Willis Towers Watson Public Limited Company (WLTW) on Q2 2021 Results - Earnings Call Transcript
Operator: Good morning. Welcome to the Willis Towers Watson's Second Quarter 2021 Earnings Conference Call. Please refer to willistowerswatson.com for the press release and supplemental information that was issued earlier today. Today's call is being recorded and will be available for the next three months on Willis Towers Watson's website. Some of the comments in today's call may constitute forward-looking statements within the meaning of the Private Securities Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from those discussed today, and the company undertakes no obligation to update these statements unless required by law. For a more detailed discussion of these and other risk factors, investors should review the forward-looking statements section of the earnings press release issued this morning as well as other disclosures in the most recent Form 10-K and in other Willis Towers Watson’s SEC filings.
John Haley: Thank you. Good morning, everyone, and thank you for joining us on our second quarter 2021 earnings call. Joining me today is Mike Burwell, our Chief Financial Officer. Today, we'll review our results for the second quarter of 2021. Let me start by thanking our 45,000 plus colleagues for their resilience, their commitment, and their focus on serving clients with excellence. At Willis Towers Watson, our colleagues have persisted through an unprecedented global pandemic while simultaneously preparing for a proposed integration and for potential divestitures. What our teams have accomplished is nothing short of extraordinary. We're now moving forward with clarity. Today, I'm going to share some observations on the termination of our proposed combination – business combination agreement with Aon. But I really want to focus on our strong second quarter results, an excellent return to shareholders. In Q2, our team delivered outstanding results with organic revenue increasing by 8% compared to the second quarter of 2020. All our business segments contributed meaningfully to this result. Our adjusted operating margin improved by 390 basis points. This translates into 48% adjusted EPS growth rate in Q2 and 30% free cash flow improvement when normalized for one-time items. Our 6% organic revenue growth for the first half reflects mid single-digit or greater organic growth in three of our four segments. Turning now to the termination of our proposed business combination with Aon. We recently announced our mutual agreement to move forward independently. On behalf of Willis Towers Watson, I'd like to thank our counterparts at Aon for their professionalism over the past 16 plus months since we announced the transaction. I again would also like to thank our Willis Towers Watson colleagues for all of their efforts, as well as our clients for their continued support throughout this process. The proposed combination had significant regulatory momentum. A notable exception was the United States, where the parties reached an impasse with the Department of Justice. In the end, working closely with Aon, we decided to terminate our agreement. We're confident. This is the right decision for Willis Towers Watson, for our colleagues, for our clients and for all of our stakeholders, including our shareholders. Aon has already paid the $1 billion termination fee.
Mike Burwell: Thanks, John; and good morning to everyone. Thanks to all of you for joining us. First, I'd like to extend my appreciation to all our colleagues. We’ve asked a lot of our teams and our colleagues over the past 16 months, and they have continued to deliver. They remain committed to our vision and upheld our values. They went above and beyond to support our company, our clients and one another. I'm extremely grateful for their patients, commitment and resilience. We delivered continued progress for both the quarter and year-to-date period, including 8% revenue growth in Q2, through the first half of the year, we translated strong organic revenue growth into excellent operating income growth and almost doubled earnings per share, demonstrating the resilience of the Willis Towers Watson business model. We continue to expect mid-single-digit revenue growth for the full year 2021. I would note that our reported revenue included the favorable impact from changes in the FX rates driven by weaker U.S. dollar versus most currencies. Our strong revenue growth and ongoing operational discipline, as well as sound, cost, management contribute to it adjusted operating income margin growth of 390 basis points in Q2 and 240 basis points through the first half of the year. It should be noted, the growth in our margins was driven by the speed of revenue growth, which outpaced our expense growth. While we made investments in people, operations and technology to enable long-term growth of the first half, we expect to increase these investments during the second half of the year. We also anticipate some resumption of teeny cost over the second half of the year as well, though we anticipate continued leverage of technology to conduct much of our business remotely, enabling us to sustain our improved efficiency and reduced carbon footprint. Looking forward, we expect to deliver margin expansion for the full year 2021 and over the long-term. Moving back to the results for the second quarter. We've translated strong operating income into adjusted EPS growth