 
Underlying Revenue Increases 4%, Reflecting Growth Across All
Operating Companies
GAAP EPS Rises 23% to $1.34 and Adjusted EPS Increases 28% to $1.38
Excluding Revenue Standard Impact, GAAP EPS Grows 9% and Adjusted
EPS Increases 14%
NEW YORK--(BUSINESS WIRE)--Apr. 26, 2018--
Marsh & McLennan Companies, Inc. (NYSE:MMC), a global professional
services firm offering clients advice and solutions in risk, strategy
and people, today reported financial results for the first quarter ended
March 31, 2018.
Dan Glaser, President and CEO, said: "We are pleased with our
performance in the first quarter. On a consolidated basis, Marsh &
McLennan delivered strong underlying revenue growth of 4% with continued
solid earnings growth and margin expansion. We had underlying revenue
growth across all of our operating companies, with growth of 3% in Risk
& Insurance Services and 5% in Consulting. Adjusted EPS grew 14%,
excluding the impact of the new revenue recognition standard."
"We are off to a good start to the year and are well positioned to
deliver underlying revenue growth in the 3-5% range, margin expansion
and strong growth in earnings per share in 2018," concluded Mr. Glaser.
Consolidated Results
Earnings per share increased 23% to $1.34. Adjusted EPS increased 28% to
$1.38 from the prior year period. The 28% increase in adjusted EPS
includes a $0.15 per share benefit from application of the new revenue
recognition accounting standard, ASC 606, effective January 2018.
Excluding the impact of the revenue standard, adjusted EPS increased
14%. The Company adopted the revenue standard using the modified
retrospective method, and accordingly has not restated prior years and
quarters.
Consolidated revenue in the first quarter of 2018 was $4.0 billion, an
increase of 14%, or 4% on an underlying basis, compared with the first
quarter of 2017. Operating income was $908 million, an increase of 21%
from the prior year. Adjusted operating income, which excludes
noteworthy items as presented in the attached supplemental schedules,
rose 24% to $918 million, and adjusted net income was $707 million.
Excluding the impact of the revenue standard, adjusted operating income
rose 10%.
Risk & Insurance Services
Risk & Insurance Services revenue was $2.3 billion in the first quarter
of 2018, an increase of 3% on an underlying basis. Operating income was
$716 million, an increase of 26%. Adjusted operating income rose 30% to
$723 million compared with $555 million in last year's first quarter.
Excluding the impact of the revenue standard, adjusted operating income
increased 11%.
Marsh's revenue in the first quarter was $1.7 billion, an increase of 2%
on an underlying basis. In U.S./Canada, underlying revenue rose 3%.
International operations underlying revenue growth was flat, reflecting
underlying growth of 6% in Latin America, 4% in Asia Pacific and a
decline of 2% in EMEA.
Guy Carpenter's revenue in the first quarter was $637 million, an
increase of 7% on an underlying basis.
Consulting
Consulting revenue in the first quarter was $1.7 billion, an increase of
5% on an underlying basis. Operating income increased 10% to $247
million. Adjusted operating income increased 8% to $248 million compared
with last year's first quarter. Excluding the impact of the revenue
standard, adjusted operating income rose 10%.
Mercer's revenue was $1.2 billion in the first quarter, an increase of
5% on an underlying basis. Wealth, with revenue of $565 million, grew 3%
on an underlying basis. Within Wealth, Investment Management & Related
Services increased 15% on an underlying basis, while Defined Benefit &
Administration declined 4%. Health revenue of $442 million was up 7% on
an underlying basis and Career revenue of $164 million increased 4%.
Oliver Wyman Group's revenue was $497 million in the first quarter, an
increase of 6% on an underlying basis.
Other Items
On March 1, 2018, the Company issued $600 million of 4.2% senior notes
due in 2048, the net proceeds of which are intended for general
corporate purposes. The Company repurchased 3.0 million shares of its
common stock for $250 million in the first quarter.
Conference Call
A conference call to discuss first quarter 2018 results will be held
today at 8:30 a.m. Eastern time. To participate in the teleconference,
please dial +1 888 882 4478. Callers from outside the United States
should dial +1 323 794 2149. The access code for both numbers is
5027620. The live audio webcast may be accessed at mmc.com.
A replay of the webcast will be available approximately two hours after
the event.
About Marsh & McLennan Companies
Marsh & McLennan (NYSE: MMC) is the world's leading professional
services firm in the areas of risk, strategy and people. The company's
nearly 65,000 colleagues advise clients in over 130 countries. With
annual revenue over $14 billion, Marsh & McLennan helps clients navigate
an increasingly dynamic and complex environment through four
market-leading firms. Marsh
advises individual and commercial clients of all sizes on
insurance broking and innovative risk management solutions. Guy
Carpenter develops advanced risk, reinsurance and capital strategies
that help clients grow profitably and pursue emerging opportunities. Mercer
delivers advice and technology-driven solutions that help organizations
meet the health, wealth and career needs of a changing workforce. Oliver
Wyman serves as a critical strategic, economic and brand advisor to
private sector and governmental clients. For more information, visit mmc.com,
follow us on LinkedIn
and Twitter @mmc_global
or subscribe to BRINK.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements," as defined in
the Private Securities Litigation Reform Act of 1995. These statements,
which express management's current views concerning future events or
results, use words like "anticipate," "assume," "believe," "continue,"
"estimate," "expect," "intend," "plan," "project" and similar terms, and
future or conditional tense verbs like "could," "may," "might,"
"should," "will" and "would."
