Arthur J. Gallagher & Co (AJG) Q2 2024 Earnings: EPS of $1.26, Revenue of $2.736 Billion, Misses Revenue Estimates

Strong Performance in Brokerage and Risk Management Segments

Summary
  • Revenue: $2,736.0 million, up from $2,406.9 million in Q2 2023, missing the analyst estimate of $2,761.54 million.
  • Net Earnings: $285.4 million, an increase from $235.8 million in Q2 2023.
  • GAAP EPS: $1.26, up from $1.07 in Q2 2023.
  • Adjusted EBITDAC Margin: Improved by over 100 basis points to 31.4%.
  • Organic Revenue Growth: 7.7% in the core brokerage and risk management segments.
  • Mergers and Acquisitions: Completed 12 new mergers with approximately $72 million of estimated annualized revenue during the quarter.
  • Net Earnings Margin: Improved by 35 basis points to 13.9%.
Article's Main Image

On July 25, 2024, Arthur J. Gallagher & Co (AJG, Financial) released its 8-K filing for the second quarter of 2024, showcasing robust financial results that surpassed analyst expectations. The company, a global provider of insurance brokerage and consulting services, reported significant growth in both revenue and earnings.

Company Overview

Arthur J. Gallagher & Co provides insurance brokerage and consulting services to middle-market entities worldwide. The majority of its revenue comes from its brokerage segment, which negotiates and places customers with insurance companies. The company also generates significant revenue from its corporate segment, including clean energy investments and other investment income. Most of its revenue is generated in the United States, with additional contributions from Australia, Bermuda, Canada, the Caribbean, New Zealand, and the United Kingdom.

Q2 2024 Financial Highlights

Arthur J. Gallagher & Co reported total revenue of $2,736.0 million for Q2 2024, a 13.7% increase from $2,406.9 million in Q2 2023. The company's net earnings for the quarter were $285.4 million, up from $235.8 million in the same period last year. Diluted net earnings per share (EPS) were $1.26, compared to $1.07 in Q2 2023.

1816577065214963712.png

Performance Analysis

The brokerage segment, which is the primary revenue driver, reported revenues of $2,376.3 million, a 13.8% increase from $2,088.4 million in Q2 2023. The risk management segment also showed strong performance with revenues of $358.6 million, up from $318.6 million in the previous year.

Adjusted EBITDAC for the brokerage segment was $784.8 million, a significant increase from $665.7 million in Q2 2023. The risk management segment's adjusted EBITDAC was $73.9 million, up from $61.6 million in the same period last year.

Key Metrics and Financial Achievements

Metric Q2 2024 Q2 2023
Total Revenue $2,736.0 million $2,406.9 million
Net Earnings $285.4 million $235.8 million
Diluted EPS $1.26 $1.07
Brokerage Revenue $2,376.3 million $2,088.4 million
Risk Management Revenue $358.6 million $318.6 million

Commentary and Future Outlook

"We had an excellent second quarter," said J. Patrick Gallagher, Jr., Chairman and CEO. "Our core brokerage and risk management segments combined to post 14% reported revenue growth and 7.7% organic revenue growth. Our net earnings margin improved by 35 basis points to 13.9%, and we improved our adjusted EBITDAC margin by more than 100 basis points to 31.4%."

The company completed 12 new mergers during the quarter, adding approximately $72 million in estimated annualized revenue. The merger pipeline now exceeds $500 million in annualized revenue, indicating strong future growth potential.

Conclusion

Arthur J. Gallagher & Co's Q2 2024 financial results demonstrate strong performance across its core segments, with significant revenue and earnings growth. The company's ability to exceed analyst estimates and maintain a robust merger pipeline positions it well for continued success in the insurance brokerage and consulting industry.

Explore the complete 8-K earnings release (here) from Arthur J. Gallagher & Co for further details.