Willis Towers Watson Public Limited (WTW) 6 Feb 202019 Q4 Earnings call transcript

Good morning. Welcome to the Willis Towers Watson Fourth Quarter 2019 Earnings Conference Call. Please refer to our website for the press release and supplemental information that was issued earlier today. Today's call is being recorded and will be available for the next three months on our website.

Some of the comments in today's call may constitute forward-looking statements within the meaning of the Private Securities Reform Act of 1995. subject and are statements forward-looking to uncertainties. risks These from today to and results these may company discussed materially differ law. by obligation Actual the those undertakes unless required statements update no

Willis the these more a risk should XX-K of this release detailed Form earnings of morning, as other forward-looking For in and as our section statements recent Towers well discussion factors, filings. other investors press Watson issued SEC the review other and disclosures

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

the as release the Investor measures other materials website. regarding of as reconciliations to For the refer these non-GAAP company's most information well Relations of in measures, and the please section earnings recent other

to will Haley, Officer. Watson's Willis turn Towers ahead. Executive call I now over John Chief go the Please

morning, fourth on Investor everyone, Keefe, and Mike quarter XXXX. joining provide us of earnings quarter good commentary Head Burwell, Officer; Then you Relations. here and we'll for our thank much, the today results a review our the and Rich our December XXXX. With ended for very call. me outlook for is: our year Financial you on and Chief the XX, we'll fourth brief Today for Thank full

flow back more results work I we to do increased have on we year, as strategy. improve that impressive focused last and return cash our remain against an generated our look So we improved think That shareholders. were we said, I We positive. on and largely the revenue, margins for executing free our to

that's Towers World participate to this Two the before to Economic to exciting update I'd on take occurred like into in Forum. a year. quarter activity to fourth Willis you Davos Watson results, ago, So moment some weeks returned diving the already

of areas year and as future strategic the strategic climate of inclusion convened Now importance address to World and Economic in risk, cybersecurity. of our the to Forum, work, including diversity our delegates business, our partner second a

Davos. a initiative I week took led work of last coalition investment, that introduced Quite continue the we sessions the part our of cooperative members during sessions which delegation resilient a in at the quarter. few climate for

launched effects helps how new and solutions. also with the affected they change and of a We Climate to Quantified adequate by mitigation organizations the will trajectory resilient climate quantify offering climate be which

also Friends The Ahead Gebauer Head Hess, in Human a session the the event Critical Broking address We sustainability. Resilience where Head Garrard, spoke Cyber Davos our co-sponsored geography & on joined of Ocean international Action development goals. Investment Live: Reinsurance Risk the in Head the on Corporate Bloomberg Year Carl on Benefits of Community increasing Julie role Adam of Capital the our sustainable Nation's organizational For & session global some Advancing of Infrastructure. of United of Risk and to ocean participated

and numerous sustainable of great are to Davos to a addition meetings. company future. events speakers by is in play, told, We lineup role had more proactive client All the to build that a working global experience were excited within a community and encouraged cohesive the and across the

quarter Now let's XXXX our turn results. fourth to

deliver to expansion. solid performance revenue constant XXX growth, of organic fourth currency financial X% points of continue margin and operating quarter XX% the basis we adjusted with For XXXX, overall growth

organic This greater growth this business operating margins. along sixth again had of margin which and marks in growth segments or in revenue we've generated with we of quarter Likewise, improved each revenue quarter. consecutive our the X%

on of prior compared $XX to revenue and efforts an up the Reported challenge up the basis to our deliver reflect for negative ourselves $X.X quarter, a billion, Reported basis. up fourth to movements. XX% constantly results XX% quarter and currency revenue million as included quarter fourth year on was Our fourth more. X% currency organic constant

year prior representing Adjusted million $XXX XX% up $XXX was $XXX fourth million, million quarter in fourth of $XXX adjusted of XX% million as to the the year EBITDA the compared EBITDA to quarter a as compared quarter. prior income fourth increase. net was for Net income

the For Adjusted year. increased year earnings year currency diluted of the $X.XX. diluted revenue as organic in share a per X% the on same quarter earnings was up were full Reported per to to XX% $X.XX, for an and were an X% prior on period the of basis share increase basis. XXXX increased compared prior compared constant X%

all let's commentary more our will an at basis, detail. organic results clear of with prior look in of the To segments segments be regarding otherwise. specifically each Now on provide comparability the unless stated periods,

corporate Such non-core segment to and mergers certain discretionary well exclude intangibles, revenues The acquisitions, which our transaction of results amortization and expenses Segment they and items consider integration from results. as include operating costs. compensation. do as using margins segment as we are other unallocated calculated resulting

Human to basis compared Capital fourth was for HCB or organic Benefits currency Revenue the on of X% an and & up the prior constant year. quarter

X% organically. For XXXX, of grew revenues the full year HCB

Benefits quarter. & Health grew XX% this business The

drive continued product North New business to expansion revenue revenue and in America.

