Welcome to the Second Quarter 2016 Willis Towers Watson's Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Aida Sukys. Ma'am, please begin.

Thanks, Howard. Good morning. This is Aida Sukys, Director of Investor Relations at Willis Towers Watson. Welcome to the Willis Towers Watson earnings call. On the call today are John Haley, Willis Towers Watson's Chief Executive Officer; and Roger Millay, our Chief Financial Officer. Please refer to our website for the press release issued earlier today. Today's call is being recorded and will be available for replay via telephone through Monday by dialing 404-537-3406, conference ID 49073928. The replay will also be available for the next three months on our website. This call may include forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 involving risks and uncertainties. For a discussion of forward-looking statements and the risks and other factors that may cause actual results or events to differ materially from those contemplated by forward-looking statements, investors should review the Forward-Looking Statement section of the earnings press release issued this morning, a copy of which is available on our website at willistowerswatson.com, as well as other disclosures under the heading of Risk Factors and Forward-Looking Statements in our most recent Annual Report on Form 10-K and quarterly report on Form 10-Q and in other Willis Towers Watson filings with the SEC. Investors are cautioned not to place undue reliance on any forward-looking statements, which speak only as the date of this earnings call. Except as required by law, we undertake no obligation to revise or publicly update forward-looking statements in light of new information or future events. During the call, we may discuss certain non-GAAP financial measures for a discussion of the non-GAAP financial measures as well as reconciliation of the non-GAAP financial measures under regulation G to the most directly comparable GAAP measures. Investors should review the press release and supplemental slides we posted on our website. After our prepared remarks, we'll open the conference call for your questions. Now, I'll turn the call over to John Haley.

Thanks, Aida. Good morning, everyone. Today we'll review our results for the second quarter of 2016 and provide updated guidance for the full-year of 2016. We'll also provide consolidated 2016 and certain pro forma 2015 financial results. Our segment results for this quarter are presented based on the new Willis Towers Watson structure. We provided historical Willis Towers Watson segment information in an 8-K filed on July 14, 2016. We're pleased with our performance this quarter in a business environment that had some challenges. Reported revenues for the quarter were $1.95 billion which includes $31 million of negative currency movement on a pro forma basis. Adjusted revenues which includes $26 million of deferred revenues were up 11% on a constant currency basis and 5% on an organic basis. Commissions and fees were up 3% on an organic basis. Net income attributable to Willis Towers Watson for the quarter was $72 million as compared to the prior year pro forma net income of $114 million. Adjusted EBITDA for the quarter was $406 million or 20.6% of adjusted revenues as compared to the prior year pro forma adjusted EBITDA of $401 million or 22.1% of adjusted revenues. The second quarter is a seasonally weak quarter due to the low level of renewals for some lines of business, primarily related to Gras Savoye and Miller where they had very strong renewals in the first quarter. Portions of the consulting and administration businesses also had weaker performance in the second quarter of the calendar year due to seasonality. Adjusted EBITDA for the first half of 2016 was $1.077 billion or 25.4% of adjusted revenues, as compared to pro forma adjusted EBITDA for the first half of 2015 of $979 million or 25.6% of adjusted revenues. Due to the seasonality quarter-over-quarter, we believe the first…

