DAYTONA BEACH, FL and TAMPA, FL--(MARKET WIRE)--Feb 9, 2006 -- Brown & Brown, Inc. (NYSE:BRO - News) today announced record earnings for 2005, the 13th consecutive year for which the Company has recorded new highs in both revenues and net income. Net income for 2005 rose to $150,551,000, or $1.08 per share, an increase of 16.8% over the $128,843,000, or $0.93 per share, earned in 2004. Total revenues for the year rose to $785,807,000, up 21.5% compared with $646,934,000 achieved in 2004.
During the fourth quarter of 2005 net income increased 18.0%, to $35,717,000, or $0.25 per share, compared with 2004 fourth quarter net income of $30,256,000, or $0.22 per share. Total revenue for the fourth quarter of 2005 was $196,857,000, a 20.7% increase over the fourth quarter 2004 revenues of $163,046,000.
Commenting on the results, J. Hyatt Brown, Chairman and Chief Executive Officer, said, "We are quite pleased to again announce outstanding earnings growth of at least 15% per share, the thirteenth consecutive year we have achieved this remarkable goal. Even though this past year's hurricane season had a very dramatic impact on our people and clients, the strength of the Brown & Brown culture and our people allowed us to overcome these challenges. This single-minded effort has brought us ever closer to our active intermediate goal of achieving B-40, that is, $1 billion in revenue and a 40% operating margin (pre-tax income with interest, amortization and non-cash stock grant compensation expense added back). We feel quite positive about our ability to continue growing in the future."
Jim W. Henderson, President and Chief Operating Officer, commented, "2005 turned out to be our second best year ever in terms of the annualized revenues from acquisitions completed during the year. This success has carried into 2006 with the operations of Axiom Intermediaries, LLC officially joining us in early January. As we have said many times, we are very excited about the exceptional caliber of the organizations seeking to join Brown & Brown. Internally, Regional Executive Vice President Linda Downs, one of our long-term and most effective leaders, has been elevated to the position of Executive Vice President for Leadership Development. Linda's promotion highlights the increased emphasis we are placing on the recruitment, training and development of future leaders. We believe that our increased focus on developing new leadership will be critical to our success going forward."
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, and managed health care programs. Providing service to business, 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 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 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 Arizona, California, Florida, Georgia, New Jersey, New York, Pennsylvania and/or Washington, where significant portions of the Company's business are concentrated; the actual costs of resolution of contingent liabilities; those factors relevant to Brown & Brown's consummation and integration of announced acquisitions, including any matters analyzed in the due diligence process, material adverse changes in the customers of the companies whose operations are acquired, and material adverse changes in the business and financial condition of either or both companies and their respective customers; 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 contingent commission 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 For the
Three Months Ended Twelve Months Ended
December 31 December 31
----------- -----------
2005 2004 2005 2004
--------- --------- --------- ---------
REVENUES
Commissions and fees $ 194,046 $ 158,352 $ 775,543 $ 638,267
Investment income 2,303 1,108 6,578 2,715
Other income, net 508 3,586 3,686 5,952
--------- --------- --------- ---------
Total revenues 196,857 163,046 785,807 646,934
--------- --------- --------- ---------
EXPENSES
Employee compensation and benefits 96,450 82,220 374,943 314,221
Non-cash stock grant compensation 977 741 3,337 2,625
Other operating expenses 26,862 21,506 105,622 84,927
Amortization 8,901 6,069 33,245 22,146
Depreciation 2,629 2,249 10,061 8,910
Interest 3,578 3,457 14,469 7,156
--------- --------- --------- ---------
Total expenses 139,397 116,242 541,677 439,985
--------- --------- --------- ---------
Income before income taxes 57,460 46,804 244,130 206,949
Income taxes 21,743 16,548 93,579 78,106
--------- --------- --------- ---------
Net income $ 35,717 $ 30,256 $ 150,551 $ 128,843
========= ========= ========= =========
Net income per share:
Basic $ 0.26 $ 0.22 $ 1.09 $ 0.93
========= ========= ========= =========
Diluted $ 0.25 $ 0.22 $ 1.08 $ 0.93
========= ========= ========= =========
Weighted average number of shares
outstanding:
Basic 139,126 138,304 138,563 137,818
========= ========= ========= =========
Diluted 140,443 139,374 139,776 138,888
========= ========= ========= =========
Dividends declared per share: $ 0.05 $ 0.04 $ 0.17 $ 0.15
========= ========= ========= =========
Brown & Brown, Inc.
