Q1 2021 Willis Towers Watson PLC Earnings Call
<unk> issued this morning as well as other disclosures in our most recent form 10-K and in other Willis towers Watson ex SEC filings.
During the call certain non-GAAP financial measures may be discussed for reconciliations of these non-GAAP measures as well as other information regarding these measures. Please refer to the most recent earnings release and other materials in the Investor Relations section of the company's website I'll now turn the call over to John Haley.
Willis towers Watson's Chief Executive Officer. Please go ahead.
Thank you.
Good morning, everyone and thank you for joining us today on our first quarter 2021 earnings call. Joining me today is Mike Burwell, Our Chief Financial Officer Today, We will review our results for the first quarter of 2021.
I'm pleased with our first quarter financial results and the continued momentum in our business, we generated organic revenue growth of 4% and 110 basis point adjusted operating margin improvement each of our operating segments contributed to the margin expansion this quarter driven by new business generation.
<unk> strong retention rates and increased operating leverage across our core businesses.
Through the first quarter of 2021, our coffee has continued their tremendous efforts to serve our clients through these challenging times and delivered a strong financial performance.
I'd like to extend my heartfelt thanks to all our colleagues for their dedication professionalism and support of one another.
Thank you for continuing to bring your very best at the table every day, you're solidarity and resilience are truly inspiring.
Our accomplishments in quarter, one are reflective of our purpose in action the impact of their work extends to the people in our client organizations to each other and to our communities for many of US. This greater impact is on why it's the purpose behind the work, we do creating clarity and confidence.
Today for a more sustainable tomorrow ground.
Grounded in this sense of purpose, we've continued to partner with our clients to help strengthen their resilience and progress towards long term success.
The events of the past year have sharpened their focus our clients our colleagues and our other stakeholders expect us to conduct our business with integrity and in an environmentally and socially responsible manner with high ethical standards. We take these expectations seriously and have embraced print.
<unk> that are aligned with our business priorities are consistent with our commitment to ethical and sustainable practices and demonstrate our respect for the communities in which we operate around the globe.
For this reason Willis towers Watson has partnered with companies worldwide to increase racial justice by joining the world Economic Forum's racial justice and business initiative.
The purpose of this initiative is to build more equitable and just workplaces for professionals with underrepresented racial and ethnic identities Willis towers Watson is among 44 founding members representing $5 2 million employees and 13 industries as part of this ongoing global conversation with leading on.
Organizations worldwide, we can both learn from them to increase racial diversity and inclusion inside the company and contribute our own ideas to address the issue more broadly.
Working towards the goal of improving the communities, which we serve I'm proud to say, we recently announced our commitment to delivering net zero greenhouse gas emissions and alignment with the science based targets initiative by 2015 at the latest with at least 50% reduction by 2030.
Through improvements to energy efficiency in our operations leveraging virtual meeting tools promoting recycling and encourage you're gonna colleagues to adapt environmentally responsible habits. The company aims to minimize its carbon emissions and any other related harmful environmental impacts.
Turning now to our proposed combination with day on we continue to be excited about the potential of the combined firm and are committed to its completion.
Upon close we will serve a common purpose to serve clients and improve communities blending the best of both of our firms will innovate on behalf of our clients and co create solutions to address unmet client needs.
We will build inclusive and diverse teams engaged colleagues and enable them to deliver their full potential during the first quarter. We continued to build momentum towards closing the transaction with E on and made significant progress and are in a gate integration planning efforts, we anticipate closing in the first half of 2021.
Subject of course to regulatory approvals.
Now, let's move on to our first quarter results reported revenue for the first quarter was $2 6 billion, that's up 5% as compared to the prior year first quarter up 1% on a constant currency basis and up 4% on an organic basis income.
One we continued to face some headwinds due to macroeconomic factors such as COVID-19.
In the prior year, we only started to see the impacts near the end of the first quarter. We started to experience some improvement in areas, where revenue is tied to discretionary project spending similar to last quarter, we experienced solid financial performance in areas, where we have a well established market position mature relationships.
And annuity or compliance driven business.
Net income was $736 million up 135% for the first quarter as compared to $313 million of net income in the prior year first quarter.
It should be noted we disposed of our Miller wholesale business on March one 2020 for $696 million in proceeds on a gain of $356 million on a tax free basis or $2 73 per share.
