WTW, a leading global advisory, broking and solutions company, today announced financial results for the second quarter ended June 30, 2023.
“As our strong organic revenue growth demonstrates, our strategic initiatives continue to gain traction in the marketplace, highlighting the value of our investments in talent and technology,” said Carl Hess, WTW’s chief executive officer. “However, headwinds from prior-year book sales, inflationary conditions and the costs of our investments negatively impacted our margins and earnings this quarter. We have reduced our 2024 adjusted operating margin and adjusted EPS targets to account for these short-term trends, as well as our ongoing strategic investments and the unfavorable pension income dynamics we have previously noted. We believe we are well-positioned to resume steady growth in margins, earnings and free cash flow from current levels.”
Revenue was $2.16 billion for the second quarter of 2023, an increase of 6% as compared to $2.03 billion for the same period in the prior year. Excluding the impact of foreign currency, revenue increased 7%. On an organic basis, revenue increased 7%. See Supplemental Segment Information on page 9 for additional detail on book-of-business settlements and interest income included in revenue. As a result of the cessation of the co-broking agreement with Gallagher (see Note 3 — Acquisitions and Divestitures in WTW’s Form 10-Q), interest income directly associated with Risk & Broking fiduciary funds will be allocated to the segment beginning in the third quarter of 2023. These amounts were previously allocated to the Corporate segment.
Net Income for the second quarter of 2023 was $96 million, a decrease of 16% compared to Net Income of $114 million in the prior-year second quarter. Adjusted EBITDA for the second quarter was $411 million, or 19.0% of revenue, a decrease of 9%, compared to Adjusted EBITDA of $450 million, or 22.2% of revenue, in the prior-year second quarter. The U.S. GAAP tax rate for the second quarter was 19.8%, and the adjusted income tax rate for the second quarter used in calculating adjusted diluted earnings per share was 23.7%.
Cash Flow and Capital Allocation
Cash flows from operating activities were $430 million for the six months ended June 30, 2023, compared to $258 million for the prior year. Free cash flow for the six months ended June 30, 2023 and 2022 was $350 million and $198 million, respectively, an improvement of $152 million. During the quarter ended June 30, 2023, the Company repurchased $350 million of WTW shares.