10-QPeriod: Q1 FY2019

BROWN & BROWN, INC. Quarterly Report for Q1 Ended Mar 31, 2019

Filed May 9, 2019For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) reported strong first-quarter 2019 results, demonstrating robust growth driven by a combination of acquisitions and organic business development. Total revenues surged by 23.5% year-over-year to $619.3 million, primarily fueled by a significant increase in commissions and fees, up 23.4% to $617.5 million. This growth was supported by an acceleration in acquisitions and a modest 2.0% organic revenue growth rate, indicating the company's ability to expand its market presence and integrate new businesses effectively. Net income saw a substantial increase of 25.4% to $113.9 million, translating to a diluted EPS of $0.40, up from $0.32 in the prior year. The company's expense management remained effective, with employee compensation and benefits increasing slightly slower than revenues, and other operating expenses growing at a more moderated pace. The company also continued its strategic acquisition strategy, completing eight acquisitions during the quarter, which contributed significantly to the revenue uplift. Brown & Brown maintains a strong financial position with total assets exceeding $6.8 billion and appears well-positioned for continued growth and profitability.

Financial Highlights

49 data points
Beta

Revenue

$501.46M

Net Income

$90.83M

18.1% Net Margin

EPS (Diluted)

$0.32

Total Assets

$5.62B

Cash & Equivalents

$558.25M

Free Cash Flow

$69.73M

Financial Statements
Beta
Revenue$501.46M
Operating Expenses$383.02M
Interest Expense$9.67M
Net Income$90.83M
EPS (Basic)$0.33
EPS (Diluted)$0.32
Shares Outstanding (Basic)270.17M
Shares Outstanding (Diluted)275.71M

Key Highlights

  • 1Total revenues increased by 23.5% to $619.3 million for the three months ended March 31, 2019, compared to $501.5 million for the same period in 2018.
  • 2Net income grew by 25.4% to $113.9 million ($0.40 diluted EPS) for the three months ended March 31, 2019, compared to $90.8 million ($0.32 diluted EPS) in the prior year.
  • 3Commissions and fees revenue increased by 23.4% to $617.5 million, driven by acquisitions and organic growth.
  • 4The company completed eight acquisitions during the quarter, contributing to revenue growth.
  • 5Organic Revenue growth was 2.0% for the first quarter of 2019, indicating continued underlying business expansion.
  • 6Employee compensation and benefits as a percentage of total revenues decreased slightly to 53.7%, demonstrating improved operational leverage.
  • 7The company issued $350.0 million in 4.500% Senior Notes due 2029, strengthening its capital structure.

Frequently Asked Questions

The primary driver of revenue growth was a significant increase in commissions and fees, which rose by 23.4% to $617.5 million. This increase was a result of both strategic acquisitions completed during the quarter and organic business development.

Profitability improved significantly. Net income increased by 25.4% to $113.9 million, leading to a rise in diluted earnings per share from $0.32 in the first quarter of 2018 to $0.40 in the first quarter of 2019.

The 2.0% Organic Revenue growth rate indicates that the company's core business, excluding the impact of recent acquisitions and divestitures, continued to expand. This demonstrates the underlying health and growth potential of Brown & Brown's existing operations.

The company has managed expenses effectively. Employee compensation and benefits, while increasing in absolute terms due to growth and acquisitions, decreased as a percentage of total revenues (from 54.0% to 53.7%). Other operating expenses also grew at a more moderate pace than revenues.