of 48% in Q2 and 23% year-to-date. Foreign currency changes had a favorable impact to revenue of $87 million or 4% in Q2 versus a prior year and no impact to diluted earnings per share. If currency was to remain stable at today's rates would expect a modest tailwind to adjusted diluted earnings per share for the full year. As John mentioned and at WTW mutually agreed to terminate our business combination agreement and move forward independently. In accordance with the business combination agreement and has paid the $1 billion termination fee. Free cash flow increased 30% year-to-date when adjusted for the $185 million for the previously announced Stanford and Willis Towers Watson merger settlements, and higher incentive comp and benefit related items of $249 million. We expect – we continue to expect to drive free cash flow growth over the long-term, building on our efforts over the past couple of years. We expect our CapEx expenditures to increase in the second half of the year as we invest in technology to grow our business. Given our outlook for the long-term free cash flow growth, we see share repurchases as the highest return on capital opportunity for capital allocation. As John noted, we plan to implement an accelerate share repurchase strategy of $500 million additional our normal share repurchase plans. We look to execute as much as practical in fiscal year 2021 and we also raised our dividend by 13%. Now turning to our balance sheet and debt capacity. We had $2.2 billion of cash on our balance sheet at the end of the quarter. We plan to pay off $450 million of debt outstanding in August, 2021. We have no borrowings outstanding under our $1.25 billion credit facility. We remain confident in the strength of our balance sheet and manage liquidity risk through a well laddered debt maturity profile. And considering our June 30 balance sheet, we have plenty of additional debt capacity for discretionary use in the second half of the year. Over the long-term, we expect to return to our past practice or growing debt and EBITDA gross. Should be noted that free cash flow generation in the second half of the year was seasonally strong, stronger than in the first half of the year and we will look to allocate cash for our best use based on return on capital. In summary, we ended the second quarter in a very strong position as we delivered strong top line and bottom line results. While the termination of our Aon – combination with Aon was not the outcome we originally intended, the opportunity for WTW as a standalone business is strong and exciting. We believe our disciplined approach to return on capital combined with our continued improved cash flow delivery and increased debt capacity provides flexibility to improve shareholder value creation over the long-term. Should be noted our U.S. GAAP’s tax rate for the second quarter was 33.8% versus 42.2% in the prior year. Adjusted tax rate for the second quarter was 19.3% versus 22.2% rate in the prior year. The current year quarter effective tax rate includes $14 million deferred tax expense related to the enacted UK statutory tax rate change over the prior year effective tax rate was higher due to additional expense recognized in connection with the temporary provisions of the CARES Act. We anticipate our annual effective adjusted tax rate will be between 20% and 21% for the full year. We're very pleased with the second quarter results and their direct reflection of our incredibly talented colleagues, an unwavering commitment to client service. Our second quarter results were very encouraging. We have momentum, we have solid financial results, a strong balance sheet and an excellent team, which gives me confidence in our ability to continue driving value for all our stakeholders. And now I'll turn the call back to you, John.
John Haley: Thanks very much, Mike. And now we'll take your questions.
Operator: Thank you. The floor is now open for questions. And your first question is from Greg Peters of Raymond James.
Greg Peters: Good morning. The first question will focus on retention. And John, I know you said that your client retention remained strong through the second quarter, but you also did highlight that there were some departures on the employee side. And I was wondering if you could give us some more color behind that? In the past, you've talked about retention as a percentage of the total employee base. Obviously, I think most of your investors are concerned about these departures and its impact on future organic revenue results. So any color you can add here will be helpful.
John Haley: Yes. So thanks very much for that question, Greg. I think we – when we look at our overall attrition over the last 16 months or so, that attrition is within the normal historical bands we have now. We've seen our attrition go up a little bit more in the second quarter than we did before, then – but that's actually something that I think has been seen by companies across the board there. And – but the biggest issue we've had is not so much the attrition, although, we have lost some value of colleges, let me be clear about that. But the issue is, while we were in the process of the merger, it was harder to hire new people and to bring them on because of the uncertainty of exactly how they would fit into the new organization. And I think what we're going to be doing now is going out aggressively, recruiting and looking to replace some of the talent we've lost.
