Sign in
WT

WILLIS TOWERS WATSON PLC (WTW)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered solid organic growth and material margin expansion: revenue $3.035B (+4% reported; +5% CC and organic), adjusted operating margin 36.1% (+190 bps), adjusted diluted EPS $8.13 (+9% YoY); GAAP diluted EPS was $12.25, inflated by an $853M gain on disposal of operations in the quarter .
  • Segment performance was broad-based: HWC revenue $1.853B (+3% reported; +3% organic; margin 41.9%, +140 bps) and R&B revenue $1.141B (+6% reported; +7% organic; margin 33.5%, +60 bps) .
  • 2025 financial considerations indicate continued capital returns (~$1.5B expected repurchases), ~100 bps average annual margin expansion in R&B, FX headwind of ~$0.18 to adjusted EPS, and non-GAAP metric changes (excluding non-cash pension credits; FCF to capture capitalized software cash outflows) .
  • Strategic catalysts: completion of TRANZACT sale (announced Oct 1, 2024; closed Jan 2, 2025) sharpening portfolio, plus share repurchase program increase by $1B in Nov 2024; both support margin/FCF trajectory and buyback capacity .

What Went Well and What Went Wrong

What Went Well

  • Transformation savings translated to operating leverage: $27M incremental run-rate savings in Q4; $473M cumulative; adjusted margin expanded to 36.1% with broad efficiency gains (WE DO, right-shoring, automation) .
  • Specialization strategy in R&B continued to drive high-quality growth (CRB +6%, ICT +11% in Q4) with strong retention and new business across geographies; HWC health sub-segment posted robust growth excluding book activity .
  • Management tone confident: “WTW is entering 2025 with considerable momentum” and “successful completion of our Grow, Simplify and Transform strategy” underpinning performance and strategic framework (accelerate performance, enhance efficiency, optimize portfolio) .

What Went Wrong

  • BD&O revenue declined as management deliberately moderated growth in TRANZACT; overall HWC growth was tempered by this headwind (HWC +3% organic; BD&O down) .
  • GAAP results for FY 2024 reflect non-cash impairment (> $1.0B) tied to TRANZACT sale, resulting in a full-year GAAP net loss and diluted loss per share, despite strong adjusted results .
  • FX and book-of-business/interest income created modest headwinds in R&B margins; management flagged FX headwinds for 2025 (~$0.18) and called out quarterly variability from book-of-business activity .

Financial Results

Consolidated Performance (quarterly)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$2.265 $2.289 $3.035
Diluted EPS ($)$1.36 $(16.44) $12.25
Adjusted Diluted EPS ($)$2.55 $2.93 $8.13
Operating Margin %9.4% (33.5)% 29.7%
Adjusted Operating Margin %17.0% 18.1% 36.1%
Adjusted EBITDA ($USD Millions)$466 $501 $1,173
Adjusted EBITDA Margin %20.6% 21.9% 38.6%

Segment Breakdown

Segment MetricQ2 2024Q3 2024Q4 2024
HWC Revenue ($USD Billions)$1.260 $1.328 $1.853
HWC Operating Margin %21.9% 24.7% 41.9%
R&B Revenue ($USD Billions)$0.979 $0.940 $1.141
R&B Operating Margin %20.6% 18.1% 33.5%

KPIs and Other Indicators

KPIQ2 2024Q3 2024Q4 2024
Organic Revenue Growth % (Enterprise)6% 6% 5%
Adjusted Tax Rate %22.6% 19.7% 21.3%
Share Repurchases ($USD Millions)$200 $205 $395

