Net income per share for the quarter ended March 31, 2007 was $0.42, an increase of 16.7% over the $0.36 in net income per share reported for the quarter ended March 31, 2006. Net income rose to $59,727,000 for the first quarter of 2007, versus net income of $50,026,000 for the quarter ended March 31, 2006, an increase of 19.4%.
Total revenues for the quarter ended March 31, 2007 were up 12.1%, to $258,513,000, compared with $230,582,000 recorded in the corresponding quarter in 2006.
J. Hyatt Brown, Chairman and Chief Executive Officer, noted, "We are pleased with our results even though the quarter was impacted by the most difficult insurance market environment in recent memory, particularly in Florida. Our net income still grew by 19.4%. Nearly half of this increase was the result of selling approximately 50% of our long-term investment in Rock-Tenn Company at a pre-tax gain of $8.8 million."
Jim W. Henderson, Vice Chairman and Chief Operating Officer, added, "Since the beginning of the year, we have completed ten acquisitions with total annualized revenues of approximately $46.1 million. Our operating model continues to attract the best-in-class of acquisition candidates, including small and mid-size agencies with above-average operating profit margins. Our track record of success in joining with agencies of this size continues to provide Brown & Brown with a good pipeline of attractive opportunities."
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 continuing our revenue, earnings and operating growth, as well as 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 and/or Washington, where significant portions of the Company's business are concentrated; and the cost and impact on the Company of previously disclosed litigation initiated against the Company and 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, 2007 and 2006
(in thousands, except per share data)
(unaudited)
2007 2006
------------ ------------
REVENUES
Commissions and fees $ 245,559 $ 227,915
Investment income 11,579 2,209
Other income, net 1,375 458
------------ ------------
Total revenues 258,513 230,582
------------ ------------
EXPENSES
Employee compensation and benefits 110,810 100,730
Non-cash stock-based compensation 1,502 2,330
Other operating expenses 31,923 30,969
Amortization 9,502 9,000
Depreciation 3,040 2,595
Interest 3,634 3,522
------------ ------------
Total expenses 160,411 149,146
------------ ------------
Income before income taxes 98,102 81,436
Income taxes 38,375 31,410
------------ ------------
Net income $ 59,727 $ 50,026
============ ============
Net income per share:
Basic $ 0.43 $ 0.36
============ ============
Diluted $ 0.42 $ 0.36
============ ============
Weighted average number of shares outstanding:
Basic 140,221 139,383
============ ============
Diluted 141,194 140,823
============ ============
Dividends declared per share $ 0.06 $ 0.05
============ ============
Brown & Brown, Inc.
INTERNAL GROWTH SCHEDULE
Core Commissions and Fees(1)
Three Months Ended March 31, 2007
(in thousands)
(unaudited)
Quarter Quarter Total Total Less Internal
Ended Ended Net Net Acquisition Net
3/31/07 3/31/06 Change Growth Revenues Growth
---------- ---------- -------- ----- --------- ------
% %
- -
Florida Retail $ 43,918 $ 39,175 $ 4,743 12.1 % $ 567 10.7 %
National Retail 53,134 50,527 2,607 5.2 % 2,962 (0.7)%
Western Retail 23,307 25,028 (1,721) (6.9)% 159 (7.5)%
---------- ---------- -------- ---------
Total Retail 120,359 114,730 5,629 4.9 % 3,688 1.7 %
---------- ---------- -------- ---------
Professional
Programs 10,438 10,157 281 2.8 % 126 1.5 %
Special Programs 24,484 26,959 (2,475) (9.2)% 1,864 (16.1)%
---------- ---------- -------- ---------
Total Programs 34,922 37,116 (2,194) (5.9)% 1,990 (11.3)%
---------- ---------- -------- ---------
Wholesale
Brokerage 37,267 35,143 2,124 6.0 % 3,977 (5.3)%
TPA Services 8,954 6,644 2,310 34.8 % 1,674 9.6 %
---------- ---------- -------- ---------
Total Core
Commissions and
Fees (1) $ 201,502 $ 193,633 $ 7,869 4.1 % $ 11,329 (1.8)%
========== ========== ======== =========
Reconciliation of Internal Growth Schedule
to Total Commissions and Fees
Included in the Consolidated Statements of Income
for the Three Months Ended March 31, 2007 and 2006
(in thousands)
(unaudited)
Quarter Quarter
Ended Ended
3/31/07 3/31/06
------------ ------------
Total core commissions and fees(1) $ 201,502 $ 193,633
Contingent commissions 44,057 33,467
Divested business - 815
------------ ------------
Total commission & fees $ 245,559 $ 227,915
============ ============
(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,
2007 2006
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 101,333 $ 88,490
Restricted cash and investments 240,785 242,187
Short-term investments 12,345 2,909
Premiums, commissions and fees receivable 244,131 282,440
Other current assets 25,259 32,180
------------ ------------
Total current assets 623,853 648,206
Fixed assets, net 58,059 44,170
Goodwill 725,952 684,521
Amortizable intangible assets, net 398,809 396,069
Investments 644 15,826
Other assets 20,090 19,160
------------ ------------
Total assets $ 1,827,407 $ 1,807,952
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Premiums payable to insurance companies $ 400,296 $ 435,449
Premium deposits and credits due customers 32,574 33,273
Accounts payable 49,172 17,854
Accrued expenses 47,143 86,009
Current portion of long-term debt 20,594 18,082
------------ ------------
Total current liabilities 549,779 590,667
Long-term debt 226,216 226,252
Deferred income taxes, net 53,638 49,721
Other liabilities 13,936 11,967
Shareholders' equity:
Common stock, par value $0.10 per share;
authorized 280,000 shares; issued and
outstanding 140,403 at 2007 and 140,016 at
2006 14,040 14,002
Additional paid-in capital 216,889 210,543
Retained earnings 746,980 695,656
Accumulated other comprehensive income 5,929 9,144
------------ ------------
Total shareholders' equity 983,838 929,345
------------ ------------
Total liabilities and shareholders' equity $ 1,827,407 $ 1,807,952
============ ============
Cory T. Walker Chief Financial Officer (386) 239-7250
SOURCE: Brown & Brown, Inc.