EX-99 3 ex991.htm Exhibit 99.1

Exhibit 99.1


Press  Release


Hilb Rogal & Hobbs Company

Contact: Carolyn Jones

4951 Lake Brook Drive, Suite 500

Phone: (804) 747-3108 

Glen Allen, Virginia 23060

Fax: (804) 747-6046     


FOR IMMEDIATE RELEASE

April 21, 2004


HILB ROGAL & HOBBS COMPANY REPORTS RECORD

FIRST QUARTER RESULTS


RICHMOND, Va. -- Hilb Rogal & Hobbs Company (NYSE:  HRH), the world’s 10th largest insurance and risk management intermediary, reported financial results today for the first quarter ended March 31, 2004.


For the first quarter, total revenues were $158.2 million, compared with $142.0 million a year ago, an increase of 11.4%. Commissions and fees rose 11.3% to $156.4 million during the quarter, compared with $140.5 million during the same period last year, driven by acquisitions; higher contingent commissions, which are heavily concentrated in the first quarter; new business and a moderating rate environment.


Net income for the quarter was $24.2 million, or $0.67 per share, compared with $18.1 million, or $0.51 per share, a year ago. Operating net income increased 15.4% to $24.6 million, or $0.68 per share, compared with $21.3 million, or $0.60 per share, a year ago.


Organic growth, defined as the change in commissions and fees before the effect of acquisitions and divestitures, was 5.1% for the quarter. The operating margin was 29.3%, compared with 28.7% for the year-ago quarter.


Martin L. (Mell) Vaughan, III, chairman and chief executive officer said, “During the first quarter, we moved forward with three major initiatives: the rollouts of our new sales process and major accounts program, and the Hobbs integration. Organized and launched last year, these initiatives required investment this quarter, and over the past several quarters, which we believe will gradually lead to improved operating margins, higher sales productivity and increased market share. Our professionals did an excellent job managing the changes while staying focused on new business and the superior client service that is HRH’s  trademark.”  


Robert B. Lockhart, president and chief operating officer, said, “The new sales model, although still in its early implementation on a national scale, has already begun to generate better information and drive disciplined activity. Where the model has been in place for a while, such as the Northeast Region, organic growth is a clear beneficiary. In the major accounts program, we have nearly completed the formation of enterprise-wide teams, which unite HRH's expertise and resources to further enhance client service capabilities.”  


(CONTINUED)

HILB ROGAL & HOBBS COMPANY REPORTS RECORD

FIRST QUARTER RESULTS – Continued


Concluding his remarks, Vaughan said, “With integration substantially complete, and as we move our operating model to the next level, there is a new energy throughout the company to seize opportunities and achieve our long-term financial goal of 15% to 20% annual growth in operating net income per share. Our three primary sources for driving those earnings: organic growth, margin improvement and acquisitions, are all beneficiaries of the new resolve. As for acquisitions, while timing is unpredictable, we believe our pipeline of potential deals is sufficient for us to achieve our stated 2004 objective of acquiring firms with aggregate annualized revenues of between $30 million and $60 million.”


The company cautions readers that the statements contained herein regarding the company’s future operations and business prospects are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon management’s current knowledge and assumptions about future events and involve risks and uncertainties that could cause actual results to differ materially from anticipated results. For more details on factors that could affect expectations, see the company’s Annual Report on Form 10-K for the year ended December 31, 2003, as filed with the Securities and Exchange Commission.


Hilb Rogal & Hobbs Company is the nation’s seventh largest insurance and risk management intermediary. With offices located throughout the United States, HRH assists clients in managing their risks in areas such as property and casualty, employee benefits and many other areas of specialized exposure. The company is traded on the New York Stock Exchange, symbol HRH, and is ranked as the 10th largest insurance and risk management intermediary in the world. Additional information about HRH, including instructions for the quarterly conference call, may be found at www.hrh.com.























 (CONTINUED)




HILB ROGAL & HOBBS COMPANY AND SUBSIDIARIES

COMPARATIVE FINANCIAL ANALYSIS

(In thousands, except per share data)



 

THREE MONTHS ENDED

 

3/31/04

3/31/03

 

(Unaudited)

Revenues


 

  Commissions and fees

$156,396    

$140,499    

  Investment income

555    

659    

  Other

1,276    

833    

 

158,227    

141,991    

Operating expenses

  

  Compensation and employee benefits

83,725    

75,813    

  Other operating expenses

25,566    

23,157    

  Depreciation

2,255    

2,288    

  Amortization of  intangibles

2,829    

2,152    

  Interest expense

2,529    

2,793    

  Integration costs1

991    

--    

  Retirement benefit2

--    

5,195    

 

