Brown & Brown, Inc. announces fourth quarter 2024 results, including total revenues of $1.2 billion, an increase of 15.4%; Organic Revenue growth of 13.8%; diluted net income per share of $0.73; and Diluted Net Income Per Share - Adjusted of $0.86
Brown & Brown (NYSE:BRO) reported strong Q4 2024 financial results with total revenues of $1.2 billion, up 15.4% year-over-year. The company achieved 13.8% Organic Revenue growth in Q4 and 10.4% for full-year 2024.
Q4 diluted net income per share was $0.73, decreasing 22.3% YoY, while adjusted diluted EPS increased 24.6% to $0.86. The decrease in GAAP earnings was primarily due to a one-time gain from business disposals in Q4 2023.
For full-year 2024, revenues reached $4.8 billion, increasing 12.9%. Net income attributable to the company grew 14% to $1.0 billion, with diluted EPS of $3.46. EBITDAC - Adjusted increased 17% to $1.7 billion, with margin improving to 35.2% from 33.9% in 2023.
Brown & Brown (NYSE:BRO) ha riportato risultati finanziari solidi per il quarto trimestre del 2024, con ricavi totali di 1,2 miliardi di dollari, in aumento del 15,4% rispetto all'anno precedente. L'azienda ha ottenuto una crescita organica dei ricavi del 13,8% nel quarto trimestre e del 10,4% per l'intero anno 2024.
L'utile netto diluito per azione del quarto trimestre è stato di $0,73, con una diminuzione del 22,3% su base annua, mentre l'utile per azione diluito rettificato è aumentato del 24,6% a $0,86. La diminuzione degli utili secondo i principi contabili generalmente accettati (GAAP) è stata principalmente dovuta a un guadagno una tantum derivante da cessioni aziendali nel quarto trimestre del 2023.
Per l'intero anno 2024, i ricavi hanno raggiunto 4,8 miliardi di dollari, con un incremento del 12,9%. L'utile netto attribuibile all'azienda è cresciuto del 14% a 1,0 miliardi di dollari, con un utile per azione diluito di $3,46. EBITDAC - Rettificato è aumentato del 17% a 1,7 miliardi di dollari, con un margine che è migliorato al 35,2% rispetto al 33,9% del 2023.
Brown & Brown (NYSE:BRO) reportó resultados financieros sólidos para el cuarto trimestre de 2024, con ingresos totales de 1.2 mil millones de dólares, un aumento del 15.4% interanual. La compañía logró un crecimiento orgánico de ingresos del 13.8% en el cuarto trimestre y del 10.4% para todo el año 2024.
El ingreso neto diluido por acción del cuarto trimestre fue de $0.73, disminuyendo un 22.3% en comparación con el año anterior, mientras que el EPS diluido ajustado aumentó un 24.6% a $0.86. La disminución en las ganancias GAAP se debió principalmente a una ganancia única por disposiciones de negocios en el cuarto trimestre de 2023.
Para todo el año 2024, los ingresos alcanzaron 4.8 mil millones de dólares, aumentando un 12.9%. El ingreso neto atribuible a la compañía creció un 14% a 1.0 mil millones de dólares, con un EPS diluido de $3.46. EBITDAC - Ajustado aumentó un 17% a 1.7 mil millones de dólares, con un margen mejorando al 35.2% desde el 33.9% en 2023.
브라운 & 브라운 (NYSE:BRO)은 2024년 4분기 강력한 재무 실적을 보고하며 총 수익이 12억 달러로 전년 대비 15.4% 증가했습니다. 회사는 4분기에 13.8%의 유기적 수익 성장률을 달성했으며 2024년 전체적으로는 10.4% 성장했습니다.
4분기 희석 주당순이익은 $0.73으로 전년 대비 22.3% 감소했지만, 조정 희석 EPS는 24.6% 증가하여 $0.86를 기록했습니다. GAAP 이익의 감소는 주로 2023년 4분기 사업 처분에서 발생한 일회성 이익 때문입니다.
