Aon reported results. Net income for the three months ended June 30, 2024 attributable to Aon shareholders decreased 9% to $2.46 per share on a diluted basis, compared to $2.71 per share on a diluted basis, in the prior year period.
Cash flows provided by operations for the first six months of 2024 decreased $309 mn to $822 mn compared to the prior year period, primarily due to higher receivables
Free cash flow, defined as cash flows from operations less capital expenditures, decreased 27%, to $721 mn for the first six months of 2024 compared to the prior year period, reflecting a decrease in cash flows provided by operations, partially offset by a $44 mn decrease in capital expenditures compared to the prior year period, which was elevated due to the timing of projects and investments within the year.
Aon’s Q2 Key Metrics
- Total revenue increased 18% to $3.8 bn, including organic revenue growth of 6%
- Operating margin decreased 910 basis points to 17.4%, and adjusted operating margin increased 10 basis points to 27.4%
- EPS decreased 9% to $2.46, and adjusted EPS increased 6% to $2.93
- For the first six months of 2024, cash flows from operations decreased 27% to $822 mn, and free cash flow decreased 27% to $721 mn
Adjusted net income per share attributable to Aon shareholders increased 6% to $2.93 on a diluted basis, including an unfavorable impact of $0.06 per share if prior year period results were translated at current period foreign exchange rates, compared to $2.76 in the prior year period.
Our colleagues delivered excellent results in the second quarter, with 6% organic revenue growth, adjusted operating margin expansion and 19% growth in adjusted operating income
Greg Case, CEO of Aon
“We welcomed our new NFP colleagues to the firm, and we’re even more excited about the opportunities we see to better serve our clients, through shared expertise, content, and capabilities enabled by Aon Business Services,” Greg Case said.
Three Months Ended June 30, 2024 Financial Data
| Category | 2024, mn $ | 2023, mn $ | % Change |
| Commercial Risk Solutions | 2015 | 1774 | 14 |
| Reinsurance Solutions | 635 | 607 | 5 |
| Health Solutions | 662 | 447 | 48 |
| Wealth Solutions | 463 | 352 | 32 |
| Eliminations | -15 | -3 | N/A |
| Total revenue | 3760 | 3177 | 18 |
Total operating expenses in the second quarter increased 33% to $3.1 bn compared to the prior year period due primarily to the inclusion of NFP’s ongoing operating expenses, Accelerating Aon United restructuring program charges, an increase in expense associated with 6% organic revenue growth, and investments in long-term growth, partially offset by $25 mn of restructuring savings realized in the quarter and a $9 mn favorable impact from foreign currency translation.
Total revenue in the second quarter increased 18% to $3.8 bn compared to the prior year period, reflecting acquired revenues from NFP and 6% organic revenue growth, partially offset by a 1% unfavorable impact from foreign currency translation.
Foreign currency translation in the second quarter had a $11 mn, or $0.05 per share, unfavorable impact on U.S. GAAP net income and a $12 mn, or $0.06 per share, unfavorable impact on adjusted net income.
Effective tax rate was 22.9% in the second quarter compared to 12.6% in the prior year period. After adjusting to exclude the applicable tax impact associated with certain non-GAAP adjustments, the adjusted effective tax rate for the second quarter of 2024 was 22.2% compared to 17.6% in the prior year period.
The primary drivers of the change in the adjusted effective tax rate were the changes in the geographical distribution of income and a net unfavorable impact from discrete items.
Weighted average diluted shares outstanding increased to 213.3 mn in the second quarter compared to 206.3 mn in the prior year period due to the issuance of 19.0 million shares to fund NFP.
The Company repurchased 0.8 mn class A ordinary shares for approximately $250 mn in the second quarter. As of June 30, 2024, the Company had approximately $2.8 bn of remaining authorization under its share repurchase program.