Forward-looking statements are subject to inherent risks and
uncertainties that could cause actual results to differ materially from
those expressed or implied in our forward-looking statements. Factors
that could materially affect our future results include, among other
things:
-
the impact of any investigations, reviews, market studies or other
activity by regulatory or law enforcement authorities, including the
U.K. CMA investment consultants market investigation, the U.K. FCA
wholesale insurance broker market study and the ongoing investigations
by the European Commission;
-
the impact from lawsuits, other contingent liabilities and loss
contingencies arising from errors and omissions, breach of fiduciary
duty or other claims against us;
-
our organization's ability to maintain adequate safeguards to protect
the security of our information systems and confidential, personal or
proprietary information, particularly given the volume of our vendor
network and the need to patch software vulnerabilities;
-
our ability to compete effectively and adapt to changes in the
competitive environment, including to respond to disintermediation,
digital disruption and other types of innovation;
-
the financial and operational impact of complying with laws and
regulations where we operate, including cybersecurity and data privacy
regulations such as the E.U.'s General Data Protection Regulation,
anticorruption laws and trade sanctions regimes;
-
the regulatory, contractual and reputational risks that arise based on
insurance placement activities and various broker revenue streams;
-
the extent to which we manage risks associated with the various
services, including fiduciary and investments and other advisory
services;
-
our ability to successfully recover if we experience a business
continuity problem due to cyberattack, natural disaster or otherwise;
-
the impact of changes in tax laws, guidance and interpretations,
including related to certain provisions of the U.S. Tax Cuts and Jobs
Act, or disagreements with tax authorities;
-
the impact of fluctuations in foreign exchange and interest rates on
our results;
-
the impact of macroeconomic, political, regulatory or market
conditions on us, our clients and the industries in which we operate;
and
-
the impact of changes in accounting rules or in our accounting
estimates or assumptions, including the impact of the adoption of the
new revenue recognition, pension and lease accounting standards.
The factors identified above are not exhaustive. Further information
concerning Marsh & McLennan Companies and its businesses, including
information about factors that could materially affect our results of
operations and financial condition, is contained in the Company's
filings with the Securities and Exchange Commission, including the "Risk
Factors" section and the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" section of our most
recently filed Annual Report on Form 10-K. We caution readers not to
place undue reliance on any forward-looking statements, which are based
only on information currently available to us and speak only as of the
dates on which they are made. We undertake no obligation to update or
revise any forward-looking statement to reflect events or circumstances
arising after the date on which it is made.
|
|
|
|
|
|
Marsh & McLennan Companies, Inc.
Consolidated Statements of Income
(In millions, except per share figures)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
Revenue
|
|
|
$
|
4,000
|
|
|
|
$
|
3,503
|
|
|
|
|
|
|
|
|
|
|
Expense:
|
|
|
|
|
|
|
|
Compensation and Benefits
|
|
|
2,224
|
|
|
|
2,005
|
|
|
Other Operating Expenses
|
|
|
868
|
|
|
|
749
|
|
|
Operating Expenses
|
|
|
3,092
|
|
|
|
2,754
|
|
|
Operating Income
|
|
|
908
|
|
|
|
749
|
|
|
Other Net Benefit Credits (a)
|
|
|
66
|
|
|
|
60
|
|
|
Interest Income
|
|
|
3
|
|
|
|
2
|
|
|
Interest Expense
|
|
|
(61
|
)
|
|
|
(58
|
)
|
|
Investment Income
|
|
|
—
|
|
|
|
—
|
|
|
Income Before Income Taxes
|
|
|
916
|
|
|
|
753
|
|
|
Income Tax Expense
|
|
|
220
|
|
|
|
175
|
|
|
Net Income Before Non-Controlling Interests
|
|
|
696
|
|
|
|
578
|
|
|
Less: Net Income Attributable to Non-Controlling Interests
|
|
|
6
|
|
|
|
9
|
|
|
Net Income Attributable to the Company
|
|
|
$
|
690
|
|
|
|
$
|
569
|
|
|
Net Income Per Share Attributable to the Company:
|
|
|
|
|
|
|
|
- Basic
|
|
|
$
|
1.36
|
|
|
|
$
|
1.10
|
|
|
- Diluted
|
|
|
$
|
1.34
|
|
|
|
$
|
1.09
|
|
|
Average Number of Shares Outstanding
|
|
|
|
|
|
|
|
- Basic
|
|
|
508
|
|
|
|
515
|
|
|
- Diluted
|
|
|
514
|
|
|
|
522
|
|
|
Shares Outstanding at 3/31
|
|
|
508
|
|
|
|
515
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) ASC 715, as amended, changes the presentation of net periodic
pension cost and net periodic postretirement cost. The Company has
restated prior years and quarters for this new presentation.
|
|
|
|
|
|
Marsh & McLennan Companies, Inc.