2024년 전체적으로 수익은 48억 달러에 달하며 12.9% 증가했습니다. 회사에 귀속되는 순이익은 14% 증가하여 10억 달러에 이르며, 희석 EPS는 $3.46입니다. EBITDAC - 조정 후 17% 증가하여 17억 달러에 이르며, 마진은 2023년 33.9%에서 35.2%로 개선되었습니다.
Brown & Brown (NYSE:BRO) a annoncé des résultats financiers solides pour le quatrième trimestre de 2024, avec des revenus totaux de 1,2 milliard de dollars, en hausse de 15,4 % d'une année sur l'autre. L'entreprise a atteint une croissance organique des revenus de 13,8 % au quatrième trimestre et de 10,4 % pour l'année 2024 dans son ensemble.
Le bénéfice net dilué par action du quatrième trimestre était de 0,73 $, en baisse de 22,3 % d'une année sur l'autre, tandis que le BPA dilué ajusté a augmenté de 24,6 % pour atteindre 0,86 $. La diminution des bénéfices conformes aux PCGR était principalement due à un gain unique tiré de cessions d'activités au quatrième trimestre 2023.
Pour l'année 2024 dans son ensemble, les revenus ont atteint 4,8 milliards de dollars, en hausse de 12,9 %. Le bénéfice net attribuable à l'entreprise a augmenté de 14 % pour atteindre 1,0 milliard de dollars, avec un BPA dilué de 3,46 $. EBITDAC - Ajusté a augmenté de 17 % pour atteindre 1,7 milliard de dollars, avec une marge améliorée à 35,2 %, contre 33,9 % en 2023.
Brown & Brown (NYSE:BRO) hat für das vierte Quartal 2024 starke finanzielle Ergebnisse gemeldet, mit Gesamterlösen von 1,2 Milliarden Dollar, was einem Anstieg von 15,4% im Vergleich zum Vorjahr entspricht. Das Unternehmen erzielte ein organisches Umsatzwachstum von 13,8% im vierten Quartal und 10,4% für das gesamte Jahr 2024.
Der verwässerte Nettogewinn je Aktie im vierten Quartal betrug 0,73 $, was einer Verringerung von 22,3% im Vergleich zum Vorjahr entspricht, während der bereinigte verwässerte EPS um 24,6% auf 0,86 $ gestiegen ist. Der Rückgang des GAAP-Gewinns war hauptsächlich auf einen einmaligen Gewinn aus Unternehmensverkäufen im vierten Quartal 2023 zurückzuführen.
Für das gesamte Jahr 2024 erreichten die Erlöse 4,8 Milliarden Dollar, was einem Anstieg von 12,9% entspricht. Der dem Unternehmen zurechenbare Nettogewinn wuchs um 14% auf 1,0 Milliarden Dollar, mit einem verwässerten EPS von 3,46 $. EBITDAC - Bereinigt stieg um 17% auf 1,7 Milliarden Dollar, wobei sich die Marge von 33,9% im Jahr 2023 auf 35,2% verbesserte.
- Q4 revenue growth of 15.4% YoY to $1.2 billion
- Strong Q4 Organic Revenue growth of 13.8%
- Full-year revenue increase of 12.9% to $4.8 billion
- Adjusted EBITDAC margin improvement to 35.2% from 33.9%
- Q4 Adjusted EPS growth of 24.6% to $0.86
- Q4 GAAP net income decreased 21.9% YoY
- Q4 GAAP diluted EPS declined 22.3% to $0.73
- Q4 Income Before Taxes Margin decreased to 23.2% from 34.7%
Insights
Brown & Brown delivered exceptional Q4 2024 results that demonstrate strong execution across all key metrics. The standout
The expansion of adjusted EBITDAC margin to
The balance sheet remains solid with
Most encouraging is the sustained momentum in organic growth, reaching
DAYTONA BEACH, Fla., Jan. 27, 2025 (GLOBE NEWSWIRE) -- Brown & Brown, Inc. (NYSE:BRO) (the "Company") announced its unaudited financial results for the fourth quarter and full year of 2024.
