The documents indicate that **cash and cash equivalents surged from $971.5 million at the end of December 2023 to $2,022.4 million as of September 30, 2024**.  **[0000950170-24-118320_ajg-20240930.htm:7]**  However, they do not provide specific details explaining the reason for this increase. They mention that potential factors could include **operational cash flow generation, financing activities, or investing activities**, but the exact cause is not explicitly detailed in the provided information.  **[0000950170-24-118320_ajg-20240930.htm:7]** **[0001193125-24-242871_d902917dex991.htm:15]** 

Why did cash and cash equivalents surge in Q3 2024?

The jump in total assets in Q2 2024 was primarily driven by **increases in fiduciary assets, accounts receivable, cash and cash equivalents, and goodwill**. Specifically, fiduciary assets rose from **$26,907.9 million** to **$37,316.9 million**, while accounts receivable increased from **$3,786.6 million** to **$4,178.3 million**. Additionally, the growth in cash and cash equivalents from **$971.5 million** to **$1,415.3 million** and an increase in goodwill from **$11,475.6 million** to **$11,915.5 million** also contributed to the overall jump in total assets.  **[0000950170-24-086937_ajg-20240630.htm:7]** **[0001193125-24-184856_d841953dex991.htm:14]** 

What drove the jump in total assets in Q2 2024?

Arthur J. Gallagher & Co. reduced its current corporate related borrowings sharply in Q1 2024 by using operating cash to retire maturing short-term debt and by shifting to long-term financing. Specifically, the company paid off a **$100.0 million Series HH note** and a **$325.0 million Series H note** in February 2024, and then issued **$1.0 billion of unsecured senior notes**—thereby replacing short-term obligations with long-term debt used for acquisitions, earnout payments, and general corporate purposes.  **[0000950170-24-050950_ajg-20240331.htm:61]** **[0000950170-24-086937_ajg-20240630.htm:72]** 

Why did current corporate related borrowings drop so sharply in Q1 2024?

ee33e5f850c802afa7a77d36a61c91647df8ee6ddedc198ad92c6a654f42ddff

Net earnings turned negative in **Q4 2023** primarily due to a combination of increased expenses directly associated with acquisitions and adjustments in accounting for earnout payables. In particular, the company recorded a **$328.5 million expense** related to changes in estimated acquisition earnout payables (up from **$118.3 million** in Q4 2022), which significantly impacted GAAP earnings. Additionally, **higher amortization expenses** and increases in both **compensation** and **operating expenses** further contributed to the downturn. The accounting treatment for earnouts, which recognizes higher performance expectations as an expense, compounded the negative effect on net earnings.  **[AJG_3370892_0]** **[AJG_3370892_3]** **[0001193125-24-015499_d721955dex991.htm:14]** 

Why did net earnings turn negative in Q4 2023?

The negative EPS in Q4 2023 was primarily driven by several factors. **First**, there was a **significant increase in acquisition earnout payables**—rising from **$118.3 million in Q4 2022 to $328.5 million in Q4 2023**, which increased GAAP expenses when acquisition performance exceeded expectations.  **[AJG_3370892_0]** **[0001193125-24-015499_d721955dex991.htm:14]**  **Second**, **amortization expenses** also increased, climbing from **$115.9 million** to **$142.8 million**, further weighing on earnings.  **[0001193125-24-015499_d721955dex991.htm:14]**  **Third**, lower net earnings from the Brokerage segment were evident, with net earnings dropping to **$24.4 million** from **$142.2 million**, reflecting the cumulative financial pressures.  **[0001193125-24-015499_d721955dex991.htm:14]**  **Finally**, the Corporate segment experienced higher pretax losses due to **unrealized foreign exchange remeasurement losses and increased banking costs related to debt issuances**.  **[0001193125-24-015499_d721955dex991.htm:7]** 

What contributed to the negative EPS in Q4 2023?

AJG's FY 2023 revenue increase was driven by several key factors. **Acquisitions** played a major role, with the company completing **50 acquisitions** (up from 36 in FY 2022) that brought in significantly higher estimated annualized revenues (**$826.0 million vs. $244.0 million**).  **[0000950170-24-013370_ajg-20231231.htm:78]**  Additionally, **organic growth** contributed notably, with an **8.9% increase** in commissions, fees, supplemental, and contingent revenues fueled by strong customer retention and new business generation.  **[0000950170-24-013370_ajg-20231231.htm:77]**  Furthermore, there was a marked improvement in **interest and other income**, which rose by **$217.3 million** (from **$150.0 million to $367.3 million**).  **[0000950170-24-013370_ajg-20231231.htm:119]**  These combined factors collectively drove the substantial increase in AJG's total revenues in FY 2023.  **[0000950170-24-013370_ajg-20231231.htm:119]** **[0000950170-24-013370_ajg-20231231.htm:77]** **[0000950170-24-013370_ajg-20231231.htm:78]** 

What drove the revenue increase in FY 2023?

