Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 06, 2018 | |
Entity Information [Line Items] | ||
Entity Registrant Name | Goosehead Insurance, Inc. | |
Entity Central Index Key | 1,726,978 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Class A Common Stock | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 13,533,267 | |
Class B Common Stock | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 22,746,667 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current Assets | ||
Cash and cash equivalents | $ 18,067 | $ 4,948 |
Restricted cash | 533 | 418 |
Commissions and agency fees receivable, net | 1,813 | 1,268 |
Receivable from franchisees, net | 583 | 564 |
Prepaid expenses | 947 | 521 |
Total current assets | 21,943 | 7,719 |
Receivable from franchisees, net of current portion | 1,930 | 1,361 |
Property and equipment, net of accumulated depreciation | 6,943 | 6,845 |
Intangible assets, net of accumulated amortization | 253 | 216 |
Other assets | 130 | 565 |
Total assets | 31,199 | 16,706 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 3,015 | 2,759 |
Premiums payable | 533 | 418 |
Unearned revenue | 550 | 1,062 |
Dividends payable | 0 | 550 |
Deferred rent | 496 | 478 |
Note payable | 2,250 | 500 |
Total current liabilities | 6,844 | 5,767 |
Deferred income taxes, net | 36 | 0 |
Deferred rent, net of current portion | 4,196 | 3,916 |
Note payable, net of current portion | 46,644 | 48,156 |
Total liabilities | 57,720 | 57,839 |
Commitments and contingencies (see note 6) | ||
Members’ deficit | 0 | (41,133) |
Additional paid in capital | 89,259 | 0 |
Accumulated deficit | (6,668) | 0 |
Total stockholders' equity and members' deficit | 82,953 | (41,133) |
Non-controlling interests | (109,474) | 0 |
Total equity | (26,521) | (41,133) |
Total liabilities and stockholders' equity | 31,199 | 16,706 |
Class A Common Stock | ||
Current Liabilities: | ||
Common stock | 135 | 0 |
Class B Common Stock | ||
Current Liabilities: | ||
Common stock | $ 227 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) Parenthetical - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Class A Common Stock | ||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock shares issued (in shares) | 13,533,000 | 0 |
Common stock shares outstanding (in shares) | 13,533,000 | 0 |
Class B Common Stock | ||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock shares issued (in shares) | 22,747,000 | 0 |
Common stock shares outstanding (in shares) | 22,747,000 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues: | ||||
Revenues | $ 16,054 | $ 10,807 | $ 45,431 | $ 31,576 |
Operating Expenses: | ||||
Employee compensation and benefits (including Class B unit compensation of $0 and $26,134 for the three and nine months ended September 30, 2018, respectively, and $1,150 and $1,335 for the three and nine months ended September 30, 2017, respectively) | 8,956 | 7,186 | 49,646 | 17,629 |
General and administrative expenses | 3,694 | 2,142 | 9,093 | 5,987 |
Bad debts | 399 | 275 | 984 | 850 |
Depreciation and amortization | 352 | 321 | 1,039 | 617 |
Total operating expenses | 13,401 | 9,924 | 60,762 | 25,083 |
Income (loss) from operations | 2,653 | 883 | (15,331) | 6,493 |
Other Income (Expense): | ||||
Other income (expense) | (22) | 0 | (22) | 3,541 |
Interest expense | (1,631) | (674) | (3,598) | (1,734) |
Income (loss) before taxes | 1,000 | 209 | (18,951) | 8,300 |
Income tax expense | 164 | 0 | 318 | 0 |
Net income (loss) | 836 | 209 | (19,269) | 8,300 |
Less: net (loss) income attributable to non-controlling interests | 595 | 209 | (10,278) | 8,300 |
Net income (loss) attributable to Goosehead Insurance, Inc. | $ 241 | $ 0 | $ (8,991) | 0 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.02 | $ (0.66) | $ (0.66) | |
Diluted (in dollars per share) | $ 0.02 | $ (0.66) | ||
Weighted average shares of Class A common stock outstanding | ||||
Basic (in shares) | 13,533 | 13,533 | ||
Diluted (in shares) | 14,614 | 13,533 | ||
Pro forma income before taxes attributable to Goosehead Insurance, Inc. | $ 373 | $ (8,705) | ||
Tax expense | (164) | $ 0 | (318) | $ 0 |
Net loss attributable to Goosehead Insurance, Inc. | 241 | (8,991) | ||
Pro forma earnings per share: | ||||
Basic (in dollars per share) | $ 0 | $ 0.17 | ||
Diluted (in dollars per share) | $ 0 | $ 0.16 | ||
Pro forma weighted average shares of Class A common stock outstanding - basic (in shares) | 13,533 | 13,533 | ||
Pro forma weighted average shares of Class A common stock outstanding - diluted (in shares) | 14,614 | 14,522 | ||
