Towers Watson (NYSE, NASDAQ: TW), a leading global professional services company, today announced financial results for the first quarter of fiscal year 2013, which ended September 30, 2012.
For the first time, these results include a full quarter for Exchange Solutions, a new reportable segment that was created by the acquisition of Extend Health on May 29, 2012. Exchange Solutions’ economic model drives very different seasonality of financial results than our general consulting and brokerage business and will impact the year over year comparisons. The Exchange Solutions business will incur significant costs in the first half of the fiscal year to enroll new members, while commission revenues will be recognized over the annual policy period. Most policies have an effective date of January 1.
Total revenues were $834 million for the quarter, an increase of 3% (5% constant currency) from $810 million for the first quarter of fiscal 2012. On an organic basis, which excludes the impact of changes in foreign currency exchange rates, acquisitions and divestitures, revenues increased 3% from the prior-year first quarter.
Adjusted EBITDA for the first quarter of fiscal 2013 was $150 million, or 17.9% of revenues, a decrease from $162 million, or 19.9% of revenues, for the prior-year first quarter. The decrease was driven in large part by the business cycle of Exchange Solutions. Adjusted EBITDA excludes transaction and integration expenses and non-cash stock-based compensation arising from the merger and acquisition activity.Net income attributable to controlling interests for the first quarter of fiscal 2013 was $59 million, a decrease from $60 million for the prior-year first quarter. For the quarter, diluted earnings per share were $0.82 and adjusted diluted earnings per share were $1.13. The impact of Exchange Solutions on diluted earnings per share was $0.13 and the impact on adjusted diluted earnings per share was $0.07, including the interest charges associated with financing the Extend Health acquisition. Adjusted diluted earnings per share exclude transaction and integration costs, non-cash stock-based compensation arising from the merger, amortization of merger and acquisition accounting intangible assets and non-recurring other income. The tax rate for the quarter was 36%.