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| News Release |
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| Cory T. Walker |
February 11, 2007 |
| Chief Financial Officer |
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| (386) 239-7250 |
BROWN & BROWN, INC. |
RESULTS FOR 2006 SET RECORDS |
FOR REVENUES AND NET INCOME |
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(Daytona Beach and Tampa, Florida) . . . Brown & Brown, Inc. (NYSE: BRO) today announced record earnings for 2006. Net income for 2006 rose to $172,350,000, or $1.22 per share, an increase of 14.5% over the $150,551,000, or $1.08 per share, earned in 2005. Total revenues for the year rose to $878,004,000, up 11.7% compared with $785,807,000 achieved in 2005. |
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During the fourth quarter of 2006 net income increased 5.3%, to $37,623,000, or $0.27 per share, compared with 2005 fourth quarter net income of $35,717,000, or $0.25 per share. Total revenue for the fourth quarter of 2006 was $214,650,000, a 9.0% increase over the fourth quarter 2005 revenues of $196,857,000. |
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Commenting on the results, J. Hyatt Brown, Chairman and Chief Executive Officer, said, "2006 was another good year for Brown & Brown. In a year with many challenges, including a lighter than normal year of completed acquisitions, our solid internal revenue growth was instrumental in raising our total revenue by nearly 12%. As a result, part of our intermediate goal, "B-40", of achieving one billion dollars of revenues now appears within reach and has our entire Company focused on delivering even stronger results in 2007." |
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Jim W. Henderson, Vice-Chairman and Chief Operating Officer, commented, "During 2006, completed acquisitions accounted for approximately $56 million in annualized revenues, with Axiom Re and Delaware Valley Underwriting Authority accounting for the majority of that amount. By the same token, just in this past week we closed three transactions: ALCOS, Inc., in Michigan, Shapiro Insurance, Inc. in Tallahassee and the Marcello Agency, Inc. in Louisiana, totaling some $23 million in annualized revenues. The acquisition opportunities continue to be robust." |
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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, 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. |
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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 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 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. |
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-2- |
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 | ||
| 2006 | 2005 |
| 2006 | 2005 |
REVENUES |
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Commissions and fees | $210,763 | $194,046 |
| $864,663 | $775,543 |
Investment income | 3,096 | 2,303 |
| 11,479 | 6,578 |
Other income, net | 791 | 508 |
| 1,862 | 3,686 |
Total revenues | 214,650 | 196,857 |
| 878,004 | 785,807 |
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EXPENSES |
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Employee compensation and benefits | 100,160 | 96,450 |
| 404,891 | 374,943 |
Non-cash stock-based compensation | 815 | 977 |
| 5,416 | 3,337 |
Other operating expenses | 35,887 | 26,862 |
| 126,492 | 105,622 |
Amortization | 9,431 | 8,901 |
| 36,498 | 33,245 |
Depreciation | 3,007 | 2,629 |
| 11,309 | 10,061 |
Interest | 3,277 | 3,578 |
| 13,357 | 14,469 |
Total expenses | 152,577 | 139,397 |
| 597,963 | 541,677 |
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Income before income taxes | 62,073 | 57,460 |
| 280,041 | 244,130 |
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Income taxes | 24,450 | 21,743 |
| 107,691 | 93,579 |
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Net income | $ 37,623 | $ 35,717 |
| $172,350 | $150,551 |
| ====== | ====== |
| ======= | ======= |
Net income per share: |
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Basic | $0.27 | $0.26 |
| $1.23 | $1.09 |
| ==== | ==== |
| ==== | ==== |
Diluted | $0.27 | $0.25 |
| $1.22 | $1.08 |
| ==== | ==== |
| ==== | ==== |
Weighted average number of shares outstanding: |
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Basic | 139,969 | 139,126 |
| 139,634 | 138,563 |
| ====== | ====== |
| ====== | ====== |
Diluted | 141,227 | 140,443 |
| 141,020 | 139,776 |
| ====== | ====== |
| ====== | ====== |
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Dividends declared per share | $0.06 | $0.05 |