Greg Peters: Can you just – as a follow-up to that, John, can you give us a sense within HCB, if you lost some healthcare brokers, can you give us a sense within CRB where the losses have been, whether it's Western Europe or North America, IRR just some additional color there, so we can sort of use it to help build out our projections going forward?
Mike Burwell: So, hey Great, this is Mike. I would just comment, so one is, as you might imagine, when you think about a merger, we've lost one of the biggest places we've lost frankly has been our corporate and some of our corporate areas overall in the business with the anticipation of the business combination. As John mentioned, we have lost some teams, but when you compare – when you look at HCB or CRB or IRR, we've lost some teams when we compare it, our turnover isn't different than what we saw back in 2019. So we have had some reinsurance team, what's been lost, let's say in Australia or things. But those – we're highlighting it, because it's in the window of looking at an M&A deal. But that's a normal process that had been happening and maybe slightly accelerated, there recently as John mentioned. But when I look at the numbers and just in terms of pure overall turnover numbers, they're not that different from where we were in 2019.
John Haley: I mean, to give you – the turnovers generally in the 10%, maybe 11% range, I think BDA, because of the nature of that business is the one outlier, where we have relatively high turnover rates.
Mike Burwell: But we hired the people up for the seasonal fourth quarter, and then they go away.
Greg Peters: Yes. Makes sense. And then the other related area, your retention bonuses. I think Aon came out on their call and they expressed their intent to pay the retention bonuses to their employees. What's your view on retention bonuses for your producers going forward?
John Haley: So our view is that the employee retention is something that we are managing constantly not just during deals. And so, we have various incentives that are embedded within our employees compensation structure. The retention awards for the business combination, they were communicated in connection with the proposed combination to address specific risks and contingencies that could arise from that transaction. Since the transaction is no longer pending, we don't think those incentives are necessarily the ones we should have in place. That doesn't mean we won't put other ones in place and we won't make sure we manage retention on an ongoing basis. We will.
Greg Peters: Yes, I would expect that. I guess my last question, I'm sorry, but I had to hammer the retention thing, would just be Mike, I think in your comments, you called out the benefit of T&E and certainly in your response reduced corporate expenses. When I think about just the overall expense structure going forward, is it fair to say that you're going to be making investments in this business, so the expense side of the house may start to increase relative to what we saw in the second quarter?
Mike Burwell: Yes. I think that's a fair statement, Greg. But I would also point to the comment that I made, which is that we're focused on continued annual improvement and we anticipate margin improvement for the year. So we'll look at those in terms of what the run rate of the company is, if we're making specific investments, we'll call them out. But our intent is to drive – continue to drive margin improvement and margin expansion.
John Haley: And maybe just as a quick addition to that, Greg. I think as I referenced and I think as Mike referenced in his comments, we're very excited about the growth prospects. And so, we will be making investments in the business, but those are investments that we expect to be generating revenue too. And so, we're looking at both organic and inorganic, we have a lot of enthusiasm around some of the prospects we see.
Greg Peters: Got it. Thanks for the answers. Good luck in the future.
Mike Burwell: Thanks.
Operator: Thank you. Your next question is from Elyse Greenspan of Wells Fargo.
Elyse Greenspan: Hi, thanks. Good morning. My first question John, in your prepared remarks you addressed that, you're planning to retire which was kind of planned in conjunction with the Aon merger as well. I understand that your contract runs through the end of this year. So is their desire to put someone in place in advance of the timeframe? Is there the potential to send your contract? And can you just tell us would both internal and external candidates be considered for your role?
John Haley: Yes. I think that – thanks very much, Elyse. Yes, my contract runs through the end of the year and I think the intention would be not to extend that, but to identify a successor and have that successor named before that time. And I'll be working with the board on that, the board has a very thorough process and considers everything, of course, we – this is not new, we've been doing this for a lot of years and so we're not just starting at square one here.
