Marsh McLennan Reports First Quarter 2023 Results

GAAP Revenue Increases 7%; Underlying Revenue Rises 9%

Growth in GAAP Operating Income of 19% and Adjusted Operating Income of 13%

First Quarter GAAP EPS Rises 18% to $2.47 and Adjusted EPS Increases 10% to $2.53

Marsh McLennan Reports First Quarter 2023 Results

Marsh McLennan

 

Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, today reported financial results for the first quarter ended March 31, 2023.

Commenting on the results, John Doyle, President and CEO, said: "Marsh McLennan is off to a strong start in 2023. For the first quarter, we generated 9% underlying revenue growth, grew adjusted EPS by 10%, and expanded our margin."

"We have momentum across our business and are well positioned for another good year, reflecting the importance of the work we do for our clients and excellent execution on the part of our colleagues."

Consolidated Results

Consolidated revenue in the first quarter of 2023 was $5.9 billion, an increase of 7% compared with the first quarter of 2022. On an underlying basis, revenue increased 9%. Operating income was $1.7 billion, an increase of 19% from the prior year. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 13% to $1.8 billion. Net income attributable to the Company was $1.2 billion, or $2.47 per diluted share, compared with $2.10 in the first quarter of 2022. Adjusted earnings per share rose 10% to $2.53 per diluted share compared with $2.30 a year ago.

Risk & Insurance Services

Risk & Insurance Services revenue was $3.9 billion in the first quarter of 2023, an increase of 10%, or 11% on an underlying basis. Operating income rose 24% to $1.4 billion, and adjusted operating income was $1.4 billion, an increase of 17% versus a year ago.

Marsh's revenue in the first quarter was $2.7 billion, an increase of 9% on an underlying basis. In U.S./Canada, underlying revenue rose 7%. International operations produced underlying revenue growth of 10%, reflecting 11% growth in Asia Pacific, 10% growth in EMEA, and 10% growth in Latin America.

Guy Carpenter's revenue in the first quarter was $1.1 billion, an increase of 10% on an underlying basis.

Consulting

Consulting revenue was $2.0 billion in the first quarter of 2023, an increase of 1%, or 5% on an underlying basis. Operating income increased 5% to $411 million, while adjusted operating income increased 1% to $406 million.

Mercer's revenue in the first quarter was $1.3 billion, an increase of 7% on an underlying basis. Health revenue of $545 million increased 12% on an underlying basis. Wealth revenue of $581 million increased 2% on an underlying basis. Career revenue of $218 million was up 12% on an underlying basis.

Oliver Wyman’s revenue in the first quarter was $687 million, flat on an underlying basis.

Other Items

The Company repurchased 1.8 million shares of stock for $300 million in the first quarter of 2023.

In the first quarter of 2023, the Company issued $600 million of 30-year senior notes.

In April, Mercer Australia completed the merger of BT Super into the Mercer Super Trust, as well as the acquisition of Advance Asset Management Limited.

Conference Call

A conference call to discuss first quarter 2023 results will be held today at 8:30 a.m. Eastern time. The live audio webcast may be accessed at marshmclennan.com. A replay of the webcast will be available approximately two hours after the event. The webcast is listen-only. Those interested in participating in the question-and-answer session may register here to receive the dial-in numbers and unique PIN to access the call.

About Marsh McLennan

Marsh McLennan (NYSE: MMC) is the world’s leading professional services firm in the areas of risk, strategy and people. The Company’s more than 85,000 colleagues advise clients in 130 countries. With annual revenue of over $20 billion, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses. Marsh provides data-driven risk advisory services and insurance solutions to commercial and consumer clients. Guy Carpenter develops advanced risk, reinsurance and capital strategies that help clients grow profitably and pursue emerging opportunities. Mercer delivers advice and technology-driven solutions that help organizations redefine the world of work, reshape retirement and investment outcomes, and unlock health and well being for a changing workforce. Oliver Wyman serves as a critical strategic, economic and brand advisor to private sector and governmental clients. For more information, visit marshmclennan.com or follow us on LinkedIn and Twitter.