increasing market appointments global local share the wins geographies. in to and other and our While new benefit growth and contributed management regional

in was aided the recognized. quarter. year results standard, revenue prior fourth lower of Health The ASC the reflect new not adopting the revenue being the growth year & by prior XXX, which also Benefits certain impact in revenue resulted comparable

risk activity quarter, the for lump in sponsors sum primarily X% steady as Retirement market attractive remained continued driven in this by flow of to momentum pension transfer North the bulk plan America. revenue increased

to growth Technology work consulting and international revenue North demand Administration Increased and Rewards and and solutions. advisory and both America in Talent in for contributed

points by quarter HCB's improved operating year compared to XXX and by margin points improved full basis XX fourth year. basis for the prior the

insight HCB brokerage challenges. trusted to benefits workforce data our and clients technology solutions address and strategic partner clients' most our complex to analytics, and combines As a

and and prioritized. Our employee takeaways well-being. reinforced as enhance from Davos AI to to part had of technology the experience response sustainability and already inclusion we areas diversity Re-skilling leveraging advances, enhancing improve in

and these indicate, continue provide results solutions and profitability. address that segment HCB's growing this clients' is therefore our issues with to As keep well we pace evolving needs, believe positioned

Corporate as prior the which look of Broking constant year on or CRB, fourth revenue increase quarter. at X% to Now currency Risk an compared a & and organic had let's basis

the full X% grew For organically. of XXXX, CRB revenues year

the the of as America North new result grew retention. international East Eastern by climbed natural XX% and prior and improved to construction The resources compared XX% in year. There business and primarily performance fourth quarter, revenues notably and in as revenues Central Middle Europe, regions in a Africa. was strong

X% of the by aerospace in growth growth Iberia new reflect results placements. France. Europe driven by benefit the X% Great These new with Western business revenue contributed strong had business non-recurring driven growth Britain one-time some and FINEX. in

with XX% XX% a management of in operating We're the the top quarter. for due quarter as compared well with year million, The the with fourth margin line year. and the $XXX cost efforts. expanded expansion the overall was top as operating performance margin revenue continued to for coupled as CRB to line margin the growth CRB prior pleased an year margin

the socioeconomic continues World of XXXX Forum global make cyber to the business. resilience and progress CRB Economic toward critical five Global growth. is profitable top The good cybersecurity Risks among to long-term solid risks, feel report prospects growth, we this support developing about and ranked attacks

cover in experts strategies established believe CRB one to their world's We leaders cyber of itself has as the helping adapt exposure. trusted business the our right

stand more secure attacks cyber clients digital rise a ready their we build to to network help continue and world. As defend innovations

an of XX% IRR, growth for on basis organic a to Risk our revenue & core quarter increase the the $XXX Reinsurance basis Investment across was or XX% to businesses. constant quarter an as on prior meaningful year Turning currency fourth compared million, and with

through IRR XXXX, grew of the revenues across segment regions. lines with year most full a continue new retention the along XX%, with For net organically. X% combination business and growth strong a of of to lead ratio Reinsurance

in revenue. continued by sales expansion investment Investment revenue and grew technology the services growth Technology portfolio. and of project with increased from Consulting Insurance delegated product XX% X%

Overall, On across an driven Miller's revenue Gayler. including wholesale was wholesale growth of XX%, from basis, up book. the XX% by results the business by acquisition Alston increased organic the

Max Matthiessen commission grew X%, increased primarily Our business revenues. from

grew quarter. to operating X% of the quarter IRR XXX contributed are and leverage to segment's X% compared line year pleased basis growth greater financial businesses. fourth operating the Overall, points the we improvement. the results margin fourth both Top with in to margin in prior our IRR's

segment basis, from prior basis. quarter. constant fourth Benefits BDA the an year quarter a Delivery Revenues Administration revenue currency grew XX% year or organic fourth compared the X% the for increased On by on prior and to

mid and large in resulted and market expanded client increased BDA's project work base segment's growth. the

strong for We new benefits continue demand in outsourcing to client resulting see service wins. several offerings core

XX% to X% BDA's to organically. XXXX, For continue was prior we growth margin to revenue We're trajectory, for the our business performance of year operating as current full expectations. momentum. improved quarter from margin due year. to the year BDA's revenue about and XX% the fourth in operating TRANZACT's TRANZACT's TRANZACT XX% XX% encouraged gain the the be this to continues in exceeded compared full inclusion joint by our BDA excited grew of year.

So in dedication and year. past our the hard their they've steadfast the client and we quarter of the to colleagues performance appreciation also another closing, around the for financial the full fourth to this delivered I service. recognize providing solid a for to world and work for take moment done year for want work our extend top-notch

turn to the over call I'll Now, Mike.

trust clients for in to good and us. of all like for to Thanks, joining to John, morning I'd also and continued us. you efforts colleagues support for our their Thanks our and all everyone. thank their

So, turn our to let's now, overview. financial

$XXX operations. XX.X% Let the $XXX from $XXX of me fourth or prior from XXX of of up revenue, was the for or income discuss fourth XX.X% quarter from million, revenue. million, Adjusted year of prior Income year basis quarter from the fourth income or revenue. of first XX.X% operating for or of revenue, million was million, basis $XXX quarter points the points operations XXX up XX.X%

for of prior for was of XXX revenue. the $XXX of $X.X billion over of the of the XXXX and Adjusted income billion fiscal of year or operating year points improvement $X.X or by revenue. full our operations year revenue from year XXXX the should purchase. XXXX or full timing basis of was XX.X% the TRANZACT, related was revenue, of to year XX.X% be basis X.X% driven XXX from the in It billion, $X.X points million noted or points Income XX of XX.X% up basis margin prior that up

me EPS, let earnings or Now per to share. turn

$X.XX and of $X.XX EPS respectively. For XXXX, diluted XXXX the quarters was fourth our and

was year fourth our EPS to compared fourth share, For share $X adjusted in the as quarter. of the per quarter to $X.XX up XX% per XXXX, prior

