ROLLING MEADOWS, Ill.,
July 25, 2019 /PRNewswire/
-- Arthur J. Gallagher & Co. (NYSE: AJG) today reported
its financial results for the quarter ended June 30,
2019. Management will host a webcast conference call to
discuss these results on Thursday, July 25, 2019 at
5:15 p.m. ET/4:15 p.m. CT. To listen to the call, and
for printer-friendly formats of this release and the "Supplemental
Quarterly Data" and "CFO Commentary," which may also be referenced
during the call, please visit ajg.com/IR. These documents
contain both GAAP and non-GAAP measures. Investors and other
users of this information should read carefully the section
entitled "Information Regarding Non-GAAP Measures" beginning on
page 8.
"We delivered another outstanding quarter of operating
performance and are excited about the remainder of 2019. During the
second quarter, we posted excellent total revenue growth, terrific
organic revenue growth, strong margins and we completed 13
brokerage mergers with $195 million of annualized revenue,"
said J. Patrick Gallagher, Jr.,
Chairman, President and CEO. Our mid-year internal insurance
rate survey suggests global P&C price increases are approaching
5%. Further, around half of our surveyed producers see rates
moving higher in the second half of 2019. This is when we
excel; our talented production staff is fully engaged helping
clients and prospects navigate the challenges of an increasing rate
environment."
Summary of
Financial Results – Second Quarter
|
Reconciliations of
non-GAAP measures begin on page 2
|
|
(Dollars in millions,
except per share data)
|
|
2nd Q
2019
|
|
2nd Q
2018
|
|
Change
|
|
|
|
|
|
Reported
|
Adjusted
|
|
Reported
|
Adjusted
|
|
Reported
|
Adjusted
|
|
Brokerage
Segment
|
|
GAAP
|
Non-GAAP
|
|
GAAP
|
Non-GAAP
|
|
GAAP
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ 1,131.2
|
$
1,129.3
|
|
$ 1,000.1
|
$
978.0
|
|
13%
|
15%
|
|
|
Organic
revenues
|
|
|
$
1,013.2
|
|
|
$
957.5
|
|
|
5.8%
|
|
|
Net
earnings
|
|
$
138.0
|
|
|
$
127.5
|
|
|
8%
|
|
|
|
Net earnings
margin
|
|
12.2%
|
|
|
12.8%
|
|
|
-55 bpts
|
|
|
|
Adjusted
EBITDAC
|
|
|
$
298.0
|
|
|
$
253.4
|
|
|
18%
|
|
|
Adjusted EBITDAC
margin
|
|
|
26.4%
|
|
|
25.9%
|
|
|
+48
bpts
|
|
|
Diluted net earnings
per share
|
|
$
0.70
|
$
0.76
|
|
$
0.68
|
$
0.67
|
|
3%
|
13%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Management
Segment
|
|
|
|
|
|
|
|
|
|
|
|
Revenues before
reimbursements
|
|
$
209.1
|
$
209.1
|
|
$
201.9
|
$
199.2
|
|
4%
|
5%
|
|
|
Organic
revenues
|
|
|
$
205.1
|
|
|
$
199.1
|
|
|
3.0%
|
|
|
Net
earnings
|
|
$
15.5
|
|
|
$
17.6
|
|
|
-12%
|
|
|
|
Net earnings margin
(before reimbursements)
|
|
7.4%
|
|
|
8.7%
|
|
|
-131
bpts
|
|
|
|
Adjusted
EBITDAC
|
|
|
$
36.6
|
|
|
$
35.1
|
|
|
4%
|
|
|
Adjusted EBITDAC
margin (before reimbursements)
|
|
|
17.5%
|
|
|
17.6%
|
|
|
-12 bpts
|
|
|
Diluted net earnings
per share
|
|
$
0.08
|
$
0.09
|
|
$
0.09
|
$
0.10
|
|
-11%
|
-10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
Segment
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net earnings
per share
|
|
$
(0.20)
|
$
(0.20)
|
|
$
(0.15)
|
$
(0.15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Company
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net earnings
per share
|
|
$
0.58
|
$
0.65
|
|
$
0.62
|
$
0.62
|
|
-6%
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Brokerage
and Risk Management Segment
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net earnings
per share
|
|
$
0.78
|
$
0.85
|
|
$
0.77
|
$
0.77
|
|
1%
|
10%
|
|
(1 of 14)
Summary of
Financial Results – Six-Months Ended June 30,
|
Reconciliations of
non-GAAP measures begin on page 3
|
|
(Dollars in millions,
except per share data)
|
|
6 Mths
2019
|
|
6 Mths
2018
|
|
Change
|
|
|
|
|
|
Reported
|
Adjusted
|
|
Reported
|
Adjusted
|
|
Reported
|
Adjusted
|
|
Brokerage
Segment
|
|
GAAP
|
Non-GAAP
|
|
GAAP
|
Non-GAAP
|
|
GAAP
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ 2,513.1
|
$
2,454.1
|
|
$ 2,195.7
|
$
2,149.7
|
|
14%
|
14%
|
|
|
Organic
revenues
|
|
|
$
2,230.5
|
|
|
$
2,109.3
|
|
|
5.8%
|
|
|
Net
earnings
|
|
$
447.5
|
|
|
$
366.7
|
|
|
22%
|
|
|
|
Net earnings
margin
|
|
17.8%
|
|
|
16.7%
|
|
|
+111
bpts
|
|
|
|
Adjusted
EBITDAC
|
|
|
$
769.9
|
|
|
$
663.6
|
|
|
16%
|
|
|
Adjusted EBITDAC
margin
|
|
|
31.4%
|
|
|
30.9%
|
|
|
+50
bpts
|
|
|
Diluted net earnings
per share
|
|
$
2.29
|
$
2.20
|
|
$
1.94
|
$
1.96
|
|
18%
|
12%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Management
Segment
|
|
|
|
|
|
|
|
|
|
|
|
Revenues before
reimbursements
|
|
$
412.4
|
$
412.4
|
|
$
397.0
|
$
391.1
|
|
4%
|
5%
|
|
|
Organic
revenues
|
|
|
$
404.6
|
|
|
$
390.8
|
|
|
3.5%
|
|
|
Net
earnings
|
|
$
31.7
|
|
|
$
33.5
|
|
|
-5%
|
|
|
|
Net earnings margin
(before reimbursements)
|
|
7.7%
|
|
|
8.4%
|
|
|
-75 bpts
|
|
|
|
Adjusted
EBITDAC
|
|
|
$
71.1
|
|
|
$
66.5
|
|
|
7%
|
|
|
Adjusted EBITDAC
margin (before reimbursements)
|
|
|
17.2%
|
|
|
17.0%
|
|
|
+24
bpts
|
|
|
Diluted net earnings
per share
|
|
$
0.17
|
$
0.18
|
|
$
0.18
|
$
0.18
|
|
-6%
|
-%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
Segment
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net earnings
per share
|
|
$
(0.11)
|
$
(0.11)
|
|
$
(0.02)
|
$
(0.02)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Company
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net earnings
per share
|
|
$
2.35
|
$
2.27
|
|
$
2.10
|
$
2.12
|
|
12%
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Brokerage
and Risk Management Segment
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net earnings
per share
|
|
$
2.46
|
$
2.38
|
|
$
2.12
|
$
2.14
|
|
16%
|
11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended June
30 Reported GAAP to Adjusted Non-GAAP
Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
Before
|
|
|
|
|
|
|
|
Diluted
Net
|
|
|
|
|
Reimbursements
|
|
Net
Earnings
|
|
EBITDAC
|
|
Earnings Per
Share
|
Segment
|
|
2nd Q
19
|
2nd Q
18
|
|
2nd Q
19
|
2nd Q
18
|
|
2nd Q
19
|
2nd Q
18
|
|
2nd Q
19
|
2nd Q
18
|
Chg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
|
(in
millions)
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage, as
reported
|
|
$ 1,131.2
|
$ 1,000.1
|
|
$
138.0
|
$
127.5
|
|
$
280.9
|
$
251.1
|
|
$
0.70
|
$
0.68
|
3%
|
|
Net gains on
divestitures
|
|
(1.9)
|
(6.1)
|
|
(1.4)
|
(4.7)
|
|
(1.9)
|
(6.1)
|
|
(0.01)
|
(0.02)
|
|
|
Acquisition
integration
|
|
-
|
-
|
|
2.5
|
-
|
|
3.4
|
-
|
|
0.01
|
-
|
|
|
Workforce & lease
termination
|
|
-
|
-
|
|
7.2
|
2.7
|
|
9.5
|
3.5
|
|
0.04
|
0.01
|
|
|
Acquisition related
adjustments
|
|
-
|
-
|
|
3.0
|
0.4
|
|
6.1
|
5.8
|
|
0.02
|
-
|
|
|
Levelized foreign
currency translation
|
-
|
(16.0)
|
|
-
|
0.6
|
|
-
|
(0.9)
|
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage, as
adjusted *
|
|
1,129.3
|
978.0
|
|
149.3
|
126.5
|
|
298.0
|
253.4
|
|
0.76
|
0.67
|
13%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Management,
as reported
|
|
209.1
|
201.9
|
|
15.5
|
17.6
|
|
33.8
|
34.7
|
|
0.08
|
0.09
|
-11%
|
|
Workforce & lease
termination
|
|
-
|
-
|
|
2.1
|
0.8
|
|
2.8
|
1.1
|
|
0.01
|
0.01
|
|
|
Acquisition related
adjustments
|
|
-
|
-
|
|
(0.2)
|
-
|
|
-
|
-
|
|
-
|
-
|
|
|
Levelized foreign
currency translation
|
-
|
(2.7)
|
|
-
|
(0.4)
|
|
-
|
(0.7)
|
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Management,
as adjusted *
|
|
209.1
|
199.2
|
|
17.4
|
18.0
|
|
36.6
|
35.1
|
|
0.09
|
0.10
|
-10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate, as
reported
|
|
284.5
|
423.0
|
|
(32.1)
|
(21.4)
|
|
(45.9)
|
(50.1)
|
|
(0.20)
|
(0.15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Company, as
reported
|
|
$ 1,624.8
|
$ 1,625.0
|
|
$
121.4
|
$
123.7
|
|
$
268.8
|
$
235.7
|
|
$
0.58
|
$
0.62
|
-6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Company, as
adjusted *
|
|
$ 1,622.9
|
$ 1,600.2
|
|
$
134.6
|
$
123.1
|
|
$
288.7
|
$
238.4
|
|
$
0.65
|
$
0.62
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Brokerage
& Risk
Management, as
reported
|
|
$ 1,340.3
|
$ 1,202.0
|
|
$
153.5
|
$
145.1
|
|
$
314.7
|
$
285.8
|
|
$
0.78
|
$
0.77
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Brokerage
& Risk
Management, as
adjusted *
|
|
$ 1,338.4
|
$ 1,177.2
|
|
$
166.7
|
$
144.5
|
|
$
334.6
|
$
288.5
|
|
$
0.85
|
$
0.77
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
For second quarter
2019, the pretax impact of the Brokerage segment adjustments totals
$15.0 million, with a corresponding adjustment to the
provision for income taxes of $3.7 million relating to these
items. The pretax impact of the Risk Management segment
adjustments totals $2.5 million, with a corresponding
adjustment to the provision for income taxes of $0.6 million
relating to these items. A detailed reconciliation of the
2019 and 2018 provision (benefit) for income taxes is shown on
pages 13 and 14.