Elyse Greenspan: Okay, great. And then on the leverage side. Your leverage is now below 2 times EBITDA, and you have some debt that's coming due shortly. So I guess I'm trying to get a sense, you guys mentioned that you would look to add to your debt capacity over the long-term visit, just to find that, and I'm assuming you'd be willing to go up to 2.5 EBITDA. I think that's historically where you have gone. And if you do add to debt, could additional share repurchases be considered for that additional capital in addition to looking to pursue growth?
Mike Burwell: So Elyse, thanks for the question. So when we think about leverage, at times we have gone up that high end leverage, but we've always a commitment to get it down below kind of 2 to 3 range, is kind of where we have been. So that gives us plenty of capacity to think about investments that we can make, both organically and inorganically in the business, which we're very excited about. And we have lots of opportunities, it's just making sure we deploy that and the best return thought process. But as we think about that, obviously we will look – continue to look at share repurchases, that's an important element to look at that return. As we look at all three components in terms of thinking about allocation of capital. We talked about the dividend increase that we had this quarter, we'll continue to look at dividends, we will look at share repurchases, and obviously we're looking at inorganic and organic growth and thinking about all three of those in a balanced way going forward.
John Haley: Okay, great. And then on the revenue guidance, I think you said for the full year you guys would be at mid-single-digit. Was that total revenue or organic, or was that meant to be both?
Mike Burwell: It's meant to be organic full year.
Elyse Greenspan: And then, so I guess you guys were at 8% for the Q2, 6% for the half year. Are there certain businesses? I mean, I know you guys addressed some of the retention and employee attrition issues in previous questions. But is – are you expecting a slowdown in the half – in the second half, given some of the retention stuff, or is it more to conservatism, given just economic uncertainty as they think about going from 8 to, I guess, kind of what seems to be maybe 6 in the back half of the year?
Mike Burwell: Yes. I mean, the quarters the Q1 and Q4 tend to be our largest quarters in particular Q4 being the largest quarter, Q3 being less of a quarter. I think you may have used the word conservative in there, I don't know if it's conservatives our best estimate in terms of where we are right now. And we thought that guidance would be helpful.
Elyse Greenspan: Okay. Thanks for the color.
Operator: Thank you. Your next question is from Paul Newsome of Piper Sandler.
Paul Newsome: Good morning. I'm curious if there is a lot of difference between the organic growth that you saw by account size, as opposed to segment, basically across the broking, as well as the healthcare businesses? Was there more improvement in the larger account stuff or middle market or about the same?
Mike Burwell: It's about the same. We really thought about the same. Yes.
Paul Newsome: And perhaps you could talk a little bit about the pricing environment and what sort of windfall that helped you within the broking side a little bit more?
Mike Burwell: Yes. We publish twice a year our marketplace realities, which we publish in April and October as a general rule and we include in there what our view of the marketplace is in terms of pricing. It continues to be a hard market, we continue to see a pricing tailwind, we've seen continued increases, and the most recently cyber being up almost 50%. And – but obviously those are what you're seeing interpreted quoted prices. Our role is to do the best thing that we can for our clients. And obviously we look to manage those risks, help them understand those risks and price those risks appropriately. And so, we think about that, we look at properties still been up, general liabilities been up, casualty has been up, and we've seen some moderation on workers' comp and D&L, but again an aggregate across the board, we're seeing pricing tailwinds overall. So yes, we are seeing that reflected in the business.
Paul Newsome: Were there any notable geographic concentrations for the organic growth?
Mike Burwell: No, it was pretty balanced across the board. When you look at our geographies, I mean, we didn't see any particular one that, I would call out otherwise, we would have specifically said that. We really saw it across all four of our segments in comparison to where they should be in the prior year and equally we saw it across all our geographies. Frankly the business is running very strong, we're very proud of the second quarter results.
John Haley: And I think where there were some differences across the geographies, I did call them out, I went through the segment review.
