BRP Group, Inc. (“BRP Group” or the “Company”) (NASDAQ: BRP), an
independent insurance distribution firm announced its results for
the second quarter ended June 30, 2021.
SECOND QUARTER 2021 HIGHLIGHTS AND SUBSEQUENT
EVENTS
- Revenue increased 133% year-over-year
to $119.7 million
- Pro Forma Revenue(1) grew 115%
year-over-year to $120.2 million
- Organic Revenue Growth(2) was 32%
year-over-year
- “MGA of the Future” revenue grew 52%
year-over-year to $20.0 million
- GAAP net loss of $20.1 million and GAAP
loss per share attributable to BRP Group of $0.22
- Adjusted Net Income(3) of $13.3
million, or $0.14(3) per fully diluted share
- Adjusted EBITDA(4) grew 143% to $20.4
million, compared to $8.4 million in the prior-year period
- Adjusted EBITDA Margin(4) of 17%,
compared to 16% in the prior-year period
- Pro Forma Adjusted EBITDA(5) of $20.5
million and Pro Forma Adjusted EBITDA Margin(5) of 17%
- “MGA of the Future” policies in force
grew by 39,181 to 605,295 at June 30, 2021. Comparatively, in
the second quarter 2020, policies in force grew sequentially by
44,468
- Closed three Partner acquisitions
during the second quarter 2021 that generated total revenue(6) of
approximately $4.6 million for the 12-month period pre-acquisition;
subsequent to June 30, 2021, closed five Partner acquisitions
that generated total revenue(6) of approximately $63.9 million for
the 12-month period pre-acquisition
“The power of our business model and overall
growth strategy was evident in the second quarter, as we more than
doubled revenue on a year-over-year basis to $119.7 million, while
we generated our best quarterly organic growth as a public
company,” said Trevor Baldwin, Chief Executive Officer of BRP
Group. “Our excellent performance was widespread across our
company, including another quarter of strong growth from our ‘MGA
of the Future’ platform as it climbed over the 600,000 mark in
policies in force, and valuable contributions from our recent large
Partnership acquisitions. We also made significant progress in
strengthening our balance sheet and executing on our deep pipeline
of Partnership opportunities, including the acquisition of
RogersGray on July 1, 2021, another of Business Insurance’s Top 100
largest U.S. brokers. We believe we remain in prime position to
generate rapid and sustainable growth and deliver additional
long-term shareholder value.”
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2021, cash and cash
equivalents were $224.5 million and there was $483.0 million of
long-term debt outstanding. The Company had aggregate borrowing
capacity of $380.0 million under its revolving credit facility.
On June 2, 2021, the Company closed a loan
syndication for an upsized $500.0 million senior secured first
lien term loan facility maturing in 2027 with interest at LIBOR
plus 350 bps subject to a LIBOR floor of 50 bps.
On August 6, 2021, the Company entered into Amendment No. 3 to
the JPM Credit Agreement, under which the aggregate principal
amount of the Revolving Facility was increased from $400.0 million
to $475.0 million. The other terms of the Revolving Facility and
the terms of the New Term Loan B remained unchanged.
SIX MONTHS 2021 RESULTS
- Revenue increased 159% year-over-year
to $272.5 million
- Pro Forma Revenue(1) grew 106%
year-over-year to $276.2 million
- Organic Revenue Growth(2) of 23%
year-over-year
- “MGA of the Future” revenue grew 54% to
$37.2 million, compared to $24.2 million in the prior-year
period
- GAAP net income of $10.5 million and
GAAP fully diluted earnings per share attributable to BRP Group of
$0.11
- Adjusted Net Income(3) of $55.8
million, or $0.58(3) per fully diluted share
- Net income margin of 4% in the current
year period
- Adjusted EBITDA(4) grew 226% to $73.1
million, compared to $22.4 million in the prior-year period
- Adjusted EBITDA Margin(4) of 27%,
compared to 21% in the prior-year period
- Pro Forma Adjusted EBITDA(5) of $74.9
million and Pro Forma Adjusted EBITDA Margin(6) of 27%
WEBCAST AND CONFERENCE CALL INFORMATION
BRP Group will host a webcast and conference
call to discuss second quarter 2021 results today at 5:00 PM ET. A
live webcast and a slide presentation of the conference call will
be available on BRP Group’s investor relations website at
ir.baldwinriskpartners.com. The dial-in number for the conference
call is (877) 451-6152 (toll-free) or (201) 389-0879
(international). Please dial the number 10 minutes prior to the
scheduled start time.
A webcast replay of the call will be available
at ir.baldwinriskpartners.com for one year following the call.
ABOUT BRP GROUP, INC.
BRP Group, Inc. (NASDAQ: BRP) is a rapidly
growing independent insurance distribution firm delivering tailored
insurance and risk management insights and solutions that give our
Clients the peace of mind to pursue their purpose, passion and
dreams. We are innovating the industry by taking a holistic and
tailored approach to risk management, insurance and employee
benefits, and support our Clients, Colleagues, Insurance Company
Partners and communities through the deployment of vanguard
resources and capital to drive our growth. BRP represents over
600,000 Clients across the United States and internationally. For
more information, please visit www.baldwinriskpartners.com.
FOOTNOTES
(1) Pro Forma Revenue is a
non-GAAP measure. Reconciliation of Pro Forma Revenue to
commissions and fees, the most directly comparable GAAP financial
measure, is set forth in the reconciliation table accompanying this
release.