|
(2 of 14)
Six Months Ended
June 30 Reported GAAP to Adjusted Non-GAAP
Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
Before
|
|
|
|
|
|
|
|
Diluted
Net
|
|
|
|
Reimbursements
|
|
Net
Earnings
|
|
EBITDAC
|
|
Earnings Per
Share
|
Segment
|
|
6 Mths
19
|
6 Mths
18
|
|
6 Mths
19
|
6 Mths
18
|
|
6 Mths
19
|
6 Mths
18
|
|
6 Mths
19
|
6 Mths
18
|
Chg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
|
(in
millions)
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage, as
reported
|
|
$ 2,513.1
|
$ 2,195.7
|
|
$
447.5
|
$
366.7
|
|
$
787.6
|
$
658.9
|
|
$
2.29
|
$
1.94
|
18%
|
|
Net gains on
divestitures
|
|
(59.0)
|
(9.0)
|
|
(34.5)
|
(6.9)
|
|
(46.0)
|
(9.0)
|
|
(0.18)
|
(0.04)
|
|
|
Acquisition
integration
|
|
-
|
-
|
|
2.8
|
-
|
|
3.8
|
-
|
|
0.01
|
-
|
|
|
Workforce & lease
termination
|
|
-
|
-
|
|
11.9
|
8.4
|
|
15.8
|
11.1
|
|
0.06
|
0.05
|
|
|
Acquisition related
adjustments
|
|
-
|
-
|
|
2.9
|
4.3
|
|
8.7
|
8.5
|
|
0.02
|
0.02
|
|
|
Levelized foreign
currency translation
|
-
|
(37.0)
|
|
-
|
(1.6)
|
|
-
|
(5.9)
|
|
-
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage, as
adjusted *
|
|
2,454.1
|
2,149.7
|
|
430.6
|
370.9
|
|
769.9
|
663.6
|
|
2.20
|
1.96
|
12%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Management,
as reported
|
|
412.4
|
397.0
|
|
31.7
|
33.5
|
|
67.9
|
66.6
|
|
0.17
|
0.18
|
-6%
|
|
Workforce & lease
termination
|
|
-
|
-
|
|
2.4
|
1.0
|
|
3.2
|
1.3
|
|
0.01
|
0.01
|
|
|
Acquisition related
adjustments
|
|
-
|
-
|
|
(0.2)
|
(0.1)
|
|
-
|
-
|
|
-
|
-
|
|
|
Levelized foreign
currency translation
|
-
|
(5.9)
|
|
-
|
(0.9)
|
|
-
|
(1.4)
|
|
-
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Management,
as adjusted *
|
|
412.4
|
391.1
|
|
33.9
|
33.5
|
|
71.1
|
66.5
|
|
0.18
|
0.18
|
-%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate, as
reported
|
|
656.8
|
835.2
|
|
(6.1)
|
9.5
|
|
(111.3)
|
(110.0)
|
|
(0.11)
|
(0.02)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Company, as
reported
|
|
$ 3,582.3
|
$ 3,427.9
|
|
$
473.1
|
$
409.7
|
|
$
744.2
|
$
615.5
|
|
$
2.35
|
$
2.10
|
12%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Company, as
adjusted *
|
|
$ 3,523.3
|
$ 3,376.0
|
|
$
458.4
|
$
413.9
|
|
$
729.7
|
$
620.1
|
|
$
2.27
|
$
2.12
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Brokerage
& Risk
Management, as
reported
|
|
$ 2,925.5
|
$ 2,592.7
|
|
$
479.2
|
$
400.2
|
|
$
855.5
|
$
725.5
|
|
$
2.46
|
$
2.12
|
16%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Brokerage
& Risk
Management, as
adjusted *
|
|
$ 2,866.5
|
$ 2,540.8
|
|
$
464.5
|
$
404.4
|
|
$
841.0
|
$
730.1
|
|
$
2.38
|
$
2.14
|
11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
For the six-month
period ended June 30, 2019, the pretax impact of the Brokerage
segment adjustments totals $(22.5) million, with a
corresponding adjustment to the provision for income taxes of
$(5.6) million relating to these items. The pretax
impact of the Risk Management segment adjustments totals
$2.9 million, with a corresponding adjustment to the provision
for income taxes of $0.7 million relating to these
items. A detailed reconciliation of the 2019 and 2018
provision (benefit) for income taxes is shown on pages 13 and
14.
|
(3 of 14)
Brokerage Segment
Reported GAAP to Adjusted Non-GAAP
Reconciliations (dollars in millions):
|
|
Organic Revenues
(Non-GAAP)
|
2nd Q
19
|
|
2nd Q
18
|
|
Change
|
|
6 Mths
19
|
|
6 Mths
18
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Commissions
and Fees
|
|
|
|
|
|
|
|
|
|
|
|
Commissions and
fees, as reported
|
$ 1,033.8
|
|
$
908.4
|
|
13.8%
|
|
$ 2,236.0
|
|
$ 2,001.0
|
|
11.7%
|
Less commissions and
fees from acquisitions
|
(90.8)
|
|
-
|
|
|
|
(175.5)
|
|
-
|
|
|
Less divested
operations
|
-
|
|
(5.7)
|
|
|
|
-
|
|
(13.5)
|
|
|
Levelized foreign
currency translation
|
-
|
|
(14.3)
|
|
|
|
-
|
|
(33.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic base
commissions and fees
|
$
943.0
|
|
$
888.4
|
|
6.2%
|
|
$ 2,060.5
|
|
$ 1,954.5
|
|
5.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
revenues, as reported
|
$
46.9
|
|
$
48.1
|
|
-2.5%
|
|
$
103.6
|
|
$
100.1
|
|
3.5%
|
Less supplemental
revenues from acquisitions
|
(1.9)
|
|
-
|
|
|
|
(2.3)
|
|
-
|
|
|
Levelized foreign
currency translation
|
-
|
|
(0.7)
|
|
|
|
-
|
|
(1.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic
supplemental revenues
|
$
45.0
|
|
$
47.4
|
|
-5.1%
|
|
$
101.3
|
|
$
98.3
|
|
3.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Contingent
revenues, as reported
|
$
29.5
|
|
$
21.8
|
|
35.3%
|
|
$
77.5
|
|
$
56.7
|
|
36.7%
|
Less contingent
revenues from acquisitions
|
(4.3)
|
|
-
|
|
|
|
(8.8)
|
|
-
|
|
|
Levelized foreign
currency translation
|
-
|
|
(0.1)
|
|
|
|
-
|
|
(0.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic contingent
revenues
|
$
25.2
|
|
$
21.7
|
|
16.1%
|
|
$
68.7
|
|
$
56.5
|
|
21.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reported
commissions, fees, supplemental
revenues and
contingent revenues
|
$ 1,110.2
|
|
$
978.3
|
|
13.5%
|
|
$ 2,417.1
|
|
$ 2,157.8
|
|
12.0%
|
Less commissions,
fees, supplemental revenues
and contingent
revenues from acquisitions
|
(97.0)
|
|
-
|
|
|
|
(186.6)
|
|
-
|
|
|
Less divested
operations
|
-
|
|
(5.7)
|
|
|
|
-
|
|
(13.5)
|
|
|
Levelized foreign
currency translation
|
-
|
|
(15.1)
|
|
|
|
-
|
|
(35.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total organic
commissions, fees, supplemental
revenues and
contingent revenues
|
$ 1,013.2
|
|
$
957.5
|
|
5.8%
|
|
$ 2,230.5
|
|
$ 2,109.3
|
|
5.8%
|
Acquisition
Activity
|
|
2nd Q
19
|
|
2nd Q
18
|
|
6 Mths
19
|
|
6 Mths
18
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
acquisitions closed *
|
|
13
|
|
12
|
|
24
|
|
18
|
|
Estimated annualized
revenues acquired (in millions)
|
|
$
194.5
|
|
$
145.2
|
|
$
265.7
|
|
$
171.9
|
|
|
* In the
second quarter of 2019, Gallagher issued 132,000 shares at the
request of sellers and/or in connection with tax‑free exchange
acquisitions.
