Total revenue for the nine months ended September 30, 2007 was $742,441,000, compared with revenue of $663,354,000 for the corresponding period in 2006, up 11.9%. Net income for the first nine months of 2007 was $157,955,000, versus $134,727,000 during the comparable 2006 period, an increase of 17.2%. Net income per share for the nine months ended September 30, 2007 was $1.12, versus the $0.96 per share posted during the same period in 2006, an increase of 16.7%.
J. Hyatt Brown, Chairman and Chief Executive Officer, noted, "The third quarter was the 'best of times' for purchasers of property and casualty insurance across the nation. Risk-bearers continue to reduce prices while expanding the terms and conditions of insurance policies. This market creates substantial challenges for agents and brokers and Brown & Brown is responding as it has in the past by seeking the best prices, terms and conditions for its customers. We are pleased to report a net income per share increase of 13.8% for the quarter."
Jim W. Henderson, Vice Chairman and Chief Operating Officer, added, "In 2007, we have closed 20 acquisitions representing approximately $81.8 million in annualized revenues. This compares to 13 transactions representing $55.5 million in annualized revenues for the same period in 2006. We believe that the current soft market pricing is a factor in the growing number of agencies exploring alternatives to their perpetuation plans. Additionally, concerns about a possible future, politically driven, capital gains tax rate increase are also a factor in the timing of potential acquisition transactions. Our business model and track record continues to attract the highest quality entrepreneurial agents and brokers."
Brown & Brown, Inc. and its subsidiaries offer a broad range of insurance and reinsurance products and services, as well as risk management, third party administration, managed health care, and Medicare set-aside services and programs. Providing service to business, public entity, quasi-public entity, individual, trade and professional association clients nationwide, the Company is ranked by Business Insurance magazine as the United States' sixth largest independent insurance intermediary. The Company's Web address is www.bbinsurance.com.
This press release may contain certain statements relating to future results which are forward-looking statements, including those relating to continuing our revenue, earnings and operating growth, as well as identifying and consummating attractive acquisition opportunities. These statements are not historical facts, but instead represent only the Company's current belief regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control. It is possible that the Company's actual results, financial condition and achievements may differ, possibly materially, from the anticipated results, financial condition and achievements contemplated by these forward-looking statements. Further information concerning the Company and its business, including factors that potentially could materially affect the Company's financial results and condition, as well as its other achievements, are contained in the Company's filings with the Securities and Exchange Commission. Some factors include: general economic conditions around the country; downward commercial property and casualty premium pressures; the effects of recent legislative and regulatory changes in Florida pertaining to the insurance industry, including those relating to coastal property coverages; the competitive environment; the integration of the Company's operations with those of businesses or assets the Company has acquired or may acquire in the future and the failure to realize the expected benefits of such integration; the potential occurrence of a disaster that affects certain areas of the States of California, Florida, Georgia, Michigan, New Jersey, New York, Pennsylvania and/or Washington, where significant portions of the Company's business are concentrated; and the cost and impact on the Company of previously disclosed litigation initiated against the Company and regulatory inquiries regarding industry and Company practices with respect to compensation received from insurance carriers. All forward-looking statements made herein are made only as of the date of this release, and the Company does not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur or of which the Company hereafter becomes aware.
Brown & Brown, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
For the For the
Three Months Nine Months
Ended Ended
September 30, September 30,
2007 2006 2007 2006
---------- ---------- ---------- ----------
REVENUES
Commissions and fees $ 225,421 $ 208,558 $ 701,456 $ 653,900
Investment income 3,286 3,218 27,855 8,383
Other income, net 8,577 189 13,130 1,071
---------- ---------- ---------- ----------
Total revenues 237,284 211,965 742,441 663,354
---------- ---------- ---------- ----------
EXPENSES
Employee compensation and
benefits 110,491 100,821 333,937 304,731
Non-cash stock-based
compensation 1,491 837 4,327 4,601
Other operating expenses 32,928 29,502 96,409 90,605
Amortization 10,331 9,089 29,798 27,067
Depreciation 3,213 2,922 9,492 8,302
Interest 3,395 3,229 10,445 10,080
---------- ---------- ---------- ----------
Total expenses 161,849 146,400 484,408 445,386
---------- ---------- ---------- ----------
Income before income taxes 75,435 65,565 258,033 217,968
Income taxes 29,219 25,295 100,078 83,241
---------- ---------- ---------- ----------
Net income $ 46,216 $ 40,270 $ 157,955 $ 134,727
========== ========== ========== ==========
Net income per share:
Basic $ 0.33 $ 0.29 $ 1.13 $ 0.97
========== ========== ========== ==========
Diluted $ 0.33 $ 0.29 $ 1.12 $ 0.96
========== ========== ========== ==========
Weighted average number of
shares outstanding:
Basic 140,593 139,668 140,401 139,522
========== ========== ========== ==========
Diluted 141,288 141,027 141,209 140,949
========== ========== ========== ==========
Dividends declared per share $ 0.06 $ 0.05 $ 0.18 $ 0.15
========== ========== ========== ==========
Brown & Brown, Inc.
