Willis Towers Watson Public Limited (WTW) 2 Nov 182018 Q3 Earnings call transcript

Good morning. Welcome to the Willis Towers Watson Earnings Call. This is Rich Keefe, Head of Investor Relations at Willis Towers Watson.

On the call with me today are John Haley, Willis Towers Watson's Chief Executive Officer; and Mike Burwell, our Chief Financial Officer. Please refer to our website for the press release issued earlier today. recorded tomorrow be ID by being via for XXXXXXX. is through telephone dialing call and available will replay Today's XXX-XXX-XXXX, conference months The the be also on three replay our available website. will next for include may the the statements This call forward-looking meaning within of U.S. of Act and which may Reform uncertainties. Litigation involve Securities XXXX, Private risks

statements place only For review risks Willis Except events. statements, by other of differ other Form forward-looking materially as and section those other undertake forward-looking contemplated statements factors the in undue Watson or that as release the of recent or morning or and heading our on a to XX-K of to results Towers which Statements information to by update and may date required any Forward-Looking no statements, call. disclosures of of forward-looking future earnings events filings. obligation should of this revise investors forward-looking forward-looking discussion new statements press in Investors this the earnings and speak SEC cause actual we the most the law, Factors reliance under from as Risk issued are not as light cautioned well publicly

non-GAAP financial During the we may discuss call, measures. certain

review conference measures open press a G we'll financial should your reconciliation measures GAAP release. For to comparable remarks, as under After for prepared the the non-GAAP of today's discussion of questions. the investors financial measures, Regulation as our well the non-GAAP call most directly

John over Now I'll turn the Haley. to call

third the XXXX. XXXX discuss you Thanks for we'll us our on of Rich joining today's and for the Today, Thank for review remainder everyone. outlook morning call. results the of and good quarter

standard statements been in new performance the a January we our Form our adopted the financial ASC presentation description provided earnings XX-Q and release the be and provided ASC morning. XXX standard reminder, has Xst, as of of the impacted of explanations how the new Just of of as impact XXX, filing detailed a in this will detailed XXXX accounting our

excluding the the report first standard standard. the prior of accounting impact Our new results accounting using the

the prior X% quarter, net on of the $XX for was and the without that million year income is EBITDA $XX X% compared to or basis to currency X% impact compared compared revenue organic Net third the XXX based adjusted quarter an third across So quarter. standard margin $X.X the basis. as the this revenue negative EBITDA quarter, included of million basis, of constant of revenue, or on on prior year XX% up billion, and was reported a as ASC year XXX of points loss prior an accounting XX.X% increase up growth currency all to a million quarter prior dollar organic XX.X% revenue of third EBIT basis up million We was as third on on and for XXX% of or our $XX the $XXX experienced improvement. $XXX Reported up segments for Adjusted movement. of million. adjusted an representing basis

were was share EBITDA adjusted had earnings were Overall performance. adjusted quarter. $X.XX. per a an margin $X.XX per diluted For it and enhanced the revenue and grew earnings quarter, share per We diluted earnings excellent share

third or to the EBITDA billion, $X.X the standard. for based adjusted million; income for was were Now ASC was net quarter or $XXX of million the revenue. on turning revenues quarter the quarter XXX third results the third new Reported $XX XX.X% accounting for

diluted share adjusted For were share $X.XX diluted per $X. the earnings were XX. per quarter, and earnings

margins as will unless all commentary be of reflect standard regarding are look prior clearer basis and otherwise. constant revenues Now results. and our of calculated the The prior transaction each let's certain operating for segments do other on costs provide a core to discretionary segment results on and Segment and exclude results using expenses consider in integration segments currency corporate our acquisitions, the include compensation. with based comparability accounting which non segment as resulting as more they of mergers at restructuring detail. To amortization the specifically periods stated revenues and costs, well such unallocated items intangibles, we

to Capital year with quarter. growth segment The the revenue the market in business our constant extended benefit increasing had outside global across basis. quarter. X% or X% all primarily For of with The third X% our as an solid as related to solid this third growth currency businesses total momentum on quarter, local continued HCB in and currency on organic appointments, revenues a increases growth the as We prior benefits management of X% organic to North well a a constant regional is grew segment. as basis by quarter share. strongest compared and the Benefits health America had compared third year prior performance our in Human in and and result

in solid experienced international, compensation in third north of work revenue we we specialty addition, for compared our in narrowed our due focus growth the the products portfolio by coupled quarter T&R business. and and Europe and increased driven software survey increased as In X% strong profit with potential. project in the primarily net as with demand advisory to and The even to to America growth Western by Talent rewards third work growth our growth greatest those quarter growth was products. prior market

offset cycle and in A volume triennial in growth the de-risking actuarial quarter. bulk due by to America of the growth valuation the compared North to expected, third activity. experience Britain retirement business pension brokerage year lump growth peak more sums Great to in Europe in Western As prior like lower related level nominal was than