| $0.21 | $0.17 |
| ==== | ==== |
| ==== | ==== |
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Brown & Brown, Inc. |
INTERNAL GROWTH SCHEDULE |
Core Commissions and Fees(1) |
Three Months Ended December 31, 2006 |
(in thousands) |
(unaudited) |
| Quarter | Quarter | Total | Total | Less | Internal |
| Ended | Ended | Net | Net | Acquisition | Net |
| 12/31/06 | 12/31/05 | Change | Growth % | Revenues | Growth % |
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Florida Retail | $ 45,513 | $ 39,546 | $ 5,967 | 15.1% | $ 3 | 15.1% |
National Retail | 49,505 | 48,918 | 587 | 1.2% | 1,422 | (1.7)% |
Western Retail | 24,875 | 26,473 | (1,598) | (6.0)% | 626 | (8.4)% |
Total Retail | 119,893 | 114,937 | 4,956 | 4.3% | 2,051 | 2.5% |
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Professional Programs | 10,599 | 10,497 | 102 | 1.0% | 43 | 0.6% |
Special Programs | 33,302 | 26,735 | 6,567 | 24.6% | 2,650 | 14.7% |
Total Programs | 43,901 | 37,232 | 6,669 | 17.9% | 2,693 | 10.7% |
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Wholesale Brokerage | 37,382 | 33,456 | 3,926 | 11.7% | 6,210 | (6.8)% |
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Services | 8,702 | 6,911 | 1,791 | 25.9% | 1,540 | 3.6% |
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Total Core Commissions |
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and Fees (1) | $209,878 | $192,536 | $17,342 | 9.0% | $12,494 | 2.5% |
| ======= | ======= | ====== | ==== | ====== | ==== |
Reconciliation of Internal Growth Schedule |
to Total Commissions and Fees |
Included in the Consolidated Statements of Income |
for the Three Months Ended December 31, 2006 and 2005 |
(in thousands) |
(unaudited) |
| Quarter | Quarter |
| Ended | Ended |
| 12/31/06 | 12/31/05 |
Total core commissions and fees(1) | $209,878 | $192,536 |
Contingent commissions | 885 | 567 |
Divested business | - | 943 |
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Total commission & fees | $210,763 | $194,046 |
| ======= | ======= |
(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). |
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-4- |
Brown & Brown, Inc. |
CONSOLIDATED BALANCE SHEETS |
(in thousands, except per share data) |
(unaudited) |
| December 31, |
| December 31, |
| 2006 |
| 2005 |
ASSETS |
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Current assets: |
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Cash and cash equivalents | $ 88,490 |
| $ 100,580 |
Restricted cash and investments | 242,187 |
| 229,872 |
Short-term investments | 2,909 |
| 2,748 |
Premiums, commissions and fees receivable | 282,440 |
| 257,930 |
Other current assets | 32,180 |
| 28,637 |
Total current assets | 648,206 |
| 619,767 |
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Fixed assets, net | 44,170 |
| 39,398 |
Goodwill | 684,521 |
| 549,040 |
Amortizable intangible assets, net | 396,069 |
| 377,907 |
Investments | 15,826 |
| 8,421 |
Other assets | 19,160 |
| 14,127 |
Total assets | $1,807,952 |
| $1,608,660 |
| ======== |
| ======== |
LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities: |
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Premiums payable to insurance companies | $ 435,449 |
| $ 397,466 |
Premium deposits and credits due customers | 33,273 |
| 34,027 |
Accounts payable | 17,854 |
| 21,161 |
Accrued expenses | 86,009 |
| 74,534 |
Current portion of long-term debt | 18,082 |
| 55,630 |
Total current liabilities | 590,667 |
| 582,818 |
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Long-term debt | 226,252 |
| 214,179 |
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Deferred income taxes, net | 49,721 |
| 35,489 |
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Other liabilities | 11,967 |
| 11,830 |
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Shareholders' equity: |
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Common stock, par value $0.10 per share; |
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Authorized 280,000 shares; issued and |
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outstanding 140,016 at 2006 and 139,383 at 2005 | 14,002 |
| 13,938 |
Additional paid-in capital | 210,543 |
| 193,313 |
Retained earnings | 695,656 |
| 552,647 |
Accumulated other comprehensive income | 9,144 |
| 4,446 |
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Total shareholders' equity | 929,345 |
| 764,344 |
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Total liabilities and shareholders' equity | $1,807,952 |
| $1,608,660 |
| ======== |
| ======== |
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-5- |