Revenues for the fourth quarter of 2024 under U.S. generally accepted accounting principles ("GAAP") were
Revenues for the twelve months ended December 31, 2024 under GAAP were
J. Powell Brown, president and chief executive officer of the Company, noted, “The fourth quarter was outstanding. We are extremely pleased with our
| Reconciliation of Commissions and Fees | ||||||||||||||||
| to Organic Revenue | ||||||||||||||||
| (in millions, unaudited) | ||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Commissions and fees | $ | 1,161 | $ | 1,006 | $ | 4,705 | $ | 4,199 | ||||||||
| Profit-sharing contingent commissions | (57 | ) | (42 | ) | (166 | ) | (130 | ) | ||||||||
| Core commissions and fees | $ | 1,104 | $ | 964 | $ | 4,539 | $ | 4,069 | ||||||||
| Acquisitions | (26 | ) | (146 | ) | ||||||||||||
| Dispositions | (20 | ) | (101 | ) | ||||||||||||
| Foreign Currency Translation | 3 | 10 | ||||||||||||||
| Organic Revenue | $ | 1,078 | $ | 947 | $ | 4,393 | $ | 3,978 | ||||||||
| Organic Revenue growth | $ | 131 | $ | 415 | ||||||||||||
| Organic Revenue growth % | 13.8 | % | 10.4 | % | ||||||||||||
See information regarding non-GAAP measures presented later in this press release.
| Reconciliation of Diluted Net Income Per Share to | ||||||||||||||||||||||||||||||||
| Diluted Net Income Per Share - Adjusted | ||||||||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||||||||
| Three Months Ended December 31, | Change | Twelve Months Ended December 31, | Change | |||||||||||||||||||||||||||||
| 2024 | 2023 | $ | % | 2024 | 2023 | $ | % | |||||||||||||||||||||||||
| Diluted net income per share | $ | 0.73 | $ | 0.94 | $ | (0.21 | ) | (22.3 | %) | $ | 3.46 | $ | 3.05 | $ | 0.41 | 13.4 | % | |||||||||||||||
| Change in estimated acquisition earn-out payables | 0.02 | (0.02 | ) | 0.04 | — | 0.06 | (0.06 | ) | ||||||||||||||||||||||||
| (Gain)/loss on disposal (1) | (0.02 | ) | (0.35 | ) | 0.33 | (0.09 | ) | (0.37 | ) | 0.28 | ||||||||||||||||||||||
| Acquisition/Integration Costs | — | 0.01 | (0.01 | ) | — | 0.04 | (0.04 | ) | ||||||||||||||||||||||||
| Amortization | 0.13 | 0.11 | 0.02 | 0.47 | 0.44 | 0.03 | ||||||||||||||||||||||||||
| 1Q23 Nonrecurring Cost | — | — | — | — | 0.03 | (0.03 | ) | |||||||||||||||||||||||||
| Diluted Net Income Per Share - Adjusted | $ | 0.86 | $ | 0.69 | $ | 0.17 | 24.6 | % | $ | 3.84 | $ | 3.25 | $ | 0.59 | 18.2 | % | ||||||||||||||||
(1) Includes the gain on disposal of
See information regarding non-GAAP measures presented later in this press release.
| Reconciliation of Income Before Income Taxes to EBITDAC and | ||||||||||||||||
| EBITDAC - Adjusted and Income Before Income Taxes Margin(1) to | ||||||||||||||||
| EBITDAC Margin and EBITDAC Margin - Adjusted | ||||||||||||||||
| (in millions, unaudited) | ||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Total revenues | $ | 1,184 | $ | 1,026 | $ | 4,805 | $ | 4,257 | ||||||||
| Income before income taxes | $ | 275 | $ | 356 | $ | 1,303 | $ | 1,146 | ||||||||
| Income Before Income Taxes Margin (1) | 23.2 | % | 34.7 | % | 27.1 | % | 26.9 | % | ||||||||
| Amortization | 48 | 43 | 178 | 166 | ||||||||||||
| Depreciation | 11 | 10 | 44 | 40 | ||||||||||||
| Interest | 46 | 47 | 193 | 190 | ||||||||||||
| Change in estimated acquisition earn-out payables | 11 | (9 | ) | 2 | 21 | |||||||||||
| EBITDAC | $ | 391 | $ | 447 | $ | 1,720 | $ | 1,563 | ||||||||
| EBITDAC Margin | 33.0 | % | 43.6 | % | 35.8 | % | 36.7 | % | ||||||||
| (Gain)/loss on disposal (2) | (1 | ) | (134 | ) | (31 | ) | (143 | ) | ||||||||
| Acquisition/Integration Costs | — | 5 | — | 13 | ||||||||||||
| 1Q23 Nonrecurring Cost | — | 11 | ||||||||||||||
| EBITDAC - Adjusted | $ | 390 | $ | 318 | $ | 1,689 | $ | 1,444 | ||||||||
| EBITDAC Margin - Adjusted | 32.9 | % | 31.0 | % | 35.2 | % | 33.9 | % | ||||||||
(1) “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues.