Commissions and agency fees | ||||
Revenues: | ||||
Revenues | 9,760 | $ 6,692 | 28,072 | $ 19,908 |
Franchise revenues | ||||
Revenues: | ||||
Revenues | 6,180 | 4,048 | 17,060 | 11,499 |
Interest income | ||||
Revenues: | ||||
Revenues | $ 114 | 67 | $ 299 | 169 |
Pro Forma | ||||
Other Income (Expense): | ||||
Income tax expense | 20 | 774 | ||
Weighted average shares of Class A common stock outstanding | ||||
Pro forma income before taxes attributable to Goosehead Insurance, Inc. | 78 | 3,096 | ||
Tax expense | (20) | (774) | ||
Net loss attributable to Goosehead Insurance, Inc. | $ 58 | $ 2,322 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Income (Unaudited) Parenthetical - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Class B Unit Compensation | $ 345 | $ 1,150 | $ 26,738 | $ 1,335 |
Class B Unit | ||||
Class B Unit Compensation | $ 0 | $ 1,150 | $ 26,134 | $ 1,335 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Members' deficit | Common stockClass A Common Stock | Common stockClass B Common Stock | Additional paid in capital | Accumulated deficit | Parent | Noncontrolling Interest |
Beginning balance (in shares) at Dec. 31, 2017 | 0 | 0 | ||||||
Beginning balance at Dec. 31, 2017 | $ (41,133) | $ (41,133) | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 4,389 | 4,389 | ||||||
Distributions | (1,278) | (1,278) | ||||||
Ending balance at May. 01, 2018 | (38,022) | (38,022) | ||||||
Beginning balance (in shares) at Dec. 31, 2017 | 0 | 0 | ||||||
Beginning balance at Dec. 31, 2017 | (41,133) | (41,133) | $ 0 | $ 0 | 0 | 0 | 0 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | (8,991) | |||||||
Ending balance (in shares) at Sep. 30, 2018 | 13,533 | 22,747 | ||||||
Ending balance at Sep. 30, 2018 | (26,521) | 0 | $ 135 | $ 227 | 89,259 | (6,668) | 82,953 | (109,474) |
Beginning balance at May. 01, 2018 | (38,022) | (38,022) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 2,355 | 711 | 711 | 1,644 | ||||
Distributions | (1,645) | (1,645) | ||||||
Effects of the Reorganization Transactions (in shares) | 22,747 | |||||||
Effects of the Reorganization Transactions | (113,734) | 38,022 | $ 227 | (132,202) | (7,379) | (139,354) | (12,402) | |
Initial non-controlling interest allocation | 0 | 97,071 | 97,071 | (97,071) | ||||
Issuance of Class A common stock sold in initial public offering, net of offering costs (in shares) | 13,533 | |||||||
Issuance of Class A common stock sold in initial public offering, net of offering costs | 124,010 | $ 135 | 123,875 | 124,010 | ||||
Equity-based compensation subsequent to initial public offering | 604 | 604 | 604 | |||||
Deferred tax adjustments | (89) | (89) | (89) | |||||
Ending balance (in shares) at Sep. 30, 2018 | 13,533 | 22,747 | ||||||
Ending balance at Sep. 30, 2018 | $ (26,521) | $ 0 | $ 135 | $ 227 | $ 89,259 | $ (6,668) | $ 82,953 | $ (109,474) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (19,269) | $ 8,300 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 1,039 | 617 |
Loss on disposal of fixed assets | 22 | 0 |
Bad debt expense | 984 | 850 |
Equity-based compensation | 26,616 | 0 |
Deferred income taxes | (53) | 0 |
Changes in operating assets and liabilities: | ||
Commissions and agency fees receivable | (1,200) | (550) |
Receivable from franchisees | (934) | (921) |
Prepaid expenses | (426) | (81) |
Other assets | 435 | (250) |
Accounts payable and accrued expenses | 259 | 465 |
Deferred rent | 298 | 3,405 |
Premiums payable | 115 | 146 |
Unearned revenue | (512) | 95 |
Net cash provided by operating activities | 7,374 | 12,076 |
Cash flows from investing activities: | ||
Changes in restricted cash | (115) | (146) |
Proceeds from member note receivable | 0 | 120 |
Proceeds from notes receivable | 16 | 294 |
Purchase of software | (121) | (170) |
Purchase of property and equipment | (1,078) | (5,278) |
Net cash used for investing activities | (1,298) | (5,180) |
Cash flows from financing activities: | ||
Loan origination fees | 364 | (89) |
Repayment of note payable | (50,125) | (250) |
Proceeds from notes payable | 50,000 | 10,000 |
Proceeds from the issuance of Class A common stock sold in initial public offering, net of underwriting discounts and offering costs | 86,773 | 0 |
Member distributions | (79,969) | (16,415) |
Net cash provided by (used for) financing activities | 7,043 | (6,754) |
Net increase in cash and cash equivalents | 13,119 | 142 |
Cash, beginning of period | 4,948 | 3,778 |
Cash, end of period | 18,067 | 3,920 |
Supplemental disclosures: | ||
