Willis Towers Watson Public Limited Company (NASDAQ:WLTW) Q1 2019 Earnings Conference Call Transcript

May 01, 2019 • 09:00 am ET

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Willis Towers Watson Public Limited Company (NASDAQ:WLTW) Q1 2019 Earnings Conference Call Transcript

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Presentation
Executive
Mike Burwell

year-over-year decline in free cash flow is due to higher compensation payments as well as some timing related income taxes and pension contributions.

As we think about cash flow generation for the remainder of the year, we expect free cash flow to build as a result of operating income growth, improved working capital and disciplined capital spending. In terms of capital allocation, we paid approximately $77 million of dividends and did not repurchase any shares in the first quarter of 2019.

Thinking about our guidance. For the full year, we are reaffirming our original guidance, we continue to expect organic revenue growth of around 4% and full year adjusted operating income margin to be around 20%. One point of clarification around our guidance. We remind you that our fourth quarter is our seasonally highest quarter primarily as a result of our enrollment activity within our Benefits and Administration and Delivery business.

Also concerning the HCB brokering recapture from the adoption of ASC 606, we recaptured approximately $11 million in Q1 2019 within the HCB segment and expect to recapture remainder by the end of Q3, 2019. The adjusted effective tax rate is still expected to be around 22%, excluding any potential discrete items and we still expect free cash flow growth of 15% or better.

Foreign exchange credited to a $0.12 headwind to adjusted EPS in the first quarter of '19. Assuming exchange rates remain at current levels, we expected an FX headwind of around $0.15 for the full year 2019, despite the additional potential FX headwinds, our adjusted diluted earnings per share guidance will remain unchanged and is projected to be in the range of $10.60 to $10.85.

On the next quarter earnings call, we expect to update our guidance to reflect the TRANZACT acquisition, which is expected to close in Q3, 2019. Overall, we delivered solid financial performance in the first quarter, while I'm pleased with the results and the continued momentum of our business, there's still a lot of opportunity ahead, we remain focused on driving execution.

And now I'll turn the call back to you, John.

Executive
John J. Haley

Thanks very much, Mike. And now we'll take your questions.