(2) Includes the gain on disposal of
See information regarding non-GAAP measures presented later in this press release.
| Brown & Brown, Inc. | ||||||||||||||||
| Consolidated Statements of Income | ||||||||||||||||
| (in millions, except per share data; unaudited) | ||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| REVENUES | ||||||||||||||||
| Commissions and fees | $ | 1,161 | $ | 1,006 | $ | 4,705 | $ | 4,199 | ||||||||
| Investment income | 22 | 18 | 93 | 52 | ||||||||||||
| Other income, net | 1 | 2 | 7 | 6 | ||||||||||||
| Total revenues | 1,184 | 1,026 | 4,805 | 4,257 | ||||||||||||
| EXPENSES | ||||||||||||||||
| Employee compensation and benefits | 582 | 554 | 2,406 | 2,187 | ||||||||||||
| Other operating expenses | 212 | 159 | 710 | 650 | ||||||||||||
| Gain on disposal | (1 | ) | (134 | ) | (31 | ) | (143 | ) | ||||||||
| Amortization | 48 | 43 | 178 | 166 | ||||||||||||
| Depreciation | 11 | 10 | 44 | 40 | ||||||||||||
| Interest | 46 | 47 | 193 | 190 | ||||||||||||
| Change in estimated acquisition earn-out payables | 11 | (9 | ) | 2 | 21 | |||||||||||
| Total expenses | 909 | 670 | 3,502 | 3,111 | ||||||||||||
| Income before income taxes | 275 | 356 | 1,303 | 1,146 | ||||||||||||
| Income taxes | 63 | 87 | 301 | 275 | ||||||||||||
| Net income before non-controlling interests | 212 | 269 | 1,002 | 871 | ||||||||||||
| Less: Net income attributable to non-controlling interests | 2 | — | 9 | — | ||||||||||||
| Net income attributable to the Company | $ | 210 | $ | 269 | $ | 993 | $ | 871 | ||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | 0.73 | $ | 0.94 | $ | 3.48 | $ | 3.07 | ||||||||
| Diluted | $ | 0.73 | $ | 0.94 | $ | 3.46 | $ | 3.05 | ||||||||
| Weighted average number of shares outstanding: | ||||||||||||||||
| Basic | 283 | 280 | 282 | 280 | ||||||||||||
| Diluted | 284 | 282 | 284 | 281 | ||||||||||||
| Brown & Brown, Inc. | ||||||||
| Consolidated Balance Sheets | ||||||||
| (in millions, except per share data, unaudited) | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 675 | $ | 700 | ||||
| Fiduciary cash | 1,827 | 1,603 | ||||||
| Short-term investments | 10 | 11 | ||||||
| Commission, fees, and other receivables | 895 | 790 | ||||||
| Fiduciary receivables | 1,116 | 1,125 | ||||||
| Reinsurance recoverable | 1,527 | 125 | ||||||
| Prepaid reinsurance premiums | 520 | 462 | ||||||
| Other current assets | 354 | 314 | ||||||
| Total current assets | 6,924 | 5,130 | ||||||
| Fixed assets, net | 319 | 270 | ||||||
| Operating lease assets | 200 | 199 | ||||||
| Goodwill | 7,970 | 7,341 | ||||||
| Amortizable intangible assets, net | 1,814 | 1,621 | ||||||
| Investments | 19 | 21 | ||||||
| Other assets | 366 | 301 | ||||||
| Total assets | $ | 17,612 | $ | 14,883 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Fiduciary liabilities | $ | 2,943 | $ | 2,727 | ||||
| Losses and loss adjustment reserve | 1,543 | 131 | ||||||
| Unearned premiums | 577 | 462 | ||||||
| Accounts payable | 373 | 459 | ||||||
| Accrued expenses and other liabilities | 653 | 608 | ||||||
| Current portion of long-term debt | 225 | 569 | ||||||
| Total current liabilities | 6,314 | 4,956 | ||||||
| Long-term debt less unamortized discount and debt issuance costs | 3,599 | 3,227 | ||||||
| Operating lease liabilities | 189 | 179 | ||||||
| Deferred income taxes, net | 711 | 616 | ||||||
| Other liabilities | 362 | 326 | ||||||
| Equity: | ||||||||
| Common stock, par value | 31 | 30 | ||||||
| Additional paid-in capital | 1,118 | 1,027 | ||||||
| Treasury stock, at cost 20 shares at 2024 and 2023 | (748 | ) | (748 | ) | ||||
| Accumulated other comprehensive loss | (109 | ) | (19 | ) | ||||
| Non-controlling interests | 17 | - | ||||||
| Retained earnings | 6,128 | 5,289 | ||||||
| Total equity | 6,437 | 5,579 | ||||||
| Total liabilities and equity | $ | 17,612 | $ | 14,883 | ||||
| Brown & Brown, Inc. | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (in millions, unaudited) | ||||||||
| Twelve Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income before non-controlling interests | $ | 1,002 | $ | 871 | ||||
| Adjustments to reconcile net income before non-controlling interests to net cash provided by operating activities: | ||||||||
| Amortization | 178 | 166 | ||||||
| Depreciation | 44 | 40 | ||||||
| Non-cash stock-based compensation | 101 | 89 | ||||||