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains "forward-looking statements," as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management's current views concerning future events or results, use words like "anticipate," "assume," "believe," "continue," "estimate," "expect," "intend," "plan," "project" and similar terms, and future or conditional tense verbs like "could," "may," "might," "should," "will" and "would".

Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. Factors that could materially affect our future results include, among other things:

  • the impact of geopolitical or macroeconomic conditions on us, our clients and the countries and industries in which we operate, including from conflicts such as the war in Ukraine, slower GDP growth or recession, capital markets volatility, instability in the banking sector and inflation;
  • the increasing prevalence of ransomware, supply chain and other forms of cyber attacks, and their potential to disrupt our operations, or the operations of our third party vendors, and result in the disclosure of confidential client or company information;
  • the impact from lawsuits or investigations arising from errors and omissions, breaches of fiduciary duty or other claims against us in our capacity as a broker or investment advisor, including claims related to our investment business’ ability to execute timely trades;
  • the financial and operational impact of complying with laws and regulations, including domestic and international sanctions regimes, anti-corruption laws such as the U.S. Foreign Corrupt Practices Act, U.K. Anti Bribery Act and cybersecurity and data privacy regulations;
  • our ability to attract, retain and develop industry leading talent;
  • our ability to compete effectively and adapt to competitive pressures in each of our businesses, including from disintermediation as well as technological change, digital disruption and other types of innovation;
  • our ability to manage potential conflicts of interest, including where our services to a client conflict, or are perceived to conflict, with the interests of another client or our own interests;
  • the impact of changes in tax laws, guidance and interpretations, such as the implementation of the Organization for Economic Cooperation and Development international tax framework, or disagreements with tax authorities; and
  • the regulatory, contractual and reputational risks that arise based on insurance placement activities and insurer revenue streams.

The factors identified above are not exhaustive. Marsh McLennan and its subsidiaries (collectively, the "Company") operate in a dynamic business environment in which new risks emerge frequently. Accordingly, we caution readers not to place undue reliance on any forward-looking statements, which are based only on information currently available to us and speak only as of the dates on which they are made. The Company undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date on which it is made.

Further information concerning Marsh McLennan and its businesses, including information about factors that could materially affect our results of operations and financial condition, is contained in the Company's filings with the Securities and Exchange Commission, including the "Risk Factors" section and the "Management’s Discussion and Analysis of Financial Condition and Results of Operations" section of our most recently filed Annual Report on Form 10-K.

 

Marsh & McLennan Companies, Inc.
Consolidated Statements of Income
(In millions, except per share data)
(Unaudited)

 

 

 

Three Months Ended
March 31,

 

 

2023

 

2022

Revenue

 

$

5,924

 

 

$

5,549

 

Expense:

 

 

 

 

Compensation and benefits

 

 

3,207

 

 

 

3,100

 

Other operating expenses

 

 

991

 

 

 

1,004

 

Operating expenses

 

 

4,198

 

 

 

4,104

 

Operating income

 

 

1,726

 

 

 

1,445

 

Other net benefit credits

 

 

58

 

 

 

62

 

Interest income

 

 

14

 

 

 

1

 

Interest expense

 

 

(136

)

 

 

(110

)

Investment income

 

 

2

 

 

 

26

 

Income before income taxes

 

 

1,664

 

 

 

1,424

 

Income tax expense

 

 

412

 

 

 

338

 

Net income before non-controlling interests

 

 

1,252

 

 

 

1,086

 

Less: Net income attributable to non-controlling interests

 

 

17

 

 

 

15

 

Net income attributable to the Company

 

$

1,235

 

 

$

1,071

 

Net income per share attributable to the Company:

 

 

 

 

- Basic

 

$

2.50

 

 

$

2.13

 

- Diluted

 

$

2.47

 

 

$

2.10

 

Average number of shares outstanding:

 

 

 

 

- Basic

 

 

495

 

 

 

503

 

- Diluted

 

 

500

 

 

 

509

 

Shares outstanding at March 31

 

 

495

 

 

 

502

 

 

Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Three Months Ended March 31
(Millions) (Unaudited)

The Company conducts business in 130 countries. As a result, foreign exchange rate movements may impact period-to-period comparisons of revenue. Similarly, certain other items such as acquisitions and dispositions, including transfers among businesses, may impact period-to-period comparisons of revenue. Non-GAAP underlying revenue measures the change in revenue from one period to the next by isolating these impacts.

