10-QPeriod: Q1 FY2021

BROWN & BROWN, INC. Quarterly Report for Q1 Ended Mar 31, 2021

Filed April 27, 2021For Securities:BRO

Summary

Brown & Brown, Inc. reported a strong first quarter for 2021, demonstrating significant revenue growth and improved profitability compared to the same period in the prior year. Total revenues increased by 16.7% to $815.3 million, primarily driven by a robust 16.9% increase in commissions and fees. This growth was fueled by a combination of net new and renewal business, contributing to an Organic Revenue growth rate of 9.8%, and contributions from recent acquisitions. The company also saw a substantial 31.1% increase in net income to $199.7 million, translating to diluted earnings per share of $0.70, up from $0.54 in the first quarter of 2020. Operational expenses also rose, notably employee compensation and benefits, which increased by 22.8% partly due to acquisition-related costs and increased stock-based compensation. However, other operating expenses decreased by 11.9% due to reduced variable costs and favorable insurance policy valuations. The company's strong performance is underpinned by its diversified business model across its four reportable segments: Retail, National Programs, Wholesale Brokerage, and Services, all of which contributed positively to revenue growth. Management highlights the effective execution of its growth strategies, including strategic acquisitions, and anticipates continued solid performance.

Financial Highlights

49 data points
Beta

Revenue

$698.50M

Net Income

$152.40M

21.8% Net Margin

EPS (Diluted)

$0.54

Total Assets

$7.58B

Cash & Equivalents

$775.18M

Free Cash Flow

$17.36M

Financial Statements
Beta
Revenue$698.50M
Operating Expenses$493.24M
Interest Expense$15.29M
Net Income$152.40M
EPS (Basic)$0.54
EPS (Diluted)$0.54
Shares Outstanding (Basic)272.78M
Shares Outstanding (Diluted)274.86M

Key Highlights

  • 1Total revenues increased by 16.7% to $815.3 million for the first quarter of 2021, up from $698.5 million in the prior year.
  • 2Net income surged by 31.1% to $199.7 million, with diluted EPS rising to $0.70 from $0.54 year-over-year.
  • 3Commissions and fees, the primary revenue driver, grew by 16.9% to $814.0 million, supported by a 9.8% Organic Revenue growth rate.
  • 4Employee compensation and benefits increased by 22.8%, partly due to acquisitions and higher stock-based compensation, while other operating expenses decreased by 11.9%.
  • 5The company completed acquisitions contributing $48.7 million in core commissions and fees, demonstrating continued inorganic growth.
  • 6EBITDAC (a non-GAAP measure) increased by 20.5% to $291.6 million, with an improved EBITDAC Margin of 35.8% compared to 34.6% in Q1 2020.
  • 7The company maintained a strong liquidity position with total cash and cash equivalents, including restricted cash, of $1.14 billion as of March 31, 2021.

Frequently Asked Questions

Brown & Brown's primary revenue driver in Q1 2021 was the increase in commissions and fees, which grew by 16.9% to $814.0 million. This growth was a result of both organic efforts, such as net new and renewal business (leading to a 9.8% Organic Revenue growth rate), and contributions from recent acquisitions.

Total expenses increased by 16.8% to $576.1 million. The largest increase was in employee compensation and benefits (up 22.8%), driven by acquisition-related costs and higher non-cash stock-based compensation. However, other operating expenses decreased by 11.9%, partly due to reduced variable costs and favorable insurance policy valuations. Amortization and depreciation also increased due to recent acquisitions.

Organic Revenue growth rate (9.8% in Q1 2021) measures the revenue growth from existing operations, excluding the impact of acquisitions and divestitures, providing insight into the core business's performance. EBITDAC (Earnings Before Interest, Taxes, Depreciation, Amortization, and Change in Estimated Acquisition Earn-out Payables) is a non-GAAP measure used by the company to assess operating performance by removing certain non-cash and financing-related items, offering a more comparable view of operational profitability. The reported EBITDAC increased by 20.5% and the EBITDAC Margin improved to 35.8%.

Yes, during the first quarter of 2021, Brown & Brown acquired one insurance intermediary and one book of business. These acquisitions contributed $48.7 million in core commissions and fees and added goodwill of $79.9 million.