Brown & Brown, Inc. (BRO) on Q2 2021 Results - Earnings Call Transcript
Operator: Good morning and welcome to the Brown & Brown, Inc. Second Quarter Earnings Call. This call is being recorded. Please note, that certain information discussed during this call, including information contained in the slide presentation posted in connection with this call and including answers given in response to your questions, may relate to future results and events, or otherwise be forward looking in nature. Such statements reflect our current views with respect to future events, including those relating to the company's anticipated financial results for the second quarter and are intended to fall within the Safe Harbor provisions of the securities laws. Actual results or events in the future are subject to a number of risks and uncertainties and may differ materially from those currently anticipated or desired or referenced in any forward-looking statements made as a result of a number of factors. Such factors include the company's determination as it finalizes its financial results for the second quarter that its financial results differ from the current preliminary unaudited numbers set forth in the press release issued yesterday. Other factors that the company may not have currently identified are quantified, and those risks and uncertainties are identified from time to time in the company's reports filed with the Securities and Exchange Commission. Additional discussion of these and other factors affecting the company's business and prospects, as well as additional information regarding forward-looking statements is contained in the slide presentation posted in connection with this call and in the company's filings with the Securities and Exchange Commission. We disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise. Powell Brown: Thank you, Marion. Good morning everyone and thank you for joining us on our second quarter '21 earnings call. Q2 was a very strong quarter, and it's the best in the history of Brown & Brown. Our performance for the first six months of 2021 is due to the tremendous effort of our talented 11,000-plus teammates that deliver creative risk management solutions for our customers. Each of our segments delivered impressive results with strong top and bottom line growth due to more new business, good customer retention, increased premium rates across most lines of coverage, and higher exposure units driven by continued economic expansion. These results reflect the strength and diversity of our operating model as well as the power of a performance-based culture. Now, let's transition to the results for the quarter. I'm on slide number three. We delivered $727 million of revenue, growing 21.5% in total and 14.7% organically. This is the strongest organic growth that we've ever delivered. I'll get into more details in a few minutes about the performance of our segments. Our EBITDAC margin was 32.9%, which is up 340 basis points from the second quarter of 2020. Our net income per share for the second quarter was $0.49, increasing 44% on an as-reported and adjusted basis, with the latter excluding the change in estimated acquisition earn-out payables. During the quarter, we completed two acquisitions and would like to extend a warm welcome to all of our new teammates that joined during the quarter. In summary, we're very pleased with our strong performance and believe we're well-positioned to continue delivering best-in-class solutions for our customers. Later in the presentation, Andy will discuss our financial results and more details. I'm on slide four. Let's start with the economy and what we saw during the quarter. As companies continue to reopen and strengthen, business confidence is improving. However, not all companies are back at 100%, and we continue to hear about struggles with certain customer segments in hiring workers. We think this will work itself out over the coming months and quarters, but these open roles are serving as a bit of a governor on the speed of recovery. Due to this uncertainty, customers remain very focused on their insurance spend and therefore managing their deductibles and aggregate limits. Andy Watts: Great. Thanks, Powell. Good morning, everybody. Like previous quarters, we'll discuss our GAAP results and certain non-GAAP financial highlights. We're on slide number six. For the second quarter, we delivered total revenue growth of $128.5 million or 21.5% and organic revenue growth of 14.7%. EBITDAC increased by 35.4%, which expanded EBITDAC margin by 340 basis points, despite lower margin associated with certain acquisitions completed in the past few quarters and slightly higher travel costs. The EBITDAC growth was driven by the continued leveraging of our expense base and lower non-cash stock-based compensation. Income before income taxes increased by 44%, growing faster than EBITDAC due to a lower growth rate in amortization and interest expense, as well as a decrease in acquisition earn-out payables. Net income increased by $42.5 million or 43.9% and our diluted net income per share increased by 44.1% to $0.49. The effective tax rate for the second quarter of this year and last year was 25.2%. We continue to anticipate our full-year effective tax rate for 2021 will be in the 23% to 24% range. Our weighted average number of shares increased slightly compared to the prior year and our dividends per share increased to $0.093 or 9.4% compared to the second quarter of 2020. Moving over on slide number seven. This slide presents our results after the adjustment to remove the change in estimated acquisition earn-out payables for both years. For the second quarter of this year and last year, the impact was minimal with the adjusted and as-reported diluted net income per share of $0.49 growing 44.1% over the prior year. Moving over to slide number eight. This slide presents the key components of our revenue performance. For the quarter, our total