- Second Quarter 2022 Revenue Grew 94%
Year-Over-Year to $232.5 Million -
- Second Quarter 2022 Organic Revenue Growth(1)
of 24% -
BRP Group, Inc. (“BRP Group” or the “Company”) (NASDAQ: BRP), an
independent insurance distribution firm delivering tailored
insurance solutions, today announced its results for the second
quarter ended June 30, 2022.
SECOND QUARTER 2022 HIGHLIGHTS AND SUBSEQUENT EVENTS
- Revenue increased 94% year-over-year to $232.5 million
- Pro Forma Revenue(2) grew 100% year-over-year to $239.9
million
- Organic Revenue Growth was 24% year-over-year
- “MGA of the Future” organic revenue grew 70%
year-over-year
- GAAP net income of $16.6 million and GAAP earnings per fully
diluted share of $0.14
- Adjusted Net Income(3) of $26.2 million, or $0.23(3) per fully
diluted share
- Adjusted EBITDA(4) grew 112% to $42.5 million
- Adjusted EBITDA Margin(4) of 18%
- Pro Forma Adjusted EBITDA(5) of $42.9 million and Pro Forma
Adjusted EBITDA Margin(5) of 18%
- Subsequent to June 30, 2022, closed one Partner acquisition
that generated total revenue(6) of approximately $11.4 million for
the 12-month period pre-acquisition
“It was an outstanding second quarter for BRP Group, as we
nearly doubled revenue and adjusted net income on a year-over-year
basis. We delivered industry leading organic growth of 24%,
including double digit organic growth in all four segments, which
was led by accelerating growth in both the MGA of the Future and
MainStreet,” said Trevor Baldwin, Chief Executive Officer of BRP
Group. “In April, we also completed the acquisition of Westwood
Insurance Agency - our largest Partnership to date - which had a
very strong quarter as a part of the BRP family. As we look ahead
into the back half of the year, we remain confident that the
business is well-positioned for continued outperformance.”
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2022, cash and cash equivalents were $183.4
million and there was $1.4 billion of long-term debt principal
amount outstanding under the Company's credit facility. The Company
had remaining availability for borrowing of $75.0 million under its
revolving credit facility.
SIX MONTHS 2022 RESULTS
- Revenue increased 74% year-over-year to $475.3 million
- Pro Forma Revenue grew 82% year-over-year to $503.1
million
- Organic Revenue Growth of 20% year-over-year
- “MGA of the Future” revenue grew 57%
- GAAP net income of $61.4 million and GAAP earnings per fully
diluted share of $0.53
- Adjusted Net Income of $83.7 million, or $0.73 per fully
diluted share
- Adjusted EBITDA grew 57% to $115.4 million
- Adjusted EBITDA Margin of 24%
- Pro Forma Adjusted EBITDA of $121.1 million and Pro Forma
Adjusted EBITDA Margin of 24%
WEBCAST AND CONFERENCE CALL INFORMATION
BRP Group will host a webcast and conference call to discuss
second quarter 2022 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 an 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 Group represents over 1,200,000 Clients across the
United States and internationally. For more information, please
visit www.baldwinriskpartners.com.
FOOTNOTES
(1)
Organic Revenue for the three and six
months ended June 30, 2021 used to calculate Organic Revenue Growth
for the three and six months ended June 30, 2022 was $119.6 million
and $272.5 million, respectively, which is adjusted to reflect
revenues from Partnerships that have reached the twelve-month owned
mark during the three and six months ended June 30, 2022. Organic
Revenue and Organic Revenue Growth are non-GAAP measures.
Reconciliation of Organic Revenue and Organic Revenue Growth to
commissions and fees, the most directly comparable GAAP financial
measure, is set forth in the reconciliation table accompanying this
release.
(2)
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.
(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 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 and
Adjusted EBITDA Margin 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 and 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 twelve-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, 2021, and in BRP Group’s other
filings with the SEC, which are available free of charge on the
SEC'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.
BRP GROUP, INC.