(2) Organic Revenue for the
three and six months ended June 30, 2020 used to calculate Organic
Revenue Growth for the three and six months ended June 30, 2021 was
$51.3 million and $105.5 million, which is adjusted to reflect
revenues from Partnerships that reach the 12-month owned mark
during the three and six months ended June 30, 2021. Organic
Revenue is a non-GAAP measure. Reconciliation of Organic Revenue to
commissions and fees, the most directly comparable GAAP financial
measure, is set forth in the reconciliation table accompanying this
release.
(3) Adjusted Net Income and
Adjusted Diluted EPS are non-GAAP measures. Reconciliation of
Adjusted Net Income to net income (loss) attributable to BRP Group,
Inc. and reconciliation of Adjusted Diluted EPS to diluted earnings
(loss) per share, the most directly comparable GAAP financial
measures, are set forth in the reconciliation table accompanying
this release.
(4) Adjusted EBITDA and
Adjusted EBITDA Margin are non-GAAP measures. Reconciliation of
Adjusted EBITDA to net income (loss), the most directly comparable
GAAP financial measure, is set forth in the reconciliation table
accompanying this release.
(5) Pro Forma Adjusted EBITDA
and Pro Forma Adjusted EBITDA Margin are non-GAAP measures.
Reconciliation of Pro Forma Adjusted EBITDA to net income (loss),
the most directly comparable GAAP financial measure, is set forth
in the reconciliation table accompanying this release.
(6) Represents the aggregate
revenues of Partners acquired during the relevant period presented,
for the most recent trailing 12-month period prior to acquisition
by the Company, in each case, at the time the due diligence was
concluded based on a quality of earnings review and not an
audit.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release may contain various
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, which represent BRP
Group’s expectations or beliefs concerning future events.
Forward-looking statements are statements other than historical
facts and may include statements that address future operating,
financial or business performance or BRP Group’s strategies or
expectations. In some cases, you can identify these statements by
forward-looking words such as “may”, “might”, “will”, “should”,
“expects”, “plans”, “anticipates”, “believes”, “estimates”,
“predicts”, “projects”, “potential”, “outlook” or “continue”, or
the negative of these terms or other comparable terminology.
Forward-looking statements are based on management’s current
expectations and beliefs and involve significant risks and
uncertainties that could cause actual results, developments and
business decisions to differ materially from those contemplated by
these statements.
Factors that could cause actual results or
performance to differ from the expectations expressed or implied in
such forward-looking statements include, but are not limited to,
those described under the caption “Risk Factors” in BRP Group’s
Annual Report on Form 10-K for the year ended December 31,
2020 and in BRP Group’s other filings with the SEC, which are
available free of charge on the Securities and Exchange
Commission's website at: www.sec.gov. Should one or more of these
risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those indicated. All forward-looking statements and all
subsequent written and oral forward-looking statements attributable
to BRP Group or to persons acting on behalf of BRP Group are
expressly qualified in their entirety by reference to these risks
and uncertainties. You should not place undue reliance on
forward-looking statements. Forward-looking statements speak only
as of the date they are made, and BRP Group does not undertake any
obligation to update them in light of new information, future
developments or otherwise, except as may be required under
applicable law.
CONTACTS
INVESTOR RELATIONS
Bonnie Bishop, Executive DirectorBaldwin Risk
Partners(813) 259-8032 | IR@baldwinriskpartners.com
PRESS
Rachel DeAngelo, Communications ManagerBaldwin
Risk Partners(813) 387-6842 | rdeangelo@baldwinriskpartners.com
BRP GROUP, INC.
Condensed Consolidated Statements of
Comprehensive Income
(Unaudited)
| |
|
For the Three Months Ended June
30, |
|
For the Six Months Ended June
30, |
| (in thousands, except
share and per share data) |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
Commissions and fees |
|
$ |
119,706 |
|
|
|
$ |
51,268 |
|
|
|
$ |
272,534 |
|
|
|
$ |
105,427 |
|
|
| |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Commissions, employee compensation and benefits |
|
89,065 |
|
|
|
39,263 |
|
|
|
178,440 |
|
|
|
73,811 |
|
|
|
Other operating expenses |
|
19,200 |
|
|
|
9,546 |
|
|
|
36,768 |
|
|
|
18,431 |
|
|
|
Amortization expense |
|
10,742 |
|
|
|
4,450 |
|
|
|
21,279 |
|
|
|
8,046 |
|
|
|
Change in fair value of contingent consideration |
|
13,325 |
|
|
|
4,581 |
|
|
|
11,822 |
|
|
|
6,242 |
|
|
|
Depreciation expense |
|
573 |
|
|
|
240 |
|
|
|
1,167 |
|
|
|
405 |
|