The sharp EPS recovery in Q1 2024 was driven by multiple factors. **Revenue growth** played a key role, with total revenues increasing by **20.4%**, including **9.4% organic growth** and additional contributions from acquisitions such as **$250 million** in rollover revenues and **12 mergers accounting for $70 million** in annualized revenue.  **[20240425CG97278:0]** **[AJG_3380796_0]** **[20240425CG97278:1]**  Improved operating efficiency was also crucial, as seen in the enhanced **net earnings margin of 21.5%** and an **adjusted EBITDAC margin of 37.8%**, which bolstered profitability.  **[AJG_3380796_0]**  Furthermore, **net earnings** attributable to controlling interests increased by **25.1%**, supporting the EPS recovery, aided by a favorable insurance pricing environment that boosted premium renewals (notably, a **7%** increase).  **[20240425CG97278:12]** **[20240425CG97278:1]**  Additionally, the impact of dilution was minimized due to only a slight increase in the basic weighted average shares outstanding.  **[20240425CG97278:12]** 

What factors led to the sharp EPS recovery in Q1 2024?

c65a7ceff21a5197095aeb87202640356a4116cabd4b4594f7612adef2fc20a1

The documents do not provide a definitive explanation for why operating cash flow in **Q2 2024** was so low. One of the filings explains that for the **six-month period** ended June 30, 2024, operating cash flows benefited from **growth in core operations** and favorable **timing differences** in cash receipts and disbursements, which drove a significant increase compared to the same period in 2023.  **[0000950170-24-086937_ajg-20240630.htm:70]**  However, this commentary relates to the period as a whole and does not specifically address the **low Q2 2024** figure of **$119.50 million**.  **[0000950170-24-086937_ajg-20240630.htm:8]** 

Why was operating cash flow so low in Q2 2024?

The documents do not provide a full explanation for the sharp drop in financing cash flow in Q1 2024. However, they do note that while proceeds from the issuance of common stock under employee stock plans increased to **$52.0 million** in Q1 2024 (compared to **$30.3 million** in Q1 2023) and the company issued **$1.0 billion** in unsecured senior notes in February 2024, these factors may have influenced the overall financing activities.  **[0000950170-24-050950_ajg-20240331.htm:64]** **[20240425CG97278:5]** 

What caused the sharp drop in financing cash flow in Q1 2024?

The decline in cash increases for Q2 2024 was driven by several factors. **Operating activities** improved with net cash provided rising to **$908.8 million** (from **$440.9 million** in Q2 2023), but this gain was insufficient to counterbalance the changes in other areas. **Investing activities** turned more costly with net cash used of **$(499.6) million** (versus **$(1,065.1) million** in the prior year due to reduced cash paid for acquisitions), while **financing activities** shifted dramatically, with a net cash outflow of **$(59.2) million** compared to **$2,560.3 million** in positive inflows in Q2 2023. Additionally, the **foreign exchange impact** turned negative at **$(55.5) million**, a reversal from a positive impact of **$41.9 million** in the previous quarter, thereby further contributing to the overall decline in the net increase in cash, cash equivalents, restricted cash, and fiduciary cash in Q2 2024.  **[0000950170-24-086937_ajg-20240630.htm:8]** 

What factors led to the decline in cash increases in Q2 2024?

8f1333f6797f46c8ae21d50643af6cd74eb18259bd98f6b9d35f83da3fc5d3da

a7d833f6f446a160a10c1c7d057e23f454ab66bda1c1d1c7c153bca1d3e840e5

Commissions (USD, millions)

Fees (USD, millions)

Supplemental revenues (USD, millions)

Contingent revenues (USD, millions)

Interest income, premium finance revenues and other income (USD, millions)

Revenues before reimbursements (USD, millions)

Reimbursements (USD, millions)

Total revenues (USD, millions)

Compensation (USD, millions)

Operating (USD, millions)

Interest Expense (USD, millions)

Depreciation (USD, millions)

Amortization (USD, millions)

Change in estimated acquisition earnout payables (USD, millions)

Total expenses (USD, millions)

Earnings before income taxes (USD, millions)

Provision for income taxes (USD, millions)

Net earnings (USD, millions)

Net earnings attributable to noncontrolling interests (USD, millions)

Net earnings attributable to controlling interests (USD, millions)

Basic net earnings per share (USD)

Diluted net earnings per share (USD)

Dividends declared per common share (USD)

3ad89f18ca56d20fe55633a5da2da1487e8b30ff5c43e637b81557aa56f37673

66ff114f7f34e4f7c2a285501400f8f67052f946b48b5aa37f7d157a07bce83a

80d333479144b2751a665e668654aab5972a8f06d1ea0bc7f1837fe6a85a1739

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from / Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

6cb4f2492392c1580e41f72f8cb5db295a2ccab3d98ac3a03a84ce050af5f798

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

SG&A [USD, Millions]

R&D [USD, Millions]

D&A [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

EPS - Basic [USD, Per Share]

EPS - Diluted [USD, Per Share]

506b1c88561789a7fb7f3e7ac158777a8dbc56ec03affc0947416924006e1a25

Number of acquisitions closed in the Brokerage segment (count)

Number of acquisitions closed in the Risk Management segment (count)

Number of acquisitions since January 1, 2002 (count)

Workforce at end of period in Risk Management segment (count)

Workforce at end of period in Brokerage segment (count)

a9450376226222e1d9b97ae84ff0083a3fe42df8b4579f8790d38e8bc6064643

a121c98b2b9e35fcff2c92912dfc2cdec093a6e0f2c3b892943e38ed7f9e886c

United States

United Kingdom

Australia

Canada

New Zealand

Other Foreign

Total Revenue

7e77200865dacbac3cc0ebfbdf81fa900108ef9b6c25ec8da5df255de6b401b5

Arthur J. Gallagher & (AJG)

Financials