Thanks, John. And good morning, everyone. I'd also like to add my thanks to our colleagues for all their hard work. Prior to the merger, in a previous call I talked about the unique opportunity we had to create a powerful organization which would be stronger than what we could have achieved as individual organizations. Now, that we're into our eighth month of integration, I'm happy to say that we're seeing clear development of these merger synergy focus areas. We have confirmation that the enhanced global footprint and large market relationships are having a positive impact on our global benefit solutions business. We're seeing some early success in utilizing the U.S. midmarket distribution network for our healthcare exchange. And we've had some early wins in the large market P&C space. And our cost rationalization efforts are bearing fruit. There's still a lot of hard work ahead of us, but seeing the collaboration among our colleagues and the market activity make me optimistic that we're creating the powerful organization that we envisioned. Now for our financial results. As a reminder, our segment margins before consideration of unallocated corporate costs such as amortization of intangibles, restructuring costs and certain integration expenses resulting from mergers and acquisitions. The segment results include discretionary compensation. Income from operations for the quarter was $136 million or 7% of revenues. The prior year second quarter pro forma operating income was $170 million or 9.4% of revenues. Adjusted operating income for the quarter was $357 million or 18.1% of adjusted revenues. In the prior year quarter, pro forma adjusted operating income was $347 million or 19.2% of adjusted revenues. Income from operations for the first half of 2016 was $462 million or 11% of revenues. The prior year first half pro forma operating income was $553 million or…

Thanks, Roger, and now we'll take your questions. [Operator Instructions]

Our first question or comment comes from the line of Greg Peters from Raymond James. Your line is open.

Good morning, and thanks for hosting the call and taking our questions. I have three areas I'd like to focus on: competitive positioning, the OIP and EBITDA guidance. First on competitive positioning. Could you provide some additional color around how you see where the company is considering the recent results from some of your peers and what looks to be like some of the challenges you reported, like in legacy Towers Watson in the second quarter?

Yeah. So, let's see, focusing specifically on the legacy Towers Watson there, I think we see some challenges in Talent and Rewards as I mentioned. And specifically, that is obviously the most economically sensitive of our businesses there and tends to go up and down. As we've seen a cutback on M&A and on some other projects, that has impacted where we are. We don't feel that we're losing out necessarily to the market at all. I just think we see the market as being a little bit slower. We do feel pretty good that we think we'll see a little more of a pickup there. We have easier comparables and we also see maybe a slightly improved pipeline for the second half of the year. So, while it's down, we don't feel that we're losing any market share and we feel that we continue to be well positioned there. I think in the Risk Consulting and Software and in the investment part of the business, those are both ones that have seen some challenges in the last couple of years really. And I think we continue to see them undergoing some challenges. Now, the Risk Consulting and Software is not one that our major competitors really have, so we don't have any direct comparables there. But we do see a decline in a lot of the Risk Consulting projects. The software piece of that business is doing relatively well. But the consulting part of the business, we're just seeing less of an appetite for that among our clients. And I would say that, again, it's not so much that it strikes us that we're losing market share there that we just see the market being softer than it had been. In the investment part of the world, we don't run the funds of funds, and so we don't have a direct comparison again to some of our competitors. But we are seeing a decline in some of the consulting projects around that. And so, we're seeing more of a focus to some of our delegated investment which I think was the growth area that we see. But a large part of our business has been consulting and we do see some softness there. If I look at the rest of the businesses, whether it's Legacy Willis or Legacy Towers Watson, I think we see some ups and downs. I think in general we're within a percent or so of where the market is going with the maybe exception of Exchange Solutions which has just had a fantastic first half of the year.

Great color. Thank you. On the OIP - oh, go ahead.

And then I think...

Yeah. I just wanted to circle back on your comments on OIP. I know you previously said that you're on track to get the $325 million savings, but I know that a lot of it has been spent or invested so far. Can you give us an update on what you might expect to harvest in savings over the next two years of that $325 million?

Yeah. So, that's a subject of intense study by us right now. And I think, Greg, we're really targeting next month when we have the Analyst Day to present the detailed analysis of that. But I think that it's safe for us to say that I think we're changing a little bit - no, we're changing a lot - the focus of OIP to say what we're concerned with is not what the cost reduction is, what we're concerned with is what the margin improvement is. And so, we'll be prepared to address that next month.

Perfect. And just - I can use that to dovetail into the EBITDA issue. It looks like the guidance is just a tad lower than where it was before. I'm curious if that changes the calculation or the calculus on the debt and the rating agency discussions? And more importantly, ultimately, we're trying to reconcile EBITDA with your longer term target, I think it was 25% by the end of 2018, so any color there would be helpful?

