Brown & Brown, Inc. (BRO) Q4 2025 Earnings Call Transcript
Revenue for Q4 $1.6 billion, growing 35.7% year-over-year. Organic revenue decreased 2.8%, primarily due to flood claims processing revenue recognized in the fourth quarter of last year.
Adjusted EBITDAC Margin for Q4 32.9%, remained flat year-over-year. This was a strong result considering the negative 200 basis point impact of Accession and prior year flood claim processing revenue.
Adjusted Earnings Per Share for Q4 $0.93, grew over 8% year-over-year. Growth was strong despite the impact of last year's flood claims processing revenue.
Revenue for Full Year 2025 $5.9 billion, growing 23% year-over-year. Organic growth was 2.8%, driven by M&A and contingent commissions.
Adjusted EBITDAC Margin for Full Year 2025 36%, increased by 70 basis points year-over-year. Growth was driven by higher contingent commissions, lower claims, and disciplined expense management.
Diluted Net Income Per Share for Full Year 2025 $4.26, grew over 10% year-over-year. Growth was supported by strong top-line performance and disciplined management.
Cash Flow from Operations for Full Year 2025 Nearly $1.5 billion, grew 24% year-over-year. Growth was attributed to strong revenue growth and disciplined working capital management.
Retail Segment Organic Growth for Q4 1.1%, negatively impacted by multiyear policies written in Q4 2024, onetime adjustments to incentive commissions, and delayed project work.
Specialty Distribution Organic Growth for Q4 Decreased by 7.8%, primarily due to $28 million of flood claims processing revenue recognized in Q4 2024 and a decrease in CAT property rates.
Accession Revenue for Q4 Approximately $405 million, below the guidance of $430 million to $450 million. Revenue recognition estimates impacted quarterly results but not annual expectations.
Contingent Commissions for Q4 Grew by $37 million, with $21 million coming from Accession. Growth was driven by minimal storm claim activity and higher underwriting profitability.
Effective Tax Rate for Q4 21%, decreased from 24.9% in the prior year. The decrease was driven by benefits from international operations and end-of-year adjustments.
Dividends Paid Per Share for Q4 Increased by 10% year-over-year.
Cash Flow from Operations Ratio for Full Year 2025 24.6% of total revenues, reflecting strong margins and disciplined working capital management.
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Brown & Brown, Inc. Q4 2025 Earnings Call Insights
- Strong Financial Performance: Brown & Brown reported Q4 2025 revenues of $1.6 billion, growing 35.7% year-over-year, despite a 2.8% decline in organic revenue primarily due to last year's flood claims, demonstrating resilience amid competitive pressures.
- Acquisition Integration Progress: The company completed its largest acquisition with Accession, adding over 5,000 employees and expecting $30 million to $40 million in EBITDA synergies in 2026, enhancing its competitive position in the market.
- Cautious Future Outlook: Anticipated a $15 million decrease in contingent commissions for Specialty Distribution in 2026 due to one-time adjustments, although management remains optimistic about organic growth, expecting modest improvement in the retail segment.
- Legal Risk Management: The loss of 275 employees resulted in a $23 million revenue loss, prompting the company to take legal action to protect customer relationships, reflecting its commitment to maintaining business integrity in a competitive landscape.
BROWN & BROWN FALLS 7.5% AS Q4 ORGANIC GROWTH WEAKENS
Company Performance: Brown & Brown reported a 7.5% increase in revenue after the fourth quarter.
Growth Trends: The company is experiencing a slowdown in organic growth.
