Sterne Agee Comments On Brown & Brown Following Earnings Report

Brown & Brown BRO reported operating EPS of $0.22. This compares to Sterne Agee's estimate and Street consensus at $0.21. The beat was driven by lower other operating expenses and lower tax rate. Total commissions and fees were up 7% versus Sterne's 8% estimate with organic decline accounting for most of the difference. Acquisition revenue was essentially in line with its forecast at $17.2 mm vs. $10.3 mm in the previous quarter. Contingent commissions came in at $6 mm vs. our $5 mm forecast and were at the high end of management's guidance of $4-6 mm. According to Sterne Agee, balance sheet flexibility remains significant. Unrestricted cash at the end of the quarter was $273 mm vs. $257 mm in the previous quarter. Debt to EBITDA remains low at 0.7x and is in line with the previous quarter. Sterne Agee has a Neutral rating and $26 PT on BRO BRO is trading higher at $24.99