Brown & Brown Announces Q2 Results, Revenue Tops $1B
Revenues for the second quarter of 2023 under U.S. generally accepted accounting principles (“GAAP”) were $1,047.3 million, increasing $207.6 million, or 24.7%, compared to the second quarter of the prior year, with commissions and fees increasing by 23.5% and Organic Revenue increasing by 11.2%. Income before income taxes was $254.4 million, increasing 28.0% from the second quarter of the prior year with Income Before Income Taxes Margin increasing to 24.3% from 23.7%. EBITDAC – Adjusted was $358.4 million, increasing 30.5% from the second quarter of the prior year with EBITDAC Margin – Adjusted increasing to 34.2% from 32.7%. Net income was $190.4 million, increasing $45.2 million, or 31.1%, and diluted net income per share increased to $0.67, or 31.4%, with Diluted Net Income Per Share – Adjusted increasing to $0.68, or 33.3%, each as compared to the second quarter of the prior year.
Revenues for the six months ended June 30, 2023 under GAAP were $2,163.3 million, increasing $418.8 million, or 24.0%, as compared to the same period in 2022, with commissions and fees increasing by 23.0%, and Organic Revenue increasing by 11.9%. Income before income taxes was $548.6 million, increasing 18.3% with Income Before Income Taxes Margin decreasing to 25.4% from 26.6% as compared to the same period in 2022. EBITDAC – Adjusted was $756.6 million, which was an increase of 26.5% and EBITDAC Margin – Adjusted increased to 35.0% from 34.3% as compared to the same period in 2022. Net income was $425.9 million, increasing $60.4 million, or 16.5%, with diluted net income per share increasing to $1.50, or 16.3%, and Diluted Net Income Per Share – Adjusted increasing to $1.52, or 18.8%, each as compared to the same period in 2022.
J. Powell Brown, president and chief executive officer of the company, noted, “We delivered another outstanding quarter of strong and profitable growth. This performance capped off a great first half of the year with significant momentum going into the second half.”
Conference call, webcast and slide presentation
A conference call to discuss the results of the second quarter of 2023 will be held on Tuesday, July 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.
| Reconciliation of Commissions and Fees to Organic Revenue (in millions, unaudited) |
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| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Commissions and fees | $ | 1,035.9 | $ | 838.7 | $ | 2,143.9 | $ | 1,743.1 | |||||||
| Profit-sharing contingent commissions | (33.6 | ) | (22.1 | ) | (60.4 | ) | (50.7 | ) | |||||||
| Core commissions and fees | $ | 1,002.3 | $ 816.6 $ | 2,083.5 | $ | 1,692.4 | |||||||||
| Acquisitions | (108.0 | ) | — | (221.9 | ) | — | |||||||||
| Dispositions | — | (12.0 | ) | — | (27.6 | ) | |||||||||
| Foreign Currency Translation | (0.1 | ) | (0.8 | ) | |||||||||||
| Organic Revenue | $ | 894.3 | $ 804.5 $ | 1,861.6 | $ | 1,664.0 | |||||||||
| Organic Revenue growth | $ | 89.8 | $ | 197.6 | |||||||||||
| Organic Revenue growth % | 11.2 | % | 11.9 | % | |||||||||||
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 |
Six Months Ended |
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| June 30, |
Change |
June 30, |
Change |
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| 2023 |
2022 |
$ |
% |
2023 |
2022 |
$ |
% |
||||||||||||||||||||
| Diluted net income per share | $ | 0.67 | $ | 0.51 | $ | 0.16 | 31.4 | % | $ | 1.50 | $ | 1.29 | $ | 0.21 | 16.3 | % | |||||||||||
| Change in estimated acquisition earn-out payables | — | — | — | (0.01 | ) | (0.02 | ) | 0.01 | |||||||||||||||||||
| (Gain)/loss on disposal | — | — | — | (0.02 | ) | — | (0.02 | ) | |||||||||||||||||||
| Acquisition/Integration Costs | 0.01 | — | 0.01 | 0.02 | 0.01 | 0.01 | |||||||||||||||||||||
| 1Q23 Nonrecurring Cost | — | — | 0.03 | 0.03 | |||||||||||||||||||||||
| Foreign Currency Translation (1) | — | — | — | — | |||||||||||||||||||||||
| Diluted Net Income Per Share – Adjusted | $ | 0.68 | $ | 0.51 | $ | 0.17 | 33.3 | % | $ | 1.52 | $ | 1.28 | $ | 0.24 | 18.8 | % | |||||||||||
(1) Immaterial Foreign Currency Translation for the three and six months ended June 30.
