8-KEarnings & Results

BROWN & BROWN, INC. 8-K Report, Financial Results (Oct 23, 2006)

Filed October 23, 2006For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) reported strong third quarter 2006 results, demonstrating robust growth in both revenues and net income compared to the prior year's third quarter. Total revenue increased by 11.2% to $211.965 million, while net income saw a significant jump of 15.8% to $40.270 million, translating to diluted earnings per share of $0.29, up from $0.25 in the same period of 2005. This performance was attributed to a combination of a lighter hurricane season, improved operating results from their National Retail Segment, and a continued focus on driving new business sales and customer service. The company also highlighted its ongoing commitment to growth through acquisitions, having completed 13 transactions representing $55.5 million in annualized revenue year-to-date. The return of Paul Vredenburg signals an increased focus on identifying and integrating acquisition candidates, underscoring this strategic pillar for future earnings growth. Overall, the report indicates a healthy financial performance and a clear strategic direction focused on organic growth and strategic acquisitions.

Key Highlights

  • 1Third quarter 2006 net income increased 15.8% to $40.27 million, or $0.29 per share, compared to $34.78 million, or $0.25 per share, in Q3 2005.
  • 2Total revenue for the third quarter of 2006 grew 11.2% to $211.965 million, up from $190.645 million in Q3 2005.
  • 3Year-to-date revenue (first nine months of 2006) rose 12.6% to $663.354 million, with net income up 17.3% to $134.727 million.
  • 4The company emphasized its acquisition strategy, having completed 13 transactions representing $55.5 million in annualized revenue year-to-date 2006.
  • 5Management cited a lighter hurricane season and improved operating results from the National Retail Segment as contributing factors to the strong quarter.
  • 6The balance sheet shows a significant increase in Goodwill ($677.8 million from $549.0 million) and Amortizable intangible assets ($407.8 million from $377.9 million), reflecting acquisition activity.
  • 7Dividends declared per share increased from $0.04 in Q3 2005 to $0.05 in Q3 2006, with year-to-date dividends at $0.15 versus $0.12.

Frequently Asked Questions

The growth was driven by a combination of factors, including a lighter hurricane season, improved operating results from the National Retail Segment, and a continued focus on new business sales and customer service. The company also benefited from its ongoing acquisition strategy.

The company views acquisitions as a key component of its long-term growth strategy. In 2006, Brown & Brown had completed 13 transactions by the end of Q3, representing $55.5 million in annualized revenue. The return of Paul Vredenburg signals an intensified effort to scout and secure more acquisition candidates.

While the press release contains forward-looking statements, management expressed optimism about continued revenue, earnings, and operating growth. They remain 'bullish on the prospects for acquisitions as a component of our long-term strategy for growth in earning.' However, the company also cautioned that actual results could differ materially from projections due to various risk factors.

Total assets grew to $1.803 billion from $1.609 billion at year-end 2005. Key changes include increases in Goodwill and Amortizable Intangible Assets, which are typical of companies pursuing growth through acquisitions. Cash and cash equivalents decreased, while premiums receivable and payable to insurance companies increased, reflecting the operational nature of the business.