Net income for the third quarter of 2008 was $40,593,000, or $0.29 per share, compared with $46,216,000, or $0.33 per share for the same quarter of 2007. Total revenues for the third quarter ended September 30, 2008 were $247,029,000, compared with 2007 third-quarter revenue of $237,284,000.
Total revenues for the nine months ended September 30, 2008 were $745,464,000, compared with the total revenues for the first nine months of 2007 of $742,441,000. Excluding the non-recurring gain of $18,664,000 on the sale of shares of Rock-Tenn Company in the first nine months of 2007, total revenues for the nine-month period of 2008 increased 3.0% over the adjusted total revenues in the corresponding period of 2007, which equaled $723,778,000. Net income for the nine-month period ended September 30, 2008 was $132,751,000, or $0.94 per share, compared with $157,955,000, or $1.12 per share for the same period of 2007. Excluding the non-recurring gain of $18,664,000 on the sale of shares of Rock-Tenn Company in the first nine months of 2007, net income for the nine-month period ended September 30, 2008 was $132,751,000 compared to the adjusted net income for the comparable period in 2007 of $146,542,000.
J. Hyatt Brown, Chairman and Chief Executive Officer, noted, "We are pleased with our third-quarter results as our industry continues to stare into the abyss of falling rates for property and casualty coverages. The joker in the deck on a forward-looking basis is the economy. Notwithstanding the course of recent events, we remain optimistic about the future."
Jim W. Henderson, Vice Chairman and Chief Operating Officer, added, "Since the second quarter of 2008 we closed on 14 transactions, representing $22.4 million in estimated annualized revenues. For the year, we have closed 44 transactions with estimated annualized revenues of $100.2 million. Soft market conditions and a challenging economy are factors prompting a favorable increase in M&A activity."
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' seventh 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 future financial results and to 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, Texas and/or Washington, where significant portions of the Company's business are concentrated; and the cost and impact on the Company of previously disclosed 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
(in thousands, except per share data)
(unaudited)
For the Three Months For the Nine Months
Ended September 30 Ended September 30
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
REVENUES
Commissions and fees $ 243,766 $ 225,421 $ 736,129 $ 701,456
Investment income 1,228 3,286 5,136 27,855
Other income, net 2,035 8,577 4,199 13,130
--------- --------- --------- ---------
Total revenues 247,029 237,284 745,464 742,441
--------- --------- --------- ---------
EXPENSES
Employee compensation and benefits 122,172 110,491 363,873 333,937
Non-cash stock-based compensation 1,819 1,491 5,563 4,327
Other operating expenses 36,405 32,928 101,993 96,409
Amortization 12,281 10,331 34,789 29,798
Depreciation 3,391 3,213 9,929 9,492
Interest 3,867 3,395 11,045 10,445
--------- --------- --------- ---------
Total expenses 179,935 161,849 527,192 484,408
--------- --------- --------- ---------
Income before income taxes 67,094 75,435 218,272 258,033
Income taxes 26,501 29,219 85,521 100,078
--------- --------- --------- ---------
Net income $ 40,593 $ 46,216 $ 132,751 $ 157,955
========= ========= ========= =========
Net income per share:
Basic $ 0.29 $ 0.33 $ 0.94 $ 1.13
========= ========= ========= =========
Diluted $ 0.29 $ 0.33 $ 0.94 $ 1.12
========= ========= ========= =========
Weighted average number of shares
outstanding:
Basic 141,073 140,593 140,834 140,401
========= ========= ========= =========
Diluted 141,606 141,288 141,395 141,209
========= ========= ========= =========
Dividends declared per share $ 0.07 $ 0.06 $ 0.21 $ 0.18
========= ========= ========= =========
Brown & Brown, Inc.