|
Compensation
Expense and Ratios
|
|
2nd Q
19
|
|
2nd Q
18
|
|
6 Mths
19
|
|
6 Mths
18
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
expense, as reported
|
|
$
659.3
|
|
$
584.3
|
|
$ 1,336.5
|
|
$ 1,209.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
integration
|
|
(2.1)
|
|
-
|
|
(2.1)
|
|
-
|
|
Workforce and lease
termination related charges
|
|
(8.5)
|
|
(2.9)
|
|
(10.7)
|
|
(6.8)
|
|
Acquisition related
adjustments
|
|
(6.1)
|
|
(5.8)
|
|
(8.7)
|
|
(8.5)
|
|
Levelized foreign
currency translation
|
|
-
|
|
(12.0)
|
|
-
|
|
(24.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
expense, as adjusted
|
|
$
642.6
|
|
$
563.6
|
|
$ 1,315.0
|
|
$ 1,169.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported compensation
expense ratios using reported
revenues on page 2
and 3
|
*
|
58.3%
|
|
58.4%
|
|
53.2%
|
|
55.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted compensation
expense ratios using adjusted
revenues on page 2
and 3
|
**
|
56.9%
|
|
57.6%
|
|
53.6%
|
|
54.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Reported second quarter
compensation ratio was 0.1 pts lower than the same period in
2018. This ratio was primarily impacted by headcount controls
partially offset by severance expense related to eliminating or
restructuring approximately 250 positions. The ratio was also
impacted by two acquisitions that closed in mid-2018, which have
lower compensation ratios and higher operating expense
ratios.
|
|
**
|
Adjusted second
quarter compensation ratio was 0.7 pts lower than the same
period in 2018. This ratio was primarily impacted by
headcount controls as well as two acquisitions that closed in
mid-2018, which have lower compensation ratios and higher operating
expense ratios.
|
(4 of 14)
Operating Expense
and Ratios
|
|
2nd Q
2019
|
|
2nd Q
2018
|
|
6 Mths
2019
|
|
6 Mths
2018
|
|
|
|
|
|
|
|
|
|
|
Operating expense,
as reported
|
|
$
191.0
|
|
$
164.7
|
|
$
389.0
|
|
$
327.1
|
|
|
|
|
|
|
|
|
|
|
Acquisition
integration
|
|
(1.3)
|
|
-
|
|
(1.7)
|
|
-
|
Workforce and lease
termination related charges
|
|
(1.0)
|
|
(0.6)
|
|
(5.1)
|
|
(4.3)
|
Costs related to
divestures
|
|
-
|
|
-
|
|
(13.0)
|
|
-
|
Levelized foreign
currency translation
|
|
-
|
|
(3.1)
|
|
-
|
|
(6.6)
|
|
|
|
|
|
|
|
|
|
|
Operating expense,
as adjusted
|
|
$
188.7
|
|
$
161.0
|
|
$
369.2
|
|
$
316.2
|
|
|
|
|
|
|
|
|
|
|
Reported operating
expense ratios using reported
revenues on page 2
and 3
|
*
|
16.9%
|
|
16.5%
|
|
15.5%
|
|
14.9%
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
expense ratios using adjusted revenues on page 2 and
3
|
*
|
16.7%
|
|
16.5%
|
|
15.0%
|
|
14.7%
|
|
|
|
|
|
|
|
|
|
|
*
|
Reported second
quarter operating expense ratio was 0.4 pts higher than the
same period in 2018. Adjusted second quarter operating
expense ratio was 0.2 pts higher than the same period in
2018. Both ratios were primarily impacted by two acquisitions
that closed in mid-2018, which have higher operating expense ratios
and lower compensation ratios. All other items were
essentially consistent with the prior period.
|
|
|
Net Earnings to
Adjusted EBITDAC (Non-GAAP)
|
|
2nd Q
2019
|
|
2nd Q
2018
|
|
Change
|
|
6 Mths
2019
|
|
6 Mths
2018
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings, as
reported
|
|
$
138.0
|
|
$
127.5
|
|
8.2%
|
|
$
447.5
|
|
$
366.7
|
|
22.0%
|
Provision for income
taxes
|
|
44.3
|
|
43.1
|
|
|
|
147.2
|
|
122.8
|
|
|
Depreciation
|
|
16.4
|
|
14.3
|
|
|
|
32.6
|
|
29.1
|
|
|
Amortization
|
|
78.7
|
|
72.5
|
|
|
|
154.2
|
|
139.4
|
|
|
Change in estimated
acquisition earnout payables
|
|
3.5
|
|
(6.3)
|
|
|
|
6.1
|
|
0.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAC
|
|
280.9
|
|
251.1
|
|
11.9%
|
|
787.6
|
|
658.9
|
|
19.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains on
divestitures
|
|
(1.9)
|
|
(6.1)
|
|
|
|
(46.0)
|
|
(9.0)
|
|
|
Acquisition
integration
|
|
3.4
|
|
-
|
|
|
|
3.8
|
|
-
|
|
|
Workforce and lease
termination related charges
|
|
9.5
|
|
3.5
|
|
|
|
15.8
|
|
11.1
|
|
|
Acquisition related
adjustments
|
|
6.1
|
|
5.8
|
|
|
|
8.7
|
|
8.5
|
|
|
Levelized foreign
currency translation
|
|
-
|
|
(0.9)
|
|
|
|
-
|
|
(5.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAC, as
adjusted
|
|
$
298.0
|
|
$
253.4
|
|
17.6%
|
|
$
769.9
|
|
$
663.6
|
|
16.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings margin,
as reported using reported
revenues on page 2
and 3
|
|
12.2%
|
|
12.8%
|
|
-55
bpts
|
|
17.8%
|
|
16.7%
|
|
+111
bpts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAC margin, as
adjusted using adjusted
revenues on page 2
and 3
|
|
26.4%
|
|
25.9%
|
|
+48
bpts
|
|
31.4%
|
|
30.9%
|
|
+50
bpts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Management
Segment Reported GAAP to Adjusted Non-GAAP
Reconciliations (dollars
in millions):
|
|
Organic Revenues
(Non-GAAP)
|
|
2nd Q
2019
|
|
2nd Q
2018
|
|
Change
|
|
6 Mths
2019
|
|
6 Mths
2018
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees
|
|
$
208.2
|
|
$
198.5
|
|
4.9%
|
|
$
409.8
|
|
$
391.8
|
|
4.6%
|
|
International
performance bonus fees
|
|
0.4
|
|
3.3
|
|
|
|
1.7
|
|
4.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees as
reported
|
|
208.6
|
|
201.8
|
|
3.4%
|
|
411.5
|
|
396.7
|
|
3.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less fees from
acquisitions
|
|
(3.5)
|
|
-
|
|
|
|
(6.9)
|
|
-
|
|
|
|
Levelized foreign
currency translation
|
|
-
|
|
(2.7)
|
|
|
|
-
|
|
(5.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic
fees
|
|
$
205.1
|
|
$
199.1
|
|
3.0%
|
|
$
404.6
|
|
$
390.8
|
|
3.5%
|
|
(5 of 14)
Risk Management
Segment Reported GAAP to Adjusted Non-GAAP
Reconciliations (continued) (dollars
in millions):
|
|
Compensation
Expense and Ratios
|
|
2nd Q
2019
|
|
2nd Q
2018
|
|
6 Mths
2019
|
|
6 Mths
2018
|
|
|
|
|
|
|
|
|
|
|
Compensation
expense, as reported
|
|
$
128.8
|
|
$
121.3
|
|
$
253.6
|
|
$
240.3
|
|
|
|
|
|
|
|
|
|
|
Workforce and lease
termination related charges
|
|
(2.8)
|
|
(0.8)
|
|
(3.2)
|
|
(0.9)
|
Levelized foreign
currency translation
|
|
-
|
|
(1.5)
|
|
-
|
|
(3.4)
|
|
|
|
|
|
|
|
|
|
|
Compensation
expense, as adjusted
|
|
$
126.0
|
|
$
119.0
|
|
$
250.4
|
|
$
236.0
|
|
|
|
|
|
|
|
|
|
|
Reported compensation
expense ratios using reported revenues (before reimbursements)
on page 2 and 3
|
*
|
61.6%
|
|
60.1%
|
|
61.5%
|
|
60.5%
|
|
|
|
|
|
|
|
|
|
|
Adjusted compensation
expense ratios using adjusted revenues (before reimbursements)
on page 2 and 3
|
**
|
60.3%
|
|
59.7%
|
|
60.7%
|
|
60.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Reported second quarter
compensation ratio was 1.5 pts higher than the same period in
2018. This ratio was primarily impacted by lesser performance
revenues, as well as severance expense related to eliminating
or restructuring approximately 50 positions.
