10-QPeriod: Q1 FY2017

BROWN & BROWN, INC. Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 5, 2017For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) reported a solid first quarter for 2017, demonstrating continued revenue growth and profitability. Total revenues increased by 9.6% to $465.1 million, driven by a 5.3% rise in commissions and fees, with organic revenue growth of 3.5%. This growth was a combination of net new business and acquisitions, reflecting the company's consistent strategy. Net income saw a significant jump of 12.9% to $70.1 million, or $0.49 per diluted share, up from $62.1 million ($0.44 per diluted share) in the prior year. A notable contributor to the "Other income, net" line was a $20.0 million legal settlement, which significantly boosted the quarter's results. The company maintained a strong balance sheet with total assets of $5.2 billion and shareholders' equity of $2.4 billion. Overall, the quarter indicates continued operational strength and effective management of growth initiatives.

Financial Highlights

48 data points
Beta

Revenue

$424.17M

Net Income

$62.07M

14.6% Net Margin

EPS (Diluted)

$0.00

Total Assets

$4.99B

Cash & Equivalents

$401.85M

Free Cash Flow

$27.65M

Financial Statements
Beta
Revenue$424.17M
Operating Expenses$321.62M
Interest Expense$9.90M
Net Income$62.07M
EPS (Basic)$0.00
EPS (Diluted)$0.00
Shares Outstanding (Basic)271.10M
Shares Outstanding (Diluted)273.88M

Key Highlights

  • 1Total revenues increased by 9.6% to $465.1 million compared to the prior year's first quarter.
  • 2Net income rose by 12.9% to $70.1 million ($0.49/share diluted), up from $62.1 million ($0.44/share diluted) in Q1 2016.
  • 3Organic revenue growth was 3.5%, driven by net new business and acquisitions.
  • 4Other income was significantly boosted by a $20.0 million legal settlement, contributing to the strong net income performance.
  • 5Employee compensation and benefits increased by 9.7% due to acquisitions, salary inflation, and incentive programs.
  • 6The company maintained a healthy liquidity position with cash and cash equivalents (including restricted cash) of $826.1 million.
  • 7Dividends declared per share increased to $0.14 from $0.12 in the prior year's comparable period.

Frequently Asked Questions

The significant increase in 'Other income, net' to $20.3 million from $1.4 million in the prior year was primarily due to a $20.0 million legal settlement received in the first quarter of 2017 related to a lawsuit against AssuredPartners, Inc. and certain former employees.

Acquisitions played a key role in revenue growth, contributing approximately $10.7 million in core commissions and fees revenue. Employee compensation and benefits also saw an increase of $5.2 million directly attributable to compensation costs from recent acquisitions. Goodwill also increased slightly due to acquisitions.

The company reported an organic revenue growth rate of 3.5% for the first quarter of 2017. This growth is primarily driven by net new business, changes in customers' exposure units, changes in insurance premium rates, and changes in fees paid by customers. It excludes the impact of acquisitions and divestitures to provide a clearer view of underlying business performance.

Total debt decreased by $13.9 million to $1,067.5 million by the end of the quarter. This decrease was mainly due to principal payments on the credit facility term loan and the repayment of a short-term promissory note. The company also indicated that it is in compliance with all debt covenants.