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Takeaway: This story doesn’t get interesting again till we get closer to 2016. But the bigger question now is whether mgmt can stave off Chapter 11.


  1. UNEVENTFUL PRINT: Mgmt already conceded 2015 was going to be a rough year when it disappointed on 2015 guidance.  While the print was relatively uneventful with a slight top-line miss on Fx, and reiterated guidance, the key takeaway from the print was that the 2015 winter selling season was in fact its worst winter selling season in its public history.
  2. DON’T CARE UNTIL 2016: Our tracker is showing decent improvement into 2Q15, but that doesn’t matter all that much.  The first quarter sets the tone for any given year given WTW’s seasonal attrition issues.  That said, no quarter in 2015 will change the tide from here, and 2015 is largely irrelevant outside of tracking seasonal attrition patterns, which at a minimum appear to be approving.  
  3. CHAPTER 11?  WTW is dangerously approaching the point where it costs more to acquire its members than the gross margin it earns from them.  If that ever happens, it’s basically game over.  WTW’s 2015 target of $290M in cash can only go so far with an annual debt service of roughly $120M.  For more detail, see the note below.

WTW: Chapter 11?

02/27/15 08:46 AM EST

[click here]

WTW: Don’t Care Until 2016 (1Q15) - WTW   1Q Selling Season 2015 4

WTW: Don’t Care Until 2016 (1Q15) - WTW   Tracker 4 15

WTW: Don’t Care Until 2016 (1Q15) - WTW   Per Member 1Q15

Let us know if you have any questions or would like to discuss in more detail. 

Hesham Shaaban, CFA


Thomas Tobin