commissions and fees increased by 21.3% and our contingent commissions and GSCs increased by 2.2%. Organic revenue, which excludes the net impact of M&A activity and changes in foreign exchange rates, increased by 14.7%. Powell Brown: Thank you, Andy. Great report. From an economic standpoint, we continue to believe the economy will improve over the coming quarters. This should drive increased confidence among business owners and how they invest in their companies. A few items we believe will impact the speed and trajectory of the economy are, in no particular order: one, the ability to hire workers in certain industries; two, supply chain issues that continue to constrain production and sales; three, the spread of and response to the delta variant; and four, the impact of inflation. How these play out will influence the bumps in the road to recovery. At this stage, we believe there should be further economic improvement throughout the remainder of '21 and into 2022 but not at the same pace experienced in the second quarter. As a result, we anticipate some moderation of our organic revenue growth during the back half of the year compared to what we delivered in the first half. As it relates to the underwriting process, we continue to anticipate our carrier partners to be competitive for new business and accounts with low losses. We also expect rate increases will be fairly similar to the first half of the year with maybe some moderation. From an M&A perspective, we believe the market will remain very active. There are a lot of companies looking to do transactions, and we feel that we are well positioned with a good pipeline to attract great companies to join the Brown & Brown team. We will continue to follow our disciplined approach of focusing on culture and financial alignment as these have been the key to our long-term success in delivering shareholder value. We've been talking over the last few earnings calls about our technology initiatives and how these are advancing. We're very pleased with our progress and the teams are doing a great job. Our holistic focus is to improve the experience for our customers, carrier partners, and teammates. To achieve this goal, we have prioritized the following areas: optimize and enhance our utilization of data and analytics; expand our digital delivery capabilities around products and services; and engage in initiatives designed to drive greater efficiency and velocity through our underwriting processes. Operator: We will take the first question from Greg Peters from Raymond James. Greg Peters: Good morning, everyone. And congratulations on a strong quarter. Before I ask a question about your results, probably worthwhile to get you guys to weigh in on what you perceive might be the opportunities and headwinds and the fallback from the fact that the Aon, Willis Towers Watson merger has been canceled. Powell Brown: Good morning, Greg. And thank you for the comment. Number one, I would say that we were probably surprised like many people and the fact that it was not able to come to some sort of conclusion with the DOJ having gone on that long surprised us. Anytime you have a transaction of that size that is in any industry that fails to go forward, there is going to be change in organization. Some people may decide they want to be on different teams. They may decide to go in different direction with different businesses. There's all kinds of scenarios. But from a standpoint of our focus is on our existing customer base and the new customers that we can bring on to our team. And the way you do that is through high-quality talented people that we have 11,000-plus today and we're on our way to the next level in the next level. So I would tell you that we're always looking for good people, and we're always looking and talking to new prospects. And so disruption creates an opportunity. But like I said, you don't wish ill will on anybody, and that was a very unusual dynamic that surprised us. Greg Peters: All right. Switching to your results, in the organic revenue results. You commented about the balance between rate, new business, etc. I was wondering if you could give us some more color, specifically as it relates to retail on how much is it new business versus how much of it is existing customers just coming back online, getting back up and running, etc.? If you could give us some additional color on that, that'd be helpful. Powell Brown: Right. Thanks for the question, Greg. As you know, we don't give that level of detail, and I know that's what everybody wants. But what I would tell you is we are writing a lot of new business, period. We do have some customers that are coming back online. That is helpful. You have, in some instances, rate increases. You also have, remember, certain industries that are not coming back online. So I don't want to give you the impression that every industry is coming back online at the same rate and speed as every other industry. And so the restaurant business is just a one perfect example, but I would tell you that we are very pleased with our retention of our existing customers and the amount of new business that we're writing across the system in all of our divisions. Greg Peters: Got it. I guess the final question I'll ask is on free cash flow. The conversion rate of an excess of 30% is well above what your annual run rate usually is. Are you anticipating that the back half is going to be lower to bring down the average for the full year? And maybe you can talk about some of the nuances that has driven the free cash flow result that you've reported in the first six months? Andy Watts: Good morning, Greg. It's Andy. So I guess I'll take your question into two pieces. Let's talk about the first six months of the year. So on an as-reported basis, we're at 30.2%. We were 28.3% last year. And keep in mind, last year as part of the pandemic, allowed all companies to defer their tax payments. So we had talked about the