INTERNAL GROWTH SCHEDULE
Core Commissions and Fees(1)
Three Months Ended September 30, 2007
(in thousands)
(unaudited)
Quarter Quarter Total Total Less Internal
Ended Ended Net Net Acquisition Net
9/30/07 9/30/06 Change Growth % Revenues Growth %
-------- -------- -------- ------ ----------- ------
Florida Retail $ 39,286 $ 43,871 $ (4,585) (10.5)% $ 797 (12.3)%
National Retail 62,237 51,948 10,289 19.8 % 10,685 (0.8)%
Western Retail 24,668 26,139 (1,471) (5.6)% 75 (5.9)%
-------- -------- -------- ----------
Total Retail 126,191 121,958 4,233 3.5 % 11,557 (6.0)%
-------- -------- -------- ----------
Professional
Programs 11,200 10,696 504 4.7 % 119 3.6 %
Special Programs 30,411 26,736 3,675 13.7 % 2,029 6.2 %
-------- -------- -------- ----------
Total Programs 41,611 37,432 4,179 11.2 % 2,148 5.4 %
-------- -------- -------- ----------
Wholesale Brokerage 39,354 36,017 3,337 9.3 % 4,400 (3.0)%
TPA Services 9,390 9,164 226 2.5 % - 2.5 %
-------- -------- -------- ----------
Total Core
Commissions
and Fees (1) $216,546 $204,571 $ 11,975 5.9 % $ 18,105 (3.0)%
======== ======== ======== ===========
Reconciliation of Internal Growth Schedule
to Total Commissions and Fees
Included in the Consolidated Statements of Income
for the Three Months Ended September 30, 2007 and 2006
(in thousands)
(unaudited)
Quarter Quarter
Ended Ended
9/30/07 9/30/06
-------------- --------------
Total core commissions and fees(1) $ 216,546 $ 204,571
Contingent commissions 8,875 2,092
Divested business - 1,895
-------------- --------------
Total commission & fees $ 225,421 $ 208,558
============== ==============
(1) Total core commissions and fees are our total commissions and fees
less (i) profit-sharing contingent commissions (revenue derived from
special revenue-sharing commissions from insurance companies based
upon the volume and the growth and/or profitability of the business
placed with such companies during the prior year), and (ii) divested
business (commissions and fees generated from offices, books of
business or niches sold by the Company or terminated).
Brown & Brown, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
September 30, December 31,
2007 2006
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 74,025 $ 88,490
Restricted cash and investments 227,146 242,187
Short-term investments 3,021 2,909
Premiums, commissions and fees receivable 271,606 282,440
Other current assets 35,217 32,180
----------- -----------
Total current assets 611,015 648,206
Fixed assets, net 58,322 44,170
Goodwill 803,330 684,521
Amortizable intangible assets, net 421,209 396,069
Investments 652 15,826
Other assets 20,831 19,160
----------- -----------
Total assets $ 1,915,359 $ 1,807,952
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Premiums payable to insurance companies $ 399,331 $ 435,449
Premium deposits and credits due customers 38,900 33,273
Accounts payable 21,127 17,854
Accrued expenses 72,883 86,009
Current portion of long-term debt 11,574 18,082
----------- -----------
Total current liabilities 543,815 590,667
Long-term debt 225,403 226,252
Deferred income taxes, net 60,596 49,721
Other liabilities 12,560 11,967
Shareholders' equity:
Common stock, par value $0.10 per share;
authorized 280,000 shares; issued and
outstanding 140,709 at 2007 and 140,016
at 2006 14,071 14,002
Additional paid-in capital 230,520 210,543
Retained earnings 828,336 695,656
Accumulated other comprehensive income 58 9,144
----------- -----------
Total shareholders' equity 1,072,985 929,345
----------- -----------
Total liabilities and shareholders' equity $ 1,915,359 $ 1,807,952
=========== ===========
Contact: Cory T. Walker Chief Financial Officer (386) 239-7250
SOURCE: Brown & Brown, Inc.