Brown & Brown, inc revenues

Brown & Brown, Inc. Announces Quarterly Revenues of $642.1 Million, an Increase of 10.9%, and Diluted Net Income Per Share of $0.34

DAYTONA BEACH, Fla., Jan. 25, 2021 (GLOBE NEWSWIRE) — Brown & Brown, Inc. (NYSE:BRO) (the “Company”) today announced its unaudited financial results for the fourth quarter and full year of 2020.

Revenues for the fourth quarter of 2020 under U.S. generally accepted accounting principles (“GAAP”) were $642.1 million, increasing $63.1 million, or 10.9%, compared to the fourth quarter of the prior year, with commissions and fees increasing by 10.9% and Organic Revenue(1) increasing by 4.7%. Net income was $97.3 million, increasing $20.8 million, or 27.2%, and diluted net income per share increased to $0.34, or 25.9% as compared to the fourth quarter of the prior year. Diluted Net Income Per Share – Adjusted(2) increased to $0.32, or 14.3%, compared to the fourth quarter of the prior year.

Revenues for the twelve months ended December 31, 2020 under GAAP were $2,613.4 million, increasing $221.2 million, or 9.2%, as compared to 2019, with commissions and fees increasing by 9.3%, and Organic Revenue increasing by 3.8%. Net income was $480.5 million, increasing $82.0 million, or 20.6%, and diluted net income per share for the year increased to $1.69, or 20.7%, each as compared to 2019. Diluted Net Income Per Share – Adjusted increased to $1.67 or 19.3% compared to 2019.

J. Powell Brown, President and Chief Executive Officer of the Company, noted, “We are very proud of our results in a year that challenged everyone globally. We delivered good organic growth and margin expansion for the quarter and the full year. Our results are driven by nearly 11,000 dedicated teammates delivering solutions to our customers worldwide. I would like to thank all of our teammates for everything they did during the year.”

Reconciliation of Commissions and Fees
to Organic Revenue
Three and Twelve Months Ended December 31, 2020 and 2019
(in millions, unaudited)

 Three Months Ended Twelve Months Ended
 12/31/2020 12/31/2019 12/31/2020 12/31/2019
Commissions and fees$640.0  $577.0  $2,606.1  $2,384.7 
Profit-sharing contingent commissions (14.6)  (17.7)  (70.9)  (59.2)
Guaranteed supplemental commissions (3.6)  (2.1)  (16.2)  (23.1)
Core commissions and fees$621.8  $557.2  $2,519.0  $2,302.4 
Acquisitions (40.4)     (141.1)   
Dispositions    (2.1)     (12.1)
Organic Revenue$581.4  $555.1  $2,377.9  $2,290.3 
Organic Revenue growth$26.3      $87.6     
Organic Revenue growth % 4.7%      3.8%    

(1) “Organic Revenue,” a non-GAAP measure, is defined as commissions and fees less (i) the first twelve months of commission and fee revenues generated from acquisitions, less (ii) profit-sharing contingent commissions (revenues 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 (commissions from insurance companies based solely upon the volume of the business placed with such companies during the current year – “GSCs”), and less (iv) divested business (net commissions and fees generated from offices and books of business sold by the Company) with the associated revenue removed from the corresponding period of the prior year. Organic Revenue can be expressed as a dollar amount or a percentage rate when describing Organic Revenue growth. We view Organic Revenue and Organic Revenue growth as important indicators when assessing and evaluating our performance on a consolidated basis and for each of our segments, because it allows us to determine a comparable, but non-GAAP, measurement of revenue growth that is associated with the revenue sources that were a part of our business in both the current and prior year and that are expected to continue in the future.

Reconciliation of Diluted Net Income Per Share to
Diluted Net Income Per Share – Adjusted
Three and Twelve Months Ended December 31, 2020,
and 2019
(unaudited)

 Three Months Ended Change Twelve Months Ended Change
 12/31/2020 12/31/2019 $ % 12/31/2020 12/31/2019 $ %
Diluted net income per share$0.34  $0.27  $0.07   25.9% $1.69  $1.40  $0.29   20.7%
Change in estimated acquisition earn-out payables (0.02)  0.01   (0.03)      (0.02)     (0.02)    
Diluted Net Income Per Share – Adjusted$0.32  $0.28  $0.04   14.3% $1.67  $1.40  $0.27   19.3%

(2) “Diluted Net Income Per Share – Adjusted,” a non-GAAP measure, is defined as diluted net income per share, excluding the change in estimated acquisition earn-out payables. We believe Diluted Net Income Per Share – Adjusted provides a meaningful representation of our operating performance and improves the comparability of our results between periods by excluding the impact of the change in estimated acquisition earn-out payables and certain other non-recurring or infrequently occurring items that have a high degree of variability from period-to-period and that we believe are not indicative of the Company’s ongoing performance.

Income before income taxes for the fourth quarter of 2020 was $130.9 million, an increase of $28.9 million, or 28.3%, and Income Before Income Taxes Margin(3) increased to 20.4% from 17.6% as compared to the fourth quarter of the prior year.

In order to provide a better understanding of our business, we evaluate EBITDAC(4) performance. We view EBITDAC and EBITDAC Margin(5) as important indicators when assessing and evaluating our performance, as they present more comparable, but non-GAAP, measurements of our operating margins in a meaningful and consistent manner. EBITDAC for the fourth quarter of 2020 was $173.9 million, an increase of $17.7 million, or 11.3%, compared to the fourth quarter of the prior year. EBITDAC Margin increased to 27.1% in the fourth quarter of 2020, as compared to 27.0% in the same period of 2019.

