Brown & Brown, Inc. announces third quarter 2024 results, including total revenues of $1.2 billion, an increase of 11.0%; Organic Revenue growth of 9.5%; diluted net income per share of $0.81; and Diluted Net Income Per Share - Adjusted of $0.91
Brown & Brown (NYSE:BRO) reported strong Q3 2024 financial results with total revenues of $1.2 billion, up 11.0% year-over-year. The company achieved organic revenue growth of 9.5% and increased diluted net income per share by 30.6% to $0.81. Key highlights include:
- Income before taxes increased 31.0% to $317 million
- EBITDAC-Adjusted rose 11.9% to $414 million
- Net income grew 33.0% to $234 million
- Diluted Net Income Per Share-Adjusted increased 12.3% to $0.91
Brown & Brown (NYSE:BRO) ha registrato risultati finanziari solidi per il terzo trimestre del 2024, con entrate totali di 1,2 miliardi di dollari, in aumento dell'11,0% rispetto all'anno precedente. L'azienda ha raggiunto un crescita dei ricavi organici del 9,5% e ha aumentato l'utile netto diluito per azione del 30,6% a $0,81. I punti salienti includono:
- L'utile ante imposte è aumentato del 31,0% a 317 milioni di dollari
- L'EBITDAC aggiustato è salito dell'11,9% a 414 milioni di dollari
- L'utile netto è cresciuto del 33,0% a 234 milioni di dollari
- L'utile netto diluito per azione aggiustato è aumentato del 12,3% a $0,91
Brown & Brown (NYSE:BRO) reportó resultados financieros sólidos para el tercer trimestre de 2024, con ingresos totales de 1.2 mil millones de dólares, un aumento del 11.0% interanual. La compañía logró un crecimiento de ingresos orgánicos del 9.5% y aumentó el ingreso neto diluido por acción en un 30.6% a $0.81. Los puntos destacados incluyen:
- El ingreso antes de impuestos aumentó un 31.0% a 317 millones de dólares
- El EBITDAC ajustado subió un 11.9% a 414 millones de dólares
- El ingreso neto creció un 33.0% a 234 millones de dólares
- El ingreso neto diluido por acción ajustado aumentó un 12.3% a $0.91
Brown & Brown (NYSE:BRO)는 2024년 3분기 강력한 재무 실적을 보고했으며, 총 수익이 12억 달러로, 지난해 대비 11.0% 증가했습니다. 회사는 유기적 수익 성장률이 9.5%에 달하며, 희석된 주당 순이익이 30.6% 증가하여 $0.81에 도달했습니다. 주요 하이라이트는 다음과 같습니다:
- 세전 수익이 31.0% 증가하여 3억 1,700만 달러에 이르렀습니다.
- 조정된 EBITDAC가 11.9% 증가하여 4억 1,400만 달러에 달했습니다.
- 순이익이 33.0% 증가하여 2억 3,400만 달러에 도달했습니다.
- 조정된 희석 주당 순이익이 12.3% 증가하여 $0.91이 되었습니다.
Brown & Brown (NYSE:BRO) a annoncé des résultats financiers solides pour le troisième trimestre 2024, avec des revenus totaux de 1,2 milliard de dollars, en hausse de 11,0 % par rapport à l'année précédente. L'entreprise a réalisé une croissance organique des revenus de 9,5 % et a augmenté le bénéfice net dilué par action de 30,6 % à 0,81 $. Les points forts comprennent :
- Le revenu avant impôts a augmenté de 31,0 % pour atteindre 317 millions de dollars
- L'EBITDAC ajusté a augmenté de 11,9 % pour atteindre 414 millions de dollars
- Le bénéfice net a augmenté de 33,0 % pour atteindre 234 millions de dollars
- Le bénéfice net dilué par action ajusté a augmenté de 12,3 % pour atteindre 0,91 $
Brown & Brown (NYSE:BRO) hat starke Finanzergebnisse für das dritte Quartal 2024 gemeldet, mit Gesamteinnahmen von 1,2 Milliarden Dollar, was einem Anstieg von 11,0% im Jahresvergleich entspricht. Das Unternehmen erzielte ein organisches Umsatzwachstum von 9,5% und erhöhte den verwässerten Gewinn pro Aktie um 30,6% auf 0,81 $. Zu den wichtigsten Highlights gehören:
- Das Einkommen vor Steuern stieg um 31,0% auf 317 Millionen Dollar
- EBITDAC-adjustiert stieg um 11,9% auf 414 Millionen Dollar
- Der Nettogewinn wuchs um 33,0% auf 234 Millionen Dollar
- Der verwässerte Nettogewinn pro Aktie-adjustiert erhöhte sich um 12,3% auf 0,91 $
- Revenue growth of 11.0% to $1.2 billion in Q3 2024
- Strong organic revenue growth of 9.5%
- Net income increased 33.0% to $234 million
- Income before taxes margin improved to 26.7% from 22.7%
- EBITDAC margin expanded to 34.9% from 34.6%
- None.