Yeah. I'll let Roger address that.

Yeah. Just to the first question, no impact on any rating agency matters at all. And in terms of the goal, I mean we - as John said, we will be talking about the levers to get to the goal by 2018 and we're still focused on that and creating the structure internally to drive to that.

Great. Thanks for the color.

Thanks.

Thank you. Our next question or comment comes from the line of Bob Glasspiegel from Janney. Your line is open.

Good morning. Quick question on the Reinsurance organic guidance, just making sure. We knew about the JLT settlement when you gave the prior guidance, so I assume we're not factoring in any lost revenues from departures in the revised lower guidance, it's other factors that you cited?

Yeah. I think that that's right. So, of course, there's a lot to IRR and John already talked about the Legacy Towers Watson Risk and Financial Services piece, there's no revision in that guidance related to the departure of the Fine Arts and Jewelry team or no change at all really with respect to that matter.

Just clarifying that, you don't look to see any significant revenue lost from the departures? You can replace that with new hires or is that a ...

No. What I'm saying is...

No. That's already in there is what we're saying. It was already in there previously.

Right. And what is the revenue impact from the departures? Is it material?

I think it's about $10 million. Is that right?

Somewhere in that neighborhood.

Or is it about $20 million a year?

$20 million revenue.

Yeah, yeah.

$20 million, about $20 million.

Okay. That's helpful. Thank you. The free cash flow operations in the quarter was roughly $300 million from your cash flow statement. What were the big drivers in improvement there in the quarter?

Well, so if you're looking sequentially, of course, we paid incentive comp in the first quarter. So, for...

I was looking more year-over-year. It was $300 million versus $70 million?

Yeah, versus even $7 million, I think. So, when you're looking at a comparative cash flow statement, that's just the Legacy Willis cash flow statement. So, the biggest difference is really the consolidation of the companies and the free cash that's been added as a result of the merger.

There weren't any significant items in and out that distorted the operating trend to cash flow?

No. Just the performance of the business and what you would expect in the June quarter from the Legacy Towers Watson business. So, no distortion.

Thank you.

Thank you. Our next question or comment comes from the line of Elyse Greenspan from Wells Fargo. Your line is open.

Hi. Good morning. First question, in terms of your guidance, what are you including for currency on earnings for the back half of the year? And also, what was the currency impact in the Q2, and what had you been assuming for currency, I guess, in your prior earnings guidance.

Yeah. I mean, I think the rates - I don't have the rates in the prior. I mean, obviously, the pound is down, the euro is about the same, I think it was - I think we're at $1.11 and it was $1.11. Off-hand, I don't have it. Are you asking for what the rates are that are assumed in the second half?

No. I'm just asking what bottom line impact on EPS are you expecting in the second half of the year.

Yeah. We'll have to get back to you on that, Elyse. We don't have that on our fingertips.

Okay. Do you know what the currency hit was in the Q2 on earnings?

About $31 million.

Okay. Great. And then in terms of the margin just going back into the EBITDA margin for this quarter in particular. So, if you kind of back out the JLT gain, you probably get close to about 400 basis points of deterioration when you look to last year. I know you said that there are some seasonality from some of the Legacy Willis acquisitions. But can you just kind of go into more detail, I guess, on what outside of just those two acquisitions is really driving the margin deterioration and how, I guess, you expect that to flip as you move - expect margin improvement in the back half of the year, and as you go towards that 25% target?

Yeah. So, that's why we gave you the six-month margins. So, for six months, the margins were either slightly up or about the same as last year. So, that illustrates the seasonal timing impact. And it's really, as we said in the first quarter call, the Gras Savoye revenues came in - about 70% of their revenues came in in the first quarter. So, there's extreme seasonality that drove that. So, again, as we said in the script, we think the six-month margin numbers are more indicative of where the company is.