of Germany administrative technology management solutions international and offset increase an quarter the by The the new the region. segment from decline contributed was disciplined for operating to and margin client third flat the Revenue expense compared X% in with Our to revenue growth. from prior TAS a or year growth in third quarter. was increased revenues HCB XX% margin prior implementations the

turning $XXX Overall, operating including million of the the business impact segment Now we HCB of for an a continue remainder had XX%. HCB the to revenues have positive to revenue the XXXX. of new and standard. the HCB results of for outlook The margin

positive revenues coupled to were operating line CRB as as quarter had wins margin challenges. in Switzerland prior grew across XX% results growth decline business X% or continued well. the America. currency several and to X% energy with let's corporate had revenue Britain and attributable on basis CRB, look solid cost million Western all by which in of compared new Latin Asia quarter. expanded X% as operating The quarter constant of an primarily market strong third at performance was increase results international in by organic margin and brokering top the risk an the a the in In and management in with a we while Great there Now lines construction, America's in of constant North wins compared XX% X% to both X% and growth with efforts. France in Europe, business in see claims margin Iberia continued a with due to $XXX organic driven last X% of third there third with was London similarly revenue year businesses, its year. and strong management growth the and momentum revenue some currency quarter, growth of also to continue new

revenue Now CRB to turning new the including of impact the results the standard.

For the $XXX million margin of revenues third XX%. CRB quarter, had of operating and an

going CRB be as continue business momentum forward the optimistic our out close to in We the year. we

services X% programs quarter third Reinsurance as and Max and a of a increased year Turning grew Risk Investment result North strong XX% grew compared result business. XXX Insurance, growth with implementations specialty basis up management by new Technology million had of as for constant revenue strong as IRR a an investment year new X% quarter. compared and The X% across business and $XXX investment had the with XX% software generation, and as a of prior by segment operating X% a of of X% from growth America consulting to delegated result and sales. for organic prior the renewals XX% result business. Investment $XXX new grew Wholesale million revenues by increased year very IRR, under margin, Reinsurance the space. and a income. points higher to client third in growth continued increase quarter in the basis an business new increased the increased and basis, our increased third assets as prior driven revenue currency Matthiessen and projects a on third on or to demand quarter Consulting and quarter.

margin XXXX robust to revenue for growth the quarter third the expanded The quarter. due

an including had of results of standard. revenues X%. margin operating IRR of the million $XXX to Turning now revenue new and the IRR impact

continue grow clients segment very clients benefits the IRR primarily increased group positive new increase for the marketplace from for drove enrollments, to to individual Increased and new the quarter, the revenues the and in We marketplace by BDA the of X% by prior due our feel continued X% and increased by rest XX%. project. to active of by increased business the exchange business the customized revenue third of outsourcing, year membership the while about remainder driven XXXX. momentum increased segment Revenues

So let me turn into XXXX enrollments.

space. both the and the call, earnings until month. winding have later currently for down and period. mid in lives over We clients about strong mid season market finalized mentioned large enrollment previous enrollment this sales market with look our XXX,XXX XXXX the be committed we have market that As total won't The to is in XX continued

as spread to XXXX million had enrollments these We're to January recorded of are a well strong So that The must of would has reflecting XX%. recent somewhat basis scale the by revenue BDA enrollment revenues operating by call. the was the due margin, negative as revenue in points BDA third a off The with at up had count this was of January fall XX% This year-end we XXXX starting the to placement margin now have now evenly in driver annual marketplace and segment the The in seasonality been enrollments to XX of won't compared prior agents during the their individual Xst, revenue XXXX. new year. enrollments the on of adjustment season. more standard rather marketplace. fall years. in difference quarter. typically and generated generated These basis primary final enrollment retained the revenues to be prior million accounting them throughout exchange until contrast revenue businesses. to to immediately. ability The cycle throughout standard our expansion the means operating pro-rata new due growth, is on an effective individual enrollment seeing the over of result as year under effect an date. the as date present as revenue revenue The $XXX continue of $XXX of prorating a a the modest shifting in increase placements standard activity year segment period be earnings able to In margin the recognized more revenues the earnings the the enrollment standard opening balance than in recognized at be fall started This the new under recognized the revenues enrollment

growth We recognition in the calendar progress. in financial track half I'm very So year. produce the deliver of second strong summary, performance of change to excellent seasonality and In with the revenue pleased XXXX. the to earnings higher third our quarter on this be in the will

collaboration year, and capital our all and our all growth, in I'd EPS future while meaningful colleagues to expansion and continuing this like quarter. invest the thank return to share expect engagement to of client a revenue their continued congratulate good on focus, margin growth, continue For shareholders everyone we very dividends through significant full for and strong to repurchases. and