Management fee note repayment through issuance of Class A common stock | $ 37,238 | $ 0 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization On May 1, 2018 Goosehead Insurance, Inc. ("GSHD") completed an initial public offering (the “Offering”) of 9,810 thousand shares of Class A common stock at a price of $10.00 per share, which included 1,280 thousand shares issued pursuant to the underwriter's over-allotment option. GSHD became the sole managing member of Goosehead Financial, LLC (“GF”). GF was organized on January 1, 2016 as a Delaware Limited Liability Company and is headquartered in Westlake, TX. The operations of GF represent the predecessor to GSHD prior to the Offering, and the consolidated and combined entities of GF are described in more detail below. Information for any periods prior to May 1, 2018 relates to GF and its subsidiaries and affiliates. GSHD (collectively with its combined and consolidated subsidiaries and affiliates, the “Company”) provides personal and commercial property and casualty insurance brokerage services for its clients through a network of corporate-owned agencies and franchise units across the nation. The operations of the corporate-owned units are recorded in Texas Wasatch Insurance Services, L.P. (“TWIS”)—a Texas limited partnership headquartered in Westlake, TX and operating since 2003 . TWIS is 99.6% owned by Goosehead Insurance Holdings, LLC (“GIH”), a wholly owned subsidiary of GF. The Company had seven and six corporate-owned locations in operation at September 30, 2018 and 2017 , respectively. The operations of the franchise units are recorded in Goosehead Insurance Agency, LLC (“GIA”)—a Delaware limited liability company headquartered in Westlake, TX and operating since 2011 . GIA is 100% owned by GIH. Franchisees are provided access to insurance Carrier Appointments, product training, technology infrastructure, client service centers and back office services. During the three months ended September 30, 2018 and 2017 , the Company sold 52 and 33 franchise locations, respectively and had 424 and 267 operating franchise locations as of September 30, 2018 and 2017 , respectively. No franchises were purchased by the Company during the three and nine months ended September 30, 2018 or 2017 . In connection with the Offering, both Goosehead Management, LLC (“GM”) and Texas Wasatch Insurance Holdings Group LLC (“TWIHG”) became wholly owned indirect subsidiaries of GF. Both GM and TWIHG are non-operating holding companies created to receive management fees from the operating entities TWIS and GIA. All intercompany accounts and transactions have been eliminated in consolidation of GF. Reorganization Transactions In connection with the Offering, the company completed the following transactions (the "Reorganization Transactions"): • The GF limited liability company agreement was amended to, among other things, i) appoint GSHD as the sole managing member of GF and ii) modify the capital structure of GF by reclassifying the interests previously held by Pre-IPO LLC Members into a single new class of non-voting LLC Units. • GSHD was authorized to issue two classes of common stock. 9,810 thousand shares of Class A common stock were issued pursuant to the Offering, including the underwriters' over-allotment option. 22,747 thousand shares of Class B common stock were issued to the Pre-IPO LLC Members in an amount equal to the number of LLC Units held by each such Pre-IPO LLC Member in exchange for certain management rights of GF. Each share of Class A common stock and Class B common stock entitles its holder to one vote per share on all matters submitted to a vote of GSHD's stockholders. Each share of Class B common stock can be exchanged for one share of Class A common stock or, at GSHD's discretion, a cash payment equal to the volume weighted average market price of one share of Class A common stock, thus canceling the share of Class B common stock on a one -for-one basis. • The Goosehead Management Holders and Texas Wasatch Holders indirectly transferred their ownership interests in GM and TWIHG, respectively, to GSHD in exchange for the Goosehead Management Note and Texas Wasatch Note. The aggregate principal amount of the Goosehead Management Note and the Texas Wasatch Note was approximately $114 million . Because the net proceeds from the Offering were insufficient to repay the aggregate principal amount of the notes, 3,724 thousand shares of Class A common stock were issued to the Goosehead Management Holders and the Texas Wasatch Holders for