 

$

6,231

 

 

18

%

 

3

%

 

3

%

 

12

%

Mercer:

 

 

 

 

 

 

 

 

 

 

 

 

Wealth

 

$

1,861

 

 

$

1,719

 

 

8

%

 

6

%

 

(1)

%

 

4

%

Health

 

1,398

 

 

1,348

 

 

4

%

 

2

%

 

(1)

%

 

3

%

Career

 

618

 

 

549

 

 

13

%

 

3

%

 

 

 

10

%

Total Mercer

 

$

3,877

 

 

$

3,616

 

 

7

%

 

4

%

 

(1)

%

 

4

%

* Components of revenue change may not add due to rounding.

Marsh & McLennan Companies, Inc. Reconciliation of Non-GAAP Measures Three Months Ended September 30 (Millions) (Unaudited)

Overview

 

The Company reports its financial results in accordance with accounting principles generally accepted in the United States (referred to in this release as in accordance with "GAAP" or "reported" results). The Company also refers to and presents certain additional non-GAAP financial measures, within the meaning of Regulation G under the Securities Exchange Act of 1934. These measures are: adjusted operating income (loss), adjusted operating margin, adjusted income, net of tax and adjusted earnings per share (EPS). The Company has included reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with GAAP in the following tables.

 

The Company believes these non-GAAP financial measures provide useful supplemental information that enables investors to better compare the Company’s performance across periods. Management also uses these measures internally to assess the operating performance of its businesses, to assess performance for employee compensation purposes, and to decide how to allocate resources. However, investors should not consider these non-GAAP measures in isolation from, or as a substitute for, the financial information that the Company reports in accordance with GAAP. The Company's non-GAAP measures include adjustments that reflect how management views its businesses, and may differ from similarly titled non-GAAP measures presented by other companies.

Adjusted Operating Income (Loss) and Adjusted Operating Margin

Adjusted operating income (loss) is calculated by excluding the impact of certain noteworthy items from the Company's GAAP operating income (loss). The following tables identify these noteworthy items and reconcile adjusted operating income (loss) to GAAP operating income (loss), on a consolidated and reportable segment basis, for the three and nine months ended September 30, 2021 and 2020. The following tables also present adjusted operating margin. For the three and nine months ended September 30, 2021 and 2020, adjusted operating margin is calculated by dividing the sum of adjusted operating income and identified intangible asset amortization by consolidated or segment adjusted revenue.

 

 

 

Risk & Insurance Services

 

Consulting

 

Corporate/ Eliminations

 

Total

Three Months Ended September 30, 2021

 

 

 

 

 

 

 

 

Operating income (loss)

 

$

403

 

 

$

404

 

 

 

$

(67

)

 

 

$

740

 

 

Operating margin

 

15.1

%

 

21.0

%

 

N/A

 

 

16.1

%

Add (deduct) impact of noteworthy items:

 

 

 

 

 

 

 

 

Restructuring, excluding JLT (a)

 

7

 

 

 

 

 

5

 

 

 

12

 

 

Changes in contingent consideration (b)

 

17

 

 

1

 

 

 

 

 

 

18

 

 

JLT integration and restructuring costs (c)

 

11

 

 

9

 

 

 

(1

)

 

 

19

 

 

JLT acquisition-related costs (d)

 

10

 

 

 

 

 

1

 

 

 

11

 

 

JLT legacy E&O provision (e)

 

 

 

(63

)

 

 

 

 

 

(63

)

 

Legal claims and other (f)

 

21

 

 

(1

)

 

 

2

 

 

 

22

 

 

Operating income adjustments

 

66

 

 

(54

)

 

 

7

 

 

 

19

 

 

Adjusted operating income (loss)

 

$

469

 

 

$

350

 

 

 

$

(60

)

 

 

$

759

 

 

Total identified intangible amortization expense

 

$

75

 

 

$

14

 

 

 

$

 

 

 

$

89

 

 

Adjusted operating margin

 

20.4

%

 

18.9

%

 

N/A

 

 

18.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2020

 

 

 

 

 

 

 

 

Operating income (loss)

 

$

333

 

 

$

278

 

 

 

$

(71

)

 

 

$

540

 

 

Operating margin

 

14.5

%

 

16.4

%

 

N/A

 

 

13.6

%

Add (deduct) impact of noteworthy items:

 

 

 

 

 

 

 

 

 

 

 

Restructuring, excluding JLT (a)

 

 

 

11

 

 

 

12

 

 

 

23

 

 

Changes in contingent consideration (b)

 

15

 

 

1

 

 

 

 

 

 

16

 

 

JLT integration and restructuring costs (c)

 

25

 

 

14

 

 

 

5

 

 

 

44

 

 

JLT acquisition-related costs (d)

 

15

 

 

1

 

 

 

(1

)

 

 

15

 

 

Other

 

 

 

1

 

 

 

(1

)

 

 

 

 

Operating income adjustments

 

55

 

 

28

 

 

 

15

 

 

 

98

 

 

Adjusted operating income (loss)

 

$

388

 

 

$

306

 

 

 

$

(56

)

 

 

$

638

 

 

Total identified intangible amortization expense

 

$

75

 

 

$

16

 

 

 

$

 

 

 

$

91

 

 

Adjusted operating margin

 

20.2

%

 

18.9

%

 

N/A

 

 

18.4

%

 

 

 

 

 

 

 

 

 

(a) Primarily includes restructuring expenses associated with the Company's global information technology and HR functions and adjustments to restructuring liabilities for future rent under non-cancellable leases.

(b) Primarily includes the change in fair value of contingent consideration related to acquisitions and dispositions measured each quarter.

(c) Includes costs incurred for staff reductions, lease related exit costs, technology and consulting costs related to the Jardine Lloyd Thompson ("JLT") integration.

(d) Reflects retention costs related to the closing of the acquisition of JLT.

(e) Reflects a reduction in the liability for a legacy JLT E&O relating to suitability of advice provided to individuals for defined benefit pension transfers in the U.K., as well as recoveries under indemnities and insurance.

(f) Primarily reflects settlement charges and legal costs related to strategic recruiting.

 

Marsh & McLennan Companies, Inc. Reconciliation of Non-GAAP Measures Nine Months Ended September 30 (Millions) (Unaudited)

 

 

Risk & Insurance Services

 

Consulting

 

Corporate/ Eliminations

 

Total

Nine Months Ended September 30, 2021

 

 

 

 

 

 

 

 

Operating income (loss)

 

$

2,413

 

 

$

1,109

 

 

$

(196)

 

 

$

3,326

 

Operating margin

 

26.7

%

 

19.5

%

 

N/A

 

22.7

%

Add (deduct) impact of noteworthy items:

 

 

 

 

 

 

 

 

Restructuring, excluding JLT (a)

 

12

 

 

8

 

 

15

 

 

35

 

Changes in contingent consideration (b)

 

18

 

 

(4)

 

 

(3)

 

 

11

 

JLT integration and restructuring costs (c)

 

38

 

 

21

 

 

2

 

 

61

 

JLT acquisition-related costs (d)

 

32

 

 

2

 

 

1

 

 

35

 

JLT legacy E&O provision (e)

 

 

 

(63)

 

 

 

 

(63)

 

Legal claims and other (f)

 

27

 

 

 

 

2

 

 

29

 

Disposal of businesses (g)

 

(52)

 

 

3

 

 

 

 

(49)

 

Operating income adjustments

 

75

 

 

(33)

 

 

17

 

 

59

 

Adjusted operating income (loss)

 

$

2,488

 

 

$

1,076

 

 

$

(179)

 

 

$

3,385

 

Total identified intangible amortization expense

 

$

236

 

 

$

42

 

 

$

 

 

$

278

 

Adjusted operating margin

 

30.3

%

 

19.6

%

 

N/A

 

25.0

%

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2020

 

 

 

 

 

 

 

 

Operating income (loss)

 

$

1,883

 

 

$

815

 

 

$

(203)

 

 

$

2,495

 

Operating margin

 

24.1

%

 

16.1

%

 

N/A

 

19.5

%

Add (deduct) impact of noteworthy items:

 

 

 

 

 

 

 

 

Restructuring, excluding JLT (a)

 

2

 

 

17

 

 

24

 

 

43

 

Changes in contingent consideration (b)

 

22

 

 

(2)

 

 

2

 

 

22

 

JLT integration and restructuring costs (c)

 

125

 

 

31

 

 

25

 

 

181

 

JLT acquisition-related costs (d)

 

39

 

 

2

 

 

 

 

41

 