 

 

 

 

 

 

Components of Revenue Change*

 

 

Three Months Ended
March 31,

 

% Change
GAAP
Revenue*

 

Currency
Impact

 

Acquisitions/
Dispositions/
Other Impact**

 

Non-GAAP
Underlying
Revenue

 

 

2023

 

2022

 

Risk and Insurance Services

 

 

 

 

 

 

 

 

 

 

 

 

Marsh

 

$

2,744

 

 

$

2,546

 

 

8%

 

(3)%

 

2%

 

9%

Guy Carpenter

 

 

1,071

 

 

 

999

 

 

7%

 

(2)%

 

(1)%

 

10%

Subtotal

 

 

3,815

 

 

 

3,545

 

 

8%

 

(3)%

 

1%

 

9%

Fiduciary interest income

 

 

91

 

 

 

4

 

 

 

 

 

 

 

 

 

Total Risk and Insurance Services

 

 

3,906

 

 

 

3,549

 

 

10%

 

(3)%

 

1%

 

11%

Consulting

 

 

 

 

 

 

 

 

 

 

 

 

Mercer

 

 

1,344

 

 

 

1,343

 

 

 

(4)%

 

(3)%

 

7%

Oliver Wyman Group

 

 

687

 

 

 

667

 

 

3%

 

(2)%

 

5%

 

Total Consulting

 

 

2,031

 

 

 

2,010

 

 

1%

 

(3)%

 

(1)%

 

5%

Corporate Eliminations

 

 

(13

)

 

 

(10

)

 

 

 

 

 

 

 

 

Total Revenue

 

$

5,924

 

 

$

5,549

 

 

7%

 

(3)%

 

1%

 

9%

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue Details

The following table provides more detailed revenue information for certain of the components presented above:

 

 

 

 

 

 

Components of Revenue Change*

 

 

Three Months Ended
March 31,

 

% Change
GAAP
Revenue*

 

Currency
Impact

 

Acquisitions/
Dispositions/
Other Impact**

 

Non-GAAP
Underlying
Revenue

 

 

2023

 

2022

 

Marsh:

 

 

 

 

 

 

 

 

 

 

 

 

EMEA (a)

 

$

932

 

$

869

 

7%

 

(6)%

 

3%

 

10%

Asia Pacific (a)

 

 

312

 

 

294

 

6%

 

(5)%

 

 

11%

Latin America

 

 

115

 

 

104

 

11%

 

 

 

10%

Total International

 

 

1,359

 

 

1,267

 

7%

 

(5)%

 

2%

 

10%

U.S./Canada

 

 

1,385

 

 

1,279

 

8%

 

 

2%

 

7%

Total Marsh

 

$

2,744

 

$

2,546

 

8%

 

(3)%

 

2%

 

9%

Mercer:

 

 

 

 

 

 

 

 

 

 

 

 

Wealth

 

$

581

 

$

617

 

(6)%

 

(5)%

 

(4)%

 

2%

Health

 

 

545

 

 

524

 

4%

 

(3)%

 

(5)%

 

12%

Career

 

 

218

 

 

202

 

8%

 

(4)%

 

 

12%

Total Mercer

 

$

1,344

 

$

1,343

 

 

(4)%

 

(3)%

 

7%

(a)

Starting In the first quarter of 2023, the Company began reporting the Marsh India operations in EMEA. Prior year results for India have been reclassified from Asia Pacific to EMEA for comparative purposes.

*

Rounded to whole percentages. Components of revenue may not add due to rounding.

**

Acquisitions, dispositions, and other includes the impact of current and prior year items excluded from the calculation of non-GAAP underlying revenue for comparability purposes. Details on these items are provided in the reconciliation of non-GAAP revenue to GAAP revenue tables included in this release.