| Change in estimated acquisition earn-out payables | 2 | 22 | ||||||
| Deferred income taxes | 13 | 12 | ||||||
| Net gain on sales/disposals of investments, businesses, fixed assets and customer accounts | (29 | ) | (140 | ) | ||||
| Payments on acquisition earn-outs in excess of original estimated payables | (37 | ) | (29 | ) | ||||
| Other | 5 | 5 | ||||||
| Changes in operating assets and liabilities, net of effect from acquisitions and divestitures: | ||||||||
| Commissions, fees and other receivables (increase)/decrease | (94 | ) | (106 | ) | ||||
| Reinsurance recoverable (increase)/decrease | (1,402 | ) | 706 | |||||
| Prepaid reinsurance premiums (increase)/decrease | (58 | ) | (68 | ) | ||||
| Other assets (increase)/decrease | (98 | ) | (118 | ) | ||||
| Losses and loss adjustment reserve increase/(decrease) | 1,411 | (710 | ) | |||||
| Unearned premiums increase/(decrease) | 115 | 50 | ||||||
| Accounts payable increase/(decrease) | (47 | ) | 260 | |||||
| Accrued expenses and other liabilities increase/(decrease) | 35 | 43 | ||||||
| Other liabilities increase/(decrease) | 33 | (83 | ) | |||||
| Net cash provided by operating activities | 1,174 | 1,010 | ||||||
| Cash flows from investing activities: | ||||||||
| Additions to fixed assets | (82 | ) | (69 | ) | ||||
| Payments for businesses acquired, net of cash acquired | (890 | ) | (631 | ) | ||||
| Proceeds from sales of businesses, fixed assets and customer accounts | 70 | 107 | ||||||
| Purchases of investments | (7 | ) | (7 | ) | ||||
| Proceeds from sales of investments | 11 | 13 | ||||||
| Net cash used in investing activities | (898 | ) | (587 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Fiduciary receivables and liabilities, net | 191 | 189 | ||||||
| Payments on acquisition earn-outs | (117 | ) | (90 | ) | ||||
| Proceeds from long-term debt | 599 | — | ||||||
| Payments on long-term debt | (719 | ) | (251 | ) | ||||
| Deferred debt issuance costs | (5 | ) | — | |||||
| Borrowings on revolving credit facility | 500 | 420 | ||||||
| Payments on revolving credit facility | (350 | ) | (320 | ) | ||||
| Issuances of common stock for employee stock benefit plans | 44 | 40 | ||||||
| Repurchase shares to fund tax withholdings for non-cash stock-based compensation | (55 | ) | (40 | ) | ||||
| Cash dividends paid | (154 | ) | (135 | ) | ||||
| Other financing activities | 2 | — | ||||||
| Net cash used in financing activities | (64 | ) | (187 | ) | ||||
| Effect of foreign exchange rate changes in cash and cash equivalents inclusive of fiduciary cash | (13 | ) | 34 | |||||
| Net increase in cash and cash equivalents inclusive of fiduciary cash | 199 | 270 | ||||||
| Cash and cash equivalents inclusive of fiduciary cash at beginning of period | 2,303 | 2,033 | ||||||
| Cash and cash equivalents inclusive of fiduciary cash at end of period | $ | 2,502 | $ | 2,303 | ||||
Conference call, webcast and slide presentation
A conference call to discuss the results of the fourth quarter and full year of 2024 will be held on Tuesday, January 28, 2025, at 8:00 AM (EST). The Company may refer to a slide presentation during its conference call. You can access the webcast and the slides from the "Investor Relations" section of the Company’s website at bbinsurance.com.
About Brown & Brown
Brown & Brown, Inc. (NYSE: BRO) is a leading insurance brokerage firm, delivering risk management solutions to individuals and businesses since 1939. With over 17,000 teammates and 500+ locations worldwide, we are committed to providing innovative strategies to help protect what our customers value most. For more information or to find an office near you, please visit bbinsurance.com.
Forward-looking statements
