Revenues for the second quarter of 2014 under U.S. generally accepted accounting principles ("GAAP") were
Total revenue for the six months ended
In the second quarter we completed our
The shares will be repurchased from time to time, at the Company's discretion and subject to the availability of stock, market conditions, the trading price of the stock, alternative uses for capital, the Company's financial performance and other potential factors. These repurchases may be carried out through open market purchases, block trades, accelerated repurchases, negotiated private transactions and pursuant to any trading plan that may be adopted in accordance with rule 10b5-1 of the
During the quarter, we also funded our new Credit Facility in conjunction with the acquisition of Wright and repaid
Brown & Brown, Inc. | |||||||||||||||||||||
INTERNAL GROWTH SCHEDULE | |||||||||||||||||||||
Organic Revenue Growth (1) | |||||||||||||||||||||
Three Months Ended June 30, 2014 | |||||||||||||||||||||
(in millions, unaudited) | |||||||||||||||||||||
Organic Revenue | |||||||||||||||||||||
Quarter Ended | Change | Acquisition | Growth | ||||||||||||||||||
06/30/14 | 06/30/13 | $ | % | Revenues | $ | % | |||||||||||||||
Retail(2) | $ | 205.9 | $ | 167.3 | $ | 38.6 | 23.1 | % | 35.2 | $ | 3.4 | 2.0 | % | ||||||||
National Programs | 89.8 | 62.4 | 27.4 | 43.9 | % | 26.0 | 1.4 | 2.2 | % | ||||||||||||
Wholesale Brokerage | 58.6 | 52.9 | 5.7 | 10.8 | % | 1.4 | 4.3 | 8.1 | % | ||||||||||||
Services | 35.6 | 30.3 | 5.3 | 17.5 | % | 4.6 | 0.7 | 2.3 | % | ||||||||||||
Total Core Comm. and Fees | $ | 389.9 | $ | 312.9 | $ | 77.0 | 24.6 | % | $ | 67.2 | $ | 9.8 | 3.1 | % | |||||||
Services Excluding Colonial Claims | 35.6 | 28.2 | 7.4 | 26.2 | % | 4.6 | 2.8 | 9.9 | % | ||||||||||||
Total Excluding Colonial Claims | $ | 389.9 | $ | 310.8 | $ | 79.1 | 25.5 | % | $ | 67.2 | $ | 11.9 | 3.8 | % |
(1) Organic Revenue Growth is defined as total commissions and fees less (i) the first twelve months of net commission and fee revenues generated from acquisitions accounted for as purchases less (ii) profit-sharing contingent commissions (revenues 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 -- "Contingents"), less (iii) guaranteed supplemental commissions (revenues derived from special revenue-sharing commissions from insurance companies based solely upon the volume of the business placed with such companies during the current year -- "GSC's"), and less (iv) divested business (commissions and fees generated from offices, books of business or niches sold by the Company or terminated).
(2) The Retail segment includes commissions and fees reported in the "Other" column of the Segment Information, which includes corporate and consolidation items.
RECONCILIATION OF INTERNAL GROWTH SCHEDULE | ||||||||
TO TOTAL COMMISSIONS AND FEES | ||||||||
Included in the Consolidated Statements of Income | ||||||||
For the Three Months Ended June 30, 2014 and 2013 | ||||||||
(in millions, unaudited) | ||||||||
