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Brown & Brown, Inc. Announces a 24.1% Increase in Earnings per Share

DAYTONA BEACH, FL and TAMPA, FL--(Marketwired - Jul 15, 2013) - Brown & Brown, Inc. ( NYSE : BRO ) today announced its preliminary, unaudited financial results for the second quarter of 2013. 

Net income for the second quarter of 2013 was $52,007,000, or $0.36 per share, compared with $42,471,000, or $0.29 per share for the same quarter of 2012, an increase of 24.1%. Total revenue for the second quarter was $325,792,000, compared with 2012 second-quarter revenue of $290,916,000, an increase of 12.0%. 

Total revenue for the six months ended June 30, 2013 was $660,804,000, compared with total revenue for the same period of 2012 of $593,402,000, an increase of 11.4%. Net income for the six-month period ended June 30, 2013 was $112,138,000, or $0.77 per share, compared with $91,904,000, or $0.63 per share for the same period of 2012, an increase of 22.0%.

J. Powell Brown, President and Chief Executive Officer of the Company, noted, "We are very pleased with our quarterly consolidated internal growth rate in core commissions and fees (see the calculation and explanation of this term later in the release) of 7.4%. Our largest Division, Retail, continues to show nice improvements with a quarterly internal growth rate in core commissions and fees of 2.3%, which reflects a gradual, but steady improvement in the middle-market economy. Our other Divisions, National Programs, Wholesale Brokerage, and Services, each had exceptional quarterly internal growth rates in core commissions and fees in excess of 10.0%."

Brown & Brown, Inc., through its subsidiaries, offers a broad range of insurance and reinsurance products and services. Additionally, certain Brown & Brown subsidiaries offer a variety of risk management, third-party administration, and other services. Serving business, public entity, individual, trade and professional association clients nationwide, the Company is ranked by Business Insurance magazine as the United States' sixth largest independent insurance intermediary. The Company's Web address is www.bbinsurance.com

This press release may contain certain statements relating to future results which are forward-looking statements, including those relating to the Company's anticipated financial results for the second quarter of 2013. These statements are not historical facts, but instead represent only the Company's current belief regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control. It is possible that the Company's actual results, financial condition and achievements may differ, possibly materially, from the anticipated results, financial condition and achievements contemplated by these forward-looking statements. These risks and uncertainties include, but are not limited to, the Company's determination as it finalizes its financial results for the second quarter of 2013 that its financial results differ from the current preliminary unaudited numbers set forth herein, other factors that the Company may not have currently identified or quantified, and other risks, relevant factors and uncertainties identified in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, and the Company's other subsequent filings with the Securities and Exchange Commission. All forward-looking statements made herein are made only as of the date of this 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. 

   
Brown & Brown, Inc.  
CONSOLIDATED STATEMENTS OF INCOME  
(in thousands, except per share data)  
(unaudited)  
   
             
    For the
Three Months Ended
June 30,
    For the
Six Months Ended
June 30,
 
    2013   2012     2013   2012  
REVENUES                            
Commissions and fees   $ 324,150   $ 289,942     $ 657,943   $ 586,475  
Investment income     239     187       425     322  
Other income, net     1,403     787       2,436     6,605  
    Total revenues     325,792     290,916       660,804     593,402  
                             
EXPENSES                            
Employee compensation and benefits     163,514     150,752       323,012     300,348  
Non-cash stock-based compensation     3,623     3,738       7,473     7,485  
Other operating expenses     47,397     42,220       93,736     85,620  
Amortization     16,121     15,881       32,282     31,494  
Depreciation     4,263     3,784       8,430     7,425  
Interest     3,997     4,000       7,981     8,087  
Change in estimated acquisition earn-out payables    
 656
   
(604
)     2,178     (992 )
    Total expenses     239,571     219,771       475,092     439,467  
                             
Income before income taxes     86,221     71,145       185,712     153,935  
                             
Income taxes     34,214     28,674       73,574     62,031  
                             
Net income   $ 52,007   $ 42,471     $ 112,138   $ 91,904  
                             
Net income per share:                            
  Basic   $ 0.36   $ 0.30     $ 0.78   $ 0.64  
  Diluted   $ 0.36   $ 0.29     $ 0.77   $ 0.63  
                             