Insights
Brown & Brown delivered a robust Q3 2024 performance with significant growth metrics across the board. The
The improvement in Income Before Taxes Margin to
DAYTONA BEACH, Fla., Oct. 28, 2024 (GLOBE NEWSWIRE) -- Brown & Brown, Inc. (NYSE:BRO) (the "Company") announced its unaudited financial results for the third quarter of 2024.
Revenues for the third quarter of 2024 under U.S. generally accepted accounting principles ("GAAP") were
Revenues for the nine months ended September 30, 2024 under GAAP were
J. Powell Brown, President and Chief Executive Officer of the Company, noted, “Our teammates delivered another outstanding quarter, and we have great momentum as we leverage our collective capabilities.”
| Reconciliation of Commissions and Fees to Organic Revenue (in millions, unaudited) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Commissions and fees | $ | 1,155 | $ | 1,049 | $ | 3,545 | $ | 3,193 | ||||||||
| Profit-sharing contingent commissions | (27 | ) | (27 | ) | (110 | ) | (88 | ) | ||||||||
| Core commissions and fees | $ | 1,128 | $ | 1,022 | $ | 3,435 | $ | 3,105 | ||||||||
| Acquisitions | (35 | ) | (120 | ) | ||||||||||||
| Dispositions | (26 | ) | (81 | ) | ||||||||||||
| Foreign Currency Translation | 2 | 7 | ||||||||||||||
| Organic Revenue | $ | 1,093 | $ | 998 | $ | 3,315 | $ | 3,031 | ||||||||
| Organic Revenue growth | $ | 95 | $ | 284 | ||||||||||||
| Organic Revenue growth % | 9.5 | % | 9.4 | % | ||||||||||||
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 September 30, | Change | Nine Months Ended September 30, | Change | |||||||||||||||||||||||||||||
| 2024 | 2023 | $ | % | 2024 | 2023 | $ | % | |||||||||||||||||||||||||
| Diluted net income per share | $ | 0.81 | $ | 0.62 | $ | 0.19 | 30.6 | % | $ | 2.73 | $ | 2.11 | $ | 0.62 | 29.4 | % | ||||||||||||||||
| Change in estimated acquisition earn-out payables | (0.02 | ) | 0.09 | (0.11 | ) | (0.02 | ) | 0.09 | (0.11 | ) | ||||||||||||||||||||||
| (Gain)/loss on disposal | — | (0.01 | ) | 0.01 | (0.08 | ) | (0.02 | ) | (0.06 | ) | ||||||||||||||||||||||
| Acquisition/Integration Costs | — | — | — | — | 0.02 | (0.02 | ) | |||||||||||||||||||||||||
| Amortization | 0.12 | 0.11 | 0.01 | 0.35 | 0.33 | 0.02 | ||||||||||||||||||||||||||
| 1Q23 Nonrecurring Cost | — | — | — | — | 0.03 | (0.03 | ) | |||||||||||||||||||||||||
| Diluted Net Income Per Share - Adjusted | $ | 0.91 | $ | 0.81 | $ | 0.10 | 12.3 | % | $ | 2.98 | $ | 2.56 | $ | 0.42 | 16.4 | % | ||||||||||||||||
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 September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Total revenues | $ | 1,186 | $ | 1,068 | $ | 3,622 | $ | 3,231 | ||||||||
| Income before income taxes | $ | 317 | $ | 242 | $ | 1,028 | $ | 791 | ||||||||
| Income Before Income Taxes Margin(1) | 26.7 | % | 22.7 | % | 28.4 | % | 24.5 | % | ||||||||
| Amortization | 45 | 41 | 131 | 123 | ||||||||||||
| Depreciation | 11 | 10 | 33 | 30 | ||||||||||||
| Interest | 50 | 48 | 147 | 143 | ||||||||||||
| Change in estimated acquisition earn-out payables | (8 | ) | 30 | (9 | ) | 30 | ||||||||||
| EBITDAC | $ | 415 | $ | 371 | $ | 1,330 | $ | 1,117 | ||||||||
| EBITDAC Margin | 35.0 | % | 34.7 | % | 36.7 | % | 34.6 | % | ||||||||
| (Gain)/loss on disposal | (1 | ) | (3 | ) | (30 | ) | (9 | ) | ||||||||
| Acquisition/Integration Costs | — | 2 | — | 8 | ||||||||||||
| 1Q23 Nonrecurring Cost | — | 11 | ||||||||||||||
| EBITDAC - Adjusted | $ | 414 | $ | 370 | $ | 1,300 | $ | 1,127 | ||||||||
| EBITDAC Margin - Adjusted | 34.9 | % | 34.6 | % | 35.9 | % | 34.9 | % | ||||||||
(1) “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues.
