Aon plc (NYSE: AON) has reported results for the three months ended June 30, 2024. It’s another positive quarter for the insurance brand, offset by a higher tax rate paid and some negative currency transaction values. Here’s the word;
Net income 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. 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 (“foreign currency translation”), compared to $2.76 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, Operating Margin and Diluted Earnings Per Share” on page 10 of this press release.
“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,” said 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. The first half marks great progress against all elements of our 3×3 plan, and we’re well-positioned for the remainder of 2024 and the long term.”
SECOND QUARTER 2024 FINANCIAL SUMMARY
Total revenue in the second quarter increased 18% to $3.8 billion 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.
Total operating expenses in the second quarter increased 33% to $3.1 billion 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 million of restructuring savings realized in the quarter and a $9 million favorable impact from foreign currency translation.
Foreign currency translation in the second quarter had a $11 million, or $0.05 per share, unfavorable impact on U.S. GAAP net income and a $12 million, or $0.06 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 $0.01 per share, or an approximately $3 million decrease in adjusted operating income, in the third quarter of 2024, and an unfavorable impact of $0.02 per share, or an approximately $6 million decrease in adjusted operating income for the fourth quarter, resulting in an unfavorable impact of approximately $0.07 per share, or an approximately $21 million decrease in adjusted operating income for full year 2024.
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 million in the second quarter compared to 206.3 million in the prior year period due to the issuance of 19.0 million shares to fund NFP. The Company repurchased 0.8 million class A ordinary shares for approximately $250 million in the second quarter. As of June 30, 2024, the Company had approximately $2.8 billion of remaining authorization under its share repurchase program.
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