|
|
Total operating expenses |
|
132,905 |
|
|
|
58,080 |
|
|
|
249,476 |
|
|
|
106,935 |
|
|
| |
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
(13,199 |
) |
|
|
(6,812 |
) |
|
|
23,058 |
|
|
|
(1,508 |
) |
|
| |
|
|
|
|
|
|
|
|
| Other expense: |
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
(5,848 |
) |
|
|
(1,047 |
) |
|
|
(11,491 |
) |
|
|
(1,632 |
) |
|
|
Other expense, net |
|
(1,057 |
) |
|
|
— |
|
|
|
(1,057 |
) |
|
|
— |
|
|
|
Total other expense |
|
(6,905 |
) |
|
|
(1,047 |
) |
|
|
(12,548 |
) |
|
|
(1,632 |
) |
|
| |
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
(20,104 |
) |
|
|
(7,859 |
) |
|
|
10,510 |
|
|
|
(3,140 |
) |
|
|
Income tax provision |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12 |
|
|
|
Net income (loss) |
|
(20,104 |
) |
|
|
(7,859 |
) |
|
|
10,510 |
|
|
|
(3,152 |
) |
|
|
Less: net income (loss) attributable to noncontrolling
interests |
|
(10,348 |
) |
|
|
(4,271 |
) |
|
|
5,653 |
|
|
|
(1,032 |
) |
|
|
Net income (loss) attributable to BRP Group, Inc. |
|
$ |
(9,756 |
) |
|
|
$ |
(3,588 |
) |
|
|
$ |
4,857 |
|
|
|
$ |
(2,120 |
) |
|
| |
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
|
$ |
(20,104 |
) |
|
|
$ |
(7,859 |
) |
|
|
$ |
10,510 |
|
|
|
$ |
(3,152 |
) |
|
|
Comprehensive income (loss) attributable to noncontrolling
interests |
|
(10,348 |
) |
|
|
(4,271 |
) |
|
|
5,653 |
|
|
|
(1,032 |
) |
|
|
Comprehensive income (loss) attributable to BRP Group, Inc. |
|
(9,756 |
) |
|
|
(3,588 |
) |
|
|
4,857 |
|
|
|
(2,120 |
) |
|
| |
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
|
$ |
(0.22 |
) |
|
|
$ |
(0.18 |
) |
|
|
$ |
0.11 |
|
|
|
$ |
(0.11 |
) |
|
|
Diluted earnings (loss) per share |
|
$ |
(0.22 |
) |
|
|
$ |
(0.18 |
) |
|
|
$ |
0.11 |
|
|
|
$ |
(0.11 |
) |
|
|
Weighted-average shares of Class A common stock outstanding -
basic |
|
44,671,308 |
|
|
|
|
20,426,082 |
|
|
|
44,464,312 |
|
|
|
19,959,828 |
|
|
|
Weighted-average shares of Class A common stock outstanding -
diluted |
|
|
44,671,308 |
|
|
|
|
20,426,082 |
|
|
|
|
46,160,474 |
|
|
|
|
19,959,828 |
|
|
BRP GROUP, INC.
Condensed Consolidated Balance
Sheets
(Unaudited)
| (in thousands, except
share and per share data) |
|
June 30, 2021 |
|
December 31, 2020 |
|
Assets |
|
|
|
|
| Current assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
224,479 |
|
|
|
$ |
108,462 |
|
|
|
Restricted cash |
|
51,505 |
|
|
|
33,560 |
|
|
|
Premiums, commissions and fees receivable, net |
|
209,664 |
|
|
|
155,501 |
|
|
|
Prepaid expenses and other current assets |
|
5,156 |
|
|
|
4,447 |
|
|
|
Due from related parties |
|
— |
|
|
|
19 |
|
|
|
Total current assets |
|
490,804 |
|
|
|
301,989 |
|
|
| Property and equipment,
net |
|
11,558 |
|
|
|
11,019 |
|
|
| Other assets |
|
14,885 |
|
|
|
11,084 |
|
|
| Intangible assets, net |
|
547,227 |
|
|
|
554,320 |
|
|
| Goodwill |
|
671,826 |
|
|
|
651,502 |
|
|
|
Total assets |
|
$ |
1,736,300 |
|
|
|
$ |
1,529,914 |
|
|
|
Liabilities, Mezzanine Equity and Stockholders’
Equity |
|
|
|
|
| Current liabilities: |
|
|
|
|
|
Premiums payable to insurance companies |
|
$ |
177,578 |
|
|
|
$ |
135,576 |
|
|
|
Producer commissions payable |
|
32,367 |
|
|
|
24,260 |
|
|
|
Accrued expenses and other current liabilities |
|
49,639 |
|
|
|
47,490 |
|
|
|
Due to related parties |
|
65 |
|
|
|
— |
|
|
|
Current portion of long-term debt |
|
5,000 |
|
|
|
4,000 |
|
|
|
Current portion of contingent earnout liabilities |
|
90,160 |
|
|
|
6,094 |
|
|
|
Total current liabilities |
|
354,809 |
|
|
|
217,420 |
|
|
| Revolving lines of credit |
|
20,000 |
|
|
|
— |
|
|
| Long-term debt, less current
portion |
|
477,985 |
|
|
|
381,382 |
|
|
| Contingent earnout
liabilities, less current portion |
|
88,092 |
|
|
|
158,725 |
|
|
| Other liabilities |
|
3,067 |
|
|
|
2,419 |
|
|
|
Total liabilities |
|
943,953 |
|
|
|
759,946 |
|
|
| Commitments and
contingencies |
|
|
|
|
| Mezzanine equity: |
|
|
|
|
|
Redeemable noncontrolling interest |
|
173 |
|
|
|
98 |
|
|
| Stockholders’ equity: |
|
|
|
|
| Class A common stock, par
value $0.01 per share, 300,000,000 shares authorized; 46,583,582
and 44,953,166 shares issued and outstanding at June 30, 2021
and December 31, 2020, respectively |
|
466 |
|
|
|
450 |
|
|
| Class B common stock, par
value $0.0001 per share, 100,000,000 shares authorized; 49,575,871
and 49,828,383 shares issued and outstanding at June 30, 2021
and December 31, 2020, respectively |
|
5 |
|
|
|
5 |
|
|
|
Additional paid-in capital |
|
404,025 |
|
|
|
392,139 |
|
|
|
Accumulated deficit |
|
(19,489 |
) |
|
|
(24,346 |
) |
|
|
Notes receivable from stockholders |
|
(306 |
) |
|
|
(465 |
) |
|
|
Total stockholders’ equity attributable to BRP Group, Inc. |
|
384,701 |
|
|
|
367,783 |
|
|
|
Noncontrolling interest |
|
407,473 |
|
|
|
402,087 |
|
|
|
Total stockholders’ equity |
|
792,174 |
|
|
|
769,870 |
|
|
|
Total liabilities, mezzanine equity and stockholders’ equity |
|
$ |
1,736,300 |
|
|
|
$ |
1,529,914 |
|
|
BRP GROUP, INC.
