Arthur J. Gallagher & Co. Quarterly Report for Q3 Ended Sep 30, 2020

Summary

Arthur J. Gallagher & Co. (AJG) reported a solid third quarter and a strong nine-month performance ending September 30, 2020, demonstrating resilience amidst economic challenges. Total revenues increased year-over-year for both periods, driven primarily by the brokerage segment's strong commission and fee growth, which benefited from favorable insurance rate increases. The company's risk management segment showed stable performance, while the corporate segment's results were impacted by lower clean energy revenues. Diluted EPS showed significant year-over-year improvement, reflecting effective cost management and operational execution. AJG's robust cash flow from operations and strong liquidity position provide a solid foundation for continued strategic investments and shareholder returns.

Key Highlights

• 1Total revenues increased to $1.85 billion for Q3 2020 and $5.30 billion for the nine-month period, up from $1.83 billion and $5.47 billion respectively in the prior year.
• 2Diluted EPS grew to $0.90 in Q3 2020 and $3.48 for the nine-month period, compared to $0.66 and $3.01 in the prior year, respectively.
• 3The brokerage segment demonstrated strong performance with revenues up 8% year-over-year for Q3 and 6% for the nine-month period, driven by organic growth and acquisitions.
• 4The company reported strong Adjusted EBITDAC growth in the brokerage segment, up 32% for Q3 and 21% for the nine-month period.
• 5Net cash provided by operating activities was $1.39 billion for the nine-month period, a significant increase from $769.1 million in the prior year.
• 6AJG's total debt was $4.6 billion at the end of the period, with a substantial cash and cash equivalents balance of $630 million.
• 7The company continued to make strategic acquisitions, with 17 acquisitions closed in the first nine months of 2020, adding approximately $151 million in annualized revenues.

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