Quarter Ended | ||||||||
06/30/14 | 06/30/13 | |||||||
Total Core Commissions and Fees | $ | 389.9 | $ | 312.9 | ||||
Profit-Sharing Contingent Commissions | 2.8 | 7.9 | ||||||
Guaranteed Supplemental Commissions | 2.0 | 1.7 | ||||||
Divested Business | - | 1.6 | ||||||
Total Commissions and Fees | $ | 394.7 | $ | 324.1 | ||||
Due to the seasonal nature of the revenue stream for the Beecher Carlson large accounts business, the large size of Wright and the impact of Hurricane Sandy revenues within our Colonial Claims business, we believe, in our opinion, it is appropriate to adjust for the margin impact of these items in order to arrive at a Pro Forma comparable to that of the prior year. After these adjustments, our earnings per share -- pro forma (as defined below) was
Brown & Brown, Inc. | |||||||||||||
EARNINGS PER SHARE RECONCILIATION TO | |||||||||||||
EARNINGS PER SHARE - PRO FORMA | |||||||||||||
Three Months Ended June 30, 2014 | |||||||||||||
(unaudited) | |||||||||||||
Quarter Ended | Change | ||||||||||||
6/30/14 | 6/30/13 | $ | % | ||||||||||
GAAP earnings per share - as reported | $ | 0.42 | $ | 0.36 | $ | 0.06 | 16.7 | % | |||||
Colonial Claims | - | -0.01 | 0.01 | 3.3 | % | ||||||||
Beecher Carlson large accounts | -0.01 | - | -0.01 | - 2.9 | % | ||||||||
Wright Insurance Group | -0.03 | - | -0.03 | - 8.6 | % | ||||||||
Earnings per share - pro forma | $ | 0.38 | $ | 0.35 | $ | 0.03 | 8.6 | % |
EBITDAC for the quarter was
Brown & Brown, Inc. | |||||||||||||
EBITDA RECONCILIATION TO | |||||||||||||
EBITDAC (3) - PRO FORMA | |||||||||||||
Three Months Ended June 30, 2014 | |||||||||||||
(in millions, unaudited) | |||||||||||||
Quarter Ended | Change | ||||||||||||
6/30/14 | 6/30/13 | $ | % | ||||||||||
EBITDA - as reported | $ | 134.7 | $ | 110.6 | $ | 24.1 | 21.8 | % | |||||
Change in acquisition earn-out payables | 0.1 | 0.6 | -0.5 | -83.3 | % | ||||||||
EBITDAC - as reported | $ | 134.8 | $ | 111.2 | $ | 23.6 | 21.2 | % | |||||
Colonial Claims | - | - 1.7 | 1.7 | 1.9 | % | ||||||||
Beecher Carlson large accounts | - 4.1 | - | - 4.1 | - 3.7 | % | ||||||||
Wright Insurance Group | - 9.9 | - | - 9.9 | - 9.1 | % | ||||||||
EBITDAC - pro forma | $ | 120.8 | $ | 109.5 | $ | 11.3 | 10.3 | % | |||||
Brown & Brown, Inc. | |||||||
EBITDA MARGIN RECONCILIATION TO | |||||||
EBITDAC (3) MARGIN - PRO FORMA | |||||||
Three Months Ended June 30, 2014 | |||||||
(unaudited) | |||||||
Quarter Ended | |||||||
6/30/14 | 6/30/13 | ||||||
EBITDA margin - as reported | 33.9 | % | 34.0 | % | |||
Change in acquisition earn-out payables | - | 0.2 | |||||
EBITDAC margin - as reported | 33.9 | % | 34.2 | % | |||
Colonial Claims | - | - 0.4 | |||||
Beecher Carlson large accounts | 0.8 | - | |||||
Wright Insurance Group | - 0.5 | - | |||||
EBITDAC margin - pro forma | 34.2 | % | 33.8 | % | |||
(3) EBITDAC is defined as net income before interest, income taxes, depreciation, amortization and the change in estimated acquisition earn-out payables.
