Stock in Focus: Aon plc (NYSE: AON)
LONDON, January 18, 2019 – Shares of Aon plc (NYSE: AON) showed the bullish trend with a higher momentum of 0.63% to $211.48. The company traded total volume of 124.468K shares as contrast to its average volume of 832.81K shares. The company has a market value of $49.01B and about 233.21M shares outstanding.
Aon plc (NYSE: AON) reported that net income from continuing operations attributable to Aon shareholders was $223.0M, or $0.93 per share, compared to $149.0M, or $0.61 per share, in the prior year period. Net income per share from continuing operations attributable to Aon shareholders, adjusted for certain items, increased 11% to $1.45, including an unfavorable impact of $0.02 per share if the company were to translate prior year period results at current period foreign exchange rates (“foreign currency translation”), compared to $1.31 in the prior year period.
THIRD QUARTER 2019 FINANCIAL SUMMARY
Total revenue in the third quarter increased 1% to $2.40B compared to the prior year period driven by 5% organic revenue growth, partially offset by a 2% unfavorable impact from foreign currency translation and a 2% unfavorable impact from divestitures, net of acquisitions.
Total operating expenses in the third quarter decreased 3% to $2.00B compared to the prior year period due primarily to a $44.0M favorable impact from foreign currency translation, a $34.0M decrease in restructuring charges, $32.0M of incremental savings related to restructuring and other operational improvement initiatives, and a $27.0M decrease in expenses related to divestitures, net of acquisitions, partially offset by a $25.0M non-recurring legacy litigation benefit recorded in the prior year period and an increase in expense associated with 5% organic revenue growth.
Restructuring expenses were $63.0M in the third quarter, primarily driven by other costs associated with restructuring and separation initiatives and technology rationalization. As previously announced, the Company expects the total estimated costs of the program to be approximately $1,525.0M. Restructuring charges are expected to be $1,350.0M, including $1,250.0M of cash charges and $100.0M of non-cash charges. All remaining charges associated with the program will be completed by the fourth quarter of 2019. To date, the Company has incurred $1,263.0M, or 94%, of the total estimated restructuring charges and $1,027.0M, or 82% of the total estimated cash spend. In addition to the $1,350.0M of total restructuring charges, the Company estimates $175.0M of incremental capital expenditures associated with the three-year program, of which $137.0M, or 78%, has been incurred to date.
Foreign currency exchange rates in the third quarter had a $2.0M, or $0.01 per share, unfavorable impact on U.S. GAAP net income, and a $4.0M, or $0.02 per share, unfavorable impact on adjusted net income if the Company were to translate prior year quarter results at current quarter foreign exchange rates. If currency were to remain stable at today’s rates, we would expect an unfavorable impact of approximately $0.04 per share, or approximately $12.0M reduction of operating income, in the fourth quarter of 2019.
Weighted average diluted shares outstanding decreased to 239.10M in the third quarter compared to 245.60M in the prior year period. The Company repurchased 1.80M Class A Ordinary Shares for approximately $350.0M in the quarter. As of September 30, 2019, the Company had $2.50B of remaining authorization under its share repurchase program.
YEAR TO DATE 2019 CASH FLOW SUMMARY
Cash flow provided by operations for the first nine months of 2019 increased 19%, or $188.0M, to $1,163.0M compared to the prior year period, primarily reflecting strong operational improvement. The current year period includes approximately $85.0M of net cash payments in the first quarter related to legacy litigation. The prior year comparable period included an $80.0M accelerated pension contribution.
Free cash flow, defined as cash flow from operations less capital expenditures, increased 25%, or $200.0M, to $996.0M for the first nine months of 2019 compared to the prior year period, reflecting an increase in cash flow from operations and a $12.0M decrease in capital expenditures.
The Company offered net profit margin of 13.80%. ROE was recorded as 37.00% while beta factor was 0.83. The stock, as of recent close, has shown the weekly upbeat performance of 0.50% which was maintained at 0.89% in this year.