Brown & Brown (BRO) Q3 2025 Earnings Transcript

Core Insights - The company reported strong financial performance for the third quarter, with total revenues of $1.606 billion, representing a 35.4% increase compared to the same period last year [19] - The adjusted EBITDAC margin improved to 36.6%, up 170 basis points year-over-year, driven by strong underlying margin expansion and increased contingent commissions [19] - The company completed seven acquisitions during the quarter, contributing to significant revenue growth, with the largest acquisition being Accession, which had total revenue of approximately $285 million for the stub period [8][16] Financial Performance - Total revenues for the third quarter reached $1.606 billion, a 35.4% increase year-over-year, with organic growth of 3.5% [8][19] - Adjusted earnings per share grew over 15% to $1.05, while diluted net income per share increased by 15.4% [20] - The company generated $1 billion in cash flow from operations for the first nine months of 2025, a 24% increase compared to the same period in 2024 [24] Segment Performance - The Retail segment achieved total revenue growth of 37.8%, with organic growth of 2.7%, impacted by adjustments related to employee benefits incentives [20] - The Specialty Distribution segment grew total revenues by 30%, with organic growth of 4.6%, driven by the acquisition of Accession and strong brokerage performance [22] - The EBITDAC margin for the Retail segment increased by 150 basis points to 28%, while the Specialty Distribution segment's margin decreased by 110 basis points to 43.9% due to the lower margin of Accession [21][22] Market and Economic Outlook - Economic growth is expected to remain stable, with no significant disruptors anticipated to affect admitted rates [28][29] - The company noted that casualty and auto rates are expected to continue increasing, while admitted property rates will remain competitively priced [29] - The M&A pipeline appears strong, with ongoing efforts to acquire businesses that align culturally and financially [30][31] Strategic Initiatives - The company announced a 10% increase in dividends, marking the 32nd consecutive year of dividend growth [6] - Share repurchase authorization was expanded to $1.5 billion, aimed at managing dilution and driving earnings per share growth [7] - The integration of Accession is progressing well, with expectations for synergies to be realized over a three-year period [70][71]