Okay. And then on the organic, the outlook for the risk and brokerage business for the second half of the year, it's implying some level of improvement versus half-year one. And I'm just curious how you kind of think about that business evolving on an organic basis, especially as you kind of look to Legacy Willis, the results there, is that you get a little bit tougher comps in the second half of the year. So, what's driving the organic improvement in your mind?

And this was in IRR you're asking about?

CRB.

CRB?

Yeah.

In CRB? Yeah. I mean, it does imply a little bit better second half. There are some areas where there's a pipeline that supports that growth level. There are areas where the difficulty in the first half or even the first quarter won't be repeated. For instance, we talked last quarter about the South Stream project that was a one-time write-off. There are also areas where seasonality of growth actually in the last couple years has been stronger in the second half. So, while it's not a big pickup, there are several factors that drive that expectation.

Okay. And then one last question, if I may. You guys started repurchasing stock probably a little bit earlier than we were expecting, yet I noticed in your guidance the share count stayed the same. How come?

Yeah. We had this odd phenomenon based on the merger close that, because it closed on January 4, actually, and we're talking plus 1 million shares here. But the count was a little bit lower that the real run rate coming in to the merged company in the first quarter. So, we're now on a path where given the share repurchases we talked about, and now that the timing is normalized, we'll be seeing downward impacts to the share count.

Okay. Thank you very much.

Thank you.

Thank you. Our next question or comment comes from the line of Quentin McMillan from KBW. Your line is open.

Hi. Thanks very much, guys. I just wanted to ask about the operational improvement program. John, thank you. It seems like you're going to give obvious a lot more color at the upcoming Investor Day, so look forward to that. But can you just clarify something? It seems that you just said that you're not focused on the cost reduction but what the margin improvement is. Am I reading correctly to assume that you're thinking that revenue synergies and top-line boost from potential gains from the operational improvement are what you now are focusing on and that the underlying expense savings are not necessarily what's going to drive the margin improvement?

No, no. That wasn't what I meant to say. What I meant to say was that we don't see getting a cost reduction by itself as the end game. What we see as the endgame is getting margin improvement. And so, what we want to look at it, the OIP is to say, how does this result in margin improvement? And that's going to be what our focus is.

Okay. Great. Appreciate that. And then, second question for you, John. People are now looking out to your own compensation metric $10.10 in 2018 as sort of the longer term guidance. I know you guys haven't necessarily put that out there, but that's what some are talking about. So, I just wanted to sort of laid out the baseline of holding the macro flag. If we live in an environment with a 2% GDP, the 10-year stays around 2%, inflation is constant, and the P&C rates stay in this negative - a couple hundred basis points maybe. Is that an environment where you feel confident that you're going to be able to drive towards that $10.10 number in 2018 or is there something that maybe needs to break to the upside for you to reach that?

No, look I think one of the things we knew that when we were putting together Willis and Towers Watson was that the first year we would have some puts and takes and it would be a little bit messy, and we were in some ways in a difficult environment. But frankly, all the different possibilities that are there from the merger, whether it's revenue synergies, cost synergies, tax synergies, whatever, we think all of those things provide tremendous upside. And so, I continue to be bullish about the prospects. And as I told investors from the beginning, this is a three year project for us. It's one of the reasons why we put together the compensation plan the way we did. It focused on those metrics. And I continue to be positive about hitting them. So I'm still focused on that.

Great. And if I could just - very quickly for the guidance in terms of the 2% to 3% organic growth, are we assuming that that $40 million is in a total organic growth number? The 2% to 3% you're giving is total, it's not commissions and fees organic growth and the $40 million JLT will be in there?

That's right. It's total revenue.

Okay. Thanks very much, guys.

Thank you. Our next question or comment comes from the line of Dave Styblo from Jefferies. Your line is open.