Adjusted EBITDA was $730 million or 28, 2% of revenue for the first quarter as compared to $680 million or 27, 6% of revenue for the same period last year, representing a 7% increase on an adjusted EBITDA dollar basis, and 60 basis of margin improvement for the <unk>.
Quarter diluted earnings per share were $5 63, an increase of 140% as compared to the prior year. This included a net $350 million gain on disposal of operations, mostly resulting from the sale of our Miller wholesale business.
Adjusted diluted earnings per share were $3.64 for the first quarter, reflecting an increase of 9% compared to the prior year overall it was a solid quarter. We grew revenue we enhance margin performance and we increased earnings per share now, let's take a look at each of the segments in more detail to provide clear comfort.
Ability with prior periods all commentary regarding the results of our segments will be on on an organic basis, unless specifically stated otherwise.
Segment margins are calculated using segment revenue and they exclude unallocated corporate costs, such as amortization of intangibles certain transaction and integration expenses, resulting from mergers and acquisitions as well as other items, which we consider non core to our operating results. The segment results do include.
Chenier compensation.
The human capital and benefits H E. B segment revenue was flat on an organic basis and constant currency basis compared to the prior the first quarter of the prior year and generated the similar level of revenue with one less billing day this year.
This result represents sequential revenue improvement compared to our prior quarter, which was driven by increased demand for advisory services across various lines of business total.
Talent and rewards revenue decreased nominally with the uptick in executive compensation in reward strategy work offset by declines in our traditional survey sales and communications and change management offerings.
Our health and benefits revenue was flat for the quarter. We continued to grow revenue from advisory work in North America, and global benefit management and local brokerage appointments outside of North America. However, this growth was offset by lower Commission based revenue, which was tied to prior year book sales.
Retirement revenue was also flat compared to the prior year with funding and guaranteed minimum pension equalization work in Great Britain offset by declines in North America, resulting from one less billing day unless derisking activity.
Technology and administration solutions revenue grew moderately primarily due to increased project work and new business activity in Great Britain.
Hcp's operating margin increased by 20 basis points compared to the prior year first quarter. As a result of continued expense reduction efforts. We're pleased with HEB sequential improvement and margin growth. Our long term outlook on H D day remains positive the pandemic has changed the needs and demands of workers and workplace.
<unk> H C V stands ready to help clients navigate the transition.
Now, let's look at corporate risk and broking, or CRB, which had a revenue increase of 5% on on organic and constant currency basis as compared to the prior year first quarter, Great Britain, and International's revenue increased 8% and 15% respectively for the first quarter. The revenue increases were primary.
Really driven by new business wins, most notably a natural resource in Phoenix insurance lines.
North America's revenue was up by 6% in the first quarter driven by strong renewals across all regions, but also particularly in the Phoenix lines.
Revenue for Western Europe decreased 2% due to both the timing of some revenue moving to later quarters and the departure of some senior staff, which pressured business in certain geographies.
CRB revenue was $810 million for the quarter with an operating margin of 20.0% compared to $739 million of revenue with an operating margin of 17, 2% in the prior year first quarter.
The 200 basis 280 basis point margin improvement reflects the continuation of effective cost containment to see the strong topline growth and improved profitability in the first quarter is encouraging and we rate remain optimistic about both see or be short term and long term growth prospects and a world.
Marked by uncertainty CRB goes beyond their traditional boundaries of insurance products and risk management to deliver services that help organizations prepare for what May lie ahead.
Turning to investment risk and reinsurance or IRR.
Revenue for the first quarter was $605 million, an increase of 4% on an organic basis and a decrease of 5% on a constant currency basis as compared to the prior year first quarter.
Reinsurance with growth of 4% continued to lead the segment's growth through a combination of net new business and favorable renewal factors.
The insurance consulting and technology and investment businesses, all contributed to the segment's revenue growth both lines of business were up 8% compared to the first quarter of the prior year, having benefited from increased demand for advisory work.
Insurance consulting and technology revenue growth was aided further by increased software sales.
Wholesale business was down 14% on an organic basis.
Although that's reported as organic about half the decline was because we transferred wholesale special contingency risk business to the CRB segment in the fourth quarter of 2020, the remainder of the revenue decline was largely caused by ongoing pressure on various insurance lines from COVID-19, as a reminder, we sold the.