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) |
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| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Total revenues | $ | 1,047.3 | $ | 839.7 | $ | 2,163.3 | $ | 1,744.5 | ||||
| Foreign Currency Translation | — | (0.7 | ) | |||||||||
| Total Revenues – Adjusted | $ | 1,047.3 | $ | 839.7 | $ | 2,163.3 | $ | 1,743.8 | ||||
| Income before income taxes | $ | 254.4 | $ | 198.8 | $ | 548.6 | $ | 463.9 | ||||
| Income Before Income Taxes Margin | 24.3 | % | 23.7 | % | 25.4 | % | 26.6 | % | ||||
| Amortization | 41.2 | 33.6 | 82.6 | 64.7 | ||||||||
| Depreciation | 10.2 | 8.9 | 20.1 | 17.1 | ||||||||
| Interest | 47.9 | 36.0 | 94.6 | 54.3 | ||||||||
| Change in estimated acquisition earn-out payables | 1.8 | (3.0 | ) | (0.5 | ) | (6.4 | ) | |||||
| EBITDAC | $ | 355.5 | $ | 274.3 | $ | 745.4 | $ | 593.6 | ||||
| EBITDAC Margin | 33.9 | % | 32.7 | % | 34.5 | % | 34.0 | % | ||||
| (Gain)/loss on disposal | (0.4 | ) | (0.7 | ) | (6.1 | ) | (0.9 | ) | ||||
| Acquisition/Integration Costs | 3.3 | 1.1 | 6.3 | 5.5 | ||||||||
| 1Q23 Nonrecurring Cost | — | 11.0 | ||||||||||
| Foreign Currency Translation | — | (0.2 | ) | |||||||||
| EBITDAC – Adjusted | $ | 358.4 | $ | 274.7 | $ | 756.6 | $ | 598.0 | ||||
| EBITDAC Margin – Adjusted | 34.2 | % | 32.7 | % | 35.0 | % | 34.3 | % | ||||
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) |
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| Three Months Ended June 30, | Six Months Ended June 30, |
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| 2023 |
2022 |
2023 |
2022 |
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| REVENUES | |||||||||||||||
| Commissions and fees | $ | 1,035.9 | $ | 838.7 | $ | 2,143.9 | $ | 1,743.1 | |||||||
| Investment income | 10.3 | 0.4 | 17.3 | 0.6 | |||||||||||
| Other | 1.1 | 0.6 | 2.1 | 0.8 | |||||||||||
| Total revenues | 1,047.3 | 839.7 | 2,163.3 | 1,744.5 | |||||||||||
| EXPENSES | |||||||||||||||
| Employee compensation and benefits | 530.2 | 412.1 | 1,101.3 | 871.0 | |||||||||||
| Other operating expenses | 162.0 | 154.0 | 322.7 | 280.8 | |||||||||||
| (Gain)/loss on disposal | (0.4 | ) | (0.7 | (6.1 | ) | (0.9 | ) | ||||||||
| Amortization | 41.2 | 33.6 | 82.6 | 64.7 | |||||||||||
| Depreciation | 10.2 | 8.9 | 20.1 | 17.1 | |||||||||||
| Interest | 47.9 | 36.0 | 94.6 | 54.3 | |||||||||||
| Change in estimated acquisition earn-out payables | 1.8 | (3.0 | ) | (0.5 | ) | (6.4 | ) | ||||||||
| Total expenses | 792.9 | 640.9 | 1,614.7 | 1,280.6 | |||||||||||
| Income before income taxes | 254.4 | 198.8 | 548.6 | 463.9 | |||||||||||
| Income taxes | 64.0 | 53.6 | 122.7 | 98.4 | |||||||||||
| Net income | $ | 190.4 | $ | 145.2 | $ | 425.9 | $ | 365.5 | |||||||
| Net income per share: | |||||||||||||||
| Basic | $ | 0.67 | $ | 0.51 | $ | 1.50 | $ | 1.29 | |||||||
| Diluted | $ | 0.67 | $ | 0.51 | $ | 1.50 | $ | 1.29 | |||||||
