10-QPeriod: Q3 FY2013

Aon plc Quarterly Report for Q3 Ended Sep 30, 2013

Filed October 25, 2013For Securities:AON

Summary

Aon plc's third quarter 2013 report shows modest revenue growth driven by both its Risk Solutions and HR Solutions segments. The company reported an increase in net income attributable to Aon shareholders, reaching $256 million for the quarter, up from $204 million in the prior year period. This growth was supported by a 3% organic revenue increase and disciplined expense management, although operating expenses did rise slightly due to various factors including acquisitions and restructuring costs. The company also highlighted strong free cash flow generation, which increased significantly year-over-year, providing flexibility for strategic initiatives such as share repurchases and dividends. Management emphasized continued focus on key metrics like organic growth, margin expansion, EPS growth, and free cash flow. Despite headwinds such as economic weakness in Europe and price compression in certain HR Solutions businesses, Aon demonstrated resilience. The company also provided updates on its ongoing restructuring initiatives, which are progressing as planned and expected to deliver significant annual savings. Overall, the report indicates a company navigating economic challenges while executing on its strategic priorities and returning capital to shareholders.

Financial Highlights

51 data points
Beta

Revenue

$2.79B

Net Income

$256.00M

9.2% Net Margin

EPS (Diluted)

$0.82

Total Assets

$29.30B

Cash & Equivalents

$369.00M

Free Cash Flow

$545.00M

Financial Statements
Beta
Revenue$2.79B
Operating Expenses$2.43B
Operating Income$364.00M
Interest Expense$53.00M
Net Income$256.00M
EPS (Basic)$0.83
EPS (Diluted)$0.82
Shares Outstanding (Basic)309.50M
Shares Outstanding (Diluted)312.90M

Key Highlights

  • 1Revenue increased by 2% to $2.8 billion in Q3 2013 compared to Q3 2012, driven by a 3% organic revenue growth.
  • 2Net income attributable to Aon shareholders rose to $256 million in Q3 2013, from $204 million in Q3 2012.
  • 3Operating income from continuing operations increased to $364 million in Q3 2013, up from $339 million in the prior year period.
  • 4Diluted earnings per share from continuing operations attributable to Aon shareholders increased to $0.82 in Q3 2013 from $0.62 in Q3 2012.
  • 5Cash flow from operating activities for the first nine months of 2013 was $984 million, an increase of 13% from the prior year period.
  • 6The company repurchased $1.0 billion of its shares in the first nine months of 2013 under its $5 billion share repurchase program.
  • 7Restructuring costs of $30 million were recorded in Q3 2013 related to the Aon Hewitt Plan, with cumulative costs reaching $364 million as of September 30, 2013.

Frequently Asked Questions

Revenue increased by 2% to $2.8 billion, primarily driven by a 3% organic revenue growth across both the Risk Solutions and HR Solutions segments. The Risk Solutions segment saw a 4% organic growth, while HR Solutions was flat, with growth in consulting services partially offset by a decline in benefits administration.

Net income attributable to Aon shareholders increased by 25% to $256 million in the third quarter of 2013 compared to the prior year. Diluted earnings per share from continuing operations also rose to $0.82 from $0.62. Operating margin from continuing operations improved to 13.0% from 12.4%.

Aon continued its share repurchase program, buying back 7.3 million shares for $500 million in the third quarter of 2013, and a total of 15.8 million shares for $1.0 billion in the first nine months of 2013. The remaining authorization under the 2012 Share Repurchase Program was approximately $3.0 billion.

Cash flow provided by operating activities for the nine months ended September 30, 2013 was $984 million, an increase from the prior year. The company reported total debt of $4.6 billion and maintained compliance with its credit facility covenants. Equity stood at $7.6 billion, reflecting strong performance offset by significant share repurchases and dividends.