Hi. Good morning. Thanks for the questions. Just want to talk about the areas of weakness and get a better understanding of what you guys think is under your control versus what's market related. We heard a lot of threads between China, a soft M&A market, some discretionary spending that happens by employers for Legacy Towers business. It seems predominantly market-related, but I just want to get a sense of the potential improvement, not so much for this year but also next year in terms of what you think you can do to change and improve the organic growth profile of the company?

Yeah. So, let me just sort of talk about that at an overall level there. I think - as you mentioned, when I was responding to the question about the Legacy Towers Watson, I said to the extent we see some areas that are underperforming, we have a sense that it's the market and not so much specific things going there. One of the things that makes it a little bit difficult is in some of those areas like Risk Consulting and Software, we don't have natural competitors that are public companies to look to see what the market is. But our overall sense is just that the market is down there. And we've been through this. We see some ups and downs. We have areas like our old Talent and Rewards that are very heavily dependent on the economy overall. So, we see those going on. We have similar areas like that from the Legacy Willis part of the business. So, when we look at the capital markets area there, that's a small area, but it's one that is very sensitive to the amount of insurance-related M&A transactions that are going on. And for comparison, last year, there was $110 billion in M&A transactions in the insurance space. So far, this year, there's been $10 billion. That's a pretty big difference and it's one of the reasons why that has contributed to a decline in the IRR this year. I think when we look at it, there's a couple areas where we are trailing the market. I think if we look at our Corporate Risk & Broking and if we look at the Reinsurance, we're a little bit lower than the market there. I think in both cases, we look at those as it may be in some cases of portfolio effect. So for example, I think the international, which has been the real source of growth for Willis versus the market over the last several years, that's the area that's particularly down this year. So, that may affect us more than some of our competitors. But I think it's safe to say that we're probably a percent or so below them this year. We don't see anything that's structural. We think that some of that is related to just some goings on in the business that we expect to reverse themselves and we expect to be growing at about the level of the market or better in 2017.

Okay. That's helpful. On the exchanges, just to make sure I square the numbers right. So, I think you said 300,000, was that all for 2017, because I think there was also a comment about one of the employers or one of the clients was going to be landing in 2018 and wasn't sure what the impact of that was? And then, also while on the exchanges, should we expect margins to rise consistently from here on out year-over-year as the business starts to scale more? I'm just trying to juxtapose that against comments about continued investments in the active side of the business.

Yeah. So, I think what we had said was, we do expect to enroll about 300,000 in total.

And those are not total covered lives, those are just actual employees. Right?

Actually, what I should have said is we've sold 300,000 in total that we will be enrolling in both 2017 and one of them that's going to be deferred to 2018. One of the big ones that's deferred to 2018 is about 60,000. So, it's a big case that is deferred.

Got it. Okay. And then lastly, just on bridging the EPS a little bit. So, I guess $0.13 decline at the midpoint. Certainly, I'd imagine it's the organic growth is driving the vast majority of that. Are there any one-timers on the positive side, whether that be FX because I think the way the currency moves that actually benefits your earnings, although my understanding is you also have some hedges in place, not sure if that mitigates it. But is there a bit of a bridge you could provide us, so we have a clearer understanding of $0.13 drop at the midpoint?

Yeah. So, I think, well, as Roger said, we'll get out some more detail on the actual currency effects and everything. I think we do have some hedges which take about 70% or 75% or so of the difference there. It's something like that.

Yeah. I mean, so specifically the pound sterling is pretty much offset when you take the hedges into consideration. I mean, I think the big driver of the, as you said, of the downgraded guidance is the organic growth expectation.

And I think if you look at it, look, in the first quarter we had revenue growth. Initially, we had said it was going to be in the mid-single digits and we said it was going to be muted. And so, that meant we were in the lower end of that. That's because it was down to about 3% to 4%. And now, we're looking and saying actually it's probably going to be closer to 2% to 3%. And so, we wanted to come out with some specific numbers this time but I think that's the overall effect. We have gone back and done - and Roger sort of alluded to this - we've gone back and done a re-forecasting exercise to look at what are reasonable revenue growth expectations. We feel pretty comfortable about that 2% to 3%. We think that's a pretty good number.

