10-QPeriod: Q3 FY2014

Aon plc Quarterly Report for Q3 Ended Sep 30, 2014

Filed October 31, 2014For Securities:AON

Summary

Aon plc's third quarter 2014 report shows a solid performance with revenue increasing by 3% year-over-year, primarily driven by organic growth across both its Risk Solutions and HR Solutions segments. The company reported an increase in net income attributable to Aon shareholders, up 21% in the quarter and 24% year-to-date, reflecting strong operational execution and benefits from cost-saving initiatives. While operating expenses saw a slight increase primarily due to investments in future growth and unfavorable foreign currency impacts, operating margin improved, indicating effective cost management. The company continued its aggressive share repurchase program, returning significant capital to shareholders. Despite some headwinds such as foreign currency fluctuations and economic weakness in certain regions, Aon's management expressed confidence in the company's liquidity and financial flexibility to create long-term shareholder value, supported by strong cash flow from operations and available credit facilities.

Financial Highlights

52 data points
Beta

Revenue

$2.88B

Net Income

$309.00M

10.7% Net Margin

EPS (Diluted)

$1.04

Total Assets

$28.83B

Cash & Equivalents

$382.00M

Free Cash Flow

$486.00M

Financial Statements
Beta
Revenue$2.88B
Operating Expenses$2.46B
Operating Income$417.00M
Interest Expense$65.00M
Net Income$309.00M
EPS (Basic)$1.06
EPS (Diluted)$1.04
Shares Outstanding (Basic)292.30M
Shares Outstanding (Diluted)296.10M

Key Highlights

  • 1Revenue increased by 3% to $2.9 billion in Q3 2014 compared to the prior year, driven by 3% organic revenue growth.
  • 2Net income attributable to Aon shareholders increased by 21% to $309 million in Q3 2014, with diluted EPS rising to $1.04 from $0.82.
  • 3Operating margin improved to 14.5% in Q3 2014 from 13.0% in Q3 2013, reflecting strong organic growth and expense discipline.
  • 4The Risk Solutions segment saw a 1% increase in revenue, driven by retail brokerage, while HR Solutions reported an 8% revenue increase fueled by consulting and benefits administration.
  • 5The company repurchased approximately $500 million of shares in Q3 2014 under its ongoing share repurchase program.
  • 6Cash flow from operations for the first nine months of 2014 was $883 million, a decrease of 10% from the prior year, attributed to organic growth and prior year receivable collections.
  • 7Effective tax rate decreased significantly to 19.1% in Q3 2014 from 25.1% in Q3 2013, positively impacting net income.

Frequently Asked Questions

Revenue growth was primarily driven by organic revenue growth of 3%. The Risk Solutions segment benefited from solid growth in Retail brokerage, while the HR Solutions segment saw strong growth in consulting and benefits administration.

Profitability improved significantly. Net income attributable to Aon shareholders increased by 21% in the third quarter, and operating margin expanded to 14.5% from 13.0%. This was supported by revenue growth and effective expense management.

Aon continued its aggressive share repurchase program, repurchasing $500 million of shares in the third quarter of 2014. The company also paid dividends to shareholders.

Yes, the company cited headwinds including unfavorable foreign currency exchange rates, economic weakness in continental Europe, and a negative market impact in its Reinsurance business. Price compression in the benefits administration business within HR Solutions was also noted.