fact that we had a $50 million deferral of taxes last year into the third quarter. So it further demonstrates what a great first six months of this year that we had. That is primarily driven out of the incremental margins and the growth that we've had in the first six months of the year. We manage our working capital very tightly, have always for many years. As it relates to the back end of the year, we'd anticipate it probably would not be at that same high level just because of the phasing of the business between the first and second half of the year, but we still anticipate it being good. Greg Peters: Got it. Thanks for the answers. Andy Watts: Thank you, sir. Operator: The next question comes from Phil Stefano from Deutsche Bank. Phil Stefano: Yes, thanks and good morning. I was hoping we could revisit the Programs business. Can you talk a little bit about what drove the continued acceleration there? It feels like you typically call out a few items. I think I missed that in the opening remarks this quarter. Powell Brown: We didn't really call it out, Phil, from a standpoint of we had a lot of strong performance across all of our Programs businesses. I think in the past we've obviously called out things that have CAT exposure and those businesses continue to perform well, but it was not exclusive to those businesses. We would just tell you that the entire segment performed really well in the quarter. Phil Stefano: Okay, all right. And so I feel like when we've talked about organic in the past, there has been a bit of a disparity between the haves and the have-nots as to what businesses have started to come back. In listening to the opening remarks today, it feels like business confidence is improving and maybe the have and have-nots is being shifted more so because of things like headwinds in hiring or supply chain issues as opposed to business confidence. I guess, is that a fair characterization that we had this shift and how should we think about this with the framework that you talked about moderation of organic in the back half of the year? Powell Brown: Yes. I think your statement, Phil, is true in kind of just at face value. The challenge with that is those people that experienced the toughest time during the downturn are going to have the longest memories relative to the go forward and their confidence and thought process in reinvesting in their business. So I think that your assessment is correct, yes. I also think there are lots of people that are watching. There is this great desire to get out and be so-called normal again and yet now people are watching the delta variant spread very closely and how does that impact their business and/or their hiring. So, we think that the economic or the GDP and expansion in the second half of the year is going to slow down slightly. It will not be like what it was in the second quarter. It doesn't mean it's going negative, doesn't mean anything like that. It's just if you look at all the stuff that we're seeing, it just shows a moderation in the second half of the year. We agree with that. And that's kind of how we'd answer that. Phil Stefano: Okay. Andy Watts: Hey, Phil, the other thing that we mentioned in our comments, and this is as you talk about the haves and have-nots, the have-nots of those industries that were most impacted over the past 15 to 18 months, one of the areas where they are challenged and, hopefully, this again will work itself out over the coming quarters is their ability to hire workers. And so that's just going to take a while for that to work itself through the system for them to get back in there. And that's why we've made the comment about a little bit of a governor right now as to how quickly things can recover. Phil Stefano: Got it. Thank you. Andy Watts: Thank you. Operator: The next question comes from Mark Hughes from Truist. Please go ahead. Mark Hughes: Yes, thank you. Good morning. Powell, you talk about I think I heard you say coastal you saw less upward pressure on renewals at the end of the quarter. Did I hear that properly? And then at the same time you talked about the Florida's coastal still being difficult to place. I think your description of the coastal property that you raised the upper bound in Q2 versus 1Q, just a little more detail there would be great. Powell Brown: Sure. So my first comment was specifically directed at commercial properties, not individual homeowners. So what I'm saying is we're seeing a slight tapering of the rate increases that we saw in the late part of the second quarter. The comment about California and Florida is personal lines, homeowners, and particularly certain segments of those personal lines markets. So they could be older homes, they could be lower-value homes, they could be frame construction homes. And in California's case, it could be anything in a brush fire area, all of those types of things. So, what I would say is when you see that range, Mark, there could be a slight wiggle in the range, be it either the bottom or the top end. Don't read too much into that in terms of we just kind of want you to know where the vast majority of those renewals are coming in and the point being is, as we got down towards the end of June, we started to see some renewals with slightly less rate pressure. Did not mean it wasn't up, but those are on commercial buildings. It could include a condo. I mean that's habitational but not a standalone home, like if we had a home in Fort Lauderdale or home in Miami or wherever. Mark Hughes: And then, any comment on employee benefits? How did you see payrolls, in particular consulting projects, just the growth there versus the P&C? Powell Brown: We're very pleased with how our benefits business has performed this year, and we continue to write a lot of new business, because it's an area obviously that's very expensive, it's complex, it's utilized by the employees of the insured, and we have continued to add capabilities in our benefits