Condensed Consolidated Statements of Cash
Flows
(Unaudited)
| |
|
For the Six Months Ended June 30, |
| (in
thousands) |
|
2021 |
|
2020 |
|
Cash flows from operating activities: |
|
|
|
|
|
Net income (loss) |
|
$ |
10,510 |
|
|
|
$ |
(3,152 |
) |
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
22,446 |
|
|
|
8,451 |
|
|
|
Change in fair value of contingent consideration |
|
11,822 |
|
|
|
6,242 |
|
|
|
Share-based compensation expense |
|
8,087 |
|
|
|
3,117 |
|
|
|
Amortization of deferred financing costs |
|
1,443 |
|
|
|
195 |
|
|
|
Change in fair value of interest rate caps |
|
825 |
|
|
|
— |
|
|
|
Payment of contingent earnout consideration in excess of purchase
price accrual |
|
(602 |
) |
|
|
(1,316 |
) |
|
|
Other fair value adjustments |
|
94 |
|
|
|
— |
|
|
|
Changes in operating assets and liabilities, net of effect of
acquisitions: |
|
|
|
|
|
Premiums, commissions and fees receivable, net |
|
(52,357 |
) |
|
|
(9,464 |
) |
|
|
Prepaid expenses and other current assets |
|
(2,254 |
) |
|
|
(334 |
) |
|
|
Due from related parties |
|
84 |
|
|
|
(78 |
) |
|
|
Accounts payable, accrued expenses and other current
liabilities |
|
49,321 |
|
|
|
39,983 |
|
|
|
Net cash provided by operating activities |
|
49,419 |
|
|
|
43,644 |
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
Capital expenditures |
|
(1,756 |
) |
|
|
(2,619 |
) |
|
|
Cash consideration paid for asset acquisitions, net of cash
received |
|
(1,575 |
) |
|
|
(695 |
) |
|
|
Cash consideration paid for business combinations, net of cash
received |
|
(24,276 |
) |
|
|
(224,112 |
) |
|
|
Net cash used in investing activities |
|
(27,607 |
) |
|
|
(227,426 |
) |
|
| Cash flows from financing
activities: |
|
|
|
|
|
Proceeds from issuance of Class A common stock, net of underwriting
discounts |
|
— |
|
|
|
167,346 |
|
|
|
Redemption and repurchase of LLC Units and Class B common
stock |
|
— |
|
|
|
(32,610 |
) |
|
|
Payment of common stock offering costs |
|
— |
|
|
|
(769 |
) |
|
|
Payment of contingent and guaranteed earnout consideration |
|
(828 |
) |
|
|
(665 |
) |
|
|
Proceeds from revolving line of credit |
|
20,000 |
|
|
|
185,637 |
|
|
|
Proceeds from long-term debt |
|
97,914 |
|
|
|
— |
|
|
|
Payments on long-term debt |
|
(1,000 |
) |
|
|
— |
|
|
|
Payments of debt issuance costs |
|
(634 |
) |
|
|
(1,918 |
) |
|
|
Purchase of interest rate caps |
|
(3,461 |
) |
|
|
— |
|
|
|
Proceeds from repayment of stockholder notes receivable |
|
159 |
|
|
|
115 |
|
|
|
Other |
|
— |
|
|
|
11 |
|
|
|
Net cash provided by financing activities |
|
112,150 |
|
|
|
317,147 |
|
|
|
Net increase in cash and cash equivalents and restricted cash |
|
133,962 |
|
|
|
133,365 |
|
|
|
Cash and cash equivalents and restricted cash at beginning of
period |
|
142,022 |
|
|
|
71,071 |
|
|
|
Cash and cash equivalents and restricted cash at end of period |
|
$ |
275,984 |
|
|
|
$ |
204,436 |
|
|
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA, Adjusted EBITDA Margin, Organic
Revenue, Organic Revenue Growth, Adjusted Net Income, Adjusted
Diluted Earnings Per Share (“EPS”), Pro Forma Revenue, Pro Forma
Adjusted EBITDA and Pro Forma Adjusted EBITDA Margin are not
measures of financial performance under GAAP and should not be
considered substitutes for GAAP measures, including commissions and
fees (for Organic Revenue, Organic Revenue Growth and Pro Forma
Revenue), net income (loss) (for Adjusted EBITDA, Adjusted EBITDA
Margin, Pro Forma Adjusted EBITDA and Pro Forma Adjusted EBITDA
Margin), net income (loss) attributable to BRP Group, Inc. (for
Adjusted Net Income) or diluted earnings (loss) per share (for
Adjusted Diluted EPS), which we consider to be the most directly
comparable GAAP measures. These non-GAAP financial measures have
limitations as analytical tools, and when assessing our operating
performance, you should not consider these non-GAAP financial
measures in isolation or as substitutes for commissions and fees,
net income (loss), net income (loss) attributable to BRP Group,
Inc. or other consolidated income statement data prepared in
accordance with GAAP. Other companies in our industry may define or
calculate these non-GAAP financial measures differently than we do,
and accordingly these measures may not be comparable to similarly
titled measures used by other companies.
