Summary
Arthur J. Gallagher & Co. (AJG) reported revenues of $459.5 million for the three months ended June 30, 2010, a slight increase from $453.6 million in the prior year period, driven primarily by commissions. However, earnings from continuing operations decreased to $41.9 million ($0.40 per diluted share) from $43.8 million ($0.44 per diluted share) in the same period last year. For the six-month period, revenues grew to $941.9 million from $854.7 million, while earnings from continuing operations saw a slight decrease to $71.1 million ($0.69 per diluted share) from $72.1 million ($0.73 per diluted share). The company continues to expand through acquisitions, completing several in the first half of 2010, which contributed to revenue growth. However, organic revenue growth in commissions and fees remained negative, reflecting a soft insurance market characterized by declining premium rates and exposure units. The company also reported results from discontinued operations, which were positive for the quarter. Management highlighted the ongoing evaluation of the impact of the Patient Protection and Affordable Care Act on its employee benefits consulting business, which currently represents a quarter of the Brokerage Segment's revenue. Financially, AJG maintained a strong balance sheet with total assets of $3.56 billion and total liabilities of $2.59 billion as of June 30, 2010. The company also refinanced its credit facility in July 2010, increasing its revolving credit commitment to $500 million, while maintaining no outstanding borrowings under the new facility at the reporting date. Dividends remained stable at $0.32 per share for the quarter.
Financial Highlights
45 data points| Revenue | $459.50M |
| Cost of Revenue | $0 |
| Gross Profit | $459.50M |
| Operating Expenses | $87.40M |
| Operating Income | $41.90M |
| Interest Expense | $8.70M |
| Net Income | $44.00M |
| EPS (Basic) | $0.42 |
| EPS (Diluted) | $0.42 |
| Shares Outstanding (Basic) | 104.40M |
Key Highlights
- 1Total revenues for the three months ended June 30, 2010, increased by 1.3% to $459.5 million compared to $453.6 million in the prior year period.
- 2Earnings from continuing operations for the quarter decreased to $41.9 million, or $0.40 per diluted share, from $43.8 million, or $0.44 per diluted share, in the same period last year.
- 3Six-month revenues increased by 10.2% to $941.9 million, primarily driven by acquisitions, while earnings from continuing operations slightly decreased to $71.1 million from $72.1 million.
- 4Organic revenue growth in commissions and fees remained negative, reflecting a challenging insurance market with declining premium rates and exposure units.
- 5The company completed several acquisitions during the first half of 2010, contributing to revenue growth and expanding its market presence.
- 6AJG's financial position remains solid with total assets of $3.56 billion and total equity of $965.4 million as of June 30, 2010.
- 7The company entered into a new $500 million credit agreement in July 2010, replacing its previous facility, and had no borrowings outstanding under the new agreement as of the reporting date.