area and feel really good about it. So both segments performed really well in Q2. So it's not one over the other. But as it specifically relates to your question, that's how I would answer it. It's performing really nicely. Mark Hughes: Okay. And then finally, new business you mentioned a couple times. You say you don't break apart your growth drivers. I understand that, but is there some difference now? Is it a step function that there is more of business out in the market and you're capturing share, or is it just good, strong but more in line with historical? Powell Brown: I don't think there is something going on dramatically different today. But what I would say is this. We were very pleased with our performance during the first wave of COVID, and as I've said before, I was very pleased at the amount of new business that we wrote over a video conference where we weren't able to meet with the people in certain periods of time. And those opportunities have continued to remain and/or accelerate with people wanting to see us. And so we're out talking to people all over the country, and we just have some really cool opportunities. And so I don't want to give you the impression that there is something different that's going on. It's just we're executing really well. Mark Hughes: Thank you. Operator: The next question comes from Elyse Greenspan from Wells Fargo. Elyse Greenspan: Hi, good morning. My first question is on the margin side. So you guys at the start of the year had said you guys expected flat to slightly up margins for the year and you reaffirmed that last quarter I believe. But you guys are sitting after the first half of the year just over 200 basis points of margin improvement. So could you just give us an update on how you think either margins will trend for the full year or how you think they'll trend for the second half of the year relative to the improvement you saw in the first half? Powell Brown: Hi. Good morning, Elyse. I know we had said when we started the year and even through the first quarter, flat to up slightly for the year. And you're right, we're up about 210 basis points right now. We feel good where we are for the year at this stage and think that dependent upon how the back end of the year looks that we will have some margin improvement. Don't know exactly where that will come out. We would not anticipate the same level of growth on a full-year basis as what we saw in the first six months just because we know we're going to have to increase in our variable cost in the back end of the year. Again, don't know exactly where those are going to land. We feel good about the back end of the year and probably have some margin expansion. But don't expect it at the same level as the first six months, okay. Elyse Greenspan: Okay, that's helpful. And then my second question, going back to the guidance of some maybe moderation in organic in the second half. So, I mean, I know we aren't even fully done with July, but have you guys seen a moderation in July relative to where things were trending in the second quarter? And when you say moderation, you guys printed a really strong, it came in at 12% for the first half in terms of organic. And so could we still be in the double digits in the second half of the year, even with some moderation? Powell Brown: So Elyse, first of all, thank you for recognizing the strong performance in the first half of the year. We appreciate that. And so we're very pleased with 12.1% organic growth. Number two, again, as you know, we don't give organic growth guidance. We have historically said that we are a low- to mid-single-digit organic growth business in a steady state economy. Obviously, there are some unique dynamics that are going on right now in terms of economic expansion and rates and some other things that are helping with that. But we're executing our plan as well as we ever have. So, what I would say is this. We would just ask you to think about the economic indicators that you see out there that we can see when we looked at and/or decided to give that potential moderation in the second half of the year. So whether you look at GDP, car sales, whatever it is that you're looking at, that may give you an idea of kind of how we're thinking around in the second half of the year. But we're not going to give organic growth guidance in the second half. Elyse Greenspan: Have you seen anything, Powell, I know we're not even done with July, but have you guys seen anything in the data to indicate things are slowing or is it more, just like you said, looking at economic indicators and just thinking that things might flow as we move through the third quarter and into the fourth quarter as well? Powell Brown: Elyse, you know that I couldn't answer that right now because that would be a forward-looking statement. I appreciate your interest, but we're not going to comment on July. But we're going to keep doing what we're doing, which we're going to continue to deliver for our existing customer base, and we're writing a lot of new business. And we've said that we think there could be some rate moderation in the second half of the year. I don't think it's going to be enormous, but it absolutely is going to happen in our opinion, and we're going to continue to invest in the business by looking for acquisitions that fit culturally makes sense financially. But yes, we're not going to comment on what we've seen in the first part of July. Elyse Greenspan: Got it. Andy Watts: And Elyse, a couple other things just to keep in mind as you're thinking about the back end of the year versus the first half of the year. Keep in mind that we have a higher weighting of employee benefits to the first half of the year and that grew very well for us. We're very, very pleased with the performance there. The second, and we were talking about this last year, is our lender placed business had just an outstanding 2020 performing well again this year, but the year-on-year