10-QPeriod: Q3 FY2021

BROWN & BROWN, INC. Quarterly Report for Q3 Ended Sep 30, 2021

Filed October 26, 2021For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) demonstrated robust financial performance for the nine months ended September 30, 2021, with total revenues increasing by 17.3% to $2.31 billion compared to the prior year. This growth was primarily driven by a strong performance in commissions and fees, which rose by 17.5% to $2.31 billion, reflecting solid organic revenue growth of 10.8% and contributions from recent acquisitions. Net income for the period saw a significant increase of 26.7% to $485.4 million, or $1.71 per diluted share. The company's strategic focus on net new business growth and acquisitions continues to yield positive results, as evidenced by the expansion across its Retail, National Programs, and Wholesale Brokerage segments. Despite increases in employee compensation and benefits and amortization expenses due to acquisitions, the company managed its overall expenses effectively, leading to improved profitability and margins. The company also maintained a strong liquidity position and was compliant with its debt covenants.

Financial Highlights

51 data points
Beta

Revenue

$673.96M

Net Income

$133.98M

19.9% Net Margin

EPS (Diluted)

$0.47

Total Assets

$8.80B

Cash & Equivalents

$1.50B

Free Cash Flow

$103.01M

Financial Statements
Beta
Revenue$673.96M
Operating Expenses$515.43M
Interest Expense$13.23M
Net Income$133.98M
EPS (Basic)$0.47
EPS (Diluted)$0.47
Shares Outstanding (Basic)275.51M
Shares Outstanding (Diluted)276.93M

Key Highlights

  • 1Total revenues for the nine months ended September 30, 2021, increased by 17.3% to $2.31 billion.
  • 2Net income for the nine months increased by 26.7% to $485.4 million, with diluted EPS growing to $1.71.
  • 3Commissions and fees, the primary revenue driver, grew by 17.5% to $2.31 billion.
  • 4Organic Revenue growth for the nine months was a strong 10.8%, indicating healthy underlying business expansion.
  • 5The company actively pursued its acquisition strategy, completing eleven acquisitions during the first nine months of 2021, contributing $131.2 million to core commissions and fees.
  • 6Employee compensation and benefits expense increased by 15.2% for the nine months, reflecting growth from acquisitions and salary inflation.
  • 7The company maintained compliance with all debt covenants and ended the period with $944.0 million in cash and cash equivalents.

Frequently Asked Questions

Revenue growth was primarily driven by a significant increase in commissions and fees, up 17.5%, due to strong organic revenue growth of 10.8% from net new and renewal business, as well as contributions from eleven acquisitions completed during the period. These factors were partially offset by a small decrease from divested businesses.

Profitability improved significantly. Net income for the first nine months of 2021 increased by 26.7% to $485.4 million, and diluted earnings per share rose to $1.71 from $1.35 in the prior year. This improvement was supported by strong revenue growth and effective management of expenses, despite increases in compensation and amortization related to acquisitions.

Acquisitions remain a core part of Brown & Brown's business strategy. The company actively acquired eleven insurance intermediary operations and books of business during the first nine months of 2021. Management views acquisitions as a key driver for growth and continues to integrate new businesses effectively into its operations.

Brown & Brown maintains a conservative balance sheet and strong liquidity. Total debt decreased by $50.4 million to $2.05 billion at September 30, 2021. The company ended the period with $944.0 million in cash and cash equivalents and had access to an $800 million revolving credit facility. Management believes its current liquidity and cash flow generation are sufficient to meet its obligations for at least the next 12 months.