|
**
|
Adjusted second
quarter compensation ratio was 0.6 pts higher than the same
period in 2018. This ratio was primarily impacted by lesser
performance revenues.
|
|
|
Operating Expense
and Ratios
|
|
2nd Q
2019
|
|
2nd Q
2018
|
|
6 Mths
2019
|
|
6 Mths
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense,
as reported
|
|
$
46.5
|
|
$
45.9
|
|
$
90.9
|
|
$
90.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Workforce and lease
termination related charges
|
|
-
|
|
(0.3)
|
|
-
|
|
(0.4)
|
|
Levelized foreign
currency translation
|
|
-
|
|
(0.5)
|
|
-
|
|
(1.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense,
as adjusted
|
|
$
46.5
|
|
$
45.1
|
|
$
90.9
|
|
$
88.6
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported operating
expense ratios using
reported revenues
(before reimbursements) on page 2 and 3
|
*
|
22.2%
|
|
22.7%
|
|
22.0%
|
|
22.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
expense ratios using
adjusted revenues
(before reimbursements) on page 2 and 3
|
*
|
22.2%
|
|
22.6%
|
|
22.0%
|
|
22.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Reported second
quarter operating expense ratio was 0.5 pts lower than the
same period in 2018. Adjusted second quarter operating
expense ratio was 0.4 pts lower than the same period in
2018. Both ratios were primarily impacted by savings in
professional fees and business insurance.
|
Net Earnings to
Adjusted EBITDAC (Non-GAAP)
|
|
2nd Q
2019
|
|
2nd Q
2018
|
|
Change
|
|
6 Mths
2019
|
|
6 Mths
2018
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings, as
reported
|
|
$
15.5
|
|
$
17.6
|
|
-11.9%
|
|
$
31.7
|
|
$
33.5
|
|
-5.4%
|
Provision for income
taxes
|
|
5.5
|
|
6.4
|
|
|
|
11.3
|
|
12.1
|
|
|
Depreciation
|
|
11.9
|
|
9.5
|
|
|
|
22.7
|
|
18.3
|
|
|
Amortization
|
|
1.0
|
|
0.9
|
|
|
|
2.0
|
|
2.2
|
|
|
Change in estimated
acquisition earnout payables
|
|
(0.1)
|
|
0.3
|
|
|
|
0.2
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAC
|
|
33.8
|
|
34.7
|
|
-2.6%
|
|
67.9
|
|
66.6
|
|
2.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Workforce and lease
termination related charges
|
|
2.8
|
|
1.1
|
|
|
|
3.2
|
|
1.3
|
|
|
Levelized foreign
currency translation
|
|
-
|
|
(0.7)
|
|
|
|
-
|
|
(1.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAC, as
adjusted
|
|
$
36.6
|
|
$
35.1
|
|
4.3%
|
|
$
71.1
|
|
$
66.5
|
|
6.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings margin,
as reported using reported
revenues (before
reimbursements) on page 2 and 3
|
|
7.4%
|
|
8.7%
|
|
-131
bpts
|
|
7.7%
|
|
8.4%
|
|
-75
bpts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAC margin, as
adjusted using adjusted
revenues (before
reimbursements) on page 2 and 3
|
|
17.5%
|
|
17.6%
|
|
-12 bpts
|
|
17.2%
|
|
17.0%
|
|
+24
bpts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6 of 14)
Corporate
Segment Reported GAAP Information (dollars
in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
Net
Earnings
|
|
|
|
|
|
Net
Earnings
|
|
|
|
|
|
Income
|
|
(Loss)
|
|
|
|
Income
|
|
(Loss)
|
|
|
|
|
|
Tax
|
|
Attributable
to
|
|
|
|
Tax
|
|
Attributable
to
|
Components of
Corporate
|
|
Pretax
|
|
(Provision)
|
|
Controlling
|
|
Pretax
|
|
(Provision)
|
|
Controlling
|
Segment, as
reported
|
|
Loss
|
|
Benefit
|
|
Interests
|
|
Loss
|
|
Benefit
|
|
Interests
|
2nd
Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and banking
costs
|
|
$
(46.0)
|
|
$
12.0
|
|
$
(34.0)
|
|
$
(34.4)
|
|
$
8.9
|
|
$
(25.5)
|
Clean energy related
(1)
|
|
(36.6)
|
|
44.8
|
|
8.2
|
|
(44.8)
|
|
59.2
|
|
14.4
|
Acquisition
costs
|
|
(7.8)
|
|
1.3
|
|
(6.5)
|
|
(3.0)
|
|
0.4
|
|
(2.6)
|
Corporate (includes
impact of U.S. Tax Reform)
|
(13.7)
|
|
7.7
|
|
(6.0)
|
|
(15.5)
|
|
1.1
|
|
(14.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported 2nd
quarter
|
|
$ (104.1)
|
|
$
65.8
|
|
$
(38.3)
|
|
$
(97.7)
|
|
$
69.6
|
|
$
(28.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and banking
costs
|
|
$
(87.1)
|
|
$
22.7
|
|
$
(64.4)
|
|
$
(66.9)
|
|
$
17.4
|
|
$
(49.5)
|
Clean energy related
(1)
|
|
(90.1)
|
|
159.8
|
|
69.7
|
|
(101.7)
|
|
168.6
|
|
66.9
|
Acquisition
costs
|
|
(11.7)
|
|
1.9
|
|
(9.8)
|
|
(5.0)
|
|
0.7
|
|
(4.3)
|
Corporate (includes
impact of U.S. Tax Reform)
|
(35.6)
|
|
20.0
|
|
(15.6)
|
|
(29.6)
|
|
12.0
|
|
(17.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported six
months
|
|
$ (224.5)
|
|
$
204.4
|
|
$
(20.1)
|
|
$ (203.2)
|
|
$
198.7
|
|
$
(4.5)
|
(1)
|
Pretax loss for the
second quarter is presented net of amounts attributable to
noncontrolling interests of $6.2 million in 2019 and
$6.7 million in 2018. Pretax loss for the six-months
ended June 30, 2019, is presented net of amounts attributable to
noncontrolling interests of $14.0 million in 2019 and
$14.0 million in 2018.
|
Interest and banking costs and debt - At
June 30, 2019, Gallagher had $3,923.0 million of borrowings from private
placements, $325.0 million of
short-term borrowings under its line of credit facility and
$137.3 million outstanding under
a revolving loan facility that provides funding for premium finance
receivables, which are fully collateralized by the underlying
premiums held by insurance carriers, and as such are excluded from
our debt covenant computations. On June 12, 2019,
Gallagher entered into a note purchase agreement for a private
placement of $175.0 million of
senior unsecured notes. Proceeds were primarily used to fund
the $50.0 million of private
placement debt that matured on June 24, 2019 and for
acquisition funding.
Clean energy - Consists of the operating results
related to our investments in 34 clean coal production plants and
royalty income from clean coal licenses related to Chem-Mod
LLC. Additional information regarding these results is
available in the "CFO Commentary" at ajg.com/IR.
Acquisition costs - Consists mostly of external
professional fees and other due diligence costs related to
acquisitions.
Corporate (includes impact of U.S. Tax Reform)
- Consists of overhead allocations mostly related to corporate
staff compensation and other corporate level activities. In
addition, this includes the tax expense related to the impact of
the U.S. tax legislation passed in December
2017 - principally the partial taxation of foreign earnings,
nondeductible executive compensation and entertainment
expenses.
Income Taxes
Gallagher allocates the provision for
income taxes to its Brokerage and Risk Management segments using
the local country statutory rates. Gallagher's consolidated
effective tax rate for the quarters ended June 30, 2019 and
2018 was (15.1)% and (19.4)%, respectively, which was lower than
the statutory rate due to the amount of IRC Section 45 tax
credits.
(7 of 14)
Webcast Conference Call
Gallagher will host a webcast
conference call on Thursday, July 25, 2019 at 5:15 p.m. ET/4:15 p.m.
CT. To listen to this call, please go to
ajg.com/IR. The call will be available for replay at such
website for at least 90 days.
About Arthur J. Gallagher
& Co.
Arthur J. Gallagher
& Co., an international insurance brokerage and risk management
services firm, is headquartered in Rolling Meadows, Illinois, has operations in
35 countries and offers client-service capabilities in more than
150 countries around the world through a network of correspondent
brokers and consultants.
Impact of a New Lease Accounting Standard in First Quarter
2019
A new lease accounting standard was adopted as of
January 1, 2019, using the modified retrospective approach
allowing Gallagher to initially apply the new lease standard at the
adoption date and recognize a cumulative effect adjustment to the
opening balance of retained earnings in the first quarter 2019.
Consequently, the reporting for the comparative prior year
periods presented in 2019 will continue to be in accordance with
the previous lease guidance, including comparative disclosure
requirements. The new lease accounting standard requires us
to recognize lease right-of-use assets and lease liabilities on our
balance sheet, which are established at the inception of a lease by
computing a net present value of the future lease payments.
Right-of-use assets are amortized to expense, and the discount
amount related to lease liabilities is accreted to expense, over
the lease term. The amortization of the right-of-use asset is
calculated as the difference between the straight-line lease
expense and the interest calculated on the lease liability.
Rent payments are applied against the lease liabilities.
Adoption of the new lease standard resulted in the recording of net
right-of-use assets and lease liabilities of approximately
$379.6 million and $420.3 million, respectively, and the
reclassification of net rent related asset and liabilities of
$38.3 million as of
January 1, 2019. The cumulative effect of the adoption
was recognized as a decrease to retained earnings of $2.4 million on January 1, 2019.