the difference. GSHD contributed direct and indirect ownership interests in each of TWIHG and GM to GF. Following completion of the Reorganization Transactions and the Offering, GSHD owned 37.3% of GF and the Pre-IPO LLC Members owned the remaining 62.7% . GSHD is the sole managing member of GF and, although GSHD holds a minority economic interest in GF, GSHD has the sole voting power and control of management of GF. Accordingly, GSHD consolidates the financial results of GF and reports non-controlling interest in GSHD's consolidated financial statements. Basis of Presentation The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all of the annual disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). However, in the opinion of management, these statements include all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the condensed consolidated financial position at September 30, 2018 , and the condensed consolidated results of operations, and cash flows for the three and nine months ended September 30, 2018 and 2017 . The interim period condensed consolidated financial statements should be read in conjunction with the Consolidated and Combined Financial Statements that are included in the Final Prospectus. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Accordingly, actual results could differ from those estimates as more information becomes known. Capitalized IPO Related Costs In connection with the Offering, the Company incurred costs which were recorded in other assets on the condensed consolidated balance sheet. Upon completion of the Offering, these deferred costs were charged against the proceeds from the Offering with a corresponding reduction to additional paid-in capital. There were $ 0 and $170 thousand of IPO related costs included in other assets at September 30, 2018 and December 31, 2017 , respectively. Income Taxes Prior to the Offering, GF was treated as a partnership for U.S. federal and applicable state and local income tax purposes. As a partnership, GF's taxable income or loss was included in the taxable income of its members. Accordingly, no income tax expense was recorded for federal and state and local jurisdictions for periods prior to the Offering. In connection with the Offering completed on May 1, 2018 , the Company became a taxable entity. Recently Issued Accounting Pronouncements Statement of Cash Flows (ASU 2016-18) : This standard requires that the Statement of Cash Flows explain the changes during the period of cash and cash equivalents inclusive of amounts categorized as Restricted Cash. As such, upon adoption, the Company’s consolidated statement of cash flows will show the sources and uses of cash that explain the movement in the balance of cash and cash equivalents, inclusive of restricted cash, over the period presented. As an emerging growth company (“EGC”), the standard will become effective for the Company January 1, 2019 . The Company does not expect that this standard will have a material impact on the Company's Statement of Cash Flows. Statement of Cash Flows (ASU 2016-15) : This standard addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified and applies to all entities, including both business entities and not-for-profit entities that are required to present a statement of cash flows under Topic 230. The standard will become effective for the Company on January 1, 2019 . The Company has evaluated the impact of ASU 2016-15 and has determined the impact to be immaterial. The Company does not, at this time, engage in the activities being addressed by the standard. Revenue from Contracts with Customers (ASU 2014-09) : This standard supersedes the existing revenue recognition guidance and provides a new framework for recognizing revenue. The core principle of the standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new standard also requires significantly more comprehensive disclosures than the existing standard. Guidance subsequent to ASU 2014-09 has been issued to clarify various provisions in the standard, including principal versus agent considerations, identifying performance obligations, licensing transactions, as well as various technical corrections and improvements. This standard may be adopted using either a retrospective or modified retrospective method. According to the superseding standard ASU 2015-14 that deferred the effective dates of the preceding, and because the Company is filing as an emerging growth company, the standard will become effective for the Company January 1, 2019 , but the Company is