Acquisitions continue to pay off for Hub

Broker consolidator Hub International (TSX, NYSE: HBG) continued to see the benefits of acquisition, reporting net earnings of US$10.7 million for the quarter ending June 30, 2002. This is an increase of 319% over the US$2.7 million in net earnings reported for the second quarter of 2001. Diluted earnings per share are US$0.41, an increase of 193% over the US$0.14 reported for the same period last year.
Total revenue for the company, which is based in both Chicago and Toronto and owns brokerages across North America, is US$28 million for the second quarter of 2002, up 95% over the US$29.3 million reported last year. Of this increase, US$25.7 million is the result of acquisitions, the company reports.
Commission income also grew, to US$52.1 million from US$27.3 million for the same period. Of this, 10% is attributable to organic growth from new business and the hardening rate environment.
For the first six months of this year, net earnings increased 212% to US$15.7 million, or US$0.63 per share, from US$5 million, or US$0.27 per share, during the same period in 2001. Total revenue for the first half of 2002 is US$106.8 million, versus US$57.4 million in 2001. Again, it was acquisitions paying the key role, resulting in US$44.5 million of the total US$49.4 million increase.
“Our results clearly demonstrate the success of our strategy to acquire quality brokerages with strong management teams that can expand their market share through leveraging the operating scale, market channels and product breadth Hub International offers,” says Hub chairman and CEO Martin Hughes.
Also, Hub recently completed a U.S. IPO (initial public offering) bringing in US$88.1 million in proceeds, which, coupled with US$43.5 million proceeds from the sale of its Old Lyme subsidiary, allowed the company to pay US$123 million in debt and a convertible subordinated debenture.
“We now have the financial flexibility to continue to selectively pursue the acquisition of quality brokerages, particularly in the southeastern, southwestern and western United States,” says Hughes.