- Third Quarter 2022 Revenue Grew 91%
Year-Over-Year to $259.4 Million -
- Third Quarter 2022 Organic Revenue Growth(1)
of 28% -
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 third
quarter ended September 30, 2022.
THIRD QUARTER 2022 HIGHLIGHTS
- Revenue increased 91% year-over-year to $259.4 million
- Pro Forma Revenue(2) grew 89% year-over-year to $260.1
million
- Organic Revenue Growth was 28% year-over-year
- “MGA of the Future” organic revenue grew 80%
year-over-year
- GAAP net loss of $46.7 million and GAAP loss per fully diluted
share of $0.43
- Adjusted Net Income(3) of $20.8 million, or $0.18(3) per fully
diluted share
- Adjusted EBITDA(4) grew 118% to $41.9 million
- Adjusted EBITDA Margin(4) of 16%
- Pro Forma Adjusted EBITDA(5) of $41.9 million and Pro Forma
Adjusted EBITDA Margin(5) of 16%
“For the third quarter, we generated exceptional results as
evidenced by accelerating double-digit organic growth across our
platform, which showcases the continued client demand for our
innovative solutions at a time of growing uncertainty in the
business and economic environment,” said Trevor Baldwin, Chief
Executive Officer of BRP Group. “Our performance on the top line
enabled us to more than double our adjusted EBITDA and
significantly grow our adjusted net income. These results highlight
the resiliency of our go-to-market approach and business model that
uniquely positions us to profitably grow throughout market and
economic cycles.”
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2022, cash and cash equivalents were $158.6
million and there was $1.37 billion of long-term debt principal
amount outstanding under the Company's credit facility. The Company
had remaining availability for borrowing of $73.0 million under its
revolving credit facility.
NINE MONTHS 2022 RESULTS
- Revenue increased 80% year-over-year to $734.7 million
- Pro Forma Revenue grew 72% year-over-year to $768.4
million
- Organic Revenue Growth of 22% year-over-year
- “MGA of the Future” revenue grew 67% year-over-year
- GAAP net income of $14.7 million and GAAP earnings per fully
diluted share of $0.11
- Adjusted Net Income of $104.5 million, or $0.90 per fully
diluted share
- Adjusted EBITDA grew 70% to $157.3 million
- Adjusted EBITDA Margin of 21%
- Pro Forma Adjusted EBITDA of $163.7 million and Pro Forma
Adjusted EBITDA Margin of 21%
WEBCAST AND CONFERENCE CALL INFORMATION
BRP Group will host a webcast and conference call to discuss
third 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 nine
months ended September 30, 2021 used to calculate Organic Revenue
Growth for the three and nine months ended September 30, 2022 was
$135.7 million and $408.3 million, respectively, which is adjusted
to reflect revenues from Partnerships that have reached the
twelve-month owned mark during the three and nine months ended
September 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 (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 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.
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 September 30,
For the Nine Months
Ended September 30,
(in thousands, except share and per
share data)
2022
2021
2022
2021
Revenues:
Commissions and fees
$
259,368
$
135,556
$
734,676
$
408,090
Operating expenses:
Commissions, employee compensation and
benefits
195,920
100,081
522,518
278,521
Other operating expenses
47,212
27,968
124,424
64,380
Amortization expense
23,180
12,596
59,912
33,875
Change in fair value of contingent
consideration
21,695
11,341
(10,809
)
23,163
Depreciation expense
1,216
753
3,309
1,920
Total operating expenses
289,223
152,739
699,354
401,859
Operating income (loss)
(29,855
)
(17,183
)
35,322
6,231
Other income (expense):
Interest expense, net
(20,766
)
(6,940
)
(45,748
)
(18,431
)
Other income (expense), net
3,914
(478
)
25,151
(1,535
)
Total other expense
(16,852
)
(7,418
)
(20,597
)
(19,966
)
Net income (loss)
(46,707
)
(24,601
)
14,725
(13,735
)
Less: net income (loss) attributable to
noncontrolling interests
(21,914
)
(11,389
)
8,007
(5,736
)
Net income (loss) attributable to BRP
Group, Inc.