 

Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three Months Ended March 31
(Millions) (Unaudited)

Overview

The Company reports its financial results in accordance with accounting principles generally accepted in the United States (referred to in this release as in accordance with "GAAP" or "reported" results). The Company also refers to and presents certain additional non-GAAP financial measures, within the meaning of Regulation G and item 10(e) Regulation S-K in accordance with the Securities Exchange Act of 1934. These measures are: non-GAAP revenue,adjusted operating income (loss), adjusted operating margin, adjusted income, net of tax and adjusted earnings per share (EPS). The Company has included reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with GAAP in the following tables.

The Company believes these non-GAAP financial measures provide useful supplemental information that enables investors to better compare the Company’s performance across periods. Management also uses these measures internally to assess the operating performance of its businesses and to decide how to allocate resources. However, investors should not consider these non-GAAP measures in isolation from, or as a substitute for, the financial information that the Company reports in accordance with GAAP. The Company's non-GAAP measures include adjustments that reflect how management views its businesses, and may differ from similarly titled non-GAAP measures presented by other companies.

Adjusted Operating Income (Loss) and Adjusted Operating Margin

Adjusted operating income (loss) is calculated by excluding the impact of certain noteworthy items from the Company's GAAP operating income (loss). The following tables identify these noteworthy items and reconcile adjusted operating income (loss) to GAAP operating income (loss), on a consolidated and reportable segment basis, for the three months ended March 31, 2023 and 2022. The following tables also present adjusted operating margin. For the three months ended March 31, 2023 and 2022, adjusted operating margin is calculated by dividing the sum of adjusted operating income and identified intangible asset amortization by consolidated or segment adjusted revenue. The Company's adjusted revenue used in the determination of adjusted operating margin is calculated by excluding the impact of certain noteworthy items from the Company's GAAP revenue.

 

 

 

Risk & Insurance
Services

 

Consulting

 

Corporate/
Eliminations

 

Total

Three Months Ended March 31, 2023

 

 

 

 

 

 

 

 

Operating income (loss)

 

$

1,395

 

 

$

411

 

 

$

(80

)

 

$

1,726

 

Operating margin

 

 

35.7

%

 

 

20.2

%

 

 

N/A

 

 

 

29.1

%

Add (deduct) impact of noteworthy items:

 

 

 

 

 

 

 

 

Restructuring, excluding JLT (a)

 

 

19

 

 

 

9

 

 

 

12

 

 

 

40

 

Changes in contingent consideration (b)

 

 

6

 

 

 

1

 

 

 

 

 

 

7

 

JLT integration and restructuring costs (c)

 

 

13

 

 

 

 

 

 

 

 

 

13

 

JLT legacy legal charges (d)

 

 

 

 

 

(51

)

 

 

 

 

 

(51

)

Pre-acquisition related costs (e)

 

 

 

 

 

17

 

 

 

 

 

 

17

 

Disposal of business (f)

 

 

 

 

 

19

 

 

 

 

 

 

19

 

Operating income adjustments

 

 

38

 

 

 

(5

)

 

 

12

 

 

 

45

 

Adjusted operating income (loss)

 

$

1,433

 

 

$

406

 

 

$

(68

)

 

$

1,771

 

Total identified intangible amortization expense

 

$

74

 

 

$

11

 

 

$

 

 

$

85

 

Adjusted operating margin

 

 

38.6

%

 

 

20.3

%

 

 

N/A

 

 

 

31.2

%

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2022

 

 

 

 

 

 

 

 

Operating income (loss)

 

$

1,121

 

 

$

392

 

 

$

(68

)

 

$

1,445

 

Operating margin

 

 

31.6

%

 

 

19.5

%

 

 

N/A

 

 

 

26.0

%

Add (deduct) impact of noteworthy items:

 

 

 

 

 

 

 

 

Restructuring, excluding JLT (a)

 

 

9

 

 

 

2

 

 

 

7

 

 

 

18

 

Changes in contingent consideration (b)

 

 

10

 

 

 

 

 

 

 

 

 

10

 

JLT integration and restructuring costs (c)

 

 

6

 

 

 

5

 

 

 

1

 

 

 

12

 

JLT legacy legal charges (d)

 

 

 

 

 

(10

)

 

 

 

 

 

