10-QPeriod: Q3 FY2016

MARSH & MCLENNAN COMPANIES, INC. Quarterly Report for Q3 Ended Sep 30, 2016

Filed October 28, 2016For Securities:MRSHMMC

Summary

Marsh & McLennan Companies, Inc. reported solid results for the third quarter and the first nine months of 2016, demonstrating revenue growth and improved operating income. For the three months ended September 30, 2016, revenue increased 1% to $3.1 billion, and operating income rose significantly by 24% to $572 million. Diluted earnings per share from continuing operations saw a healthy increase of 22% to $0.73. The year-to-date performance was also strong, with consolidated revenue up 3% to $9.8 billion and operating income increasing 11% to $2.0 billion. The company's Risk and Insurance Services segment, driven by Marsh, showed robust revenue growth, while the Consulting segment, including Mercer and Oliver Wyman, maintained steady performance. The company also actively managed its capital through share repurchases and dividend payments.

Financial Highlights

51 data points
Beta

Revenue

$3.13B

Net Income

$379.00M

12.1% Net Margin

EPS (Diluted)

$0.73

Total Assets

$18.36B

Cash & Equivalents

$1.39B

Free Cash Flow

$823.00M

Financial Statements
Beta
Revenue$3.13B
Operating Expenses$2.56B
Operating Income$572.00M
Interest Expense$47.00M
Net Income$379.00M
EPS (Basic)$0.73
EPS (Diluted)$0.73
Shares Outstanding (Basic)518.00M
Shares Outstanding (Diluted)523.00M

Key Highlights

  • 1Revenue for Q3 2016 increased 1% to $3.1 billion, with underlying revenue growth of 1%.
  • 2Operating income for Q3 2016 surged 24% to $572 million, driven by revenue growth and a 3% decrease in expenses.
  • 3Diluted EPS from continuing operations increased 22% to $0.73 in Q3 2016.
  • 4For the first nine months of 2016, consolidated revenue grew 3% to $9.8 billion, and operating income rose 11% to $2.0 billion.
  • 5Risk and Insurance Services segment revenue grew 3% in Q3 2016, with Marsh showing particular strength in underlying revenue.
  • 6Consulting segment revenue decreased 2% in Q3 2016, primarily due to foreign currency impacts, but was flat on an underlying basis.
  • 7The company repurchased approximately 10 million shares of common stock for $625 million in the first nine months of 2016.

Frequently Asked Questions

Consolidated revenue for the third quarter of 2016 was $3.1 billion, a 1% increase compared to the prior year. Underlying revenue, which excludes the impact of currency fluctuations and acquisitions/dispositions, also increased by 1%.

The 24% increase in operating income to $572 million in Q3 2016 was driven by a combination of a 1% increase in revenue and a 3% decrease in operating expenses. The expense reduction was primarily due to lower incentive compensation, reduced defined benefit plan pension expense, and lower charges for contingent consideration adjustments related to acquisitions.

Marsh & McLennan Companies demonstrated a commitment to shareholder returns by repurchasing approximately 10 million shares of its common stock for $625 million during the first nine months of 2016. The company also paid dividends totaling $504 million during the same period.

The Risk and Insurance Services segment showed strong revenue growth, with Marsh performing particularly well. The Consulting segment experienced a slight revenue decrease in Q3 2016 mainly due to currency impacts, but underlying revenue remained flat, indicating a stable performance in core operations.