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Brown & Brown (BRO) Q4 Earnings Miss, Revenues Beat Estimates
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Brown & Brown, Inc. (BRO - Free Report) reported fourth-quarter 2018 earnings of 26 cents per share, missing the Zacks Consensus Estimate by 3.7%. However, the bottom line improved 8.3% year over year.
Though the quarter witnessed increased commissions and fees plus net investment income, organic revenues declined. As expenses increased, net income before interest, income taxes, depreciation, amortization and a change in estimated acquisition earn-out payables (EBITDAC) declined in the quarter.
Behind the Headlines
Adjusted revenues of $508.7 million beat the Zacks Consensus Estimate by 1.5%. Moreover, the top line rose 7.4% year over year, riding on higher commissions and fees plus net investment income. Organic revenues declined 2.1% in the reported quarter.
Commissions and fees grew 5.6% year over year to $454.2 million.
Investment income increased 20% year over year to $0.6 million.
Total expenses increased 10.9% to $408 million, driven by a rise in employee compensation and benefits as well as other operating expenses and interest expense.
EBITDAC were $143 million, down 0.1% year over year. EBITDAC margin contracted 210 basis points (bps) year over year to 28.1%.
Brown & Brown, Inc. Price, Consensus and EPS Surprise
Brown & Brown delivered earnings of $1.22 in 2018, missing the Zacks Consensus Estimate by a cent.
Revenues of about $2 billion were in line the consensus mark and increased 7.1% from 2017.
EBITDAC increased 1.7% year over year to $615.4 million with EBITDAC margin contracting 160 bps.
Financial Update
Brown & Brown exited 2018 with cash and cash equivalents of $777.6 million, down 5.6% from 2017-end level.
Long-term debt of $1.5 billion as of Dec 31, 2018 was up 70.2% from 2017 end.
Net cash provided by operating activities in 2018 came in at $567.5 million, up 28.4% from 2017.
Adoption of New Accounting Standard
On Jan 1, 2018, Brown & Brown adopted FASB Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) and Accounting Standards Codification (Topic 340) — Other Assets and Deferred Cost. This hurt the top line by $6.3 million and the bottom line by 1 cent in the quarter under review.
Zacks Rank
Brown & Brown currently has a Zacks Rank #2 (Buy).
Of the insurance industry players that have reported fourth-quarter earnings so far, The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings while The Progressive Corporation (PGR - Free Report) missed the same.
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Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Brown & Brown (BRO) Q4 Earnings Miss, Revenues Beat Estimates
Brown & Brown, Inc. (BRO - Free Report) reported fourth-quarter 2018 earnings of 26 cents per share, missing the Zacks Consensus Estimate by 3.7%. However, the bottom line improved 8.3% year over year.
Though the quarter witnessed increased commissions and fees plus net investment income, organic revenues declined. As expenses increased, net income before interest, income taxes, depreciation, amortization and a change in estimated acquisition earn-out payables (EBITDAC) declined in the quarter.
Behind the Headlines
Adjusted revenues of $508.7 million beat the Zacks Consensus Estimate by 1.5%. Moreover, the top line rose 7.4% year over year, riding on higher commissions and fees plus net investment income. Organic revenues declined 2.1% in the reported quarter.
Commissions and fees grew 5.6% year over year to $454.2 million.
Investment income increased 20% year over year to $0.6 million.
Total expenses increased 10.9% to $408 million, driven by a rise in employee compensation and benefits as well as other operating expenses and interest expense.
EBITDAC were $143 million, down 0.1% year over year. EBITDAC margin contracted 210 basis points (bps) year over year to 28.1%.
Brown & Brown, Inc. Price, Consensus and EPS Surprise
Brown & Brown, Inc. Price, Consensus and EPS Surprise | Brown & Brown, Inc. Quote
Full Year Highlights
Brown & Brown delivered earnings of $1.22 in 2018, missing the Zacks Consensus Estimate by a cent.
Revenues of about $2 billion were in line the consensus mark and increased 7.1% from 2017.
EBITDAC increased 1.7% year over year to $615.4 million with EBITDAC margin contracting 160 bps.
Financial Update
Brown & Brown exited 2018 with cash and cash equivalents of $777.6 million, down 5.6% from 2017-end level.
Long-term debt of $1.5 billion as of Dec 31, 2018 was up 70.2% from 2017 end.
Net cash provided by operating activities in 2018 came in at $567.5 million, up 28.4% from 2017.
Adoption of New Accounting Standard
On Jan 1, 2018, Brown & Brown adopted FASB Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) and Accounting Standards Codification (Topic 340) — Other Assets and Deferred Cost. This hurt the top line by $6.3 million and the bottom line by 1 cent in the quarter under review.
Zacks Rank
Brown & Brown currently has a Zacks Rank #2 (Buy).
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 fourth-quarter earnings so far, The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings while The Progressive Corporation (PGR - Free Report) missed the same.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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