10-QPeriod: Q2 FY2023

BROWN & BROWN, INC. Quarterly Report for Q2 Ended Jun 30, 2023

Filed July 27, 2023For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) reported a strong second quarter of 2023, with total revenues increasing by 24.7% to $1,047.3 million compared to the prior year period. Net income rose significantly by 31.1% to $190.4 million, resulting in diluted earnings per share of $0.67, up from $0.51 in the second quarter of 2022. This growth was primarily driven by robust performance in core commissions and fees, up 22.7%, fueled by both organic revenue growth of 11.2% and contributions from recent acquisitions. The company also benefited from a substantial increase in investment income due to higher interest rates. Despite increased employee compensation and benefits expenses, which rose 28.7%, the company managed to expand its EBITDAC Margin - Adjusted to 34.2%, indicating effective cost management and operational leverage. The first six months of 2023 also showed solid growth, with total revenues up 24.0% to $2,163.3 million and net income up 16.5% to $425.9 million. Organic revenue growth for the six-month period was 11.9%, demonstrating the company's ability to generate growth from its existing operations. The company continued its acquisition strategy, integrating several new intermediaries, which contributed significantly to revenue growth across its segments, particularly Retail and National Programs. Brown & Brown maintains a strong liquidity position with substantial available credit facilities, positioning it well for future growth and operational needs.

Financial Highlights

52 data points
Beta

Revenue

$839.70M

Net Income

$145.20M

17.3% Net Margin

EPS (Diluted)

$0.51

Total Assets

$12.28B

Cash & Equivalents

$3.29B

Free Cash Flow

$234.30M

Financial Statements
Beta
Revenue$839.70M
Operating Expenses$640.90M
Interest Expense$36.00M
Net Income$145.20M
EPS (Basic)$0.51
EPS (Diluted)$0.51
Shares Outstanding (Basic)277.20M
Shares Outstanding (Diluted)278.20M

Key Highlights

  • 1Total revenues increased by 24.7% to $1,047.3 million in Q2 2023 compared to Q2 2022.
  • 2Net income grew by 31.1% to $190.4 million in Q2 2023, with diluted EPS rising to $0.67 from $0.51.
  • 3Organic revenue growth was strong at 11.2% for Q2 2023, indicating healthy performance from existing operations.
  • 4Acquisitions continue to be a key growth driver, contributing significantly to revenue increases across multiple segments.
  • 5Investment income saw a substantial increase to $10.3 million in Q2 2023, up from $0.4 million in Q2 2022, primarily due to higher interest rates.
  • 6EBITDAC Margin - Adjusted improved to 34.2% in Q2 2023, reflecting operational efficiency and effective cost management.
  • 7The company maintained a strong liquidity position, with ample cash and available credit facilities.

Frequently Asked Questions

Revenue growth in the second quarter of 2023 was primarily driven by a 22.7% increase in core commissions and fees, which benefited from both organic revenue growth of 11.2% and contributions from recent acquisitions. Investment income also saw a significant rise due to higher interest rates.

Acquisitions played a significant role in Brown & Brown's revenue growth, contributing $108.0 million in the second quarter. The company integrated several new insurance intermediaries, which positively impacted performance across its Retail and National Programs segments.

Employee compensation and benefits expenses increased by 28.7% in the second quarter, partly due to the costs associated with recent acquisitions and an increase in staff salaries and producer compensation reflecting revenue growth. The company is also experiencing a year-over-year increase in deferred compensation liabilities. While these costs are rising, the overall increase in revenue and improved EBITDAC Margin suggest that the company is managing these expenses effectively in relation to its growth.

Brown & Brown maintains a strong liquidity position. As of June 30, 2023, the company had substantial cash and cash equivalents, along with significant available borrowing capacity under its revolving credit facility. The company believes its current liquidity, combined with operational cash flow, is sufficient to meet its needs for at least the next 12 months.