Adjusted EBITDA eliminates the effects of
financing, depreciation, amortization and change in fair value of
contingent consideration. We define Adjusted EBITDA as net income
(loss) before interest, taxes, depreciation, amortization, change
in fair value of contingent consideration and certain items of
income and expense, including share-based compensation expense,
transaction-related expenses related to Partnerships including
severance, and certain non-recurring costs, including those related
to raising capital. We believe that Adjusted EBITDA is an
appropriate measure of operating performance because it eliminates
the impact of expenses that do not relate to business performance,
and that the presentation of this measure enhances an investor’s
understanding of our financial performance.
Adjusted EBITDA Margin is Adjusted EBITDA
divided by commissions and fees. Adjusted EBITDA Margin is a key
metric used by management and our board of directors to assess our
financial performance. We believe that Adjusted EBITDA Margin is an
appropriate measure of operating performance because it eliminates
the impact of expenses that do not relate to business performance,
and that the presentation of this measure enhances an investor’s
understanding of our financial performance. We believe that
Adjusted EBITDA Margin is helpful in measuring profitability of
operations on a consolidated level.
Adjusted EBITDA and Adjusted EBITDA Margin have
important limitations as analytical tools. For example, Adjusted
EBITDA and Adjusted EBITDA Margin:
- do not reflect any
cash capital expenditure requirements for the assets being
depreciated and amortized that may have to be replaced in the
future;
- do not reflect
changes in, or cash requirements for, our working capital
needs;
- do not reflect the
impact of certain cash charges resulting from matters we consider
not to be indicative of our ongoing operations;
- do not reflect the
interest expense or the cash requirements necessary to service
interest or principal payments on our debt;
- do not reflect
share-based compensation expense and other non-cash charges;
and
- exclude certain tax
payments that may represent a reduction in cash available to
us.
We calculate Organic Revenue Growth based on
commissions and fees for the relevant period by excluding the first
twelve months of commissions and fees generated from new Partners.
Organic Revenue Growth is the change in Organic Revenue
period-to-period, with prior period results adjusted for Organic
Revenues that were excluded in the prior period because the
relevant Partners had not yet reached the twelve-month owned mark,
but which reach the twelve-month owned mark in the current period.
For example, revenues from a Partner acquired on June 1, 2020 are
excluded from Organic Revenue for 2020. However, after June 1,
2021, results from June 1, 2020 to December 31, 2020 for such
Partners are compared to results from June 1, 2021 to December 31,
2021 for purposes of calculating Organic Revenue Growth in 2021.
Organic Revenue Growth is a key metric used by management and our
board of directors to assess our financial performance. We believe
that Organic Revenue and Organic Revenue Growth are appropriate
measures of operating performance as they allow investors to
measure, analyze and compare growth in a meaningful and consistent
manner.
Adjusted Net Income is presented for the purpose
of calculating Adjusted Diluted EPS. We define Adjusted Net Income
as net income (loss) attributable to BRP Group, Inc. adjusted for
amortization, change in fair value of contingent consideration and
certain items of income and expense, including share-based
compensation expense, transaction-related expenses related to
Partnerships including severance, and certain non-recurring costs
that, in the opinion of management, significantly affect the
period-over-period assessment of operating results, and the related
tax effect of those adjustments.
Adjusted Diluted EPS measures our per share
earnings excluding certain expenses as discussed above and assuming
all shares of Class B common stock were exchanged for Class A
common stock. Adjusted Diluted EPS is calculated as Adjusted Net
Income divided by adjusted dilutive weighted-average shares
outstanding. We believe Adjusted Diluted EPS is useful to investors
because it enables them to better evaluate per share operating
performance across reporting periods.
Pro Forma Revenue reflects GAAP revenue
(commissions and fees), plus revenue from Partnerships in the
unowned periods.
Pro Forma Adjusted EBITDA takes into account
Adjusted EBITDA from Partnerships in the unowned periods and
eliminates the effects of financing, depreciation and amortization.
We define Pro Forma Adjusted EBITDA as pro forma net income (loss)
before interest, taxes, depreciation, amortization, change in fair
value of contingent consideration and certain items of income and
expense, including share-based compensation expense,
transaction-related expenses related to Partnerships including
severance, and certain non-recurring costs, including those related
to raising capital. We believe that Pro Forma Adjusted EBITDA is an
appropriate measure of operating performance because it eliminates
the impact of expenses that do not relate to business performance,
and that the presentation of this measure enhances an investor’s
understanding of our financial performance.
Pro Forma Adjusted EBITDA Margin is Pro Forma
Adjusted EBITDA divided by Pro Forma Revenue. Pro Forma Adjusted
EBITDA is a key metric used by management and our board of
directors to assess our financial performance. We believe that Pro
Forma Adjusted EBITDA is an appropriate measure of operating
performance because it eliminates the impact of expenses that do
not relate to business performance, and that the presentation of
this measure enhances an investor’s understanding of our financial
performance. We believe that Pro Forma Adjusted EBITDA Margin is
helpful in measuring profitability of operations on a consolidated
level.