(10

)

JLT acquisition-related costs and other (g)

 

 

12

 

 

 

1

 

 

 

 

 

 

13

 

Legal claims (h)

 

 

30

 

 

 

 

 

 

 

 

 

30

 

Deconsolidation of Russian businesses and other related charges (i)

 

 

40

 

 

 

12

 

 

 

 

 

 

52

 

Operating income adjustments

 

 

107

 

 

 

10

 

 

 

8

 

 

 

125

 

Adjusted operating income (loss)

 

$

1,228

 

 

$

402

 

 

$

(60

)

 

$

1,570

 

Total identified intangible amortization expense

 

$

78

 

 

$

13

 

 

$

 

 

$

91

 

Adjusted operating margin

 

 

36.5

%

 

 

20.6

%

 

 

N/A

 

 

 

29.7

%

(a)

In 2023, costs primarily include severance and lease exit charges for activities focused on workforce actions, rationalization of technology and functional resources, and reductions in real estate. Costs also reflect charges for Marsh's operational excellence program.

(b)

Change in fair value of contingent consideration related to acquisitions and dispositions measured each quarter.

(c)

Reflects adjustments to restructuring liabilities for future rent under non-cancelable leases for a legacy JLT U.K. location.

(d)

Reflects insurance and indemnity recoveries for a legacy JLT E&O matter relating to suitability of advice provided to individuals for defined benefit pension transfers in the U.K.

(e)

Integration costs for the Westpac superannuation fund transaction in Australia, which closed on April 1, 2023.

(f)

Loss on sale of a small individual financial advisory business in Canada. This amount is included in revenue in the consolidated statements of income and excluded from non-GAAP revenue and adjusted revenue used in the calculation of adjusted operating margin.

(g)

Retention costs and legal charges related to the acquisition of JLT.

(h)

Settlement charges and legal costs related to strategic recruiting.

(i)

Loss on deconsolidation of Russian businesses and other related charges. The loss on deconsolidation of $39 million is included in revenue in the consolidated statements of income and excluded from non-GAAP revenue and adjusted revenue used in the calculation of adjusted operating margin. The remaining expense charges of $13 million are included in other operating expenses in the consolidated statements of income.

 

Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three Months Ended March 31
(In millions, except per share data)
(Unaudited)

Adjusted income, net of tax is calculated as the Company's GAAP income from continuing operations, adjusted to reflect the after tax impact of the operating income adjustments in the preceding tables and the additional items listed below. Adjusted EPS is calculated by dividing the Company’s adjusted income, net of tax, by the average number of shares outstanding-diluted for the relevant period. The following tables reconcile adjusted income, net of tax to GAAP income from continuing operations and adjusted EPS to GAAP EPS for the three months ended March 31, 2023 and 2022.

 

 

 

 

Three Months Ended
March 31, 2023

 

Three Months Ended
March 31, 2022

 

Amount

 

Adjusted
EPS

 

Amount

 

Adjusted
EPS

Net income before non-controlling interests, as reported

 

 

$

1,252

 

 

 

 

 

$

1,086

 

 

Less: Non-controlling interest, net of tax

 

 

 

17

 

 

 

 

 

 

15

 

 

Subtotal

 

 

$

1,235

 

$

2.47

 

 

 

$

1,071

 

$

2.10

Operating income adjustments

$

45

 

 

 

 

 

 

$

125

 

 

 

 

 

Investments adjustment (a)

 

2

 

 

 

 

 

 

 

(9

)

 

 

 

 

Income tax effect of adjustments (b)

 

(16

)

 

 

 

 

 

 

(18

)

 

 

 

 

 

 

 

 

31

 

 

0.06

 

 

 

 

98

 

 

0.20

Adjusted income, net of tax

 

 

$

1,266

 

$

2.53

 

 

 

$

1,169

 

$

2.30

(a)

Represents mark-to-market losses and gains.

(b)

For items with an income tax impact, the tax effect was calculated using an effective tax rate based on the tax jurisdiction for each item.