This press release may contain certain statements relating to future results which are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created by those laws. You can identify these statements by forward-looking words such as “may,” “will,” “should,” “expect,” “anticipate,” “believe,” “intend,” “estimate,” “plan” and “continue” or similar words. We have based these statements on our current expectations about potential future events. Although we believe the expectations expressed in the forward-looking statements included in this press release are based upon reasonable assumptions within the bounds of our knowledge of our business, a number of factors could cause actual results to differ materially from those expressed in any forward-looking statements, whether oral or written, made by us or on our behalf. Many of these factors have previously been identified in filings or statements made by us or on our behalf. Important factors which could cause our actual results to differ, possibly materially from the forward-looking statements in this press release include but are not limited to the following items: the Company's determination as it finalizes its financial results for the fourth quarter and full year 2024 that its financial results differ from the current preliminary unaudited numbers set forth herein; the inability to hire, retain and develop qualified employees, as well as the loss of any of our executive officers or other key employees; a cybersecurity attack or any other interruption in information technology and/or data security that may impact our operations or the operations of third parties that support us; acquisition-related risks that could negatively affect the success of our growth strategy, including the possibility that we may not be able to successfully identify suitable acquisition candidates, complete acquisitions, successfully integrate acquired businesses into our operations and expand into new markets; risks related to our international operations, which may result in additional risks or require more management time and expense than our domestic operations to achieve or maintain profitability; the requirement for additional resources and time to adequately respond to dynamics resulting from rapid technological change; the loss of or significant change to any of our insurance company relationships, which could result in loss of capacity to write business, additional expense, loss of market share or material decrease in our commissions; the effect of natural disasters on our profit-sharing contingent commissions, insurer capacity or claims expenses within our capitalized captive insurance facilities; adverse economic conditions, political conditions, outbreaks of war, disasters, or regulatory changes in states or countries where we have a concentration of our business; the inability to maintain our culture or a significant change in management, management philosophy or our business strategy; fluctuations in our commission revenue as a result of factors outside of our control; the effects of sustained inflation or higher interest rates; claims expense resulting from the limited underwriting risk associated with our participation in capitalized captive insurance facilities; risks associated with our automobile and recreational vehicle dealer services (“F&I”) businesses; changes in, or the termination of, certain programs administered by the U.S. federal government from which we derive revenues; the limitations of our system of disclosure and internal controls and procedures in preventing errors or fraud, or in informing management of all material information in a timely manner; the significant control certain shareholders have over the Company; changes in data privacy and protection laws and regulations or any failure to comply with such laws and regulations; improper disclosure of confidential information; our ability to comply with non-U.S. laws, regulations and policies; the potential adverse effect of certain actual or potential claims, regulatory actions or proceedings on our businesses, results of operations, financial condition or liquidity; uncertainty in our business practices and compensation arrangements with insurance carriers due to potential changes in regulations; regulatory changes that could reduce our profitability or growth by increasing compliance costs, technology compliance, restricting the products or services we may sell, the markets we may enter, the methods by which we may sell our products and services, or the prices we may charge for our services and the form of compensation we may accept from our customers, carriers and third-parties; increasing scrutiny and changing laws and expectations from regulators, investors and customers with respect to our environmental, social and governance practices and disclosure; a decrease in demand for liability insurance as a result of tort reform legislation; our failure to comply with any covenants contained in our debt agreements; the possibility that covenants in our debt agreements could prevent us from engaging in certain potentially beneficial activities; changes in the U.S.