Now I'll Mike. call to over turn the

comparability impact over will everyone. otherwise our Thanks order XXX good Thanks joining In of all of unless without earnings John and prior to the assist year us. morning reflect period. comments stated. ASC to My with you for

turn let's the Now overview. to financial

quarter Income Let Income or me was XX.X% million in XX% X.X% months negative operations from same year XX.X% income loss or operations period the for operating up X.X% prior of compared quarter, revenue. from the XX% of of revenue, $XXX prior of third nine for of income third of Adjusted from million the was was first revenue. months XXX% XX.X% the $XXX operations. the for of $XXX up quarter XX third operations million from from $XX or the up in income revenue, was as quarter $ year year of or income operating $XXX of the discuss or third of year million was $X.X period the operating from revenue, adjusted or revenue. adjusted X.X% prior or XXXX of revenue. million of for XX% million in income to prior which same billion of and revenue, XX.X% from XXXX the up $X.X orXX.X% nine Adjusted operating billion

me let earnings per adjusted share adjusted Now EPS. turn or to diluted

third XXXX For diluted the and EPS negative quarter our $X.XX XXXX, of was respectively. and $X.XX

was the a compared per $X.XX quarter. prior to and quarter XXXX EPS $X.XX of up $X.XX XXXX, in respectively. The of a was nine For third share months adjusted to EPS $X.XX per and as our year share diluted the XX% XXXX third

Under and for share $X.XX $X.XX the a the to in nine standard, the year. XX% the was in share nine months new of revenue same diluted XXXX quarter months XXXX $X. per was $X.XX versus XXXX. and our per nine and period For quarter XX adjusted months for $X.XX for prior EPS $X.XX share the the EPS for recognition the of our was up EPS adjusted of per the

impact move prior with zero, GAAP negative US our provide compared year the rate to quarter into to some insight was of the as Let's third GAAP tax for rates. XX% and US additional I'd third the the like for adjusted tax ASC quarter. you to XXX, taxes. Without

Our the adjusted rate third from the for XX% decrease year XX%, was third quarter for quarter. tax prior a

prior quarter year rate one-time to adjusted a Our third lower is tax than discreet due for benefits. tax

Let's balance move to sheet. the

to continue financial have We a position. strong

successfully the transaction feel helps comprised of notes We period of impact prior we our flow of the ten-year increase senior including the of one During million same the $XXX $XXX $XXX impact XX% million, that million with quarter, billion the $XXX an to period the standard, compared to standard, issued XX-year in notes in of efficiency and notes. this same cash new was the our repay million in capital new or revenue used The compared $XXX million, due financial XXXX $XXX Year-to-date flow of $XXX additional revolving loan credit off balance XX% million an Without our year. our year-to-date to the to million increase were facility. bond structure and approximately under proceeds pay $XXX was million revenue flexibility. provides of or term the free free of in prior the cash and year.

to be quarter. quarter highest our generating fourth the expect We cash

During shares. million the quarter, we third repurchased approximately XXX in

Since shares We expect buyback XXXX to market have a total of shares XXX million in have subject approximately to XXX conditions. million in paid $XXX retired repurchased dividends. million we and million merger, the or to XX.X

XXXX old based about release So on standard our results ASC quarterly and both XXX. in financial ASC we standard we guidance, the year-to-date and reported this morning's accounting full-year XXX think

sight last However, we investors have the want period. to to ensure a of finished clear we progress that year our line three-year integration as of our

standard or XXXX provide XXX continuing GAAP US standard. such, ASC to the the ASC As XXX to on we're guidance prior

Towers for XXXX let's now our guidance year review Watson. Willis full So

revenue we organic company, X%. to approximately the continue to growth For be expect

growth the IRR digits mid single segments, For high to expect we be and BDA. and for digit single the revenue HCB, for growth low CRB

believe to We year be $XXX basis into relates primarily company outlook $XXX XXXX. increase expect are savings improve expected our costs points year. identified at yield range around least actions actions the the for adjusted expected adjusted for overall continue versus to XXXX. in approximately account, savings these EBITDA million. to million in can guidance be have margin $XXX million our Transaction previous immigration EBITDA meaningful cost in by of in our additional of to XX segments integration XX% spend The the full to business that in Taking which fiscal we we additional expected are

clarification result adjusted are interpretation regulations actions US we applicability result reform tax for also range the and analysis and benefits from implementation is as earnings $X.XX to of old Reform, receive of from this additional well we recognized complete impact current as rate a take assumptions, interpretations as of both this tax a guidance US guidance. share as the the Treasury. US the diluted $XX.XX. and we're retroactive a free QX may guidance a XX% per raising reform to of tax tax accounting to new This of a adjusted in consistent US As Changes our our we may may but to XX% $XX.XX change previous our guidance to Accordingly, Tax tax XX% of and XX%. standards of reducing from to range guidance our $XX.XX