 

Marsh & McLennan Companies, Inc.
Supplemental Information
Three Months Ended March 31
(Millions) (Unaudited)

 

 

Three Months Ended
March 31,

 

2023

 

2022

Consolidated

 

 

 

Compensation and benefits

$

3,207

 

$

3,100

Other operating expenses

 

991

 

 

1,004

Total expenses

$

4,198

 

$

4,104

 

 

 

 

Depreciation and amortization expense

$

84

 

$

89

Identified intangible amortization expense

 

85

 

 

91

Total

$

169

 

$

180

 

 

 

 

Risk and Insurance Services

 

 

 

Compensation and benefits

$

1,880

 

$

1,801

Other operating expenses

 

631

 

 

627

Total expenses

$

2,511

 

$

2,428

 

 

 

 

Depreciation and amortization expense

$

37

 

$

43

Identified intangible amortization expense

 

74

 

 

78

Total

$

111

 

$

121

 

 

 

 

Consulting

 

 

 

Compensation and benefits

$

1,168

 

$

1,164

Other operating expenses

 

452

 

 

454

Total expenses

$

1,620

 

$

1,618

 

 

 

 

Depreciation and amortization expense

$

21

 

$

26

Identified intangible amortization expense

 

11

 

 

13

Total

$

32

 

$

39

 

Marsh & McLennan Companies, Inc.
Consolidated Balance Sheets
(Millions)

 

 

 

(Unaudited)
M
arch 31,
2023

 

December 31,
2022

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,006

 

 

$

1,442

 

Net receivables

 

 

6,700

 

 

 

5,852

 

Other current assets

 

 

1,407

 

 

 

1,005

 

Total current assets

 

 

9,113

 

 

 

8,299

 

 

 

 

 

 

Goodwill and intangible assets

 

 

18,752

 

 

 

18,788

 

Fixed assets, net

 

 

867

 

 

 

871

 

Pension related assets

 

 

2,200

 

 

 

2,127

 

Right of use assets

 

 

1,586

 

 

 

1,562

 

Deferred tax assets

 

 

369

 

 

 

358

 

Other assets

 

 

1,471

 

 

 

1,449

 

TOTAL ASSETS

 

$

34,358

 

 

$

33,454

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Short-term debt

 

$

2,111

 

 

$

268

 

Accounts payable and accrued liabilities

 

 

3,406

 

 

 

3,278

 

Accrued compensation and employee benefits

 

 

1,443

 

 

 

3,095

 

Current lease liabilities

 

 

306

 

 

 

310

 

Accrued income taxes

 

 

356

 

 

 

221

 

Dividends payable

 

 

292

 

 

 

 

Total current liabilities

 

 

7,914

 

 

 

7,172

 

 

 

 

 

 

Fiduciary liabilities

 

 

10,834

 

 

 

10,660

 

Less - cash and cash equivalents held in a fiduciary capacity

 

 

(10,834

)

 

 

(10,660

)

 

 

 

 

 

 

 

Long-term debt

 

 

10,841

 

 

 

11,227

 

Pension, post-retirement and post-employment benefits

 

 

896

 

 

 

921

 

Long-term lease liabilities

 

 

1,723

 

 

 

1,667

 

Liabilities for errors and omissions

 

 

355

 

 

 

355

 

Other liabilities

 

 

1,433

 

 

 

1,363

 

 

 

 

 

 

Total equity

 

 

11,196

 

 

 

10,749

 

TOTAL LIABILITIES AND EQUITY

 

$

34,358

 

 

$

33,454

 

 

Marsh & McLennan Companies, Inc.
Consolidated Statements of Cash Flows
(Millions) (Unaudited)

 

 

Three Months Ended
March 31,

 

 

2023

 

2022

Operating cash flows:

 

 

 

Net income before non-controlling interests

$

1,252

 

 

$

1,086

 

Adjustments to reconcile net income to cash provided by operations:

 

 

 

Depreciation and amortization

 

169

 

 

 

180

 

Non-cash lease expense

 

73

 

 

 

77

 

Deconsolidation of Russian businesses

 

 

 

 

39

 

Share-based compensation expense

 

99

 

 

 

105

 

Net loss (gain) on investments, disposition of assets and other

 

27

 

 

 

(17

)

 