Paul Newsome: Great. Appreciate. Thank you.
Mike Burwell: Thank you.
Operator: Thank you. Your next question is from Shlomo Rosenbaum of Stifel.
Shlomo Rosenbaum: Hi, good morning, and thank you for taking my questions. John, just to ask you a little bit about, when you have a merger like this that you're anticipating, a lot of times company will go ahead and delay certain initiatives, the anticipation of a certain joint strategy post the deal close. And with the Willis Towers Watson going out on their own more, what items might have been placed on ice before that will now be revisited or what are some strategies that you're going to be pursuing that you might not have been pursuing beforehand, now that the company is in on its own? Specific areas, you could talk about more and acceleration of investments into specific areas or specific verticals. Any color you could provide there would be helpful?
John Haley: Yes. So thanks very much for that question, Shlomo. We clearly had some initiatives that we were delayed in anticipation of the combination. And our leaders are going through and doing a review of those right now, but they're in all of our businesses that we see that in the CRB, we see it in IRR, we see it in HCB, so all of these – all the different businesses. We're looking at them, we're prioritizing them in an Investor Day, we're going to be presenting you a comprehensive plan at about how we're attacking them and taking them forward. So I think there clearly – there are some other initiatives that we've continued to pursue even during these 16 months, for example, our leadership on climate change, which we think is important from just the perspective of the good work we're doing there. But also we think that will be a very nice business for us going forward.
Shlomo Rosenbaum: Okay. And then just the company posted very strong growth 8%, clearly off of a weaker 2Q comp. If we’re going ahead and just looking at what the momentum – underline momentum in the business feels like. Would you say it feels more like mid-single-digits, like what you’ve guided to for the year, or maybe just some kind of color around what would be – if you were looking at this and more of a normalized year-over-year number?
John Haley: Yes. I mean, I think we've been talking for a couple of years now about the overall market growing at about mid single-digits and that's growing with at least as fast as the overall market. I would say if we look at it today, we feel slightly more bullish than that. So it would be at least mid single-digits is what we see for the longer run.
Shlomo Rosenbaum: Okay, great. Thank you.
Operator: Thank you. In the interest of time, we do ask that you please limit yourself to one question and one follow-up. And your next question is from Suneet Kamath of Citi.
Suneet Kamath: Great. Thanks. So just back on retention, just quick one. Are there any agreements in place between you and Aon regarding recruiting and hiring each other's talent?
John Haley: There are not, I mean, I think there are limitations on the use of confidential information that we've exchanged, but that's basically it.
Suneet Kamath: Okay. And then in the CRB business, I think in the press release, you talked about growth tied to settlements and book of business sales. So I just was hoping you could give us a sense of how much did that contribute to the growth in the quarter. I think it's normal course things or should we be viewing this as some of this is one-time in nature. Thanks.
John Haley: Yes, I mean, I think as we referenced like we've had business sales that that's an ongoing feature of the business that we're in. And so we had some last year, we had some, this year, we probably had a little more this year than in prior years, but it's not something that we really break out.
Suneet Kamath: Okay. All right. That's fine. Thanks.
Operator: Thank you. Next question is from Mark Hughes of Truist.
Mark Hughes: Yes. Thank you. Good morning. Mike, one would be a good way to approach other income, it was $74 million this quarter. What's a good proxy in the future quarters?
Mike Burwell: Yes, I mean, I think this quarter is probably a reasonable representation, of what would you wish to expect or think about? I mean, there obviously can be some slight ups and downs, but I think it's a reasonable proxy to think about.
Mark Hughes: Okay. And then John, the Willis Re decision at this time, could you expand a little bit more on what’s your thinking is about the – maybe the best thing that why and anything else that might fall into that category?
John Haley: No, as I said in the – as I said in the call, we have great appreciation for the Willis Re business for our colleagues and the work they've been doing. We just thought that coming off the termination of the deal with Aon was an appropriate time to consider strategic alternatives. That's the only business we're looking at this for.
Mark Hughes: Thank you.
