10-QPeriod: Q3 FY2023

BROWN & BROWN, INC. Quarterly Report for Q3 Ended Sep 30, 2023

Filed October 26, 2023For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) reported strong financial results for the nine months ended September 30, 2023, with total revenues increasing by 20.9% to $3,230.9 million and net income growing by 14.3% to $601.8 million. This growth was primarily driven by robust performance in core commissions and fees, which increased by 19.0% to $3,105.5 million, supported by both organic growth and contributions from recent acquisitions. The company demonstrated significant organic revenue growth of 11.1% for the nine-month period, reflecting the strength of its core business operations. Profitability also saw a considerable boost, with Adjusted EBITDAC (Earnings Before Interest, Taxes, Depreciation, Amortization, and Change in Estimated Acquisition Earn-Out Payables) increasing by 26.7% to $1,127.0 million. This indicates strong operational efficiency and the successful integration of acquired entities. Despite a notable increase in interest expenses due to higher debt levels and rates, the company maintained healthy margins and a strong liquidity position. Key drivers of this performance include strong net new and renewal business, strategic acquisitions contributing substantial revenue, and favorable market conditions leading to higher investment income and profit-sharing contingent commissions. Management's focus on operational efficiency and growth through acquisitions continues to yield positive financial outcomes, positioning the company for sustained success.

Financial Highlights

52 data points
Beta

Revenue

$927.60M

Net Income

$161.10M

17.4% Net Margin

EPS (Diluted)

$0.57

Total Assets

$13.66B

Cash & Equivalents

$1.85B

Free Cash Flow

$239.50M

Financial Statements
Beta
Revenue$927.60M
Operating Expenses$709.60M
Interest Expense$41.50M
Net Income$161.10M
EPS (Basic)$0.57
EPS (Diluted)$0.57
Shares Outstanding (Basic)277.80M
Shares Outstanding (Diluted)278.70M

Key Highlights

  • 1Total revenues increased by 20.9% to $3,230.9 million for the nine months ended September 30, 2023, compared to the same period in 2022.
  • 2Net income rose by 14.3% to $601.8 million for the nine months ended September 30, 2023.
  • 3Core commissions and fees grew significantly by 19.0% to $3,105.5 million for the nine months ended September 30, 2023.
  • 4Organic Revenue growth was a healthy 11.1% for the nine months ended September 30, 2023.
  • 5Adjusted EBITDAC increased by 26.7% to $1,127.0 million for the nine months ended September 30, 2023, indicating strong operational performance.
  • 6The company completed 21 acquisitions during the first nine months of 2023, contributing to revenue growth.
  • 7Total assets remained stable at $13,983.0 million as of September 30, 2023, reflecting effective asset management.

Frequently Asked Questions

The primary driver of Brown & Brown's revenue growth was the significant increase in core commissions and fees, which rose by 19.0% to $3,105.5 million. This growth was fueled by a combination of strong net new and renewal business (organic growth of 11.1%) and contributions from 21 acquired businesses.

Acquisitions played a significant role in revenue growth, contributing $243.8 million to core commissions and fees in the first nine months of 2023 for businesses acquired that had no comparable revenues in the prior year. The company also recorded $154.2 million in goodwill related to these acquisitions. Additionally, the change in estimated acquisition earn-out payables had a notable impact, resulting in a charge of $29.4 million for the nine-month period.

Brown & Brown maintains a conservative balance sheet and strong liquidity profile. As of September 30, 2023, the company had $2.27 billion in cash and cash equivalents (inclusive of fiduciary cash). They also have access to an $800.0 million Revolving Credit Facility, with expansion options providing further capacity. Management believes its current cash, operational cash flow, and available credit facilities are sufficient to meet its liquidity needs for at least the next 12 months and the long term.

Interest expense increased by 48.3% to $142.1 million for the nine months ended September 30, 2023, compared to the same period in 2022. This increase was primarily due to higher average debt balances resulting from debt issuances and bank financing in 2022 to fund acquisitions, as well as an increase in floating interest rates on their adjustable-rate debt. Total debt (net of unamortized discount and debt issuance costs) decreased by $235.0 million to $3,707.1 million as of September 30, 2023.