| NEWS RELEASE |
| Cory T. Walker |
April 23, 2007 | Chief Financial Officer |
| (386) 239-7250 |
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BROWN & BROWN, INC. |
ANNOUNCES A 19.4% INCREASE IN FIRST QUARTER NET INCOME |
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(Daytona Beach and Tampa, Florida) . . . Brown & Brown, Inc. (NYSE:BRO) today announced its net income and net income per share for the first quarter of 2007, which are at the highest levels ever attained by the Company in a first quarter. |
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Net income per share for the quarter ended March 31, 2007 was $0.42, an increase of 16.7% over the $0.36 in net income per share reported for the quarter ended March 31, 2006. Net income rose to $59,727,000 for the first quarter of 2007, versus net income of $50,026,000 for the quarter ended March 31, 2006, an increase of 19.4%. |
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Total revenues for the quarter ended March 31, 2007 were up 12.1%, to $258,513,000, compared with $230,582,000 recorded in the corresponding quarter in 2006. |
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J. Hyatt Brown, Chairman and Chief Executive Officer, noted, "We are pleased with our results even though the quarter was impacted by the most difficult insurance market environment in recent memory, particularly in Florida. Our net income still grew by 19.4%. Nearly half of this increase was the result of selling approximately 50% of our long-term investment in Rock-Tenn Company at a pre-tax gain of $8.8 million." |
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Jim W. Henderson, Vice Chairman and Chief Operating Officer, added, "Since the beginning of the year, we have completed ten acquisitions with total annualized revenues of approximately $46.1 million. Our operating model continues to attract the best-in-class of acquisition candidates, including small and mid-size agencies with above-average operating profit margins. Our track record of success in joining with agencies of this size continues to provide Brown & Brown with a good pipeline of attractive opportunities." |
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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, quasi-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 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 and/or Washington, where significant portions of the Company's business are concentrated; 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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# # # # # |
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Brown & Brown, Inc. | ||
CONSOLIDATED STATEMENTS OF INCOME | ||
For the Three Months Ended March 31, 2007 and 2006 | ||
(in thousands, except per share data) | ||
(unaudited) | ||
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2007 | 2006 | |
REVENUES |
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Commissions and fees | $245,559 | $227,915 |
Investment income | 11,579 | 2,209 |
Other income, net | 1,375 | 458 |
Total revenues | 258,513 | 230,582 |
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EXPENSES |
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Employee compensation and benefits | 110,810 | 100,730 |
Non-cash stock-based compensation | 1,502 | 2,330 |
Other operating expenses | 31,923 | 30,969 |
Amortization | 9,502 | 9,000 |
Depreciation | 3,040 | 2,595 |
Interest | 3,634 | 3,522 |
Total expenses | 160,411 | 149,146 |
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Income before income taxes | 98,102 | 81,436 |
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Income taxes | 38,375 | 31,410 |
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Net income | $ 59,727 | $ 50,026 |
| ====== | ====== |
Net income per share: |
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Basic | $0.43 | $0.36 |
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Diluted | $0.42 | $0.36 |
| ==== | ==== |
Weighted average number of shares outstanding: |
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Basic | 140,221 | 139,383 |
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Diluted | 141,194 | 140,823 |
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Dividends declared per share | $0.06 | $0.05 |
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Brown & Brown, Inc. | ||||||
INTERNAL GROWTH SCHEDULE | ||||||
Core Commissions and Fees(1) | ||||||
Three Months Ended March 31, 2007 | ||||||
(in thousands) | ||||||
(unaudited) | ||||||
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| Quarter | Quarter | Total | Total | Less | Internal |
| Ended | Ended | Net | Net | Acquisition | Net |
| 3/31/07 | 3/31/06 | Change | Growth % | Revenues | Growth % |
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Florida Retail | $ 43,918 | $ 39,175 | $ 4,743 | 12.1% | $ 567 | 10.7% |
National Retail | 53,134 | 50,527 | 2,607 | 5.2% | 2,962 | (0.7)% |
Western Retail | 23,307 | 25,028 | (1,721) | (6.9)% | 159 | (7.5)% |
Total Retail | 120,359 | 114,730 | 5,629 | 4.9% | 3,688 | 1.7% |
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Professional Programs | 10,438 | 10,157 | 281 | 2.8% | 126 | 1.5% |
Special Programs | 24,484 | 26,959 | (2,475) | (9.2)% | 1,864 | (16.1)% |
Total Programs | 34,922 | 37,116 | (2,194) | (5.9)% | 1,990 | (11.3)% |
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Wholesale Brokerage | 37,267 | 35,143 | 2,124 | 6.0% | 3,977 | (5.3)% |
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TPA Services | 8,954 | 6,644 | 2,310 | 34.8% | 1,674 | 9.6% |
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Total Core Commissions |
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and Fees(1) | $201,502 | $193,633 | $ 7,869 | 4.1% | $11,329 | (1.8)% |
| ====== | ====== | ===== |
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Reconciliation of Internal Growth Schedule |
to Total Commissions and Fees |
Included in the Consolidated Statements of Income |
for the Three Months Ended March 31, 2007 and 2006 |
(in thousands) |
(unaudited) |
| Quarter | Quarter |
| Ended | Ended |
| 3/31/07 | 3/31/06 |
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Total core commissions and fees(1) | $201,502 | $193,633 |
Contingent commissions | 44,057 | 33,467 |
Divested business | - | 815 |
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Total commission & fees | $245,559 | $227,915 |
| ====== | ====== |
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(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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Brown & Brown, Inc. | ||
CONSOLIDATED BALANCE SHEETS | ||
(in thousands, except per share data) | ||
(unaudited) | ||
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| March 31, | December 31, |
| 2007 | 2006 |
ASSETS |
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Current assets: |
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Cash and cash equivalents | $ 101,333 | $ 88,490 |
Restricted cash and investments | 240,785 | 242,187 |
Short-term investments | 12,345 | 2,909 |
Premiums, commissions and fees receivable | 244,131 | 282,440 |
Other current assets | 25,259 | 32,180 |
Total current assets | 623,853 | 648,206 |
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Fixed assets, net | 58,059 | 44,170 |
Goodwill | 725,952 | 684,521 |
Amortizable intangible assets, net | 398,809 | 396,069 |
Investments | 644 | 15,826 |
Other assets | 20,090 | 19,160 |
Total assets | $1,827,407 | $1,807,952 |
| ======== | ======== |
LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities: |
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Premiums payable to insurance companies | $ 400,296 | $ 435,449 |
Premium deposits and credits due customers | 32,574 | 33,273 |
Accounts payable | 49,172 | 17,854 |
Accrued expenses | 47,143 | 86,009 |
Current portion of long-term debt | 20,594 | 18,082 |
Total current liabilities | 549,779 | 590,667 |
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Long-term debt | 226,216 | 226,252 |
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Deferred income taxes, net | 53,638 | 49,721 |
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Other liabilities | 13,936 | 11,967 |
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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 140,403 at 2007 and 140,016 at 2006 | 14,040 | 14,002 |
Additional paid-in capital | 216,889 | 210,543 |
Retained earnings | 746,980 | 695,656 |
Accumulated other comprehensive income | 5,929 | 9,144 |
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Total shareholders' equity | 983,838 | 929,345 |
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Total liabilities and shareholders' equity | $1,827,407 | $1,807,952 |
| ======== | ======== |
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