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Arthur J. Gallagher (AJG) Q2 Earnings Beat Estimates, Rise Y/Y
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Arthur J. Gallagher & Co. (AJG - Free Report) reported second-quarter 2024 adjusted net earnings of $2.26 per share, which beat the Zacks Consensus Estimate by 0.8%. The bottom line increased 19.5% on a year-over-year basis.
The quarter’s results overall benefited from adjusted EBITDAC margin expansion across the Brokerage and Risk Management segments and higher commissions, fees and supplemental, contingent revenues, premium finance revenues and other income, partly offset by an elevated overall expense level.
Arthur J. Gallagher & Co. Price, Consensus and EPS Surprise
Total revenues were $2.7 billion, up 13.6% year over year, primarily driven by higher commissions, fees and supplemental, contingent revenues and interest income, premium finance revenues and other income. However, the top line missed the Zacks Consensus Estimate by 0.7%.
Arthur J. Gallagher’s total expenses increased 12.3% year over year to $2.4 billion in the reported quarter due to higher compensation, reimbursements, interest and amortization.
Adjusted earnings before interest, tax, depreciation and amortization and change in estimated acquisition earnout payables (EBITDAC) grew 20.7% from the prior-year quarter to $811.4 million.
Segmental Results
Brokerage: Revenues of $2.3 billion increased 14.4% year over year on higher commissions, supplemental revenues, contingent revenues, interest income, premium finance revenues and other income. The figure missed the Zacks Consensus Estimate by 2.5%.
Expenses jumped 13.7% from the year-ago quarter to $1.9 billion due to higher operating, amortization and depreciation.
Adjusted EBITDAC climbed 17.8% from the year-ago level to $784.8 million and the margin expanded 100 basis points (bps) to 33.1%. Adjusted EBITDAC for the quarter missed the Zacks Consensus Estimate by 3.6%.
Risk Management: Revenues were up 12.8% year over year to $358.5 million, mainly owing to higher fees and interest income and other income. The figure missed the Zacks Consensus Estimate by 11.4%.
Expenses rose 9.5% from the prior-year period to $332.6 million on higher compensation and reimbursements.
Adjusted EBITDAC improved 20% year over year to $73.9 million and the margin expanded 120 bps to 20.6%. Adjusted EBITDAC for the quarter beat the Zacks Consensus Estimate by 0.4%.
Corporate: EBITDAC was a negative $47.3 million compared with a negative $55.3 million in the year-ago quarter.
Financial Update
As of Jun 30, 2024, total assets were $63 billion, up 22% from the 2023-end level.
At the end of the quarter, cash and cash equivalents of $1.4 billion increased 45.6% from the 2023-end level.
As of Jun 30, 2024, shareholders’ equity increased 7.2% to $11.6 billion from the level on Dec 31, 2023.
Dividend Update
The board of directors approved a quarterly cash dividend of 60 cents per share. The dividend will be paid out on Sep 20, 2024, to shareholders of record as of Sep 6.
Acquisition Update
In the quarter, Arthur J. Gallagher closed 12 acquisitions with estimated annualized revenues of about $72 million.
Brown & Brown, Inc.’s (BRO - Free Report) second-quarter 2024 adjusted earnings of 93 cents per share beat the Zacks Consensus Estimate by 6.8%. The bottom line increased 17.7% year over year. Total revenues of $1.2 billion beat the Zacks Consensus Estimate by 3.3%. The top line improved 12.5% year over year. The upside can be primarily attributed to commission and fees, which grew 11.4% year over year to $1.1 billion. Our estimate for commission and fees growth was 7.2%.
Organic revenues improved 10% to $1 billion in the quarter under review. Investment income more than doubled year over year to $22 million. The Zacks Consensus Estimate for the metric was pegged at $18.6 million and our estimate was $23.2 million. Adjusted EBITDAC was $420 million, up 17.3% year over year. EBITDAC margin expanded 150 bps year over year to 35.7%. Our estimate for adjusted EBITDAC was $411.4 million.
Marsh & McLennan Companies, Inc. (MMC - Free Report) reported second-quarter 2024 adjusted earnings per share of $2.41, which beat the Zacks Consensus Estimate by 0.8%. The bottom line advanced 10% year over year. Consolidated revenues rose 6% year over year to $6.2 billion. The figure also improved 6% on an underlying basis.
The top line, however, fell short of the consensus mark by 1%. Total operating expenses of $4.58 billion increased 3.6% year over year but were lower than our estimate of $4.62 billion. MMC’s adjusted operating income was $1.72 billion in the second quarter, which grew 11% year over year and beat our estimate of $1.68 billion. Adjusted operating margin improved 130 bps year over year to 29%.
Willis Towers Watson Public Limited Company (WTW - Free Report) delivered second-quarter 2024 adjusted earnings of $2.55 per share, which beat the Zacks Consensus Estimate by 11.8%. The bottom line increased 24% year over year. Willis Towers posted adjusted consolidated revenues of $2.26 billion, up 5% year over year on a reported basis. Revenues increased 6% on both organic basis and constant currency basis. The top line beat the Zacks Consensus Estimate by 0.04%.
The total costs of providing services increased 1.7% year over year to $2 billion. The metric matched our estimate. Adjusted operating income was $385 million, which increased 22% year over year. The figure was higher than our estimate of $343 million. Margin expanded 240 bps to 17%. Adjusted EBITDA was $466 million, up 13% year over year. The figure was higher than our estimate of $437.4 million. Adjusted EBITDA margin expanded 160 bps to 20.6%.