Consolidated Statements of Income - Impact of Revenue Standard
(In millions, except per share figures)
(Unaudited)
|
|
|
|
The Company adopted the new revenue standard ("ASC 606") using the
modified retrospective method, applied to all contracts. The
guidance requires entities that elected the modified retrospective
method to disclose the impact to financial statement line items as a
result of applying the new guidance (rather than previous U.S.
GAAP). The table below shows the impacts on the consolidated
statement of income.
|
|
|
|
|
Three Months Ended
March 31, 2018
|
|
|
|
|
As
Reported
|
|
|
Revenue
Standard
Impact
|
|
|
Prior to
Adoption
|
|
Revenue
|
|
|
$
|
4,000
|
|
|
|
$
|
(161
|
)
|
|
|
$
|
3,839
|
|
|
Expense:
|
|
|
|
|
|
|
|
|
|
|
Compensation and Benefits
|
|
|
2,224
|
|
|
|
(60
|
)
|
|
|
2,164
|
|
|
Other Operating Expenses
|
|
|
868
|
|
|
|
—
|
|
|
|
868
|
|
|
Operating Expenses
|
|
|
3,092
|
|
|
|
(60
|
)
|
|
|
3,032
|
|
|
Operating Income
|
|
|
908
|
|
|
|
(101
|
)
|
|
|
807
|
|
|
Other Net Benefit Credits
|
|
|
66
|
|
|
|
—
|
|
|
|
66
|
|
|
Interest Income
|
|
|
3
|
|
|
|
—
|
|
|
|
3
|
|
|
Interest Expense
|
|
|
(61
|
)
|
|
|
—
|
|
|
|
(61
|
)
|
|
Investment Income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Income Before Income Taxes
|
|
|
916
|
|
|
|
(101
|
)
|
|
|
815
|
|
|
Income Tax Expense
|
|
|
220
|
|
|
|
(26
|
)
|
|
|
194
|
|
|
Net Income Before Non-Controlling Interests
|
|
|
696
|
|
|
|
(75
|
)
|
|
|
621
|
|
|
Less: Net Income Attributable to Non-Controlling Interests
|
|
|
6
|
|
|
|
—
|
|
|
|
6
|
|
|
Net Income Attributable to the Company
|
|
|
$
|
690
|
|
|
|
$
|
(75
|
)
|
|
|
$
|
615
|
|
|
Net Income Per Share Attributable to the Company:
|
|
|
|
|
|
|
|
|
|
|
- Basic
|
|
|
$
|
1.36
|
|
|
|
$
|
(0.15
|
)
|
|
|
$
|
1.21
|
|
|
- Diluted
|
|
|
$
|
1.34
|
|
|
|
$
|
(0.15
|
)
|
|
|
$
|
1.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Number of Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
- Basic
|
|
|
508
|
|
|
|
508
|
|
|
|
508
|
|
|
- Diluted
|
|
|
514
|
|
|
|
514
|
|
|
|
514
|
|
|
Shares Outstanding at 3/31
|
|
|
508
|
|
|
|
508
|
|
|
|
508
|
|
|
|
|
|
|
|
|
|
|
|
|
Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Three Months Ended March 31
(Millions) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of Revenue Change*
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
%
Change
GAAP
Revenue
|
|
Currency
Impact
|
|
Acquisitions/
Dispositions/
Other Impact
|
|
Revenue
Standard
Impact
|
|
Underlying
Revenue
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
Risk and Insurance Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marsh
|
|
|
$
|
1,694
|
|
|
|
$
|
1,596
|
|
|
|
6
|
%
|
|
4
|
%
|
|
3
|
%
|
|
(3
|
)%
|
|
2
|
%
|
|
Guy Carpenter
|
|
|
637
|
|
|
|
385
|
|
|
|
66
|
%
|
|
2
|
%
|
|
—
|
|
|
56
|
%
|
|
7
|
%
|
|
Subtotal
|
|
|
2,331
|
|
|
|
1,981
|
|
|
|
18
|
%
|
|
4
|
%
|
|
2
|
%
|
|
9
|
%
|
|
3
|
%
|
|
Fiduciary Interest Income
|
|
|
13
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Risk and Insurance Services
|
|
|
2,344
|
|
|
|
1,989
|
|
|
|
18
|
%
|
|
4
|
%
|
|
2
|
%
|
|
8
|
%
|
|
3
|
%
|
|
Consulting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mercer
|
|
|
1,171
|
|
|
|
1,077
|
|
|
|
9
|
%
|
|
4
|
%
|
|
—
|
|
|
(1
|
)%
|
|
5
|
%
|
|
Oliver Wyman Group
|
|
|
497
|
|
|
|
449
|
|
|
|
11
|
%
|
|
5
|
%
|
|
—
|
|
|
—
|
|
|
6
|
%
|
|
Total Consulting
|
|
|
1,668
|
|
|
|
1,526
|
|
|
|
9
|
%
|
|
5
|
%
|
|
—
|
|
|
—
|
|
|
5
|
%
|
|
Corporate / Eliminations
|
|
|
(12
|
)
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenue
|
|
|
$
|
4,000
|
|
|
|
$
|
3,503
|
|
|
|
14
|
%
|
|
4
|
%
|
|
1
|
%
|
|
5
|
%
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Details
The following table provides more detailed revenue information for
certain of the components presented above:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of Revenue Change*
