Brown & Brown(US:BRO)2023-04-25 16:21Financial Data and Key Metrics Changes - The company reported earnings per share of $0.83, a growth of 7.8% compared to Q1 2022 [4] - Total revenues reached over $1.1 billion, growing 23% year-over-year, with organic growth of 12.6% [91] - Adjusted EBITDAC margin remained strong at 35.7% for the quarter [91] - The effective tax rate was 20%, up from 16.8% in the same quarter last year [102] Business Line Data and Key Metrics Changes - The Retail segment delivered organic growth of 8.8%, with an adjusted EBITDAC margin of 37%, slightly down due to GRP revenue phasing [117][123] - The Wholesale Brokerage segment achieved organic growth of 7%, with a slight contraction in adjusted EBITDAC margin due to higher salaries and related costs [118][124] - The Program Segment saw nearly 34% organic growth, driven by new business rate increases and claims processing revenue from Hurricane Ian [97] Market Data and Key Metrics Changes - The insurance marketplace remains challenging, with rate increases across most lines of coverage, particularly in admitted markets (up 5% to 7%) and excess and surplus markets (up 10% to 20%) [93] - Workers' compensation rates continue to decline, while E&S professional liability rates have moderated, with some rates decreasing by 10% or more [5] Company Strategy and Development Direction - The company is focused on identifying high-quality acquisitions that fit culturally and financially, maintaining a strong M&A pipeline [13][96] - The company anticipates lower organic growth in the second half of the year compared to the same period last year due to a more comparative basis for captives [10] - The company is optimistic about its ability to retain and increase capacity, which is crucial for delivering incremental organic growth [106] Management's Comments on Operating Environment and Future Outlook - Management noted that business leaders are cautious regarding hiring and investing due to inflation and interest rate increases, but most customers are prospering [12][113] - The company expects the impact of legal reforms in Florida's insurance market to be positive in the long term, although improvements may take time [115] - Management expressed confidence in the company's performance and growth prospects, highlighting strong new business wins and customer retention [127] Other Important Information - The company completed seven acquisitions with estimated annual revenues of $11 million [4] - The company generated approximately $60 million in cash flow from operations in Q1, with plans for further debt repayments [150] Q&A Session Summary Question: What is the outlook for margin expansion for the full year? - Management indicated that the 40 basis points headwind from GRP in Retail will reverse in the latter part of the year, contributing positively to margins [133][157] Question: Are there any economic pressures in Florida affecting the business? - Management noted that while construction is booming and businesses are generally doing well, different industries face varying levels of inflation impacting their margins [160] Question: How are the captive revenues expected to perform? - Captive revenues are expected to deliver $30 million to $35 million for the year, with approximately $10 million recognized in Q1 [149][178]