Condensed Consolidated
Statements of Comprehensive Income (Loss)
(Unaudited)
For the Three Months
Ended June 30,
For the Six Months
Ended June 30,
(in thousands, except share and per
share data)
2022
2021
2022
2021
Revenues:
Commissions and fees
$
232,460
$
119,706
$
475,308
$
272,534
Operating expenses:
Commissions, employee compensation and
benefits
172,848
89,065
326,598
178,440
Other operating expenses
40,770
19,537
77,212
36,412
Amortization expense
19,170
10,742
36,732
21,279
Change in fair value of contingent
consideration
(26,872
)
13,325
(32,504
)
11,822
Depreciation expense
1,105
573
2,093
1,167
Total operating expenses
207,021
133,242
410,131
249,120
Operating income (loss)
25,439
(13,536
)
65,177
23,414
Other income (expense):
Interest expense, net
(14,632
)
(5,848
)
(24,982
)
(11,491
)
Other income (expense), net
5,786
(1,057
)
21,237
(1,057
)
Total other expense
(8,846
)
(6,905
)
(3,745
)
(12,548
)
Net income (loss)
16,593
(20,441
)
61,432
10,866
Less: net income (loss) attributable to
noncontrolling interests
7,951
(10,348
)
29,921
5,653
Net income (loss) attributable to BRP
Group, Inc.
$
8,642
$
(10,093
)
$
31,511
$
5,213
Comprehensive income (loss)
$
16,593
$
(20,441
)
$
61,432
$
10,866
Comprehensive income (loss) attributable
to noncontrolling interests
7,951
(10,348
)
29,921
5,653
Comprehensive income (loss) attributable
to BRP Group, Inc.
8,642
(10,093
)
31,511
5,213
Basic earnings (loss) per share
$
0.15
$
(0.23
)
$
0.56
$
0.12
Diluted earnings (loss) per share
$
0.14
$
(0.23
)
$
0.53
$
0.11
Weighted-average shares of Class A common
stock outstanding - basic
56,270,491
44,671,308
55,996,668
44,464,312
Weighted-average shares of Class A common
stock outstanding - diluted
59,858,816
44,671,308
59,354,168
46,160,474
BRP GROUP, INC.
Condensed Consolidated Balance
Sheets
(Unaudited)
(in thousands, except share and per
share data)
June 30, 2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
183,402
$
138,292
Restricted cash
100,529
89,445
Premiums, commissions and fees receivable,
net
427,351
340,837
Prepaid expenses and other current
assets
13,533
8,151
Due from related parties
1,715
1,668
Total current assets
726,530
578,393
Property and equipment, net
22,756
17,474
Right-of-use assets
86,374
81,646
Other assets
34,316
25,586
Intangible assets, net
1,125,388
944,467
Goodwill
1,415,281
1,228,741
Total assets
$
3,410,645
$
2,876,307
Liabilities, Mezzanine Equity
and Stockholders’ Equity
Current liabilities:
Premiums payable to insurance
companies
$
366,217
$
310,045
Producer commissions payable
56,138
41,833
Accrued expenses and other current
liabilities
104,330
92,223
Related party notes payable
—
61,500
Current portion of contingent earnout
liabilities
43,615
35,088
Total current liabilities
570,300
540,689
Revolving line of credit
525,000
35,000
Long-term debt, less current portion
812,080
814,614
Contingent earnout liabilities, less
current portion
166,381
223,501
Operating lease liabilities, less current
portion
76,999
71,357
Other liabilities
—
3,590
Total liabilities
2,150,760
1,688,751
Commitments and contingencies
Mezzanine equity:
Redeemable noncontrolling interest
350
269
Stockholders’ equity:
Class A common stock, par value $0.01 per
share, 300,000,000 shares authorized; 60,122,842 and 58,602,859
shares issued and outstanding at June 30, 2022 and December 31,
2021, respectively
601
586
Class B common stock, par value $0.0001
per share, 100,000,000 shares authorized; 55,442,435 and 56,338,051
shares issued and outstanding at June 30, 2022 and December 31,
2021, respectively
6
6
Additional paid-in capital
683,331
663,002
Accumulated deficit
(23,481
)
(54,992
)
Stockholder notes receivable
(131
)
(219
)
Total stockholders’ equity attributable to
BRP Group, Inc.
