DAYTONA BEACH, FL --(Marketwired - April 18, 2016) - Brown & Brown, Inc. (NYSE: BRO) (the "Company") today announced its unaudited financial results for the first quarter of 2016.
Revenues for the first quarter of 2016 under U.S. generally accepted accounting principles ("GAAP") were $424.2 million, increasing $19.9 million, or 4.9%, as compared to the first quarter of the prior year, with Organic Revenue (as defined below) increasing by 1.3%. Net income was $62.1 million, increasing by 9.1%, and diluted earnings per share under GAAP were $0.44.
J. Powell Brown, President and Chief Executive Officer of the Company noted, "During the first quarter, we grew each of our divisions organically and we continued to invest for the long term."
In the fourth quarter of 2015 we initiated a $75 million accelerated share repurchase program that was part of the Company's board-approved $200 million share repurchase authorization announced on July 21, 2014, and the Company's board-approved $400 million share repurchase authorization announced on July 20, 2015. This $75 million program was completed in January 2016. Under these authorizations, the Company has remaining approval to repurchase up to an additional $375 million of the Company's common stock.
In addition, the Company's Board of Directors has declared a regular quarterly cash dividend of $0.1225 per share to be paid on May 18, 2016, to shareholders of record on May 9, 2016.
Brown & Brown, Inc.
INTERNAL GROWTH SCHEDULE
Organic Revenue Growth (1)
Three Months Ended March 31, 2016 and 2015
(in millions, unaudited)
Organic
Revenue
Quarter Ended Change Acquisition Growth (1)
3/31/2016 3/31/2015 $ % Revenues $ %
--------- --------- ------ ----- ----------- ------ -----
Retail(2) $ 208.3 $ 195.8 $ 12.5 6.4% $ 11.1 $ 1.4 0.7%
National
Programs 95.6 92.8 2.8 3.0% 1.3 1.5 1.6%
Wholesale
Brokerage 47.9 46.1 1.8 3.9% 0.3 1.5 3.4%
Services 36.5 34.5 2.0 5.8% 1.6 0.4 1.2%
--------- --------- ------ ----- ----------- ------ -----
Total Core
Comm. and Fees $ 388.3 $ 369.2 $19.1 5.2 % $ 14.3 $ 4.8 1.3 %
--------- --------- ------ ----- ----------- ------ -----
(1) "Organic Revenue" is defined as total commissions and fees less (i)
the first twelve months of net commission and fee revenues generated
from acquisitions accounted for as purchases less (ii) profit-sharing
contingent commissions (revenues from insurance companies based upon
the volume and the growth and/or profitability of the business placed
with such companies during the prior year -- "Contingents"), less
(iii) guaranteed supplemental commissions (commissions from insurance
companies based solely upon the volume of the business placed with
such companies during the current year -- "GSCs"), and less (iv)
divested business (net commissions and fees generated from offices,
books of business or niche businesses sold by the Company) with the
associated revenue removed from the corresponding period of the prior
year.
(2) The Retail Segment includes commissions and fees, which will be
reported in the "Other" column of the Segment Information in the Notes
to the Condensed Consolidated Financial Statements on the Company's
Form 10-Q, which includes corporate and consolidation items.
Brown & Brown, Inc.
RECONCILIATION OF INTERNAL GROWTH SCHEDULE
TO TOTAL COMMISSIONS AND FEES
Included in the Consolidated Statements of Income
Three Months Ended March 31, 2016 and 2015
(in millions, unaudited)
Quarter Ended
3/31/2016 3/31/2015
------------ ------------
Total Core Commissions and Fees $ 388.3 $ 369.2
Profit-Sharing Contingent Commissions 31.0 29.8
Guaranteed Supplemental Commissions 3.1 3.4
Divested Businesses - 1.4
------------ ------------
Total Commissions and Fees $ 422.4 $ 403.8
------------ ------------
We believe it is appropriate to adjust for the change in estimated acquisition earn-out payables in order to arrive at results that are more comparable to the prior year. Our diluted earnings per share - adjusted (as defined in the table below) were $0.44 for the three months ended March 31, 2016, increasing 10.0% over the first quarter of the prior year.