$
(24,793
)
$
(13,212
)
$
6,718
$
(7,999
)
Comprehensive income (loss)
$
(46,707
)
$
(24,601
)
$
14,725
$
(13,735
)
Comprehensive income (loss) attributable
to noncontrolling interests
(21,914
)
(11,389
)
8,007
(5,736
)
Comprehensive income (loss) attributable
to BRP Group, Inc.
(24,793
)
(13,212
)
6,718
(7,999
)
Basic earnings (loss) per share
$
(0.43
)
$
(0.28
)
$
0.12
$
(0.18
)
Diluted earnings (loss) per share
$
(0.43
)
$
(0.28
)
$
0.11
$
(0.18
)
Weighted-average shares of Class A common
stock outstanding - basic
57,282,132
46,446,254
56,430,095
45,132,217
Weighted-average shares of Class A common
stock outstanding - diluted
57,282,132
46,446,254
59,895,371
45,132,217
BRP GROUP, INC.
Condensed Consolidated Balance
Sheets
(Unaudited)
(in thousands, except share and per
share data)
September 30, 2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
158,600
$
138,292
Restricted cash
92,017
89,445
Premiums, commissions and fees receivable,
net
446,112
340,837
Prepaid expenses and other current
assets
12,318
8,151
Due from related parties
1,844
1,668
Total current assets
710,891
578,393
Property and equipment, net
24,500
17,474
Right-of-use assets
98,049
81,646
Other assets
39,890
25,586
Intangible assets, net
1,118,129
944,467
Goodwill
1,420,929
1,228,741
Total assets
$
3,412,388
$
2,876,307
Liabilities, Mezzanine Equity
and Stockholders’ Equity
Current liabilities:
Premiums payable to insurance
companies
$
356,671
$
310,045
Producer commissions payable
60,789
41,833
Accrued expenses and other current
liabilities
114,198
92,223
Related party notes payable
—
61,500
Current portion of contingent earnout
liabilities
41,645
35,088
Total current liabilities
573,303
540,689
Revolving line of credit
527,000
35,000
Long-term debt, less current portion
810,973
814,614
Contingent earnout liabilities, less
current portion
187,969
223,501
Operating lease liabilities, less current
portion
88,749
71,357
Other liabilities
330
3,590
Total liabilities
2,188,324
1,688,751
Commitments and contingencies
Mezzanine equity:
Redeemable noncontrolling interest
424
269
Stockholders’ equity:
Class A common stock, par value $0.01 per
share, 300,000,000 shares authorized; 61,227,330 and 58,602,859
shares issued and outstanding at September 30, 2022 and December
31, 2021, respectively
612
586
Class B common stock, par value $0.0001
per share, 100,000,000 shares authorized; 54,611,484 and 56,338,051
shares issued and outstanding at September 30, 2022 and December
31, 2021, respectively
5
6
Additional paid-in capital
699,415
663,002
Accumulated deficit
(48,274
)
(54,992
)
Stockholder notes receivable
(63
)
(219
)
Total stockholders’ equity attributable to
BRP Group, Inc.