$X.XX For the was diluted and respectively. EPS full and XXXX, XXXX $X.XX years

For EPS the year. the XXXX, XX%, share share prior versus per was up full year per $XX.XX in adjusted $X.XX to

year Foreign diluted adjusted to a earnings currency quarter the million revenue of the prior $XX share fourth $X.XX quarter, per to compared caused quarter. headwind a consolidated in for decrease our with this

XXXX year prior full in currency caused decrease year. share of $X.XX adjusted a earnings to $XXX our with million the compared headwind a to diluted the revenue as the Foreign for consolidated for per overall year,

U.S. additional to I'd you like our tax with Moving taxes. insight some GAAP rates. adjusted and to provide into

tax for was to GAAP the prior the XX.X% Our fourth U.S. rate compared XX.X% quarter for year fourth quarter. as

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

rate than Our tax prior for due adjusted discrete quarter the benefits. is one-time the lower fourth to tax year

compared XX.X% Full as XX% adjusted for rate year. XXXX prior the XX.X% tax compared GAAP while year, tax the year, the U.S. to was for rate prior XX.X% for was to the

rate for the items, approximately was full XX%. Excluding tax adjusted discrete year our

guidance forward be positive not We project We rate. negative. tax which discrete can will give and/or items do around our

to Moving balance the sheet.

position. We to financial continue strong a have

new the in result liabilities gross-up offset but first The to a in approximately standard. assets. operating in income, which a balance lease our in reminder, increase a totaled by on sheet, did no quarter, impact had increase accounting are $X.X we implemented largely corresponding material billion. result As This our

Our to strengthen. balance position sheet continues

successfully at help debt During flexibility. was the capital structure of billion the of compared financial year, and offering efficiency the we notes issued provide billion the in of XXXX end senior at with the $X.X $X billion additional quarter. a our end to $X.X with Total third

quarter third acquisition no the facility. $XXX the $XXX Our million our end we down of borrowings balance as had a million of credit of commitment year, revolving term TRANZACT resulting and as loan under had at year-end from the from

Our date next July XXXX. due debt maturities is

particularly year flow tax higher Lastly, free from of of receivable of tax The and unfavorable prior working full year-over-year primarily decline the changes cash a resulting in year the due million, compared was global flow free $X.X is $XXX reform, $XXX accounts of flows cash cash cash payments $XXX and million. decrease to negative million, U.S. million TRANZACT. capital to in

remain paid position. In approximately returning Towers to of the committed year for terms improving dividends. to full and historic near free repurchased allocation million our we of leverage $XXX levels, capital approximately cash in the deleveraging flow XXXX, We term, stock million in Watson $XXX our ratio Willis in

let's we look Now year's performance, fiscal to our XXXX. summarize guidance last year that ahead for

Turning to revenue.

growth X% For for currency X% of we X% the constant company, overall to to organic around an revenue expect and XXXX. on basis X%

Our is classified approximately by other to improve non-cash to net planned due pension income, within primarily expected improved returns is which on $XX income line, assets. million,

XX% to effective any we adjusted XXXX, $X.XX tax, average around to of assumes, year be for items. to discrete Pertaining excluding expect potential euro. the tax our Annual pound rate to the $X.XX and fiscal currency rate guidance

in we Assuming a we approximately exchange quarter. headwind per share. EPS first current rates this $X.XX most be expect FX by And the to levels, XXXX, to remain at of expect impact adjusted by

impact range to adjusted expected the from $X.XX. of Adjusted earnings diluted diluted per share, This currency to such items share, includes of as be per the earnings the the to line headwind with guidance $XX.XX. $XX.XX projected in

Finally, Stanford no XXXX. which be appeal. we to flow to be subject billion, million will assumes will $X And $XXX further settlement cash free around we payment, expect in make longer approximately the

summary, businesses. ahead There executing remain acceleration I'm pleased quarter, the growth. of on and still a strategy. And opportunity operating seen our with continued leverage this our of we good is In momentum lot the And focused we've on results positive of of us. revenue

look call be back March John, hosting And seeing year want Washington on the turn to in D.C. to Investor we'll you Day, I mention, XX. before I an there. So do to this forward we

you John. turn I'll call to the back over now So

that, And Thanks to with I'd Okay. open for questions. like the call Mike.

