Towers Watson Q2 Profit Increases; Cuts FY14 Outlook - Quick Facts

(RTTNews) - Professional services company Towers Watson (TW) said that its second-quarter net income attributable to common stockholders increased to $86.19 million from the prior year's $82.29 million, with net income per share improving to $1.21 from last year's $1.15.

Income from continuing operations attributable to common stockholders for the second quarter of fiscal 2014 was $87 million, an increase from $80 million for the prior-year second quarter.

Adjusted earnings per share from continuing operations was $1.40 down from $1.44 last year.

Total revenues were $888 million for the quarter, a decrease of 2.5% (2% decrease constant currency) from $911 million for the second quarter of fiscal 2013. On an organic basis, which excludes the impact of changes in foreign currency exchange rates, acquisitions and divestitures, revenues decreased 2% from the prior-year second quarter. The prior year quarter experienced particularly strong results due to short-term strength across several lines of business.

Analysts polled by Thomson Reuters expected the company to report earnings of $1.34 per share and revenues of $910.09 million for the quarter. Analysts' estimates typically exclude special items.

The company expects to return to constant currency revenue growth in the second half of this fiscal year. It also continue to be focused on cost saving initiatives and streamlining its workflow, which could bring the anticipated total of severance costs to $15 million this fiscal year.

For the third quarter of fiscal 2014, the company expects to report revenues in the range of $915 million to $925 million, reflecting constant currency revenue growth in the low single digits, and adjusted earnings per share in the range of $1.45 to $1.50. Analysts expect the company to report earnings of $1.55 per share and revenues of $932.53 million for the third-quarter.

For fiscal 2014, the company expects to report revenues in the range of $3.5 billion and adjusted earnings per share in the range of $5.55 to $5.65. Street currently is looking for fiscal year 2014 earnings of $5.69 per share on annual revenues of $3.54 billion. This guidance assumes an average exchange rate of 1.61 U.S. dollars to the British Pound and 1.36 U.S. dollars to the Euro for fiscal 2014.

The company said in November that it expected adjusted earnings per share in the range of $5.75 - $5.82, and revenues of $3.53 billion for fiscal 2014.