10-QPeriod: Q1 FY2001

BROWN & BROWN, INC. Quarterly Report for Q1 Ended Mar 31, 2001

Filed May 15, 2001For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) reported strong first-quarter 2001 results, demonstrating significant growth compared to the prior year. Total revenues surged by 37% to $77.2 million, driven primarily by a 39% increase in commissions and fees. This revenue growth was largely attributable to strategic acquisitions, notably the acquisition of Riedman Corporation, which contributed significantly to organic growth of 9.0% in core commissions and fees. Net income rose by 34% to $12.2 million, translating to a 32% increase in diluted earnings per share to $0.41 from $0.31 in the first quarter of 2000. The company's expansion efforts are evident in its balance sheet, with total assets growing substantially, fueled by acquisitions and a new $90 million term loan. Despite increased debt and amortization expenses related to acquisitions, the company maintained its profitability and demonstrated effective integration of new businesses.

Key Highlights

  • 1Total revenues increased by 37% year-over-year to $77.2 million for Q1 2001.
  • 2Commissions and fees grew by 39% to $75.8 million, with 9.0% attributed to organic growth excluding acquisitions.
  • 3Net income increased by 34% to $12.2 million compared to Q1 2000.
  • 4Diluted Earnings Per Share (EPS) rose by 32% to $0.41 from $0.31 in the prior year's quarter.
  • 5Significant acquisitions, including Riedman Corporation, were completed, contributing to asset and revenue growth.
  • 6Total assets increased substantially to $442.1 million as of March 31, 2001, up from $282.8 million at year-end 2000.
  • 7A new $90 million, seven-year term loan was secured in January 2001 to fund acquisitions.

Frequently Asked Questions

The substantial increase in revenues and net income was primarily driven by strategic acquisitions, most notably the acquisition of Riedman Corporation, which significantly boosted commissions and fees. Organic growth in core commissions and fees also contributed positively, growing by 9.0%. This expansion in revenue, coupled with managed expenses, led to a 34% increase in net income.

The company funded its recent acquisitions, including the significant Riedman Corporation acquisition, through a combination of existing cash, operating cash flow, and a new $90 million, seven-year term loan secured in January 2001. This resulted in a notable increase in long-term debt and associated interest expenses, which rose by 659% compared to the prior year's quarter. However, the company views this debt as essential for its growth strategy.

Management believes that its current cash and cash equivalents, short-term investments, funds generated from operations, and its available credit facilities are sufficient to meet its normal financial needs. The company's cash and cash equivalents increased significantly during the quarter, and while the current ratio slightly decreased, the overall liquidity position is considered adequate for ongoing operations and strategic initiatives.

The company's management stated that it is not a party to any material legal proceedings that would materially affect its financial condition or results of operations. While routine litigation arises in the normal course of business, none are expected to have a significant adverse impact.