Arthur J. Gallagher & (AJG) - 2024 Q4 - Annual Results

Financial Performance - Fourth quarter revenues before reimbursements reached $2,680.0 million, a 12.0% increase from $2,393.1 million in Q4 2023[3] - Net earnings for the fourth quarter were $258.2 million, compared to a net loss of $39.6 million in the same quarter last year[3] - Adjusted EBITDAC for Q4 2024 grew by 17% to $686.7 million, with an adjusted EBITDAC margin of 31.4%[5] - The company achieved organic revenue growth of 7% in Q4 2024, marking the 16th consecutive quarter of double-digit revenue growth[5] - For the full year 2024, total revenues before reimbursements were $11,400.6 million, up from $9,926.5 million in 2023, representing a 14.9% increase[6] - Full year net earnings increased to $1,470.4 million, compared to $966.0 million in 2023[6] - The company reported a diluted net earnings per share of $6.50 for the full year 2024, up from $4.42 in 2023[6] - Net earnings for Q4 2024 were reported at $317.3 million, significantly higher than $24.8 million in Q4 2023[14] - Adjusted EBITDAC for Year 2024 was $3,475.1 million, up from $2,952.8 million in Year 2023, indicating a 17.7% increase[14] - Year-end net earnings for the total company were $1,470.4 million in 2024, compared to $966.0 million in 2023, representing a growth of 52.3%[47] Revenue Growth and Acquisitions - A total of 20 new mergers were completed in Q4 2024, contributing to an annual total of 48 mergers and an estimated $387 million in annualized revenue[5] - The acquisition of AssuredPartners, with pro-forma revenue of $2.9 billion, was announced in early December 2024[5] - The company announced the acquisition of AssuredPartners for approximately $13.45 billion, to be funded through cash and senior notes[9] - The company closed 19 acquisitions in Q4 2024, compared to 13 in Q4 2023, with estimated annualized revenues from acquired entities at $188.7 million[8] - Organic change in supplemental revenues for Year 2024 was 11.0%, with total organic supplemental revenues reaching $350.0 million[8] Operating Expenses and Efficiency - The compensation expense ratio for Q4 2024 was 56.2%, down from 57.4% in Q4 2023, primarily due to headcount controls and lower integration costs[11] - Operating expenses for Q4 2024 were $344.1 million, slightly up from $334.7 million in Q4 2023, with an adjusted operating expense ratio of 14.2%[12] - Reported operating expenses for Q4 2024 were $72.2 million, up from $62.7 million in Q4 2023, representing a 7.9% increase[18] - Adjusted operating expenses for Q4 2024 were $70.7 million, compared to $62.1 million in Q4 2023, reflecting an increase of 13.9%[18] - The adjusted operating expense ratio for Q4 2024 was 19.1%, up 0.8 percentage points from 18.3% in Q4 2023[19] Tax and Financial Position - The consolidated effective tax rate for Q4 2024 was 22.5%, compared to (51.8)% in Q4 2023[28] - Gallagher's total borrowings as of December 31, 2024, amounted to $9,550.0 million from public debt and $3,523.0 million from private placements[24] - Total liabilities increased to $44,075.6 million in 2024 from $40,800.5 million in 2023, a rise of 5.6%[49] - Total assets increased to $64,255.2 million in 2024 from $51,615.8 million in 2023, representing a growth of 24.9%[49] - Cash and cash equivalents surged to $14,987.3 million in 2024, up from $971.5 million in 2023, a significant increase of 1433.5%[49] Shareholder Returns and Equity - The company declared a dividend of $0.60 per share in Q4 2024, up from $0.55 per share in Q4 2023[47] - Stockholders' equity grew to $20,179.6 million in 2024, up from $10,815.3 million in 2023, reflecting an increase of 86.5%[49] - The number of common shares outstanding at the end of the period increased to 249,999,000 in 2024 from 216,686,000 in 2023, a rise of 15.4%[51] Workforce and Operational Strategy - The workforce expanded to 55,977 employees in 2024, up from 52,118 in 2023, indicating a growth of 7.4%[51] - Gallagher's workforce-related charges included severance costs associated with employee terminations, reflecting ongoing adjustments in operational strategy[39] Market Conditions and Challenges - The global P/C insurance market continues to grow, with January 2025 primary renewal premium increases slightly above 5%[5] - The company faced challenges related to geopolitical events and economic fluctuations, which could impact future performance[33] - Gallagher emphasized the importance of maintaining a strong reputation amidst increasing scrutiny over sustainability-related activities and compliance with climate regulations[33] Future Outlook - Gallagher plans to host a webcast conference call on January 30, 2025, to discuss these results and future outlook[29]