There were de minimis impacts on the first and second quarter 2019
statement of earnings related to the adoption of this new lease
standard.
Cautionary Information
This press release contains
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. When used in this
press release, the words "anticipates," "believes," "contemplates,"
"see," "should," "could," "will," "estimates," "expects,"
"intends," "plans" and variations thereof and similar expressions,
are intended to identify forward-looking statements. Examples
of forward-looking statements include, but are not limited to,
statements regarding (i) anticipated future results or performance
of any segment or the Company as a whole; (ii) the premium rate
environment and the state of insurance markets; and (iii) the
economic environment.
Gallagher's actual results may differ materially from those
contemplated by the forward-looking statements. Readers are
therefore cautioned against relying on any of the forward-looking
statements, which are neither statements of historical fact nor
guarantees or assurances of future performance. Important
factors that could cause actual results to differ materially from
those in the forward-looking statements include changes in
worldwide and national economic conditions, including as a result
of Brexit, a prolonged government shutdown or tariffs; changes in
premium rates and in insurance markets generally; and changes in
the insurance brokerage industry's competitive landscape.
Please refer to Gallagher's filings with the SEC, including Item
1A, "Risk Factors," of its Annual Report on Form 10-K for the
fiscal year ended December 31, 2018 for a more detailed
discussion of these and other factors that could impact its
forward-looking statements. Any forward-looking statement
made by Gallagher in this press release speaks only as of the date
on which it is made. Except as required by applicable law,
Gallagher does not undertake to update the information included
herein or the corresponding earnings release posted on Gallagher's
website.
Information Regarding Non-GAAP Measures
In addition to
reporting financial results in accordance with GAAP, this press
release provides information regarding EBITDAC, EBITDAC margin,
adjusted EBITDAC, adjusted EBITDAC margin, diluted net earnings per
share, as adjusted (adjusted EPS), for the Brokerage and Risk
Management segments, adjusted revenues, adjusted compensation and
operating expenses, adjusted compensation expense ratio, adjusted
operating expense ratio and organic revenue measures for each
operating segment. These measures are not in accordance with,
or an alternative to, the GAAP information provided in this press
release. Gallagher's management believes that these
presentations provide useful information to management, analysts
and investors regarding financial and business trends relating to
Gallagher's results of operations and financial condition.
See further below for definitions and the reason each of
these measures is useful to investors. Gallagher's industry
peers may provide similar supplemental non-GAAP information with
respect to one or more of these measures, although they may not use
the same or comparable terminology and may not make identical
adjustments. The non-GAAP information provided by Gallagher
should be used in addition to, but not as a substitute for, the
GAAP information provided. As disclosed in its most recent
Proxy Statement, Gallagher makes determinations regarding certain
elements of executive officer compensation, performance share
awards and annual cash incentive awards, partly on the basis of
measures related to adjusted EBITDAC. Certain
reclassifications have been made to the prior year amounts reported
in this press release in order to conform them to the current year
presentation.
(8 of 14)
Adjusted Non-GAAP presentation - Gallagher believes
that the adjusted non-GAAP presentations of the current and prior
year information presented in this earnings release provide
stockholders and other interested persons with useful information
regarding certain financial metrics of Gallagher that may assist
such persons in analyzing Gallagher's operating results as
they develop a future earnings outlook for Gallagher. The
after-tax amounts related to the adjustments were computed using
the normalized effective tax rate for each respective period.
See pages 13 and 14 for a reconciliation of the adjustments made to
income taxes.
- Adjusted revenues and expenses - Revenues (for the
Brokerage segment), revenues before reimbursements (for the Risk
Management segment), compensation expense and operating expense,
respectively, each adjusted to exclude the following, as
applicable:
-
- Net gains on divestitures, which are primarily net proceeds
received related to sales of books of business and other
divestiture transactions, such as the disposal of a business
through sale or closure.
- Costs related to divestitures, which include legal and other
costs related to certain operations that are being exited by
Gallagher.
- Acquisition integration costs, which include costs related to
certain large acquisitions, outside the scope of the usual tuck-in
strategy, not expected to occur on an ongoing basis in the future
once Gallagher fully assimilates the applicable acquisition. These
costs are typically associated with redundant workforce, extra
lease space, duplicate services and external costs incurred to
assimilate the acquisition with our IT related systems.
- Workforce related charges, which primarily include severance
costs (either accrued or paid) related to employee terminations and
other costs associated with redundant workforce.
- Lease termination related charges, which primarily include
costs related to terminations of real estate leases and abandonment
of leased space.
- Acquisition related adjustments, which include change in
estimated acquisition earnout payables adjustments, impacts of
acquisition valuation true-ups, impairment charges and acquisition
related compensation charges.
- The impact of foreign currency translation, as applicable. The
amounts excluded with respect to foreign currency translation are
calculated by applying current year foreign exchange rates to the
same periods in the prior year.
- Adjusted ratios - Adjusted compensation expense and
adjusted operating expense, respectively, each divided by adjusted
revenues.
Non-GAAP Earnings Measures
- EBITDAC and EBITDAC margin - EBITDAC is net
earnings before interest, income taxes, depreciation, amortization
and the change in estimated acquisition earnout payables and
EBITDAC margin is EBITDAC divided by total revenues (for the
brokerage segment) and revenues before reimbursements (for the risk
management segment). These measures for the Brokerage and Risk
Management segments provide a meaningful representation of
Gallagher's operating performance and, for the overall business,
provide a meaningful way to measure its financial performance on an
ongoing basis.
- Adjusted EBITDAC and Adjusted EBITDAC Margin -
Adjusted EBITDAC is EBITDAC adjusted to exclude net gains on
divestitures, acquisition integration costs, workforce related
charges, lease termination related charges, acquisition related
adjustments and the period-over-period impact of foreign currency
translation, as applicable and Adjusted EBITDAC margin is Adjusted
EBITDAC divided by total adjusted revenues (defined above). These
measures for the Brokerage and Risk Management segments provide a
meaningful representation of Gallagher's operating performance, and
are also presented to improve the comparability of our results
between periods by eliminating the impact of the items that have a
high degree of variability.
- Adjusted EPS for the Brokerage and Risk Management
segments - Net earnings adjusted to exclude the after-tax
impact of net gains on divestitures, acquisition integration costs,
the impact of foreign currency translation, workforce related
charges, lease termination related charges and acquisition related
adjustments divided by diluted weighted average shares outstanding.
This measure provides a meaningful representation of Gallagher's
operating performance (and as such should not be used as a measure
of Gallagher's liquidity), and is also presented to improve the
comparability of our results between periods by eliminating the
impact of the items that have a high degree of variability.
Organic Revenues (a non-GAAP measure) - For the
Brokerage segment, organic change in base commission and fee
revenues, supplemental revenues and contingent revenues exclude the
first twelve months of such revenues generated from acquisitions
and such revenues related to divested operations in each year
presented. These revenues are excluded from organic revenues
in order to help interested persons analyze the revenue growth
associated with the operations that were a part of Gallagher in
both the current and prior year. In addition, organic change
in base commission and fee revenues, supplemental revenues and
contingent revenues exclude the period-over-period impact of
foreign currency translation. For the Risk Management
segment, organic change in fee revenues excludes the first twelve
months of fee revenues generated from acquisitions and the fee
revenues related to operations disposed of in each year
presented. In addition, change in organic growth excludes the
period-over-period impact of foreign currency translation to
improve the comparability of our results between periods by
eliminating the impact of the items that have a high degree of
variability or are due to the limited-time nature of these revenue
sources.
(9 of 14)
These revenue items are excluded from organic revenues in order
to determine a comparable, but non-GAAP, measurement of revenue
growth that is associated with the revenue sources that are
expected to continue in the current year and beyond.
Gallagher has historically viewed organic revenue growth as an
important indicator when assessing and evaluating the performance
of its Brokerage and Risk Management segments. Gallagher also
believes that using this non-GAAP measure allows readers of our
financial statements to measure, analyze and compare the growth
from its Brokerage and Risk Management segments in a meaningful and
consistent manner.
Reconciliation of Non-GAAP Information Presented to GAAP
Measures - This press release includes tabular
reconciliations to the most comparable GAAP measures, as follows:
for EBITDAC (on pages 11 and 12), for adjusted revenues,
adjusted EBITDAC and adjusted diluted net earnings per share (on
pages 2 and 3), for organic revenue measures (on pages 4 and
6, respectively, for the Brokerage and Risk Management segments),
for adjusted compensation and operating expenses and adjusted
EBITDAC margin (on pages 5, 6 and 7, respectively, for the
Brokerage and Risk Management segments).
