10-QPeriod: Q2 FY2020

MARSH & MCLENNAN COMPANIES, INC. Quarterly Report for Q2 Ended Jun 30, 2020

Filed July 31, 2020For Securities:MRSHMMC

Summary

Marsh & McLennan Companies, Inc. (MRSH) reported its Q2 2020 financial results, showing resilience amidst the COVID-19 pandemic. The company generated $4.19 billion in revenue for the quarter, a slight decrease of 4% compared to the prior year, primarily impacted by foreign currency translation and dispositions, while underlying revenue showed a modest decrease of 2%. Despite the revenue dip, operating income increased by 30% to $885 million, driven by significant expense reductions, including lower JLT integration costs and COVID-19 related cost containment measures. Diluted earnings per share saw a substantial rise to $1.12 from $0.65 in the prior year. For the first six months of 2020, consolidated revenue increased 5% to $8.84 billion, with underlying revenue growing 2%. Operating income for the period also saw robust growth, up 21% to $1.96 billion. The company's proactive management of expenses, including substantial savings from the JLT integration and cost-saving initiatives, contributed to the improved profitability. Marsh & McLennan maintained a strong liquidity position, ending the period with $1.71 billion in cash and cash equivalents and $11.99 billion in long-term debt.

Financial Highlights

51 data points
Beta

Revenue

$4.19B

Net Income

$572.00M

13.7% Net Margin

EPS (Diluted)

$1.12

Total Assets

$32.17B

Cash & Equivalents

$1.71B

Free Cash Flow

$1.13B

Financial Statements
Beta
Revenue$4.19B
Operating Expenses$3.30B
Operating Income$885.00M
Interest Expense$132.00M
Net Income$572.00M
EPS (Basic)$1.13
EPS (Diluted)$1.12
Shares Outstanding (Basic)506.00M
Shares Outstanding (Diluted)511.00M

Key Highlights

  • 1Consolidated revenue for Q2 2020 was $4.19 billion, a 4% decrease year-over-year, with underlying revenue down 2%.
  • 2Operating income increased significantly by 30% to $885 million in Q2 2020, driven by expense management and reduced integration costs.
  • 3Diluted Earnings Per Share (EPS) rose to $1.12 in Q2 2020, up from $0.65 in the prior year's quarter.
  • 4For the first six months of 2020, consolidated revenue grew 5% to $8.84 billion, with underlying revenue up 2%.
  • 5Operating income for the first six months of 2020 increased by 21% to $1.96 billion.
  • 6The company maintained a strong cash position, with $1.71 billion in cash and cash equivalents at June 30, 2020.
  • 7JLT integration and restructuring costs were significantly lower in Q2 2020 compared to the prior year, contributing to improved profitability.

Frequently Asked Questions

Marsh & McLennan reported that while the COVID-19 pandemic created uncertainty and impacted revenue (leading to a 4% decrease year-over-year for Q2 2020), the company successfully managed expenses. Cost containment measures, including reduced travel and entertainment expenses, and lower integration costs related to the JLT acquisition, helped to boost operating income by 30% and diluted EPS by a significant margin.

The integration of JLT is progressing, with JLT integration and restructuring costs being significantly lower in Q2 2020 compared to the prior year. The company has realized cost savings from the completion of integration efforts and expects to achieve substantial run-rate savings from the combined operations.

Marsh & McLennan ended the second quarter of 2020 with $1.71 billion in cash and cash equivalents, indicating a strong liquidity position. The company had $11.99 billion in long-term debt, with management actively managing its debt structure, including issuing new senior notes and repaying existing ones.

The Risk and Insurance Services segment saw revenue increase by 1% year-over-year, driven by underlying growth and acquisitions, despite currency headwinds. The Consulting segment experienced a 10% revenue decrease, primarily due to underlying revenue declines in Mercer and Oliver Wyman, along with dispositions and currency impacts. However, both segments contributed positively to overall profitability.