our to in We XXXX. as between of system cash result portion previous accounting is our flow $X.X a guidance million flow billion to capital $X.X and prior a $X.X software-related difference versus billion approximately guidance does investing flow allocation There operating moving from in expect free $XXX difference of standards. billion implementations free cash The or new impact strategy. of activities client small the capitalized of accounting to a change the to our activities overall not statement. This cash in

to assumes $X.XX accounting dividends, the the former assess pound will M&A. standard for Annual currency for of ASC XXXX euro. share internal the continue average bonus $X.XX exchange to and XXX use and calculations, capital a the to investments of rates We buybacks, guidance remainder to

our that and the us improvement continue this So in value to revenue cash summary, drive you plans to the back quarter. turn year shareholder this significant help we acceleration well continued have basis? position call With us growth, on on happy leverage should greater John. long term Which I'd and to and seen good operating flow execute creation to

questions. your take Thanks Mike. And now we'll

Pan Stanley. question of from first Morgan the from Kai comes Your Instructions] [Operator line

is Your open. line

and morning. good Thank you

you your you organic a results growth, in I segments, it's look if probably The you roughly line at give first with towards the peers. nice wonder from have the second your global the rebound from quarter, just could question on about you your able going Do quarter. you be or position to forward? the second be see third able competitive maintain shares to across the detail sort more gain of your share, improvement quarter your to what's --are you line

Yes.

of So Only I half comparison we look call quarter the were had were how we think our a it you first let think we to the probably the look advised second was versus second that quarter. half, things when say at year. as revenue growth think first at we have with as people I last was peers better quarter or if we the I the delighted against generally. doing our look me above at one we're year, of in than revenue higher generally in And our And the last peers if delighted it we're here. you quarter our at of the third the growth third because peers especially

happier had think with comparables, we a our and couldn't this we competitive had So We result. so year. reflects of growth having if we positioning third And fair competitive the tougher we the quarter, quarters at think positioning. our three be whole comparables at look the tougher getting that's here look we that the

second $XX other great. press XXX your is also improvement on Okay, Q&A point there's mention My million on you a in but question lines. the large that's year-over-year release the that if-- improvements income margin. The basis session

least on is that gross? probably or also year, would be the basically revenue it the at old XXXX, your underlying accounting clarify next XX.X% to of or get contributed least the expense that in to view want try just like imply on new to your versus you most margin I what's margin Basically will And year-over-year, improvements and improvements XX.X%. what so versus So I at XX that wonder accounting? that said point basis

quarter you that were there is here, things the and I'm about be of said in first million the to at -- coming look let control expenses couple And should going talk thought that at let of Mike we the thought improvement we if me And expense of we've make what our down where et comments. quarter $XX the hollered And cetera growth of they how call -- all, specifics a let that. that of quick out was to just but we, we done the So the have me factors running third of margin one second X%. we then. we ahead our we could

growth and that growth expense told X% discipline we've So think felt improvement. what's and could We of a X% exercise that X% that's kind we we've contributing do, exactly had the something we rate. rate continue we forward. folks to we had can going that's margin That's what to

as impacted I actually think item at points that Mike should to by where the But an the control revenues, translate it's as XX much That's let standard that. look we either not basis revenue -- expense again.

on add would other $XX the I million income. John. Yes,

had basis back segments. across just up picking we to to expenses XXX John revenue four so improvement in management as organic that across due all addition in growth. it comments. segment's at And So on margins said, John's X% points look the we of X%

The $XX terms was change of the in there. million other income included that was in is

terms And that see we in managing foreign impacts currency pension of we what overall. see what was is our so

we So it. think how that's about

Your comes question Shlomo from the line Stifel. from next Rosenbaum of

line is Your open.

is hear how at a kind people -ish one-time and gain get break pension look thing you we're was that FX increase. me? want in year-over-year that year-over-year thanks. off and much just margin to can business? I excluding much just trying that question pension? was first loss expand to that. piggyback is just you How Because and of the kind million disposal to growth Okay, $XX much How ask out of last Hello, from

a add can little here. bit I

at If changed basis income adjustments that's -- line. GAAP settlement on have items. pension that other the you on look for the We did a so

a things there's of there. So variety in

FX composition million we and what that. about roughly the year-over-year. think mainly it $XX net I income difference adjusted of the line out, and basis, income off release of less press if you the other the kind at an adjusted look It's at look it's you If losses hedging it's that's

it you an most of So as increase saying? what take it is if are year-over-year, to of FX XX it's and really we're

FX hedge Correct, losses. less

rate? Mike entire tax then guidance difference Got just is the it in raised and the

It Yes normal. is

and cash in that great flow flow? sounded where there can just is statement, Okay, this was account, kind on you the attention what's an real with it's quarter or It estate that on also no go free -- of saying you're then you into came cash to going the put stuff like-- differences something your

would say always I continues timing just at in No. our but you is of some example. as in additional space as around spends are challenge consolidations a that looked when was CapEx consolidating it we we office have what we specifically an facilities completing things, terms communicate our merger and we