not required to present the impacts of the standard until it files its annual report on Form 10-K for the fiscal year ended December 31, 2019. The Company is continuing to evaluate the impact this standard is expected to have on the consolidated financial statements and expects to adopt the modified retrospective method. The primary anticipated impacts of the new standard to the Company's revenues and expenses are as follows: Under the new guidance, the Company expects commission revenues will be recognized at the effective date of the policy, which will accelerate some revenues. Currently, commissions from insurance carriers, net of estimated cancellations, are recognized as revenue when the data necessary to reasonably determine such amounts is made available to the Company. For contingent commissions, the Company anticipates revenues will be estimated and recorded throughout the year as the underlying business is placed with the insurance carriers as opposed to the Company's historical recognition when the Company received cash, the related policy detail, or other carrier specific information from the insurance carrier, typically in the first quarter of the following year. The effect of this change will result in revenue being recognized more evenly throughout the year. Franchise revenues, including franchise fees are also likely to change under the new guidance. Currently, initial franchise fees are recognized as revenue in the month the agency owner or initial agency representative attends training. Under the new guidance, the Company anticipates these revenues will likely be recognized over a longer period of time. The Company also expects to recognize an asset for the costs to obtain and/or fulfill a contract and to amortize on a systematic basis that is consistent with the transfer of the services to which the asset relates. The Company intends to continue to evaluate the impact of ASU 2014-09 and intends to further clarify the expected impact of the adoption of the standard in its annual report on Form 10-K for the fiscal year ended December 31, 2018. Leases (ASU 2016-02) : This standard establishes a new lease accounting model, which introduces the recognition of lease assets and liabilities for those leases classified as operating leases under previous GAAP. It should be applied using a modified retrospective approach, with the option to elect various practical expedients. Early adoption is permitted. The standard will become effective for the Company January 1, 2020 . The Company is currently evaluating the impact this standard will have on the Company's consolidated financial statements. |
Franchise Fees Receivable
Franchise Fees Receivable | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
Franchise Fees Receivable | Franchise Fees Receivable The balance of Franchise fees receivable included in Receivable from franchisees consisted of the following at September 30, 2018 and December 31, 2017 (in thousands) : September 30 December 31 2018 2017 Franchise fees receivable $ 3,711 $ 2,501 Less: Unamortized discount (1,300 ) (823 ) Less: Allowance for uncollectible franchise fees (482 ) (336 ) Total franchise fees receivable $ 1,929 $ 1,342 Activity in the allowance for uncollectible franchise fees was as follows (in thousands) : Balance at December 31, 2016 $ 193 Charges to bad debts 382 Write offs (259 ) Balance at September 30, 2017 $ 316 Balance at December 31, 2017 $ 336 Charges to bad debts 329 Write offs (183 ) Balance at September 30, 2018 $ 482 Allowance for Uncollectible Agency Fees Activity in the allowance for uncollectible agency fees was as follows (in thousands) : Balance at December 31, 2016 $ 167 Charges to bad debts 468 Write offs (457 ) Balance at September 30, 2017 $ 178 Balance at December 31, 2017 $ 183 Charges to bad debts 655 Write offs (598 ) Balance at September 30, 2018 $ 240 |
Allowance for Uncollectible Age
Allowance for Uncollectible Agency Fees | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