Weighted average number of shares outstanding:                            
  Basic     140,836     139,086       140,816     139,044  
  Diluted     143,021     141,828       142,938     141,664  
                             
Dividends declared per share   $ 0.09   $ 0.085     $ 0.18   $ 0.17  
                             
   
Brown & Brown, Inc.  
INTERNAL GROWTH SCHEDULE  
Core Organic Commissions and Fees(1)  
Three Months Ended June 30, 2013  
(in thousands)  
(unaudited)  
   
                                 
    Quarter
Ended
06/30/13
  Quarter
Ended
06/30/12
  Total
Net
Change
  Total
Net
Growth %
    Less
Acquisition
Revenues
  Internal
Net
Growth $
  Internal
Net
Growth %
 
                                           
Retail(2)   $ 168,582   $ 158,035   $ 10,547   6.7 %   $ 6,922   $ 3,625   2.3 %
                                           
National Programs     62,860     53,135     9,725   18.3 %     -     9,725   18.3 %
                                           
Wholesale Brokerage     52,858     46,286     6,572   14.2 %     1,592     4,980   10.8 %
                                           
Services     30,271     27,521     2,750   10.0 %     -     2,750   10.0 %
                                           
Total Core Commissions and Fees (1)   $
314,571
  $
284,977
  $
29,594
 
10.4
%   $
8,514
  $
21,080
 
7.4
%
                                           
 
Reconciliation of Internal Growth Schedule
to Total Commissions and Fees
Included in the Consolidated Statements of Income
For the Three Months Ended June 30, 2013 and 2012
(in thousands)
(unaudited)
 
 
    Quarter
Ended
06/30/13
  Quarter
Ended
06/30/12
Total core commissions and fees(1)   $ 314,571   $ 284,977
Profit-sharing contingent commissions     7,879     1,043
Guaranteed supplemental commissions     1,700     2,258
Divested business     -     1,664
             
Total commissions & fees   $ 324,150   $ 289,942
             

(1) Total core commissions and fees are our total commissions and fees less (i) profit-sharing contingent 
commissions (revenues derived from special revenue-sharing commissions from insurance companies based upon the volume and the growth and/or profitability of the business placed with such companies during the prior year), (ii) guaranteed supplemental commissions (GSC) (revenues derived from special revenue-sharing commissions from insurance companies based solely upon the volume of the business placed with such companies during the current year),and (iii) divested business (commissions and fees generated from offices, books of business or niches sold by the Company or terminated).

(2) The Retail segment includes commissions and fees reported in the "Other" column of the Segment Information, which includes corporate and consolidation items.

 
Brown & Brown, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
         
    June 30, 2013   December 31, 2012
ASSETS            
Current assets:            
  Cash and cash equivalents   $ 385,525   $ 219,821
  Restricted cash and investments     210,538     164,564
  Short-term investments     12,205     8,183
  Premiums, commissions and fees receivable     310,486     302,725
  Deferred income taxes     15,051     24,408
  Other current assets     38,767     39,811
    Total current assets     972,572     759,512
             
Fixed assets, net     72,929     74,337
Goodwill     1,722,828     1,711,514
Amortizable intangible assets, net     538,767     566,538
Other assets     19,224     16,157
    Total assets   $ 3,326,320   $ 3,128,058
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Current liabilities:            
  Premiums payable to insurance companies   $ 476,529   $ 406,704
  Premium deposits and credits due customers     31,216     32,867
  Accounts payable     46,884     48,524
  Accrued expenses and other liabilities     107,153     79,593
  Current portion of long-term debt     33     93
    Total current liabilities     661,815     567,781
             
Long-term debt     450,000     450,000
             
Deferred income taxes, net     249,195     237,630
             
Other liabilities     63,252     65,314
             
Shareholders' equity:            
  Common stock, par value $0.10 per share; authorized 280,000 shares; issued and outstanding 144,045 at 2013 and 143,878 at 2012    
14,405
   
14,388
  Additional paid-in capital     344,354     335,872
  Retained earnings     1,543,299     1,457,073
    Total shareholders' equity     1,902,058     1,807,333
             
    Total liabilities and shareholders' equity   $ 3,326,320   $ 3,128,058