10-QPeriod: Q3 FY2022

Aon plc Quarterly Report for Q3 Ended Sep 30, 2022

Filed October 28, 2022For Securities:AON

Summary

Aon plc's third quarter 2022 report shows a significant turnaround in profitability compared to the same period in the previous year. The company reported a net income attributable to Aon shareholders of $408 million, a substantial improvement from a net loss of $(900) million in Q3 2021. This rebound was driven by a considerable reduction in operating expenses, notably the absence of the significant "Termination Fee" and related transaction costs incurred in the prior year. Revenue remained relatively flat year-over-year, with organic revenue growth of 5% in the quarter, partially offset by foreign currency translation headwinds. For the first nine months of 2022, Aon demonstrated robust performance with net income attributable to shareholders reaching $1.9 billion, up from $392 million in the prior year period. This strong financial performance was supported by consistent organic revenue growth of 7% for the year-to-date period and effective expense management. The company also highlighted improvements in key non-GAAP metrics, including adjusted operating margin and adjusted diluted earnings per share, reinforcing the positive operational trends. Aon continues its significant share repurchase program, underscoring its commitment to returning capital to shareholders.

Financial Highlights

51 data points
Beta

Revenue

$2.70B

Net Income

$408.00M

15.1% Net Margin

EPS (Diluted)

$1.92

Total Assets

$31.22B

Cash & Equivalents

$692.00M

Free Cash Flow

$988.00M

Financial Statements
Beta
Revenue$2.70B
Operating Expenses$2.11B
Operating Income$590.00M
Interest Expense$103.00M
Net Income$408.00M
EPS (Basic)$1.93
EPS (Diluted)$1.92
Shares Outstanding (Basic)210.90M
Shares Outstanding (Diluted)212.60M

Key Highlights

  • 1Net income attributable to Aon shareholders for Q3 2022 was $408 million, a significant improvement from a net loss of $(900) million in Q3 2021, primarily due to reduced operating expenses.
  • 2Total revenue for Q3 2022 was $2.7 billion, flat compared to the prior year, but driven by 5% organic revenue growth, indicating underlying business strength.
  • 3For the nine months ended September 30, 2022, net income attributable to Aon shareholders increased to $1.9 billion from $392 million in the prior year.
  • 4Operating expenses decreased significantly in Q3 2022 due to the absence of prior year transaction costs (including the WTW termination fee) and favorable foreign currency translation.
  • 5The company continued its aggressive share repurchase program, repurchasing 4.2 million shares for $1.2 billion in Q3 2022, with approximately $6.7 billion remaining authorization.
  • 6Diluted EPS for Q3 2022 was $1.92, a substantial increase from $(3.99) in the prior year quarter, reflecting improved profitability.
  • 7Adjusted operating margin improved to 23.1% in Q3 2022 from 22.1% in Q3 2021, demonstrating operational efficiency gains.

Frequently Asked Questions

The primary driver for the significant increase in net income in the third quarter of 2022 was the substantial reduction in operating expenses. This was largely due to the absence of the "Termination Fee" and associated transaction costs that were incurred in the third quarter of 2021 related to the termination of the proposed combination with WTW.

Total revenue in the third quarter of 2022 was flat at $2.7 billion compared to the prior year. This stability was achieved through 5% organic revenue growth, which reflects strong client retention and new business generation, partially offset by a 5% unfavorable impact from foreign currency translation and a 1% impact from acquisitions/divestitures.

Aon continues to be very active in its share repurchase program. In the third quarter of 2022, the company repurchased 4.2 million shares for $1.2 billion. As of September 30, 2022, approximately $6.7 billion remained authorized for future repurchases, indicating a strong commitment to returning capital to shareholders.

Total debt increased to $10.8 billion as of September 30, 2022, from $9.6 billion at December 31, 2021, primarily due to new senior note issuances. The company maintains a strong liquidity position, supported by robust cash flows from operations, available credit facilities totaling $1.8 billion, and access to capital markets. Aon expects its liquidity to be sufficient to meet its obligations and capital needs.