651,695
608,383
Noncontrolling interest
571,945
578,904
Total stockholders’ equity
1,223,640
1,187,287
Total liabilities, mezzanine equity and
stockholders’ equity
$
3,412,388
$
2,876,307
BRP GROUP, INC.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
For the Nine Months
Ended September 30,
(in thousands)
2022
2021
Cash flows from operating activities:
Net income (loss)
$
14,725
$
(13,735
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization
63,221
35,795
Change in fair value of contingent
consideration
(10,809
)
23,163
Share-based compensation expense
26,065
11,921
(Gain) loss on interest rate caps
(25,420
)
1,159
Payment of contingent earnout
consideration in excess of purchase price accrual
(48,943
)
(602
)
Amortization of deferred financing
costs
3,894
2,301
Other fair value adjustments
369
217
Changes in operating assets and
liabilities, net of effect of acquisitions:
Premiums, commissions and fees receivable,
net
(97,126
)
(58,150
)
Prepaid expenses and other current
assets
(10,911
)
(5,604
)
Due to/from related parties
(176
)
19
Right-of-use assets
(15,076
)
(66,373
)
Accounts payable, accrued expenses and
other current liabilities
70,282
28,818
Operating lease liabilities
16,992
68,112
Other liabilities
(3,740
)
—
Net cash provided by (used in) operating
activities
(16,653
)
27,041
Cash flows from investing activities:
Cash consideration paid for business
combinations, net of cash received
(387,919
)
(218,818
)
Cash consideration paid for asset
acquisitions, net of cash received
(3,356
)
(1,575
)
Capital expenditures
(15,400
)
(3,188
)
Investment in business venture
(791
)
—
Net cash used in investing activities
(407,466
)
(223,581
)
Cash flows from financing activities:
Proceeds from issuance of Class A common
stock, net of underwriting discounts
—
269,376
Payment of common stock offering costs
—
(1,055
)
Payment of contingent earnout
consideration up to amount of purchase price accrual
(47,218
)
(1,078
)
Proceeds from revolving line of credit
512,000
120,000
Payments on revolving line of credit
(20,000
)
—
Proceeds from long-term debt
—
97,914
Payments on long-term debt
(6,382
)
(2,250
)
Payments of debt issuance costs
(1,751
)
(693
)
Proceeds from the sales and settlements of
interest rate caps
19,587
—
Tax distributions to BRP LLC members
(9,393
)
—
Purchase of interest rate caps
—
(6,461
)
Proceeds from repayment of stockholder
notes receivable
156
202
Net cash provided by financing
activities
446,999
475,955
Net increase in cash and cash equivalents
and restricted cash
22,880
279,415
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
$
250,617
$
421,437
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 free cash flow), 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., diluted earnings (loss) per share 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 items, including those related to raising capital. We
believe that Adjusted EBITDA is an appropriate measure of operating
performance because it eliminates the impact of income and 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 income
and 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 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 to include commissions and fees that
were excluded from Organic Revenue 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 free cash flow because we hold fiduciary cash
designated for our Insurance Company partners on behalf of our
clients and incur substantial earnout liabilities in conjunction
with our Partnership strategy. Free cash flow 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 free cash flow 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 September 30,
For the Nine Months
Ended September 30,
(in thousands, except
percentages)
2022
2021(1)
2022
2021(1)
Commissions and fees
$
259,368
$
135,556
$
734,676
$
408,090
Net income (loss)
$
(46,707
)
$
(24,601
)
$
14,725
$
(13,735
)
Adjustments to net income (loss):
Amortization expense
23,180
12,596
59,912
33,875
Interest expense, net
20,766
6,940
45,748
18,431
Transaction-related Partnership and
integration expenses
12,128
5,556
29,552
11,226
Share-based compensation
8,388
3,834
26,065
11,921
(Gain) loss on interest rate caps
(4,151
)
334
(25,420
)
1,159
Change in fair value of contingent
consideration
21,695
11,341
(10,809
)
23,163
Depreciation expense
1,216
753
3,309
1,920
Severance
260
481
1,135
481
Other(2)
5,109
1,951
13,083
4,222
Adjusted EBITDA
$
41,884
$
19,185
$
157,300
$
92,663
Adjusted EBITDA Margin
16
%
14
%
21
%
23
%
__________
(1)
We revised operating expenses for the
three and nine months ended September 30, 2021 to reflect the
adoption of Topic 842 as described further in our Quarterly Report
on Form 10-Q filed with the SEC on November 7, 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 September 30,
For the Nine Months
Ended September 30,
(in thousands, except
percentages)
2022
2021
2022
2021
Commissions and fees
$
259,368
$
135,556
$
734,676
$
408,090
Partnership commissions and fees(1)
(85,638
)
(52,673
)
(234,601
)
(195,781
)
Organic Revenue
$
173,730
$
82,883
$
500,075
$
212,309
Organic Revenue Growth(2)
$
38,014
$
16,978
$
91,825
$
40,907
Organic Revenue Growth %(2)
28
%
26
%
22
%
24
%
__________
(1)
Includes the first twelve months of such
commissions and fees generated from newly acquired Partners.
