The latest financials from Aon plc (NYSE: AON);
Net income attributable to Aon shareholders increased 32% to $501 million, or $2.33 per share on a diluted basis, compared to $379 million, or $1.66 per share, in the prior year period. Net income per share attributable to Aon shareholders, adjusted for certain items, increased 15% to $2.63 on a diluted basis, including an unfavorable impact of $0.10 per share if prior year period results were translated at current period foreign exchange rates (“foreign currency translation”), compared to $2.29 in the prior year period. Certain items that impacted second quarter results and comparisons with the prior year period are detailed in the “Reconciliation of Non-GAAP Measures – Operating Income and Diluted Earnings Per Share” on page 10 of this press release.
“In the second quarter, our team delivered strong financial results that reflect the momentum of our business, with 8% organic revenue growth, operating margin expansion of 40 basis points to 26.2%, and EPS growth of 15%,” said Greg Case, Chief Executive Officer. “This performance highlights the fundamental strength of our core business and client belief in the exceptional value they receive through our globally connected Aon United operating model.”
Total revenue in the second quarter increased 3% to $3.0 billion compared to the prior year period driven by 8% organic revenue growth, partially offset by a 4% unfavorable impact from foreign currency translation and a 1% unfavorable impact from acquisitions, divestitures, and other.
Total operating expenses in the second quarter increased 3% to $2.3 billion compared to the prior year period due primarily to an increase in expense associated with 8% organic revenue growth, a $58 million charge related to certain legal settlements reached, and investments in long-term growth, partially offset by a $90 million favorable impact from foreign currency translation and a $38 million decrease in transaction costs.
Foreign currency translation in the second quarter had a $19 million, or $0.09 per share, unfavorable impact on U.S. GAAP net income and a $21 million, or $0.10 per share, unfavorable impact on adjusted net income. If currency were to remain stable at today’s rates, the Company would expect an unfavorable impact of approximately $0.04 per share, or an approximately $12 million decrease in operating income, in the third quarter of 2022, and an unfavorable impact of approximately $0.07 per share, or an approximately $21 million decrease in operating income, in the fourth quarter of 2022.
Effective tax rate used in the Company’s U.S. GAAP financial statements in the second quarter was 18.8%, compared to 34.1% in the prior year period. The primary driver of the change in the U.S. GAAP tax rate was the unfavorable discrete impact of the U.K. tax rate increase 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 2022 decreased to 19.3% compared to 20.1% in the prior year period. The primary drivers of the change in the adjusted tax rate were the geographical distribution of income and a higher net favorable impact from discrete items.
Weighted average diluted shares outstanding decreased to 214.7 million in the second quarter compared to 228.0 million in the prior year period. The Company repurchased 1.7 million Class A Ordinary Shares for approximately $500 million in the second quarter. As of June 30, 2022, the Company had approximately $7.9 billion of remaining authorization under its share repurchase program.
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