DAYTONA BEACH, Fla. and TAMPA, Fla., Apr 10, 2003 /PRNewswire-FirstCall via COMTEX/ -- Brown & Brown, Inc. (NYSE: BRO) today announced a new record for its earnings in the first quarter.
Net income per share for the quarter ended March 31, 2003 was $0.44, an increase of 41.9% over the $0.31 in net income per share reported for the quarter ended March 31, 2002. Net income rose to $30,536,000 for the first quarter of 2003, versus net income of $20,162,000 for the quarter ended March 31, 2002, an increase of 51.5%.
Total revenue for the quarter ended March 31, 2003 was up 30.4%, to $144,736,000, compared with $111,035,000 recorded in the corresponding quarter in 2002. Our revenue increase was enhanced by an 83% increase in the contingent commissions earned in the first quarter of 2003 over the similar revenues earned in the corresponding quarter of 2002.
J. Hyatt Brown, Chairman and CEO, commented, "We had a gangbuster quarter. Every facet of our proven operating model generated positive results; not only did we experience good internal growth, along with very effective and profitable acquisition activity, but also the strong relationships that we have forged with our insurance company partners enhanced both our revenues and earnings."
Jim W. Henderson, President and Chief Operating Officer added, "We completed seven very fine acquisitions during the quarter, with $23.7 million in annualized revenues. Notable among these is the premier agency, MFC&V, in Santa Barbara, California, The Coleman Agency in San Antonio, Texas, and Saville & Associates, Inc., of Atlanta, Georgia that further enhances our role as a leader in serving the insurance needs of small to medium-sized governmental entities. We also purchased the remaining 25% interest in our FIU subsidiary."
Brown & Brown, Inc. and its subsidiaries provide a broad range of insurance and reinsurance products and services, as well as risk management, employee benefit administration, and managed health care services through offices located across the United States. The company is ranked by Business Insurance magazine as the nation's sixth largest independent insurance intermediary organization. Our Web address is www.bbinsurance.com.
This press release may contain certain statements relating to future results which are forward-looking statements. These statements are not historical facts, but instead represent only the Company's 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 and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Further information concerning the Company and its business, including factors that potentially could materially affect the Company's financial results, 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 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; and the potential occurrence of a disaster that affects certain areas of the States of Arizona, California, Florida and/or New York, where significant portions of the Company's business are concentrated. All forward- looking statements included in this press release are made only as of the date of this press release, and we do not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur or of which we hereafter become aware.
This press release includes an Internal Growth Schedule that may contain references to non-GAAP (generally accepted accounting principles) financial measures as defined in new SEC Regulation G. Consistent with Regulation G, a reconciliation of this financial information to our GAAP information follows the Internal Growth Schedule. As explained in the Reconciliation, the Internal Growth Schedule shows period to period performance of certain aspects of our business, excluding contingent commissions and commissions and fees generated from divested business, as well as an adjustment for a one-time upfront payment of commissions in 2002.
The information in this press release that may contain non-GAAP financial measures as defined in Regulation G is included in the press release because we believe such information is of interest to the investment community because it provides additional methods of evaluating certain aspects of the Company's performance from period to period on a basis that may not otherwise be apparent on a GAAP basis. The Internal Growth Schedule should be viewed in addition to, and not in lieu of, the Company's reported Consolidated Statements of Income for the Three Months ended March 31, 2003 and 2002.
Brown & Brown, Inc.
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 2003 and 2002
(In thousands, except per share data)
(unaudited)
2003 2002
REVENUES
Commissions and fees $144,252 $110,826
Investment income 333 355
Other income (loss), net 151 (146)
Total revenues 144,736 111,035
EXPENSES
Employee compensation and benefits 68,241 55,400
Non-cash stock grant compensation 817 777
Other operating expenses 19,406 14,927
Amortization 4,337 3,269
Depreciation 1,927 1,715
Interest 1,007 1,236
Total expenses 95,735 77,324
Income before income taxes
and minority interest 49,001 33,711
Income taxes 18,465 12,979
Minority interest, net of income tax -- 570
Net income $30,536 $20,162
Net income per share:
Basic $0.45 $0.31
Diluted $0.44 $0.31
Weighted average number of shares outstanding:
Basic 68,173 64,300
Diluted 68,931 65,158
Brown & Brown, Inc.