Operator: Thank you. Next question is from Ryan Tunis of Autonomous Research.
Ryan Tunis: Hey, thanks. Quick one for Mike, on free cash flow. What are you thinking you'll be able to do for the full year of 2021 after we got through the second quarter?
Mike Burwell: Yes, Ryan. I mean, we have not given guidance and we're not intended to do it. I mean, just given the marketplaces of COVID variants, et cetera, in terms of giving specific free cash flow guidance. I believe that we will continue to improve from what we've delivered previously, as you've seen rough on 30%, 31% year-to-date. And if you look at on a run rate basis for the first half, which I think is consistent with where we've been – now over the last couple of years. And, I think that's accentuated in terms of our increased dividend that our board and we announced here as of today. I think we continue to work on free cash flow. I mean, there's continued view inside the organization on how important that is for us to have that cash that we can reinvest in the business and buy back shares and do a variety of different things that we can do with that cash. And so I can just tell you, there's a lot of focus on it. We're very proud of what we continue to do there, and we'll look to continue to improve it.
Ryan Tunis: Thanks. And then it seems like there's a little bit of a mixed message on investing versus buyback. You're saying that you want to invest organically and inorganically, but you're divesting Willis Re. On the other hand, the buyback could clearly be bigger than it is. So I guess, thinking about the decision to sell Willis Re, what are you thinking about in terms of revenue or replacement type options or is there any opportunity we could just see a larger share repurchase program?
John Haley: I think we have that Investor Day coming up September 9 and we intend to talk and somewhat more specifics about our growth plans. But as we said in our remarks, we see a lot of growth opportunities in all of our businesses whether it's broking or consulting or BDA businesses. And we're going to be going through and thinking about them and prioritizing what we're looking at. But we think that's probably, there are opportunities there that are going to be the best use of capital. To the extent, we don't find ones that are as attractive as we'd like, we will probably do more share repurchase, but we're going to be guided by what's best for shareholders there in terms of financing growth.
Ryan Tunis: Thanks for the answers.
Operator: Thank you. Our next question is from Mark Marcon of Baird.
Mark Marcon: Good morning. And thanks for taking my questions. I'm just wondering with regards to this kind of the margin outlook for the second half of the year. How should we think about that vis-à-vis some replacement hiring and related to replacement hiring, generally speaking, when we take a look at the top leadership team within Willis Towers Watson and then perhaps, the layer or two below, how should we think about the retention on a go-forward basis? Obviously, there were some agreements that were put in place to basically hold things together through the merger. And some of those, obviously are no longer relevant. So how should we think about that? As we look through until the successor is named?
John Haley: Yes. I think we – one of the things we learned, we've had really incredible performance during the 16 months that we've been in this combination period where we were looking forward to that. And the reason we've had that is because of the performance of our colleagues overall, but especially because of the performance of our leaders and the broad leadership group within Willis Towers Watson has been nothing short about standing. And we have incredibly deep talent in this organization and I think we recognize that we're going to make sure we do the appropriate things to retain them and to motivate them, but we're moving forward with a lot of confidence there, Mark.
Mark Marcon: Great. And what – will you highlight that to a greater extent on September 9? And again, how should we think about the margin outlook over the next six months, to any extent that you can eliminate that?
John Haley: Yes, I think we will highlight some of that on September 9. I think for the margins, we have two things that we say we're relative – we're proud of the margin expansion we've seen over the last couple of years here. We think we can continue that. We're recognizing that there are some features like some travel and entertainment expenses are probably artificially well. However, as we continue to do more of that, we're going to be looking to make sure that we increase T&E, to the extent that drives revenue and that's what we're going to be trying to make sure we do. So we feel pretty good about continuing to drive margin expansion over the longer timeframe.
Mark Marcon: Great, thank you.
Operator: Thank you. Our next question comes from Meyer Shields of KBW.
Meyer Shields: Thanks. I guess, the first question, probably for John, can you talk about how you came up with $1 million as the share repurchase, I'm asking that because of how much cash is on the balance sheet?