(10 of 14)
Arthur J. Gallagher
& Co.
|
Reported Statement of
Earnings and EBITDAC - 2nd Qtr Ended June 30,
|
(Unaudited - in
millions except per share, percentage and workforce
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2nd Q
Ended
|
|
2nd Q
Ended
|
|
6 Mths
Ended
|
|
6 Mths
Ended
|
Brokerage
Segment
|
|
|
|
|
|
|
|
|
June 30,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions
|
|
|
|
|
|
|
|
$
777.7
|
|
$
688.0
|
|
$
1,718.1
|
|
$
1,527.4
|
Fees
|
|
|
|
|
|
|
|
256.1
|
|
220.4
|
|
517.9
|
|
473.6
|
Supplemental
revenues
|
|
|
|
|
|
|
|
46.9
|
|
48.1
|
|
103.6
|
|
100.1
|
Contingent
revenues
|
|
|
|
|
|
|
|
29.5
|
|
21.8
|
|
77.5
|
|
56.7
|
Investment income and
net gains on divestitures
|
|
|
|
|
|
21.0
|
|
21.8
|
|
96.0
|
|
37.9
|
Total
revenues
|
|
|
|
|
|
|
|
|
1,131.2
|
|
1,000.1
|
|
2,513.1
|
|
2,195.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
|
659.3
|
|
584.3
|
|
1,336.5
|
|
1,209.7
|
Operating
|
|
|
|
|
|
|
|
191.0
|
|
164.7
|
|
389.0
|
|
327.1
|
Depreciation
|
|
|
|
|
|
|
|
16.4
|
|
14.3
|
|
32.6
|
|
29.1
|
Amortization
|
|
|
|
|
|
|
|
78.7
|
|
72.5
|
|
154.2
|
|
139.4
|
Change in estimated
acquisition earnout payables
|
|
|
|
|
|
3.5
|
|
(6.3)
|
|
6.1
|
|
0.9
|
Expenses
|
|
|
|
|
|
|
|
|
948.9
|
|
829.5
|
|
1,918.4
|
|
1,706.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes
|
|
|
|
|
|
|
|
182.3
|
|
170.6
|
|
594.7
|
|
489.5
|
Provision for income
taxes
|
|
|
|
|
|
|
|
44.3
|
|
43.1
|
|
147.2
|
|
122.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
|
|
|
|
|
138.0
|
|
127.5
|
|
447.5
|
|
366.7
|
Net earnings
attributable to noncontrolling interests
|
|
|
|
|
|
5.1
|
|
2.1
|
|
14.9
|
|
7.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to controlling interests
|
|
|
|
|
|
$
132.9
|
|
$
125.4
|
|
$
432.6
|
|
$
359.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
|
|
|
|
|
$
138.0
|
|
$
127.5
|
|
$
447.5
|
|
$
366.7
|
Provision for income
taxes
|
|
|
|
|
|
|
|
44.3
|
|
43.1
|
|
147.2
|
|
122.8
|
Depreciation
|
|
|
|
|
|
|
|
16.4
|
|
14.3
|
|
32.6
|
|
29.1
|
Amortization
|
|
|
|
|
|
|
|
78.7
|
|
72.5
|
|
154.2
|
|
139.4
|
Change in estimated
acquisition earnout payables
|
|
|
|
|
|
3.5
|
|
(6.3)
|
|
6.1
|
|
0.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAC
|
|
|
|
|
|
|
|
$
280.9
|
|
$
251.1
|
|
$
787.6
|
|
$
658.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2nd Q
Ended
|
|
2nd Q
Ended
|
|
6 Mths
Ended
|
|
6 Mths
Ended
|
Risk Management
Segment
|
|
|
|
|
|
|
|
June 30,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
$
208.6
|
|
$
201.8
|
|
$
411.5
|
|
$
396.7
|
Investment
income
|
|
|
|
|
|
|
|
0.5
|
|
0.1
|
|
0.9
|
|
0.3
|
Revenues before
reimbursements
|
|
|
|
|
|
|
|
|
209.1
|
|
201.9
|
|
412.4
|
|
397.0
|
Reimbursements
|
|
|
|
|
|
|
|
33.0
|
|
35.4
|
|
66.1
|
|
70.2
|
Total
revenues
|
|
|
|
|
|
|
|
|
242.1
|
|
237.3
|
|
478.5
|
|
467.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
|
128.8
|
|
121.3
|
|
253.6
|
|
240.3
|
Operating
|
|
|
|
|
|
|
|
46.5
|
|
45.9
|
|
90.9
|
|
90.1
|
Reimbursements
|
|
|
|
|
|
|
|
33.0
|
|
35.4
|
|
66.1
|
|
70.2
|
Depreciation
|
|
|
|
|
|
|
|
11.9
|
|
9.5
|
|
22.7
|
|
18.3
|
Amortization
|
|
|
|
|
|
|
|
1.0
|
|
0.9
|
|
2.0
|
|
2.2
|
Change in estimated
acquisition earnout payables
|
|
|
|
|
|
(0.1)
|
|
0.3
|
|
0.2
|
|
0.5
|
Expenses
|
|
|
|
|
|
|
|
|
221.1
|
|
213.3
|
|
435.5
|
|
421.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes
|
|
|
|
|
|
|
|
21.0
|
|
24.0
|
|
43.0
|
|
45.6
|
Provision for income
taxes
|
|
|
|
|
|
|
|
5.5
|
|
6.4
|
|
11.3
|
|
12.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
|
|
|
|
|
15.5
|
|
17.6
|
|
31.7
|
|
33.5
|
Net earnings
attributable to noncontrolling interests
|
|
|
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to controlling interests
|
|
|
|
|
|
$
15.5
|
|
$
17.6
|
|
$
31.7
|
|
$
33.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
|
|
|
|
|
$
15.5
|
|
$
17.6
|
|
$
31.7
|
|
$
33.5
|
Provision for income
taxes
|
|
|
|
|
|
|
|
5.5
|
|
6.4
|
|
11.3
|
|
12.1
|
Depreciation
|
|
|
|
|
|
|
|
11.9
|
|
9.5
|
|
22.7
|
|
18.3
|
Amortization
|
|
|
|
|
|
|
|
1.0
|
|
0.9
|
|
2.0
|
|
2.2
|
Change in estimated
acquisition earnout payables
|
|
|
|
|
|
(0.1)
|
|
0.3
|
|
0.2
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAC
|
|
|
|
|
|
|
|
$
33.8
|
|
$
34.7
|
|
$
67.9
|
|
$
66.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See "Information
Regarding Non-GAAP Measures" on page 8 of 14.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11 of 14)
|
Arthur J. Gallagher
& Co.
|
Reported Statement of
Earnings and EBITDAC - 2nd Qtr Ended June 30,
|
(Unaudited - in
millions except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2nd Q
Ended
|
|
2nd Q
Ended
|
|
6 Mths
Ended
|
|
6 Mths
Ended
|
Corporate
Segment
|
|
|
|
|
|
|
|
June 30,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from
consolidated clean coal facilities
|
|
|
|
|
|
$
270.0
|
|
$
411.8
|
|
$
626.4
|
|
$
812.3
|
Royalty income from
clean coal licenses
|
|
|
|
|
|
|
15.3
|
|
11.3
|
|
31.9
|
|
23.5
|
Loss from
unconsolidated clean coal facilities
|
|
|
|
|
|
(0.9)
|
|
(0.7)
|
|
(1.6)
|
|
(1.2)
|
Other net
revenues
|
|
|
|
|
|
|
|
0.1
|
|
0.6
|
|
0.1
|
|
0.6
|
|
Total
revenues
|
|
|
|
|
|
|
|
284.5
|
|
423.0
|
|
656.8
|
|
835.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues from
consolidated clean coal facilities
|
|
|
|
|
|
292.0
|
|
441.8
|
|
674.5
|
|
873.0
|
Compensation
|
|
|
|
|
|
|
|
18.2
|
|
19.1
|
|
53.3
|
|
50.5
|
Operating
|
|
|
|
|
|
|
|
20.2
|
|
12.2
|
|
40.3
|
|
21.7
|
Interest
|
|
|
|
|
|
|
|
44.9
|
|
33.9
|
|
85.1
|
|
65.2
|
Depreciation
|
|
|
|
|
|
|
|
7.0
|
|
7.0
|
|
14.0
|
|
14.0
|
|
Expenses
|
|
|
|
|
|
|
|
382.3
|
|
514.0
|
|
867.2
|
|
1,024.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
|
|
|
|
|
|
(97.8)
|
|
(91.0)
|
|
(210.4)
|
|
(189.2)
|
Benefit for income
taxes
|
|
|
|
|
|
|
|
(65.7)
|
|
(69.6)
|
|
(204.3)
|
|
(198.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
|
|
|
|
|
|
|
(32.1)
|
|
(21.4)
|
|
(6.1)
|
|
9.5
|
Net earnings
attributable to noncontrolling interests
|
|
|
|
|
|
6.2
|
|
6.7
|
|
14.0
|
|
14.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss) attributable to controlling interests
|
|
|
|
|
$
(38.3)
|
|
$
(28.1)
|
|
$
(20.1)
|
|
$
(4.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
|
|
|
|
|
