Summary
Arthur J. Gallagher & Co. (AJG) reported total revenues of $1.87 billion for the first quarter of 2020, a decrease from $1.99 billion in the same period of 2019. Net earnings attributable to controlling interests increased slightly to $346.3 million ($1.79 per diluted share) compared to $334.1 million ($1.77 per diluted share) in the prior year's quarter. The company's brokerage segment, its largest, saw a revenue increase of 4% year-over-year, driven by organic growth and acquisitions, while the risk management segment also showed revenue growth. However, the corporate segment, primarily comprising clean energy investments, experienced a significant revenue decline due to decreased refined coal production. The company noted the initial impact of COVID-19 on its operations, primarily affecting revenue estimates and leading to a modest reduction in earnings and increased expenses related to bad debts and intangible asset impairments. Despite these challenges, AJG highlighted strong new business generation, solid retention rates, and ongoing premium rate increases in the insurance market as positive factors. Management has implemented cost-saving measures and has significant liquidity to navigate the uncertain economic environment.
Financial Highlights
45 data points| Revenue | $1.87B |
| Cost of Revenue | $185.40M |
| Gross Profit | $1.68B |
| Operating Expenses | $1.51B |
| Interest Expense | $50.50M |
| Net Income | $346.30M |
| EPS (Basic) | $1.83 |
| EPS (Diluted) | $1.79 |
| Shares Outstanding (Basic) | 188.70M |
Key Highlights
- 1Total revenues for Q1 2020 were $1.87 billion, down from $1.99 billion in Q1 2019, largely due to a significant decrease in the corporate segment's clean coal revenues.
- 2Net earnings attributable to controlling interests increased to $346.3 million ($1.79 per diluted share) in Q1 2020, up from $334.1 million ($1.77 per diluted share) in Q1 2019.
- 3The brokerage segment, the largest contributor, saw revenues rise 4% to $1.44 billion, driven by organic growth and acquisitions.
- 4The risk management segment also reported a revenue increase of 4% to $249.5 million.
- 5The company reported a $45.8 million write-off of amortizable intangible assets during the quarter, primarily linked to the impact of COVID-19 on future performance expectations.
- 6AJG's balance sheet shows total assets of $20.8 billion as of March 31, 2020, with significant goodwill and amortizable intangible assets.
- 7The company's liquidity remains strong, with $1.1 billion in available liquidity as of April 30, 2020, and it has activated cost-saving measures in response to the pandemic.