John Haley: Well, if you think about the share repurchases we've had in the past have bounced around somewhat from year-to-year, but if you look at what we would have been expected to have done during the 16 months, that's about $1 billion.
Meyer Shields: Okay. No, that's fair. That's definitely the catch-up. The second question and I know we've been talking about retention a lot, but it really does seem to be top of mind for investors. Is there any way of guiding or ballparking the impact on revenue growth either in the second quarter or maybe over the next 12 months from the people that you've lost?
John Haley: No, I mean, I think probably if you look at what Mike said about, we're expecting a mid single-digit growth. I mean, I think that gives you the net of everything. So we haven't broken things down any finer than that.
Meyer Shields: Right. Okay. Thank you.
Operator: Thank you. Your next question is from Brian Meredith of UBS.
Brian Meredith: Yes, thanks. Two questions, your first one, Mike, I think a recall a couple of years ago, you talking about the need to integrate systems to really drive meaningful margin improvement in the CRB business. Where are you in that process and did the Aon merger agreement kind of put a halt on some of that integration?
Mike Burwell: As the teams continue to invest in systems and technology as appropriate and we've continued to do that, we are obviously we're mindful of thinking about what that could mean. But we've continued to most of the CRB is just – it's supported really by two systems. And that's really the way, we've continued to invest in those systems that are core to our brokering capabilities and the operations. And so Adam and the team are very focused on it and continue to drive efficiency and effectiveness. And I see you're seeing that being reflected in their results.
Brian Meredith: Great. Thanks. And then my second question, I'm just curious, John, the sale of Max Matthiessen and the sale of Miller, was that all driven by this merger and are there certain things that maybe happened that you may not have done as a result of the merger agreement that maybe you want to kind of build – rebuild in that area?
John Haley: No, actually both Miller and Max Matthiessen were started before we announced the merger.
Brian Meredith: Were there anything that you probably did during the course of the merger that maybe you’re doing an anticipation of it that you'd want to do some reinvestment in that area?
John Haley: I don't think there's anything specific like that, as we did say, we expected that we would there are some things that we were going slower on and we'll address them on September 9 that we're going to reinvigorate some initiatives we had. But nothing major like whole businesses or anything like that.
Brian Meredith: Great, good to hear. Thank you.
Operator: Your next question is from Phil Stefano of Deutsche Bank.
Phil Stefano: Yes. Good morning. On the margin conversation, it feels like, at least from most of the investors we talked to, there's a focus on the adjusted EBITDA margin. I think when you most recently gave guidance that was on the adjusted operating margin. Maybe you could talk about which of these is more important if there is one and where you want us to be focused on our margin thoughts looking forward.
John Haley: Yes. I mean, I think we tend to focus on operating margins, overall in the business. And so I think that that's an appropriate spot for you to focus on as well. I mean, you have depreciation and amortization, that are in there as well, but I think that's really the focal point.
Phil Stefano: Okay. So my follow-up, there's always these strategic actions that could be happening in announced over the next couple of months. The potential for share repurchases, do we or don't we lever up the debt, the strategic review for Willis Re. How should we think about the timeline for all these things, with the understanding that we don't have a new CEO in place and presumably this will be part of the job appealed to someone externally is to be, have this strategic footprint and flexibility around them. So maybe you can talk about the timeline for these strategic decisions with the idea that we don't have a CEO of looking forward.
John Haley: Yes. I think we are working, as I said, on a review of what opportunities we have across all the businesses, both ones, we have deferred both new ones we've identified during the last 16 months and what we should be doing. It's an effort that is a broad-based effort across our leadership. And so it will have the buy-in of the whole leadership of the company. And we think it'll be something that'll be in the words up and ready for the new CEO to execute on.
Operator: Thank you. We have no further questions at this time. I will hand the call back over for any additional or closing remarks.
John Haley: Okay. Thanks very much, everyone for joining us on today's call. And we look forward to seeing you on September 9, when we'll be discussing the company's growth plans at our Investor Day in New York City.
Operator: Thank you. This does conclude today's conference call. You may now disconnect.