comps are going to be extremely challenging. They probably realistically will not grow at the same amount they did last year. So that's just going to make the second half of the year just more challenging to grow over that. So just kind of keep those in mind as you're thinking about kind of weighting on the full year. Elyse Greenspan: Okay. That's helpful, Andy. Thanks, Andy and Powell, for the color. Andy Watts: Thank you. Powell Brown: Thank you. Operator: The next question comes from Meyer Shields from KBW. Meyer Shields: Great, thanks. Good morning. Not to take anything away, sorry, second quarter organic growth, obviously, very strong. You're doing a lot of things right. Some of it is the environment. And I was hoping you could talk about how that's impacting M&A discussions. Powell Brown: Well, I think the impact on M&A discussions, if there is something that is driving a discussion differently, it is the potential change in the tax laws as opposed to in the rate environment or the topping of the market or whatever the case may be. So everybody sells, and when they sell and why they sell are for different reasons, but I would say, a very common point that is raised in lots of discussions, that doesn't mean it's the reason but a reason, is the concern that the tax structure may be different next year on businesses that will be sold, and how is that going to be impacted in the U.S. tax structure. So what I would say, Meyer, is this, to your point, we understand that there is a little bit of an environment and economic positive impact, but I do want to make sure that you remember that growing at 14.7% on a $2.6 billion trailing base is a pretty big number. And so I would like to make sure that you and everybody else out there listening understand that I wouldn't want anyone to take that for granted. That is not easy. It is something that we're very proud of, and we've got a lot of things firing on all cylinders. But I would moderate that comment just a little bit. Meyer Shields: No, I understand. That's very helpful. I guess what I was trying to get an understanding of is whether there are broader-than-normal differences in terms of future productivity among potential acquisitions like between your perspective and the potential sellers. Powell Brown: Well, I think, there's two ways to look at that. I think there are very high expectations of value. And the interesting thing is how people portray their business going forward, particularly if there is a business broker involved might be very optimistic. A pro forma of a pro forma is not actual numbers. So, we look closely at that. That's how I would answer that question. Meyer Shields: Okay. No, that's helpful. Also, earlier you talked about the various technology priorities going forward in terms of data and analytics, etc. From our perspective, where are we going to see that make the biggest difference? Is that in revenue or margin factor? Powell Brown: Well, here's the way I would tell you. You aren't going to be able to write on a piece of paper and say, huh, there is the deal. What you're going to be able to see is we're going to implement technology we either bought or developed or both into our systems that make us more efficient and we're going to continue to invest in the business to grow the thing quickly going forward. So what I would try to say is we are going to capture data, we're going to invest in the technology, we're going to make things easier for our teammates and our customers, but we're going to continue to reinvest in the business as well. So we said, as someone said earlier, that we're going to have incremental margin improvement in 2021. We've been very fortunate in the year to date so far. And Andy talked about what we think we're going to see in terms of margins in the second half of the year. But it is part of a long-term game plan to enable us to be more competitive and deliver for our customers. So we're not going to be able to say, here's your deal. We're going to break it out on a line item. We're not going to do that. We're just not going to do it. But we are investing in it, and it's important that you know that. But at the end of the day, we're going to just have to apply that to our customers and they'll be able to see the benefits. Andy Watts: And Meyer, it's cutting across all of our segments. So again, if you're not going to just see retail or wholesale jump by X on either top line or bottom line. It's something that's just going to naturally organically happen over time in all the segments. But it's one of the key priorities for us. Meyer Shields: Got it. Thank you very much. Andy Watts: Thank you. Operator: We'll now take our next question from Michael Phillips from Morgan Stanley. Michael Phillips: Thanks. Good morning, everybody. A bit of a follow-up to one of Andy's earlier comments on second half and margin and expenses. I guess specifically on T&E. We've heard some varying opinions on how that's going to play out in second half of the year. Just curious on your opinion thereof do we get back to full T&E by the end of the year or how is the pace looking for that? Powell Brown: It's Powell, Michael. And the answer is, do I think we're going to get back to full T&E by the end of the year. I think that's unlikely. But we're starting to see a ramp up, because I can tell you, our customers and our prospects want to see us. And so we are on air planes and trains and automobiles a lot more today than we have been, and I only anticipate that increasing. Michael Phillips: Okay, thanks. And then, one more for you I guess. In the opening question on kind of the fallout from the merger that didn't happen. You mentioned opportunities on talent is what you were kind of alluding to. I guess does that have other implications on just broader implications for the mix or the pace at all for industry M&A? Powell Brown: That's interesting. I don't think so. I think- Michael Phillips: And specifically