Okay. Thank you.

Thank you. Our next question or comment comes from the line of Tim McHugh from William Blair & Company. Your line is open.

Thanks. Just to follow up on the exchange, two questions. One, I guess - sorry, I was a little confused. So, the 300,000 includes the 60,000 that's deferred into next year?

That's correct.

Okay.

Sorry, Tim. We were talking. The 300,000 is the total we sold. And this client has signed up for 2018 already. So, we've already done that. But it does include everything, yeah.

And then the 80% to 100% growth, what piece was that referring to?

That was the enrollment growth in the active space year-over-year.

Not including the 60,000 because that will take effect in...

That's correct. Not including the 60,000, we'll still have the 80% to 100% growth.

Okay. And on the retiree side, I get you're not going to have an Ohio every year, but how do you feel competitively you held up? Were there just not opportunities, or was there any change in the competitive dynamics in terms of competing for some of the larger retiree opportunities?

No. No change in the competitive dynamics. There was not any big case like the Ohio case or even one any remotely close to that this year. So, yeah. We feel like we continue to have by far the strongest offering in the retiree exchange space.

Okay. And then last question, just turnover. Where's it trended year-to-date, I guess, and I guess besides just the overall turnover number, I guess, any sense of how meaningful the turnover is in terms of key individuals?

Yeah. So, I think, overall, frankly, the turnover has been lower than I would have expected. We were running, I think for last year or so, a little over 10%, in voluntary turnover, and we're actually running just under 10% now, which I used to think in terms of when we were in just the consulting area, whether it was Watson Wyatt or Towers Watson, I used to think of maybe 10% to 12% voluntary turnover rate as being about the right level. And I think there's probably more turnover in the brokerage market generally. So, I would've expected that to be somewhat higher. So, I think coming in at just under 10% - we're at 9.8% or something like that now - is a little bit lower than I'd expected, and so that's where we feel about that overall. When we look at the - there is obviously seasonality. And so, we noticed this in the old Towers Watson days, you get more turnover after you've just paid bonuses than you do there. We continue to see that, no particular changes there. And I think when we look at specifically where we've had some competitors try to target some of our individuals, one of the things we do is we prioritize those, and we don't necessarily try to respond to every raid on an employee like that. And we target the ones that we think are the real high value employees. We've been very successful at that, and we've continued to hold on to the ones that we really wanted to.

Okay. Great. Thank you.

Thank you. Our next question or comment comes from the line of Mark Marcon from R.W. Baird. Your line is open.

All right. Good morning and thanks for taking my question. With regards to the Exchange Solutions, can you just talk about that midmarket pipeline and what your expectations would be for continued sales through the balance of this year that can go into effect in 2017? And then I have a follow-up question on a different area.

Yeah. So, I don't have right off at my fingertips here, Mark, the relative numbers for the second half. But the midmarket is different than the large market in that you can continue that sales that occur up until almost the November timeframe and still implement them. But by far the bulk of it will occur in the first half. So, I don't have at my fingertips whether it's like 80% occurs in the first half or it's probably something like that, but we'll get you those numbers. I would think it's safe to say, though, that the bulk of the sales have already occurred by far, although there will be some continuing. I think I made a comment in the script to say that we look at the midmarket as saying that it's accelerated and that we feel that that's sustainable. So, that's based on our talking with clients, our seeing what's happening to the pipeline, so I don't think we're expecting to see. We've had a terrific first half of the year in terms of selling this. We're not predicting any decline in the second half as a result of that. We think we're going to continue to see the midmarket being an important source of new business.

Can you talk us about the existing clients in terms of their experiences? What sort of client retention rate you're current lead running? What are the savings that you're currently experiencing? And also, to what extent do you think the ACA, all the work that went into getting ready for 1094s, 1095 may have distracted people from putting in place exchanges for this year.

