Aon plc Quarterly Report for Q2 Ended Jun 30, 2015

Summary

Aon plc's second-quarter 2015 results show a notable decline in net income attributable to shareholders, down 41% year-over-year to $178 million, primarily driven by a significant increase in operating expenses, notably $176 million related to legacy litigation. Despite these pressures, the company demonstrated resilience with organic revenue growth of 2% in both its Risk Solutions and HR Solutions segments. Foreign currency headwinds were a material factor, impacting revenue negatively by 7% overall. Management highlighted their focus on non-GAAP metrics like adjusted diluted earnings per share, which increased to $1.31 from $1.25 in the prior year's quarter, and free cash flow, which grew to $223 million. Shareholder returns were supported by share repurchases totaling $300 million and a 20% increase in the quarterly dividend to $0.30 per share.

Key Highlights

• 1Net income attributable to Aon shareholders decreased by 41% to $178 million in Q2 2015 compared to $304 million in Q2 2014.
• 2Total revenue for Q2 2015 decreased by 4% to $2.8 billion, primarily due to an unfavorable impact of foreign currency exchange rates (-7%), partially offset by 2% organic revenue growth.
• 3Operating expenses increased by 2% to $2.5 billion in Q2 2015, significantly impacted by $176 million related to legacy litigation.
• 4Adjusted diluted earnings per share (a non-GAAP measure) increased to $1.31 in Q2 2015 from $1.25 in Q2 2014.
• 5Free cash flow (a non-GAAP measure) increased by $5 million to $223 million for the first six months of 2015 compared to the same period in 2014.
• 6Aon repurchased approximately $300 million of Class A Ordinary Shares in Q2 2015 and announced a 20% increase in its quarterly cash dividend to $0.30 per share.

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