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Brown & Brown, Inc. Announces Record Third-Quarter Earnings of $49.5 Million

Oct 15, 2012 (Marketwire via COMTEX) --Brown & Brown, Inc. (NYSE: BRO) today announced its preliminary, unaudited financial results for the third quarter of 2012.

Net income for the third quarter of 2012 was $49,504,000, or $0.34 per share, compared with $44,173,000, or $0.30 per share for the same quarter of 2011, an increase of 12.1%. Total revenue for the third quarter was $303,800,000, compared with 2011 third-quarter revenue of $260,401,000, an increase of 16.7%. 

Total revenue for the nine months ended September 30, 2012 was $897,202,000, compared with total revenue for the same period of 2011 of $769,445,000, an increase of 16.6%. Net income for the nine-month period ended September 30, 2012 was $141,408,000, or $0.97 per share, compared with $127,501,000, or $0.88 per share for the same period of 2011, an increase of 10.9%.

J. Powell Brown, President and Chief Executive Officer of the Company, noted, "We are pleased with our record earnings in the third quarter. Our Retail Division continues to show increasing organic growth, which suggests that economic conditions are improving for our clients across the country, who are predominantly in the middle market."

Brown & Brown, Inc., through its subsidiaries, offers a broad range of insurance and reinsurance products and services. Additionally, certain Brown & Brown subsidiaries offer a variety of risk management, third party administration, and other services. Serving 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

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 third quarter of 2012. 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 third quarter of 2012 that its financial results differ from the current preliminary unaudited numbers set forth herein, other factors that the Company may not have currently identified or quantified, and other risks, relevant factors and uncertainties identified in the Company's Annual Report on Form 10-K for the year ended December 31, 2011, and the Company's other filings with the Securities and Exchange Commission. 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 Ended
September 30,
    For the
Nine Months Ended
September 30,
      2012   2011     2012     2011
REVENUES                              
Commissions and fees     $ 302,310   $ 257,177     $ 888,785     $ 764,612
Investment income       239     317       561       934
Other income, net       1,251     2,907       7,856       3,899
    Total revenues       303,800     260,401       897,202       769,445
                               
EXPENSES                              
Employee compensation and benefits       149,691     126,877       450,039       379,286
Non-cash stock-based compensation       3,908     2,856       11,393       8,338
Other operating expenses       43,774     38,434       129,394       109,489
Amortization       15,956     13,725       47,450       40,790
Depreciation       3,958     3,062       11,383       9,276
Interest       4,006     3,565       12,093       10,780
Change in estimated acquisition earn-out payables      
 858
   
(810
)     (134 )     656
    Total expenses       222,151     187,709       661,618       558,615
                               
Income before income taxes       81,649     72,692       235,584       210,830
                               
Income taxes       32,145     28,519       94,176       83,329
                               
Net income     $ 49,504   $ 44,173     $ 141,408     $ 127,501
                               
Net income per share:                              
  Basic     $ 0.34   $ 0.31     $ 0.99     $ 0.89
  Diluted     $ 0.34   $ 0.30     $ 0.97     $ 0.88
                               
Weighted average number of shares outstanding:                              
  Basic       139,465     138,690       139,185       138,475
  Diluted       142,097     140,443       141,769       140,120
                               
Dividends declared per share     $ 0.0850   $ 0.0800     $ 0.2550     $ 0.2400
                               
                               
                               
Brown & Brown, Inc.  
INTERNAL GROWTH SCHEDULE  
Core Organic Commissions and Fees(1)  
Three Months Ended September 30, 2012  
(in thousands)  
(unaudited)  
   
    Quarter
Ended
09/30/12
  Quarter
Ended
09/30/11
  Total
Net
Change
  Total
Net
Growth
%
    Less
Acquisition
Revenues
  Internal
Net
Growth
$
    Internal
Net
Growth
%
 
                                             
Retail(2)   $ 153,702   $ 143,681   $ 10,021   7.0 %   $ 8,593   $ 1,428     1.0 %
                                             
National Programs     62,406     42,265     20,141   47.7 %     21,536     (1,395 )   (3.3) %
                                             
Wholesale Brokerage     43,200     41,192     2,008   4.9 %     868     1,140     2.8 %
                                             
Services     28,566     16,450     12,116   73.7 %     10,845     1,271     7.7 %
                                             
Total Core Commissions and Fees (1)   $
287,874
  $
243,588
  $
44,286
 
18.2
%   $
41,842
  $
2,444
   
1.0
%
                                             
                                             
                                             
Reconciliation of Internal Growth Schedule
to Total Commissions and Fees
Included in the Consolidated Statements of Income
For the Three Months Ended September 30, 2012 and 2011
(in thousands)
(unaudited)
    Quarter
Ended
09/30/12
  Quarter
Ended
09/30/11
Total core commissions and fees(1)   $ 287,874   $ 243,588
Profit-sharing contingent commissions    
 12,077
   
 7,233
Guaranteed supplemental commissions    
 2,359
   
 3,460
Divested business     -     2,896
             
Total commissions & fees   $ 302,310   $ 257,177
(1)   Total core commissions and fees are our total commissions and fees less (i) 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), (ii) guaranteed supplemental commissions (GSC) (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),and (iii) 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.
     
     
     
Brown & Brown, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
 
 
    September 30,   December 31,
    2012   2011
ASSETS            
Current assets:            
  Cash and cash equivalents   $ 244,637   $ 286,305
  Restricted cash and investments     198,137     130,535
  Short-term investments     8,176     7,627
  Premiums, commissions and fees receivable     282,972     240,257
  Deferred income taxes     18,792     19,863
  Other current assets     32,794     23,540
    Total current assets     785,508     708,127
             
Fixed assets, net     73,191     61,360
Goodwill     1,686,460     1,323,469
Amortizable intangible assets, net     567,489     496,182
Other assets     22,081     17,873
    Total assets   $ 3,134,729   $ 2,607,011
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Current liabilities:            
  Premiums payable to insurance companies   $ 397,995   $ 327,096
  Premium deposits and credits due customers     47,798     30,048
  Accounts payable     57,046     22,384
  Accrued expenses and other liabilities     120,667     100,865
  Current portion of long-term debt     93     1,227
    Total current liabilities     623,599     481,620
             
Long-term debt     450,000     250,033
             
Deferred income taxes, net     229,458     178,052
             
Other liabilities     62,858     53,343
             
Shareholders' equity:            
  Common stock, par value $0.10 per share; authorized 280,000 shares; issued and outstanding 143,817 at 2012 and 143,352 at 2011    

14,382
   

14,335
  Additional paid-in capital     327,053     307,059
  Retained earnings     1,427,379     1,322,562
  Accumulated other comprehensive income     -     7
             
    Total shareholders' equity     1,768,814     1,643,963
                 
    Total liabilities and shareholders' equity   $ 3,134,729   $ 2,607,011
Cory T. Walker
        Chief Financial Officer
        (386) 239-7250
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