So, I think in terms of the overall savings, we can see that varied significantly. It can vary based on the specific geographical distribution of the employers. It can vary based on what kind of plan they're coming from, whether they already had a plan that, for example, had high deductibles or what other features they might have already had built into it. Generally, we look at savings between 5% and 15% for the employer, although often what will happen is the employers will probably give about one-third of that back to the employees and keep about two-thirds. So when they make the exchange, it's a win-win for both the employer and the employee in terms of the cost aspect of that. That's been something that we've seen since the beginning and we're not seeing any change in that overall. I think in terms of the adoption rate, it's hard to say exactly whether people are distracted by some of these other ACA things. I tend to think that that's not the case. I think we have seen, as I said, the midmarket pickup. And in fact, if you're thinking about employers that might be distracted more, you might think that actually it's the smaller one that have more of those distractions. So, I don't think that's what we're really seeing there. I do think we're seeing the natural conservatism of larger organizations continue to be a factor in the marketplace. But we are seeing the smaller ones adopting it somewhat more enthusiastically than they did even a year ago.

Great. And then can you just comment with regard to your UK business? I mean, Bank of England just took down their growth forecast. So, to what extent do you think your overall portfolio of UK businesses are cyclically sensitive?

Yeah. I think they - the whole impact of Brexit, of course we did that call the other day and I guess it was last month after Brexit and went through that. I would say that we really don't have any change in views or necessarily guidance from then to now. When we look at Brexit, I think it's a hodgepodge of both pluses and minuses. And when we look at our overall exposure, for example, in Corporate Risk & Broking, the overall CRB revenue exposure, it's about 7% of our revenues. So, it's not like we see that that is the biggest deal in the world. If markets were to move from London to elsewhere, it's not clear that we're disadvantage by that. In fact, we might even be advantaged depending on where it were to move to. So, I think there's nothing that we see now that we say, this is necessarily a problem for us. I mean, I think even at the senior levels of our company we have different views as to the impact of Brexit overall. Some of us have - I've been relatively relaxed about the notion of Brexit. Some other people are more concerned about that. But I think overall we don't see - the movement of the BofE today isn't anything that was unexpected, and I don't think it changes our overall guidance.

Great. Thank you.

Okay. I think we'll take one more question. So.

All right, sir. Our final question or comment comes from the line of Kai Pan from Morgan Stanley. Your line is open.

Thank you so much for fitting me in. Just on the free cash flow usage. Like how much you plan to spending on deleveraging the balance sheet and merger acquisitions as well as buybacks? Is that - can you spend most of your - would rating agency have issues with you spending most of your free cash flow on return to shareholders?

A number of angles in there. So, maybe just stay at the last one. Everything that we're doing has been part of the communications with the rating agencies. So, we've been managing that internal and there are no issues there. With respect to the usages ultimately of free cash for the year, as we've said, we expect another $200 million of share repurchases at this point and we continue to evaluate that quarter to quarter based on how the company performs. So, that's where we are for right now.

Are you considering [indiscernible] deleveraging or like are there going to be any sort of like on the merger front as well?

So, I mean I think as we - we're in the same kind of mindset that we talked about, I think, last quarter, which was stabilizing the rating agency metrics and around the level that support our current rating. And there are a lot of angles to the rating agencies calculations, but it doesn't imply significant deleveraging.

Okay. That's great. Last one, if I may. It's just like press a little bit further Quentin's earlier question. If organic growth is going to be slower that you currently expected going forward, are there other levers you can pull on the expense side will enable you still be able to achieve your $10-plus by 2018?

Well, I don't know.

I mean we think that - we have plans to get to the $10-plus level even with modest organic growth. So, we remain confident about hitting that.

That's great. Well, thank you so much for the questions.

Okay. Thanks a lot.

Thanks everybody else for joining us this morning and I look forward to talking to you at Analyst Day in September.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.