Brown & Brown(BRO) - 2025 Q2 - Quarterly Results

Financial Highlights Brown & Brown, Inc. reported strong revenue growth for Q2 and H1 2025, with adjusted diluted net income per share increasing despite a GAAP decrease Q2 and Six-Month 2025 Performance Summary Brown & Brown reported strong revenue growth for the second quarter and first six months of 2025, with Q2 total revenues increasing 9.1% to $1.3 billion and adjusted diluted net income per share rising 10.8% to $1.03 Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 | Change | | :--- | :--- | :--- | | Total Revenues | $1.3 billion | +9.1% | | Organic Revenue Growth | 3.6% | N/A | | Income Before Income Taxes | $311 million | -10.1% | | Net Income | $231 million | -10.1% | | Diluted Net Income Per Share (GAAP) | $0.78 | -13.3% | | Diluted Net Income Per Share (Adjusted) | $1.03 | +10.8% | | EBITDAC - Adjusted | $471 million | +12.1% | Six Months Ended June 30, 2025 Key Financial Metrics (vs. 2024) | Metric | H1 2025 | Change | | :--- | :--- | :--- | | Total Revenues | $2.7 billion | +10.4% | | Organic Revenue Growth | 5.1% | N/A | | Income Before Income Taxes | $738 million | +3.7% | | Net Income | $563 million | +2.4% | | Diluted Net Income Per Share (GAAP) | $1.93 | +0.5% | | Diluted Net Income Per Share (Adjusted) | $2.32 | +12.1% | | EBITDAC - Adjusted | $1.0 billion | +13.6% | - The President and CEO, J. Powell Brown, expressed satisfaction with the quarterly earnings and noted positive momentum for the second half of the year[4] Financial Statements This section presents the company's consolidated income statements, balance sheets, and cash flow statements for the reported periods Consolidated Statements of Income For Q2 2025, total revenues increased to $1,285 million, but net income attributable to the company decreased to $231 million, while H1 2025 saw total revenues grow to $2,689 million and net income slightly increase to $563 million Income Statement Highlights (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1,285 | $1,178 | $2,689 | $2,435 | | Total Expenses | $974 | $832 | $1,951 | $1,723 | | Income Before Income Taxes | $311 | $346 | $738 | $712 | | Net Income Attributable to Company | $231 | $257 | $563 | $550 | | Diluted Net Income Per Share | $0.78 | $0.90 | $1.93 | $1.92 | Consolidated Balance Sheets As of June 30, 2025, total assets significantly increased to $25,636 million, driven by a substantial rise in cash and cash equivalents to $8,893 million and long-term debt to $7,470 million, largely for the pending Accession acquisition Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $8,893 | $675 | | Total Assets | $25,636 | $17,612 | | Long-term debt | $7,470 | $3,599 | | Total Equity | $11,617 | $6,437 | | Total Liabilities and Equity | $25,636 | $17,612 | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash from operating activities was $538 million, with a significant net cash inflow of $7,981 million from financing activities, primarily due to debt and stock issuance Six Months Ended June 30 Cash Flow Summary (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $538 | $373 | | Net cash used in investing activities | ($187) | ($77) | | Net cash provided by financing activities | $7,981 | $375 | | Net increase in cash | $8,417 | $671 | - Financing activities were dominated by proceeds from long-term debt ($4.19 billion) and issuance of common stock ($4.32 billion), significantly boosting the company's cash position[18] Reconciliation of GAAP to Non-GAAP Measures This section provides reconciliations of GAAP financial measures to non-GAAP metrics, including Organic Revenue, Adjusted Diluted EPS, and Adjusted EBITDAC, used for performance evaluation Reconciliation of Commissions and Fees to Organic Revenue This section reconciles GAAP commissions and fees to Organic Revenue, reporting growth of 3.6% for Q2 and 5.1% for the first six months of 2025 Organic Revenue Growth | Period | Organic Revenue Growth % | | :--- | :--- | | Three Months Ended June 30, 2025 | 3.6% | | Six Months Ended June 30, 2025 | 5.1% | Reconciliation of Diluted Net Income Per Share to Diluted Net Income Per Share - Adjusted GAAP Diluted