Summary
Arthur J. Gallagher & Co. (AJG) reported strong financial performance for the nine months ended September 30, 2018. Total revenues reached $5.28 billion, a 11.8% increase over the prior year, driven by growth in both the Brokerage and Risk Management segments. Net earnings attributable to controlling interests were $516.2 million, up 23.7% year-over-year, translating to diluted earnings per share of $2.78, an increase from $2.26 in the prior year period. The company's strategic acquisitions continue to contribute to revenue growth, with total acquisitions for the nine months amounting to $575.5 million. Despite increased debt financing for acquisitions, the company maintained compliance with its financial covenants, demonstrating robust liquidity and operational strength.
Financial Highlights
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Financial Statements
Beta
| Revenue | $1.78B |
| Cost of Revenue | $508.80M |
| Gross Profit | $1.27B |
| Operating Expenses | $1.69B |
| Interest Expense | $36.70M |
| Net Income | $127.60M |
| EPS (Basic) | $0.70 |
| EPS (Diluted) | $0.68 |
| Shares Outstanding (Basic) | 183.30M |
Key Highlights
- 1Total revenues increased by 11.8% to $5.28 billion for the nine months ended September 30, 2018, compared to $4.73 billion in the prior year period.
- 2Net earnings attributable to controlling interests grew by 23.7% to $516.2 million for the nine months ended September 30, 2018, compared to $409.8 million in the prior year period.
- 3Diluted earnings per share rose to $2.78 for the nine months ended September 30, 2018, up from $2.26 in the prior year period.
- 4The Brokerage segment remains the largest contributor to revenue, with total revenues of $3.25 billion for the nine months ended September 30, 2018.
- 5Acquisitions remain a key growth driver, with $575.5 million spent on acquisitions during the nine months ended September 30, 2018.
- 6The company's clean energy investments generated substantial earnings of $96.6 million for the nine months ended September 30, 2018.
- 7Cash flows from operating activities were $504.6 million for the nine months ended September 30, 2018, a decrease from $593.2 million in the prior year, primarily due to pension contributions and changes in working capital.
Frequently Asked Questions
Arthur J. Gallagher & Co. reported total revenues of $5.28 billion for the nine months ended September 30, 2018, representing an increase of 11.8% compared to $4.73 billion in the same period of 2017. This growth was driven by contributions from both the Brokerage and Risk Management segments, as well as ongoing strategic acquisitions.
For the nine months ended September 30, 2018, Arthur J. Gallagher & Co. reported net earnings attributable to controlling interests of $516.2 million, a significant increase of 23.7% from $409.8 million in the prior year. Diluted earnings per share also saw a substantial improvement, rising to $2.78 from $2.26 in the comparable period of 2017.
Acquisitions remain a key component of Arthur J. Gallagher & Co.'s growth strategy. During the nine months ended September 30, 2018, the company invested $575.5 million in acquisitions, which contributed to the overall revenue growth. The company believes these strategic acquisitions expand its market presence and service offerings.
The company's clean energy investments, primarily related to refined coal production facilities qualifying for IRC Section 45 tax credits, continued to perform well. For the nine months ended September 30, 2018, these investments generated $96.6 million in earnings, contributing positively to the company's overall financial results. Management anticipates these investments will continue to generate positive net cash flows.
Cash flows from operating activities decreased to $504.6 million for the nine months ended September 30, 2018, from $593.2 million in the prior year. This decrease was primarily attributed to a $30 million discretionary contribution made to the company's defined benefit pension plan in 2018, along with an increase in acquisition earnout payments and higher deferred tax assets. Changes in working capital, particularly in premiums and fees receivable and premiums payable, also impacted operating cash flows due to timing differences.