Additionally, improvement do going you're integration, benefit obviously the that seeing that cost XX that moving the referenced see in and additional points XXXX. that we we're John fiscal into that spend to drives on as and and year incremental basis additional

the away couple flow. gave from not get about view pieces long-term thought free guidance adjustment of of be we in our terms to still cash sure going in XX% our back and on what our terms it to what appropriate just where free look ultimately in are those a it, of we know. that we up bigger We we're based to we of that was make we're going to and of to investors thinking as but you from but would flow, cash say So terms at look,

is CapEx difference million So all it is of Is that of and the it? facilities? much $XXX how

No, no.

It's Shlomo. of a number things,

much? We have the CapEx how the was additional,

million $XX around was CapEx

had $XX like of around restructuring that additional was million. was We the CapEx --

million $XX

a big but to and wasn't something necessarily pension enough had but knew the earlier, we we an this extra we make was it million, UK. adjust $XX million to had contribution $XX

is there's the forward, UK be, they these pension. we mean the to it this for the of that number items pension expect -- one-off -- affect will of little most it so this increases affect for is year there it's And one are a things I did for are of that but million CapEx things we $XX like million year. don't that $XX going think one-off, that so a

Hey, just the John decline stock the a sneak not your could the if stock Got repurchases? all given come one. how in the aggressive and more in these getting it, hitting just confidence I you're way on and price margins last

not stock. dividend try purchases are quarter is think And actually we buyback ramp where metrics we XX% I to if do. this the our than we Well, mean --will given our a our I this trying look but we you as payments lower Shlomo, careful be to year, what cash flow we stock --we the of our use real not did, little stock we prices had already. returned and shareholders also try bit have about borrowing that over more up we to to repurchases, some

Your next the question from Baird. Mark comes line of R Marcon W from

Your line is open.

the stronger for you. about period. in we we segments also think following year Thank how the seeing And out bit next of commentary And be the, little year. to it's Or that nice you about we how wondering wondering could growth quite an sounded the year seemed to the the should possible a three-year see full growth should progress that? morning. was strong, Good guidance strong. IRR over was the and end it specifically just think on basis? year the up Is gave the I I'm by in terms the segment.

So I XXXX the think, we'll for be the for guidance year. our call, deal Mark, IRR fantastic a have to giving moment. with They detailed at had but next just

all really the have very year. contributed, has it's parts was had -- strong but of been it's it a going different think through I I especially reinsurance as

growth prepared remainder the this remarks, to continued expect XXXX. see in As of my I the in we through said

I the like is also XXXX that the the a with prospects growth ourselves comment this a time of this give other we is The and business good we've course performance set up had could we've comparable here. for it for tough lot. a we But like

Yes.

So but be then tough continue to -- good overall fundamentals and comp

Exactly.

bit particularly might we that a to should optimizing you with the up end given Yes rate about there talk lump extent. should greater think for environment. to environment sums How coming some we and HCB with a given seeing you then and year think little you've today down? Can we changes How rates in HCB. about then with on what things change regard unemployment economic the made about current next think

Yes.

we all, So they of year think, as bulk this I are expected down had first lump the sums would be.

so out lump lump that we the it next of Again, of an that kind we arbitrage using, easy that we decision as any And I you're the to bulk of on would level detailed a year. sums between estimate catch the the rate forward is comparable going absolute say as I haven't rate gotten you think the for to an do sum where have the overall compare bulk can to case is rate but them much what rate. and have--there's accounting

So low, do to probably sometimes sum or we lower than but do going and if when real both any when be rates level had do to the are to lump but higher, there's think significant. that year. even activity have to again not thoughts how it this of a certainly pick activity, overall will as it's be don't will I significant we've think be will there's But the even reasons rates not in increase lump sums we reason are up rates bulk

So we that. good feel pretty about

rewards talent And and

I'm Mark, question, your to sorry. part another So

Yes.

Just within the talent rewards HCB. that, and within

Yes.

of and control we is to try that second half rewards taking the quarter. saw, said some areas perform particularly get we there So first actions that we to growth I think expenses not and one then well talent year to the up. the very be in the And would did of the in

the profit and and relatively focus potential. X% that we're be As because And that We're that's the to growth have an be areas are made growth that see actually area rewards growth so. us. happy is We or not growth that we There want attractive the trying remarks, are seem about one and or high seem in with the the we've to very the prepared actually that to and little and done grew profit profit. of potential. that I on profit stress areas. things areas have sure talent particularly high the I mentioned Those and to to in negative

we and we think And areas that from like of we are so to X% we to the margins placed doing some grow there. getting had the movement growth, and those

great, up That easy well. us sets so that sounds comp,

Fargo. of line next question the from Your from Elyse Greenspan comes Wells

line Your open. is

Hi, morning. guidance longer-term growth. your EPS first double-digit for thank little just a question is you, My good about

thinking and XXXX gave EPS there, next that XXXX and So assume be year. from us essentially back since EPS the the then guidance we for using today, new double-digit when should come accounting we're should growth you old between about essentially Delta

