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10-QPeriod: Q3 FY2010

Arthur J. Gallagher & Co. Quarterly Report for Q3 Ended Sep 30, 2010

Filed October 29, 2010For Securities:AJG

Summary

Arthur J. Gallagher & Co. (AJG) reported solid financial results for the nine-month period ended September 30, 2010. Total revenues increased by 8.5% year-over-year to $1.405 billion, driven by growth in commissions and supplemental commissions, and significant contributions from acquisitions. Net earnings rose to $119.4 million, or $1.14 per diluted share, compared to $111.8 million, or $1.12 per diluted share, in the prior year period. The company demonstrated effective expense management, with total expenses growing at a slower pace than revenues. During the period, AJG continued its strategic acquisition strategy, integrating several new firms that are expected to contribute to future revenue growth. The company also maintained a strong balance sheet with increased cash and cash equivalents and a stable debt structure, with $550 million in senior notes outstanding. The company's Brokerage segment remains the primary revenue driver, showing robust commission growth, while the Risk Management segment experienced a slight revenue decline but maintained profitability.

Financial Highlights

45 data points
Beta

Revenue

$463.20M

1.0% Gross Margin

Net Income

$46.20M

0.1% Net Margin

EPS (Diluted)

$0.44

Total Assets

$3.46B

Cash & Equivalents

$296.30M

Free Cash Flow

$117.70M

Financial Statements
Beta
Revenue$463.20M
Cost of Revenue$0
Gross Profit$463.20M
Operating Expenses$84.80M
Operating Income$46.20M
Interest Expense$8.60M
Net Income$46.20M
EPS (Basic)$0.44
EPS (Diluted)$0.44
Shares Outstanding (Basic)105.50M

Key Highlights

  • 1Total revenues increased by 8.5% to $1.405 billion for the nine months ended September 30, 2010.
  • 2Net earnings grew to $119.4 million, or $1.14 per diluted share, from $111.8 million, or $1.12 per diluted share, in the prior year.
  • 3The Brokerage segment showed strong performance with an 8% revenue increase and a 20% rise in earnings before income taxes, driven by acquisitions and new business.
  • 4The company successfully integrated multiple acquisitions during the period, contributing to revenue growth.
  • 5Total expenses increased by 10.2%, but on a percentage of revenue basis, expenses remained manageable, indicating effective cost control.
  • 6Cash flow from operations remained strong at $212.4 million for the nine months, supporting the company's financial flexibility.
  • 7The company refinanced its credit facility, increasing its commitment to $500 million, enhancing its liquidity and financial flexibility.

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