10-QPeriod: Q2 FY2014

BROWN & BROWN, INC. Quarterly Report for Q2 Ended Jun 30, 2014

Filed August 7, 2014For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) reported strong revenue growth in the second quarter and first half of 2014, driven by a significant increase in core commissions and fees, largely attributable to strategic acquisitions. The company's revenue climbed by 22.1% year-over-year for the quarter and 15.2% for the six-month period, with substantial contributions from newly acquired entities. Organic growth also remained positive, indicating underlying business strength. Despite increased operating expenses, particularly employee compensation and benefits, and other operating expenses due to acquisitions, the company managed to grow income before income taxes by 18.0% for the quarter. This growth was bolstered by the successful integration of recent acquisitions and positive contributions from core operations. The company also announced a new $200 million share repurchase program, signaling confidence in its financial position and commitment to returning value to shareholders.

Financial Highlights

46 data points
Beta

Revenue

$325.79M

Net Income

$52.01M

16.0% Net Margin

EPS (Diluted)

$0.18

Total Assets

$3.33B

Cash & Equivalents

$385.52M

Free Cash Flow

$80.69M

Financial Statements
Beta
Revenue$325.79M
Operating Expenses$239.57M
Interest Expense$4.00M
Net Income$52.01M
EPS (Basic)$0.18
EPS (Diluted)$0.18
Shares Outstanding (Basic)281.67M
Shares Outstanding (Diluted)286.04M

Key Highlights

  • 1Total revenues increased by 22.1% to $397.8 million for the three months ended June 30, 2014, compared to $325.8 million in the prior year period.
  • 2Income before income taxes grew by 18.0% to $101.8 million for the three months ended June 30, 2014, compared to $86.2 million in the prior year period.
  • 3Net income increased by 18.7% to $61.8 million for the three months ended June 30, 2014, compared to $52.0 million in the prior year period.
  • 4The company completed significant acquisitions, including The Wright Insurance Group, LLC, contributing substantially to revenue growth.
  • 5Total assets grew to $4.93 billion as of June 30, 2014, up from $3.65 billion at December 31, 2013, driven by acquisitions.
  • 6The company announced a new $200 million share repurchase program, demonstrating confidence in its financial health and commitment to shareholder value.
  • 7Employee compensation and benefits expense increased by 20.1% for the quarter, largely due to new acquisitions, but as a percentage of total revenues, it decreased slightly, indicating improved efficiency.

Frequently Asked Questions

The primary driver for the revenue increase was a substantial rise in core commissions and fees, fueled by recent acquisitions, most notably The Wright Insurance Group, LLC. Organic growth also contributed positively.

While acquisitions led to higher employee compensation and benefits, as well as other operating expenses, Brown & Brown managed these by focusing on improved operational efficiency. Employee compensation and benefits as a percentage of total revenues saw a slight decrease, indicating successful integration and cost management.

The approval of a $200 million share repurchase program signals management's confidence in the company's financial stability and future prospects. It indicates a commitment to returning capital to shareholders and can potentially boost earnings per share.

Acquisitions significantly increased the company's total assets, which grew to $4.93 billion. This growth is primarily reflected in goodwill and amortizable intangible assets, reflecting the strategic expansion of the company's operations.