01—Abstract
Summary
Summary of the 10-K filed February 28, 2018. Cited figures are marked; the original filing is the authoritative source.
Brown & Brown, Inc. (BRO) demonstrated robust growth in its 2017 fiscal year, with total revenues increasing by 6.5% to $1.88 billiona.
The company's core business, driven by commissions and fees, saw a 5.4% increase, supported by strong organic revenue growth of 4.4%. This growth was consistent across all four operating segments: Retail, National Programs, Wholesale Brokerage, and Services, highlighting the diversified nature of their business model. Net income saw a significant surge of 55.2% to $399.6 millionb, largely influenced by a substantial legal settlement that contributed to "Other Income." The company continues its strategy of acquiring and integrating new businesses, having completed eleven acquisitions in 2017, adding to its already extensive network of 238 locations across 40 states and several international locations.
The company's financial health remains strong, with operating cash flow of $442 millionc, allowing for continued investment in growth, dividend payments, and share repurchases. Despite a modest increase in employee compensation and benefits as a percentage of revenue, the company maintained operational efficiency.
The acquisition strategy, coupled with consistent organic growth and a focus on customer service, positions Brown & Brown for continued success in the insurance intermediary market. Investors can find reassurance in the company's consistent revenue growth trajectory and its ability to effectively integrate acquisitions, contributing to an overall positive financial performance.
02—Key points
Key Highlights
- Total revenues grew 6.5% to $1.88 billion in 2017.
- Net income increased by a significant 55.2% to $399.6 million, partly due to a legal settlement.
- Core commissions and fees increased by 5.4%, with a solid organic revenue growth rate of 4.4%.
- All four operating segments (Retail, National Programs, Wholesale Brokerage, Services) reported positive organic revenue growth in 2017.
- The company completed eleven acquisitions in 2017, reinforcing its growth strategy.
- Operating cash flow was strong at $442 million, supporting dividends and share repurchases.
- The company's stock price showed a positive trend, with a year-end price of $51.46, up from $44.86 in the prior year.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 28, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $1.88B$1.77B | +6.5% |
| Operating Expenses | $1.43B$1.34B | +6.6% |
| Interest Expense | $38.32M$39.48M | −3.0% |
| Net Income | $399.63M$257.49M | +55.2% |
| EPS (Basic) | $1.43$0.92 | +55.4% |
| EPS (Diluted) | $1.40$0.91 | +53.8% |
| Shares Outstanding (Basic) | 272.58M272.28M | +0.1% |
| Shares Outstanding (Diluted) | 277.59M275.61M | +0.7% |
05—Questions
Frequently Asked Questions
What is Brown & Brown's primary source of revenue?
Brown & Brown's primary sources of revenue are commissions paid by insurance companies and, to a lesser extent, fees paid directly by customers for services.
How does the company describe its growth strategy?
The company's growth strategy is driven by a combination of organic growth through net new business production and the acquisition of other insurance intermediaries. They foster a strong, decentralized sales and service culture to achieve consistent, sustained growth.
What are the main segments of Brown & Brown's business?
Brown & Brown's business is divided into four reportable segments: Retail, National Programs, Wholesale Brokerage, and Services.
How did the company perform in terms of profitability in 2017?
In 2017, Brown & Brown reported a net income of $399.6 million, a significant increase of 55.2% from the previous year, driven by strong revenue growth and a notable legal settlement that boosted 'Other Income'.
06—Continue