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Arthur J. Gallagher (AJG) Q1 Earnings & Revenues Top Estimates

Arthur J. Gallagher & Co. AJG reported first-quarter 2021 adjusted net earnings of $2.02 per share, which beat the Zacks Consensus Estimate by 10.4%. Moreover, the bottom line increased 10.4% on a year-over-year basis.

The company’s performance was driven by higher revenues and strong margin expansion across Brokerage and Risk Management segments.

Arthur J. Gallagher & Co. Price, Consensus and EPS Surprise

Arthur J. Gallagher & Co. price-consensus-eps-surprise-chart | Arthur J. Gallagher & Co. Quote

Operational Update

Total revenues of $2.1 billion outpaced the Zacks Consensus Estimate by 10.9%. Moreover, the top line improved 16.6% year over year.

Arthur J. Gallagher’s total expenses increased 16.3% year over year to $1.8 billion in the reported quarter due to higher compensation, and depreciation, cost of revenues from clean coal activities.

Adjusted earnings before interest, tax, depreciation and amortization and change (EBITDAC) in estimated acquisition earnout payables increased 25.5% from the prior-year quarter to $614.8 million.

Segmental Results

Brokerage: Revenues of $1.6 billion increased 12.2% year over year on higher fees, and commission, supplemental and contingent revenues.
Expenses jumped 10.2% from the year-ago quarter to $1.1 billion due to higher compensation and depreciation.

Adjusted EBITDAC climbed 24.1% from the year-ago level to $629.7 million and margin expanded 480 basis points (bps) to 39.2%.

Risk Management: Revenues were up 4% year over year to $220.3 million, mainly owing to higher fees.

Expenses rose 2.1% from the prior-year period to $228.6 million on higher compensation.

Adjusted EBITDAC improved 11.9% year over year to $40.5 million and margin expanded 180 bps.

Corporate: Total revenues of $302.1 million were up 66.2% year over year due to higher revenues from consolidated clean coal facilities and higher royalty income from clean coal licenses.

EBITDAC was a negative $43.4 million compared with a negative $23 million in the year- ago quarter.

Financial Update

As of Mar 31, 2021, total assets were $24.4 billion, up 9.3% from the 2020-end level.

At the end of the quarter, cash and cash equivalents of $526.3 million decreased 20.8% from the 2020-end level.

As of Mar 31, 2021, shareholders’ equity increased 8.8% to $6.8 billion from the level on Dec 31, 2020.

Dividend Update

The board of directors approved a quarterly cash dividend of 48 cents per share. The dividend will be paid out on Jun 18, 2021 to shareholders of record on Jun 4.

Acquisition Update

In the quarter, the company closed five acquisitions with estimated annualized revenues of about $89.7 million.

Zacks Rank and Performance of Other Insurers

Currently, Arthur J. Gallagher carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cincinnati Financial Corporation CINF first-quarter 2021 earnings per share of $1.37 beat the Zacks Consensus Estimate of $1.05.

W.R. Berkley Corporation’s WRB first-quarter 2021 earnings per share of $1.08 beat the Zacks Consensus Estimate by 21.3%.

Selective Insurance Group, Inc. SIGI reported first-quarter 2021 operating income of $1.70 per share, which beat the Zacks Consensus Estimate by 75.2%.

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