WTW Financial Performance Analysis
Revenue Analysis
Total and Operating Revenue: Over the past three years, WTW’s Total Revenue showed a notable fluctuation. The Total Revenue was the highest in 2023-12-31 at $2,914,000,000 and lowest in 2023-09-30 at $2,166,000,000. Operating Revenue followed a similar pattern but with the highest value at $3,453,000,000 on 2023-12-31.
Gross Profit Margin: Gross Profit has seen significant growth, increasing from $807,000,000 on 2023-09-30 to $999,000,000 on 2024-03-31. This suggests an improvement in the efficiency of the cost of goods sold or an increase in selling prices.
Cost Management
Cost of Revenue: The cost of revenue as a part of total revenue has decreased slightly in the most recent year, indicative of potentially improved operational efficiency.
Operating Expense and Total Expenses: Operating expenses peaked in 2023-03-31 at $584,000,000, aligning closely with a higher operating revenue in the same period. Total Expenses were highest at $1,918,000,000 on 2023-12-31.
Profitability Analysis
EBITDA: WTW’s EBITDA was highest on 2023-12-31 at $920,000,000 but reduced in the latter periods, down to $425,000,000 by 2024-03-31, indicating potential challenges in maintaining operational profitability.
Operating Income: Operating Income peaks at the end of 2023, totaling $856,000,000, showing suitable overhead control relative to revenue during this period.
Pretax and Net Income: Pretax income hovered around the figures between $120,000,000 and $739,000,000 across the periods. Net income shows a declining trend from $623,000,000 in 2023-12 to $190,000,000 by 2024-03-31, which may raise concerns regarding the company’s future profitability.
Cash Flow Indicators
Reconciled Depreciation: Depreciation costs were consistent around $119,000,000 to $134,000,000, representing stable capital expenditure on assets.
Interest Expense: The interest expense was stable, fluctuating slightly around $60,000,000 to $64,000,000, suggesting a manageable level of debt.
Taxation
Tax Rate: WTW’s effective tax rate varied from 0.155 to 0.199 across the periods, with a trend towards higher rates in more recent periods.
Tax Provision: Tax Provision saw a relatively proportionate increase with pretax income, indicating consistent statutory compliance.
Tax Effect of Unusual Items: The tax effect of unusual items varied considerably, showing values aligning closely with fluctuations in operating profit and unusual expenses.
Shareholder Metrics
Diluted and Basic EPS: Both Diluted and Basic EPS have shown considerable variation, with the highest EPS of 6.02 on 2023-12-31, which then dropped significantly to 1.83 by 2024-03-31.
Average Shares: There has been slight fluctuation in the number of average shares, which might influence the EPS calculation.
Net Income Available to Common Stockholders: There has been a decrease in net income available to common stockholders, particularly noticeable in the 2024-03-31 period.
Conclusion
WTW has shown fluctuation in revenue and profitability metrics over the past three years with significant peaks and troubling drops especially in net income metrics. The firm’s ability to manage expenses relative to revenue fluctuates, although the cost management appears robust. Based on these observations, WTW may need to explore strategic initiatives to bolster revenue growth, reduce cost pressures, or possibly improve operational efficiency to sustain profitability.