Question-and-Answer Session

line And our from the Instructions] Rosenbaum comes [Operator Shlomo question from of first Stifel.

is Your open. now line

really Thank improving the job businesses. you free growth the morning. Good good just my flow such cash Hi. for Mike, you a point. very of taking Hey! much sore the are organic is questions. in guys But rate doing a various

far exactly could should to the you year? lot how about company how falling last is we've that are impact changes that are what happening And the think we What of comment going seen be we issue? behind? over just where thinking you And that? -- than so -- on, more about what the should What's XXXX? for a And are kind

your year. it. about question, landed we're I point very Shlomo. working the first We're it. here's the for in where what Thanks we Sure. for pleased to we're the of not hard guess with is, obviously current But outcome, on doing terms

the the One been is that have. we the in organization. operating goals And top that the have the committee tied for variable established XXX that we implemented. people compensation to company, of to has Equally that's true

we area. with dedicated a management performance and manage the directly to Additionally, process implementing XXX% improved in system are a we've the on that contracted cash task And consistently. individuals sustainable established contract management in are contract terms cash force and and more focus of to

So we're very line. it. I focused is the on guess bottom

a of in is, just items are to there few any getting things can thing? that done?" where it not just there are words a matter Is with the customers? is -- And is like one you it This "Hey! point like saying other Is specific communication that

tell you, we Shlomo entirety of the bottom. would and to process the from I at top look

see unturned area And that of for So, after stones the progress. leaving every look going it we as are made Obviously, it. there's a we'll we've can areas in itself. any some totality at But process of terms not improvement.

John, with more little you TRANZACT. can Hey! bit then, Okay, And what's going about on great. talk a

company next the You little said give expected. than that, it general expect over this business? you had better growth you're more Can what trends in that about year? us, commentary the And bit revenue seeing you that from just a

Yeah.

we medium-term, had short we expected high-growth think of was I to relatively at be And where case XX%. bought excess least business when Shlomo, in this business. the to look TRANZACT, a for think, I grow it going a we So to

We -- And over That's grew even we the XX% get there first that XX%. a growth basis, the XX% we we actually did those; on. even year. could by revenue the passed in deal all was to or surpassed thought possibility

this of revenue. TRANZACT has done just additional and -- on a have And it these our gearing all terrific -- been taking colleagues up job

very by that grew Advantage important about XX%, what's market. of most Medicare growth there. part probably the And Our so good

see this the to years. -- to a comparable expecting and medium-term. have expect for growth continue we business over We though several a be a even expectation short to that tough building still this still going we're the, high-growth pretty to we're base We're next we that, And to see for have on. XX%

great. Okay,

a number is But Okay. embedded the were the impact to on the basis, There's currency a is on there expected one, XXXX? it revenue, more guidance? have in what I you EPS. housekeeping, You Mike, like, on if in look noted dollar guys $X.XX

Shlomo. it's It's really is really small nominal, mean This I on revenue. very expenses. on

Thank great. you. Okay,

you. Thank

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

is Your now line open.

for questions. morning. you taking my Good Thank

First organic. up on

posted For I provided especially guidance to unusual it was items there specific of fourth Is us the happened strong? And results pretty fourth anything you for in you impressive around out some can quarter, sense call quarter? in CRB. help the next Any know so why what a to organic. year get you

folks think did and clients than others. of fourth natural we resources I I actually that. help And really resources in to that's to some in be projects our and the episodic natural one-time call hard the which quarter. delivered worked with of construction big the a in were some nature out had projects and tend construction more

had those. a we couple of So,

might we all area the it way all expected. have really they Board. our across performed think growth of But wasn't was frankly pretty It we was top I ahead Greg at like others, one just of at the that when you much look what the had

think basis over on a fiscal us around margin XXXX, opportunities that's Yes. I the XX growth just an Can year margin posting. point improvement XX.X% of guiding why XXXX. not anticipating you're better you're with to the operating for Can better walk seems guidance there's through like I It operating and expansion? you're especially you the pivot to margin

Greg. Sure

So, my so being really prepared I it had when basis said we in XXXX XX originally points about improvement XX%. for at you -- year TRANZACT as remarks, around had targeted fiscal look a and

And XX like, then basis would XX% and it. you that looked basis look that XX.X% about if annual what on really an of normalized XX you like targeting what you of gets about that on a and to terms terms so normalize in thinking we've more basis in that's points talked at improvement when we're

Got it. looks makes like ex-TRANZACT And BDA the business pivot maybe legacy or business sense. we That us then exchanges down because some can there? color it slowed to you -- give can the

that think is mean left now about with the Yes. we've tremendous market I a years, been the ,but are episodic we've talking I had that one a over now. BDA mega opportunities be the opportunities to still success while more for there's tend few opportunities that penetrating

And surprised. so we're not

sales The we're some these work cycle time continuing on on take ones and large to them.

some medical. So, same because to have steady going I years we think you're don't but you there. clients and the growth have up, maintain of reasons pipeline we'll our the retiree see on we the where of don't a jump see marketplace big the as leadership It's technology one for focused the make why our sure we're go-to really to operations market now

of -- of are of retirements. some the an when expect to feels Listen to realize this idea the make year, businesses? on the lineup to I be the like get Got we call, executives regarding some going give going running and this the Board company going you're to end the but you next you of be it some can when And conference there's announcement not who it. us to announce when management

Sure.

the right, and role tell ones Towers multi-year Directors, you're CEO. year details succession this And lead them. has not the -- And any actively we're to but provide me of the and the Willis year right process. just for been how who The our real or as the position governance what thinking develop about year look succession is course, how of talent even that along Watson Board This Board the this we you last the in let we this. in a acting now, bring engaged So, through they're committee process a planning has whole happened isn't them is before. or something of

candidates. Resources Board involved an attributes to And me and basis. of a and on so have the make have sure experience engaged we the third-party regular with regularly a in our committee We've and been meet outside that. look governance the our They at Head Human of

expectation is in a name of new second the Our we half year. this will CEO that

to other I time an going have we're that's allow make much say pretty than all So, transition. moment. that, can orderly to sure at But the enough we

John. Great. Thanks for your answers

Thank you.