Our wholesale business on March one 2021.
IRR had an operating margin of 47, 9% up 280 basis points as compared to 45, 1% for the first prior year first quarter. The strong margin expansion was the result of careful cost containment efforts, coupled with solid top line growth.
<unk> helps businesses and communities to sustainably navigate the risks and opportunities ahead.
<unk> powerful combination of advisory services technology solutions, and analytical capabilities continues to create value for companies as they reevaluate risk and reinforce resilience post pandemic.
Yeah.
Revenue for the benefits delivery and administration or BDA segment increased by 23% on on organic basis, and 24% on a constant currency basis from the prior year first quarter. The growth in revenue was largely driven by individual marketplace, primarily by transact which contributed one.
<unk> $48 million to Bda's top line this quarter with growth in Medicare advantage products. The benefits outsourcing business also contributed to the increase in revenue, which was largely driven by its expanded client base.
BDA segment had revenue of $287 million with a two 5% operating margin as compared to revenue of $231 million and a negative operating margin of minus four 7% in the prior year fourth quarter first quarter excuse me.
We continue to feel positive about the momentum of our BDA business for 2021 for many people. The pandemic has highlighted the importance of securing health and wellness plans that meet their individual needs BDA provides education communication and decision support tools that empower employers employees and.
Retirees to navigate the changing world of benefits.
Overall I'm very pleased with our results. This quarter, we delivered strong overall financial performance with topline growth margin expansion and EPS growth all while continuing to make progress against strategic initiatives and our proposed combination with day on now I'll turn the call over to Mike.
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 on our colleagues continue to pull together and deliver I'm proud of all the work they have done to continue supporting our clients each other and the communities in which we work in.
We're.
We're off to a solid start this year, while we continue to face some headwinds from COVID-19 pandemic. We are reassured by the improved demand for our discretionary services and solutions and by our ability to generate profitable growth. We're pleased to see another quarter of solid revenue growth with other line adjusted EPS growth.
While free cash flow decreased and improve when normalized for certain significant litigation and compensation payments made this quarter.
Now I'll turn to the overall detailed financial results.
Income from operations for the first quarter was $452 million or 17, 5% of revenue up 290 basis points from the prior year first quarter income from operations of $360 million or 14, 6% of revenue.
Adjusted operating income from the first quarter was $579 million or 22, 4% of revenue up 110 basis points from $525 million or 21, 3% of revenue in the prior year first quarter.
For the first quarters of 2021 and 2020, our diluted EPS from $5 63.
And $2.34, respectively, which included the $359 million gain on disposals.
For the first quarter of 2021, our adjusted EPS was up 9% to $3 64 per share as compared to $3 34 per share in the prior year first quarter.
Foreign currency rate changes caused an increase on our consolidated revenue of $86 million or 4% of revenue for the quarter compared to the prior year first quarter with 12, <unk> tailwind to adjusted diluted EPS per share this quarter.
Our U S GAAP tax rate for the first quarter was 11, 5% versus 20% in the prior year. The current quarter tax rate was lower primarily due to the tax exempt disposal of our Miller business on.
Our adjusted tax rate for the first quarter was 25% up nominally from 24% in the prior year.
Turning to the balance sheet, we ended the first quarter with a strong capital and liquidity position with cash and cash equivalents of $2 billion and full capacity on our Undrawn $1 5 billion revolving credit.
Facility, we also successfully reduced our leverage profile by repaying $500 million of bonds outstanding during the quarter.
Lets towers Watson remains well positioned from a liquidity perspective, we aim to continue to maintain a strong and durable balance sheet and continue pushing forward on our cost savings and efficiency initiatives as.
As the economic recovery unfolds, we will continue to monitor the ever evolving impact of the pandemic and are prepared to take appropriate measures as needed to preserve our financial position.
Free cash flow was negative $165 million compared to negative $43 million in the prior year. The decrease from the year over year free cash flow was due to the net legal settlement payments of approximately $185 million in respect to the previously announced Stanford and Willis towers Watson merger settlement and higher incentive compensation and benefit related items of approximately 180 <unk>.
Absent. These one off items free cash flow would have increased more accurately reflecting our run rate improvements on working capital and cost containment efforts.