-based credit markets that might adversely affect our business, results of operations and financial condition; changes in current U.S. or global economic conditions, including an extended slowdown in the markets in which we operate; disintermediation within the insurance industry, including increased competition from insurance companies, technology companies and the financial services industry, as well as the shift away from traditional insurance markets; conditions that result in reduced insurer capacity; quarterly and annual variations in our commissions that result from the timing of policy renewals and the net effect of new and lost business production; intangible asset risk, including the possibility that our goodwill may become impaired in the future; future pandemics, epidemics or outbreaks of infectious diseases, and the resulting governmental and societal responses; other risks and uncertainties as may be detailed from time to time in our public announcements and Securities and Exchange Commission (“SEC”) filings; and other factors that the Company may not have currently identified or quantified. Assumptions as to any of the foregoing, and all statements, are not based upon historical fact, but rather reflect our current expectations concerning future results and events. Forward-looking statements that we make or that are made by others on our behalf are based upon a knowledge of our business and the environment in which we operate, but because of the factors listed above, among others, actual results may differ from those in the forward-looking statements. Consequently, these cautionary statements qualify all of the forward-looking statements we make herein. We cannot assure you that the results or developments anticipated by us will be realized, or even if substantially realized, that those results or developments will result in the expected consequences for us or affect us, our business or our operations in the way we expect. We caution readers not to place undue reliance on these forward-looking statements. All forward-looking statements made herein are made only as of the date of this press 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.
Non-GAAP supplemental financial information
This press release contains references to "non-GAAP financial measures" as defined in SEC Regulation G, consisting of Organic Revenue, EBITDAC, EBITDAC Margin, EBITDAC - Adjusted, EBITDAC Margin - Adjusted and Diluted Net Income Per Share - Adjusted. We present these measures because we believe such information is of interest to the investment community and because we believe it provides additional meaningful methods to evaluate the Company’s operating performance from period to period on a basis that may not be otherwise apparent on a GAAP basis due to the impact of certain items that have a high degree of variability, that we believe are not indicative of ongoing performance and that are not easily comparable from period to period. This non-GAAP financial information should be considered in addition to, not in lieu of, the Company’s consolidated income statements and balance sheets as of the relevant date. Consistent with Regulation G, a description of such information is provided below and a reconciliation of such items to GAAP information can be found within this press release as well as in our periodic filings with the SEC.
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 three 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. In addition, 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, the impact of amortization of intangible assets and certain other non-recurring or infrequently occurring items. We also view EBITDAC, EBITDAC - Adjusted, EBITDAC Margin and EBITDAC Margin - Adjusted as important indicators when assessing and evaluating our performance, as they present more comparable measurements of our operating margins in a meaningful and consistent manner. As disclosed in our most recent proxy statement, we use Organic Revenue growth, Diluted Net Income Per Share - Adjusted and EBITDAC Margin - Adjusted as key performance metrics for our short-term and long-term incentive compensation plans for executive officers and other key employees.