 

 

 

Changes in assets and liabilities:

 

 

 

Accrued compensation and employee benefits

 

(1,670

)

 

 

(1,528

)

Provision for taxes, net of payments and refunds

 

189

 

 

 

144

 

Net receivables

 

(775

)

 

 

(429

)

Other changes to assets and liabilities

 

(29

)

 

 

(150

)

Contributions to pension and other benefit plans in excess of current year credit

 

(75

)

 

 

(125

)

Operating lease liabilities

 

(79

)

 

 

(84

)

Net cash used for operations

 

(819

)

 

 

(702

)

Financing cash flows:

 

 

 

Purchase of treasury shares

 

(300

)

 

 

(500

)

Borrowings from term-loan and credit facilities

 

250

 

 

 

 

Net proceeds from issuance of commercial paper

 

594

 

 

 

825

 

Proceeds from issuance of debt

 

589

 

 

 

 

Repayments of debt

 

(4

)

 

 

(4

)

Net issuance of common stock from treasury shares

 

(94

)

 

 

(100

)

Net distributions of non-controlling interests and deferred/contingent consideration

 

(14

)

 

 

(20

)

Dividends paid

 

(296

)

 

 

(272

)

Increase in fiduciary liabilities

 

48

 

 

 

926

 

Net cash provided by financing activities

 

773

 

 

 

855

 

Investing cash flows:

 

 

 

Capital expenditures

 

(84

)

 

 

(122

)

Purchases of long term investments and other

 

(1

)

 

 

(9

)

Dispositions

 

(20

)

 

 

(4

)

Acquisitions, net of cash and cash held in a fiduciary capacity acquired

 

(263

)

 

 

(24

)

Net cash used for investing activities

 

(368

)

 

 

(159

)

Effect of exchange rate changes on cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity

 

152

 

 

 

(136

)

Decrease in cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity

 

(262

)

 

 

(142

)

Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at beginning of period

 

12,102

 

 

 

11,375

 

Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at end of period

$

11,840

 

 

$

11,233

 

Reconciliation of cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity to the Consolidated Balance Sheets

Balance at March 31,

2023

 

2022

(In millions)

 

 

 

Cash and cash equivalents

$

1,006

 

$

772

Cash and cash equivalents held in a fiduciary capacity

 

10,834

 

 

10,461

Total cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity

$

11,840

 

$

11,233

 

Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three Months Ended March 31
(Millions) (Unaudited)

Non-GAAP revenue isolates the impact of foreign exchange rate movements and certain transaction-related items from the current period GAAP revenue. The non-GAAP revenue measure is presented on a constant currency basis, excluding the impact of foreign currency fluctuations. The Company isolates the impact of foreign exchange rate movements period over period, by translating the current period foreign currency GAAP revenue into U.S. Dollars based on the difference in the current and corresponding prior period exchange rates. Similarly, certain other items such as acquisitions and dispositions, including transfers among businesses, may impact period over period comparisons of revenue and are consistently excluded from current and prior period GAAP revenues for comparability purposes. Percentage changes, referred to as non-GAAP underlying revenue, are calculated by dividing the period over period change in non-GAAP revenue by the prior period non-GAAP revenue.

The following table provides the reconciliation of GAAP revenue to non-GAAP revenue:

 

 

2023

 

2022

Three Months Ended March 31,

 

GAAP
Revenue

 

Currency
Impact

 

Acquisitions/
Dispositions/
Other Impact

 

Non-GAAP
Revenue

 

GAAP
Revenue

 

Acquisitions/
Dispositions/
Other Impact

 

Non-GAAP
Revenue

Risk and Insurance Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marsh (a)

 

$

2,744

 

 

$

71

 

$

(24

)

 

$

2,791

 

 

$

2,546

 

 

$

22

 

 

$

2,568

 

Guy Carpenter

 

 

1,071

 

 

 

18

 

 

(14

)

 

 

1,075

 

 

 

999

 

 

 

(19

)

 

 

980

 

Subtotal

 

 

3,815

 

 

 

89

 

 

(38

)

 

 

3,866

 

 

 

3,545

 

 

 

3

 

 