Brown & Brown, Inc.
GAAP EARNINGS PER SHARE RECONCILIATION TO
EARNINGS PER SHARE - ADJUSTED
Three Months Ended March 31, 2016 and 2015
(unaudited)
Quarter Ended Change
3/31/2016 3/31/2015 $ %
--------- --------- --------- --------
GAAP earnings per share - as
reported $ 0.44 $ 0.39 $ 0.05 12.8 %
Change in estimated acquisition
earn-out payables - 0.01 (0.01)
--------- --------- ---------
Earnings per share - adjusted $ 0.44 $ 0.40 $ 0.04 10.0 %
--------- --------- ---------
In order to provide a better understanding of our business, we evaluate EBITDAC (defined below) performance. EBITDAC for the first quarter of 2016 was $138.6 million, an increase of $6.8 million or 5.2%, compared to the first quarter of the prior year. The associated EBITDAC margin increased to 32.7%.
Brown & Brown, Inc.
GAAP RECONCILIATION -
INCOME BEFORE INCOME TAXES TO EBITDAC (3)
Three Months Ended March 31, 2016 and 2015
(in millions, unaudited)
Quarter Ended
3/31/2016 3/31/2015
------------- ------------
Income before income taxes $ 102.6 $ 93.7
Amortization 21.6 21.6
Depreciation 5.3 5.2
Interest 9.9 9.9
Change in estimated acquisition earn-out
payables (0.8) 1.4
------------- ------------
EBITDAC $ 138.6 $ 131.8
EBITDAC margin (4) 32.7 % 32.6 %
(3) "EBITDAC" is defined as net income before interest, income taxes,
depreciation, amortization and the change in estimated acquisition
earn-out payables.
(4) "EBITDAC margin" is defined as EBITDAC divided by total revenues.
Brown & Brown, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data; unaudited)
For the three months ended
March 31,
--------------------------
2016 2015
------------ ------------
REVENUES
Commissions and fees $ 422.4 $ 403.8
Investment income 0.4 0.2
Other income, net 1.4 0.3
------------ ------------
Total revenues 424.2 404.3
------------ ------------
EXPENSES
Employee compensation and benefits 224.1 211.7
Other operating expenses 63.6 61.1
Gain on disposal (2.1) (0.3)
Amortization 21.6 21.6
Depreciation 5.3 5.2
Interest 9.9 9.9
Change in estimated acquisition earn-out
payables (0.8) 1.4
------------ ------------
Total expenses 321.6 310.6
------------ ------------
Income before income taxes 102.6 93.7
Income taxes 40.5 36.8
------------ ------------
Net income $ 62.1 $ 56.9
============ ============
Net income per share:
Basic $ 0.45 $ 0.40
============ ============
Diluted $ 0.44 $ 0.39
============ ============
Weighted average number of shares outstanding -
in thousands:
Basic 135,548 139,360
============ ============
Diluted 136,940 141,487
============ ============
Dividends declared per share $ 0.12 $ 0.11
============ ============
Brown & Brown, Inc.