what I mean is, will there be more demand for kind of middle markets or lower M&A if big ones didn't happen? Powell Brown: Yes. I don't think so. I think those are two independent things. I think there is a demand in the insurance brokerage space for all sizes as you know. That's number one. Number two, what you see certain firms are interested in acquiring or building more than others large and upper-middle market capabilities, and that could be domestically or internationally for that matter, and some firms have tried to focus on hiring teams, as you know, from large brokers and moving them over. Historically we haven't done that. We have hired people from other firms, and we have acquired people in other organizations that had been at large firms before. And so I think those are two independent things. I do think that any time you have a shakeup in something like this, you combine that with the pandemic and the ongoing issues around the pandemic, I think you have still a lot of people that are evaluating, do I want to be part of this type of organization, whatever that is, or do I want something a little different, and that may create opportunity for entrepreneurial firms like ours. That's the way we look at it. Michael Phillips: Okay. Thanks, Powell and Andy. Thanks very much. Andy Watts: Thank you. Operator: We'll now take the next question from Mark Hughes from Truist. Please go ahead. Mark Hughes: Yes, thank you. Just one detail. Andy, you talked about the Social Security Administration kind of slow rolling claims. Could you expand on that? Andy Watts: Yes. So Mark, we were talking about this last year. And again, it's kind of a trend that we see that just happens over different cycles where the Social Security Administration will either accelerate the processing of a number of cases that we have submitted in there and they did that back in the '17, '18, a little bit of '19. Then what happens is then they constrain the number of lawyers that they have in their reviewing cases those slow down over time. And then it'll kind of work back out. You've probably seen the announcement that the previous director is no longer with the administration and they're looking to put a new one in. So that will, again, cause some changes up there. It is a cycle. We'll kind of work through it and then hopefully the amount that we've been submitting in there will get processed over the coming year. It does take a while. It just doesn't turn back on like a faucet overnight. We've got really good inflow into the business. We just can't get the output from SSA, and that's where we anticipate headwinds at least for the back end of the year, and then we'll have a view as to what it looks like for '22 when we get some more road covered. Mark Hughes: Thank you. Operator: As there are no further questions, I'd like to hand the call back over to your host for any additional or closing remarks. Powell Brown: Thank you all very much. We look forward to talking to you for our Q3 earnings call. Have a wonderful day, and thank you. Bye-bye. Operator: Thank you. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.
Brown & Brown, Inc. (NYSE:BRO) Earnings Preview: A Look into the Insurance Brokerage's Financial Health
- Projected earnings per share (EPS) of $1.30, marking a 14% increase from the previous year.
- Anticipated revenue of $1.41 billion, an 11.5% rise from the same quarter last year.
- Positive outlook with an upward revision of the EPS estimate by 0.6% over the past 30 days.
Brown & Brown, Inc. (NYSE:BRO) is a prominent player in the insurance brokerage industry. The company provides a wide range of insurance products and services, including property and casualty insurance, employee benefits, and risk management solutions. As a competitor in a market with firms like Marsh & McLennan and Aon, Brown & Brown has carved out a significant niche with its comprehensive offerings.
On April 28, 2025, Brown & Brown is set to release its quarterly earnings. Wall Street analysts project earnings per share (EPS) of $1.30, marking a 14% increase from the previous year. This growth is supported by a projected revenue of $1.41 billion, an 11.5% rise from the same quarter last year. The upward revision of the EPS estimate by 0.6% over the past 30 days indicates a positive outlook from analysts.
The anticipated improvement in Brown & Brown's financial performance is attributed to several factors. The company is expected to benefit from organic revenue growth, higher average interest rates, and improved underwriting results. These elements contribute to the positive Earnings ESP and favorable Zacks Rank, suggesting a potential earnings beat.
Brown & Brown's financial metrics provide insight into its market valuation. With a price-to-earnings (P/E) ratio of 33.53, investors are willing to pay a premium for each dollar of earnings. The company's price-to-sales ratio of 7.20 and enterprise value to sales ratio of 7.14 reflect the market's valuation of its revenue and total worth, respectively.
The company's financial health is further underscored by its low debt-to-equity ratio of 0.064, indicating a conservative use of debt. Additionally, a current ratio of 1.10 suggests that Brown & Brown is well-positioned to cover its short-term liabilities with its short-term assets. These metrics highlight the company's strong financial foundation as it approaches its earnings release.
Brown & Brown, Inc. (NYSE:BRO) Surpasses Earnings and Revenue Estimates
- Earnings Per Share (EPS) of $0.86 exceeded the estimated $0.767, showcasing a significant year-over-year improvement.
- Revenue Growth: Achieved approximately $1.18 billion, surpassing the estimated $1.12 billion and demonstrating consistent growth over the past four quarters.
- Financial Health Indicators: Showcased by a price-to-earnings (P/E) ratio of approximately 29.97 and a debt-to-equity ratio of 0.064, indicating a conservative use of debt and a positive market valuation.