660,326
608,383
Noncontrolling interest
599,209
578,904
Total stockholders’ equity
1,259,535
1,187,287
Total liabilities, mezzanine equity and
stockholders’ equity
$
3,410,645
$
2,876,307
BRP GROUP, INC.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
For the Six Months
Ended June 30,
(in thousands)
2022
2021
Cash flows from operating activities:
Net income
$
61,432
$
10,866
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization
38,825
22,446
Change in fair value of contingent
consideration
(32,504
)
11,822
Share-based compensation expense
17,677
8,087
Amortization of deferred financing
costs
2,474
1,443
Change in fair value of interest rate
caps
(21,269
)
825
Other fair value adjustments
—
94
Payment of contingent earnout
consideration in excess of purchase price accrual
(47,803
)
(602
)
Changes in operating assets and
liabilities, net of effect of acquisitions:
Premiums, commissions and fees receivable,
net
(78,365
)
(52,357
)
Prepaid expenses and other current
assets
(10,061
)
(2,085
)
Due to/from related parties
(47
)
84
Right-of-use assets
(4,116
)
(57,816
)
Accounts payable, accrued expenses and
other current liabilities
63,763
47,436
Operating lease liabilities
5,353
59,176
Net cash provided by (used in) operating
activities
(4,641
)
49,419
Cash flows from investing activities:
Cash consideration paid for business
combinations, net of cash received
(377,299
)
(24,276
)
Cash consideration paid for asset
acquisitions, net of cash received
(3,356
)
(1,575
)
Capital expenditures
(8,565
)
(1,756
)
Investment in business venture
(675
)
—
Net cash used in investing activities
(389,895
)
(27,607
)
Cash flows from financing activities:
Payment of contingent earnout
consideration up to amount of purchase price accrual
(43,184
)
(828
)
Proceeds from revolving line of credit
495,000
20,000
Payments on revolving line of credit
(5,000
)
—
Proceeds from long-term debt
—
97,914
Payments on long-term debt
(4,254
)
(1,000
)
Payments of debt issuance costs
(1,565
)
(634
)
Proceeds from the sale of interest rate
caps
19,038
—
Tax distributions to BRP LLC members
(9,393
)
—
Purchase of interest rate caps
—
(3,461
)
Proceeds from repayment of stockholder
notes receivable
88
159
Net cash provided by financing
activities
450,730
112,150
Net increase in cash and cash equivalents
and restricted cash
56,194
133,962
Cash and cash equivalents and restricted
cash at beginning of period
227,737
142,022
Cash and cash equivalents and restricted
cash at end of period
$
283,931
$
275,984
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, Pro Forma Adjusted EBITDA Margin and adjusted net cash
provided by operating activities ("free cash flow") 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), diluted earnings (loss) per share (for
Adjusted Diluted EPS) or net cash provided by (used in) operating
activities (for adjusted net cash provided by operating activities
), 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.
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, 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. Reconciliation of guidance regarding Adjusted
EBITDA margin to the most directly comparable GAAP measure is not
available without unreasonable efforts on a forward-looking basis
due to the high variability, complexity, and low visibility with
respect to the charges excluded from Adjusted EBITDA, the non-GAAP
metric from which Adjusted EBITDA margin is derived; in particular,
the measures and effects of share-based compensation expense,
transaction-related expenses related to Partnerships, severance,
and certain non-recurring costs, including those related to raising
capital.
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 have reached the
twelve-month owned mark in the current period. For example,
revenues from a Partner acquired on June 1, 2021 are excluded from
Organic Revenue for 2021. However, after June 1, 2022, results from
June 1, 2021 to December 31, 2021 for such Partners are compared to
results from June 1, 2022 to December 31, 2022 for purposes of
calculating Organic Revenue Growth in 2022. 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 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, 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. We believe that Adjusted Net
Income is an appropriate measure of operating performance because
it eliminates the impact of expenses that do not relate to business
performance.