Allowance for Uncollectible Agency Fees | Franchise Fees Receivable The balance of Franchise fees receivable included in Receivable from franchisees consisted of the following at September 30, 2018 and December 31, 2017 (in thousands) : September 30 December 31 2018 2017 Franchise fees receivable $ 3,711 $ 2,501 Less: Unamortized discount (1,300 ) (823 ) Less: Allowance for uncollectible franchise fees (482 ) (336 ) Total franchise fees receivable $ 1,929 $ 1,342 Activity in the allowance for uncollectible franchise fees was as follows (in thousands) : Balance at December 31, 2016 $ 193 Charges to bad debts 382 Write offs (259 ) Balance at September 30, 2017 $ 316 Balance at December 31, 2017 $ 336 Charges to bad debts 329 Write offs (183 ) Balance at September 30, 2018 $ 482 Allowance for Uncollectible Agency Fees Activity in the allowance for uncollectible agency fees was as follows (in thousands) : Balance at December 31, 2016 $ 167 Charges to bad debts 468 Write offs (457 ) Balance at September 30, 2017 $ 178 Balance at December 31, 2017 $ 183 Charges to bad debts 655 Write offs (598 ) Balance at September 30, 2018 $ 240 |
Note Payable
Note Payable | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Note Payable | Note Payable On August 3, 2018 , the Company refinanced its $3.0 million revolving credit facility and $50.0 million term note payable to a $13.0 million revolving credit facility and $40.0 million term note payable in order to obtain a more favorable interest rate on the outstanding debt. The Company has the right, subject to approval by the administrative agent and each issuing bank, to increase the commitments under the credit facilities an additional $50.0 million . The $13.0 million revolving credit facility accrues interest on amounts drawn at an initial interest rate of LIBOR plus 2.50% , then at an interest rate determined by the Company's leverage ratio for the preceding period. At September 30, 2018 , the Company had $10.0 million drawn against the revolver. At September 30, 2018 , the Company had a letter of credit of $500,000 applied against the maximum borrowing availability, thus amounts available to draw totaled $2,500,000 . The revolving credit facility is collateralized by substantially all the Company’s assets, which includes rights to future commissions. Interest payment on the revolving credit facility totaled $72 thousand for the three and nine months ended September 30, 2018 . The $40.0 million term note accrues interest at an initial interest rate of LIBOR plus 2.5% , then at an interest rate determined by the Company's leverage ratio for the preceding period. The aggregate principal amount of the term note as of September 30, 2018 is $39.5 million , payable in quarterly installments of (x) $500,000 from the fiscal quarter ending December 31, 2018 through the fiscal quarter ending June 30, 2019 , (y) $750,000 from the fiscal quarter ending September 30, 2019 through the fiscal quarter ending June 30, 2020 , and (z) $1,250,000 from the fiscal quarter ending September 30, 2020 through the fiscal quarter ending June 30, 2021 , with a balloon payment of the entire unpaid principal amount of the term note on August 3, 2021 .The term note is collateralized by substantially all the Company’s assets, which includes rights to future commissions. The interest rate for each leverage ratio tier are as follows: Leverage Ratio Interest Rate < 1.50x LIBOR + 175.0 bps > 1.50x LIBOR + 200.0 bps > 2.50x LIBOR + 225.0 bps > 3.50x LIBOR + 250.0 bps Maturities of the term note payable for the next four calendar years as of September 30, 2018 are as follows (in thousands) : Amount 2018 $ 500 2019 2,500 2020 4,000 2021 32,500 $ 39,500 The $10.0 million drawn against the revolver is coterminous with the term loan and is due in full on August 3, 2021 . Loan origination fees of $606 thousand at September 30, 2018 are reflected as a reduction to the note balance and will be amortized through interest expense over three years (the term of the note payable). As part of the refinancing, $871 thousand of origination fees from previous debt were immediately recognized as interest expense. The Company’s note payable agreement contains certain restrictions and covenants. Under these restrictions, the Company is limited in the amount of debt incurred and distributions payable. In addition, the credit agreement contains certain change of control provisions that, if broken, would trigger a default. Finally, the Company must maintain certain financial ratios. As of September 30, 2018 , the Company was in compliance with these covenants. Because of both instruments’ origination date and variable interest rate, the note payable balance at September 30, 2018 and December 31, 2017 , approximates fair value using Level 2 inputs, described below. The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described as follows: • Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets. • Level 2—Significant other observable inputs other than Level 1 prices such as quoted prices in markets that are not active, quoted prices