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
%
Change
GAAP
Revenue
|
|
|
Currency
Impact
|
|
|
Acquisitions/
Dispositions/
Other Impact
|
|
|
Revenue
Standard
Impact
|
|
|
Underlying
Revenue
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
Marsh:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
|
$
|
643
|
|
|
|
$
|
589
|
|
|
|
9
|
%
|
|
|
10
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
(2
|
)%
|
|
Asia Pacific
|
|
|
164
|
|
|
|
152
|
|
|
|
8
|
%
|
|
|
4
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
%
|
|
Latin America
|
|
|
84
|
|
|
|
80
|
|
|
|
5
|
%
|
|
|
(1
|
)%
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
%
|
|
Total International
|
|
|
891
|
|
|
|
821
|
|
|
|
8
|
%
|
|
|
8
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
U.S. / Canada
|
|
|
803
|
|
|
|
775
|
|
|
|
4
|
%
|
|
|
—
|
|
|
|
6
|
%
|
|
|
(6
|
)%
|
|
|
3
|
%
|
|
Total Marsh
|
|
|
$
|
1,694
|
|
|
|
$
|
1,596
|
|
|
|
6
|
%
|
|
|
4
|
%
|
|
|
3
|
%
|
|
|
(3
|
)%
|
|
|
2
|
%
|
|
Mercer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Benefit Consulting & Administration
|
|
|
$
|
339
|
|
|
|
$
|
334
|
|
|
|
2
|
%
|
|
|
6
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
(4
|
)%
|
|
Investment Management & Related Services
|
|
|
226
|
|
|
|
186
|
|
|
|
21
|
%
|
|
|
5
|
%
|
|
|
1
|
%
|
|
|
—
|
|
|
|
15
|
%
|
|
Total Wealth
|
|
|
565
|
|
|
|
520
|
|
|
|
9
|
%
|
|
|
6
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
%
|
|
Health
|
|
|
442
|
|
|
|
415
|
|
|
|
6
|
%
|
|
|
3
|
%
|
|
|
(2
|
)%
|
|
|
(2
|
)%
|
|
|
7
|
%
|
|
Career
|
|
|
164
|
|
|
|
142
|
|
|
|
15
|
%
|
|
|
4
|
%
|
|
|
7
|
%
|
|
|
—
|
|
|
|
4
|
%
|
|
Total Mercer
|
|
|
$
|
1,171
|
|
|
|
$
|
1,077
|
|
|
|
9
|
%
|
|
|
4
|
%
|
|
|
—
|
|
|
|
(1
|
)%
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
|
Underlying revenue measures the change in revenue using consistent
currency exchange rates, excluding the impact of certain items that
affect comparability such as: acquisitions, dispositions, transfers
among businesses, changes in estimate methodology and the impact of
the new revenue standard.
|
|
|
|
* Components of revenue change may not add due to rounding.
|
|
|
|
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Includes Revenue Standard Impact
Three Months Ended March 31
(Millions) (Unaudited)
|
|
|
Overview
The Company reports its financial results in
accordance with accounting principles generally accepted in the
United States (referred to in this release as "GAAP" or "reported"
results). The Company also refers to and presents below certain
additional non-GAAP financial measures, within the meaning of
Regulation G under the Securities Exchange Act of 1934. These
measures are: adjusted operating income (loss), adjusted
operating margin, adjusted income, net of tax and adjusted
earnings per share (EPS). The Company has included
reconciliations of these non-GAAP financial measures to the most
directly comparable financial measure calculated in accordance with
GAAP in the following tables.
|
|
The Company believes these non-GAAP financial measures provide
useful supplemental information that enables investors to better
compare the Company's performance across periods. Management also
uses these measures internally to assess the operating performance
of its businesses, to assess performance for employee compensation
purposes and to decide how to allocate resources. However, investors
should not consider these non-GAAP measures in isolation from, or as
a substitute for, the financial information that the Company reports
in accordance with GAAP. The Company's non-GAAP measures include
adjustments that reflect how management views our businesses, and
may differ from similarly titled non-GAAP measures presented by
other companies.