We've made tremendous progress to improve our free cash flow in 2020, and we remain dedicated and are focused on maintaining our progress on this area in 2021.
In terms of capital allocation in the first quarter of 2021, we paid approximately $92 million of dividends, we do not expect to repurchase any shares for the remainder of 2021, given certain prohibitions on the transaction agreement with them in connection with our pending business combination.
Pension contribution to our qualified plans totaled 86 million in the first quarter.
We're currently projecting contributions of 126 million from 2021.
As a general matter of COVID-19, pandemic did not have a material adverse impact on our overall financial results in 2020 or on the first quarter of 2021, how long the pandemic did continue to impact revenue growth, particularly on some discretionary lines and we expect the effects of COVID-19 on general economic activity may continue to negatively impact our revenue on our results were.
Remainder of 2021.
The duration of the pandemic the full magnitude of its economic impact and the subsequent speed of recovery remain unknown in the meantime, we remain focused on maintaining a strong balance sheet liquidity and financial flexibility.
We're very pleased with these first quarter results. There are a direct reflection of our resilience and our continued focus on strategic priorities.
Our first quarter results were very encouraging we have momentum solid financial results and our strong balance sheet and an excellent team, which gives me confidence on our ability to continue driving value for all our stakeholders on now I'll turn the call back to John.
Thanks, very much Mike and now we'll take your questions.
We will now begin our question and answer session.
Like to ask a question. Please press star followed by the number one on your telephone keypad to withdraw your question press the pound key please standby for the first question.
Your first question will come from Greg Peters with Raymond James. Please proceed with your question.
Good morning, John Mike and team.
So I'll just ask three questions.
First I realize you are bound by Irish takeover law, but I guess it might be professional malpractice. If I don't ask you on merger question.
Two parts of the merger question you said in your comments Youre still expecting expect to close in the first half of 'twenty one.
Pending regulatory approval I'm wondering if I'm not mistaken the phase two extension from the EC goes into July so that would imply a second half potential regulatory approval and the second piece on the merger as I know you haven't commented on it but.
The disclosures in the press suggests that you're going to exceed the revenue divestiture cap in the purchase documents. So I was just wondering if you could give us some color on those two items.
Yeah, Thanks, very much Greg.
On the.
First of all on the EC I think.
I think there.
Tension goes into July that doesn't mean, it has to run that long.
It is still possible to close June 30th and be consistent with that with that extension.
So no particular kind.
Conflict there.
And.
I'm sorry, what was the second question.
Pieces on the divestitures the <unk>.
The links to the price given what we're hearing suggests that you might exceed the $1 8 billion dollar revenue divestiture cap that's in the purchase document and just trying to reconcile that.
And your perspective on that to the expense I can comment on it.
Yeah actually as you won't be surprised to hear a debt, we're really not in a position to speculate on any potential divestitures.
Yeah I figured.
Well, let's pivot to <unk>.
The producer retention.
Comment that you made regarding CRB.
And let's expand that can you just give us an update I know from time to time, you have comment on an employee retention in the past can you give us a sense of how the retention has stacked up through the first quarter. We have seen reports in the price of certain teams, leaving just curious how the Willis franchise.
As exists today versus where it was a year ago.
Yeah.
So a couple of things, let me say first of all.
I think our.
When we look at our turnover.
On.
Sales roles.
Rolling 12 months today compared to where it was a year ago and I look at it.
Segment by segment, it's pretty much.
About the same.
Maybe slightly improved in general the one segment that it's up it's BDA.
And.
That's just a function of some of the expansion I think of transact then.
We have a lot of turnover a lot of turnover there, but overall.
If I look at it segment by segment our turnover is.
Slightly improved now at the same time every time a.
A transaction like a big merger are.
Acquisition gets announced there are some people that decide.
They don't want to be part of the new organization and certainly we've seen that in some.
In some instances, but when we look at it in terms of the overall impact it's not it's not necessarily showing up as a big overall impact, but we can certainly point to isolated instances, where that's happened those are the kinds of things we've seen happened before in this business and we think we're prepared to to deal with them, but it is something we continue to look at.
Got it I guess the final question would be on free cash flow I know you called out the Stanford cash payment settlement in the first quarter.
If we exclude that and think about the full year. How are you feeling about free cash flow for 2021. After what was a phenomenal result in 2020.
