10-QPeriod: Q2 FY2021

BROWN & BROWN, INC. Quarterly Report for Q2 Ended Jun 30, 2021

Filed July 27, 2021For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) demonstrated robust financial performance in the second quarter and first half of 2021, reporting significant increases in total revenues and net income compared to the prior year. Total revenues grew by 21.5% to $727.4 million for the quarter and 18.9% to $1.54 billion for the six months ended June 30, 2021. This growth was primarily driven by a substantial increase in commissions and fees, particularly from net new and renewal business, alongside contributions from acquisitions. Net income saw a significant rise of 43.9% to $139.3 million for the quarter and 36.1% to $339.0 million for the six months. The company's core business segments, Retail and National Programs, showed particularly strong organic revenue growth, reflecting successful new business generation and effective pricing strategies. Expenses, notably employee compensation and benefits, also increased but at a slower pace than revenue, leading to improved profitability margins, including a notable expansion in EBITDAC Margin. The company also continues its strategy of disciplined acquisitions, integrating new operations effectively and contributing to overall growth. Despite ongoing economic uncertainties, Brown & Brown maintains a strong liquidity position and compliance with its debt covenants.

Financial Highlights

50 data points
Beta

Revenue

$598.81M

Net Income

$96.78M

16.2% Net Margin

EPS (Diluted)

$0.34

Total Assets

$8.20B

Cash & Equivalents

$1.06B

Free Cash Flow

$363.40M

Financial Statements
Beta
Revenue$598.81M
Operating Expenses$469.40M
Interest Expense$13.81M
Net Income$96.78M
EPS (Basic)$0.34
EPS (Diluted)$0.34
Shares Outstanding (Basic)273.10M
Shares Outstanding (Diluted)274.36M

Key Highlights

  • 1Total revenues increased by 21.5% to $727.4 million for Q2 2021 and by 18.9% to $1.54 billion for the first six months of 2021, year-over-year.
  • 2Net income surged by 43.9% to $139.3 million for Q2 2021 and by 36.1% to $339.0 million for the first six months of 2021.
  • 3Organic Revenue growth was strong at 14.7% for Q2 2021 and 12.1% for the first six months of 2021, indicating healthy underlying business performance.
  • 4The Retail Segment experienced substantial growth, with total revenues up 28.3% for the quarter and 21.6% for the six months, driven by new business and acquisitions.
  • 5EBITDAC (Earnings Before Interest, Taxes, Depreciation, Amortization, and Change in Earn-out Payables) increased by 35.4% for the quarter and 26.8% for the six months, with EBITDAC Margin expanding to 32.9% and 34.4% respectively.
  • 6The company completed four acquisitions during the first six months of 2021, contributing $17.5 million in revenue and demonstrating continued execution of its growth strategy.
  • 7Long-term debt decreased by $33.6 million to $2.06 billion, while the company maintained a strong liquidity position with $1.35 billion in cash and cash equivalents (including restricted cash) as of June 30, 2021.

Frequently Asked Questions

Brown & Brown reported strong revenue growth. For the three months ended June 30, 2021, total revenues increased by 21.5% to $727.4 million compared to $598.8 million in the prior year. For the six months ended June 30, 2021, total revenues increased by 18.9% to $1.54 billion compared to $1.30 billion in the prior year. This growth was primarily driven by an increase in commissions and fees from net new business and acquisitions.

Profitability increased significantly, with net income rising by 43.9% for the quarter and 36.1% for the six months. This improvement was largely due to strong revenue growth outpacing expense increases, particularly in employee compensation and benefits which grew at a slower rate than revenues. The company also saw an expansion in its EBITDAC Margin, indicating improved operational efficiency.

Acquisitions remain a key part of Brown & Brown's growth strategy. During the first six months of 2021, the company completed four acquisitions, which contributed $17.5 million in revenue and added $121.8 million in goodwill. These acquisitions are being effectively integrated and are contributing positively to the overall financial results.

Brown & Brown maintains a strong financial position and liquidity. As of June 30, 2021, the company had $1.35 billion in cash and cash equivalents (including restricted cash). Total debt decreased slightly to $2.06 billion. The company has access to an $800.0 million revolving credit facility and believes its current liquidity and cash generated from operations are sufficient to meet its obligations for at least the next 12 months.