| Weighted average number of shares outstanding: | |||||||||||||||
| Basic | 279.4 | 277.2 | 279.0 | 277.1 | |||||||||||
| Diluted | 280.5 | 278.2 | 279.9 | 278.4 | |||||||||||
| Dividends declared per share | $ | 0.115 | $ | 0.103 | $ | 0.230 | $ | 0.205 | |||||||
| Brown & Brown, Inc. Consolidated Balance Sheets (in millions, except per share data, unaudited) |
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| June 30, 2023 |
December 31, 2022 |
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| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 627.9 | $ | 650.0 | ||||
| Fiduciary cash | 1,635.5 | 1,383.2 | ||||||
| Short-term investments | 10.1 | 12.0 | ||||||
| Commission, fees, and other receivable | 751.3 | 642.9 | ||||||
| Fiduciary receivables | 1,005.0 | 881.4 | ||||||
| Reinsurance recoverable | 187.2 | 831.0 | ||||||
| Prepaid reinsurance premiums | 450.6 | 393.2 | ||||||
| Other current assets | 227.3 | 202.3 | ||||||
| Total current assets | 4,894.9 | 4,996.0 | ||||||
| Fixed assets, net | 244.7 | 239.9 | ||||||
| Operating lease assets | 204.9 | 214.9 | ||||||
| Goodwill | 6,865.1 | 6,674.2 | ||||||
| Amortizable intangible assets, net | 1,562.5 | 1,595.2 | ||||||
| Investments | 27.5 | 22.4 | ||||||
| Other assets | 271.9 | 230.9 | ||||||
| Total assets | $ | 14,071.5 | $ | 13,973.5 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Fiduciary liabilities | $ | 2,640.5 | $ | 2,264.6 | ||||
| Losses and loss adjustment reserve | 198.8 | 841.1 | ||||||
| Unearned premiums | 487.5 | 412.3 | ||||||
| Accounts payable | 329.1 | 286.5 | ||||||
| Accrued expenses and other liabilities | 448.6 | 541.5 | ||||||
| Current portion of long-term debt | 53.1 | 250.6 | ||||||
| Total current liabilities | 4,157.6 | 4,596.6 | ||||||
| Long-term debt | 3,762.4 | 3,691.5 | ||||||
| Operating lease liabilities | 186.0 | 195.9 | ||||||
| Deferred income taxes, net | 571.9 | 584.0 | ||||||
| Other liabilities | 321.1 | 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 | 927.1 | 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 | (50.5 | ) | (148.4 | ) | ||||
| Retained earnings | 4,913.7 | 4,553.0 | ||||||
| Total shareholders’ equity | 5,072.5 | 4,606.6 | ||||||
| Total liabilities and shareholders’ equity | $ | 14,071.5 | $ | 13,973.5 | ||||
| Brown & Brown, Inc. Consolidated Statements of Cash Flows (in millions, unaudited) |
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| Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 425.9 | $ | 365.5 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Amortization | 82.6 | 64.7 | ||||||
| Depreciation | 20.1 | 17.1 | ||||||
| Non-cash stock-based compensation | 45.2 | 34.0 | ||||||
| Change in estimated acquisition earn-out payables | (0.5 | ) | (6.4 | ) | ||||
| Deferred income taxes | 2.4 | 26.6 | ||||||
| Amortization of debt discount and disposal of deferred financing costs | 2.2 | 1.8 | ||||||