Beginning January 1, 2024, we no longer exclude Foreign Currency Translation from the calculation of EBITDAC - Adjusted, EBITDAC Margin - Adjusted and Diluted Net Income Per Share - Adjusted. Prior periods are presented accordingly on the same basis so that the calculations of EBITDAC - Adjusted, EBITDAC Margin - Adjusted and Diluted Net Income Per Share - Adjusted are comparable for both periods. We no longer exclude Foreign Currency Translation from the calculation of these earnings measures because fluctuations in Foreign Currency Translation affect both our revenues and expenses, largely offsetting each other. Therefore, excluding Foreign Currency Translation from these earnings measures provides no meaningful incremental value in evaluating our financial performance.
Beginning January 1, 2024, amortization of intangible assets is excluded from the calculation of Diluted Net Income Per Share - Adjusted. Prior periods are presented accordingly on the same basis so that the calculation of Diluted Net Income Per Share - Adjusted is comparable for both periods. We exclude the impact of amortization of intangible assets from the calculation of Diluted Net Income Per Share - Adjusted because amortization of intangible assets is a non-cash expense that is not indicative of the performance of our business and provides no meaningful incremental value in evaluating our financial performance.
Non-GAAP Revenue Measures
- Organic Revenue is our core commissions and fees less: (i) the core commissions and fees earned for the first 12 months by newly acquired operations; (ii) divested business (core commissions and fees generated from offices, books of business or niches sold or terminated during the comparable period); and (iii) Foreign Currency Translation (as defined below). The term “core commissions and fees” excludes profit-sharing contingent commissions and therefore represents the revenues earned directly from specific insurance policies sold and specific fee-based services rendered. Organic Revenue can be expressed as a dollar amount or a percentage rate when describing Organic Revenue growth.
Non-GAAP Earnings Measures
- EBITDAC is defined as income before interest, income taxes, depreciation, amortization and the change in estimated acquisition earn-out payables.
- EBITDAC Margin is defined as EBITDAC divided by total revenues.
- EBITDAC - Adjusted is defined as EBITDAC, excluding (i) (gain)/loss on disposal, (ii) for 2023, Acquisition/Integration Costs (as defined below) and (iii) for 2023, the 1Q23 Nonrecurring Cost (as defined below).
- EBITDAC Margin - Adjusted is defined as EBITDAC - Adjusted divided by total revenues.
- Diluted Net Income Per Share - Adjusted is defined as diluted net income per share, excluding the after-tax impact of (i) the change in estimated acquisition earn-out payables, (ii) (gain)/loss on disposal, (iii) for 2023, Acquisition/Integration Costs (as defined below), (iv) for 2023, the 1Q23 Nonrecurring Cost (as defined below) and (v) amortization.
Definitions Related to Certain Components of Non-GAAP Measures
- “Acquisition/Integration Costs” means the acquisition and integration costs (e.g., costs associated with regulatory filings, legal/accounting services, due diligence and the costs of integrating our information technology systems) arising out of our acquisitions of GRP (Jersey) Holdco Limited and its business, Orchid Underwriters Agency and CrossCover Insurance Services, and BdB Limited companies, which are not considered to be normal, recurring or part of the ongoing operations.
- “Foreign Currency Translation” means the period-over-period impact of foreign currency translation, which is calculated by applying current-year foreign exchange rates to the various functional currencies in our business to our reporting currency of US dollars for the same period in the prior year.
- “1Q23 Nonrecurring Cost” means approximately
$11.0 million expensed and substantially paid in the first quarter of 2023 to resolve a business matter, which is not considered to be normal, recurring or part of the ongoing operations. - “(Gain)/loss on disposal,” a caption on our consolidated statements of income which reflects net proceeds received as compared to net book value related to sales of books of business and other divestiture transactions, such as the disposal of a business through sale or closure.
Our industry peers may provide similar supplemental non-GAAP information with respect to one or more of these measures, although they may not use the same or comparable terminology and may not make identical adjustments and, therefore comparability may be limited. This supplemental non-GAAP financial information should be considered in addition to, and not in lieu of, the Company's condensed consolidated financial statements.
For more information:
R. Andrew Watts
Chief Financial Officer
(386) 239-5770
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