Marsh McLennan (MRSH) Q3 2024 earnings summary

Executive summary

• Achieved 6% GAAP revenue growth and 5% underlying revenue growth in Q3 2024, with strong execution in Risk & Insurance Services and Consulting.

• Q3 net income was $747M, with diluted EPS up 3% to $1.51 and adjusted EPS up 4% to $1.63; nine-month net income was $3.3B.

• Announced $7.75B acquisition of McGriff Insurance Services, expected to close by year-end, funded by cash and new debt, and expected to be modestly accretive to adjusted EPS in year one.

• Year-to-date, nearly $10B committed to acquisitions, including McGriff and other strategic deals, marking the largest M&A year in company history.

• Repurchased 4.3M shares for $900M year-to-date; quarterly dividend raised to $0.815 per share.

Financial highlights

• Q3 consolidated revenue was $5.7B (+6%); nine-month revenue was $18.4B (+7%).

• Q3 operating income was $1.1B (+11%); adjusted operating income was $1.2B (+12%).

• Q3 adjusted EPS was $1.63, up 4% year-over-year, or 11% excluding a discrete tax benefit last year; nine-month adjusted EPS was $6.93, up 10%.

• Q3 net income margin was 13.1%; nine-month net income margin was 17.8%.

• Completed $300M in share repurchases in Q3; $900M YTD.

Outlook and guidance

• Expect mid-single-digit or better underlying revenue growth, margin expansion, and strong adjusted EPS growth for full year 2024, assuming current macro conditions persist.

• Integration of McGriff expected to enhance capabilities and growth; $500M deferred tax asset assumed.

• Restructuring activities expected to total $650M in charges, with $540M incurred through Q3 2024; over $500M in savings anticipated, mostly by end of 2024.

• Plan to pause share repurchases in Q4 due to the McGriff acquisition, but expect to maintain a balanced capital management approach in 2025.

• Anticipate continued strong free cash flow growth aligned with earnings growth.