|
|
|
|
Adjusted Operating Income (Loss) and Adjusted Operating Margin
|
|
Adjusted operating income (loss) is calculated by excluding
the impact of certain noteworthy items from the Company's GAAP
operating income or loss. The following tables identify these
noteworthy items and reconcile adjusted operating income (loss)
to GAAP operating income or loss, on a consolidated and segment
basis, for the three months ended March 31, 2018. The following
tables also present adjusted operating margin. For the three months
ended March 31, 2018, adjusted operating margin is calculated
by dividing adjusted operating income by consolidated or
segment GAAP revenue.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk &
Insurance
Services
|
|
|
Consulting
|
|
|
Corporate/
Eliminations
|
|
|
Total
|
|
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
$
|
716
|
|
|
|
$
|
247
|
|
|
|
$
|
(55
|
)
|
|
|
$
|
908
|
|
|
Add impact of Noteworthy Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring (a)
|
|
|
3
|
|
|
|
1
|
|
|
|
2
|
|
|
|
6
|
|
|
Adjustments to acquisition related accounts (b)
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
Operating income adjustments
|
|
|
7
|
|
|
|
1
|
|
|
|
2
|
|
|
|
10
|
|
|
Adjusted operating income (loss)
|
|
|
$
|
723
|
|
|
|
$
|
248
|
|
|
|
$
|
(53
|
)
|
|
|
$
|
918
|
|
|
Operating margin
|
|
|
30.5
|
%
|
|
|
14.8
|
%
|
|
|
N/A
|
|
|
22.7
|
%
|
|
Adjusted operating margin
|
|
|
30.9
|
%
|
|
|
14.9
|
%
|
|
|
N/A
|
|
|
23.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes severance and related charges from restructuring
activities, adjustments to restructuring liabilities for future rent
under non-cancellable leases and other real estate costs, and
restructuring costs related to the integration of recent
acquisitions.
|
|
(b) Primarily includes the change in fair value as measured each
quarter of contingent consideration related to acquisitions.
|
|
|
|
Note:
|
|
Comparative financial information for the three months ended March
31, 2017 is presented on page 9.
|
|
|
|
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures - Comparable Accounting
Basis
Excludes the Revenue Standard Impact
Three Months Ended March 31
(Millions) (Unaudited)
|
|
|
|
As discussed earlier, the Company has adopted the new revenue
standard using the modified retrospective method, which requires the
disclosure of the impacts of the standard on each financial
statement line item. The non-GAAP measures below present an analysis
of results reflecting 2018 financial information excluding the
impact of the application of ASC 606, to facilitate a comparison to
the 2017 results. Except for the adjustment for the effects of ASC
606 in 2018, these non-GAAP measures are calculated as described on
the prior page.
|
|
|
|
|
Risk &
Insurance
Services
|
|
|
Consulting
|
|
|
Corporate/
Eliminations
|
|
|
Total
|
|
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) without adoption
|
|
|
$
|
610
|
|
|
|
$
|
252
|
|
|
|
$
|
(55
|
)
|
|
|
$
|
807
|
|
|
Add impact of Noteworthy Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring (a)
|
|
|
3
|
|
|
|
1
|
|
|
|
2
|
|
|
|
6
|
|
|
Adjustments to acquisition related accounts (b)
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
Operating income adjustments
|
|
|
7
|
|
|
|
1
|
|
|
|
2
|
|
|
|
10
|
|
|
Adjusted operating income (loss)
|
|
|
$
|
617
|
|
|
|
$
|
253
|
|
|
|
$
|
(53
|
)
|
|
|
$
|
817
|
|
|
Operating margin - Comparable basis
|
|
|
28.0
|
%
|
|
|
15.0
|
%
|
|
|
N/A
|
|
|
21.0
|
%
|
|
Adjusted operating margin - Comparable basis
|
|
|
28.4
|
%
|
|
|
15.1
|
%
|
|
|
N/A
|
|
|
21.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
$
|
568
|
|
|
|
$
|
225
|
|
|
|
$
|
(44
|
)
|
|
|
$
|
749
|
|
|
Add (Deduct) impact of Noteworthy Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring (a)
|
|
|
4
|
|
|
|
3
|
|
|
|
2
|
|
|
|
9
|
|
|
Adjustments to acquisition related accounts (b)
|
|
|
(17
|
)
|
|
|
1
|
|
|
|
—
|
|
|
|
(16
|
)
|
|
Operating income adjustments
|
|
|
(13
|
)
|
|
|
4
|
|
|
|
2
|
|
|
|
(7
|
)
|
|
Adjusted operating income (loss)
|
|
|
$
|
555
|
|
|
|
$
|
229
|
|
|
|
$
|
(42
|
)
|
|
|
$
|
742
|
|
|
Operating margin
|
|
|
28.6
|
%
|
|
|
14.7
|
%
|
|
|
N/A
|
|
|
21.4
|
%
|
|
Adjusted operating margin
|
|
|
27.9
|
%
|
|
|
15.0
|
%
|
|
|
N/A
|
|
|
21.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes severance and related charges from restructuring
activities, adjustments to restructuring liabilities for future rent
under non-cancellable leases and other real estate costs, and
restructuring costs related to the integration of recent
acquisitions.
