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Brown & Brown (BRO) Q1 Earnings & Revenues Beat Estimates

Zacks Equity Research

Brown & Brown, Inc. BRO reported first-quarter 2019 earnings of 41 cents per share, beating the Zacks Consensus Estimate by 13.9%. The bottom line improved 24.2% year over year.

The quarter witnessed increased commissions and fees plus net investment income as well as increase in organic revenues. Though expenses increased, net income before interest, income taxes, depreciation, amortization and a change in estimated acquisition earn-out payables (EBITDAC) improved in the quarter.

Behind the Headlines

Adjusted revenues of $619.3 million beat the Zacks Consensus Estimate by 3.8%. Moreover, the top line rose 23.3% year over year, riding on higher commissions and fees plus net investment income. Organic revenues increased 2% in the reported quarter.

Commissions and fees grew 23.4% year over year to $617.5 million.

Investment income surged 83.3% year over year to $1.1 million.

Total expenses increased 22.9% to $470.8 million, driven by a rise in employee compensation and benefits as well as other operating expenses and interest expense.

EBITDAC was $197.1 million, up 25.8% year over year. EBITDAC margin expanded 60 basis points (bps) year over year to 31.8%.

Brown & Brown, Inc. Price, Consensus and EPS Surprise

Brown & Brown, Inc. Price, Consensus and EPS Surprise | Brown & Brown, Inc. Quote

Financial Update

Brown & Brown exited the first quarter of 2019 with cash and cash equivalents of $624.9 million, down 19.6% from 2018-end level.

Long-term debt of $1.4 billion as of Mar 31, 2019 was down 1.2% from 2018 end.

Net cash provided by operating activities in the quarter was $5.4 million, much lower than $79.5 million generated in the year-ago quarter.

Dividend Update

The board of directors announced a regular quarterly cash dividend of 8 cents per share to shareholders of record as of May 8, 2019. The dividend will be paid on May 17.

Zacks Rank

Brown & Brown currently has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Of the insurance industry players that have reported first-quarter results so far, The Travelers Companies, Inc. TRV, The Progressive Corporation PGR and RLI Corp. RLI beat the respective Zacks Consensus Estimate for earnings.

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