10-QPeriod: Q2 FY2022

BROWN & BROWN, INC. Quarterly Report for Q2 Ended Jun 30, 2022

Filed July 26, 2022For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) reported solid financial results for the second quarter and first half of 2022, demonstrating continued growth and operational strength. Total revenues for the second quarter increased by 15.5% to $839.7 million, driven by a strong 15.6% increase in commissions and fees. This growth was fueled by net new and renewal business, contributing to an organic revenue growth rate of 10.3% for the quarter. The company also successfully integrated recent acquisitions, which added $40.9 million in revenue for the quarter. Net income for the quarter rose to $145.2 million, a 4.2% increase year-over-year, with diluted earnings per share remaining stable at $0.51. The first half of 2022 also showed robust performance, with total revenues up 13.1% to $1,744.5 million and net income growing 7.8% to $365.5 million. The company's balance sheet remains strong, with total assets increasing to $12.3 billion as of June 30, 2022, largely due to strategic acquisitions. Management highlighted the successful execution of its growth strategy, both organically and through targeted acquisitions, while effectively managing expenses. The company also secured significant debt financing to support its acquisition strategy, notably the substantial GRP acquisition completed shortly after the quarter's end.

Financial Highlights

51 data points
Beta

Revenue

$727.30M

Net Income

$139.30M

19.2% Net Margin

EPS (Diluted)

$0.49

Total Assets

$9.36B

Cash & Equivalents

$1.35B

Free Cash Flow

$228.20M

Financial Statements
Beta
Revenue$727.30M
Operating Expenses$541.00M
Interest Expense$16.30M
Net Income$139.30M
EPS (Basic)$0.49
EPS (Diluted)$0.49
Shares Outstanding (Basic)275.70M
Shares Outstanding (Diluted)276.90M

Key Highlights

  • 1Total revenues for Q2 2022 increased 15.5% to $839.7 million, with commissions and fees growing 15.6%.
  • 2Organic revenue growth was 10.3% for Q2 2022 and 9.0% for the first six months of 2022, indicating strong underlying business momentum.
  • 3Net income for Q2 2022 rose 4.2% to $145.2 million, and for the first six months of 2022 increased 7.8% to $365.5 million.
  • 4Diluted earnings per share remained consistent at $0.51 for Q2 2022, and $1.29 for the first six months of 2022.
  • 5The company completed ten acquisitions in the first half of 2022, investing $500.9 million, and significantly increased its long-term debt to $4.16 billion, partly to fund acquisitions like GRP.
  • 6Employee compensation and benefits as a percentage of total revenues improved to 49.1% in Q2 2022 from 54.4% in Q2 2021, indicating improved operational leverage.
  • 7Total assets grew to $12.3 billion as of June 30, 2022, up from $9.8 billion at the end of 2021, reflecting strong asset growth, largely driven by acquisitions.

Frequently Asked Questions

Revenue growth in the second quarter of 2022 was primarily driven by a significant increase in commissions and fees, up 15.6% year-over-year. This growth was supported by a combination of net new and renewal business, resulting in a strong organic revenue growth rate of 10.3%, as well as contributions from recent acquisitions.

The company's total debt significantly increased from $2.0 billion at the end of 2021 to $4.2 billion as of June 30, 2022. This increase was primarily due to the issuance of $1.2 billion in Senior Notes and substantial drawdowns under new and existing credit facilities, which were strategically undertaken to finance significant acquisitions, including the preparation for the GRP acquisition.

Acquisitions remain a core part of Brown & Brown's continuing business strategy. The company actively seeks to attract and integrate high-quality insurance intermediaries. In the first half of 2022 alone, they completed ten acquisitions, deploying $500.9 million. This strategy is supported by robust financing, including significant debt issuances and credit facility usage.

Employee compensation and benefits expenses as a percentage of total revenues improved significantly, decreasing from 54.4% in Q2 2021 to 49.1% in Q2 2022. This indicates improved operational efficiency and expense leverage, as revenue growth outpaced the growth in compensation costs, despite an increase in absolute dollar terms primarily due to acquisitions and salary inflation.