Gallagher’s adjusted earnings per share jump 29.9% and margins widen (NYSE: AJG)

What happened

Arthur J. Gallagher & Co. (NYSE: AJG) reported third-quarter adjusted earnings of $3.00 per diluted share, up from $2.31 a year earlier. OptimistFi calculates that as a 29.9% gain.

Reported results rose too. GAAP diluted earnings per share were $1.55 against $1.04, and net earnings were $406 million against $273 million. Revenue before reimbursements reached $3.93 billion, up from $3.33 billion, for the quarter ended Sept. 30.

Chairman and CEO J. Patrick Gallagher, Jr. called it another excellent quarter. Combined Brokerage and Risk Management revenue grew 18%, including organic growth of 5%. He also cited the 26th straight quarter of double-digit adjusted EBITDAC growth, with margins wider again.

Key numbers

Metric	Latest	Change	Source
Adjusted diluted EPS, total company	$3.00	from $2.31, +29.9%	Calculated from SEC 8-K
Adjusted EBITDAC, total company	$1.25 billion	from $1.01 billion, +$240 million	Calculated from SEC 8-K
Revenues before reimbursements, as reported	$3.93 billion	from $3.33 billion, +18.2%	Calculated from SEC 8-K
Diluted EPS, as reported	$1.55	from $1.04, +49.0%	Calculated from SEC 8-K
Organic growth, Brokerage and Risk Management combined	5%		SEC 8-K
Third-quarter share repurchases	$100 million		SEC 8-K

Read more: Arthur J. Gallagher & (AJG) company research

Where the growth came from

Brokerage organic revenue grew 5%. Supplemental revenues grew 14% organically. Base commissions and fees, the largest line, grew 4%. Contingent revenues were flat at $60 million. Risk Management organic fees grew 10%, to $435 million from $397 million.

Acquisitions explain the gap between organic and reported growth. AssuredPartners closed on Aug. 18, 2025, and the organic measure leaves out all of its revenue. Of Brokerage base commissions and fees of $3.15 billion, $838 million came from acquisitions, divested operations and other, versus $358 million a year earlier.

Brokerage adjusted EBITDAC margin widened to 35.3% from 33.3%. The adjusted compensation expense ratio fell to 51.3% from 53.0%. The release says the AssuredPartners roll-in, including compensation savings tied to synergies, more than offset lower interest income.

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Why it matters

OptimistFi has argued that Gallagher's value depends on clients continuing to pay for advice and on management turning organic growth and acquisitions into per-share cash earnings. This quarter supports both halves. Total company adjusted EBITDAC rose $240 million, to $1.25 billion from $1.01 billion.

Gallagher also bought back about 0.4 million shares for about $100 million in the quarter. Over nine months it bought about 2.7 million shares for about $580 million. Fewer shares outstanding lifts per-share results.

Acquisitions come with a funding bill. At Sept. 30, Gallagher had $9.55 billion of public debt, $2.68 billion of private placements and $630 million drawn on its line of credit. Corporate interest and banking costs were $169 million pretax, against $162 million a year earlier.

What sits behind the adjusted figures

The adjustments are large. In Brokerage, amortization of intangible assets added back $0.82 per share and acquisition integration costs $0.30, against $0.63 and $0.19 a year earlier. Pretax adjustments in Brokerage totaled $477 million.

The year-ago Brokerage base included about $76 million of extra interest income, worth about 22 cents per share after tax. It was earned on cash raised for the AssuredPartners financing. This quarter's growth came against that base. The 5% organic rate also covers less revenue than the 18% reported growth.

Corporate moved the other way. Its adjusted EBITDAC loss widened to $73 million from $51 million. Its pretax loss included a $9 million net unrealized foreign exchange remeasurement loss, versus a $5 million gain a year earlier.

What's next

Management hosts a webcast call on Thursday, Oct. 29, at 5:15 p.m. ET. A replay will be at ajg.com for at least 90 days.

The case would weaken if organic growth slipped below this quarter's 5% while acquisition volume stayed low. Gallagher closed five Brokerage acquisitions in the quarter with estimated annualized revenue of $102 million, against six and $3.04 billion a year earlier.

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