10-QPeriod: Q3 FY2016

BROWN & BROWN, INC. Quarterly Report for Q3 Ended Sep 30, 2016

Filed November 9, 2016For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) reported solid financial results for the nine months ended September 30, 2016, with total revenues increasing by 6.1% to $1,332.965 million compared to the prior year. This growth was primarily driven by an 8.0% increase in commissions and fees for the third quarter and a 6.3% increase for the nine-month period, reflecting both acquisitions and organic growth. Net income for the nine months rose to $199.865 million, a 7.7% increase year-over-year, leading to diluted earnings per share of $1.41. The company continues its strategy of growth through acquisitions, completing six acquisitions (excluding book of business purchases) in the first nine months of 2016. Total assets grew to $5.52 billion. While employee compensation and benefits expenses rose, reflecting investments in growth and acquisitions, the company managed other operating expenses effectively. The balance sheet remains robust with adequate liquidity, supported by operating cash flows and an undrawn revolving credit facility, allowing the company to continue its strategic initiatives.

Financial Highlights

50 data points
Beta

Revenue

$432.17M

Net Income

$67.43M

15.6% Net Margin

EPS (Diluted)

$0.23

Total Assets

$5.00B

Cash & Equivalents

$448.82M

Free Cash Flow

$59.08M

Financial Statements
Beta
Revenue$432.17M
Operating Expenses$319.34M
Interest Expense$9.88M
Net Income$67.43M
EPS (Basic)$0.24
EPS (Diluted)$0.23
Shares Outstanding (Basic)275.37M
Shares Outstanding (Diluted)280.08M

Key Highlights

  • 1Total revenues for the nine months ended September 30, 2016, increased by 6.1% to $1,332.965 million.
  • 2Net income for the nine months ended September 30, 2016, grew by 7.7% to $199.865 million, with diluted EPS at $1.41.
  • 3Commissions and fees, the primary revenue driver, saw a significant increase, with core commissions and fees growing by 8.0% in Q3 and 6.3% year-to-date.
  • 4The company executed six acquisitions in the first nine months of 2016, aligning with its growth strategy.
  • 5Total assets expanded to $5.52 billion as of September 30, 2016.
  • 6Employee compensation and benefits increased, reflecting investments in acquisitions and personnel to support revenue growth.
  • 7The company maintained strong liquidity, with cash and cash equivalents totaling $488.683 million.

Frequently Asked Questions

The primary driver of revenue growth was an increase in commissions and fees. Core commissions and fees, the main component of revenue, saw a 6.3% increase for the nine-month period, supported by both acquisitions and organic net new business growth.

The company continued its active acquisition strategy, completing six acquisitions in the first nine months of 2016. These acquisitions contributed to revenue growth, with $47.5 million in core commissions and fees from these newly acquired operations for the nine-month period.

Brown & Brown demonstrated a healthy financial position. Total assets grew to $5.52 billion. Liquidity remained strong with cash and cash equivalents at $488.68 million, and the company had access to its revolving credit facility, indicating sufficient resources to meet its obligations.

Employee compensation and benefits expenses increased by 7.3% for the nine-month period, reflecting investments in personnel for growth and integration of acquisitions. Other operating expenses also saw a modest increase. The company managed amortization and depreciation expenses effectively, with slight decreases or stable figures.