10-QPeriod: Q1 FY2013

Aon plc Quarterly Report for Q1 Ended Mar 31, 2013

Filed May 1, 2013For Securities:AON

Summary

Aon plc (AON) reported a solid first quarter for 2013, with revenue increasing by 3% to $2.9 billion, driven by 2% organic growth. Net income attributable to Aon shareholders rose by 10% to $261 million, resulting in diluted EPS of $0.82, up from $0.71 in the prior year quarter. The company also showed a significant improvement in operating cash flow, which swung from a $15 million use in Q1 2012 to $54 million in provided cash in Q1 2013. Key drivers for the performance include continued organic revenue growth in both the Risk Solutions and HR Solutions segments. The company also benefited from ongoing restructuring initiatives aimed at streamlining operations and achieving cost savings. Aon repurchased $300 million of its shares during the quarter under its expanded share repurchase program, signaling confidence in its financial position and commitment to returning value to shareholders. Despite some headwinds such as economic weakness in continental Europe and price compression in certain HR Solutions businesses, Aon's management remains focused on its strategic priorities of organic growth, margin expansion, and earnings per share growth.

Financial Highlights

51 data points
Beta

Revenue

$2.92B

Net Income

$261.00M

9.0% Net Margin

EPS (Diluted)

$0.82

Total Assets

$30.03B

Cash & Equivalents

$408.00M

Free Cash Flow

-$6.00M

Financial Statements
Beta
Revenue$2.92B
Operating Expenses$2.50B
Operating Income$410.00M
Interest Expense$52.00M
Net Income$261.00M
EPS (Basic)$0.82
EPS (Diluted)$0.82
Shares Outstanding (Basic)316.40M
Shares Outstanding (Diluted)320.00M

Key Highlights

  • 1Total revenue increased by 3% to $2.9 billion compared to the prior year quarter.
  • 2Net income attributable to Aon shareholders increased by 10% to $261 million.
  • 3Diluted earnings per share grew to $0.82 from $0.71 in the prior year quarter.
  • 4Operating cash flow improved significantly, turning from a $15 million use in Q1 2012 to $54 million provided in Q1 2013.
  • 5The company repurchased $300 million of its shares under its share repurchase program.
  • 6Risk Solutions segment revenue grew 3% and HR Solutions segment revenue grew 1% organically.
  • 7Aon continued to execute on restructuring initiatives, expecting to realize substantial annual savings.

Frequently Asked Questions

Revenue growth was driven by a 2% overall organic revenue increase, with the Risk Solutions segment growing by 3% and the HR Solutions segment by 1%. Acquisitions also contributed a 1% increase, partially offset by divestitures and a decline in fiduciary investment income.

Net income attributable to Aon shareholders increased by 10% to $261 million, leading to a rise in diluted EPS from $0.71 to $0.82. Operating margin remained stable at 14.1% on a reported basis, but adjusted operating margin showed improvement in Risk Solutions.

During the first quarter of 2013, Aon repurchased $300 million worth of its shares. The company has an ongoing $5 billion share repurchase program authorized in April 2012, with approximately $3.7 billion remaining under this authorization as of March 31, 2013.

The company reported strong operating cash flow improvement and maintained a significant level of available credit facilities. Debt levels increased slightly due to commercial paper and new note issuance, but debt as a percentage of total capital remained manageable. The company expressed confidence in its liquidity to meet obligations and fund growth initiatives.