Well I'll I'll, maybe just give you a quick reaction from me which is debt.
I couldnt be happier with our cash.
Cash performance in the first quarter I thought we had a tremendous first quarter last year and I think we did significantly better. This year. So I was really pleased to see what we have been as Mike mentioned, we did have a couple of the.
Trends things that affected us this year compared to last year, but I see continued progress being made but Mike maybe you want to comment on that.
Yes, Thanks, John and thanks for the question Greg.
We have put a lot of effort on a lot of focus to <unk>.
A repeatable processes on our colleagues and I'm working very hard and continuing to deliver as John said in terms of delivering that free cash flow. So.
Although as you know, Greg we are not giving any guidance, but but nonetheless, we're very pleased with what's happened here for the first quarter and as I say I'm very very proud and pleased with what the team continues to deliver.
Got it thank you for the answers.
Great. Thanks.
Your next question will come from Elyse Greenspan with Wells Fargo. Please proceed with your question.
Hi, Thanks, Good morning, Mike.
My first question.
Going back to you had mentioned on senior staff departures right.
ERP within Western Europe.
And I guess tying that together with on your.
In response to Greg's question on.
And the fact that I think you said mergers right. There's always some type of kind of individuals that will choose to believe is that the only area of adjusted your business with no debt on.
On my significant impact from some employees on that might have left the organization.
I would have to say Elyse I think we've seen.
You might see.
Half a dozen people leave here or half a dozen people live there and so you see some isolated ones I think the western Europe, one was probably the most significant one lease up.
Okay, and then as we think about you guys mentioned.
The impact of the economy on it at all.
Visibility and impact on your business right, but if we look on an overall basis for Willis towers Watson right you guys reported on 4% organic revenue growth, which was an improvement from what we saw in the back late quarter. It on 2020.
Back on.
Based on the fact that no vaccines are being rolled out on books.
It looks like the economy, one truth on shall.
Can we be that Q1 is kind of the low bar for the year in.
It sounds like there should be somehow weighted here organic revenue that either can be quite a bit on 2021 should be better than what we saw in the first quarter.
Yeah, I would say so first of all we haven't given a guidance.
You know the reason we haven't given guidance is because this is such a volatile environment and it's hard to predict.
Exactly what's going to happen, but I would say this we feel better about the rest of the year today than we did when we enter 2021 and we also feel very good about our ability to grow with the market and to compete so.
We're somewhat optimistic.
Yeah.
Okay. That's helpful on.
And then from on.
We're talking to expenses and margins and on at.
It sounds like you're always kind of growth driving margin improvement ex solid expense.
Management throughout the different segments on it doesn't sound like there was anything one off within your margins that perhaps you think about not continuing on but is there anything COVID-19 related or is it just kind of a great on good expense management quarter in line.
Could think about that continuing on from here.
Yeah, I think the theme that Mike had touched upon was on.
Our colleagues throughout the organization embracing what we needed to do during COVID-19 and responding and we've seen them do that and we do in general. We think these are things that are going to be ongoing.
Okay. Thanks for the color.
Mm Hmm okay.
Your next question will come from Phil Stefano with Deutsche Bank. Please proceed with your question.
Yeah. Thanks.
Good morning, so the growth in transactions continues to be a fantastic. It's outpacing our expectations. If I'm not mistaken. This is the first segment operating margin that was positive for BBVA.
Outside of a fourth quarter maybe ever.
Can you talk about the extent to which transact is helping to drive that and the extent to which growth could continue to lap the strong growth we saw last year.
Mike do you want to.
Yes, we are.
<unk> been very pleased with transact if you go back when we announced transact.
We are very excited about what they brought to the table.
And in terms of their ability to serve the market.
We saw it as a market that was very very strong and we had put out there in terms of organic revenue growth.
Is it pretty formidable view over the next several years.
In terms of what the CAGR growth rate was going to be and transact has exceeded it.
So.
As you said and rightly pointed out in terms of where the margin is in terms of improvement and positive for the first time other than the fourth quarter.
Happening.
Transaction on a big Big contributed on it so I got to tell you we see it as is doing very well and we really like the transaction transact team and what they continue to deliver and we couldnt be happier with their performance.
Okay.
Okay, Thanks, and so switching gears a bit and just going back to the potential merger with E. On.