Yes.

first Elyse, other yet. numbers the outlook detail but comments; we to think, response next give is call going I finished over aspiration the couple really will we specific with EPS coming here, couple suggest in the -- as out A growth into guidance a the at not medium-term XXXX low double-digit up we're think after with I as with earnings questions year actual that after any the year. adjust in come one, So next the that we double-digit of haven't the just an That's I've come fact of full low with XXXX growth idea we're to to that of finished out have how factors mentioned we the appropriate. we won't

some is disappear move the Your will that that XXXX. difficulties of we XXXX we've those with though into point XXX well-taken had when

would of expect should growth more we And actually so robust. the be kind we see

great can then running items? get and discrete on tax How the earnings we is excluding year-to-date possible-- rate? that's Okay, it adjusted

me Elyse. yes, here, pull data - some we Well, let

will to do more mention --it we We another in are this working are and in do will we that pop try --so answer. minutes real going life, but a and Elyse, few try -- we if and

sense to a then I the the quarter. in XXXX right Is the because for yes, million unallocated that think like was of trying about Okay, line to rate tax level that for net a get that on go-forward go and forward was $XX just basis?

Mike want do to? you

moves It said bit, the Elyse. it a I I does around of range in is a bit. kind of where it think estimate but little move your little we've around that's mean

Okay and question. just then on more one follow Kai's up

year. basis of at next expansion for XX points Your least margin

margin new Delta old and a is between accounting. there So

earnings essentially lost, it could it's back under XX meaning mean points. basis the than that basis the getting be margin greater plus new So XX points that we'll accretion the see from accounting that we

That's correct.

James. Greg from line from comes next question Your Peters the of Raymond

open. Your line is

it my you be and how it thinking to longer this visioned. XXXX I integration sort to of to about curious additional And continuing there's operational fourth to ongoing be and out questions. going I be going finding concept. and I'm your thank called focus of wanted line was-- or taking morning, it is I expense than you quarter improvement reasonable just like about integration because you're beyond savings. And Good originally term seems in the that's part opportunities the integration expense for on should going some there's assume for to restructuring that more

Yes.

the to to zero. it's that going be no, answer Greg, So, is,

actually Now if normal distinct that that try the restructurings as in we're do all, the not making a to we're earnings. effort, the up there we do to we'll to it, of going just to, part extent take at are future, come going we're it

thanks Got it and for that.

half than less It's

I a question talk UK versus America before in going that? the CRB, of is you the perhaps update can parts one up us in what's you and guess income second North was Europe, have minute would I about sense. market spend make on issues know Yes, the you with and the moving maybe called can of derived I some on organic

Yes.

think premium had That's market. --I down we derived this prior several I So just the our London important projects around our this don't market one-time have year-over-year. in see into period We performance income year. thing we is our year flow is another hampering and think in that pressure space the

a globe shortfall, from strong the the so areas say would have but that London the other all And that's market growth. around distinction quite where a out overall stands I to the we're as seeing contributing to

that. And just follow a on up

and that it Brexit on last that's view my might Your affect question. business, how

I Yes. how for all And businesses is our post continuity about indeed -- that's think that clients things with Brexit. reinsurance partners a something different and need all across our as be and worried can that service of seamless we look, for happen. to I mean, for we transition and provide making sure Brexit of areas, really regardless

plans have hard working we've on. that We been

the Brexit been regulatory working necessary prepared diligently very are that that's platform We to including Brexit. We're we're any sure post the be different that, out come able not We're future. say a to but good we're near but have on we we'll in in anything And approvals. we'll our announcing soon for that close make --we've finalizing today, with outcome confident plan. something to something

David next of Jefferies. question Your line the from Styblo comes from

Your line is open.

for about this a Obviously, get basis to next to part to little try guidance But some be questions. of you that. bit understand want Hi, XX can opportunity for morning. another talked an and don't Thanks the I'm margin headwinds going to back specific into would us you you of Elyse's the to good circle help question. question spending EPS points to as key the give increased integration maybe of yielding you expansion. year, what's tailwind realizing,

not guys I that million. in are realizing think year run this also the the of cost benefits you energies quite up $XXX full

think I $XXX goal run the was rate exit million.

