10-QPeriod: Q3 FY2022

MARSH & MCLENNAN COMPANIES, INC. Quarterly Report for Q3 Ended Sep 30, 2022

Filed October 20, 2022For Securities:MRSHMMC

Summary

Marsh & McLennan Companies, Inc. (MRSH) reported solid financial results for the nine months ended September 30, 2022, demonstrating resilience and continued growth across its operating segments. Consolidated revenue increased by 7% year-over-year to $15.7 billion, driven by robust underlying revenue growth of 9% in the Risk and Insurance Services (RIS) segment and 9% in the Consulting segment. Operating income saw a significant increase of 8% to $3.6 billion for the same period. Despite macroeconomic headwinds and foreign currency translation impacts that reduced reported revenue by 3% year-over-year, the company's operational performance remained strong. The company continued its strategic capital deployment through significant share repurchases totaling $1.6 billion in the first nine months of 2022, alongside a 10% increase in its quarterly dividend. The company also made strategic acquisitions, bolstering its capabilities within both its RIS and Consulting segments. Importantly, the company successfully navigated the deconsolidation of its Russian businesses with a manageable loss, indicating strong operational and risk management capabilities.

Financial Highlights

50 data points
Beta

Revenue

$4.77B

Net Income

$546.00M

11.4% Net Margin

EPS (Diluted)

$1.08

Total Assets

$32.02B

Cash & Equivalents

$802.00M

Free Cash Flow

$1.25B

Financial Statements
Beta
Revenue$4.77B
Operating Expenses$3.98B
Operating Income$791.00M
Interest Expense$118.00M
Net Income$546.00M
EPS (Basic)$1.10
EPS (Diluted)$1.08
Shares Outstanding (Basic)498.00M
Shares Outstanding (Diluted)503.00M

Key Highlights

  • 1Consolidated revenue grew 7% to $15.7 billion for the first nine months of 2022, with underlying revenue growth of 9% across both Risk & Insurance Services and Consulting segments.
  • 2Operating income increased by 8% to $3.6 billion for the first nine months of 2022, reflecting strong operational performance.
  • 3Diluted Earnings Per Share (EPS) increased by 12% to $5.11 for the first nine months of 2022, demonstrating enhanced profitability.
  • 4The company returned significant capital to shareholders, repurchasing $1.6 billion of its stock in the first nine months of 2022 and increasing its quarterly dividend by 10%.
  • 5Acquisitions across both segments (RIS and Consulting) were actively pursued, enhancing strategic capabilities and market presence.
  • 6The company reported a manageable loss of $52 million related to the deconsolidation of its Russian businesses, with no significant ongoing impact anticipated.
  • 7The company's effective tax rate remained stable at 24.6% for the first nine months of 2022.

Frequently Asked Questions

Revenue growth was primarily driven by strong underlying revenue increases in both the Risk and Insurance Services (RIS) and Consulting segments. These segments experienced underlying revenue growth of 10% and 9%, respectively, fueled by robust demand for their advice and services, new business growth, solid client retention, and favorable market pricing.

The strengthening of the U.S. dollar had a negative impact on reported results. For the nine months ended September 30, 2022, foreign currency translation negatively impacted consolidated revenue by 3% and operating expenses by 4%. The company estimates that a 10% adverse movement in major currencies against the U.S. dollar could decrease full-year net operating income by approximately $65 million.

Marsh & McLennan is actively returning capital to shareholders through share repurchases and dividends. In the first nine months of 2022, the company repurchased $1.6 billion of its common stock, with approximately $4.7 billion remaining authorization as of September 30, 2022. Additionally, the company increased its quarterly dividend by 10% in the third quarter of 2022, demonstrating a commitment to shareholder returns.

The company recorded a loss of $52 million in the first quarter of 2022 related to the deconsolidation of its Russian businesses and other related charges. This loss is primarily due to the evolving trade and economic sanctions impacting control over these operations. The company has entered into an agreement to exit these businesses entirely.