Adjusted EBITDA and Adjusted EBITDA Margin
The following table reconciles Adjusted EBITDA
and Adjusted EBITDA Margin to net income (loss), which we consider
to be the most directly comparable GAAP financial measure to
Adjusted EBITDA and Adjusted EBITDA Margin:
| |
|
For the Three Months Ended June
30, |
|
For the Six Months Ended June
30, |
| |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
| Commissions and fees |
|
$ |
119,706 |
|
|
|
$ |
51,268 |
|
|
|
$ |
272,534 |
|
|
$ |
105,427 |
|
|
| |
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(20,104 |
) |
|
|
$ |
(7,859 |
) |
|
|
$ |
10,510 |
|
|
$ |
(3,152 |
) |
|
| Adjustments to net income
(loss): |
|
|
|
|
|
|
|
|
|
Amortization expense |
|
10,742 |
|
|
|
4,450 |
|
|
|
21,279 |
|
|
8,046 |
|
|
|
Change in fair value of contingent consideration |
|
13,325 |
|
|
|
4,581 |
|
|
|
11,822 |
|
|
6,242 |
|
|
|
Interest expense, net |
|
5,848 |
|
|
|
1,047 |
|
|
|
11,491 |
|
|
1,632 |
|
|
|
Share-based compensation |
|
4,545 |
|
|
|
1,978 |
|
|
|
8,087 |
|
|
3,117 |
|
|
|
Transaction-related Partnership expenses |
|
3,225 |
|
|
|
2,020 |
|
|
|
5,670 |
|
|
3,868 |
|
|
|
Depreciation expense |
|
573 |
|
|
|
240 |
|
|
|
1,167 |
|
|
405 |
|
|
|
Change in fair value of interest rate caps |
|
825 |
|
|
|
— |
|
|
|
825 |
|
|
— |
|
|
|
Capital related expenses |
|
— |
|
|
|
1,000 |
|
|
|
— |
|
|
1,000 |
|
|
|
Severance related to Partnership activity |
|
— |
|
|
|
360 |
|
|
|
— |
|
|
413 |
|
|
|
Income tax provision |
|
— |
|
|
|
— |
|
|
|
— |
|
|
12 |
|
|
|
Other |
|
1,412 |
|
|
|
568 |
|
|
|
2,271 |
|
|
834 |
|
|
|
Adjusted EBITDA |
|
$ |
20,391 |
|
|
|
$ |
8,385 |
|
|
|
$ |
73,122 |
|
|
$ |
22,417 |
|
|
| Adjusted EBITDA Margin |
|
17 |
|
% |
|
16 |
|
% |
|
27 |
% |
|
21 |
|
% |
Organic Revenue and Organic Revenue Growth
The following table reconciles Organic Revenue
to commissions and fees, which we consider to be the most directly
comparable GAAP financial measure to Organic Revenue:
| |
|
For the Three Months Ended June
30, |
For the Six Months Ended June
30, |
| (in thousands, except
percentages) |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
| Commissions and fees |
|
$ |
119,706 |
|
|
|
$ |
51,268 |
|
|
|
$ |
272,534 |
|
|
|
$ |
105,427 |
|
|
| Partnership commissions and
fees (1) |
|
(51,893 |
) |
|
|
(12,064 |
) |
|
|
(143,108 |
) |
|
|
(34,932 |
) |
|
|
Organic Revenue |
|
$ |
67,813 |
|
|
|
$ |
39,204 |
|
|
|
$ |
129,426 |
|
|
|
$ |
70,495 |
|
|
| Organic Revenue Growth
(2) |
|
$ |
16,482 |
|
|
|
$ |
6,130 |
|
|
|
$ |
23,929 |
|
|
|
$ |
7,584 |
|
|
| Organic Revenue Growth %
(2) |
|
32 |
|
% |
|
19 |
|
% |
|
23 |
|
% |
|
12 |
|
% |
__________
(1) Includes the first twelve
months of such commissions and fees generated from newly acquired
Partners. Amount is reduced by approximately $830,000 for the
timing of certain cash receipts that were fully constrained under
ASC 606 in the post-partnership period for our partnership with
Agency RM, which closed February 1,
2020.(2) Organic Revenue for the three and six
months ended June 30, 2020 used to calculate Organic Revenue Growth
for the three and six months ended June 30, 2021 was $51.3 million
and $105.5 million, which is adjusted to reflect revenues from
Partnerships that reached the twelve-month owned mark during the
three and six months ended June 30, 2021.
