Net income for the first quarter of 2008 was $51,760,000 or $0.37 per share, compared with $59,727,000 or $0.42 per share for the same quarter of 2007. Excluding the non-recurring gain of $8,840,000 on the sale of Rock-Tenn shares in the first quarter of 2007, net income for the first quarter of 2007 was $54,343,000 or $0.38 per share.
Total revenues for the quarter ended March 31, 2008 were $256,715,000, compared with $258,513,000 recorded in the corresponding quarter of 2007. Excluding the $8,840,000 non-recurring gain on the sale of stock of Rock-Tenn Company in the first quarter of 2007, total revenues for the quarter ended March 31, 2008 increased 2.8% over the adjusted total revenues in the corresponding quarter of 2007, which equaled $249,673,000.
J. Hyatt Brown, Chairman and Chief Executive Officer, noted, "Our results are not surprising given the continuation of the most difficult insurance market environment in recent memory. We have great faith in the ability of our leaders at each of our decentralized office locations to continue to drive the sales and operating margins in the most effective manner given their local market environments. This leadership depth is critical to our ability to continue industry-leading results even in the face of continued difficult market conditions."
Jim W. Henderson, Vice Chairman and Chief Operating Officer, added, "For the first quarter and April to date, we have announced the completion of 13 acquisitions with annualized revenue of $43.8 million. We believe this select group of agencies is the best in class and we are proud to have them join the team. The continued soft market is a catalyst for change and has stimulated an abundance of M & A opportunities. Our operating model and available liquidity combine to make us an attractive option for like-minded sellers."
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 future financial results and to 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, Texas and/or Washington, where significant portions of the Company's business are concentrated; and the cost and impact on the Company of previously disclosed 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 For the Three Months Ended March 31, 2008 and 2007 (in thousands, except per share data) (unaudited) 2008 2007 --------- --------- REVENUES Commissions and fees $ 253,528 $ 245,559 Investment income 1,999 11,579 Other income, net 1,188 1,375 --------- --------- Total revenues 256,715 258,513 --------- --------- EXPENSES Employee compensation and benefits 121,187 110,810 Non-cash stock-based compensation 1,944 1,502 Other operating expenses 31,204 31,923 Amortization 11,116 9,502 Depreciation 3,246 3,040 Interest 3,434 3,634 --------- --------- Total expenses 172,131 160,411 --------- --------- Income before income taxes 84,584 98,102 Income taxes 32,824 38,375 --------- --------- Net income $ 51,760 $ 59,727 ========= ========= Net income per share: Basic $ 0.37 $ 0.43 ========= ========= Diluted $ 0.37 $ 0.42 ========= ========= Weighted average number of shares outstanding: Basic 140,704 140,221 ========= ========= Diluted 141,327 141,194 ========= ========= Dividends declared per share $ 0.07 $ 0.06 ========= ========= Brown & Brown, Inc. INTERNAL GROWTH SCHEDULE Core Commissions and Fees(1) Three Months Ended March 31, 2008 (in thousands) (unaudited) Total Less Internal Internal Quarter Quarter Total Net Acquisi- Net Net Ended Ended Net Growth tion Growth Growth 3/31/08 3/31/07 Change % Revenues $ % --------- --------- -------- ----- -------- -------- ----- Florida Retail $ 41,635 $ 43,891 $ (2,256) (5.1)% $ 921 $ (3,177) (7.2)% National Retail 70,685 51,701 18,984 36.7 % 19,842 (858) (1.7)% Western Retail 21,704 22,426 (722) (3.2)% 262 (984) (4.4)% --------- --------- -------- -------- -------- Total Retail 134,024 118,018 16,006 13.6 % 21,025 (5,019) (4.3)% --------- --------- -------- -------- -------- Wholesale Brokerage 37,039 37,267 (228) (0.6)% 4,979 (5,207) (14.0)% Professional Programs 10,385 10,438 (53) (0.5)% - (53) (0.5)% Special Programs 27,800 24,484 3,316 13.5 % 131 3,185 13.0 % --------- --------- -------- -------- -------- Total National Programs 38,185 34,922 3,263 9.3 % 131 3,132 9.0 % --------- --------- -------- -------- -------- Services 7,933 8,954 (1,021) (11.4)% - (1,021) (11.4)% --------- --------- -------- -------- -------- Total Core Commissions and Fees (1) $ 217,181 $ 199,161 $ 18,020 9.0 % $ 26,135 $ (8,115) (4.1)% ========= ========= ======== ======== ======== Reconciliation of Internal Growth Schedule to Total Commissions and Fees Included in the Consolidated Statements of Income for the Three Months Ended March 31, 2008 and 2007 (in thousands) (unaudited) Quarter Quarter Ended Ended 3/31/08 3/31/07 --------- --------- Total core commissions and fees(1) $ 217,181 $ 199,161 Contingent commissions 36,347 44,057 Divested business - 2,341 --------- --------- Total commission & fees $ 253,528 $ 245,559 ========= ========= (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) March 31, December 31, 2008 2007 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 16,990 $ 38,234 Restricted cash and investments 239,350 254,404 Short-term investments 4,673 2,892 Premiums, commissions and fees receivable 231,471 240,680 Deferred income taxes - 17,208 Other current assets 55,022 33,964 ----------- ----------- Total current assets 547,506 587,382 Fixed assets, net 62,199 62,327 Goodwill 896,544 846,433 Amortizable intangible assets, net 459,098 443,224 Other assets 20,802 21,293 ----------- ----------- Total assets $ 1,986,149 $ 1,960,659 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Premiums payable to insurance companies $ 376,829 $ 394,034 Premium deposits and credits due customers 35,956 41,211 Accounts payable 35,665 18,760 Accrued expenses 52,472 90,599 Current portion of long-term debt 7,421 11,519 ----------- ----------- Total current liabilities 508,343 556,123 Long-term debt 252,627 227,707 Deferred income taxes, net 69,048 65,736 Other liabilities 14,300 13,635 Shareholders' equity: Common stock, par value $0.10 per share; authorized 280,000 shares; issued and outstanding 140,724 at 2008 and 140,673 at 2007 14,072 14,067 Additional paid-in capital 234,342 231,888 Retained earnings 893,403 851,490 Accumulated other comprehensive income 14 13 ----------- ----------- Total shareholders' equity 1,141,831 1,097,458 ----------- ----------- Total liabilities and shareholders' equity $ 1,986,149 $ 1,960,659 =========== ===========
Contact: Cory T. Walker Chief Financial Officer (386) 239-7250
SOURCE: Brown & Brown, Inc.