Brown & Brown 2023 Q1 Report Shows Revenues Up 23.4%

RV Business

DAYTONA BEACH, Fla. – Brown & Brown Inc. (NYSE:BRO) today announced its unaudited financial results for the first quarter of 2023.

Revenues for the first quarter of 2023 under U.S. generally accepted accounting principles (“GAAP”) were $1,116 million, increasing $211.3 million, or 23.4%, compared to the first quarter of the prior year, with commissions and fees increasing by 22.5% and Organic Revenue increasing by 12.6%. Income before income taxes was $294.2 million, increasing 11% from the first quarter of the previous year with Income Before Income Taxes Margin decreasing to 26.4% from 29.3%. EBITDAC – Adjusted was $398.2 million, increasing 23.2% from the first quarter of the prior year with EBITDAC Margin – Adjusted of 35.7% for both periods. Net income was $235.5 million, increasing $15.2 million, or 6.9%, and diluted net income per share increased to $0.83, or 7.8%, with Diluted Net Income Per Share – Adjusted increasing to $0.84, or 7.7%, as compared to the first quarter of the prior year.

J. Powell Brown, president and chief executive officer of the company, noted, “The first quarter was an outstanding start to the year, and we delivered good profitable growth. We continue to leverage the collective capabilities of Brown & Brown to deliver innovative solutions for our customers. I want to thank all of our teammates for their great efforts in delivering these results.”

In addition, the company today announced that the Board of Directors has declared a regular quarterly cash dividend of $0.1150 per share. The dividend is payable on May 17, 2023, to shareholders of record on May 8, 2023.

Reconciliation of Commissions and Fees
to Organic Revenue
(in millions, unaudited)

	Three Months Ended March 31,
	2023			2022
Commissions and fees	$	1,108.0		$	904.3
Profit-sharing contingent commissions		(26.8	)		(28.6	)
Core commissions and fees	$	1,081.2		$	875.7
Acquisitions		(113.9	)		—
Dispositions		—			(15.6	)
Foreign Currency Translation					(0.7	)
Organic Revenue	$	967.3		$	859.4
Organic Revenue growth	$	107.9
Organic Revenue growth %		12.6	%

See information regarding non-GAAP measures presented later in this press release.

Reconciliation of Diluted Net Income Per Share to
Diluted Net Income Per Share – Adjusted
(unaudited)

	Three Months Ended March 31,						Change
	2023			2022			$			%
Diluted net income per share	$	0.83		$	0.77		$	0.06			7.8	%
Change in estimated acquisition earn-out payables		(0.01	)		(0.01	)		—
(Gain)/loss on disposal		(0.02	)		—			(0.02	)
Acquisition/Integration Costs		0.01			0.02			(0.01	)
1Q23 Nonrecurring Cost		0.03						0.03
Foreign Currency Translation					—			—
Diluted Net Income Per Share – Adjusted	$	0.84		$	0.78		$	0.06			7.7	%

See information regarding non-GAAP measures presented later in this press release.

Reconciliation of Total Revenues to Total Revenues – Adjusted, Income Before Income Taxes to
EBITDAC and EBITDAC – Adjusted and Income Before Income Taxes Margin to
EBITDAC Margin and EBITDAC Margin – Adjusted
(in millions, unaudited)

	Three Months Ended March 31,
	2023			2022
Total revenues	$	1,116.0		$	904.7
Foreign Currency Translation					(0.7	)
Total Revenues – Adjusted	$	1,116.0		$	904.0
Income before income taxes	$	294.2		$	265.0
Income Before Income Taxes Margin		26.4	%		29.3	%
Amortization		41.4			31.1
Depreciation		9.9			8.1
Interest		46.7			18.3
Change in estimated acquisition earn-out payables		(2.3	)		(3.4	)
EBITDAC	$	389.9		$	319.1
EBITDAC Margin		34.9	%		35.3	%
(Gain)/loss on disposal		(5.7	)		(0.2	)
Acquisition/Integration Costs		3.0			4.4
1Q23 Nonrecurring Cost		11.0
Foreign Currency Translation					(0.2	)
EBITDAC – Adjusted	$	398.2		$	323.1
EBITDAC Margin – Adjusted		35.7	%		35.7	%

See information regarding non-GAAP measures presented later in this press release.

Brown & Brown, Inc.
Consolidated Statements of Income
(in millions, except per share data; unaudited)

	Three Months Ended March 31,
	2023			2022
REVENUES
Commissions and fees	$	1,108.0		$	904.3
Investment income		7.0			0.2
Other		1.0			0.2
Total revenues		1,116.0			904.7
EXPENSES
Employee compensation and benefits		571.1			459.0
Other operating expenses		160.7			126.8
(Gain)/loss on disposal		(5.7	)		(0.2	)
Amortization		41.4			31.1
Depreciation		9.9			8.1
Interest		46.7			18.3
Change in estimated acquisition earn-out payables		(2.3	)		(3.4	)
Total expenses		821.8			639.7
Income before income taxes		294.2			265.0
Income taxes		58.7			44.7
Net income	$	235.5		$	220.3
Net income per share:
Basic	$	0.83		$	0.78
Diluted	$	0.83		$	0.77
Weighted average number of shares outstanding:
Basic		278.6			277.1
Diluted		279.4			278.6
Dividends declared per share	$	0.115		$	0.103

Brown & Brown, Inc.
Consolidated Balance Sheets
(in millions, except per share data, unaudited)

