Hub International reports Q3 results

Hub International Ltd. (TSX:HBG) recently announced that it generated a 7% increase to $98.3 million – from $92 million the previous year – in consolidated revenue due to 5% organic growth, even though the company incurred a small loss for the Q3 partly due to to severance costs and the Talbot earnout charge.The operational changes included a reduction of approximately 75 positions and an annualized payroll savings of about $3 million.The Company’s Canadian revenue grew 9%, net of dispositions, to $31.0 million from $28.4 million. In Canada, organic growth of 11% included 10% organic growth of core commissions. A stronger Canadian dollar added nine percentage points of the improvement in Canadian revenue growth rates. Organic growth rates were higher than total growth rates in Canada due to the sale of three small brokerages.Part of the companies small Q3 losses were based on severance which included an increase in employee cash compensation of 5% to $58.5 million in the from $55.5 million a year earlier, including $1.6 million of severance charges. The Company also recognized a higher compensation expense related to its 2004 Talbot acquisition. Reflecting earnings growth at Talbot, this earnout compensation increased to $7.6 million in the Q3 of 2005 from $6.9 million a year earlier. As the three-year Talbot earnout period continues, the amount of compensation recognized for the earnout will decline, beginning in the fourth quarter of 2005.The low Q3 earnings level and the non-deductible nature of the Talbot charge led to a 110% effective tax rate in the third quarter, up from 71% a year earlier. Excluding the impact of the Talbot charge, the tax rate would have been 32% compared with 27% in 2004.