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

Elyse your line is now now mute Pardon open. me, button. Please your Wells is Your Greenspan Fargo, check from open. line

hearing on anything. Elyse we to bit. little not come We're Could in a back and move maybe

Thank you.

line question next the Our comes of Mark Marcon from from Baird.

now is open. line Your

Good taking for And my thanks morning. questions.

big First specific of And – good cyber strength? the really all, what is opportunity are on CRB performance, within what to how North that? is the sustainable And areas be? how extent could America of

Yeah.

throughout and as may this. CRB high I to Let very real me good the growth at the number. a think America fourth throughout weigh Mike as a mean, XX% quarter, year. growth North very they in the even had the grew big year XX% I in good XX% in still not on is but But look just want

and when think that one the on in talk market you are in to strength. of folks the our industry, it's particular people generally, one focused is middle relative in I America North

prefer to of about feel I we that. know question I modest. our when pretty some this growth is projection we we And revenue talked our So more have think said There that. for would we've I faster. on sure that's the more a whether pretty good projections we we as about was, what mean, we year. fast or expectation, was market we delivered budget I grew modest make the but as much think thought forward. on basis, going And And we

is is fantastic think where I there opportunity long run. cyber something,

of tremendous the right require it'll market developing is solutions towards we and think I as And a the opportunity. clients. but that. moving the going market there to of be the for kind kind that's think don't think I yet, policies we're right I do,

And should plus we organic year-over-year. X% the continue grow look take XXXX at the for in Great. to then growth, when mentioned you of guidance X% terms XX% to a overall at least TRANZACT

drive that So segment. that will

are the each or same the growth segments, in we general to the up then think taking lock assuming X% should on, it and other of sort of we For generally stance year of those for goes how terms we'll X% as about that?

Yeah. get our No. obviously, don't almost we we build line it. details when do overall by line business. We – do of don't – company look all the of into we how we But segment disclose growth it of by the – segment business we we our for Mark,

go just think I thing, as Retirement. we We example, is and through just going mean to clear and grow for So faster much we than one know CRB do that. pretty

revenue we the then give growth just for company. a models the and that way So we – but build

question a then And Terrific. Mike. for

going impact the of of relative on major is goal the you cash normalizing for be year source the what improvement DSOs? in free Just to the of next flow. for it's TRANZACT terms DSOs? the whether or Can to TRANZACT disaggregate And

Yeah.

mean, it did as to TRANZACT TRANZACT, looked when and the Mark, we diligence at relates TRANZACT. understood we I So originally

the But be because that bit to making think were given the market do we a implications et drag, wonderful significant we investments, it take that a they will, some there satisfy the With well to our for it the there growth. rates growth to we and will having turned able positioned of we licensed level sure or more team to build advantage that was Board I of but demand. that growth rates it cash was across And in minor. a could make did as cetera if what had in the it be what job to had we sure of knew revenue agents, saw you of

I as the it So issue TRANZACT. that's think relates one to

more. build up our And looking – it to the a we I we cash. I earlier, said think and as relates just it that we how really as I contracts from bit how saw receivables set contracting collect ultimately at to was the

it. from a So focused contracted on very cash we're process standpoint

see that receivables So we build. did

very we're forward. so improving going And focused that on

So some that insight. you hopefully gives further

maybe we TRANZACT when think could Mike had said And we it we have and just the we – deal and we knew had we you TRANZACT when would first I for mention the that this when – Mark about cost of we number Yeah. out had did sort a financing bigger our more going It we're well bother to became from expected updating turned a of was there. some forecast impact growth than just and it growth that. the we thought result the as not that. We for as sizable

this built focused then our the improving on focused the incentives some And we that, gives we're having these collection fact that of job without think year. – think things. building I that's and it us so to we a but into to we kind of incentives And system, the better right very we whole what have improving on of surprise better now system good being kind cash were going the we missed needed we which collection, payments right surprises, were but won't this in for confidence payments that lot tax than the into of us projected. things one a year think of our those clearly putting a system. in forecasting a compensation much also And tax kind coming had I cash improving more that I forecasting cash Mike done significant were a because some incentives has our

always work. Thanks. Thank you very much. planning. of I incentive appreciate efficacy your the long-term It

Thanks.

