10-QPeriod: Q1 FY2013

MARSH & MCLENNAN COMPANIES, INC. Quarterly Report for Q1 Ended Mar 31, 2013

Filed May 9, 2013For Securities:MRSHMMC

Summary

Marsh & McLennan Companies, Inc. (MRSH) reported a solid first quarter for 2013, with revenue increasing by 2% to $3.1 billion and operating income rising by 15% to $607 million compared to the prior year period. This growth was driven by strong performance in the Risk and Insurance Services segment, which saw a 5% revenue increase, while the Consulting segment's revenue was flat on an underlying basis. The company also demonstrated effective expense management, with consolidated operating expenses slightly decreasing year-over-year. Key financial metrics showed improvement, with diluted earnings per share from continuing operations at $0.72, up from $0.63 in the previous year. The company's balance sheet remains robust, although cash and cash equivalents decreased significantly from December 31, 2012, due to operational cash usage and debt repayments. The company also continued its share repurchase program, reflecting confidence in its financial position and commitment to shareholder returns.

Financial Highlights

50 data points
Beta

Revenue

$3.13B

Net Income

$413.00M

13.2% Net Margin

EPS (Diluted)

$0.74

Total Assets

$15.54B

Cash & Equivalents

$1.26B

Free Cash Flow

-$681.00M

Financial Statements
Beta
Revenue$3.13B
Operating Expenses$2.52B
Operating Income$607.00M
Interest Expense$44.00M
Net Income$413.00M
EPS (Basic)$0.75
EPS (Diluted)$0.74
Shares Outstanding (Basic)548.00M
Shares Outstanding (Diluted)557.00M

Key Highlights

  • 1Total revenue increased by 2% to $3.1 billion for the first quarter of 2013 compared to the prior year.
  • 2Operating income saw a substantial increase of 15% to $607 million.
  • 3Diluted EPS from continuing operations improved to $0.72 from $0.63 in the prior year.
  • 4Risk and Insurance Services segment revenue grew 5% on a reported basis, driven by Marsh and Guy Carpenter.
  • 5Consulting segment revenue was flat on an underlying basis, with Mercer showing growth and Oliver Wyman experiencing a decline.
  • 6The company repurchased approximately $100 million of its common stock during the quarter.
  • 7Cash and cash equivalents decreased from $2.3 billion at the end of 2012 to $1.3 billion at the end of the first quarter of 2013, partly due to debt repayments.

Frequently Asked Questions

In the first quarter of 2013, Marsh & McLennan Companies reported a consolidated revenue of $3.1 billion, a 2% increase compared to the same period in 2012. Operating income increased significantly by 15% to $607 million. Diluted earnings per share from continuing operations rose to $0.72 from $0.63 in the prior year, indicating improved profitability.

The Risk and Insurance Services segment showed strong performance, with revenue increasing by 5% due to growth in Marsh and Guy Carpenter. The Consulting segment's revenue was flat on an underlying basis; Mercer's revenue grew by 3%, while Oliver Wyman's revenue decreased by 9%.

Cash and cash equivalents decreased from $2.3 billion at the end of December 2012 to $1.3 billion at the end of March 2013. This decrease was partly due to $252 million in debt repayments and $127 million in dividend payments during the quarter. The company also has a $1 billion revolving credit facility, under which no borrowings were outstanding as of March 31, 2013.

The company faces various claims and lawsuits in the ordinary course of business, primarily related to alleged errors and omissions in professional services. While management establishes liabilities when losses are probable and estimable, there are other pending legal proceedings and contingencies where a reasonable estimate of loss cannot be made. Adverse outcomes in these matters could materially impact the company's financial results. Investors are advised to review the 'Legal Proceedings' and 'Risk Factors' sections in the company's filings for detailed information.