 

3,548

 

Fiduciary interest income

 

 

91

 

 

 

2

 

 

 

 

 

93

 

 

 

4

 

 

 

 

 

 

4

 

Total Risk and Insurance Services

 

 

3,906

 

 

 

91

 

 

(38

)

 

 

3,959

 

 

 

3,549

 

 

 

3

 

 

 

3,552

 

Consulting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mercer (b)

 

 

1,344

 

 

 

50

 

 

19

 

 

 

1,413

 

 

 

1,343

 

 

 

(27

)

 

 

1,316

 

Oliver Wyman Group (a)

 

 

687

 

 

 

16

 

 

(24

)

 

 

679

 

 

 

667

 

 

 

11

 

 

 

678

 

Total Consulting

 

 

2,031

 

 

 

66

 

 

(5

)

 

 

2,092

 

 

 

2,010

 

 

 

(16

)

 

 

1,994

 

Corporate Eliminations

 

 

(13

)

 

 

 

 

 

 

 

(13

)

 

 

(10

)

 

 

 

 

 

(10

)

Total Revenue

 

$

5,924

 

 

$

157

 

$

(43

)

 

$

6,038

 

 

$

5,549

 

 

$

(13

)

 

$

5,536

 

(a)

Acquisitions, dispositions, and other in 2022 includes the loss on deconsolidation of the Company's Russian businesses at Marsh of $27 million and Oliver Wyman Group of $12 million.

(b)

Acquisitions, dispositions and other in 2023 includes the loss on sale of a small individual financial advisory business in Canada of $19 million.

 

Revenue Details

The following table provides more detailed revenue information for certain of the components presented above:

 

 

2023

 

2022

Three Months Ended March 31,

 

GAAP
Revenue

 

Currency
Impact

 

Acquisitions/
Dispositions/
Other Impact

 

Non-GAAP
Revenue

 

GAAP
Revenue

 

Acquisitions/
Dispositions/
Other Impact

 

Non-GAAP
Revenue

Marsh:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EMEA (c) (d)

 

$

932

 

$

50

 

$

(3

)

 

$

979

 

$

869

 

$

22

 

 

$

891

Asia Pacific (c)

 

 

312

 

 

15

 

 

(1

)

 

 

326

 

 

294

 

 

 

 

 

294

Latin America

 

 

115

 

 

 

 

 

 

 

115

 

 

104

 

 

 

 

 

104

Total International

 

 

1,359

 

 

65

 

 

(4

)

 

 

1,420

 

 

1,267

 

 

22

 

 

 

1,289

U.S./Canada

 

 

1,385

 

 

6

 

 

(20

)

 

 

1,371

 

 

1,279

 

 

 

 

 

1,279

Total Marsh

 

$

2,744

 

$

71

 

$

(24

)

 

$

2,791

 

$

2,546

 

$

22

 

 

$

2,568

Mercer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wealth (e)

 

$

581

 

$

28

 

$

21

 

 

$

630

 

$

617

 

$

(2

)

 

$

615

Health

 

 

545

 

 

14

 

 

(1

)

 

 

558

 

 

524

 

 

(25

)

 

 

499

Career

 

 

218

 

 

8

 

 

(1

)

 

 

225

 

 

202

 

 

 

 

 

202

Total Mercer

 

$

1,344

 

$

50

 

$

19

 

 

$

1,413

 

$

1,343

 

$

(27

)

 

$

1,316

(c)

Starting in the first quarter of 2023, the Company began reporting the Marsh India operations in EMEA. Prior year results for India have been reclassified from Asia Pacific to EMEA for comparative purposes.

(d)

Acquisitions, dispositions, and other in 2022 includes the loss on deconsolidation of the Company's Russian businesses of $27 million.

(e)

Acquisitions, dispositions, and other in 2023 includes the loss on sale of a small individual financial advisory business in Canada of $19 million.

Media Contact:
Erick R. Gustafson
Marsh McLennan
+1 202 263 7788
erick.gustafson@mmc.com

Investor Contact:
Sarah DeWitt
Marsh McLennan
+1 212 345 6750
sarah.dewitt@mmc.com 

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