So that you don't want to comment on any potential divestitures, but maybe I'll come at this from a different angle.
If I wanted to take a negative lens to view this at.
I could argue that the divestitures and a regulatory approval scenario might be at a.
A forced sale price it will be less than you would get in the.
And the market, otherwise and if I layer on top of that.
<unk> comp retention awards, how do you think about these dynamics to get the deal done versus the fiduciary duty to maximize value for shareholders.
Okay.
I mean I think we.
We always have in mind.
Sure he duty to maximize.
Value for shareholders and when we're considering anything whether it's acquiring a company divesting of company are just running our business. So that's one of our Paramount considerations.
So.
Maybe the press on this just a bit and then and then I'll, let it go but is there a level of revenues and.
Price that you could get for potential divestitures at which.
This starts to feel like the deal doesn't make sense anymore for the Willis towers shareholders.
Well I mean.
Again, I don't want to speculate on things, but let me just address something as a theoretical matter. If you were told you have to give away our businesses and couldn't get anything for them of course that would seem like that would not be a good thing for shareholders. So clearly there is some price at which it occurs.
Okay. Thanks.
Yeah.
Your next question will come from Sumit <unk> with Citi. Please proceed with your question.
Thanks, I wanted to ask another one on the pending merger.
Can you talk about the client reaction to the deal and obviously, it's been announced its been out there for a year are you seeing any concerns around sort of concentration risk.
With the combined company from from your clients.
Quite the contrary our clients are.
Very excited about the <unk>.
Possibilities that the new firm can bring to addressing unmet needs and you may remember when.
Great case, when I first announced this.
Merger.
What we talked about was the possibility for innovation the possibility of the new firm being in a better position to address unmet client needs clients have responded quite enthusiastically about this and I would say you know the fact of the matter is the businesses we're in.
Across the whole spectrum are all highly competitive businesses and we don't see any concentration risk.
Got it and then on the 400 million dollar retention payment that was part of the deal.
Is any of that being paid now which could be impacting your <unk>.
Level of attrition.
No.
So that's all start once the deal closes.
Any retention payments are at the time the deal closes or after.
Got it and just one last one on that.
Is there an element here, where the retention payments are effectively being communicated to employees, but not being paid.
Oh, yes of course.
Have any retention effect, if they didn't really know what they were getting.
Yeah, Okay got it thanks.
Yeah.
Your next question will come from Mark Mccollum with Baird. Please proceed with your question.
Hey, good morning, John and Michael and John I, just wanted to start off by saying.
We don't know if we're going to have a second quarter call.
Just given that this is going to end up closing.
Prior so first of all congratulations going all the way back to the Watson Wyatt days.
For all the shareholder value that you've created.
Over multiple decades.
It's been on incredible run.
So I just wanted to start with that.
Can you can you just talk a little bit about.
If there's if the if the client reaction has all been positive.
You know who what are what would what would be the driver behind.
Some of the objections that are out there broadly theoretically.
Yeah, So first of all Mark.
Thank you very much for those kind words, it's been a pleasure to work with you.
Over the years and.
I am I am actually hopeful that this ends up being my last earnings call in that we closed June 30th is as anticipated.
So I think we're.
When regulators look at.
Markets, They go and they talk to.
They talk to clients they talk to other market participants they talk to competitors and they get a wide variety of comments from them.
Sometimes.
They you could hear from a small minority of the.
Market participants and the regulators are still put some emphasis on that so you know there's lots of different ways that you could.
Look at it and at least at least have the potential to ask some questions about it.
But our experience and of course, you know, we're probably going to hear from our clients that are the most enthusiastic about it I get that but our experience has been that clients are quite excited about the prospects of the combination.
Great and then can you just talk about.
So.
Aggressive law.
Is that now just from a revenue perspective roughly speaking.
Mike do you have the figure on that don't you.
Mike are you on mute.
Sorry, John Yes, so its about think about it I don't know.
And the $400 million range something in that range.
Okay, and then Willis re in the U S. How do you wouldn't happen to have that would you Mike.
I don't think we've really disclosed that mark and that kind of breakout.
Sorry would you have an estimation or.
Now now we just really haven't I'm, sorry, Mark we really haven't disclosed that.
Yeah, I think mark it's not it's not that Mike doesn't know that we just haven't disclosed on.
