Workflow
AON Q1 Earnings Miss on Higher Costs, Wealth Solutions Shows Strength
AONAON(AON) ZACKS·2025-04-25 17:10

Core Viewpoint - Aon plc reported mixed financial results for Q1 2025, with adjusted earnings per share missing estimates but total revenues showing year-over-year growth [1][2]. Financial Performance - Adjusted earnings per share for Q1 2025 were 5.67,missingtheZacksConsensusEstimateby6.15.67, missing the Zacks Consensus Estimate by 6.1%, but improved by 0.01 from the previous year [1]. - Total revenues increased by 16% year over year to 4.73billion,althoughthiswas2.64.73 billion, although this was 2.6% below consensus expectations [1]. - Organic revenue growth was reported at 5% [1]. Operating Costs and Margins - Total operating expenses rose by 25% year over year to 3.3 billion, driven by higher costs associated with the NFP acquisition and long-term growth investments [3]. - Adjusted operating income grew by 12% year over year to 1.8billion,butfellshortoftheestimated1.8 billion, but fell short of the estimated 1.9 billion [4]. - The adjusted operating margin decreased by 130 basis points year over year to 38.4% [4]. Segment Performance - Commercial Risk Solutions: Organic revenues grew by 5% year over year, with revenues of 2billion,an112 billion, an 11% increase, but missed estimates by 4.8% [5]. - **Reinsurance Solutions**: Organic revenues improved by 4% year over year, with revenues of 1.2 billion, a 2% increase, but also missed estimates by 3.6% [6]. - Health Solutions: Organic revenues grew by 5% year over year, with revenues of 1billion,a401 billion, a 40% increase, but fell short of estimates by 1.7% [7]. - **Wealth Solutions**: Organic revenues increased by 8% year over year, with revenues soaring by 40% to 519 million, exceeding estimates by 3.8% [8]. Financial Position - As of March 31, 2025, Aon had cash and cash equivalents of 964million,downfrom964 million, down from 1.1 billion at the end of 2024 [9]. - Total assets increased to 50.3billionfrom50.3 billion from 49 billion at the end of 2024 [9]. - Long-term debt remained stable at 16.28billion,whileshort−termdebttotaled16.28 billion, while short-term debt totaled 1.3 billion [9]. Cash Flow and Capital Deployment - Cash flow from operations was 140million,downfrom140 million, down from 309 million a year ago [10]. - Adjusted free cash flows decreased by 68% year over year to 84million[10].−Aonrepurchased0.6millionclassAordinarysharesforapproximately84 million [10]. - Aon repurchased 0.6 million class A ordinary shares for approximately 250 million, with 2.1billionremainingunderitsrepurchaseauthorization[11].FutureOutlook−Aonexpectsmid−single−digitorhigherorganicrevenuegrowthfor2025andanticipatesanexpansioninadjustedoperatingmargin[12].−AdjustedEPSisprojectedtoseestronggrowththisyear,withfreecashflowexpectedtowitnessdouble−digitgrowthinthelongterm[12].−TheAonUnitedRestructuringprogramaimsforannualrun−ratesavingsofapproximately2.1 billion remaining under its repurchase authorization [11]. Future Outlook - Aon expects mid-single-digit or higher organic revenue growth for 2025 and anticipates an expansion in adjusted operating margin [12]. - Adjusted EPS is projected to see strong growth this year, with free cash flow expected to witness double-digit growth in the long term [12]. - The Aon United Restructuring program aims for annual run-rate savings of approximately 350 million by the end of 2026, with $40 million in net savings realized in Q1 [13].