Adjusted Net Income and Adjusted Diluted
EPS
The following table reconciles Adjusted Net
Income to net income (loss) attributable to BRP Group, Inc. and
reconciles Adjusted Diluted EPS to diluted earnings (loss) per
share attributable to BRP Group, Inc. Class A common stock:
| |
|
For the Three Months Ended June
30, |
|
For the Six Months Ended June
30, |
| (in thousands, except
per share data) |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
| Net income (loss) attributable
to BRP Group, Inc. |
|
$ |
(9,756 |
) |
|
|
$ |
(3,588 |
) |
|
|
$ |
4,857 |
|
|
|
$ |
(2,120 |
) |
|
|
Net income (loss) attributable to noncontrolling interests |
|
(10,348 |
) |
|
|
(4,271 |
) |
|
|
5,653 |
|
|
|
(1,032 |
) |
|
|
Amortization expense |
|
10,742 |
|
|
|
4,450 |
|
|
|
21,279 |
|
|
|
8,046 |
|
|
|
Change in fair value of contingent consideration |
|
13,325 |
|
|
|
4,581 |
|
|
|
11,822 |
|
|
|
6,242 |
|
|
|
Share-based compensation |
|
4,545 |
|
|
|
1,978 |
|
|
|
8,087 |
|
|
|
3,117 |
|
|
|
Transaction-related Partnership expenses |
|
3,225 |
|
|
|
2,020 |
|
|
|
5,670 |
|
|
|
3,868 |
|
|
|
Amortization of deferred financing costs |
|
750 |
|
|
|
119 |
|
|
|
1,443 |
|
|
|
195 |
|
|
|
Change in fair value of interest rate caps |
|
825 |
|
|
|
— |
|
|
|
825 |
|
|
|
— |
|
|
|
Capital related expenses |
|
— |
|
|
|
1,000 |
|
|
|
— |
|
|
|
1,000 |
|
|
|
Severance related to Partnership activity |
|
— |
|
|
|
360 |
|
|
|
— |
|
|
|
413 |
|
|
|
Other |
|
1,412 |
|
|
|
568 |
|
|
|
2,271 |
|
|
|
834 |
|
|
| Adjusted pre-tax income |
|
14,720 |
|
|
|
7,217 |
|
|
|
61,907 |
|
|
|
20,563 |
|
|
|
Adjusted income taxes (1) |
|
1,457 |
|
|
|
715 |
|
|
|
6,129 |
|
|
|
2,036 |
|
|
| Adjusted Net Income |
|
$ |
13,263 |
|
|
|
$ |
6,502 |
|
|
|
$ |
55,778 |
|
|
|
$ |
18,527 |
|
|
| |
|
|
|
|
|
|
|
|
| Weighted-average shares of
Class A common stock outstanding - diluted |
|
44,671 |
|
|
|
20,426 |
|
|
|
46,160 |
|
|
|
19,960 |
|
|
|
Dilutive effect of unvested restricted shares of Class A common
stock |
|
1,862 |
|
|
|
365 |
|
|
|
— |
|
|
|
344 |
|
|
|
Exchange of Class B shares (2) |
|
49,600 |
|
|
|
45,466 |
|
|
|
49,694 |
|
|
|
44,503 |
|
|
| Adjusted dilutive
weighted-average shares outstanding |
|
96,133 |
|
|
|
66,257 |
|
|
|
95,854 |
|
|
|
64,807 |
|
|
| |
|
|
|
|
|
|
|
|
| Adjusted Diluted EPS |
|
$ |
0.14 |
|
|
|
$ |
0.10 |
|
|
|
$ |
0.58 |
|
|
|
$ |
0.29 |
|
|
| |
|
|
|
|
|
|
|
|
| Diluted earnings (loss) per
share |
|
$ |
(0.22 |
) |
|
|
$ |
(0.18 |
) |
|
|
$ |
0.11 |
|
|
|
$ |
(0.11 |
) |
|
|
Effect of exchange of Class B shares and net income attributable to
noncontrolling interests per share |
|
0.01 |
|
|
|
0.06 |
|
|
|
— |
|
|
|
0.06 |
|
|
|
Other adjustments to earnings per share |
|
0.37 |
|
|
|
0.23 |
|
|
|
0.53 |
|
|
|
0.37 |
|
|
|
Adjusted income taxes per share |
|
(0.02 |
) |
|
|
(0.01 |
) |
|
|
(0.06 |
) |
|
|
(0.03 |
) |
|
| Adjusted Diluted EPS |
|
$ |
0.14 |
|
|
|
$ |
0.10 |
|
|
|
$ |
0.58 |
|
|
|
$ |
0.29 |
|
|
___________(1) Represents corporate income
taxes at assumed effective tax rate of 9.9% applied to adjusted
pre-tax income.(2) Assumes the full exchange of
Class B shares for Class A common stock pursuant to the Amended LLC
Agreement.
Pro Forma Revenue
The following table reconciles Pro Forma Revenue
to commissions and fees, which we consider to be the most directly
comparable GAAP financial measure to Pro Forma Revenue:
| |
|
For the Three Months Ended June
30, |
For the Six Months Ended June
30, |
| (in
thousands) |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
| Commissions and fees |
|
$ |
119,706 |
|
|
$ |
51,268 |
|
|
$ |
272,534 |
|
|
$ |
105,427 |
|
| Revenue for Partnerships in
the unowned period (1) |
|
489 |
|
|
4,553 |
|
|
3,714 |
|
|
28,478 |
|
|
Pro Forma Revenue |
|
$ |
120,195 |
|
|
$ |
55,821 |
|
|
$ |
276,248 |
|
|
$ |
133,905 |
|
___________
(1) The adjustments for the
three months ended June 30, 2021 reflect commissions and fees
revenue for Only Medicare Solutions, Seniors’ Insurance Services of
Washington, Inc. and Mid-Continent Companies, Ltd./Mid-Continent
Securities Ltd. as if the Company had acquired the Partners on
January 1, 2021. The adjustments for the three months ended June
30, 2020 reflect commissions and fees revenue for Insurance Risk
Partners, LLC, Southern Protective Group, LLC, Pendulum, LLC,
Rosenthal Bros., Inc. and Trinity Benefit Advisors, Inc./Russ
Blakely & Associates, LLC as if the Company had acquired the
Partners on January 1, 2020. The adjustments for the six months
ended June 30, 2021 reflect commissions and fees revenue for
LeaseTrack Services LLC/Effective Coverage LLC, Medicare Help Now,
Only Medicare Solutions, Seniors’ Insurance Services of Washington,
Inc. and Mid-Continent Companies, Ltd./Mid-Continent Securities
Ltd. as if the Company had acquired the Partners on January 1,
2021. The adjustments for the six months ended June 30, 2020
reflect commissions and fees revenue for AgencyRM LLC, VibrantUSA
Inc., Insurance Risk Partners, LLC, Southern Protective Group, LLC,
Pendulum, LLC, Rosenthal Bros., Inc. and Trinity Benefit Advisors,
Inc./Russ Blakely & Associates, LLC as if the Company had
acquired the Partners on January 1, 2020. This unaudited pro forma
information should not be relied upon as being indicative of the
historical results that would have been obtained if the
acquisitions had occurred on that date, nor the results that may be
obtained in the future.