Disposal of business (g)

 

6

 

 

(4)

 

 

 

 

2

 

Other

 

5

 

 

1

 

 

(1)

 

 

5

 

Operating income adjustments

 

199

 

 

45

 

 

50

 

 

294

 

Adjusted operating income (loss)

 

$

2,082

 

 

$

860

 

 

$

(153)

 

 

$

2,789

 

Total identified intangible amortization expense

 

$

222

 

 

$

43

 

 

$

 

 

$

265

 

Adjusted operating margin

 

29.5

%

 

17.8

%

 

N/A

 

23.8

%

(a) Primarily includes restructuring expenses associated with the Company's global information technology and HR functions and adjustments to restructuring liabilities for future rent under non-cancellable leases. Consulting charges in 2020 reflect severance and real estate exit costs related to the Mercer restructuring program completed in 2020.

(b) Primarily includes the change in fair value of contingent consideration related to acquisitions and dispositions as measured each quarter.

(c) Includes costs incurred for staff reductions, lease related exit costs, technology and consulting costs related to the JLT integration.

(d) Reflects retention costs related to the closing of the acquisition of JLT.

(e) Reflects a reduction in the liability for a legacy JLT E&O relating to suitability of advice provided to individuals for defined benefit pension transfers in the U.K., as well as recoveries under indemnities and insurance.

(f) Primarily reflects settlement charges and legal costs related to strategic recruiting.

(g) Primarily reflects a gain on the sale of the U.K. commercial networks business that provided broking and back-office solutions for small independent brokers during the second quarter of 2021. 2020 reflects net loss on disposal of specialty businesses sold in the U.S., U.K. and Canada, previously acquired as part of the JLT Transaction. These amounts are reflected as an increase or decrease of other revenue, which is reflected as part of revenue in the consolidated statements of income. These items are removed from GAAP revenue in the calculation of adjusted operating margin.

Marsh & McLennan Companies, Inc. Reconciliation of Non-GAAP Measures Three and Nine Months Ended September 30 (Millions) (Unaudited)

Adjusted income, net of tax is calculated as the Company's GAAP income from continuing operations, adjusted to reflect the after tax impact of the operating income adjustments in the preceding tables and the additional items listed below. Adjusted EPS is calculated by dividing the Company’s adjusted income, net of tax, by average number of shares outstanding-diluted for the relevant period. The following tables reconcile adjusted income, net of tax to GAAP income from continuing operations and adjusted EPS to GAAP EPS for the three and nine month periods ended September 30, 2021 and 2020.

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2021

 

Three Months Ended September 30, 2020

 

Amount

 

Adjusted EPS

 

Amount

 

Adjusted EPS

Net income before non-controlling interests, as reported

 

 

$

542

 

 

 

 

 

 

$

320

 

 

 

Less: Non-controlling interest, net of tax

 

 

5

 

 

 

 

 

 

4

 

 

 

Subtotal

 

 

$

537

 

 

$

1.05

 

 

 

 

$

316

 

 

$

0.62

 

Operating income adjustments

$

19

 

 

 

 

 

 

 

$

98

 

 

 

 

 

 

Investments adjustment (a)

(1

)

 

 

 

 

 

 

16

 

 

 

 

 

 

Pension settlement adjustment

2

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax effect of adjustments (b)

(10

)

 

 

 

 

 

 

(12

)

 

 

 

 

 

Impact of U.K. tax rate change (c)

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15

 

 

0.03

 

 

 

 

102

 

 

0.20

 

Adjusted income, net of tax

 

 

$

552

 

 

$

1.08

 

 

 

 

$

418

 

 

$

0.82

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2021

 

Nine Months Ended September 30, 2020

 

Amount

 

Adjusted EPS

 

Amount

 

Adjusted EPS

Net income before non-controlling interests, as

reported

 

 

$

2,367

 

 

 

 

 

 

$

1,667

 

 

 

Less: Non-controlling interest, net of tax

 

 

27

 

 

 

 

 

 

25

 

 

 

Subtotal

 

 

$

2,340

 

 

$

4.56

 

 

 

 

$

1,642

 

 

$

3.21

 

Operating income adjustments

$

59

 

 

 

 

 

 

 

$

294

 

 

 

 

 

 

Investments adjustment (a)

(2

)

 

 

 

 

 

 

42

 

 

 

 

 

 

Pension settlement adjustment

2

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax effect of adjustments (b)

(31

)

 

 

 

 

 

 

(50

)

 

 

 

 

 

Impact of U.K. tax rate change (c)

105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

133

 

 

0.26

 

 

 

 

286

 

 

0.56

 

Adjusted income, net of tax

 

 

$

2,473

 

 

$

4.82

 

 

 

 

$

1,928

 

 

$

3.77

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Represents mark-to-market gains in 2021 and losses in 2020, primarily related to the Company’s investment in Alexander Forbes ("AF").