Thank you.

line Suneet of the from from comes Citi. question Kamath next Our

Your line is now open.

cash flow back to to free the just go I Thanks. wanted a for second.

think optimistic you the in about quarter I billion $X.X and pretty below Just were that. billion said obviously to -- $X.X came you last as guys

that what I want want I it it mean of on and I'm the the I -- just cash happened the but was to just or what end make something to So taxes surprise? was? just the sure and towards Was it answer to year just maybe clarify was TRANZACT? Obviously clear

I Yeah. actually $X.X be. cash last our billion billion billion from lowered said to $XXX we year think the to million $X.X mean, down to it would I $X.X we what forecast had

to kept So -- said billion excuse $X.X -- billion. we $X.X we me. We

We were come look lovely. had thought. taxes cash million the bigger -- taxes But and cash we Okay We concerned we it the TRANZACT about had -- where anyway. than $XXX I higher. were would the was the about guess

something so going that us. knew weighing And to on then us had though with. to was in decline And a that expect. that surprise something was we But to that receivables we was the was be not we begin did

I would the an your comments terms is always fourth quarter And add only we mean, of in for I timing. John. to just outsized us quarter know

the we exactly frankly actually when were sat points knew couple we that's done build about of at raised But prior there had in the of we it. really why at receivables. down year we we These what the working third build. had fact just capital what worried quarter. we fourth stood. of in saw the third took And And in where guidance We influenced end So knew we quarter. that quarter, end John that's the the

of Obviously and area that We, We've working of the capital. that of income back is is And it. flow. really is CapEx. process operating not incentives cash reduction ultimate And means -- go big that's referenced, capital to our organization. to we improvement sure in are that's collection we we're make the beginning where coming to that the cash And place the working from throughout looking what one some I we're at process terms terms are obviously from a forward John driving the would place -- again driver looking going. in as so at contracting really free at put improvements know underestimate the in this is really driver in seen putting the going standpoint until the a obviously, in back

in be you Makes would growth we that cash cash XX%? I XXXX to know if term Are sense. growth guess don't like at imply And something free flow rate still guiding around I guidance longer your high-teens look to flow.

would we I $X do right guidance laser look too. where Well, sort billion after year if we're of what Stanford for next at say you paying we're to us anticipate of the is our growing on settlement But we're focused now. going

XX% free cash So in growth a to it's flow. closer to XX%

growth And you're capital you're any to then continue on XXXX. target terms share lastly assuming double-digit the outlook repurchases? it. capital or dividends. to return in in Got going management of color for what But I'm just for expecting

Yeah.

really So again dilutive nominal as we we share relates weren't and it given to benefit you really we to doing TRANZACT, as that year would manage had we know of XXXX. last as just our which programs so think acquisition that employee anticipate repurchases, about were the

TRANZACT and Additionally committed $XXX to related when it of payments, paying then to down at debt look we've there. kind to got then you are million dividend at $XXX say equally our referenced. that as look you I our million range And to

If get ratios, you look at our to looking to we're the debt-to-EBITDA more we're X.X%. range in closer current X.X% and

look XXXX. at will really we're that So as capital we least at be where deploy to looking

Thanks. Okay.

Thank you.

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

now is Your open. line

to you. segments level. question you I some the a CRB? running back conceptually to delta improve to the there's to know and within But where I to your peers maybe don't morning. guide one you neutralizing thinking more being the want first pointed just of their the of right a about are are XX% still of and that brokerage in going guess for Thank was Good target. where thought But I between I'm discussion, guys certain kind business. goal margin I to XX% questions TRANZACT you earlier and from then understand My

-- margin is also it's in IRR like when deal by just HCB offset impact comes that does does guide perhaps in that improvement to be of TRANZACT there CRB the underlying assume accounting this and going margin and So operating on?

and And We ahead we're what the revenue business we're Well, build mean think response I margin certainly we of line to by of up in was growth the is to some our our business our just saying, project saying, same margin terms business. retirement peers. peers across I in Mark all opportunities then the where revenue for more in line we growth question we of that Marcon's like here Elyse company improvement line I of -- not revenue growth CRB of we so have line been see do them. by of our of trailing project and business of where

in reflected So yes. projections, those are our

flow just I'm the then, of in about for I And timing the to XXXX, great. guys first And seasonality. understand litigation? cash Okay, I quarter? the think want we know free weak have Stanford if you of as is of flow typically kind not sure the cash a sense

a flow sure seasonalities does another would free from negative is that of be into Does flow And that also then XXXX then account? is question guide cash there drag And that take guide? part that pretty it free cash a TRANZACT imply the perspective? any

account. the does It drag take into TRANZACT

So, with I start that.

seems when the place we I for when it able be like to things pay it alert and longer able on thought had don't should made during where would pay the we've of court be But particular we've we we have at system But than couple up. a estimating years think we it's thought. to we're a payment. We it, time you Stanford, drags will a year. the now

then, seasonality. lot And a clearly of there's

Our cash year. the flow second towards highly the half of is skewed

tend tax in quarter. first have We payments to the come

quarter. We payments first have in or the our bonus second

of in have we a strain the so, And beginning the lot of year. cash

And helpful. Okay, is last that's question leverage. on my

the it to sense down going been close want the of obviously we move through have just of the pay a guide? expense guys with expected I You your Does -- and down XXXX? leverage are -- as get of to to managing acquisition. TRANZACT your Does the leverage more kind you interest

Yeah.

as do of to looking deployment. that. is do plan And to that game our the part Elyse, we're So capital

from the And the continue see obviously terms fourth that us half going do to So of to us you've the quarter in to terms corollary to third reduction, effect that you in interest really balance, of quarter addressing should the first continue to see. expense. of have will which outstanding you're as seen over XXXX that

you. Thank Okay.

you. Thank

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

Your line is now open.