|
|
(b) Primarily includes the change in fair value as measured each
quarter of contingent consideration related to acquisitions.
|
|
|
|
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Includes the Revenue Standard Impact
Three Months Ended March 31
(Millions) (Unaudited)
|
|
|
|
Adjusted Income, Net of Tax and Adjusted Earnings per Share
|
|
Adjusted income, net of tax is calculated as the
Company's GAAP income from continuing operations, adjusted to
reflect the after-tax impact of the operating income adjustments set
forth in the preceding tables and investments gains or losses
related to the impact of mark-to-market adjustments on certain
equity securities previously recorded to equity. Adjusted EPS
is calculated by dividing the Company's adjusted income, net of
tax, by MMC's average number of shares outstanding-diluted for
the relevant period. The following tables reconcile adjusted
income, net of tax to GAAP income from continuing operations and
adjusted EPS to GAAP EPS for the three months ended March 31,
2018.
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2018
|
|
|
|
|
Amount
|
|
|
Adjusted EPS
|
|
Income from continuing operations
|
|
|
|
|
|
$
|
696
|
|
|
|
|
|
Less: Non-controlling interest, net of tax
|
|
|
|
|
|
6
|
|
|
|
|
|
Subtotal
|
|
|
|
|
|
$
|
690
|
|
|
|
$
|
1.34
|
|
Operating income adjustments
|
|
|
$
|
10
|
|
|
|
|
|
|
|
|
Investments adjustment (a)
|
|
|
8
|
|
|
|
|
|
|
|
|
Impact of income taxes
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
Adjustments to provisional 2017 tax estimates (b)
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
|
|
|
|
0.04
|
|
Adjusted income, net of tax
|
|
|
|
|
|
$
|
707
|
|
|
|
$
|
1.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Mark-to-market adjustments for investments classified as
available for sale under prior guidance were recorded to equity, net
of tax. Beginning January 1, 2018 such adjustments must be recorded
as part of investment income. Prior periods were not restated. The
Company will exclude such mark-to-market gains or losses from its
calculation of adjusted earnings per share. In the first quarter of
2018, the Company recorded $8 million of mark-to-market losses which
are included in Investment Income in the Consolidated Statement of
Income.
|
|
(b) Relates to adjustments to provisional 2017 year-end estimates of
transition taxes and U.S. deferred tax assets and liabilities from
U.S. tax reform.
|
|
|
|
Note:
|
|
Comparative financial information for the three months ended March
31, 2017 is presented on page 11.
|
|
|
|
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures - Comparable Accounting
Basis
Excludes the Revenue Standard Impact
Three Months Ended March 31
(Millions) (Unaudited)
|
|
|
|
As discussed earlier, the Company adopted the new revenue standard
using the modified retrospective method, which requires the
disclosure of the impacts of the standard on each financial
statement line item. The non-GAAP measures below present an analysis
of results reflecting 2018 financial information excluding the
impact of the application of ASC 606, to facilitate a comparison to
the 2017 results. Except for the adjustment for the effects of ASC
606 in 2018, these non-GAAP measures are calculated as described on
the prior page.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2018
|
|
|
Three Months Ended
March 31, 2017
|
|
|
|
|
Amount
|
|
|
Adjusted
EPS
|
|
|
Amount
|
|
|
Adjusted
EPS
|
|
Income from continuing operations, (2018 prior to the impact of ASC
606)
|
|
|
|
|
|
$
|
621
|
|
|
|
|
|
|
|
|
|
$
|
578
|
|
|
|
|
|
Less: Non-controlling interest, net of tax
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
Subtotal
|
|
|
|
|
|
$
|
615
|
|
|
|
$
|
1.19
|
|
|
|
|
|
|
$
|
569
|
|
|
|
$
|
1.09
|
|
|
Operating income adjustments
|
|
|
$
|
10
|
|
|
|
|
|
|
|
|
|
$
|
(7
|
)
|
|
|
|
|
|
|
|
Investments adjustment (a)
|
|
|
8
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
Impact of income taxes
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
Adjustments to provisional 2017 tax estimates (b)
|
|
|
3
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
|
|
|
|
0.04
|
|
|
|
|
|
|
(6
|
)
|
|
|
(0.01
|
)
|
|
Adjusted income, net of tax
|
|
|
|
|
|
$
|
632
|
|
|
|
$
|
1.23
|
|
|
|
|
|
|
$
|
563
|
|
|
|
$
|
1.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Mark-to-market adjustments for investments classified as
available for sale under prior guidance were recorded to equity, net
of tax. Beginning January 1, 2018 such adjustments must be recorded
as part of investment income. Prior periods were not restated. The
Company will exclude such mark-to-market gains or losses from its
calculation of adjusted earnings per share. In the first quarter of
2018, the Company recorded $8 million of mark-to-market losses which
are included in Investment Income in the Consolidated Statement of
Income.
|
|
(b) Relates to adjustments to provisional 2017 year-end estimates of
transition taxes and U.S. deferred tax assets and liabilities from
U.S. tax reform.
|
|
|
|
|
|
|
Marsh & McLennan Companies, Inc.