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, 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 Margin is a
key metric used by management and our board of directors to assess
our financial performance. We believe that Pro Forma 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 Pro Forma Adjusted EBITDA Margin is helpful in
measuring profitability of operations on a consolidated level.
We calculate adjusted net cash provided by operating activities
because we hold fiduciary cash designated for our Insurance Company
partners on behalf of our clients and incur substantial earnout
liabilities in conjunction with its Partnership strategy. Adjusted
net cash provided by operating activities is calculated as net cash
provided by (used in) operating activities excluding: (i) the
impact of the change in premiums, commissions and fees receivable,
net; (ii) the change in accounts payable, accrued expenses and
other current liabilities; and (iii) the payment of contingent
earnout consideration in excess of purchase price accrual. We
believe that adjusted net cash provided by operating activities is
an important financial measure for use in evaluating financial
performance because it measures our ability to generate additional
cash from our business operations.
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:
For the Three Months
Ended June 30,
For the Six Months
Ended June 30,
(in thousands, except
percentages)
2022
2021(1)
2022
2021(1)
Commissions and fees
$
232,460
$
119,706
$
475,308
$
272,534
Net income (loss)
$
16,593
$
(20,441
)
$
61,432
$
10,866
Adjustments to net income (loss):
Amortization expense
19,170
10,742
36,732
21,279
Change in fair value of contingent
consideration
(26,872
)
13,325
(32,504
)
11,822
Interest expense, net
14,632
5,848
24,982
11,491
Change in fair value of interest rate
caps
(5,459
)
825
(21,269
)
825
Share-based compensation
10,113
4,545
17,677
8,087
Transaction-related Partnership
expenses
9,208
3,225
17,424
5,670
Depreciation expense
1,105
573
2,093
1,167
Severance
653
—
875
—
Other(2)
3,341
1,412
7,974
2,271
Adjusted EBITDA
$
42,484
$
20,054
$
115,416
$
73,478
Adjusted EBITDA Margin
18
%
17
%
24
%
27
%
__________
(1)
We revised operating expenses for the
three and six months ended June 30, 2021 to reflect the adoption of
Topic 842 as described further in our Quarterly Report of Form 10-Q
filed with the SEC on August 9, 2022. This adjustment affected net
income (loss) and Adjusted EBITDA values.
(2)
Other addbacks to Adjusted EBITDA include
certain expenses that are considered to be non-recurring or
non-operational, including certain recruiting costs, remediation
efforts, professional fees and litigation costs, and bonuses.
Organic Revenue and Organic Revenue Growth
The following table reconciles Organic Revenue and Organic
Revenue Growth to commissions and fees, which we consider to be the
most directly comparable GAAP financial measure:
For the Three Months
Ended June 30,
For the Six Months
Ended June 30,
(in thousands, except
percentages)
2022
2021
2022
2021
Commissions and fees
$
232,460
$
119,706
$
475,308
$
272,534
Partnership commissions and fees(1)
(84,186
)
(51,893
)
(148,963
)
(143,108
)
Organic Revenue
$
148,274
$
67,813
$
326,345
$
129,426
Organic Revenue Growth(2)
$
28,630
$
16,482
$
53,811
$
23,929
Organic Revenue Growth %(2)
24
%
32
%
20
%
23
%
__________
(1)
Includes the first twelve months of such
commissions and fees generated from newly acquired Partners.
(2)
Organic Revenue for the three and six
months ended June 30, 2021 used to calculate Organic Revenue Growth
for the three and six months ended June 30, 2022 was $119.6 million
and $272.5 million, respectively, which is adjusted to reflect
revenues from Partnerships that have reached the twelve-month owned
mark during the three and six months ended June 30, 2022.