Net Income Per Share is adjusted for specific items to arrive at Diluted Net Income Per Share - Adjusted, which was $1.03 for Q2 2025 (up 10.8%) and $2.32 for H1 2025 (up 12.1%) Diluted EPS Reconciliation (GAAP to Adjusted) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Diluted net income per share (GAAP) | $0.78 | $0.90 | $1.93 | $1.92 | | Diluted Net Income Per Share - Adjusted | $1.03 | $0.93 | $2.32 | $2.07 | Reconciliation of Income Before Income Taxes to EBITDAC and EBITDAC - Adjusted This table reconciles Income Before Income Taxes to EBITDAC and EBITDAC - Adjusted, showing Q2 2025 Adjusted EBITDAC increased to $471 million with a margin improvement to 36.7%, positively impacted by interest income from funds for the Accession acquisition EBITDAC - Adjusted and Margin (in millions) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Income before income taxes | $311 | $346 | $738 | $712 | | EBITDAC - Adjusted | $471 | $420 | $1,005 | $885 | | EBITDAC Margin - Adjusted | 36.7% | 35.7% | 37.4% | 36.3% | - 2025 results were positively impacted by approximately $13 million in interest income from proceeds of a recent stock offering and senior notes issuance, held in preparation for the pending acquisition of RSC Topco, Inc. ("Accession")[10] Definitions of Non-GAAP Measures The company defines its non-GAAP financial measures, including Organic Revenue, EBITDAC, and Diluted Net Income Per Share - Adjusted, which are used by management for evaluating operating performance and executive compensation - The company uses non-GAAP measures to provide additional meaningful methods to evaluate operating performance by excluding items with high variability that are not indicative of ongoing performance[23] - Key non-GAAP measures are defined as: - Organic Revenue: Core commissions and fees adjusted for the first 12 months of acquisitions, divested businesses, and foreign currency translation - EBITDAC: Income before interest, taxes, depreciation, amortization, and change in estimated acquisition earn-out payables - Diluted Net Income Per Share - Adjusted: Diluted EPS excluding the after-tax impact of changes in earn-out payables, gains/losses on disposal, acquisition/integration costs, and amortization[25][31] - Organic Revenue growth, Diluted Net Income Per Share - Adjusted, and EBITDAC Margin - Adjusted are used as key performance metrics for short-term and long-term incentive compensation plans[24] Other Information This section provides details on the upcoming conference call, an overview of Brown & Brown, Inc., and important forward-looking statements Conference Call Information The company will host a conference call and webcast on Tuesday, July 29, 2025, at 8:00 AM (EDT) to discuss the second quarter 2025 financial results, with a slide presentation available online - A conference call to discuss Q2 2025 results is scheduled for Tuesday, July 29, 2025, at 8:00 AM (EDT)[19] About Brown & Brown, Inc. Brown & Brown, Inc. is a leading insurance brokerage firm established in 1939, providing customer-focused risk management solutions through a global network of over 500 locations and more than 17,000 professionals - Brown & Brown is a leading insurance brokerage firm providing risk management solutions since 1939, with over 17,000 professionals across 500+ locations[20] Forward-Looking Statements This section provides a safe harbor statement cautioning that the press release contains forward-looking statements subject to numerous factors that could cause actual results to differ materially, including risks related to the pending Accession acquisition, financing, cybersecurity, economic conditions, and regulatory changes - The report contains forward-looking statements that are subject to a number of risks and uncertainties which could cause actual results to differ materially[21] - Key risks include: final financial results differing from preliminary numbers, risks related to the timing and completion of the Accession acquisition, failure to realize anticipated benefits from the transaction, increased indebtedness from financing, cybersecurity attacks, and adverse economic or political conditions[21][22]