INTERNAL GROWTH SCHEDULE
Core Commissions and Fees(1)
Three Months Ended December 31, 2005
(in thousands)
(unaudited)
Quarter Quarter Total Total Less Internal
Ended Ended Net Net Acquisition Net
12/31/05 12/31/04 Change Growth% Revenues Growth%
-------- -------- ------ ------ -------- -------
Florida Retail $ 39,626 $ 37,177 $ 2,449 6.6% $ 1,364 2.9%
National Retail 49,921 45,598 4,323 9.5% 4,624 (0.7)%
Western Retail 26,582 24,710 1,872 7.6% 1,087 3.2%
-------- -------- -------- --------
Total Retail 116,129 107,485 8,644 8.0% 7,075 1.5%
-------- -------- -------- --------
Professional Programs 10,836 11,095 (259) (2.3)% - (2.3)%
Special Programs 26,147 20,449 5,698 27.9% 3,501 10.7%
-------- -------- -------- --------
Total Programs 36,983 31,544 5,439 17.2% 3,501 6.1%
-------- -------- -------- --------
Brokerage 33,456 12,139 21,317 175.6% 17,128 34.5%
TPA Services 6,911 6,348 563 8.9% - 8.9%
-------- -------- -------- --------
Total Core Commissions
and Fees (1) $193,479 $157,516 $ 35,963 22.8% $ 27,704 5.2%
======== ======== ======== ===== ======== ====
Reconciliation of Internal Growth Schedule
to Total Commissions and Fees
Included in the Consolidated Statements of Income
for the Three Months Ended December 31, 2005 and 2004
(in thousands)
(unaudited)
Quarter Quarter
Ended Ended
12/31/05 12/31/04
------------ ------------
Total core commissions and fees(1) $ 193,479 $ 157,516
Contingent commissions 567 368
Divested business - 468
------------ ------------
Total Commission & Fees $ 194,046 $ 158,352
============ ============
(1) Total core commissions and fees are our total commissions and fees less
(i) 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)
(unaudited)
December 31, December 31,
2005 2004
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 100,580 $ 188,106
Restricted cash and investments 229,872 147,483
Short-term investments 2,748 3,163
Premiums, commissions and fees receivable 257,930 172,395
Other current assets 28,637 28,819
------------ ------------
Total current assets 619,767 539,966
Fixed assets, net 39,398 33,438
Goodwill 549,040 360,843
Amortizable intangible assets, net 377,907 293,009
Investments 8,421 9,328
Other assets 14,127 12,933
------------ ------------
Total assets $ 1,608,660 $ 1,249,517
============ ============
LIABILITIES
Current liabilities:
Premiums payable to insurance companies $ 397,466 $ 242,414
Premium deposits and credits due customers 34,027 32,273
Accounts payable 21,161 16,257
Accrued expenses 74,534 58,031
Current portion of long-term debt 55,630 16,135
------------ ------------
Total current liabilities 582,818 365,110
Long-term debt 214,179 227,063
Deferred income taxes, net 35,489 24,859
Other liabilities 11,830 8,160
SHAREHOLDERS' EQUITY
Common stock, par value $0.10 per share;
authorized 280,000 shares; issued and
outstanding, 139,383 at 2005 and 138,318 at
2004 13,938 13,832
Additional paid-in capital 193,313 180,364
Retained earnings 552,647 425,662
Accumulated other comprehensive income 4,446 4,467
------------ ------------
Total shareholders' equity 764,344 624,325
------------ ------------
Total liabilities and shareholders' equity $ 1,608,660 $ 1,249,517
============ ============
Contact:
Cory T. Walker
Chief Financial Officer
(386) 239-7250
Source: Brown & Brown, Inc.