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, which we consider
to be the most directly comparable GAAP financial measures:
For the Three Months
Ended June 30,
For the Six Months
Ended June 30,
(in thousands, except per share
data)
2022
2021(1)(2)
2022
2021(1)(2)
Net income (loss) attributable to BRP
Group, Inc.
$
8,642
$
(10,093
)
$
31,511
$
5,213
Net income (loss) attributable to
noncontrolling interests
7,951
(10,348
)
29,921
5,653
Amortization expense
19,170
10,742
36,732
21,279
Change in fair value of contingent
consideration
(26,872
)
13,325
(32,504
)
11,822
Change in fair value of interest rate
caps
(5,459
)
825
(21,269
)
825
Share-based compensation
10,113
4,545
17,677
8,087
Transaction-related Partnership
expenses
9,208
3,225
17,424
5,670
Amortization of deferred financing
costs
1,188
750
2,474
1,443
Depreciation
1,105
573
2,093
1,167
Severance
653
—
875
—
Other(3)
3,341
1,412
7,974
2,271
Adjusted pre-tax income
29,040
14,956
92,908
63,430
Adjusted income taxes(4)
2,875
1,481
9,198
6,280
Adjusted Net Income
$
26,165
$
13,475
$
83,710
$
57,150
Weighted-average shares of Class A common
stock outstanding - diluted
59,859
44,671
59,354
46,160
Dilutive effect of unvested restricted
shares of Class A common stock
—
1,862
—
—
Exchange of Class B shares(5)
55,864
49,600
56,065
49,694
Adjusted dilutive weighted-average shares
outstanding
115,723
96,133
115,419
95,854
Adjusted Diluted EPS
$
0.23
$
0.14
$
0.73
$
0.60
Diluted earnings (loss) per share
$
0.14
$
(0.23
)
$
0.53
$
0.11
Effect of exchange of Class B shares and
net income (loss) attributable to noncontrolling interests per
share
—
0.02
—
—
Other adjustments to earnings (loss) per
share
0.11
0.37
0.28
0.56
Adjusted income taxes per share
(0.02
)
(0.02
)
(0.08
)
(0.07
)
Adjusted Diluted EPS
$
0.23
$
0.14
$
0.73
$
0.60
___________
(1)
We revised operating expenses for the
three and six months ended June 30, 2021 to reflect the adoption of
Topic 842 as described further in our Quarterly Report of Form 10-Q
filed with the SEC on August 9, 2022. This adjustment affected net
income (loss) attributable to BRP Group, Inc. and Adjusted Net
Income values as well as diluted earnings per share and Adjusted
Diluted EPS.
(2)
Calculation was adjusted in the fourth
quarter of 2021 to include depreciation. Prior year amounts have
been conformed to current year presentation.
(3)
Other addbacks to Adjusted Net Income
include certain expenses that are considered to be non-recurring or
non-operational, including certain recruiting costs, remediation
efforts, professional fees and litigation costs, and bonuses.
(4)
Represents corporate income taxes at
assumed effective tax rate of 9.9% applied to adjusted pre-tax
income.
