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Arthur J. Gallagher (AJG) Q3 Earnings Top Estimates, Up Y/Y
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Arthur J. Gallagher & Co. (AJG - Free Report) reported third-quarter 2018 adjusted net earnings of 78 cents per share, which beat the Zacks Consensus Estimate by 1.3%. Moreover, the bottom line improved 11.4% on a year-over-year basis.
Arthur J. Gallagher & Co. Price, Consensus and EPS Surprise
The company’s performance was driven by solid organic growth, sturdy performance across all segments and a strong margin expansion.
Net income climbed 11.5% year over year to 68 cents per share.
Operational Update
Total revenues were $1.8 billion, up 11.6% year over year. This upside was driven by higher total revenues in the Brokerage, Risk Management as well as Corporate segments. Also, the top line surpassed the Zacks Consensus Estimate by 5.3%.
Total commissions and fees earned increased nearly 10.1% year over year to $1.2 billion in the quarter under review.
Arthur J. Gallagher’s total expense rose 11.3% year over year to $1.7 billion in the reported quarter. Expenses escalated primarily due to a higher compensation costs, operating costs, reimbursements, interest expenses, cost of revenues from clean coal activities, interest plus higher depreciation as well as amortization expenses.
Earnings before interest, tax, depreciation and amortization and change in estimated acquisition earnout payables (EBITDAC) grew 9.1% to $239 million.
Segment Results
Brokerage: Adjusted revenues of $1 billion improved 13% year over year on higher fees, commissions, supplemental as well as contingent revenues plus investment income and gains realized on books of business sales. Total expense shot up nearly 11.1% year over year to $886.2 million.
Adjusted EBITDAC climbed 13.9% to $277.3 million.
Risk Management: Adjusted revenues were up 5.8% year over year to $199.1 million, mainly owing to higher fees. Total expenses rose 8.2% year over year to $214.1 million.
Adjusted EBITDAC increased 5.9% year over year to $35.9 million.
Corporate: Total revenues came in at $492.7 million, up 14.4% year over year. Total expenses escalated 12.6% year over year to $587.9 million.
EBITDAC was at a loss of $51.4 million, slightly narrower than the loss of $51.5 million in the prior-year quarter.
Financial Update
As of Sep 30, 2018, total assets were $16.1 billion, up 8.1% from the level at year-end 2017.
Cash and cash equivalents at the reviewed quarter-end declined 11.2% from the 2017-end level to $605 million.
Shareholders’ equity increased 7.3% from the level as of Dec 31, 2017 to $4.6 billion as of Sep 30, 2018.
Acquisition Update
In the third quarter, the company closed 9 acquisitions with estimated annualized revenues of about $61.7 million.
Among other players from the insurance industry having reported third-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) and MGIC Investment Corporation (MTG - Free Report) outpaced the respective Zacks Consensus Estimate while the metric of RLI Corp. (RLI - Free Report) missed the same.
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Arthur J. Gallagher (AJG) Q3 Earnings Top Estimates, Up Y/Y
Arthur J. Gallagher & Co. (AJG - Free Report) reported third-quarter 2018 adjusted net earnings of 78 cents per share, which beat the Zacks Consensus Estimate by 1.3%. Moreover, the bottom line improved 11.4% on a year-over-year basis.
Arthur J. Gallagher & Co. Price, Consensus and EPS Surprise
Arthur J. Gallagher & Co. Price, Consensus and EPS Surprise | Arthur J. Gallagher & Co. Quote
The company’s performance was driven by solid organic growth, sturdy performance across all segments and a strong margin expansion.
Net income climbed 11.5% year over year to 68 cents per share.
Operational Update
Total revenues were $1.8 billion, up 11.6% year over year. This upside was driven by higher total revenues in the Brokerage, Risk Management as well as Corporate segments. Also, the top line surpassed the Zacks Consensus Estimate by 5.3%.
Total commissions and fees earned increased nearly 10.1% year over year to $1.2 billion in the quarter under review.
Arthur J. Gallagher’s total expense rose 11.3% year over year to $1.7 billion in the reported quarter. Expenses escalated primarily due to a higher compensation costs, operating costs, reimbursements, interest expenses, cost of revenues from clean coal activities, interest plus higher depreciation as well as amortization expenses.
Earnings before interest, tax, depreciation and amortization and change in estimated acquisition earnout payables (EBITDAC) grew 9.1% to $239 million.
Segment Results
Brokerage: Adjusted revenues of $1 billion improved 13% year over year on higher fees, commissions, supplemental as well as contingent revenues plus investment income and gains realized on books of business sales. Total expense shot up nearly 11.1% year over year to $886.2 million.
Adjusted EBITDAC climbed 13.9% to $277.3 million.
Risk Management: Adjusted revenues were up 5.8% year over year to $199.1 million, mainly owing to higher fees. Total expenses rose 8.2% year over year to $214.1 million.
Adjusted EBITDAC increased 5.9% year over year to $35.9 million.
Corporate: Total revenues came in at $492.7 million, up 14.4% year over year. Total expenses escalated 12.6% year over year to $587.9 million.
EBITDAC was at a loss of $51.4 million, slightly narrower than the loss of $51.5 million in the prior-year quarter.
Financial Update
As of Sep 30, 2018, total assets were $16.1 billion, up 8.1% from the level at year-end 2017.
Cash and cash equivalents at the reviewed quarter-end declined 11.2% from the 2017-end level to $605 million.
Shareholders’ equity increased 7.3% from the level as of Dec 31, 2017 to $4.6 billion as of Sep 30, 2018.
Acquisition Update
In the third quarter, the company closed 9 acquisitions with estimated annualized revenues of about $61.7 million.
Zacks Rank
Currently, Arthur J. Gallagher 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
Among other players from the insurance industry having reported third-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) and MGIC Investment Corporation (MTG - Free Report) outpaced the respective Zacks Consensus Estimate while the metric of RLI Corp. (RLI - Free Report) missed the same.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>