|
|
$
(32.1)
|
|
$
(21.4)
|
|
$
(6.1)
|
|
$
9.5
|
Benefit for income
taxes
|
|
|
|
|
|
|
|
(65.7)
|
|
(69.6)
|
|
(204.3)
|
|
(198.7)
|
Interest
|
|
|
|
|
|
|
|
44.9
|
|
33.9
|
|
85.1
|
|
65.2
|
Depreciation
|
|
|
|
|
|
|
|
7.0
|
|
7.0
|
|
14.0
|
|
14.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAC
|
|
|
|
|
|
|
|
$
(45.9)
|
|
$
(50.1)
|
|
$
(111.3)
|
|
$
(110.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2nd Q
Ended
|
|
2nd Q
Ended
|
|
6 Mths
Ended
|
|
6 Mths
Ended
|
Total
Company
|
|
|
|
|
|
|
|
June 30,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions
|
|
|
|
|
|
|
|
$
777.7
|
|
$
688.0
|
|
$
1,718.1
|
|
$
1,527.4
|
Fees
|
|
|
|
|
|
|
|
464.7
|
|
422.2
|
|
929.4
|
|
870.3
|
Supplemental
revenues
|
|
|
|
|
|
|
|
46.9
|
|
48.1
|
|
103.6
|
|
100.1
|
Contingent
revenues
|
|
|
|
|
|
|
|
29.5
|
|
21.8
|
|
77.5
|
|
56.7
|
Investment income and
net gains on divestitures
|
|
|
|
|
|
21.5
|
|
21.9
|
|
96.9
|
|
38.2
|
Revenues from clean
coal activities
|
|
|
|
|
|
|
|
284.4
|
|
422.4
|
|
656.7
|
|
834.6
|
Other net revenues -
Corporate
|
|
|
|
|
|
|
|
0.1
|
|
0.6
|
|
0.1
|
|
0.6
|
|
Revenues before
reimbursements
|
|
|
|
|
|
|
|
1,624.8
|
|
1,625.0
|
|
3,582.3
|
|
3,427.9
|
Reimbursements
|
|
|
|
|
|
|
|
33.0
|
|
35.4
|
|
66.1
|
|
70.2
|
|
Total
revenues
|
|
|
|
|
|
|
|
1,657.8
|
|
1,660.4
|
|
3,648.4
|
|
3,498.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
|
806.3
|
|
724.7
|
|
1,643.4
|
|
1,500.5
|
Operating
|
|
|
|
|
|
|
|
257.7
|
|
222.8
|
|
520.2
|
|
438.9
|
Reimbursements
|
|
|
|
|
|
|
|
33.0
|
|
35.4
|
|
66.1
|
|
70.2
|
Cost of revenues from
clean coal activities
|
|
|
|
|
|
292.0
|
|
441.8
|
|
674.5
|
|
873.0
|
Interest
|
|
|
|
|
|
|
|
44.9
|
|
33.9
|
|
85.1
|
|
65.2
|
Depreciation
|
|
|
|
|
|
|
|
35.3
|
|
30.8
|
|
69.3
|
|
61.4
|
Amortization
|
|
|
|
|
|
|
|
79.7
|
|
73.4
|
|
156.2
|
|
141.6
|
Change in estimated
acquisition earnout payables
|
|
|
|
|
|
3.4
|
|
(6.0)
|
|
6.3
|
|
1.4
|
|
Expenses
|
|
|
|
|
|
|
|
1,552.3
|
|
1,556.8
|
|
3,221.1
|
|
3,152.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes
|
|
|
|
|
|
|
|
105.5
|
|
103.6
|
|
427.3
|
|
345.9
|
Benefit for income
taxes
|
|
|
|
|
|
|
|
(15.9)
|
|
(20.1)
|
|
(45.8)
|
|
(63.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
|
|
|
|
|
121.4
|
|
123.7
|
|
473.1
|
|
409.7
|
Net earnings
attributable to noncontrolling interests
|
|
|
|
|
|
11.3
|
|
8.8
|
|
28.9
|
|
21.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to controlling interests
|
|
|
|
|
|
$
110.1
|
|
$
114.9
|
|
$
444.2
|
|
$
388.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net earnings
per share
|
|
|
|
|
|
|
|
$
0.58
|
|
$
0.62
|
|
$
2.35
|
|
$
2.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per share
|
|
|
|
|
|
|
|
$
0.43
|
|
$
0.41
|
|
$
0.86
|
|
$
0.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
|
|
|
|
|
$
121.4
|
|
$
123.7
|
|
$
473.1
|
|
$
409.7
|
Benefit for income
taxes
|
|
|
|
|
|
|
|
(15.9)
|
|
(20.1)
|
|
(45.8)
|
|
(63.8)
|
Interest
|
|
|
|
|
|
|
|
44.9
|
|
33.9
|
|
85.1
|
|
65.2
|
Depreciation
|
|
|
|
|
|
|
|
35.3
|
|
30.8
|
|
69.3
|
|
61.4
|
Amortization
|
|
|
|
|
|
|
|
79.7
|
|
73.4
|
|
156.2
|
|
141.6
|
Change in estimated
acquisition earnout payables
|
|
|
|
|
|
3.4
|
|
(6.0)
|
|
6.3
|
|
1.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAC
|
|
|
|
|
|
|
|
$
268.8
|
|
$
235.7
|
|
$
744.2
|
|
$
615.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See "Information
Regarding Non-GAAP Measures" on page 8 of 14.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12 of 14)
|
Arthur J. Gallagher
& Co.
|
Consolidated Balance
Sheet
|
(Unaudited - in
millions except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2019
|
|
Dec 31,
2018
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
|
|
$
512.3
|
|
$
607.2
|
Restricted
cash
|
|
|
|
|
|
|
2,034.3
|
|
1,629.6
|
Premiums and fees
receivable
|
|
|
|
|
|
|
6,007.6
|
|
4,857.5
|
Other current
assets
|
|
|
|
|
|
|
993.2
|
|
1,024.4
|
|
|
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
|
|
|
|
|
|
9,547.4
|
|
8,118.7
|
|
|
|
|
|
|
|
|
|
|
|
Fixed assets -
net
|
|
|
|
|
|
|
458.0
|
|
436.9
|
Deferred income taxes
(includes tax credit carryforwards of $947.7 in 2019 and $856.9 in
2018)
|
|
|
|
|
|
|
905.7
|
|
806.2
|
Other noncurrent
assets
|
|
|
|
|
|
|
670.1
|
|
573.6
|
Right-of-use
assets
|
|
|
|
|
|
*
|
368.4
|
|
-
|
Goodwill
|
|
|
|
|
|
|
5,241.9
|
|
4,625.6
|
Amortizable
intangible assets - net
|
|
|
|
|
|
|
2,008.8
|
|
1,773.0
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
|
|
$
19,200.3
|
|
$
16,334.0
|
|
|
|
|
|
|
|
|
|
|
|
Premiums payable to
underwriting enterprises
|
|
|
|
|
|
|
$
6,873.8
|
|
$
5,740.2
|
Accrued compensation
and other current liabilities
|
|
|
|
|
|
|
1,067.4
|
|
1,055.1
|
Deferred revenue -
current
|
|
|
|
|
|
|
429.0
|
|
379.3
|
Premium financing
debt
|
|
|
|
|
|
|
137.3
|
|
154.0
|
Corporate related
borrowings - current
|
|
|
|
|
|
|
425.0
|
|
365.0
|
|
|
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
|
|
|
|
|
|
8,932.5
|
|
7,693.6
|
|
|
|
|
|
|
|
|
|
|
|
Corporate related
borrowings - noncurrent
|
|
|
|
|
|
|
3,815.6
|
|
3,091.4
|
Deferred revenue -
noncurrent
|
|
|
|
|
|
|
75.3
|
|
78.4
|
Lease liabilities -
noncurrent
|
|
|
|
|
|
*
|
327.4
|
|
-
|
Other noncurrent
liabilities
|
|
|
|
|
|
|
1,101.7
|
|
900.9
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
|
|
|
14,252.5
|
|
11,764.3
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
|
Common stock - issued
and outstanding
|
|
|
|
|
|
|
186.1
|
|
184.0
|
Capital in excess of
par value
|
|
|
|
|
|
|
3,656.5
|
|
3,541.9
|
Retained
earnings
|
|
|
|
|
|
|
1,839.3
|
|
1,558.6
|
Accumulated other
comprehensive loss
|
|
|
|
|
|
|
(802.5)
|
|
(785.6)
|
|
|
|
|
|
|
|
|
|
|
|
Total controlling
interests stockholders' equity
|
|
|
|
|
4,879.4
|
|
4,498.9
|
|
|
|
Noncontrolling
interests
|
|
|
|
|
|
|
68.4
|
|
70.8
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
|
|
|
|
|
|
4,947.8
|
|
4,569.7
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
|
|
|
|
$
19,200.3
|
|
$
16,334.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Right-of-use assets
and Lease liabilities - noncurrent relate to the adoption of a new
lease accounting standard in first quarter 2019. See page 7
of 14 for additional information.
|
Arthur J. Gallagher
& Co.
