DUBLIN - Aon plc (NYSE: NYSE:AON) announced its first-quarter financial performance, revealing mixed results with a revenue increase but a miss on earnings per share (EPS) expectations.
The global professional services firm reported adjusted EPS of $5.66, which was $0.23 short of the analyst consensus of $5.89. However, the company's revenue rose to $4.07 billion, marking a 5% increase year-over-year (YoY), albeit slightly below the estimated $4.13 billion.
CEO Greg Case commented on the quarter's outcomes, "Our global team delivered strong operating results in the first quarter, including 5% organic revenue growth, 100 basis points of adjusted operating margin improvement, and 9% adjusted EPS growth." He also highlighted the acquisition of NFP and the anticipated acceleration of accretion and free cash flow benefits.
Despite the revenue growth, the company's operating margin saw a decline, dropping 210 basis points to 36.0%. However, when adjusted for certain items, the operating margin improved by 100 basis points to 39.7%. The firm also reported a 6% increase in net income attributable to Aon shareholders on a diluted basis, rising from $5.07 per share in the prior year to $5.35 per share.
Aon's total revenue for the quarter reflected organic growth and was positively impacted by fiduciary investment income and foreign currency translation. However, these gains were partially offset by the unfavorable impact from acquisitions, divestitures, and other items. Operating expenses increased by 9% to $2.6 billion, driven primarily by restructuring charges and investments in long-term growth.
The company's cash flow also experienced a downturn, with free cash flow decreasing by 29% to $261 million for the first three months of 2024. This was attributed to higher receivables, payments related to errors and omissions, restructuring, higher cash taxes, and transaction and integration costs, despite strong operating income growth.
Aon's effective tax rate for the quarter was 23.2%, up from 19.6% in the prior year period. After adjustments, the effective tax rate stood at 22.6%. The firm also continued its share repurchase program, buying back 0.8 million class A ordinary shares for approximately $250 million.
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