10-QPeriod: Q1 FY2002

BROWN & BROWN, INC. Quarterly Report for Q1 Ended Mar 31, 2002

Filed May 15, 2002For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) reported a strong first quarter for 2002, demonstrating significant growth and improved profitability. Total revenues increased by 24% year-over-year, driven primarily by a robust 27% rise in commissions and fees. This growth was fueled by a combination of new business production, higher renewal commissions, and the strategic acquisition of smaller insurance agencies, which contributed approximately $11.6 million to revenue. Net income saw a substantial increase of 55% to $20.2 million, or $0.31 per diluted share, compared to $12.9 million, or $0.20 per diluted share, in the prior year's first quarter. This improvement in profitability was achieved despite a decrease in investment income due to lower cash balances from acquisition activity. The company also successfully implemented new accounting standards related to goodwill, eliminating amortization expense and positively impacting reported earnings. Furthermore, a successful follow-on stock offering in March 2002 raised $149.4 million, significantly bolstering the company's liquidity and capital position.

Key Highlights

  • 1Total revenues increased 27% to $111.0 million in Q1 2002 compared to $89.4 million in Q1 2001.
  • 2Commissions and fees revenue grew by 27% to $110.8 million, with acquisitions contributing significantly to this growth.
  • 3Net income surged by 55% to $20.2 million in Q1 2002, up from $12.9 million in Q1 2001.
  • 4Diluted earnings per share (EPS) increased to $0.31 from $0.20, a 55% rise year-over-year.
  • 5The company raised approximately $149.4 million in net proceeds from a follow-on stock offering in March 2002.
  • 6Cash and cash equivalents increased substantially to $169.6 million at March 31, 2002, from $16.0 million at December 31, 2001, largely due to the stock offering.
  • 7Adoption of SFAS No. 142 eliminated goodwill amortization, positively impacting net income by approximately $0.5 million (net of tax) for Q1 2001.

Frequently Asked Questions

The primary driver of revenue growth was a 27% increase in commissions and fees, totaling $110.8 million. This growth was attributed to a combination of new business production, higher renewal commissions, and revenue generated from recently acquired insurance agencies.

Profitability improved significantly. Net income increased by 55% to $20.2 million, and diluted earnings per share rose by 55% to $0.31, compared to $12.9 million and $0.20, respectively, in the same period of 2001.

The adoption of SFAS No. 142, which eliminated the amortization of goodwill, had a positive impact on reported earnings. For the first quarter of 2001, the company adjusted its net income to reflect this change, showing an increase of approximately $0.5 million (net of tax). For the current quarter (Q1 2002), goodwill amortization is no longer a reported expense.

The company's liquidity position strengthened considerably. Cash and cash equivalents increased dramatically from $16.0 million at the end of 2001 to $169.6 million at the end of Q1 2002. This significant increase was primarily due to the $149.4 million raised from a follow-on stock offering in March 2002, in addition to cash generated from operating activities.