(2)
Organic Revenue for the three and nine
months ended September 30, 2021 used to calculate Organic Revenue
Growth for the three and nine months ended September 30, 2022 was
$135.7 million and $408.3 million, respectively, which is adjusted
to reflect revenues from Partnerships that have reached the
twelve-month owned mark during the three and nine months ended
September 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 September 30,
For the Nine Months
Ended September 30,
(in thousands, except per share
data)
2022
2021(1)(2)
2022
2021(1)(2)
Net income (loss) attributable to BRP
Group, Inc.
$
(24,793
)
$
(13,212
)
$
6,718
$
(7,999
)
Net income (loss) attributable to
noncontrolling interests
(21,914
)
(11,389
)
8,007
(5,736
)
Amortization expense
23,180
12,596
59,912
33,875
Transaction-related Partnership and
integration expenses
12,128
5,556
29,552
11,226
Share-based compensation
8,388
3,834
26,065
11,921
(Gain) loss on interest rate caps, net of
cash settlements
(3,602
)
334
(24,871
)
1,159
Change in fair value of contingent
consideration
21,695
11,341
(10,809
)
23,163
Amortization of deferred financing
costs
1,420
858
3,894
2,301
Depreciation
1,216
753
3,309
1,920
Severance
260
481
1,135
481
Other(3)
5,109
1,951
13,083
4,222
Adjusted pre-tax income
23,087
13,103
115,995
76,533
Adjusted income taxes(4)
2,286
1,297
11,484
7,577
Adjusted Net Income
$
20,801
$
11,806
$
104,511
$
68,956
Weighted-average shares of Class A common
stock outstanding - diluted
57,282
46,446
59,895
45,132
Dilutive effect of unvested restricted
shares of Class A common stock
3,675
1,818
—
1,737
Exchange of Class B shares(5)
55,151
52,148
55,743
50,521
Adjusted dilutive weighted-average shares
outstanding
116,108
100,412
115,638
97,390
Adjusted Diluted EPS
$
0.18
$
0.12
$
0.90
$
0.71
Diluted earnings (loss) per share
$
(0.43
)
$
(0.28
)
$
0.11
$
(0.18
)
Effect of exchange of Class B shares and
net income (loss) attributable to noncontrolling interests per
share
0.03
0.03
0.02
0.04
Other adjustments to earnings (loss) per
share
0.60
0.38
0.87
0.93
Adjusted income taxes per share
(0.02
)
(0.01
)
(0.10
)
(0.08
)
Adjusted Diluted EPS
$
0.18
$
0.12
$
0.90
$
0.71
___________
(1)
We revised operating expenses for the
three and nine months ended September 30, 2021 to reflect the
adoption of Topic 842 as described further in our Quarterly Report
on Form 10-Q filed with the SEC on November 7, 2022. This
adjustment affected net income (loss) attributable to BRP Group,
Inc. and Adjusted Net Income values as well as 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 September 30,
For the Nine Months
Ended September 30,
(in thousands, except
percentages)
2022
2021
2022
2021
Commissions and fees
$
259,368
$
135,556
$
734,676
$
408,090
Revenue for Partnerships in the unowned
period(1)
683
2,274
33,768
38,364
Pro Forma Revenue
$
260,051
$
137,830
$
768,444
$
446,454
Pro Forma Revenue Growth
$
122,221
$
71,755
$
321,990
$
244,494
Pro Forma Revenue Growth %
89
%
109
%
72
%
121
%
___________
(1)
The adjustments for the three months ended
September 30, 2022 reflect commissions and fees for National Health
Plans & Benefits Agency, LLC as if the Company had acquired the
Partner on January 1, 2022. The adjustments for the three months
ended September 30, 2021 reflect commissions and fees for EBSME,
LLC, FounderShield LLC, The Capital Group, LLC and River Oak Risk,
LLC as if the Company had acquired the Partners on January 1, 2021.