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Operating MarginFY 202422.5%–23.5% 23.0%–23.5% Raised low end
Adjusted Diluted EPS ($)FY 2024$15.40–$17.00 $16.00–$17.00 Raised low end
Transformation Savings (run-rate)FY 2024~$425M ~$450M Increased
FX Headwind on Adj. EPSFY 2024~$0.05 ~$0.10 Increased headwind
Share RepurchasesFY 2024~$750M (earlier) ~$900M Increased in Q3 update
Non-GAAP presentation changesFY 2025N/AExclude non-cash pension credits; FCF to capture capitalized software cash outflows Methodology change
R&B Adjusted Operating MarginFY 2025–2027N/A~100 bps average annual expansion New outlook
Share RepurchasesFY 2025N/A~$1.5B expected (subject to conditions) New outlook
FX Headwind on Adj. EPSFY 2025N/A~$0.18 at current rates New outlook

Earnings Call Themes & Trends

TopicQ2 2024 (Jul)Q3 2024 (Oct)Q4 2024 (Feb)Trend
Transformation savings / efficiency$24M incremental; raised savings target to $450M $52M incremental; cumulative $446M; margin leverage $27M incremental; cumulative $473M; continued efficiency focus incl. automation/AI Sustained savings; pivot to ongoing efficiency programs
Specialization strategy (R&B)CRB +11% organic; talent investments; Verita MGU building R&B +10% organic; high retention/new business; global specialty strength CRB +6%, ICT +11%; expanding specialties/geographies; leadership additions Consistent driver of growth and margin
BD&O / TRANZACT moderationManaging growth to optimize FCF; BD&O flat Moderation continued; headwinds recognized BD&O down; TRANZACT divested (closed Jan 2, 2025) Intentional moderation then divestiture
Free Cash Flow profileQ2 FCF $361M; trajectory improving 9M FCF $807M; normalizing; target long-term margin 16%+ FY24 FCF $1.376B; normalized margin commentary; 2025 residual transformation/earnout cash headwinds Improving; normalization adjustments noted
FX / macroFY24 FX headwind increased to $0.10 Stabilizing/softening insurance pricing; FX headwind ~$0.06 FY 2025 FX headwind ~$0.18; Q1 headwind ~$0.08 FX drag intensifies in 2025
Capital allocation~$750M repurchases target; balanced approach Raised to ~$900M; M&A optionality ~$1.5B repurchases planned for 2025; continued balance Acceleration; buybacks central

Management Commentary

  • “WTW is entering 2025 with considerable momentum after delivering on our 2024 financial targets through solid revenue growth, robust margin expansion and earnings growth.” — Carl Hess, CEO .
  • “Our specialization strategy continues to lead the way... Operating leverage driven by organic revenue growth and disciplined expense management...” — prepared remarks on R&B .
  • “We expect to expand our margins for ‘25… capture benefits from our Transformation program… focus on automation to support productivity gains.” — Q&A margin expansion roadmap .
  • “We intend to maintain share repurchases as the primary form of capital return… approximately $1.5 billion in 2025.” — capital allocation stance .

Q&A Highlights

  • Margin expansion drivers: Tailwinds from TRANZACT divestiture (~50 bps enterprise), R&B ~100 bps average annual expansion, incremental HWC and enterprise efficiency; unallocated net expected roughly in line with 2024 .
  • Free cash flow trajectory: FY24 reported FCF margin 13.9% with normalization benefits; 2025 headwinds include ~$90M transformation settlements and up to ~$90M cash taxes on Willis Re earnout; longer-run FCF margin to improve as mix/margins expand .
  • FX and reinsurance JV: FX exposures (GBP, EUR, CAD) with Q1 ~$0.08 headwind; reinsurance JV EPS headwind $0.25–$0.35 in 2025, below operating line and outside FCF .
  • Specialization/hiring: Continued productivity from prior hiring cohorts; selective new leadership (e.g., North America), strategy expansion to local specialties across regions .
  • Market/pricing: Stabilizing/softening across many lines; casualty in North America remains firm; growth primarily driven by retention and new business rather than rate .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue could not be retrieved due to provider limits at this time; therefore, estimate comparisons are unavailable for this recap. If required, we can update with S&P Global consensus once access is restored [GetEstimates error: Daily Request Limit Exceeded].

