01—Abstract
Summary
Summary of the 10-K filed February 24, 2020. Cited figures are marked; the original filing is the authoritative source.
Brown & Brown, Inc. (BRO) demonstrated strong revenue growth in 2019, with total revenues reaching $2.39 billiona, an increase of 18.8% over the prior year.
This growth was primarily driven by acquisitions, which contributed significantly to the company's core commissions and fees across all segments, particularly in the Retail segment. The company maintained healthy profitability, with net income rising to $398.5 millionb, up 15.8% from 2018. BRO's strategic focus on organic growth, coupled with its aggressive acquisition strategy, continues to be a key driver of its financial performance, reinforcing its position as a leading insurance intermediary.
The company also reported a solid increase in its employee base, reflecting ongoing expansion and operational capacity. Looking ahead, Brown & Brown's financial health appears robust, supported by strong operating cash flow and a significant share repurchase program. The company's diversified business model across Retail, National Programs, Wholesale Brokerage, and Services segments provides resilience.
Despite potential headwinds such as increased employee compensation expenses and integration costs from acquisitions, the company's consistent revenue and profit growth, along with a clear strategy for future expansion, position it favorably for continued success. Investors should note the company's ongoing investment in technology, which is expected to impact operating margins in the short term but is crucial for long-term competitiveness.
02—Key points
Key Highlights
- Total revenues increased by 18.8% to $2.38 billion in 2019, driven by acquisitions and organic growth.
- Net income grew by 15.8% to $398.5 million in 2019.
- The Retail segment remains the largest contributor, accounting for 57.3% of total commissions and fees in 2019.
- Employee compensation and benefits increased by 22.4%, partly due to acquisition-related costs.
- The company repurchased $58.7 million of its common stock in 2019.
- Total assets grew by 14.0% to $7.62 billion, largely due to acquisitions.
- Long-term debt increased by $48.4 million to $1.56 billion.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 24, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $2.39B$2.01B | +18.8% |
| Operating Expenses | $1.87B$1.55B | +20.3% |
| Interest Expense | $63.66M$40.58M | +56.9% |
| Net Income | $398.51M$344.25M | +15.8% |
| EPS (Basic) | $1.42$1.24 | +14.5% |
| EPS (Diluted) | $1.40$1.22 | +14.8% |
| Shares Outstanding (Basic) | 272K270.97M | −99.9% |
| Shares Outstanding (Diluted) | 275K275.52M | −99.9% |
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. These revenues are generated across its four reportable segments: Retail, National Programs, Wholesale Brokerage, and Services.
How did acquisitions impact Brown & Brown's performance in 2019?
Acquisitions were a significant driver of Brown & Brown's performance in 2019, contributing substantially to the increase in core commissions and fees, particularly in the Retail segment. The company acquired 22 insurance intermediaries and one insurance intermediary stock during the year, integrating them into its operations.
What is the company's outlook regarding organic revenue growth?
Brown & Brown anticipates continued positive quarterly Organic Revenue growth in 2020, assuming gradual increases in insurable exposure units and similar premium rate changes as in 2019. Organic Revenue growth was 3.6% in 2019.
How is the company managing its debt and capital?
Brown & Brown aims to maintain a conservative balance sheet and liquidity profile. Its capital requirements are low, and growth has been financed primarily through operating cash flow. The company has a revolving credit facility providing access to cash and believes its existing cash, investments, and operating cash flow will be sufficient to meet its liquidity needs for at least the next 12 months. Debt increased in 2019 due to acquisitions, including the issuance of $350 million in Senior Notes.
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