The adjustments for the nine months ended September 30, 2022
reflect commissions and fees for Westwood Insurance Agency, Venture
Captive Management, LLC and National Health Plans & Benefits
Agency, LLC as if the Company had acquired the Partners on January
1, 2022. The adjustments for the nine months ended September 30,
2021 reflect commissions and fees for LeaseTrack Services
LLC/Effective Coverage LLC, Riley Financial, Inc. (operating as
“Medicare Help Now”), Tim Altman, Inc. (operating as “Only Medicare
Solutions”), Seniors’ Insurance Services of Washington, Inc.,
Mid-Continent Companies, Ltd., RogersGray, Inc., EBSME, LLC,
FounderShield LLC, The Capital Group, LLC and River Oak Risk, LLC
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 September 30,
For the Nine Months
Ended September 30,
(in thousands, except
percentages)
2022
2021(1)
2022
2021(1)
Pro Forma Revenue
$
260,051
$
137,830
$
768,444
$
446,454
Net income (loss)
(46,707
)
(24,601
)
14,725
(13,735
)
Net income (loss) for Partnerships in the
unowned period(2)
574
(90
)
(2,756
)
2,570
Pro Forma Net Income (Loss)
(46,133
)
(24,691
)
11,969
(11,165
)
Adjustments to Pro Forma Net Income
(Loss):
Amortization expense
23,225
12,905
66,762
38,866
Interest expense, net
20,168
7,271
48,101
19,223
Transaction-related Partnership and
integration expenses
12,128
5,556
29,552
11,226
Share-based compensation
8,388
3,834
26,065
11,921
(Gain) loss on interest rate caps
(4,151
)
334
(25,420
)
1,159
Change in fair value of contingent
consideration
21,695
11,341
(10,809
)
23,163
Depreciation expense
1,216
753
3,309
1,920
Severance
260
481
1,135
481
Other
5,109
1,951
13,083
4,222
Pro Forma Adjusted EBITDA
$
41,905
$
19,735
$
163,747
$
101,016
Pro Forma Adjusted EBITDA Margin
16
%
14
%
21
%
23
%
___________
(1)
We revised operating expenses for the
three and nine months ended September 30, 2021 to reflect the
adoption of Topic 842 as described further in our Quarterly Report
on Form 10-Q filed with the SEC on November 7, 2022. This
adjustment affected net income (loss) and Pro Forma Adjusted EBITDA
values as well as Pro Forma Adjusted EBITDA Margin.
(2)
The adjustments for the three months ended
September 30, 2022 reflect net income (loss) for National Health
Plans & Benefits Agency, LLC as if the Company had acquired the
Partner on January 1, 2022. The adjustments for the three months
ended September 30, 2021 reflect net income (loss) for EBSME, LLC,
FounderShield LLC, The Capital Group, LLC and River Oak Risk, LLC
as if the Company had acquired the Partners on January 1, 2021. The
adjustments for the nine months ended September 30, 2022 reflect
net income (loss) for Westwood Insurance Agency, Venture Captive
Management, LLC and National Health Plans & Benefits Agency,
LLC as if the Company had acquired the Partners on January 1, 2022.
The adjustments for the nine months ended September 30, 2021
reflect net income (loss) for LeaseTrack Services LLC/Effective
Coverage LLC, Riley Financial, Inc. (operating as “Medicare Help
Now”), Tim Altman, Inc. (operating as “Only Medicare Solutions”),
Seniors’ Insurance Services of Washington, Inc., Mid-Continent
Companies, Ltd., RogersGray, Inc., EBSME, LLC, FounderShield LLC,
The Capital Group, LLC and River Oak Risk, LLC 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 free cash flow to net cash
provided by (used in) operating activities, which we consider to be
the most directly comparable GAAP financial measure:
For the Nine Months
Ended September 30,
(in thousands)
2022
2021
Net cash provided by (used in) operating
activities
$
(16,653
)
$
27,041
Adjustments to net cash provided by (used
in) operating activities:
Change in premiums, commissions and fees
receivable
97,126
58,150
Change in accounts payable, accrued
expenses and other current liabilities
(70,282
)
(28,818
)
Payment of contingent earnout in excess of
purchase price accrual
48,943
602
Free cash flow
$
59,134
$
56,975
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/20221107005979/en/
INVESTOR RELATIONS
Bonnie Bishop, Executive Director Baldwin Risk Partners (813)
259-8032 | IR@baldwinriskpartners.com
PRESS
Anna R. Rozenich, Senior Director - Enterprise Communications
Baldwin Risk Partners (630) 561-5907 |
anna.rozenich@baldwinriskpartners.com
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