(b) For items with an income tax impact, the tax effect was calculated using an effective tax rate based on the tax jurisdiction for each item.

(c) Reflects the re-measurement of the Company's U.K. deferred tax assets and liabilities upon enactment of legislation that increased the corporate income tax rate applicable to U.K. based entities from 19% to 25%, effective April 1, 2023.

 

Marsh & McLennan Companies, Inc.

Supplemental Information

Three and Nine Months Ended September 30

(Millions) (Unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

Consolidated

 

 

 

 

 

 

 

 

Compensation and benefits

 

$

2,853

 

 

$

2,495

 

 

$

8,520

 

 

$

7,479

 

Other operating expenses

 

990

 

 

933

 

 

2,837

 

 

2,834

 

Total expenses

 

$

3,843

 

 

$

3,428

 

 

$

11,357

 

 

$

10,313

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

$

90

 

 

$

94

 

 

$

291

 

 

$

282

 

Identified intangible amortization expense

 

89

 

 

91

 

 

278

 

 

265

 

Total

 

$

179

 

 

$

185

 

 

$

569

 

 

$

547

 

 

 

 

 

 

 

 

 

 

Stock option expense

 

$

4

 

 

$

4

 

 

$

29

 

 

$

25

 

 

 

 

 

 

 

 

 

 

Risk and Insurance Services

 

 

 

 

 

 

 

 

Compensation and benefits

 

$

1,634

 

 

$

1,400

 

 

$

4,876

 

 

$

4,234

 

Other operating expenses

 

633

 

 

558

 

 

1,747

 

 

1,688

 

Total expenses

 

$

2,267

 

 

$

1,958

 

 

$

6,623

 

 

$

5,922

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

$

44

 

 

$

49

 

 

$

152

 

 

$

146

 

Identified intangible amortization expense

 

75

 

 

75

 

 

236

 

 

222

 

Total

 

$

119

 

 

$

124

 

 

$

388

 

 

$

368

 

 

 

 

 

 

 

 

 

 

Consulting

 

 

 

 

 

 

 

 

Compensation and benefits

 

$

1,103

 

 

$

980

 

 

$

3,287

 

 

$

2,911

 

Other operating expenses

 

418

 

 

438

 

 

1,294

 

 

1,348

 

Total expenses

 

$

1,521

 

 

$

1,418

 

 

$

4,581

 

 

$

4,259

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

$

29

 

 

$

29

 

 

$

87

 

 

$

86

 

Identified intangible amortization expense

 

14

 

 

16

 

 

42

 

 

43

 

Total

 

$

43

 

 

$

45

 

 

$

129

 

 

$

129

 

Marsh & McLennan Companies, Inc.

Consolidated Balance Sheets

(Millions)

 

 

(Unaudited) September 30, 2021

 

December 31, 2020

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,398

 

 

 

$

2,089

 

 

Net receivables

 

5,624

 

 

 

5,326

 

 

Other current assets

 

855

 

 

 

740

 

 

Total current assets

 

7,877

 

 

 

8,155

 

 

 

 

 

 

 

Goodwill and intangible assets

 

18,235

 

 

 

18,216

 

 

Fixed assets, net

 

824

 

 

 

856

 

 

Pension related assets

 

1,935

 

 

 

1,768

 

 

Right of use assets

 

1,899

 

 

 

1,894

 

 

Deferred tax assets

 

692

 

 

 

702

 

 

Other assets

 

1,520

 

 

 

1,458

 

 

TOTAL ASSETS

 

$

32,982

 

 

 

$

33,049

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Short-term debt

 

$

516

 

 

 

$

517

 

 

Accounts payable and accrued liabilities

 

2,833

 

 

 

3,050

 

 

Accrued compensation and employee benefits

 

2,365

 