(5)
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 and Pro Forma
Revenue Growth to commissions and fees, which we consider to be the
most directly comparable GAAP financial measure:
For the Three Months
Ended June 30,
For the Six Months
Ended June 30,
(in thousands, except
percentages)
2022
2021
2022
2021
Commissions and fees
$
232,460
$
119,706
$
475,308
$
272,534
Revenue for Partnerships in the unowned
period(1)
7,452
489
27,750
3,714
Pro Forma Revenue
$
239,912
$
120,195
$
503,058
$
276,248
Pro Forma Revenue Growth
$
119,717
$
64,374
$
226,810
$
142,343
Pro Forma Revenue Growth %
100
%
115
%
82
%
106
%
___________
(1)
The adjustments for the three and
six months ended June 30, 2022 reflect commissions and fees revenue
for Westwood Insurance Agency and Venture Captive Management, LLC
as if the Company had acquired the Partners on January 1, 2022. The
adjustments for the three months ended June 30, 2021 reflect
commissions and fees revenue for Tim Altman, Inc. (operating as
"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,
2021 reflect commissions and fees revenue for LeaseTrack Services
LLC/Effective Coverage LLC, Riley Financial, Inc. (operating as
"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. 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:
For the Three Months
Ended June 30,
For the Six Months
Ended June 30,
(in thousands, except
percentages)
2022
2021(1)
2022
2021(1)
Pro Forma Revenue
$
239,912
$
120,195
$
503,058
$
276,248
Net income (loss)
16,593
(20,441
)
61,432
10,866
Net income (loss) for Partnerships in the
unowned period(2)
(840
)
76
(1,062
)
1,571
Pro Forma Net Income (Loss)
15,753
(20,365
)
60,370
12,437
Adjustments to Pro Forma Net Income
(Loss):
Amortization expense
20,119
10,773
40,450
21,530
Change in fair value of contingent
consideration
(26,872
)
13,325
(32,504
)
11,822
Interest expense, net
14,956
5,848
27,976
11,491
Change in fair value of interest rate
caps
(5,459
)
825
(21,269
)
825
Share-based compensation
10,113
4,545
17,677
8,087
Transaction-related Partnership
expenses
9,208
3,225
17,424
5,670
Depreciation expense
1,105
573
2,093
1,167
Severance
653
—
875
—
Other
3,341
1,412
7,974
2,271
Pro Forma Adjusted EBITDA
$
42,917
$
20,161
$
121,066
$
75,300
Pro Forma Adjusted EBITDA Margin
18
%
17
%
24
%
27
%
___________
(1)
We revised operating expenses for the
three and six months ended June 30, 2021 to reflect the adoption of
Topic 842 as described further in our Quarterly Report of Form 10-Q
filed with the SEC on August 9, 2022. This adjustment affected net
income (loss) and Adjusted EBITDA values.
(2)
The adjustments for the three and six
months ended June 30, 2022 reflect net income (loss) for Westwood
Insurance Agency and Venture Captive Management, LLC as if the
Company had acquired the Partners on January 1, 2022. The
adjustments for the three months ended June 30, 2021 reflect net
income (loss) 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 six months
ended June 30, 2021 reflect net income (loss) 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. 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.
Adjusted Net Cash Provided by Operating Activities ("Free
Cash Flow")
The following table reconciles adjusted net cash provided by
operating activities to net cash provided by (used in) operating
activities, which we consider to be the most directly comparable
GAAP financial measure:
For the Six Months
Ended June 30,
(in thousands)
2022
2021
Net cash provided by (used in) operating
activities
$
(4,641
)
$
49,419
Adjustments to net cash provided by (used
in) operating activities:
Change in premiums, commissions and fees
receivable
78,365
52,357
Change in accounts payable, accrued
expenses and other current liabilities
(63,763
)
(47,436
)
Payment of contingent earnout in excess of
purchase price accrual
47,803
602
Adjusted net cash provided by operating
activities
$
57,764
$
54,942
COMMONLY USED DEFINED TERMS
The following terms have the following meanings throughout this
press release unless the context indicates or requires
otherwise:
Amended LLC Agreement
Third Amended and Restated Limited
Liability Company Agreement of Baldwin Risk Partners, LLC, as
amended
Clients
Our insureds
Colleagues
Our employees
GAAP
Accounting principles generally accepted
in the United States of America
Partners
Companies that we have acquired, or in the
case of asset acquisitions, the producers
Partnerships
Strategic acquisitions made by the
Company
SEC
U.S. Securities and Exchange
Commission
Topic 842
Accounting Standards Codification Topic
842, Leases
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220809005953/en/
INVESTOR RELATIONS Bonnie Bishop, Executive Director
Baldwin Risk Partners (813) 259-8032 | IR@baldwinriskpartners.com
PRESS Rachel DeAngelo, Communications Manager Baldwin Risk
Partners (813) 387-6842 | rdeangelo@baldwinriskpartners.com
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