Supplemental Information - Impact of Revenue Recognition
Standard
Three Months Ended March 31
(Millions) (Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
Excludes
Impact of
Revenue
Standard
|
|
|
|
|
|
|
|
2018
|
|
|
2018
|
|
|
2017
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
Compensation and Benefits
|
|
|
$
|
2,224
|
|
|
|
$
|
2,164
|
|
|
|
$
|
2,005
|
|
|
Other operating expenses
|
|
|
868
|
|
|
|
868
|
|
|
|
749
|
|
|
Total Expenses
|
|
|
$
|
3,092
|
|
|
|
$
|
3,032
|
|
|
|
$
|
2,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
$
|
80
|
|
|
|
$
|
80
|
|
|
|
$
|
80
|
|
|
Identified intangible amortization expense
|
|
|
45
|
|
|
|
45
|
|
|
|
40
|
|
|
Total
|
|
|
$
|
125
|
|
|
|
$
|
125
|
|
|
|
$
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock option expense
|
|
|
$
|
14
|
|
|
|
$
|
14
|
|
|
|
$
|
14
|
|
|
Capital expenditures
|
|
|
$
|
58
|
|
|
|
$
|
58
|
|
|
|
$
|
62
|
|
|
Operating cash flows
|
|
|
$
|
(364
|
)
|
|
|
$
|
(364
|
)
|
|
|
$
|
(399
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk and Insurance Services
|
|
|
|
|
|
|
|
|
|
|
Compensation and Benefits
|
|
|
$
|
1,168
|
|
|
|
$
|
1,106
|
|
|
|
$
|
1,025
|
|
|
Other operating expenses
|
|
|
460
|
|
|
|
460
|
|
|
|
396
|
|
|
Total Expenses
|
|
|
$
|
1,628
|
|
|
|
$
|
1,566
|
|
|
|
$
|
1,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
$
|
37
|
|
|
|
$
|
37
|
|
|
|
$
|
35
|
|
|
Identified intangible amortization expense
|
|
|
37
|
|
|
|
37
|
|
|
|
32
|
|
|
Total
|
|
|
$
|
74
|
|
|
|
$
|
74
|
|
|
|
$
|
67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
|
|
|
|
|
|
|
|
|
Compensation and Benefits
|
|
|
$
|
956
|
|
|
|
$
|
958
|
|
|
|
$
|
891
|
|
|
Other operating expenses
|
|
|
465
|
|
|
|
465
|
|
|
|
410
|
|
|
Total Expenses
|
|
|
$
|
1,421
|
|
|
|
$
|
1,423
|
|
|
|
$
|
1,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
$
|
25
|
|
|
|
$
|
25
|
|
|
|
$
|
27
|
|
|
Identified intangible amortization expense
|
|
|
8
|
|
|
|
8
|
|
|
|
8
|
|
|
Total
|
|
|
$
|
33
|
|
|
|
$
|
33
|
|
|
|
$
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
|
Effective January 1, 2018, the Company recorded the cumulative
effect of adopting the new revenue standard, resulting in a $364
million increase to the opening balance of retained earnings, with
offsetting increases/decreases to other balance sheet accounts,
including accounts receivable, other current assets, other assets
and deferred income taxes.
|
|
|
|
|
|
|
|
|
|
Marsh & McLennan Companies, Inc.
Consolidated Balance Sheets
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
March 31,
2018
|
|
|
December 31,
2017
|
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
1,168
|
|
|
|
$
|
1,205
|
|
|
Net receivables
|
|
|
4,562
|
|
|
|
4,133
|
|
|
Other current assets
|
|
|
540
|
|
|
|
224
|
|
|
Total current assets
|
|
|
6,270
|
|
|
|
5,562
|
|
|
|
|
|
|
|
|
|
|
Goodwill and intangible assets
|
|
|
10,450
|
|
|
|
10,363
|
|
|
Fixed assets, net
|
|
|
713
|
|
|
|
712
|
|
|
Pension related assets
|
|
|
1,857
|
|
|
|
1,693
|
|
|
Deferred tax assets
|
|
|
554
|
|
|
|
669
|
|
|
Other assets
|
|
|
1,535
|
|
|
|
1,430
|
|
|
TOTAL ASSETS
|
|
|
$
|
21,379
|
|
|
|
$
|
20,429
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Short-term debt
|
|
|
$
|
512
|
|
|
|
$
|
262
|
|
|
Accounts payable and accrued liabilities
|
|
|
2,343
|
|
|
|
2,083
|
|
|
Accrued compensation and employee benefits
|
|
|
813
|
|
|
|
1,718
|
|
|
Accrued income taxes
|
|
|
261
|
|
|
|
199
|
|
|
Dividends payable
|
|
|
193
|
|
|
|
—
|
|
|
Total current liabilities
|
|
|
4,122
|
|
|
|
4,262
|
|
|
|
|
|
|
|
|
|
|
Fiduciary liabilities
|
|
|
5,140
|
|
|
|
4,847
|
|
|
Less - cash and investments held in a fiduciary capacity
|
|
|
(5,140
|
)
|
|
|
(4,847
|
)
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Long-term debt
|
|
|
5,815
|
|
|
|
5,225
|
|
|
Pension, post-retirement and post-employment benefits
|
|
|
1,842
|
|
|
|
1,888
|
|
|
Liabilities for errors and omissions
|
|
|
312
|
|
|
|
301
|
|
|
Other liabilities
|
|
|
1,267
|
|
|
|
1,311
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
8,021
|
|
|
|
7,442
|
|
|
TOTAL LIABILITIES AND EQUITY
|
|
|
$
|
21,379
|
|
|
|
$
|
20,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marsh & McLennan Companies, Inc.