	March 31, 2023			December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	563.5		$	650.0
Fiduciary cash		1,380.0			1,383.2
Short-term investments		9.3			12.0
Commission, fees, and other receivable		776.0			642.9
Fiduciary receivables		914.2			881.4
Reinsurance recoverable		142.7			831.0
Prepaid reinsurance premiums		379.6			393.2
Other current assets		190.8			202.3
Total current assets		4,356.1			4,996.0
Fixed assets, net		241.6			239.9
Operating lease assets		210.0			214.9
Goodwill		6,730.2			6,674.2
Amortizable intangible assets, net		1,581.6			1,595.2
Investments		25.4			22.4
Other assets		255.0			230.9
Total assets	$	13,399.9		$	13,973.5
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Fiduciary liabilities	$	2,294.3		$	2,264.6
Losses and loss adjustment reserve		154.1			841.1
Unearned premiums		399.7			412.3
Accounts payable		342.7			286.5
Accrued expenses and other liabilities		375.8			541.5
Current portion of long-term debt		246.3			250.6
Total current liabilities		3,812.9			4,596.6
Long-term debt		3,680.0			3,691.5
Operating lease liabilities		191.0			195.9
Deferred income taxes, net		563.5			584.0
Other liabilities		307.5			298.9
Shareholders’ equity:
Common stock, par value $0.10 per share; authorized 560.0 shares; issued 303.3 shares and outstanding 283.6 shares at 2023, issued 302.9 shares and outstanding 283.2 shares at 2022, respectively		30.3			30.3
Additional paid-in capital		907.9			919.7
Treasury stock, at cost 19.7 shares at 2023, 19.7 shares at 2022, respectively.		(748.1	)		(748.0	)
Accumulated other comprehensive loss		(101.0	)		(148.4	)
Retained earnings		4,755.9			4,553.0
Total shareholders’ equity		4,845.0			4,606.6
Total liabilities and shareholders’ equity	$	13,399.9		$	13,973.5

Brown & Brown, Inc.
Consolidated Statements of Cash Flows
(in millions, unaudited)

	Three Months Ended March 31,
	2023			2022
Cash flows from operating activities:
Net income	$	235.5		$	220.3
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization		41.4			31.1
Depreciation		9.9			8.1
Non-cash stock-based compensation		24.4			20.1
Change in estimated acquisition earn-out payables		(2.3	)		(3.4	)
Deferred income taxes		0.6			15.2
Amortization of debt discount and disposal of deferred financing costs		1.0			0.7
Net (gain)/loss on sales/disposals of investments, fixed assets and customer accounts		(5.4	)		(0.1	)
Payments on acquisition earn-outs in excess of original estimated payables		—			(13.5	)
Effect of changes in foreign exchange rate		—			(0.1	)
Changes in operating assets and liabilities, net of effect from acquisitions and divestitures:
Commissions and fees receivable (increase)/decrease		(130.7	)		(87.8	)
Reinsurance recoverables (increase)/decrease		688.3			24.8
Prepaid reinsurance premiums (increase)/decrease		13.6			29.8
Other assets (increase)/decrease		(6.1	)		31.0
Losses and loss adjustment reserve increase/(decrease)		(687.0	)		(24.8	)
Unearned premiums increase/(decrease)		(12.7	)		(29.7	)
Accounts payable increase/(decrease)		71.5			22.2
Accrued expenses and other liabilities increase/(decrease)		(169.8	)		(143.1	)
Other liabilities increase/(decrease)		(12.4	)		2.8
Net cash provided by operating activities		59.8			103.6
Cash flows from investing activities:
Additions to fixed assets		(11.8	)		(10.0	)
Payments for businesses acquired, net of cash acquired		(37.6	)		(436.0	)
Proceeds from sales of fixed assets and customer accounts		6.1			0.2
Purchases of investments		(3.6	)		—
Proceeds from sales of investments		3.7			—
Net cash used in investing activities		(43.2	)		(445.8	)
Cash flows from financing activities:
Fiduciary receivables and liabilities, net		(22.6	)		(85.2	)
Payments on acquisition earn-outs		(16.1	)		(33.4	)
Proceeds from long-term debt		—			1,200.0
Payments on long-term debt		(16.9	)		(10.6	)
Deferred debt issuance costs		—			(23.4	)
Borrowings on revolving credit facilities		—			350.0
Repurchase shares to fund tax withholdings for non-cash stock-based compensation		(36.2	)		(46.0	)
Purchase of treasury stock		(0.1	)		(24.1	)
Cash dividends paid		(32.6	)		(28.9	)
Net cash (used in)/provided by financing activities		(120.6	)		1,298.4
Effect of foreign exchange rate changes in cash and cash equivalents inclusive of fiduciary cash		14.3			(0.3	)
Net (decrease)/increase in cash and cash equivalents inclusive of fiduciary cash		(89.7	)		955.9
Cash and cash equivalents inclusive of fiduciary cash at beginning of period		2,033.2			1,470.2
Cash and cash equivalents inclusive of fiduciary cash at end of period	$	1,943.5		$	2,426.1

Conference call, webcast and slide presentation

A conference call to discuss the results of the first quarter of 2023 will be held on Tuesday, April 25, 2023, 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 bbinsurance.com.

Source: https://rvbusiness.com/brown-brown-2023-q1-report-shows-revenues-up-23-4/