INTERNAL GROWTH SCHEDULE
Core Commissions and Fees(1)
Three Months Ended September 30, 2008
(in thousands)
(unaudited)
Quarter Quarter Total
Ended Ended Total Net Net
9/30/08 9/30/07 Change Growth %
---------- ---------- --------- --------
Florida Retail $ 40,087 $ 39,088 $ 999 2.6%
National Retail 77,172 60,958 16,214 26.6%
Western Retail 27,293 23,752 3,541 14.9%
---------- ---------- ---------
Total Retail 144,552 123,798 20,754 16.8%
---------- ---------- ---------
Wholesale Brokerage 36,491 39,328 (2,837) (7.2)%
Professional Programs 11,643 11,200 443 4.0%
Special Programs 33,433 30,411 3,022 9.9%
---------- ---------- ---------
Total National Programs 45,076 41,611 3,465 8.3%
---------- ---------- ---------
Services 7,917 9,390 (1,473) (15.7)%
---------- ---------- ---------
Total Core Commissions and
Fees (1) $ 234,036 $ 214,127 $ 19,909 9.3%
========== ========== =========
Less Internal Internal
Acquisition Net Net
Revenues Growth $ Growth %
---------- --------- --------
Florida Retail $ 4,620 $ (3,621) (9.3)%
National Retail 16,802 (588) (1.0)%
Western Retail 5,473 (1,932) (8.1)%
---------- ---------
Total Retail 26,895 (6,141) (5.0)%
---------- ---------
Wholesale Brokerage 3,831 (6,668) (17.0)%
Professional Programs - 443 4.0%
Special Programs 210 2,812 9.2%
---------- ---------
Total National Programs 210 3,255 7.8%
---------- ---------
Services - (1,473) (15.7)%
---------- ---------
Total Core Commissions and
Fees (1) $ 30,936 $ (11,027) (5.1)%
========== =========
Reconciliation of Internal Growth Schedule
to Total Commissions and Fees
Included in the Consolidated Statements of Income
for the Three Months Ended September 30, 2008 and 2007
(in thousands)
(unaudited)
Quarter Quarter
Ended Ended
9/30/08 9/30/07
--------- ---------
Total core commissions and fees(1) $ 234,036 $ 214,127
Contingent commissions 9,730 8,875
Divested business - 2,419
--------- ---------
Total commission & fees $ 243,766 $ 225,421
========= =========
(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)
Sept. 30, December 31,
2008 2007
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ - $ 38,234
Restricted cash and investments 240,616 254,404
Short-term investments 7,287 2,892
Premiums, commissions and fees receivable 256,479 240,680
Deferred income taxes - 17,208
Other current assets 35,846 33,964
----------- -----------
Total current assets 540,228 587,382
Fixed assets, net 63,673 62,327
Goodwill 995,720 846,433
Amortizable intangible assets, net 493,737 443,224
Other assets 13,943 21,293
----------- -----------
Total assets $ 2,107,301 $ 1,960,659
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Premiums payable to insurance companies $ 390,616 $ 394,034
Premium deposits and credits due customers 48,352 41,211
Accounts payable 16,814 18,760
Accrued expenses 77,488 90,599
Current portion of long-term debt 7,703 11,519
----------- -----------
Total current liabilities 540,973 556,123
Long-term debt 253,655 227,707
Deferred income taxes, net 83,972 65,736
Other liabilities 11,912 13,635
Shareholders' equity:
Common stock, par value $0.10 per share;
authorized 280,000 shares; issued and
outstanding 141,412 at 2008 and 140,673
at 2007 14,141 14,067
Additional paid-in capital 247,988 231,888
Retained earnings 954,647 851,490
Accumulated other comprehensive income 13 13
----------- -----------
Total shareholders' equity 1,216,789 1,097,458
----------- -----------
Total liabilities and shareholders' equity $ 2,107,301 $ 1,960,659
=========== ===========
Contact: Cory T. Walker Chief Financial Officer (386) 239-7250
SOURCE: Brown & Brown, Inc.