Consolidated Balance Sheets - Impact of Revenue Standard
(Millions) (Unaudited)
|
|
|
|
As discussed earlier, the Company adopted the new revenue standard
(ASC 606) using the modified retrospective method, applied to all
contracts. The guidance requires entities that elected the modified
retrospective method to disclose the impact to financial statement
line items as a result of applying the new guidance (rather than
previous U.S. GAAP). The table below shows the impacts on the
consolidated balance sheet.
|
|
|
|
|
March 31, 2018
|
|
|
|
|
As Reported
|
|
|
Impact of
Revenue
Standard
|
|
|
Prior to
Adoption
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
1,168
|
|
|
|
$
|
—
|
|
|
|
$
|
1,168
|
|
|
Net receivables
|
|
|
4,562
|
|
|
|
(242
|
)
|
|
|
4,320
|
|
|
Other current assets
|
|
|
540
|
|
|
|
(294
|
)
|
|
|
246
|
|
|
Total current assets
|
|
|
6,270
|
|
|
|
(536
|
)
|
|
|
5,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and intangible assets
|
|
|
10,450
|
|
|
|
—
|
|
|
|
10,450
|
|
|
Fixed assets, net
|
|
|
713
|
|
|
|
—
|
|
|
|
713
|
|
|
Pension related assets
|
|
|
1,857
|
|
|
|
—
|
|
|
|
1,857
|
|
|
Deferred tax assets
|
|
|
554
|
|
|
|
119
|
|
|
|
673
|
|
|
Other assets
|
|
|
1,535
|
|
|
|
(231
|
)
|
|
|
1,304
|
|
|
TOTAL ASSETS
|
|
|
$
|
21,379
|
|
|
|
$
|
(648
|
)
|
|
|
$
|
20,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
|
$
|
512
|
|
|
|
$
|
—
|
|
|
|
$
|
512
|
|
|
Accounts payable and accrued liabilities
|
|
|
2,343
|
|
|
|
(176
|
)
|
|
|
2,167
|
|
|
Accrued compensation and employee benefits
|
|
|
813
|
|
|
|
—
|
|
|
|
813
|
|
|
Accrued income taxes
|
|
|
261
|
|
|
|
—
|
|
|
|
261
|
|
|
Dividends payable
|
|
|
193
|
|
|
|
—
|
|
|
|
193
|
|
|
Total current liabilities
|
|
|
4,122
|
|
|
|
(176
|
)
|
|
|
3,946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiduciary liabilities
|
|
|
5,140
|
|
|
|
—
|
|
|
|
5,140
|
|
|
Less - cash and investments held in a fiduciary capacity
|
|
|
(5,140
|
)
|
|
|
—
|
|
|
|
(5,140
|
)
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Long-term debt
|
|
|
5,815
|
|
|
|
—
|
|
|
|
5,815
|
|
|
Pension, post-retirement and post-employment benefits
|
|
|
1,842
|
|
|
|
—
|
|
|
|
1,842
|
|
|
Liabilities for errors and omissions
|
|
|
312
|
|
|
|
—
|
|
|
|
312
|
|
|
Other liabilities
|
|
|
1,267
|
|
|
|
(33
|
)
|
|
|
1,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
8,021
|
|
|
|
(439
|
)
|
|
|
7,582
|
|
|
TOTAL LIABILITIES AND EQUITY
|
|
|
$
|
21,379
|
|
|
|
$
|
(648
|
)
|
|
|
$
|
20,731
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180426005765/en/
Source: Marsh & McLennan Companies, Inc.
Media:
Marsh & McLennan Companies
Laura Schooler,
+1 212-345-0370
laura.schooler@mmc.com
or
Investors:
Marsh
& McLennan Companies
Dan Farrell, +1 212-345-3713
daniel.farrell@mmc.com
|