10-QPeriod: Q1 FY2017

Arthur J. Gallagher & Co. Quarterly Report for Q1 Ended Mar 31, 2017

Filed April 28, 2017For Securities:AJG

Summary

Arthur J. Gallagher & Co. (AJG) reported strong first-quarter 2017 results, with total revenues increasing 9% year-over-year to $1.41 billion. Net earnings attributable to controlling interests rose 20% to $55.7 million, and diluted EPS grew 19% to $0.31. This growth was primarily driven by the brokerage segment, which saw a 6% increase in total revenues and a significant improvement in adjusted EBITDAC margin. The company's strategic acquisitions continued to contribute positively, with $143.3 million in cash paid for acquisitions during the quarter, alongside the issuance of common stock. Despite these investments, AJG maintained a healthy cash flow from operations of $169.7 million. The company also reiterated its commitment to shareholder returns, declaring a dividend of $0.39 per share. Overall, the filing indicates robust performance and continued execution of AJG's growth strategy.

Financial Highlights

43 data points
Beta

Revenue

$1.65B

Net Income

$228.80M

13.9% Net Margin

EPS (Diluted)

$1.27

Total Assets

$11.78B

Cash & Equivalents

$564.00M

Free Cash Flow

-$13.80M

Financial Statements
Beta
Revenue$1.65B
Operating Expenses$1.45B
Interest Expense$29.90M
Net Income$228.80M
EPS (Basic)$1.28
EPS (Diluted)$1.27
Shares Outstanding (Basic)178.90M

Key Highlights

  • 1Total revenues increased by 9% to $1.41 billion for the three-month period ended March 31, 2017, compared to $1.30 billion in the prior year period.
  • 2Net earnings attributable to controlling interests increased by 20% to $55.7 million, up from $46.5 million in the same period last year.
  • 3Diluted earnings per share (EPS) rose by 19% to $0.31 for the quarter, compared to $0.26 in the prior year.
  • 4The Brokerage segment demonstrated strong performance with total revenues up 6% to $878.5 million and adjusted EBITDAC increasing by 14% to $215.7 million.
  • 5The company completed 12 acquisitions in the first quarter of 2017, with cash paid for acquisitions totaling $143.3 million.
  • 6Cash flow from operating activities was strong, totaling $169.7 million for the period, an increase from $100.0 million in the prior year.
  • 7The company declared a quarterly dividend of $0.39 per common share, representing a 3% increase over the prior year's dividend.

Frequently Asked Questions

Arthur J. Gallagher & Co. reported solid financial performance in Q1 2017. Total revenues grew by 9% year-over-year to $1.41 billion. Net earnings attributable to controlling interests increased by 20% to $55.7 million, and diluted EPS saw a 19% increase to $0.31. This growth was supported by strong performance in the brokerage segment and significant acquisition activity.

Acquisitions played a significant role in AJG's growth. In Q1 2017, the company completed 12 acquisitions, spending $143.3 million in cash and issuing common stock. These acquisitions contributed to the increase in total revenues and were a key part of the company's growth strategy, particularly within the brokerage segment.

Based on the Q1 2017 results, AJG appears to be on a positive trajectory, driven by organic growth in its core segments and successful integration of acquisitions. The company expects to continue its merger and acquisition strategy, funded by operating cash flows and debt. The clean energy investments are also projected to generate substantial earnings, supporting the company's overall financial health and strategic initiatives.

The filing mentions ongoing IRS investigations into the company's micro-captive advisory services, which could potentially impact future earnings. Additionally, there are risks associated with international operations, regulatory compliance, and the inherent uncertainties of litigation. The company also notes the potential impact of changes in U.S. Federal income tax laws on its clean energy investments.