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 September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| REVENUES | ||||||||||||||||
| Commissions and fees | $ | 1,155 | $ | 1,049 | $ | 3,545 | $ | 3,193 | ||||||||
| Investment income | 31 | 17 | 71 | 34 | ||||||||||||
| Other | — | 2 | 6 | 4 | ||||||||||||
| Total revenues | 1,186 | 1,068 | 3,622 | 3,231 | ||||||||||||
| EXPENSES | ||||||||||||||||
| Employee compensation and benefits | 607 | 532 | 1,823 | 1,633 | ||||||||||||
| Other operating expenses | 165 | 168 | 499 | 490 | ||||||||||||
| Gain on disposal | (1 | ) | (3 | ) | (30 | ) | (9 | ) | ||||||||
| Amortization | 45 | 41 | 131 | 123 | ||||||||||||
| Depreciation | 11 | 10 | 33 | 30 | ||||||||||||
| Interest | 50 | 48 | 147 | 143 | ||||||||||||
| Change in estimated acquisition earn-out payables | (8 | ) | 30 | (9 | ) | 30 | ||||||||||
| Total expenses | 869 | 826 | 2,594 | 2,440 | ||||||||||||
| Income before income taxes | 317 | 242 | 1,028 | 791 | ||||||||||||
| Income taxes | 78 | 66 | 237 | 189 | ||||||||||||
| Net income before non-controlling interests | 239 | 176 | 791 | 602 | ||||||||||||
| Less: Net income attributable to non-controlling interests | 5 | — | 8 | — | ||||||||||||
| Net income attributable to the Company | $ | 234 | $ | 176 | $ | 783 | $ | 602 | ||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | 0.82 | $ | 0.62 | $ | 2.75 | $ | 2.12 | ||||||||
| Diluted | $ | 0.81 | $ | 0.62 | $ | 2.73 | $ | 2.11 | ||||||||
| Weighted average number of shares outstanding: | ||||||||||||||||
| Basic | 282 | 280 | 282 | 279 | ||||||||||||
| Diluted | 284 | 281 | 283 | 280 | ||||||||||||
| Brown & Brown, Inc. Consolidated Balance Sheets (in millions, except per share data, unaudited) | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 957 | $ | 700 | ||||
| Fiduciary cash | 1,744 | 1,603 | ||||||
| Short-term investments | 11 | 11 | ||||||
| Commission, fees, and other receivables | 917 | 790 | ||||||
| Fiduciary receivables | 961 | 1,125 | ||||||
| Reinsurance recoverable | 2,036 | 125 | ||||||
| Prepaid reinsurance premiums | 539 | 462 | ||||||
| Other current assets | 314 | 314 | ||||||
| Total current assets | 7,479 | 5,130 | ||||||
| Fixed assets, net | 309 | 270 | ||||||
| Operating lease assets | 192 | 199 | ||||||
| Goodwill | 7,577 | 7,341 | ||||||
| Amortizable intangible assets, net | 1,582 | 1,621 | ||||||
| Investments | 21 | 21 | ||||||
| Other assets | 365 | 301 | ||||||
| Total assets | $ | 17,525 | $ | 14,883 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Fiduciary liabilities | $ | 2,705 | $ | 2,727 | ||||
| Losses and loss adjustment reserve | 2,044 | 131 | ||||||
| Unearned premiums | 625 | 462 | ||||||
| Accounts payable | 329 | 459 | ||||||
| Accrued expenses and other liabilities | 597 | 608 | ||||||
| Current portion of long-term debt | 225 | 569 | ||||||
| Total current liabilities | 6,525 | 4,956 | ||||||
| Long-term debt less unamortized discount and debt issuance costs | 3,367 | 3,227 | ||||||
| Operating lease liabilities | 181 | 179 | ||||||
| Deferred income taxes, net | 638 | 616 | ||||||
| Other liabilities | 334 | 326 | ||||||
| Equity: | ||||||||
| Common stock, par value | 31 | 30 | ||||||
| Additional paid-in capital | 1,095 | 1,027 | ||||||
| Treasury stock, at cost 20 shares at 2024 and 2023 | (748 | ) | (748 | ) | ||||
| Accumulated other comprehensive loss | 125 | (19 | ) | |||||
| Non-controlling interests | 16 | - | ||||||
| Retained earnings | 5,961 | 5,289 | ||||||
| Total equity | 6,480 | 5,579 | ||||||
| Total liabilities and equity | $ | 17,525 | $ | 14,883 | ||||
| Brown & Brown, Inc. Consolidated Statements of Cash Flows (in millions, unaudited) | ||||||||
| Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income before non-controlling interests | $ | 791 | $ | 602 | ||||
| Adjustments to reconcile net income before non-controlling interests to net cash provided by operating activities: | ||||||||
| Amortization | 131 | 123 | ||||||
| Depreciation | 33 | 30 | ||||||
| Non-cash stock-based compensation | 77 | 67 | ||||||
| Change in estimated acquisition earn-out payables | (9 | ) | 30 | |||||
| Deferred income taxes | (11 | ) | (1 | ) | ||||
| Amortization of debt discount and disposal of deferred financing costs | 3 | 3 | ||||||
| Net gain on sales/disposals of investments, businesses, fixed assets and customer accounts | (29 | ) | (11 | ) | ||||
| Payments on acquisition earn-outs in excess of original estimated payables | (35 | ) | (18 | ) | ||||
| Changes in operating assets and liabilities, net of effect from acquisitions and divestitures: | ||||||||
| Commissions, fees and other receivables (increase)/decrease | (119 | ) | (83 | ) | ||||
| Reinsurance recoverables (increase)/decrease | (1,911 | ) | 612 | |||||
| Prepaid reinsurance premiums (increase)/decrease | (77 | ) | (110 | ) | ||||
| Other assets (increase)/decrease | (81 | ) | (87 | ) | ||||
| Losses and loss adjustment reserve increase/(decrease) | 1,913 | (609 | ) | |||||
| Unearned premiums increase/(decrease) | 163 | 118 | ||||||
| Accounts payable increase/(decrease) | (9 | ) | 163 | |||||
| Accrued expenses and other liabilities increase/(decrease) | (17 | ) | (41 | ) | ||||
| Other liabilities increase/(decrease) | — | (84 | ) | |||||
| Net cash provided by operating activities | 813 | 704 | ||||||
| Cash flows from investing activities: | ||||||||
| Additions to fixed assets | (62 | ) | (38 | ) | ||||
| Payments for businesses acquired, net of cash acquired | (118 | ) | (163 | ) | ||||
| Proceeds from sales of businesses, fixed assets and customer accounts | 60 | 8 | ||||||
| Purchases of investments | (5 | ) | (6 | ) | ||||
| Proceeds from sales of investments | 6 | 6 | ||||||
| Net cash used in investing activities | (119 | ) | (193 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Fiduciary receivables and liabilities, net | 83 | 117 | ||||||
| Payments on acquisition earn-outs | (100 | ) | (57 | ) | ||||
| Proceeds from long-term debt | 599 | — | ||||||
| Payments on long-term debt | (700 | ) | (238 | ) | ||||
| Deferred debt issuance costs | (5 | ) | — | |||||
| Borrowings on revolving credit facilities | 150 | 170 | ||||||
| Payments on revolving credit facilities | (250 | ) | (170 | ) | ||||
| Issuances of common stock for employee stock benefit plans | 44 | 41 | ||||||
| Repurchase shares to fund tax withholdings for non-cash stock-based compensation | (54 | ) | (40 | ) | ||||
| Cash dividends paid | (111 | ) | (98 | ) | ||||
| Other financing activities | 3 | — | ||||||
| Net cash used in financing activities | (341 | ) | (275 | ) | ||||
| Effect of foreign exchange rate changes in cash and cash equivalents inclusive of fiduciary cash | 45 | 2 | ||||||
| Net increase in cash and cash equivalents inclusive of fiduciary cash | 398 | 238 | ||||||
| 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 | $ | 2,701 | $ | 2,271 | ||||
Conference call, webcast and slide presentation
A conference call to discuss the results of the third quarter of 2024 will be held on Tuesday, October 29, 2024, at 8:00 AM (EDT). 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 16,000 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 third quarter of 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 2022 and 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 2022 and 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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