|
Other
Information
|
(Unaudited - data is
rounded where indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2nd Q
Ended
|
|
2nd Q
Ended
|
|
6 Mths
Ended
|
|
6 Mths
Ended
|
OTHER
INFORMATION
|
|
|
|
|
|
|
|
June 30,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding (000s)
|
|
|
185,769
|
|
182,370
|
|
185,145
|
|
181,918
|
Diluted weighted
average shares outstanding (000s)
|
|
|
189,768
|
|
185,491
|
|
189,054
|
|
185,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of common
shares outstanding at end of period (000s)
|
|
|
|
|
|
186,070
|
|
182,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Workforce at end of
period (includes acquisitions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage
|
|
|
|
|
|
|
|
|
|
|
|
23,940
|
|
21,944
|
|
Risk
Management
|
|
|
|
|
|
|
|
|
|
|
|
6,454
|
|
6,061
|
|
Total
Company
|
|
|
|
|
|
|
|
|
|
|
|
31,675
|
|
28,992
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Non-GAAP Measures - Pre-tax Earnings and Diluted Net Earnings per
Share (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited - in
millions except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
|
|
|
|
Net
Earnings
|
|
Net
Earnings
|
|
|
|
|
|
|
|
Earnings
|
|
(Benefit)
|
|
|
|
Attributable
to
|
|
Attributable
to
|
|
Diluted
Net
|
|
|
|
|
|
Before
Income
|
|
for
Income
|
|
Net
|
|
Noncontrolling
|
|
Controlling
|
|
Earnings
|
|
|
|
|
|
Taxes
|
|
Taxes
|
|
Earnings
|
|
Interests
|
|
Interests
|
|
per
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2nd Q Ended June
30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage, as
reported
|
|
|
|
$
182.3
|
|
$
44.3
|
|
$
138.0
|
|
$
5.1
|
|
$
132.9
|
|
$
0.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains on
divestitures
|
|
|
|
(1.9)
|
|
(0.5)
|
|
(1.4)
|
|
-
|
|
(1.4)
|
|
(0.01)
|
Acquisition
integration
|
|
|
|
3.4
|
|
0.9
|
|
2.5
|
|
-
|
|
2.5
|
|
0.01
|
Workforce & lease
termination
|
|
|
|
9.5
|
|
2.3
|
|
7.2
|
|
-
|
|
7.2
|
|
0.04
|
Acquisition related
adjustments
|
|
|
|
4.0
|
|
1.0
|
|
3.0
|
|
-
|
|
3.0
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage, as
adjusted
|
|
|
|
$
197.3
|
|
$
48.0
|
|
$
149.3
|
|
$
5.1
|
|
$
144.2
|
|
$
0.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Management,
as reported
|
|
|
|
$
21.0
|
|
$
5.5
|
|
$
15.5
|
|
$
-
|
|
$
15.5
|
|
$
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Workforce & lease
termination
|
|
|
|
2.8
|
|
0.7
|
|
2.1
|
|
-
|
|
2.1
|
|
0.01
|
Acquisition related
adjustments
|
|
|
|
(0.3)
|
|
(0.1)
|
|
(0.2)
|
|
-
|
|
(0.2)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Management, as
adjusted
|
|
|
|
$
23.5
|
|
$
6.1
|
|
$
17.4
|
|
$
-
|
|
$
17.4
|
|
$
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See "Information
Regarding Non-GAAP Measures" on page 8 of 14.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13 of 14)
|
Reconciliation of
Non-GAAP Measures - Pre-tax Earnings and Diluted Net Earnings per
Share (Unaudited) - Continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited - in
millions except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
|
|
Provision
(Benefit)
|
|
|
|
Net Earnings
Attributable to
|
|
Net
Earnings
Attributable
to
|
|
Diluted
Net
|
|
|
|
|
|
Before
Income
|
|
for
Income
|
|
Net
|
|
Noncontrolling
|
|
Controlling
|
|
Earnings
|
|
|
|
|
|
Taxes
|
|
Taxes
|
|
Earnings
|
|
Interests
|
|
Interests
|
|
per
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2nd Q Ended June
30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage, as
reported
|
|
|
|
$
170.6
|
|
$
43.1
|
|
$
127.5
|
|
$
2.1
|
|
$
125.4
|
|
$
0.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains on
divestitures
|
|
|
|
(6.1)
|
|
(1.4)
|
|
(4.7)
|
|
-
|
|
(4.7)
|
|
(0.02)
|
Workforce & lease
termination
|
|
|
|
3.5
|
|
0.8
|
|
2.7
|
|
-
|
|
2.7
|
|
0.01
|
Acquisition related
adjustments
|
|
|
|
0.5
|
|
0.1
|
|
0.4
|
|
-
|
|
0.4
|
|
-
|
Levelized foreign
currency translation
|
|
|
|
0.8
|
|
0.2
|
|
0.6
|
|
-
|
|
0.6
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage, as
adjusted
|
|
|
|
$
169.3
|
|
$
42.8
|
|
$
126.5
|
|
$
2.1
|
|
$
124.4
|
|
$
0.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Management,
as reported
|
|
|
|
$
24.0
|
|
$
6.4
|
|
$
17.6
|
|
$
-
|
|
$
17.6
|
|
$
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Workforce & lease
termination
|
|
|
|
1.1
|
|
0.3
|
|
0.8
|
|
-
|
|
0.8
|
|
0.01
|
Levelized foreign
currency translation
|
|
|
|
(0.5)
|
|
(0.1)
|
|
(0.4)
|
|
-
|
|
(0.4)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Management, as
adjusted
|
|
|
|
$
24.6
|
|
$
6.6
|
|
$
18.0
|
|
$
-
|
|
$
18.0
|
|
$
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
|
|
|
|
Net
Earnings
|
|
Net
Earnings
|
|
|
|
|
|
|
|
Earnings
|
|
(Benefit)
|
|
|
|
Attributable
to
|
|
Attributable
to
|
|
Diluted
Net
|
|
|
|
|
|
Before
Income
|
|
for
Income
|
|
Net
|
|
Noncontrolling
|
|
Controlling
|
|
Earnings
|
|
|
|
|
|
Taxes
|
|
Taxes
|
|
Earnings
|
|
Interests
|
|
Interests
|
|
per
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 Mths Ended June
30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage, as
reported
|
|
|
|
$
594.7
|
|
$
147.2
|
|
$
447.5
|
|
$
14.9
|
|
$
432.6
|
|
$
2.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains on
divestitures
|
|
|
|
(46.0)
|
|
(11.5)
|
|
(34.5)
|
|
-
|
|
(34.5)
|
|
(0.18)
|
Acquisition
integration
|
|
|
|
3.8
|
|
1.0
|
|
2.8
|
|
-
|
|
2.8
|
|
0.01
|
Workforce & lease
termination
|
|
|
|
15.8
|
|
3.9
|
|
11.9
|
|
-
|
|
11.9
|
|
0.06
|
Acquisition related
adjustments
|
|
|
|
3.9
|
|
1.0
|
|
2.9
|
|
-
|
|
2.9
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage, as
adjusted
|
|
|
|
$
572.2
|
|
$
141.6
|
|
$
430.6
|
|
$
14.9
|
|
$
415.7
|
|
$
2.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Management,
as reported
|
|
|
|
$
43.0
|
|
$
11.3
|
|
$
31.7
|
|
$
-
|
|
$
31.7
|
|
$
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Workforce & lease
termination
|
|
|
|
3.2
|
|
0.8
|
|
2.4
|
|
-
|
|
2.4
|
|
0.01
|
Acquisition related
adjustments
|
|
|
|
(0.3)
|
|
(0.1)
|
|
(0.2)
|
|
-
|
|
(0.2)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Management, as
adjusted
|
|
|
|
$
45.9
|
|
$
12.0
|
|
$
33.9
|
|
$
-
|
|
$
33.9
|
|
$
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
|
|
|
|
Net
Earnings
|
|
Net
Earnings
|
|
|
|
|
|
|
|
Earnings
|
|
(Benefit)
|
|
|
|
Attributable
to
|
|
Attributable
to
|
|
Diluted
Net
|
|
|
|
|
|
Before
Income
|
|
for
Income
|
|
Net
|
|
Noncontrolling
|
|
Controlling
|
|
Earnings
|
|
|
|
|
|
Taxes
|
|
Taxes
|
|
Earnings
|
|
Interests
|
|
Interests
|
|
per
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 Mths Ended June
30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage, as
reported
|
|
|
|
$
489.5
|
|
$
122.8
|
|
$
366.7
|
|
$
7.1
|
|
$
359.6
|
|
$
1.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains on
divestitures
|
|
|
|
(9.0)
|
|
(2.1)
|
|
(6.9)
|
|
-
|
|
(6.9)
|
|
(0.04)
|
Workforce & lease
termination
|
|
|
|
11.1
|
|
2.7
|
|
8.4
|
|
-
|
|
8.4
|
|
0.05
|
Acquisition related
adjustments
|
|
|
|
5.6
|
|
1.3
|
|
4.3
|
|
-
|
|
4.3
|
|
0.02
|
Levelized foreign
currency translation
|
|
|
|
(2.1)
|
|
(0.5)
|
|
(1.6)
|
|
-
|
|
(1.6)
|
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brokerage, as
adjusted
|
|
|
|
$
495.1
|
|
$
124.2
|
|
$
370.9
|
|
$
7.1
|
|
$
363.8
|
|
$
1.96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Management,
as reported
|
|
|
|
$
45.6
|
|
$
12.1
|
|
$
33.5
|
|
$
-
|
|
$
33.5
|
|
$
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Workforce & lease
termination
|
|
|
|
1.3
|
|
0.3
|
|
1.0
|
|
-
|
|
1.0
|
|
0.01
|
Acquisition related
adjustments
|
|
|
|
(0.1)
|
|
-
|
|
(0.1)
|
|
-
|
|
(0.1)
|
|
-
|
Levelized foreign
currency translation
|
|
|
|
(1.2)
|
|
(0.3)
|
|
(0.9)
|
|
-
|
|
(0.9)
|
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Management, as
adjusted
|
|
|
|
$
45.6
|
|
$
12.1
|
|
$
33.5
|
|
$
-
|
|
$
33.5
|
|
$
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See "Information
Regarding Non-GAAP Measures" on page 8 of 14.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact:
Ray Iardella
Vice President - Investor Relations
630-285-3661 or ray_iardella@ajg.com
(14 of 14)
View original
content:http://www.prnewswire.com/news-releases/arthur-j-gallagher--co-announces-second-quarter-2019-financial-results-300891282.html
SOURCE Arthur J. Gallagher &
Co.