10-QPeriod: Q1 FY2014

MARSH & MCLENNAN COMPANIES, INC. Quarterly Report for Q1 Ended Mar 31, 2014

Filed May 8, 2014For Securities:MRSHMMC

Summary

Marsh & McLennan Companies (MMC) reported solid results for the first quarter of 2014, with consolidated revenue increasing by 4% to $3.26 billion and operating income rising 11% to $673 million, compared to the prior year. This growth was driven by strong performance in both the Risk and Insurance Services and Consulting segments, with underlying revenue increasing by 3% and 5% respectively. The company also demonstrated effective cost management, with operating expenses growing at a slower pace than revenue. Profitability saw a notable improvement, with income from continuing operations up 11% to $457 million, translating to diluted earnings per share of $0.80. The company continued its strategic acquisition activity, completing six acquisitions in the quarter to expand its market reach, particularly within the Marsh & McLennan Agency division. Despite some headwinds such as a slight increase in compensation and benefits, the company's diversified business model and disciplined execution position it favorably for continued performance.

Financial Highlights

51 data points
Beta

Revenue

$3.26B

Net Income

$443.00M

13.6% Net Margin

EPS (Diluted)

$0.80

Total Assets

$16.58B

Cash & Equivalents

$1.38B

Free Cash Flow

-$479.00M

Financial Statements
Beta
Revenue$3.26B
Operating Expenses$2.59B
Operating Income$673.00M
Interest Expense$42.00M
Net Income$443.00M
EPS (Basic)$0.81
EPS (Diluted)$0.80
Shares Outstanding (Basic)548.00M
Shares Outstanding (Diluted)556.00M

Key Highlights

  • 1Consolidated revenue increased 4% to $3.26 billion for Q1 2014, compared to $3.13 billion in Q1 2013.
  • 2Operating income rose 11% to $673 million, indicating strong operational efficiency and revenue growth.
  • 3Income from continuing operations grew 11% to $457 million, resulting in diluted EPS of $0.80, up from $0.72 in the prior year.
  • 4The Risk and Insurance Services segment saw revenue increase 4% (3% underlying), driven by Marsh's performance.
  • 5The Consulting segment revenue increased 5% (5% underlying), with strong growth in Oliver Wyman offsetting slower growth in Mercer.
  • 6The company completed six strategic acquisitions during the quarter, primarily focused on expanding the Marsh & McLennan Agency's U.S. middle-market presence.
  • 7Share repurchases continued, with $100 million spent in Q1 2014, and the company has $463 million remaining under its authorized repurchase program.

Frequently Asked Questions

Marsh & McLennan Companies reported a solid first quarter in 2014. Consolidated revenue increased by 4% to $3.26 billion, and operating income saw an 11% rise to $673 million, compared to the same period in 2013. This growth was supported by increases in both the Risk and Insurance Services and Consulting segments.

The Risk and Insurance Services segment's revenue grew 4% (3% on an underlying basis), largely due to Marsh's performance. The Consulting segment's revenue increased by 5% (5% underlying), with Oliver Wyman showing significant underlying revenue growth of 11%.

The company continued its share repurchase program in the first quarter of 2014, spending $100 million to buy back approximately 2 million shares. As of March 31, 2014, there was approximately $463 million remaining under the authorized share repurchase program. Dividends paid on common shares amounted to $137 million in the quarter.

Yes, the company completed six acquisitions in the first three months of 2014, primarily through its Marsh & McLennan Agency (MMA) division. These acquisitions were strategically focused on expanding Marsh's presence in the U.S. middle-market business.