On Tuesday, Brown & Brown, Inc. (NYSE:BRO) reported its third quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Bonus Program Impact
Keith Walsh – Citi: First question for Cory, I’m not sure if I missed this in the commentary. But can you just remind us the bonus program, how much did that impact the EPS and margins in the quarter and how do you accrue for it? Is it accrued on a quarterly basis? If you could just give us some color around that and I got a follow-up.
Cory Walker – SVP, Treasurer and CFO: Yes, it is accrued on a quarterly basis. This quarter and the third quarter we increased it by $1.9 million. We expect for the whole year it to be between $6 million and $8 million, and I think we are on track for that and so that’s it.
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Keith Walsh – Citi: Then, secondly just for Powell. Arrowhead seems to be growing, doing very well. Can you just talk a little bit about what’s going on there? Is there a business mix or geography issue, why it seems to be doing better than maybe other parts of Retail?
J. Powell Brown – President and CEO: Sure. I will tell you that, what we’re seeing is; number one, we buy businesses and invest in businesses because they have good people and good people develop and run good businesses and attract more good people. So, over a long period of time, Arrowhead has developed a reputation for doing a very good job in running programs for our strategic partners that we work with there at Arrowhead; that’s the first thing. The second thing is they work as you know in three or four areas that are not easy to work in. So, there are four big markets prior to the addition to the Automobile Aftermarket Program are California quake residential and commercial, non-standard auto, and workers’ compensation in California. So those are not easy classes of business to begin with; and so we have – so there’s lots of – it’s discombobulated in many of those markets which creates an opportunity for us. Then enter the opportunity with Zurich on top of that, which as Cory said, is going to be a $20 million to $25 million revenue piece for us next year, and we’re going to start getting revenue this month, but we really think it will start flowing in really come 1/1, and that $20 million to $25 million will really start next year on a run rate at. So, there are also – finally, Keith, there are some carriers who we believe see us as an option to efficiently distribute their product in a manner that maybe they would be doing it a little differently. That doesn’t mean it’s bad; it just means that would do it a little differently than we could with our technology platform and the distribution force into our agents. And so, we think all of that is very positive and we’re very pleased with the acquisition, and as you know, we’re really pleased with the organic growth with 13% for the quarter.
Sarah Dewitt – Barclays Capital: When I exclude some of the unusual timing issues from programs, I get organic growth in the quarter of about 1.7%. So how long you think it will take you to get back to mid-single-digit organic growth and is that the right level to be thinking about in terms of when you can start expanding the margins?
J. Powell Brown – President and CEO: Well, if you remember Sarah, in September at an Investor Conference we said that we anticipated internal growth to be in the range of the first and second quarter for the second half of the year; that would be Q3 and Q4. And as Cory said, actually when you look inside some of our numbers, we actually have improvement in margins in areas already, but in aggregate we have – and remember, we say what it is, we take the good with the challenges. It is basically, as Cory said its 35% EBITDA versus 35.4%. Well, if you go back into what Cory said, there’s just one line item that I would direct you to. That’s $1.9 million of additional expense that was accrued this quarter. That’s all you got to look at. So, there’s already improvement, and we believe that as we continue to grow, assuming the economy does what we hope Sarah, so if you’ve got something that we don’t know about that’d be great, but we think that we can continue to see incremental improvement and as we grow our business organically more quickly that will help us lift the margins more quickly.
Sarah Dewitt – Barclays Capital: Then on the sales incentive program, do you expect to start up another incentive program next year?
J. Powell Brown – President and CEO: The answer is we don’t know yet, but I said a year ago that – and I have said repeatedly that we would like to continue to do things that stimulate desired performance and we are going to pay those people who help us drive this company to the next level. So, you can interpret that any way you want, but I have said that our program is a one-year plan and we are not going to be doing the same plan next year, but we reserve the right to do something that would stimulate growth in less dollars over an extended period of time.