| Net (gain)/loss on sales/disposals of investments, fixed assets and customer accounts | (5.5 | ) | (0.5 | ) | ||||
| Payments on acquisition earn-outs in excess of original estimated payables | (17.7 | ) | (23.4 | ) | ||||
| Effect of changes in foreign exchange rate | 0.2 | (0.2 | ) | |||||
| Changes in operating assets and liabilities, net of effect from acquisitions and divestitures: |
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| Commissions and fees receivable (increase)/decrease | (103.0 | ) | (78.3 | ) | ||||
| Reinsurance recoverables (increase)/decrease | 643.8 | 28.4 | ||||||
| Prepaid reinsurance premiums (increase)/decrease | (57.4 | ) | 6.8 | |||||
| Other assets (increase)/decrease | (56.1 | ) | (52.8 | ) | ||||
| Losses and loss adjustment reserve increase/(decrease) | (642.3 | ) | (28.4 | ) | ||||
| Unearned premiums increase/(decrease) | 75.1 | 16.2 | ||||||
| Accounts payable increase/(decrease) | 101.4 | 101.3 | ||||||
| Accrued expenses and other liabilities increase/(decrease) | (100.0 | ) | (46.9 | ) | ||||
| Other liabilities increase/(decrease) | (27.9 | ) | (79.3 | ) | ||||
| Net cash provided by operating activities | 388.5 | 346.2 | ||||||
| Cash flows from investing activities: | ||||||||
| Additions to fixed assets | (25.1 | ) | (18.3 | ) | ||||
| Payments for businesses acquired, net of cash acquired | (115.3 | ) | (457.2 | ) | ||||
| Proceeds from sales of fixed assets and customer accounts | 6.0 | 4.4 | ||||||
| Purchases of investments | (6.2 | ) | — | |||||
| Proceeds from sales of investments | 5.9 | 3.6 | ||||||
| Net cash used in investing activities | (134.7 | ) | (467.5 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Fiduciary receivables and liabilities, net | 223.9 | 89.3 | ||||||
| Payments on acquisition earn-outs | (45.9 | ) | (43.1 | ) | ||||
| Proceeds from long-term debt | — | 2,000.0 | ||||||
| Payments on long-term debt | (228.8 | ) | (27.5 | ) | ||||
| Deferred debt issuance costs | — | (23.3 | ) | |||||
| Borrowings on revolving credit facilities | 170.0 | 350.0 | ||||||
| Payments on revolving credit facilities | (70.0 | ) | (100.0 | ) | ||||
| Issuances of common stock for employee stock benefit plans | 1.6 | 0.9 | ||||||
| Repurchase shares to fund tax withholdings for non-cash stock-based compensation | (39.0 | ) | (48.4 | ) | ||||
| Purchase of treasury stock | (0.1 | ) | (74.1 | ) | ||||
| Cash dividends paid | (65.2 | ) | (57.9 | ) | ||||
| Net cash (used in)/provided by financing activities | (53.5 | ) | 2,065.9 | |||||
| Effect of foreign exchange rate changes in cash and cash equivalents inclusive of fiduciary cash |
29.9 |
(127.3 |
) |
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| Net increase in cash and cash equivalents inclusive of fiduciary cash | 230.2 | 1,817.3 | ||||||
| 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 | $ | 2,263.4 | $ | 3,287.5 | ||||
Source: https://rvbusiness.com/brown-brown-announces-q2-results-revenue-tops-1b/