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Arthur J. Gallagher (AJG) Q2 Earnings Beat Estimates, Rise Y/Y
Arthur J. Gallagher & Co. (AJG - Free Report) reported second-quarter 2024 adjusted net earnings of $2.26 per share, which beat the Zacks Consensus Estimate by 0.8%. The bottom line increased 19.5% on a year-over-year basis.
The quarter’s results overall benefited from adjusted EBITDAC margin expansion across the Brokerage and Risk Management segments and higher commissions, fees and supplemental, contingent revenues, premium finance revenues and other income, partly offset by an elevated overall expense level.
Arthur J. Gallagher & Co. Price, Consensus and EPS Surprise
Arthur J. Gallagher & Co. price-consensus-eps-surprise-chart | Arthur J. Gallagher & Co. Quote
Operational Update
Total revenues were $2.7 billion, up 13.6% year over year, primarily driven by higher commissions, fees and supplemental, contingent revenues and interest income, premium finance revenues and other income. However, the top line missed the Zacks Consensus Estimate by 0.7%.
Arthur J. Gallagher’s total expenses increased 12.3% year over year to $2.4 billion in the reported quarter due to higher compensation, reimbursements, interest and amortization.
Adjusted earnings before interest, tax, depreciation and amortization and change in estimated acquisition earnout payables (EBITDAC) grew 20.7% from the prior-year quarter to $811.4 million.
Segmental Results
Brokerage: Revenues of $2.3 billion increased 14.4% year over year on higher commissions, supplemental revenues, contingent revenues, interest income, premium finance revenues and other income. The figure missed the Zacks Consensus Estimate by 2.5%.
Expenses jumped 13.7% from the year-ago quarter to $1.9 billion due to higher operating, amortization and depreciation.
Adjusted EBITDAC climbed 17.8% from the year-ago level to $784.8 million and the margin expanded 100 basis points (bps) to 33.1%. Adjusted EBITDAC for the quarter missed the Zacks Consensus Estimate by 3.6%.
Risk Management: Revenues were up 12.8% year over year to $358.5 million, mainly owing to higher fees and interest income and other income. The figure missed the Zacks Consensus Estimate by 11.4%.
Expenses rose 9.5% from the prior-year period to $332.6 million on higher compensation and reimbursements.
Adjusted EBITDAC improved 20% year over year to $73.9 million and the margin expanded 120 bps to 20.6%. Adjusted EBITDAC for the quarter beat the Zacks Consensus Estimate by 0.4%.
Corporate: EBITDAC was a negative $47.3 million compared with a negative $55.3 million in the year-ago quarter.
Financial Update
As of Jun 30, 2024, total assets were $63 billion, up 22% from the 2023-end level.
At the end of the quarter, cash and cash equivalents of $1.4 billion increased 45.6% from the 2023-end level.
As of Jun 30, 2024, shareholders’ equity increased 7.2% to $11.6 billion from the level on Dec 31, 2023.
Dividend Update
The board of directors approved a quarterly cash dividend of 60 cents per share. The dividend will be paid out on Sep 20, 2024, to shareholders of record as of Sep 6.
Acquisition Update
In the quarter, Arthur J. Gallagher closed 12 acquisitions with estimated annualized revenues of about $72 million.
Zacks Rank
Currently, AJG carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Brown & Brown, Inc.’s (BRO - Free Report) second-quarter 2024 adjusted earnings of 93 cents per share beat the Zacks Consensus Estimate by 6.8%. The bottom line increased 17.7% year over year. Total revenues of $1.2 billion beat the Zacks Consensus Estimate by 3.3%. The top line improved 12.5% year over year. The upside can be primarily attributed to commission and fees, which grew 11.4% year over year to $1.1 billion. Our estimate for commission and fees growth was 7.2%.
Organic revenues improved 10% to $1 billion in the quarter under review. Investment income more than doubled year over year to $22 million. The Zacks Consensus Estimate for the metric was pegged at $18.6 million and our estimate was $23.2 million. Adjusted EBITDAC was $420 million, up 17.3% year over year. EBITDAC margin expanded 150 bps year over year to 35.7%. Our estimate for adjusted EBITDAC was $411.4 million.
Marsh & McLennan Companies, Inc. (MMC - Free Report) reported second-quarter 2024 adjusted earnings per share of $2.41, which beat the Zacks Consensus Estimate by 0.8%. The bottom line advanced 10% year over year. Consolidated revenues rose 6% year over year to $6.2 billion. The figure also improved 6% on an underlying basis.
The top line, however, fell short of the consensus mark by 1%. Total operating expenses of $4.58 billion increased 3.6% year over year but were lower than our estimate of $4.62 billion. MMC’s adjusted operating income was $1.72 billion in the second quarter, which grew 11% year over year and beat our estimate of $1.68 billion. Adjusted operating margin improved 130 bps year over year to 29%.
Willis Towers Watson Public Limited Company (WTW - Free Report) delivered second-quarter 2024 adjusted earnings of $2.55 per share, which beat the Zacks Consensus Estimate by 11.8%. The bottom line increased 24% year over year. Willis Towers posted adjusted consolidated revenues of $2.26 billion, up 5% year over year on a reported basis. Revenues increased 6% on both organic basis and constant currency basis. The top line beat the Zacks Consensus Estimate by 0.04%.
The total costs of providing services increased 1.7% year over year to $2 billion. The metric matched our estimate. Adjusted operating income was $385 million, which increased 22% year over year. The figure was higher than our estimate of $343 million. Margin expanded 240 bps to 17%. Adjusted EBITDA was $466 million, up 13% year over year. The figure was higher than our estimate of $437.4 million. Adjusted EBITDA margin expanded 160 bps to 20.6%.