Income before income taxes for twelve months ended December 31, 2020 was $624.1 million, an increase of $98.2 million, or 18.7%, compared to the same period of the prior year. Income Before Income Taxes Margin increased to 23.9% from 22.0%, as compared to the fourth quarter of the prior year. EBITDAC for the twelve months ended December 31, 2020 was $813.4 million, an increase of $96.5 million, or 13.5% as compared to 2019. EBITDAC Margin increased to 31.1% for the twelve months ended December 31, 2020, as compared to 30.0% in 2019.

Reconciliation of Income Before Income Taxes to EBITDAC and
Income Before Income Taxes Margin to EBITDAC Margin
Three and Twelve Months Ended December 31, 2020 and 2019
(in millions, unaudited)

 Three Months Ended Twelve Months Ended
 12/31/2020 12/31/2019 12/31/2020 12/31/2019
Income before income taxes$130.9  $102.0  $624.1  $525.9 
Income Before Income Taxes Margin 20.4%  17.6%  23.9%  22.0%
Amortization 28.3   26.9   108.5   105.3 
Depreciation 7.5   5.9   26.3   23.4 
Interest 16.7   15.9   59.0   63.7 
Change in estimated acquisition earn-out payables (9.5)  5.5   (4.5)  (1.4)
EBITDAC 173.9   156.2   813.4   716.9 
EBITDAC Margin 27.1%  27.0%  31.1%  30.0%

(3) “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues.
(4) “EBITDAC,” a non-GAAP measure, is defined as income before interest, income taxes, depreciation, amortization and the change in estimated acquisition earn-out payables.
(5) “EBITDAC Margin,” a non-GAAP measure, is defined as EBITDAC divided by total revenues.

Brown & Brown, Inc.
Consolidated Statements of Income
(in millions, except per share data; unaudited)

 Three Months Ended Twelve Months Ended
 December 31, December 31,
 2020 2019 2020 2019
REVENUES               
Commissions and fees$640.0  $577.0  $2,606.1  $2,384.7 
Investment income 1.0   1.5   2.8   5.8 
Other income, net 1.1   0.5   4.5   1.7 
Total revenues 642.1   579.0   2,613.4   2,392.2 
EXPENSES               
Employee compensation and benefits 377.4   334.6   1,436.4   1,308.2 
Other operating expenses 91.9   93.9   366.0   377.1 
(Gain) on disposal (1.1)  (5.7)  (2.4)  (10.0)
Amortization 28.3   26.9   108.5   105.3 
Depreciation 7.5   5.9   26.3   23.4 
Interest 16.7   15.9   59.0   63.7 
Change in estimated acquisition earn-out payables (9.5)  5.5   (4.5)  (1.4)
Total expenses 511.2   477.0   1,989.3   1,866.3 
Income before income taxes 130.9   102.0   624.1   525.9 
Income taxes 33.6   25.5   143.6   127.4 
Net income$97.3  $76.5  $480.5  $398.5 
Net income per share:               
Basic$0.34  $0.27  $1.70  $1.42 
Diluted$0.34  $0.27  $1.69  $1.40 
Weighted average number of shares outstanding – in thousands:               
Basic 275,914   272,607   274,334   272,471 
Diluted 277,398   274,814   275,867   274,616 
Dividends declared per share$0.093  $0.085  $0.348  $0.325 
 

Brown & Brown, Inc.
Consolidated Balance Sheets
(in millions, except per share data, unaudited)

 December 31, December 31,
 2020 2019
ASSETS       
Current assets:       
Cash and cash equivalents$817.4  $542.2 
Restricted cash and investments 454.5   420.8 
Short-term investments 18.3   12.3 
Premiums, commissions and fees receivable 1,099.2   942.9 
Reinsurance recoverable 43.5   58.5 
Prepaid reinsurance premiums 377.6   366.0 
Other current assets 147.7   152.1 
Total current assets 2,958.2   2,494.8 
Fixed assets, net 201.1   148.6 
Operating lease assets 187.0   184.3 
Goodwill 4,395.9   3,746.1 
Amortizable intangible assets, net 1,049.7   916.8 
Investments 25.0   27.4 
Other assets 149.6   104.8 
Total assets$8,966.5  $7,622.8 
LIABILITIES AND SHAREHOLDERS’ EQUITY       
Current liabilities:       
Premiums payable to insurance companies$1,198.5  $1,014.3 
Losses and loss adjustment reserve 43.5   58.5 
Unearned premiums 377.6   366.0 
Premium deposits and credits due customers 102.5   113.8 
Accounts payable 190.5   100.0 
Accrued expenses and other liabilities 371.8   337.7 
Current portion of long-term debt 70.0   55.0 
Total current liabilities 2,354.4   2,045.3 
Long-term debt 2,025.9   1,500.3 
Operating lease liabilities 172.9   167.9 
Deferred income taxes, net 344.2   328.3 
Other liabilities 314.9   230.7 
Shareholders’ equity:       
Common stock, par value $0.10 per share; authorized 560,000 shares; issued 299,689 shares and outstanding 283,004 at 2020, issued 297,106 shares and outstanding 281,655 shares at 2019 – in thousands. 30.0   29.7 
Additional paid-in capital 794.9   716.0 
Treasury stock, at cost 16,685 shares at 2020, 15,451 at 2019, respectively – in thousands. (591.3)  (536.2)
Retained earnings 3,520.6   3,140.8 
Total shareholders’ equity 3,754.2   3,350.3 
Total liabilities and shareholders’ equity$8,966.5  $7,622.8 
 

Brown & Brown, Inc.
Consolidated Statements of Cash Flows
(in millions, unaudited)


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