Good morning. A couple more on free cash flow.

that a mode cash very long is First it being the for you How TRANZACT, do still start in a that -- business? the growing drag still see as up considering rapidly.

to of is years, see see that. projected year out go about we those we're Yaron to there with or we continue the a it growth we But growth rates drag -- standpoint, look so see rates, to -- kinds five the over are from see which cash five side only year we starting a out we continuing years so we of next that to mean, in the only in that I cash. equation only over on see -- really a really terms of cash its terms of with four

the I Okay. back end to And question the contracts then, got of beginning or a would the renewed very of the lot seasonality on maybe earlier, think of the DSO the year the very at and that coming year. side

first of So, language with quarter in in I would think adjustment that contract the would to regards changes be the a the comp by And DSO first of XXXX. place DSO variable by you've there quarter? lot in lift from that of a offset made bit little the be the place probably to just is in also already. an a seasonality regular Shouldn't

in mean I a quarter. that Yeah. factors lot we've first got of

But contractual all As rightly in that I bonus said, place. were have a payments. be variable we it have the mean we you also standpoint. from aligning We're tacking to terms compensation we the

tax of We there candidly, and looking what we've expectations saying those come make we're in sure that amounts put there. terms out in And payments meet we're to around. have we

what the plan. of So, of going, use see where cash being a first but I you're the that's the year really logic half understand see and of it, more the game we over and year half historically with of the cash you in. quarter in fourth if second outsized coming see of terms back company you the it the build look the really being in

the with and the I with won't plan, which the making until formally but point Board the out the changes this just meeting, changes they are we've And to month we've our discussed these put place mean in Board committee, -- I compensation comp them. discussed of end variable that would be at

there, year. in last we'll those but So, in weren't have they

them And this so, the I last hesitate to them from any to would in we'll effect year. year. But from see ascribe impact

just then, my is HCB And going Okay. the other question to margins.

XXX, ASC up by think in declined catch XX accounting I this we quarter. out the the actually points if margins basis adjust about year-over-year

is right? if decline my considering math actually that growth is b, a, it roughly So up? caused what organic was And that

in have -- high Yeah. maybe terms mean how I calculation just quite that math We a your you way. of it little didn't it. seems calculation your calculate

how kind is flat at looked it So, may it, of a be we've to decline slight really Yaron.

numbers be give the feedback. would to terms in that that of So, just our thoughts you

And would that have what caused decline?

slower most shift. portfolio is is than others. a Well, the bit there the growing is a which of of Retirement some profitable

Okay. Thank you.

Thank you.

SunTrust. line Our from next the Mark of Hughes question comes from

line is Your now open.

you. morning. Good Any receivables? been debt change Has change in any Thank write-off in Yeah. of there your trends? bad

after going been we've Actually No. that.

collecting So dealing we've if change we've accounting change it, had no that on been of been and hasn't no, in anything stuff nothing of really it older so that making no policy, way. the progress terms some in with

really growing top the to two make it's more receivables business, got sides you're the that that the fair sense? it just faster. you've faster Is organic because Does drag line coin you're in cash think in of growth the the that same

look how basis. mean of and XXXX Yeah. I some January year-over-year at of XXXX it of the element into that. December beginning rolls it rolled you how I into definitely comparison at and of December XXXX it to mean, a XXXX, in on there's

difficult that. it's portion absolutely so point, quantify to yes, your think I that And some But it. to think there's I of

And an quarter thinking that over how then especially really carries much finally had into relative acceleration to XXXX? IRR, QX, you of this

some point very our as included in mean, overall impact as definitely our Yes. an impact -- so There's is But and to thing, is there. Reinsurance definitely I the well I'd business there. Investment that. other particular that's multi-year strong John just his commented was as there there there comments in out that arrangements guess, business opening I are yes, in

thought I when particularly if this year mean Technology we slow like two or we're think Investments and to you them. And seeing outlook future the year. think fruition a But for ago growing said I that come I Insurance, we to Consulting and back we think were

forward. them XXXX. going feel they in about So were like good We positioned we where

there. fourth grow to Reinsurance. fast as way market we else faster. feel I We're quarter. we And positive. We about very our was growth the grew anybody think in whole as going fast XXXX. of the positioning like like did same we as strong Look quarter But they're very our sure the not in the we Reinsurance as they think or I'm prospects and

good that. market And against about think feel future. well so we perform the the in we'll And we

you. Thank

KBW. Shields from Our next question of Meyer line comes from the

Your open. is line now

headwind expect guess Great. Thanks. to quarters? inclusion some hoping much earlier you XXXX of was maybe margin I in I how the on guidance TRANZACT, with start from

that? we what that's or like about think probably So something X%

Yeah. X%. Yeah. Yes

X%.

So drag? X% margin

Yeah.

Yeah.

Yeah.

acquired XXXX. back months of right? in -- have we of you we a that five acquisition year July months to look revenue TRANZACT it from And of into go you back had Obviously, five full remember XXXX, reminder for a expense. we're going as Just and

Right.

in just terms and I quarter the expansion. of Can you give that very Now nonrecurring understand in I'm actually sense margin the because that's news good a it magnitude? better thinking implies CRB us fourth items underlying

don't aspects Yes, the the we to individual really disclose those deals or particular it. --

we when them. say, system those there of but too couple there might a note oh, ones They and And ones, big aggregating then lot doing notable other -- have a we are of don't there's that be problem just smaller them. ones is with the a

so Thanks All much. sense. make right. That Yeah.