Brown & Brown, Inc. (NYSE:BRO) is a prominent player in the insurance brokerage industry, providing a wide range of insurance products and services to both individuals and businesses. Operating within the Zacks Insurance - Brokerage industry, Brown & Brown has demonstrated strong performance and growth, competing with other major insurance brokers to maintain its position through consistent financial achievements.
On January 27, 2025, Brown & Brown reported earnings per share (EPS) of $0.86, surpassing the estimated $0.767. This performance reflects a significant improvement from the $0.58 per share reported in the same quarter last year. The earnings surprise for this quarter stands at 14.67%, as highlighted by Zacks. In the previous quarter, the company also exceeded expectations with earnings of $0.91 per share against an anticipated $0.87, reflecting a 4.60% surprise.
In terms of revenue, Brown & Brown achieved approximately $1.18 billion, exceeding the estimated $1.12 billion. This represents a notable increase from the $1.03 billion in revenue reported in the same period the previous year. The company has consistently surpassed consensus revenue estimates in each of the last four quarters, demonstrating its ability to generate growth. The 15.4% increase in total revenues for the fourth quarter was driven by a rise in commissions and fees, alongside a 13.8% increase in organic revenue.
Despite the revenue growth, income before income taxes fell by 22.8% to $275 million, with the margin decreasing to 23.2% from 34.7%. This decline was attributed to a gain from the sale of certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023. However, the company's EBITDAC - Adjusted rose by 22.6% to $390 million, with the EBITDAC Margin - Adjusted improving to 32.9% from 31.0%.
Brown & Brown's financial metrics provide insight into its market valuation and financial health. The company has a price-to-earnings (P/E) ratio of approximately 29.97, indicating how much investors are willing to pay per dollar of earnings. Its price-to-sales ratio stands at about 6.26, reflecting the market's valuation of the company's revenue. The debt-to-equity ratio is relatively low at 0.064, indicating a conservative use of debt in the company's capital structure. The current ratio is 1.10, suggesting a positive indicator of short-term financial health.
Brown & Brown, Inc. (NYSE:BRO) Surpasses Earnings Estimates
- Brown & Brown, Inc. (NYSE:BRO) reported an EPS of $0.91, exceeding the estimated $0.881 and the Zacks Consensus Estimate of $0.87.
- The company's total revenues reached approximately $1.19 billion, surpassing the estimated $1.16 billion and indicating an 11% increase year-over-year.
- Brown & Brown's financial health is highlighted by a debt-to-equity ratio of 0.69 and a current ratio of about 1.13, showcasing its financial stability.
Brown & Brown, Inc. (NYSE:BRO) is a prominent player in the insurance brokerage industry. The company provides a wide range of insurance products and services, catering to both individuals and businesses. It competes with other major firms in the sector, such as Marsh & McLennan and Aon. Brown & Brown's recent financial performance highlights its strong market position and growth trajectory.
On October 28, 2024, Brown & Brown reported earnings per share (EPS) of $0.91, surpassing the estimated $0.881. This achievement also exceeded the Zacks Consensus Estimate of $0.87 per share, as highlighted by GlobeNewsWire. The company's EPS showed a significant improvement from the previous year's $0.71, indicating robust growth in profitability.
The company reported total revenues of approximately $1.19 billion, exceeding the estimated $1.16 billion. This figure aligns closely with the reported $1.2 billion, marking an 11% increase compared to the previous period. Brown & Brown's organic revenue growth of 9.5% further underscores its ability to expand its business operations effectively.
Brown & Brown's financial metrics provide insight into its market valuation. The company has a price-to-earnings (P/E) ratio of approximately 29.30, reflecting the market's confidence in its earnings potential. Its price-to-sales ratio of about 6.51 and enterprise value to sales ratio of 6.81 indicate how the market values its revenue and overall worth.
The company's financial health is supported by a debt-to-equity ratio of approximately 0.69, suggesting a moderate level of debt relative to equity. Additionally, a current ratio of about 1.13 indicates Brown & Brown's ability to cover short-term liabilities with its short-term assets, showcasing its financial stability.
RBC Capital Upgrades Brown & Brown, Inc. (NYSE:BRO) to Outperform
- RBC Capital upgrades Brown & Brown, Inc. (NYSE:BRO) to Outperform from Hold and increases the price target to $110 from $95.
- The upgrade reflects strong confidence in Brown & Brown's future market performance, with the stock price at the time being $97.56.
- Brown & Brown's significant growth trajectory is supported by a strong market capitalization of around $27.83 billion and robust investor interest.