Elyse's taxes kind seems the provides incremental back of to level year. that year new now. side guidance it help anything So flip how that for I quantify perhaps going Street's next would sense off to reverting that more of Is moving normalized maybe imply be? to to Could low again parts pretty next think question headwind. add would back a on to that like some next the least a to much get just on you you seems the then year a And XX.XX% the range at us considering especially be that for growth benefit

low that but when of mid I right we the John growth all revenue I of update in that's we've perform different digits this quarter. And look to And to in overall kind thought area, of of we kind obviously would mean, their as good I as being no about that double-digit said the our gives we But at prospects as comps we really growth except whether the than more quarter. those feel will business feel in we single it BDA. what here forward. fourth and continued difficult be we for terms terms in good we about growth -we terms in businesses prospects us in Yes. referenced going rates of and feel and of for had those

rate, I just as As and that our would that prepared third we're to math say comments again had quarter. my terms about discrete that in mentioned will the we those XX% it it it work the discrete numbers in the the of will to as in real-time and XX% XX% you nothing fourth relates looking -- at in tax of XX% quarter. We gets than rate I well drove the some rate in quarter at you look items here, tax, when at it. here those but effective a reverse continuing And to items believe doing more to down fourth

will all fourth we'll that quarter. As to reason forward to rate do its issued believe evaluate believe and different. it's we you be time about applicability look at and the guidance see have in We think treasury to Frankly, as but no we us. some at continue this rules going come it will additional

call best view, going and of our us and of we and it anything don't that's at we'll know end kind like of terms for that this our but year best in guess on We but what going honestly, forward, those will evaluate update guess looks not perspective further forward. best and stage

Yes clear and let me we're this. about just make sure

the think we to something about the that. questions in item $XX in That's fourth to answer quarter. quarter or million I had reverse going was Elyse's like discrete this

rate. is see a we to as guess was a giving really more I --how in So to Elyse item the because And what something asking projection already normal affected when we're tax that's to year, quarter. telling think the I that's to that's tax and XX% get What's for what going XX% that's discrete think we've normal can what I probably XX% XX% reverse I fourth you is this rate the not is. assumed the of for by we're

that will on exit extra $XXX little Okay that million. I you year to to there the numbers? because that next specifically annualize energies back bit margins we to cost a come a of area helpful rate that's part. are that just still to XXXX really run Is generate think maybe the that's an Can

those we around year that this beyond things, our update we we we look, Yes. out Again, margin XXXX February, to we we'll when see in margins. get expected in some our be would details we're that said say, into that. when were coming to in increases targeting expected but a any go I the expect thought with of earnings on XX% not come would we our position just to in on years increases And out really

exchanges, a of retiree think growth at any did that don't rolling year? next just XXXX. understand I comments on what sounds XXX,XXX the end how expecting throughout you on thanks. about the what some base of the-- this for And So we you year Can to the or be members about the sense is right that help like heard I have exchange. comments, point for us you're there base is is that the at in be And then Okay, it the that'll guys have year? growth How business. prospects any look

above on much to I the The but Yes. I the have the expect I that. that here's digits. the numbers It'll good is good Rich right in so single don't there marketplace. portion say I way in the group in is into of marketplace double grow largely the be mean we what probably going probably individual to mid is and marketplaces double me growth the marketplace And bit smaller a up overall to we in with digits. would in mean terms think of grow digits that, into of the a high individual enrollment. anyway. to Can the the follow the a ask of the I front BDA group growth up function segment you

that. something the how combination like that's XX% comes so right around And out

Your from next SunTrust. Sommer from line question Tobey of the comes

Your line is open.

not but or levers, three Maybe internally?. Thanks. the market drivers a I you headcount could organic from growth was whether perspective and your growth if internal consultants discuss brokers price, wondering productivity. it's be of ones their you the in or maybe the descending look quarter? out prioritize you drivers would of growth in biggest of as terms think of will which contributors? kind order How ascending do And you of broad those

Yes.

the adding look you to consulting that business consultants been get, traditionally think a I that tend has you revenues it's there. tend So by increase to

which but I of to is products see some will scale, think although I driven and by a and or think we'll business give still from think bit in largely see and last so is the most that a software tools continue revenues bit help. the it's increased are a technology so I little of driver can we more seen bodies, important that we've decade --that'll which

I-- think get then what it's happens though similar technology and I business, headcount. I our brokers we I it without some increased make that in we the is although thing brokerage be and think in get a it's extent comes efficiencies productive that more think and to the can may that

that or your just Yes. in been is of comments in really you've not. losses John I had X% terms pricing, of would depending to kind to Maybe pricing the on whether X% just add

really the of from a numbers pricing overall so standpoint. And kind been that's

still Are of organic generate of X% that you you're to mentioned for in be maintain able ahead that going targeting kind the expense previously? kind add and you growth us to that

Yes.