Pro Forma Adjusted EBITDA and Pro Forma Adjusted EBITDA
Margin
The following table reconciles Pro Forma
Adjusted EBITDA and Pro Forma Adjusted EBITDA Margin to net income
(loss), which we consider to be the most directly comparable GAAP
financial measure to Pro Forma Adjusted EBITDA and Pro Forma
Adjusted EBITDA Margin:
| |
|
For the Three Months Ended June
30, |
For the Six Months Ended June
30, |
| (in
thousands) |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
| Pro Forma Revenue |
|
$ |
120,195 |
|
|
|
$ |
55,821 |
|
|
|
$ |
276,248 |
|
|
$ |
133,905 |
|
|
| |
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(20,104 |
) |
|
|
$ |
(7,859 |
) |
|
|
$ |
10,510 |
|
|
$ |
(3,152 |
) |
|
|
Net income (loss) for Partnerships in the unowned period (1) |
|
76 |
|
|
|
(319 |
) |
|
|
1,571 |
|
|
9,296 |
|
|
| Pro Forma Net Income
(Loss) |
|
(20,028 |
) |
|
|
(8,178 |
) |
|
|
12,081 |
|
|
6,144 |
|
|
| Adjustments to pro forma net
income (loss): |
|
|
|
|
|
|
|
|
|
Amortization expense |
|
10,773 |
|
|
|
5,446 |
|
|
|
21,530 |
|
|
10,903 |
|
|
|
Change in fair value of contingent consideration |
|
13,325 |
|
|
|
4,581 |
|
|
|
11,822 |
|
|
6,242 |
|
|
|
Interest expense, net |
|
5,848 |
|
|
|
1,570 |
|
|
|
11,491 |
|
|
3,075 |
|
|
|
Share-based compensation |
|
4,545 |
|
|
|
1,978 |
|
|
|
8,087 |
|
|
3,117 |
|
|
|
Transaction-related Partnership expenses |
|
3,225 |
|
|
|
2,020 |
|
|
|
5,670 |
|
|
3,868 |
|
|
|
Depreciation expense |
|
573 |
|
|
|
240 |
|
|
|
1,167 |
|
|
405 |
|
|
|
Change in fair value of interest rate caps |
|
825 |
|
|
|
— |
|
|
|
825 |
|
|
— |
|
|
|
Capital related expenses |
|
— |
|
|
|
1,000 |
|
|
|
— |
|
|
1,000 |
|
|
|
Severance related to Partnership activity |
|
— |
|
|
|
360 |
|
|
|
— |
|
|
413 |
|
|
|
Income tax provision |
|
— |
|
|
|
— |
|
|
|
— |
|
|
12 |
|
|
|
Other |
|
1,412 |
|
|
|
568 |
|
|
|
2,271 |
|
|
834 |
|
|
| Pro Forma Adjusted EBITDA |
|
$ |
20,498 |
|
|
|
$ |
9,585 |
|
|
|
$ |
74,944 |
|
|
$ |
36,013 |
|
|
| Pro Forma Adjusted EBITDA
Margin |
|
17 |
|
% |
|
17 |
|
% |
|
27 |
% |
|
27 |
|
% |
___________
(1) The adjustments for the
three months ended June 30, 2021 reflect commissions and fees
revenue for Only Medicare Solutions, Seniors’ Insurance Services of
Washington, Inc. and Mid-Continent Companies, Ltd./Mid-Continent
Securities Ltd. as if the Company had acquired the Partners on
January 1, 2021. The adjustments for the three months ended June
30, 2020 reflect commissions and fees revenue for Insurance Risk
Partners, LLC, Southern Protective Group, LLC, Pendulum, LLC,
Rosenthal Bros., Inc. and Trinity Benefit Advisors, Inc./Russ
Blakely & Associates, LLC as if the Company had acquired the
Partners on January 1, 2020. The adjustments for the six months
ended June 30, 2021 reflect commissions and fees revenue for
LeaseTrack Services LLC/Effective Coverage LLC, Medicare Help Now,
Only Medicare Solutions, Seniors’ Insurance Services of Washington,
Inc. and Mid-Continent Companies, Ltd./Mid-Continent Securities
Ltd. as if the Company had acquired the Partners on January 1,
2021. The adjustments for the six months ended June 30, 2020
reflect commissions and fees revenue for AgencyRM LLC, VibrantUSA
Inc., Insurance Risk Partners, LLC, Southern Protective Group, LLC,
Pendulum, LLC, Rosenthal Bros., Inc. and Trinity Benefit Advisors,
Inc./Russ Blakely & Associates, LLC as if the Company had
acquired the Partners on January 1, 2020. This unaudited pro forma
information should not be relied upon as being indicative of the
historical results that would have been obtained if the
acquisitions had occurred on that date, nor the results that may be
obtained in the future.
COMMONLY USED DEFINED TERMS
The following terms have the following meanings
throughout this press release unless the context indicates or
requires otherwise:
|
bps |
|
Basis points |
| |
|
|
| Clients |
|
Our
insureds |
| |
|
|
|
Colleagues |
|
Our
employees |
| |
|
|
| GAAP |
|
Accounting
principles generally accepted in the United States of America |
| |
|
|
| LIBOR |
|
London
Interbank Offered Rate |
| |
|
|
|
Partners |
|
Companies
that we have acquired, or in the case of asset acquisitions, the
producers |
| |
|
|
|
Partnerships |
|
Strategic
acquisitions made by the Company |
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