On Wednesday, July 24, 2024, RBC Capital upgraded Brown & Brown, Inc. (NYSE:BRO), a leading insurance brokerage firm, to Outperform while previously maintaining a hold action. This significant upgrade came with an increase in the price target to $110 from $95, as reported by TheFly. This adjustment by RBC Capital indicates a strong confidence in Brown & Brown's future market performance, especially considering the stock's price at the time was $97.56.
Brown & Brown, Inc. has been a notable player in the insurance sector, providing a range of insurance and reinsurance products and services. The company's performance, especially in the second quarter of 2024, has evidently caught the attention of financial analysts and institutions, including RBC Capital. During its second quarter earnings call, key figures such as President and CEO Powell Brown and EVP, CFO, and Treasurer Andy Watts highlighted the company's financial achievements and operational progress. This event was closely followed by financial analysts from prestigious institutions, underscoring the financial community's keen interest in Brown & Brown's business trajectory.
The stock's performance on the NYSE, with a slight decrease of $0.49 or about -0.50% to $97.56, reflects the market's immediate reaction to the company's financial disclosures and RBC Capital's upgrade. Despite this minor fluctuation, Brown & Brown's stock has shown significant growth over the past year, trading as low as $66.73 and reaching highs of $99.08. This growth trajectory is supported by the company's strong market capitalization of around $27.83 billion and a trading volume of 1,733,652 shares, indicating robust investor interest and confidence in the firm's market value and financial health.
RBC Capital's upgraded outlook and revised price target for Brown & Brown are based on a comprehensive analysis of the company's operational efficiency, market position, and financial performance. The positive adjustment reflects an anticipation of continued growth and success for Brown & Brown in the insurance industry, setting a bullish tone for the company's stock in the eyes of investors and market analysts alike. This upgrade, following closely after the company's second quarter earnings call, suggests that Brown & Brown is on a solid path to achieving and possibly exceeding its financial and operational goals, making it a noteworthy stock for investors to watch.
Brown & Brown, Inc. Q1 2024 Earnings: Revenue Beats, EPS Misses Estimates
Brown & Brown, Inc. Reports First Quarter Earnings for 2024
On Monday, April 22, 2024, before the market opened, BRO:NYSE reported earnings per share (EPS) of $1.04, which was slightly below the estimated $1.07. However, the company's revenue for the period stood at approximately $1.26 billion, surpassing the estimated revenue of about $1.22 billion. This performance is a testament to Brown & Brown's ability to exceed market expectations, particularly in terms of revenue generation. The company's financial health is further underscored by its strong organic growth and improved EBITDAC margin, as highlighted by Zacks Investment Research. This combination of factors suggests that BRO is on a positive trajectory, with a robust operational efficiency that could potentially favor its stock price performance in the future.
The detailed financial metrics provided by Brown & Brown, Inc. (BRO) for the first quarter of 2024 reveal a company in strong financial standing. With total revenues reaching $1.258 billion, marking a significant year-over-year increase of 12.7%, BRO demonstrates its capacity for growth. This increase is supported by an 11.6% rise in commissions and fees and an 8.6% increase in Organic Revenue, indicating a diversified and expanding revenue base. The company's income before income taxes also saw a substantial rise of 23.8%, reaching $364 million, with the Income Before Income Taxes Margin improving to 28.9% from 26.3%. These figures not only highlight the company's ability to generate profit but also its efficiency in managing its operations to improve profitability margins.
Furthermore, Brown & Brown's adjusted EBITDAC grew by 17.1% to $466 million, with the Adjusted EBITDAC Margin expanding to 37.0% from 35.7%. This growth in EBITDAC, a measure of a company's operating performance, indicates that BRO is effectively controlling its costs and optimizing its operational processes. The net income for the quarter stood at $293 million, a 24.2% increase, which translates to a diluted net income per share of $1.02, up by 22.9%. This increase in net income and earnings per share reflects the company's strong profitability and its ability to deliver value to its shareholders.
In terms of valuation metrics, Brown & Brown, Inc. (BRO) exhibits a price-to-earnings (P/E) ratio of approximately 24.86, indicating the market's willingness to pay for its earnings. The company's price-to-sales (P/S) ratio stands at about 5.33, reflecting the value placed on each dollar of BRO's sales. With an enterprise value to sales (EV/Sales) ratio of roughly 6.12, it suggests the market's valuation of the company in relation to its sales, taking into account its debt and cash levels. These valuation ratios, along with the company's earnings yield of about 4.02% and a debt-to-equity (D/E) ratio of around 0.70, provide a comprehensive view of BRO's financial health and market valuation. The current ratio of approximately 1.03 further indicates the company's ability to cover its short-term liabilities with its short-term assets, underscoring its financial stability.