Internal Growth Schedule
Core Commissions and Fees(1)
Three Months Ended March 31, 2003
(In thousands)
(unaudited)
Quarter Quarter Total Total Less Internal
Ended Ended Net Net Acq. Net
3/31/03 3/31/02 Change Growth % Revenues Growth %
Florida Retail $32,581 $29,575 $3,006 10.2% $292 9.2%
National Retail 36,625 27,980 8,645 30.9% 7,057 5.7%
Western Retail 22,807 16,817 5,990 35.6% 4,609 8.2%
Total Retail 92,013 74,372 17,641 23.7% 11,958 7.6%
Professional
Programs 9,867 3,889 5,978 153.7% 5,828 3.9%
Special Programs 9,768 8,093 1,675 20.7% 62 19.9%
Total Programs 19,635 11,982 7,653 63.9% 5,890 14.7%
Brokerage 7,212 3,891 3,321 85.4% 1,438 48.4%
TPA Services 7,219 6,646 573 8.6% -- 8.6%
Total Core
Commissions
and Fees(1) $126,079 $96,891 $29,188 30.1% $19,286 10.2%
Reconciliation of Internal Growth Schedule
to Total Commissions and Fees
Included in the Consolidated Statements of Income
for the Three Months Ended March 31, 2003 and 2002
(in thousands)
(unaudited)
Quarter Quarter
Ended Ended
3/31/03 3/31/02
Total core commissions and
fees(1) $126,079 $96,891
Contingent commissions 18,173 9,933
Adjustment for upfront annual
commissions (2) -- 1,475
Divested business in 2001 -- 57
Divested business in 2002 -- 2,470
Total Commission & Fees $144,252 $110,826
(1) Total core commissions and fees are our total commissions and fees less 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), (ii) adjustment for upfront annual commissions (explained below), and (iii) divested business (commissions and fees generated from offices, books of business or niches sold by the Company or terminated).
(2) Commissions from a Florida-based workers' compensation carrier that changed its agency commission payment policy from paying on a monthly basis to paying on an up-front annual basis only for year 2002. Beginning January 1, 2003, this carrier reverted back to paying commissions on a monthly basis.
Brown & Brown, Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2003 2002
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $49,835 $91,247
Restricted cash 116,724 79,796
Short-term investments 1,931 446
Premiums, commissions and fees receivable 132,808 144,244
Other current assets 16,040 16,527
Total current assets 317,338 332,260
Fixed assets, net 25,384 24,730
Goodwill, net 201,705 176,269
Other intangible assets, net 232,852 203,984
Investments 8,267 8,585
Deferred income taxes, net 1,972 1,788
Other assets 6,517 6,733
Total assets $794,035 $754,349
LIABILITIES
Current liabilities:
Premiums payable to insurance companies $201,001 $191,682
Premium deposits and credits due customers 15,931 16,723
Accounts payable 34,455 15,393
Accrued expenses 39,506 46,586
Current portion of long-term debt 27,348 27,334
Total current liabilities 318,241 297,718
Long-term debt 53,324 57,585
Other liabilities 5,854 5,604
Minority Interest -- 1,852
SHAREHOLDERS' EQUITY
Common stock, par value $0.10 per share;
authorized 140,000 shares; issued and
outstanding, 68,084 at 2003 and 68,178 at 2002 6,808 6,818
Additional paid-in capital 158,170 159,564
Retained earnings 249,718 223,102
Accumulated other comprehensive income 1,920 2,106
Total shareholders' equity 416,616 391,590
Total liabilities and shareholders' equity $794,035 $754,349
SOURCE Brown & Brown, Inc.
Cory T. Walker, Chief Financial Officer, Brown & Brown, Inc., +1-386-239-7250
http://www.bbinsurance.com