Total revenue for the first half of 2007 was $505,157,000, compared with revenue of $451,389,000 for the corresponding period in 2006, up 11.9%. Net income for the first six months of 2007 was $111,739,000, versus $94,457,000 during the comparable 2006 period, an increase of 18.3%. Net income per share for the six months ended June 30, 2007 was $0.79, versus the $0.67 per share posted during the same period in 2006, an increase of 17.9%.
J. Hyatt Brown, Chairman and Chief Executive Officer, noted, "We continue to slog through the mush of a very soft market with significant positive results. Our net income for the quarter grew by 17.1%. A significant part of this increase was the result of selling all of the remaining shares of our long-term investment in Rock-Tenn Company at a pre-tax gain of $9.8 million."
Jim W. Henderson, Vice Chairman and Chief Operating Officer, added, "Since the beginning of the second quarter of 2007, we have closed three acquisitions with estimated annual revenues of $21.6 million. We are pleased with the number and quality of the agencies that are current opportunities."
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 Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
----------- ----------- ----------- -----------
REVENUES
Commissions and fees $ 230,476 $ 217,427 $ 476,035 $ 445,342
Investment income 12,990 2,956 24,569 5,165
Other income, net 3,178 424 4,553 882
----------- ----------- ----------- -----------
Total revenues 246,644 220,807 505,157 451,389
----------- ----------- ----------- -----------
EXPENSES
Employee compensation and
benefits 112,636 103,180 223,446 203,910
Non-cash stock-based
compensation 1,334 1,434 2,836 3,764
Other operating expenses 31,558 30,134 63,481 61,103
Amortization 9,965 8,978 19,467 17,978
Depreciation 3,239 2,785 6,279 5,380
Interest 3,416 3,329 7,050 6,851
----------- ----------- ----------- -----------
Total expenses 162,148 149,840 322,559 298,986
----------- ----------- ----------- -----------
Income before income taxes 84,496 70,967 182,598 152,403
Income taxes 32,484 26,536 70,859 57,946
----------- ----------- ----------- -----------
Net income $ 52,012 $ 44,431 $ 111,739 $ 94,457
=========== =========== =========== ===========
Net income per share:
Basic $ 0.37 $ 0.32 $ 0.80 $ 0.68
=========== =========== =========== ===========
Diluted $ 0.37 $ 0.32 $ 0.79 $ 0.67
=========== =========== =========== ===========
Weighted average number of
shares outstanding:
Basic 140,384 139,511 140,303 139,447
=========== =========== =========== ===========
Diluted 141,120 141,006 141,170 140,915
=========== =========== =========== ===========
Dividends declared per
share $ 0.06 $ 0.05 $ 0.12 $ 0.10
=========== =========== =========== ===========
Brown & Brown, Inc.
INTERNAL GROWTH SCHEDULE
Core Commissions and Fees(1)
Three Months Ended June 30, 2007
(in thousands)
(unaudited)
Quarter Quarter Total Total Less Internal
Ended Ended Net Net Acquisition Net
6/30/07 6/30/06 Change Growth % Revenues Growth %
--------- --------- -------- ------- --------- -------
Florida Retail $ 50,876 $ 46,812 $ 4,064 8.7% $ 762 7.1%
National Retail 65,150 52,052 13,098 25.2% 11,711 2.7%
Western Retail 25,472 26,426 (954) (3.6)% 122 (4.1)%
--------- --------- -------- ---------
Total Retail 141,498 125,290 16,208 12.9% 12,595 2.9%
--------- --------- -------- ---------
Professional
Programs 9,080 9,034 46 0.5% 131 (0.9)%
Special
Programs 22,599 26,525 (3,926) (14.8)% 1,454 (20.3)%
--------- --------- -------- ---------
Total
Programs 31,679 35,559 (3,880) (10.9)% 1,585 (15.4)%
--------- --------- -------- ---------
Wholesale
Brokerage 45,369 42,736 2,633 6.2% 3,390 (1.8)%
TPA Services 9,184 8,051 1,133 14.1% 654 5.9%
--------- --------- -------- ---------
Total Core
Commissions
and Fees (1) $ 227,730 $ 211,636 $ 16,094 7.6% $ 18,224 (1.0)%
========= ========= ======== ======= ========= =======
Reconciliation of Internal Growth Schedule
to Total Commissions and Fees
Included in the Consolidated Statements of Income
for the Three Months Ended June 30, 2007 and 2006
(in thousands)
(unaudited)
Quarter Ended Quarter Ended
6/30/07 6/30/06
--------------- ---------------
Total core commissions and fees(1) $ 227,730 $ 211,636
Contingent commissions 2,746 4,604
Divested business - 1,187
--------------- ---------------
Total commission & fees $ 230,476 $ 217,427
=============== ===============
(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)
June 30, December 31,
2007 2006
--------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents $ 67,942 $ 88,490
Restricted cash and investments 240,509 242,187
Short-term investments 2,637 2,909
Premiums, commissions and fees receivable 273,811 282,440
Other current assets 26,808 32,180
--------------- ---------------
Total current assets 611,707 648,206
Fixed assets, net 58,493 44,170
Goodwill 779,597 684,521
Amortizable intangible assets, net 409,885 396,069
Investments 649 15,826
Other assets 24,361 19,160
--------------- ---------------
Total assets $ 1,884,692 $ 1,807,952
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Premiums payable to insurance companies $ 423,772 $ 435,449
Premium deposits and credits due
customers 31,368 33,273
Accounts payable 29,785 17,854
Accrued expenses 68,098 86,009
Current portion of long-term debt 17,190 18,082
--------------- ---------------
Total current liabilities 570,213 590,667
Long-term debt 225,432 226,252
Deferred income taxes, net 53,556 49,721
Other liabilities 12,576 11,967
Shareholders' equity:
Common stock, par value $0.10 per share;
authorized 280,000 shares; issued
and outstanding 140,337 at 2007 and
140,016 at 2006 14,034 14,002
Additional paid-in capital 218,237 210,543
Retained earnings 790,570 695,656
Accumulated other comprehensive income 74 9,144
--------------- ---------------
Total shareholders' equity 1,022,915 929,345
--------------- ---------------
Total liabilities and shareholders'
equity $ 1,884,692 $ 1,807,952
=============== ===============
Contact: Cory T. Walker Chief Financial Officer (386) 239-7250
SOURCE: Brown & Brown, Inc.