that are the their think we something and and to client if to pulled to And doing we meetings to related that, looked as things that indeed went said Watson We need and way we recognize quarter and the focus expenses kinds that's to after do the down out it, to wanted these we held and Willis a and are we reduce the beyond. fourth We Towers to looking of on and be the into meetings by We that business how out more X%. work. efficient we we cut internal on we're expenses it be lot we managing about we do. can, not didn't disciplined to people. able out that should go quarter that continue more results unnecessary to --the a continue do of second look, whole, So, we be to

to it But some what's John, service continues offerings as that it's seeing level just has or Yes I commented mean of continue investment it make you of productivity technology happening. and that a not the I we drive component terms and overnight. add, every would we're it, to incremental before, just overall of our to business. in every across one It's changing

coming how Thanks. have organic the a integration we capital your get we to about short years, assuming employment Thanks. few growth there? do like we're think momentum into Since the as stock period, that starts next better you of the close, the

Yes.

we've pass we that I grow profitably. in the can it's to growth, that the prefer the and any So to find find what some prefer undervalued We organization is is think would of that said moment, at it actually particularly acquisitions grow to actually look, we organic we sense --that's do. always stock think, we make if can things threshold we're acquisitions and those find acquisitions to When that somewhat that size. comparing a hard --what

if though to to And so going one, that shareholders. continue would priority. to we're we're that with our overall Acquisitions we going that return number make can't sense be do and cash

over in to a question cash we XX% previous As flow at free you shareholders. if responds returned I to mentioned look quarter, of last our the

that to we in looking that's do think future. would I the something be

O'Neill. Your from line comes Sandler Paul the next question of Newsome from

open. is line Your

excluding and Thanks and sort for things that expenses. of can really other improve to levers could Are XXXX prospectively? the could trying for hoping than revenue improvements I margin you little just there a Good of profitability might or bit was morning. call. what obvious be as you do to be well you talk about possible faster beyond think the get beyond

more think in a the employees professional more efficient ours. that's that mean like efficient, I obviously technology especially service is I firm making And all answer in think I is Well, true businesses. making us all

to seconds. to our in as And and take as kind three the ago month of projections actuary physical them button and actuaries I me spreadsheets, four of actual today's And businesses. in it a a brokerage do so of over using we well at XX,XXX spreadsheets look I look joined on I press the enormous get all in consulting used to I that our these continue technology paper had. years businesses, possibilities company mean of an at as the

be do. biggest that we technology sometimes seen would but I everything some incremental occur influence we've of don't So And part. we year-to-year, think recognize the that the things

we of we And differences the would be a change we're at prospectively then picture growth having guess the impacts still And integration are as do though or that into that's the charges? I separate have thinking some or integration we relief this big past point XXXX. of organic question if even get case the about past

into question not not I'm organic sure mean started what expenses quite out is. sure integration year, I your be question --there you no asking next what quite will don't your about to going I'm growth. we is. have but expect

in I'm asking if if that's been to making together. big and some past And strong, this appeared I typically changes organic had on let's over companies that that's guess in opinion has very still it they're benefits there's curious has I'm the you're have your to that integration putting growth do actually with when organic impact still a that lags in doing prospectively. the assumption if we're and this and growth. seeing just or release, it's, I'm to two that obviously you've the negative year year years and call

No.

I think that's, I think that's over.

XXXX, that but our at of same. the And XXXX competitors. would some a doing grew We a I was you bit as performed of, look we're businesses wholly any fact, creeped we that a In little we if phenomenon. as as, say almost XXXX little into had bit into fast in XXXX

impact So, that. no, we any don't from see

from Goldman Your from Sachs. comes the next question line of Kinar Yaron

open. is line Your

so Thanks question. my for taking much

you'd go separate? the a free to out is CapEx flow CapEx capitalization want or second. the Just of part that Is cash back of to the $XX for million is that software a that called

separate. It's

okay. Separate,

so And FX and adjusted that long-term? million of take also items out flow as of roll we forward you capitalization. are with CapEx margin the that So to or have of kind free $XXX cash XX% so the EBITDA you those to and called you that XX% comfortable the have restructuring software if

ultimate we're mean into where I right. long-term our yes. say we future, looking as that's goal mean I is the Yes.

XX% free flow the, But thing. mean longer-term so, I yes cash or is yes, I is it's think I a; right We, growing the to XX%. our XX% think Yes. XX%

In terms of this probably this year.

see expect year growth we next to a And too, yes. significant

you positive any space. my see some then couple space. way? creepage the talent back were a those whether question your creepage Have brokerage or second going you seen your from of way? impacting and deals Okay business We've Do or that deals just revenue that a in to seen negative moving in of maybe

think we session. to Mr. And way repercussions I that to haven't are turn now deal, go looking impacts. your No, the those organizations. to see we, And there big concludes and sometimes this they mean would market I individuals reconfigured, but terms there's from anytime the And there's I both John that a little how move seen we always our competitors question-and -answer of bit over conference big in occur Haley. like any in a of to terms some market. of

forward and earnings our Thanks very fourth-quarter look year call on And for much February. full to in Okay. everyone joining I about call. today's us talking

your you concludes for this participation. And call. conference today's Thank

may You now disconnect.