Thanks.

you. Thank

Our of Zaremski Mike from Suisse. next question from Crédit comes the line

is now line open. Your

free with guess starting Hey, question flow. I a cash good morning. on

cash maybe are CapEx headwinds? year-over-year Our slight or those contributions pension

way. no No, don't that see we

in we As next that at reasonable... look year see Mike. don't see them We we a No.

the About same, yes.

yes. Same,

of I into think move will also tailwind and quarters kind half into kind back the kind remind TRANZACT's growth of eventually the Okay. And XXXX? in growth just categorize being outlook organic recent if of in And of going growth you more the us XXXX? is a would organic calculation about of

Yes.

include then in last there first. sales growth with as Yes, I will an as from your So it same-store mean question soon standpoint. to we we starting organic get TRANZACT,

of pricing. terms we've in seen if at business some organic about -- In you on tailwinds question look yes growth, our your of certain

price marketplace look in most right seen thing that one the obviously customers and in a But report our some to clients have put see be marketplace you through you that. for to XXXX the tailwind, if recent through equally continue pricing we to realities tailwind our out that. do and got So November come thinking but back we definitely we continues to

at organic our right And rates terms at market look been if and we've peers of been our we in growing growth look what we've at the you at.

looking at terms in rate So in we X% of realistic for we're how organic pretty to there. budgets there skewed we've had the X% current it. year being when growth put more in been terms and see that out we and for we we think it our build X% But around out about recognizing way consistent we're how the of tailwinds that we

we why X%. that's went So with X% and

only Yes. go less of as people And because it. of in the equation us the revenue only that other for is buy thing I'd that the part prices up pricing one is add to

the is trying that it's for. solve so what And net we're to

up remind roughly fee? breakdown And you of your the on lastly of what -- commission to that. Can the business insurance I the us follow side of versus to guess, just

that. haven't really Yes. Mike we disclosed

question, appreciate information. but I given that really So the we haven't

Thank you.

Sandler. comes Piper Our of line Newsome question from next from the Paul

open. now is line Your

Good morning.

year? flow cash to which I the the going an Does the perhaps change that this guess we does be deleveraging over here left. XXXX the XXXX, in question have had you're one course Just and on at speed in impact that -- of

that we responding I end -- the -- -- first earlier -- what mean a pay payments. the a At tax that, we we have cash we kind I guess to couple Yes. bonuses. the of in of patterns of couple where have bonuses been questions. quarter, sense In said obviously know a

real the have there loan of the build by then through the We rest see second deal of half the But first a of cash. the over outflows out term to of with quarter. intent is year. year obviously start some the end we to that really the And that's or

Okay.

year? by end So by first be the the of -- the this hopefully done loan the term of should end

one-year loan. a It's term Yes.

So...

very it. Got much. Appreciate it. Thank you

problem. No

Thank you.

UBS. of comes from Meredith Our line next the Brian from question

now is Your line open.

and year was margins basis, margins, company Yeah. XXXX full and curious, just of at from of assuming is and One overall, it overall a just full look exist how it understand kind here pressure or pro you Thanks. at if BDA XXXX? going in is XXXX, I margins the have it dilutive to timing it's is TRANZACT look I kind hurt margins the I the to that TRANZACT just have accretive or line? one year on on or I left. if forma a two impact the quick ones perspective,

Yeah.

five overall. about it fourth when look going the So when be we're ended margins was months we're And will pleased very in talked look margins where expenses overall. revenue was in this and but we back, full-year, terms you months we quarter, TRANZACT that very at in with and BDA for down being of good five there. has and included their had just of at margins, accretive you actually the the that only up of down Again, although

what we and normalized And accretive we're very about fiscal so your the see. growth to think XXXX. margin it was a absolutely excited higher we're bit to But and about that going we've year that and is question, -- first as with

But accretive margins. percentage lower but

Margins.

TRANZACT when lower in, to earnings margins, but percentage. the of a have, the we it dollars So TRANZACT it's adds we bring

Okay.

got I percentage. margin operating lower you. a it's So

Exactly.

versus business? of Yes. Got you. wondering if I was any rest difference TRANZACT like And your there's the seasonality of BDA

to compared regular our exchange business. different that Not

less regular but exchange little seasonal a Our is not... than TRANZACT business

much. that Not

apart. World's

I want to lastly, question. And Mike's just helpful. That's on Okay. follow-up

growth kind or in IRR here improving marketplace? your nothing guidance, in in you the assumed confirm to business for the organic CRB want commercialized business of business Just pricing that have revenue brokerage for

have in we something do there. do. yes, We Well,

Yes.

consistent And how much roughly? it with... And is

don't do this line We're We to we business in go that. want -- segment. things by into do don't saying we of

build that's we up, that's how we... it but And how not

Yeah, our I terms differentially margins. in growth We to by up we things build revenue up. do was segment in an made earlier an it and question. answer of by that of And build terms

So that's -- impacted. clearly it's

it. Got Got you. Very helpful. you. Thank Appreciate you.

time, no remarks. further to Thank I'm you. showing for like the over this closing to questions. back At turn Haley I would call John

in March. all morning to and forward Okay. Thanks this look seeing you everyone for of joining I us

today's you this for Thank call. gentlemen, and conference participating. Ladies concludes

You may now disconnect.