Arthur J. Gallagher (Arthur J. Gallagher) Operating Income

: $1,859 Mil (TTM As of Dec. 2023)

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Arthur J. Gallagher's Operating Income for the three months ended in Dec. 2023 was $331 Mil. Its Operating Income for the trailing twelve months (TTM) ended in Dec. 2023 was $1,859 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. Arthur J. Gallagher's Operating Income for the three months ended in Dec. 2023 was $331 Mil. Arthur J. Gallagher's Revenue for the three months ended in Dec. 2023 was $2,438 Mil. Therefore, Arthur J. Gallagher's Operating Margin % for the quarter that ended in Dec. 2023 was 13.56%.

Good Sign:

Arthur J. Gallagher & Co operating margin is expanding. Margin expansion is usually a good sign.

Arthur J. Gallagher's 5-Year average Growth Rate for Operating Margin % was 17.30% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. Arthur J. Gallagher's annualized ROC % for the quarter that ended in Dec. 2023 was 1.24%. Arthur J. Gallagher's annualized ROC (Joel Greenblatt) % for the quarter that ended in Dec. 2023 was -0.74%.

Arthur J. Gallagher Operating Income Historical Data

The historical data trend for Arthur J. Gallagher's Operating Income can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Arthur J. Gallagher Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

Operating Income

745.90

1,040.20

1,337.00

1,666.90

1,859.10

Arthur J. Gallagher Quarterly Data
	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23
Operating Income																301.00	715.20	379.50	433.90	330.50

Arthur J. Gallagher Operating Income Calculation

Operating Income, is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

Operating Income for the trailing twelve months (TTM) ended in Dec. 2023 adds up the quarterly data reported by the company within the most recent 12 months, which was $1,859 Mil.

Arthur J. Gallagher (NYSE:AJG) Operating Income Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition.

Arthur J. Gallagher's annualized ROC % for the quarter that ended in Dec. 2023 is calculated as:

	ROC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Sep. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	1322 * ( 1 - 51.82% )	/	( (52176.4	+	50644.3)	/ 2 )
=	636.9396	/	51410.35
=	1.24 %

where

	Invested Capital		(Q: Sep. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	53203.9	-	0	-	( 1027.5	-	max(0, 34473.9	-	35937.7	+	1027.5	))
=	52176.4

	Invested Capital		(Q: Dec. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	51615.8	-	0	-	( 971.5	-	max(0, 31064.7	-	32116.1	+	971.5	))
=	50644.3

Note: The Operating Income data used here is four times the quarterly (Dec. 2023) data.

2. Joel Greenblatt's definition of Return on Capital:

Arthur J. Gallagher's annualized ROC (Joel Greenblatt) % for the quarter that ended in Dec. 2023 is calculated as:

	ROC (Joel Greenblatt) %		(Q: Dec. 2023 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: Sep. 2023		Q: Dec. 2023
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	-16	/	( ( (1016 + max(1140.3, 0))	+	(1126.7 + max(1038.9, 0)) )	/	2 )
=	-16	/	( ( 2156.3	+	2165.6 )	/	2 )
=	-16	/	2160.95
=	-0.74 %

where Working Capital is:

	Working Capital		(Q: Sep. 2023 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(3769.3	+	0	+	31140.9)	-	(0	+	634	+	33135.9)
=	1140.3

	Working Capital		(Q: Dec. 2023 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(3786.6	+	0	+	27358)	-	(0	+	644.7	+	29461)
=	1038.9

When net working capital is negative, 0 is used.

Note: The EBIT data used here is four times the quarterly (Dec. 2023) EBIT data.

3. Operating Income is also linked to Operating Margin %:

Arthur J. Gallagher's Operating Margin % for the quarter that ended in Dec. 2023 is calculated as:

Operating Margin %	=	Operating Income (Q: Dec. 2023 )	/	Revenue (Q: Dec. 2023 )
	=	330.5	/	2437.8
	=	13.56 %

4. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Operating Income growth rate using Operating Income per share data.

Be Aware

Compared with a company's EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company's revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia's Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.

Arthur J. Gallagher Operating Income Related Terms

Thank you for viewing the detailed overview of Arthur J. Gallagher's Operating Income provided by GuruFocus.com. Please click on the following links to see related term pages.

Arthur J. Gallagher (Arthur J. Gallagher) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Insurance » Arthur J. Gallagher & Co (NYSE:AJG) » Definitions » Operating Income

Comparable Companies

Traded in Other Exchanges

AJG:Mexico GAH:Germany GAH:Germany

Address

2850 Golf Road, Rolling Meadows, IL, USA, 60008-4050

Website

https://investor.ajg.com

Arthur J. Gallagher & Co provides insurance brokerage and consulting services to middle-market entities around the world. The majority of the company's revenue comes from its brokerage segment, where it negotiates and places its customers with insurance companies that provide, among other types, property/casualty and health insurance. The company's primary source of revenue in the brokerage segment is commissioning from the insurance companies. The company also generates significant revenue in its corporate segment, which includes clean energy investment and other investment income. The company generates most of its revenue in the United States, with the remaining revenue coming primarily from Australia, Bermuda, Canada, the Caribbean, New Zealand, and the United Kingdom.

Executives

Douglas K Howell	officer: Vice President and Chief	ARTHUR J. GALLAGHER & CO., TWO PIERCE PLACE, ITASCA IL 60143
William F Ziebell	officer: VICE PRESIDENT	2 PIERCE PLACE, ITASCA IL 60143
Christopher E Mead	officer: VICE PRESIDENT	2850 GOLF ROAD, ROLLING MEADOWS IL 60008
Joel D Cavaness	officer: Vice President	2 PIERCE PLACE, ITASCA IL 60143
David S Johnson	director	C/O ARTHUR J. GALLAGHER & CO., TWO PIERCE PLACE, ITASCA IL 60143
Walter D. Bay	officer: VICE PRESIDENT, SECRETARY AND	1011 ELM STREET, WINNETKA IL 60093
Richard C Cary	officer: Controller	C/O ARTHUR J. GALLAGHER & CO., TWO PIERCE PLACE, ITASCA IL 60143
Sherry S Barrat	director	C/O NEXTERA ENERGY, INC., 700 UNIVERSE BLVD, JUNO BEACH FL 33408
Susan E Mcgrath	other: Vice President	C/O ARTHUR J. GALLAGHER & CO., TWO PIERCE PLACE, ITASCA IL 60143
Kay W Mccurdy	director	C/O ARTHUR J. GALLAGHER & CO., TWO PIERCE PLACE, ITASCA IL 60143
Patrick Murphy Gallagher	officer: Vice President	2850 GOLF ROAD, ROLLING MEADOWS IL 60008
Scott R Hudson	officer: CORPORATE VP	C/O ARTHUR J. GALLAGHER & CO., TWO PIERCE PLACE, ITASCA IL 60143
William L Bax	director	TWO PIERCE PLACE, C/O ARTHUR J. GALLAGHER & CO., ITASCA IL 60143
Mark H. Bloom	officer: Vice President	8200 JONES BRANCH DRIVE, MCLEAN VA 22102
Gallagher J Patrick Jr	director, officer: President & CEO	C/O ARTHUR J. GALLAGHER & CO., TWO PIERCE PLACE, ITASCA IL 60143