CONSOLIDATED BALANCE SHEETS
(in millions, except per share data, unaudited)
March 31, December 31,
2016 2015
--------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents $ 401.8 $ 443.4
Restricted cash and investments 231.1 229.8
Short-term investments 13.9 13.7
Premiums, commissions and fees receivable 430.0 433.9
Reinsurance recoverable 58.1 32.0
Prepaid reinsurance premiums 279.8 309.6
Deferred income taxes 24.6 24.6
Other current assets 67.8 50.4
--------------- ---------------
Total current assets 1,507.1 1,537.4
Fixed assets, net 80.9 81.8
Goodwill 2,615.6 2,586.7
Amortizable intangible assets, net 739.6 744.7
Investments 20.5 18.1
Other assets 39.7 44.1
--------------- ---------------
Total assets $ 5,003.4 $ 5,012.8
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Premiums payable to insurance companies $ 554.5 $ 574.7
Losses and loss adjustment reserve 58.1 32.0
Unearned premiums 279.8 309.6
Premium deposits and credits due customers 89.3 83.1
Accounts payable 77.9 63.9
Accrued expenses and other liabilities 143.2 192.3
Current portion of long-term debt 80.5 73.1
--------------- ---------------
Total current liabilities 1,283.3 1,328.7
Long-term debt 1,058.3 1,079.9
Deferred income taxes, net 374.1 360.9
Other liabilities 89.2 93.6
Shareholders' equity:
Common stock, par value $0.10 per share;
authorized 280,000 shares; issued 147,967
shares and outstanding 140,173 shares at
2016, issued 146,415 shares and
outstanding 138,985 shares at 2015 - in
thousands 14.8 14.6
Additional paid-in capital 441.2 426.5
Treasury stock, at cost 7,794 and 7,430
shares at 2016 and 2015, respectively -
in thousands (250.0) (238.8)
Retained earnings 1,992.5 1,947.4
-------------------------------
Total shareholders' equity 2,198.5 2,149.7
--------------- ---------------
Total liabilities and shareholders'
equity $ 5,003.4 $ 5,012.8
=============== ===============
Conference call, webcast and slide presentation
A conference call to discuss the results of the first quarter of 2016 will be held on Tuesday, April 19, 2016 at 8:00 AM (EDT). The Company may refer to a slide presentation during its conference call. You can access the webcast and the slides from the "Investor Relations" section of the Company's website at www.bbinsurance.com.
About Brown & Brown
Brown & Brown, Inc., through its subsidiaries, offers a broad range of insurance products and services. Additionally, certain Brown & Brown subsidiaries offer a variety of risk management, third-party administration, and other services. Serving business, 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.
Forward-looking statements
This press release may contain certain statements relating to future results which are forward-looking statements, including those relating to the Company's anticipated financial results for the first quarter of 2016 and those relating to potential repurchases of the Company's common stock. 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. These risks and uncertainties include, but are not limited to, the Company's determination as it finalizes its financial results for the first quarter of 2016 that its financial results differ from the current preliminary unaudited numbers set forth herein; fluctuations in the Company's stock's market price; fluctuations in operating results and cash flows; material adverse changes in economic conditions in the markets we serve and in the general economy; downward commercial property and casualty premium pressures; future regulatory actions and conditions in the states in which the Company conducts business; competition from others in the insurance agency, wholesale brokerage, insurance programs and service business; 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 including, but not limited to, the States of California, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Massachusetts, Michigan, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Texas, Virginia and/or Washington, where significant portions of the Company's business are conducted; and other factors that the Company may not have currently identified or quantified, and other risks, relevant factors and uncertainties identified in the Company's Annual Report on Form 10-K for the year ended December 31, 2015, and the Company's other filings with the Securities and Exchange Commission. 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.
Non-GAAP supplemental financial information
This press release contains references to non-GAAP financial measures as defined in Regulation G of SEC rules, including Organic Revenue, Earnings per share - adjusted, EBITDAC and EBITDAC margin. A reconciliation of this supplemental non-GAAP financial information to the Company's GAAP information is contained in this earnings release. We present such non-GAAP supplemental financial information, as we believe such information is of interest to the investment community because it provides additional meaningful methods of evaluating certain aspects of the Company's operating performance from period to period on a basis that may not be otherwise apparent on a GAAP basis. This supplemental financial information should be considered in addition to, not in lieu of, the Company's condensed consolidated financial statements.
R. Andrew Watts
Chief Financial Officer
(386) 239-5770