117,895    

111,398    

   

INCOME BEFORE INCOME TAXES

40,332    

30,593    

Income taxes

16,098    

12,495    

   

NET INCOME

$  24,234    

$ 18,098    

   

Net Income Per Share:

  

  Basic

$0.68    

$0.54    

  Assuming Dilution

$0.67    

$0.51    

   

Dividends Per Share

$0.0925    

$0.0900    

   

Weighted Average Number

  

  of Shares Outstanding:

  

    Basic

35,588    

33,681    

    Assuming Dilution

36,336    

35,493    



____________________

1 Integration costs represent one-time costs including severance and other employee-related costs, facility and lease termination costs and branding expenses.

2 The company recorded a one-time retirement benefit charge for the quarter ended March 31, 2003, representing a contractual retirement benefit for Andrew L. Rogal, the company’s former chairman and chief executive officer.




HILB ROGAL & HOBBS COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(In thousands)



 

MARCH 31,

DECEMBER 31,

 

2004

2003

 

 (Unaudited)

 

ASSETS

CURRENT ASSETS

 


   Cash and cash equivalents

$   158,149    

$  126,464    

   Receivables (net)

216,192    

255,251    

   Prepaid expenses and other

12,551    

14,603    

      TOTAL CURRENT ASSETS

386,892    

396,318    

   

PROPERTY & EQUIPMENT (NET)

24,564    

25,487    

   

INTANGIBLE ASSETS (NET)

615,598    

614,246    

   

OTHER ASSETS

17,847    

13,176    

 

$1,044,901    

$1,049,227    

   

LIABILITIES AND SHAREHOLDERS’ EQUITY

  

CURRENT LIABILITIES

  

   Premiums payable to insurance companies

$   273,867    

$   308,533    

   Accounts payable

9,584    

9,089    

   Accrued expenses

30,588    

37,434    

   Premium deposits and credits due customers

41,710    

34,290    

   Current portion of long-term debt

9,035    

9,321    

      TOTAL CURRENT LIABILITIES

364,784    

398,667    

   

LONG-TERM DEBT

172,251    

174,012    

   

DEFERRED INCOME TAXES

18,990    

19,208    

   

OTHER LONG-TERM LIABILITIES

27,242    

23,073    

   

SHAREHOLDERS’ EQUITY

  

   Common Stock (outstanding 35,865 and 35,446

  

     shares, respectively)

234,050    

228,357    

   Retained earnings

226,108    

205,184    

   Accumulated other comprehensive income (loss)

1,476    

726    

 

461,634    

434,267    

 

$1,044,901    

$1,049,227    




HILB ROGAL & HOBBS COMPANY AND SUBSIDIARIES

GAAP MEASURES RECONCILIATION

(In thousands, except per share data)


This press release contains references to financial measures that exclude certain charges and non-recurring items. The company believes that these adjusted financial measures provide additional measures of performance that investors can use in evaluating the company’s performance. The schedule below provides a reconciliation of these financial measures to those prepared in accordance with accounting principles generally accepted in the United States (GAAP).



 


NET INCOME

NET INCOME PER SHARE ASSUMING DILUTION

 

THREE MONTHS ENDED

THREE MONTHS ENDED

 

3/31/04

3/31/03

3/31/04

3/31/03

 

(Unaudited)

(Unaudited)

 



  

GAAP NET INCOME

$24,234    

$18,098    

$0.67    

$0.51    

  Excluding:

  



   Non-operating (gains) losses,

  



     net of tax

(238)   

45    

(0.01)   

--    

   Integration costs, net of tax

595    

--    

0.02    

--    

   Retirement benefit, net of tax

--    

3,169    

--    

0.09    

OPERATING NET INCOME

$24,591    

$21,312    

$0.68    

$0.60    

  



 


 

OPERATING MARGIN

OPERATING REVENUE

 

THREE MONTHS ENDED

THREE MONTHS ENDED

 

3/31/04

3/31/03

3/31/04

3/31/03

 

(Unaudited)

(Unaudited)

 




 

GAAP NET INCOME / REVENUE


$24,234    


$18,098    


$158,227    


$141,991    

  Excluding:

    

   Non-operating (gains) losses

(397)   

76    

(397)   

76    

   Amortization of  intangibles

2,829    

2,152    

--    

--    

   Interest expense

2,529    

2,793    

--    

--    

   Integration costs

991    

--    

--    

--    

   Retirement benefit

--    

5,195    

--    

--    

   Income taxes

16,098    

12,495    

--    

--    

OPERATING MARGIN / REVENUE


$46,284    


$40,809    


$157,830    


$142,067    



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