10-QPeriod: Q2 FY2015

BROWN & BROWN, INC. Quarterly Report for Q2 Ended Jun 30, 2015

Filed August 7, 2015For Securities:BRO

Summary

Brown & Brown, Inc. reported solid performance for the six months ended June 30, 2015, demonstrating revenue growth driven by both acquisitions and organic expansion. Total revenues increased by 8.2% year-over-year to $823.7 million, with commissions and fees, the primary revenue driver, up 8.5%. Net income saw a modest increase of 3.3% to $117.9 million. The company continues its strategy of acquiring and integrating new businesses, contributing significantly to revenue growth, particularly in the Retail and National Programs segments. Organic growth, measured by core organic commissions and fees, also showed positive momentum, with a 2.8% increase for the six-month period. Expenses, particularly employee compensation and benefits, rose in line with revenue growth and strategic investments. The company also managed its debt effectively, reducing its overall long-term debt slightly while maintaining strong liquidity.

Financial Highlights

49 data points
Beta

Revenue

$397.76M

Net Income

$61.76M

15.5% Net Margin

EPS (Diluted)

$0.21

Total Assets

$4.93B

Cash & Equivalents

$309.11M

Free Cash Flow

$102.61M

Financial Statements
Beta
Revenue$397.76M
Operating Expenses$295.98M
Interest Expense$7.00M
Net Income$61.76M
EPS (Basic)$0.21
EPS (Diluted)$0.21
Shares Outstanding (Basic)282.50M
Shares Outstanding (Diluted)286.06M

Key Highlights

  • 1Total revenues increased by 8.2% to $823.7 million for the first six months of 2015 compared to the same period in 2014.
  • 2Net income grew by 3.3% to $117.9 million for the first six months of 2015.
  • 3Commissions and fees revenue, the primary income source, increased by 8.5% to $821.0 million for the six-month period.
  • 4Core organic commissions and fees showed a healthy internal growth rate of 2.8% for the first six months of 2015.
  • 5The company completed seven acquisitions (excluding book of business purchases) in the first half of 2015, contributing to segment growth.
  • 6Employee compensation and benefits expenses increased by 9.5% for the six-month period, reflecting investments in personnel and integration of acquisitions.
  • 7Interest expense significantly increased by 76.3% for the six-month period due to new debt facilities taken on in 2014.

Frequently Asked Questions

Revenue growth was driven by a combination of acquisitions and organic expansion. Acquisitions contributed significantly to the increase in core commissions and fees, while organic growth, measured by core organic commissions and fees, showed a positive trend of 2.8% for the six-month period.

Total expenses increased by 9.8% for the six months ended June 30, 2015. The largest expense category, employee compensation and benefits, increased by 9.5%, reflecting investments in staff and the integration of acquired businesses. Other operating expenses and amortization also increased, largely due to acquisitions.

Brown & Brown believes its existing cash, cash equivalents, investment portfolio, and funds generated from operations, along with its available revolving credit facilities, are sufficient to meet its liquidity needs for at least the next twelve months. The company maintains a conservative balance sheet and has low capital requirements as an insurance intermediary.

The acquisition of The Wright Insurance Group, completed in May 2014, contributed to the growth in the National Programs segment. While it added revenues, it also resulted in increased amortization and interest expenses in the first half of 2015 due to the inclusion of full periods of financial results and related debt.