BRP Group, Inc. Announces Third Quarter 2022 Results
BRP Group reported impressive financial results for Q3 2022, with a 91% year-over-year revenue increase to $259.4 million. Organic revenue grew by 28%, while 'MGA of the Future' revenue surged 80%. Despite a GAAP net loss of $46.7 million, adjusted net income reached $20.8 million, translating to $0.18 per share. Adjusted EBITDA grew 118% to $41.9 million, showcasing the company's resilience in a challenging economic climate. Liquidity remains strong with $158.6 million in cash and a credit facility availability of $73.0 million.
- 91% year-over-year revenue growth to $259.4 million in Q3 2022.
- Organic revenue growth of 28% year-over-year.
- 'MGA of the Future' revenue increased by 80% year-over-year.
- Adjusted EBITDA rose 118% to $41.9 million.
- GAAP net loss of $46.7 million in Q3 2022.
- GAAP loss per share of $0.43.
- Third Quarter 2022 Revenue Grew
- Third Quarter 2022 Organic Revenue Growth(1) of
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 $0.43
-
Adjusted Net Income(3) of
$20.8 million $0.18
-
Adjusted EBITDA(4) grew
118% to$41.9 million
-
Adjusted EBITDA Margin(4) of
16%
-
Pro Forma Adjusted EBITDA(5) of
$41.9 million 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
LIQUIDITY AND CAPITAL RESOURCES
As of
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 $0.11
-
Adjusted Net Income of
$104.5 million $0.90
-
Adjusted EBITDA grew
70% to$157.3 million
-
Adjusted EBITDA Margin of
21%
-
Pro Forma Adjusted EBITDA of
$163.7 million 21%
WEBCAST AND CONFERENCE CALL INFORMATION
A webcast replay of the call will be available at ir.baldwinriskpartners.com for one year following the call.
ABOUT
FOOTNOTES
(1) |
Organic Revenue for the three and nine months ended |
|
(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 |
|
(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
|
||||||||||||||||
Condensed Consolidated Statements of Comprehensive Income (Loss) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
For the Three Months
Ended |
|
For the Nine Months
Ended |
||||||||||||
(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 |
|
$ |
(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 |
|
|
(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 |
|
|
||||||||
Condensed Consolidated Balance Sheets |
||||||||
(Unaudited) |
||||||||
(in thousands, except share and per share data) |
|
|
|
|
||||
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 |
|
|
|
|
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 |
|
|
612 |
|
|
|
586 |
|
Class B common stock, par value |
|
|
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 |
|
|
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 |
|
|
||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||
(Unaudited) |
||||||||
|
|
For the Nine Months
Ended |
||||||
(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 |
|
|
(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
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
Adjusted Net Income is presented for the purpose of calculating Adjusted Diluted EPS. We define Adjusted Net Income as net income (loss) attributable to
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
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 |
|
For the Nine Months
Ended |
||||||||||||
(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 |
|
|
|
|
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 |
|
(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 |
For the Nine Months
Ended |
|||||||||||||
(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 |
|
Adjusted Net Income and Adjusted Diluted EPS
The following table reconciles Adjusted Net Income to net income (loss) attributable to
|
|
For the Three Months
Ended |
|
For the Nine Months
Ended |
||||||||||||
(in thousands, except per share data) |
|
|
2022 |
|
|
|
2021(1)(2) |
|
|
2022 |
|
|
|
2021(1)(2) |
||
Net income (loss) attributable to |
|
$ |
(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 |
|
|
|
|
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 |
|
(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 |
|
(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 |
|
For the Nine Months
Ended |
||||||||||||
(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 |
|
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 |
|
For the Nine Months
Ended |
||||||||||||
(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 |
|
|
|
|
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 |
|
(2) |
The adjustments for the three months ended |
|
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 |
||||||
(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 |
Clients |
|
Our insureds |
Colleagues |
|
Our employees |
GAAP |
|
Accounting principles generally accepted in |
Partners |
|
Companies that we have acquired, or in the case of asset acquisitions, the producers |
Partnerships |
|
Strategic acquisitions made by the Company |
|
|
|
Topic 842 |
|
Accounting Standards Codification Topic 842, Leases |
View source version on businesswire.com: https://www.businesswire.com/news/home/20221107005979/en/
INVESTOR RELATIONS
(813) 259-8032 | IR@baldwinriskpartners.com
PRESS
(630) 561-5907 | anna.rozenich@baldwinriskpartners.com
Source:
FAQ
What were BRP Group's Q3 2022 revenue figures?
How did BRP Group perform in terms of organic revenue growth in Q3 2022?
What is BRP Group's GAAP net loss for Q3 2022?
What was BRP Group's adjusted EBITDA in Q3 2022?
What does the 'MGA of the Future' revenue growth signify for BRP Group?