Brown & Brown, Inc. | |||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||
(in millions, except per share data; unaudited) | |||||||||||||
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
REVENUES | |||||||||||||
Commissions and fees | $ | 394.7 | $ | 324.1 | $ | 756.7 | $ | 657.9 | |||||
Investment income | 0.2 | 0.2 | 0.3 | 0.4 | |||||||||
Other income, net | 2.9 | 1.4 | 4.4 | 2.4 | |||||||||
Total revenues | 397.8 | 325.7 | 761.4 | 660.7 | |||||||||
EXPENSES | |||||||||||||
Employee compensation and benefits | 196.4 | 163.5 | 380.5 | 323.0 | |||||||||
Non-cash stock-based compensation | 6.0 | 3.6 | 13.5 | 7.5 | |||||||||
Other operating expenses | 60.6 | 47.4 | 113.1 | 93.7 | |||||||||
Amortization | 20.6 | 16.2 | 38.5 | 32.3 | |||||||||
Depreciation | 5.3 | 4.2 | 9.9 | 8.4 | |||||||||
Interest | 7.0 | 4.0 | 11.1 | 8.0 | |||||||||
Change in estimated acquisition earn-out payables | 0.1 | 0.7 | 6.2 | 2.2 | |||||||||
Total expenses | 296.0 | 239.6 | 572.8 | 475.1 | |||||||||
Income before income taxes | 101.8 | 86.1 | 188.6 | 185.6 | |||||||||
Income taxes | 40.0 | 34.2 | 74.4 | 73.6 | |||||||||
Net income | $ | 61.8 | $ | 51.9 | $ | 114.2 | $ | 112.0 | |||||
Net income per share: | |||||||||||||
Basic | $ | 0.43 | $ | 0.36 | $ | 0.79 | $ | 0.78 | |||||
Diluted | $ | 0.42 | $ | 0.36 | $ | 0.78 | $ | 0.77 | |||||
Weighted average number of shares outstanding: | |||||||||||||
Basic | 141,250 | 140,836 | 141,428 | 140,816 | |||||||||
Diluted | 143,032 | 143,021 | 143,169 | 142,938 | |||||||||
Dividends declared per share | $ | 0.10 | $ | 0.09 | $ | 0.20 | $ | 0.18 |
Brown & Brown, Inc. | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
(in millions, except per share data, unaudited) | |||||||||
June 30, | December 31, | ||||||||
2014
|
2013 | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 309.1 | $ | 203.0 | |||||
Restricted cash and investments | 300.4 | 250.0 | |||||||
Short-term investments | 12.3 | 10.6 | |||||||
Premiums, commissions and fees receivable | 433.0 | 395.9 | |||||||
Deferred income taxes | 16.3 | 29.3 | |||||||
Other current assets | 388.0 | 39.3 | |||||||
Total current assets | 1,459.1 | 928.1 | |||||||
Fixed assets, net | 86.4 | 74.7 | |||||||
Goodwill | 2,509.3 | 2,006.2 | |||||||
Amortizable intangible assets, net | 829.0 | 618.9 | |||||||
Investments | 19.2 | - | |||||||
Other assets | 27.4 | 21.7 | |||||||
Total assets | $ | 4,930.4 | $ | 3,649.6 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Current liabilities: | |||||||||
Premiums payable to insurance companies | $ | 634.8 | $ | 534.4 | |||||
Premium deposits and credits due customers | 98.5 | 81.0 | |||||||
Accounts payable | 55.9 | 34.2 | |||||||
Accrued expenses and other liabilities | 446.7 | 157.4 | |||||||
Current portion of long-term debt | 6.6 | 100.0 | |||||||
Total current liabilities | 1,242.5 | 907.0 | |||||||
Long-term debt | 1,168.1 | 380.0 | |||||||
Deferred income taxes, net | 337.5 | 291.7 | |||||||
Other liabilities | 100.8 | 63.8 | |||||||
Shareholders' equity: | |||||||||
Common stock, par value $0.10 per share; authorized 280,000 shares; issued 145,389 and 145,419;outstanding 144,544 and 145,419 at 2014 and 2013, respectively - in thousands |
14.5 |
14.5 |
|||||||
Additional paid-in capital | 386.2 | 372.0 | |||||||
Treasury Stock, at cost 845 and 0 shares at 2014 and 2013, respectively - in thousands | (25.0 | ) | - | ||||||
Retained earnings | 1,705.8 | 1,620.6 | |||||||
Total shareholders' equity | 2,081.5 | 2,007.1 | |||||||
Total liabilities and shareholders' equity | $ | 4,930.4 | $ | 3,649.6 |
Conference call, webcast and slide presentation
A conference call to discuss the second quarter 2014 results will be held on
About
Forward-looking statements
This press release may contain certain statements relating to future results which are forward-looking statements, including those relating to the Company's anticipated financial results for the second quarter of 2014, and potential repurchases of our common stock. 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. These risks and uncertainties include, but are not limited to, the Company's determination as it finalizes its financial results for the second quarter of 2014 that its financial results differ from the current preliminary unaudited numbers set forth herein; fluctuations in our stock's market price; fluctuations in operating results and cash flows; material adverse changes in economic conditions in the markets we serve and in the general economy; downward commercial property and casualty premium pressures; future regulatory actions and conditions in the states in which the Company conducts business; competition from others in the insurance agency, wholesale brokerage, insurance programs and service business; 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 including, but not limited to, the States of
Non-GAAP supplemental financial information
This press release contains references to non-GAAP financial measures as defined in Regulation G of
Chief Financial Officer
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