Key Takeaways for Investors

  • Q4 quality of earnings strong on an adjusted basis (EPS $8.13, margin 36.1%); GAAP EPS uplift was non-recurring (gain on disposal), so focus on adjusted metrics for run-rate valuation .
  • Portfolio simplification (TRANZACT exit) and non-GAAP methodology changes improve transparency and should be margin/FCF accretive in 2025, offsetting residual transformation cash and FX headwinds .
  • R&B specialization continues to deliver above-segment growth and margin trajectory (~100 bps annual expansion guide), a key lever for multiple expansion if sustained .
  • Capital returns are a prominent 2025 catalyst (~$1.5B buybacks planned), supported by improved FCF and balance sheet flexibility; monitor pacing vs. M&A deployment .
  • FX headwind (~$0.18 to adjusted EPS) and JV start-up costs ($0.25–$0.35 EPS) are near-term drags but manageable against structural margin/FCF improvements .
  • Watch HWC mix: health and outsourcing momentum vs. post-TRANZACT cadence; continued margin expansion in HWC (29.7% FY24) supports enterprise profile .
  • Narrative is improving around efficiency, automation/AI, and cross-segment “smart connections” — supportive of sustained operating leverage across cycles .

Appendix — Other Q4 2024 Press Releases (context)

  • WTW increased share repurchase program by $1B (Nov 22, 2024) .
  • Regular quarterly dividend announcement (Dec 11, 2024) .
  • Agreement to sell TRANZACT (Oct 1, 2024) ahead of completion (Jan 2, 2025) .
Sources: 
- Q4 2024 Earnings Press Release and Supplemental: **[1140536_0f130ccb961a4560a3140a8f78c8defc_0]** **[1140536_0f130ccb961a4560a3140a8f78c8defc_1]** **[1140536_0f130ccb961a4560a3140a8f78c8defc_2]** **[1140536_0f130ccb961a4560a3140a8f78c8defc_3]** **[1140536_0f130ccb961a4560a3140a8f78c8defc_4]** **[1140536_0f130ccb961a4560a3140a8f78c8defc_17]** **[1140536_0f130ccb961a4560a3140a8f78c8defc_19]** **[1140536_0f130ccb961a4560a3140a8f78c8defc_20]** **[1140536_0f130ccb961a4560a3140a8f78c8defc_21]** **[1140536_0f130ccb961a4560a3140a8f78c8defc_22]** 
- Form 8-K (Item 2.02) and Exhibits: **[1140536_0001171843-25-000589_exh_991.htm:0]** **[1140536_0001171843-25-000589_exh_991.htm:1]** **[1140536_0001171843-25-000589_exh_991.htm:2]** **[1140536_0001171843-25-000589_exh_991.htm:3]** **[1140536_0001171843-25-000589_exh_991.htm:4]** **[1140536_0001171843-25-000589_exh_992.htm:0]**–**[1140536_0001171843-25-000589_exh_992.htm:19]** 
- Q4 2024 Earnings Call Transcript: **[1140536_WTW_3414229_0]**–**[1140536_WTW_3414229_27]** 
- Q3 2024 Press Release and Call: **[1140536_bf576e6120254e88bb96652db163a5b2_0]**–**[1140536_bf576e6120254e88bb96652db163a5b2_24]** **[1140536_WTW_3405063_0]**–**[1140536_WTW_3405063_23]** 
- Q2 2024 Press Release and Call: **[1140536_c28e7a7c48ff41209c19491c701cdd09_0]**–**[1140536_c28e7a7c48ff41209c19491c701cdd09_23]** **[1140536_WTW_3394281_0]**–**[1140536_WTW_3394281_27]** 
- Other Press Releases: Share Repurchase Increase (Nov 2024) **[1140536_6e1228b688904e94836ca346f3c9d1cc_0]**; TRANZACT sale agreement (Oct 2024) **[1140536_20241001CG20158:0]**; TRANZACT sale completion (Jan 2025) **[1140536_2371acfae6ea4d03baac8ca0ab5583b5_0]**.