Yeah, I was just saying on this as a public forum and obviously you know.
It's I mean, it's fairly obvious what I'm trying to get at.
Just because it does seem like we.
There are some press reports that we're going to be.
Above the merger cap on there are some that are.
Would suggest that maybe we're going to be below and so I was just trying to triangulate on some of the pieces.
<unk>.
Is there any comment that you can make just with regards to what seems realistic on what the next step.
Yeah.
You've obviously got a long term track record of success, you think about all of the possibilities.
You didn't just.
Yeah.
You're obviously super sophisticated and all of your advisors are as well so just.
It's hard to imagine that you havent conceived of some of the possibilities that could come up or in some of the next steps to address those so just trying to think through like I mean, even if we if were slightly above the merger cap I mean, there would be a relatively easy.
<unk> on that winter.
Yeah, I mean I think.
Mark So first of all I think youre right as we think about any of these things with our.
Our partners at a on about.
Whether we might whether there might be some remedies that we we offer two regulatory authorities.
So I said to an earlier question, we always have the best interest of the shareholders in mind and doing something debt that makes sense, but.
We've.
We really we're not in a position right now where we can just comment about any potential and certainly not about press reports, which.
Are out there and you know sometimes have some elements of truth, but a lot of times a wildly inaccurate.
Got it.
And just I mean from.
From a purely regulatory strategy perspective.
Does it make sense to think okay. The E. C was the first priority next up is the Doj.
And then after that we go to some of the smaller countries.
If the Doj on the E C are both on board.
It's going to be hard to imagine that some of the smaller countries would end up.
Proving to be decisive is that.
Reasonable way on it.
Yeah, well I would say debt certainly the the vast bulk of our business is in.
The.
EC, including the U K and that and in the U S on the other hand.
We have been.
Meeting with and addressing our regulators in jurisdictions throughout the world.
And we.
We are committed to working with all of them were committed to.
Making sure they understand the transaction and why this is good for the competitive.
Competition in the industry and we're not we're not emphasizing necessarily one over the other but it is true that the bulk of that business is in those two jurisdictions.
Okay.
And then if Matt I imagined that.
<unk> is growing better than.
Anybody anticipated say.
912 months ago when.
When we take a look at the growth that we're seeing here and the possibilities going forward I mean, what what inning do you think we're in with regards to transact and how powerful that could end up being.
Yeah. So.
I think we had.
And gene Wickes, and Mike Burwell and I. When we were first looking at this and Jane and Mike are the ones, who really led the charge on transact.
Had lofty expectations and transact has performed way above our lofty expectations. So we couldnt be more pleased with how that has worked out.
This is a very dynamic market there's lots of.
I think growth opportunities, there's lots of potential changes, which could be down to the benefit of organizations like transact. So we think.
We're in the early innings second third I mean this is there there's a lot left to play out here, yet I think mark.
Congratulations to you John and also to gene if he's listening.
<unk> and <unk>.
Everybody else on the team so congrats thanks.
Thanks, very much mark.
Thanks Mark.
Your final question in queue will come from Meyer Shields with Kb Debbie. Please proceed with your question.
Thanks, two really good questions I think one John can you quantify the impact on CRB.
If organic growth from the transfer of wholesale business.
Mike do you have that number don't you.
It's really immaterial.
Mayor.
Yeah, I think we talked about that on the last quarter. We said it was it was material for the wholesale business, but immaterial foresee our tariff on CRB.
No I just want to see whether that held up in the first quarter second line, yes. It does.
Okay perfect.
Can you sort of lay out the timeline from.
The Western European staff left and when do you hooked weighted revenues kind of disappeared with debt at the same time of day or lag.
It was the middle of last year, some time, I think middle to late middle debt folks left.
But the revenue impact tends to be noticed a little more in the first quarter. When you have a lot of the renewables.
Okay. That's perfect. Thanks, so much.
Yeah.
And we have reached the end of our question and answer session I would now like to turn the call back over to John Haley for closing remarks.
Great well, thanks, very much everybody.
This is the time when I traditionally say, we look forward to.
Updating you on our second quarter earnings.
Later this year.
I'm actually hoping that transaction is closed and we don't have that call, but if not we do look forward to updating you then have a good day.
This concludes today's conference call. Thank you for participating you may now disconnect.
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