 

 

2,400

 

 

Current lease liabilities

 

339

 

 

 

342

 

 

Accrued income taxes

 

333

 

 

 

247

 

 

Dividends payable

 

273

 

 

 

 

 

Total current liabilities

 

6,659

 

 

 

6,556

 

 

 

 

 

 

 

Fiduciary liabilities

 

10,408

 

 

 

8,585

 

 

Less - cash and investments held in a fiduciary capacity

 

(10,408

)

 

 

(8,585

)

 

 

 

 

 

 

 

 

Long-term debt

 

10,228

 

 

 

10,796

 

 

Pension, post-retirement and post-employment benefits

 

2,387

 

 

 

2,662

 

 

Long-term lease liabilities

 

1,900

 

 

 

1,924

 

 

Liabilities for errors and omissions

 

356

 

 

 

366

 

 

Other liabilities

 

1,564

 

 

 

1,485

 

 

 

 

 

 

 

Total equity

 

9,888

 

 

 

9,260

 

 

TOTAL LIABILITIES AND EQUITY

 

$

32,982

 

 

 

$

33,049

 

 

   

Marsh & McLennan Companies, Inc.

Consolidated Statements of Cash Flows

(Millions) (Unaudited)

 

Nine Months Ended September 30,

 

2021

 

2020

Operating cash flows:

 

 

 

Net income before non-controlling interests

$

2,367

 

 

 

$

1,667

 

 

Adjustments to reconcile net income to cash used for operations:

 

 

 

Depreciation and amortization

569

 

 

 

547

 

 

Non cash lease expense

241

 

 

 

241

 

 

Share-based compensation expense

263

 

 

 

219

 

 

Net (gain) loss on investments, disposition of assets and other

(89

)

 

 

48

 

 

 

 

 

 

Changes in Assets and Liabilities:

 

 

 

Accrued compensation and employee benefits

(53

)

 

 

(431

)

 

Net receivables

(336

)

 

 

77

 

 

Other changes to assets and liabilities

(299

)

 

 

135

 

 

Contributions to pension and other benefit plans in excess of current year credit

(282

)

 

 

(240

)

 

Operating lease liabilities

(262

)

 

 

(254

)

 

Effect of exchange rate changes

(45

)

 

 

(10

)

 

Net cash provided by operations

2,074

 

 

 

1,999

 

 

Financing cash flows:

 

 

 

Purchase of treasury shares

(734

)

 

 

 

 

Borrowings from term-loan and credit facilities

 

 

 

1,000

 

 

Proceeds from issuance of debt

 

 

 

737

 

 

Repayments of debt

(512

)

 

 

(1,011

)

 

Net issuance of common stock from treasury shares

16

 

 

 

(33

)

 

Net distributions of non-controlling interests and deferred/contingent consideration

(66

)

 

 

(154

)

 

Dividends paid

(750

)

 

 

(702

)

 

Net cash used for financing activities

(2,046

)

 

 

(163

)

 

Investing cash flows:

 

 

 

Capital expenditures

(268

)

 

 

(278

)

 

Net (purchase) sale of long-term investments and other

(4

)

 

 

98

 

 

Dispositions

84

 

 

 

93

 

 

Acquisitions

(401

)

 

 

(559

)

 

Net cash used for investing activities

(589

)

 

 

(646

)

 

Effect of exchange rate changes on cash and cash equivalents

(130

)

 

 

43

 

 

(Decrease) increase in cash and cash equivalents

(691

)

 

 

1,233

 

 

Cash and cash equivalents at beginning of period

2,089

 

 

 

1,155

 

 

Cash and cash equivalents at end of period

$

1,398

 

 

 

$

2,388

 

 

 

Media Contact: Erick R. Gustafson Marsh McLennan +1 202 263 7788 erick.gustafson@mmc.com

Investor Contact: Sarah DeWitt Marsh McLennan +1 212 345 6750 sarah.dewitt@mmc.com

Grafico Azioni Marsh and McLennan Compa... (NYSE:MMC)
Storico
Da Feb 2024 a Mar 2024 Clicca qui per i Grafici di Marsh and McLennan Compa...
Grafico Azioni Marsh and McLennan Compa... (NYSE:MMC)
Storico
Da Mar 2023 a Mar 2024 Clicca qui per i Grafici di Marsh and McLennan Compa...