for similar assets or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset. • Level 3—Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company leases its facilities under non-cancelable operating leases, expiring in various years through 2029 . In addition to monthly lease payments, the lease agreements require the Company to reimburse the lessors for its portion of operating costs each year. The following is a schedule of future minimum lease payments as of September 30, 2018 (in thousands) : Amount 2018 $ 331 2019 1,888 2020 2,588 2021 2,683 2022 2,551 2023-2029 14,043 $ 24,084 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes As a result of the Reorganization Transactions and the Offering, GSHD became the sole managing member of GF, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, GF is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by GF is passed through to and included in the taxable income or loss of its members, including GSHD, on a pro rata basis. GSHD is subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to GSHD's allocable share of income of GF. Income tax expense A reconciliation of income tax expense computed at the U.S. federal statutory income tax rate to the income tax expense recognized is as follows (in thousands) : Three months ended Nine months ended September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017 Income (loss) before taxes $ 1,000 $ 209 $ (18,951 ) $ 8,300 Less: (income) prior to the Reorganization Transactions — (209 ) (4,389 ) (8,300 ) Income (loss) before taxes $ 1,000 $ — $ (23,340 ) $ — Income taxes at U.S. federal statutory rate $ 215 $ — $ (4,902 ) $ — Tax on income not subject to entity level federal income tax (147 ) — (382 ) — Permanent Differences: Non-deductible stock compensation costs — — 2,038 — Non-controlling interest 32 — 3,479 Other permanent differences 11 — 25 — State income tax, net of federal benefit 51 — 58 — Other Reconciling items: Other 2 — 2 — Income tax expense $ 164 $ — $ 318 $ — Deferred tax assets and liabilities The components of deferred tax assets and liabilities are as follows: September 30, 2018 December 31, 2017 Investment in partnership (36 ) — Net deferred tax asset (liability) $ (36 ) $ — Uncertain tax positions GSHD has determined there are no material uncertain tax positions as of September 30, 2018 . Tax Receivable Agreement GF intends to make an election under Section 754 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “Code”) effective for each taxable year in which a redemption or exchange of LLC Units and corresponding Class B common stock for shares of Class A common stock occurs. Future taxable redemptions or exchanges are expected to result in tax basis adjustments to the assets of GF that will be allocated to the Company and thus produce favorable tax attributes. These tax attributes would not be available to us in the absence of those transactions. The anticipated tax basis adjustments are expected to reduce the amount of tax that GSHD would otherwise be required to pay in the future. GSHD entered into a tax receivable agreement with the Pre-IPO LLC Members on May 1, 2018 that provides for the payment by GSHD to the Pre-IPO LLC Members of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that GSHD actually realizes as a result of (i) any increase in tax basis in GSHD's assets and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the tax receivable agreement. During the three and nine month period ended September 30, 2018 , no distributions or redemptions were made that triggered an increase in GSHD's tax basis. |
Other income (expense)
Other income (expense) | 9 Months Ended |
Sep. 30, 2018 | |
Other Income and Expenses [Abstract] | |
Other income (expense) | Other income (expense) On June 1, 2017, GF executed a buyout agreement with a franchisee per the terms of a franchise agreement executed in 2014. As part of the buyout, the departing franchisee purchased Goosehead’s economic interests in future royalty fees. Goosehead recognized a $3.5 million gain on the transaction in June 2017 which is included in Other income on the consolidated statement of income. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Class A Common Stock GSHD has a total of 13,533 thousand shares of its Class A common stock outstanding at September 30, 2018 . Each share of Class A common stock holds economic rights and entitles its holder to one vote per share on all matters submitted to a vote of the stockholders of GSHD. Class B Common Stock GSHD has a total of 22,747 thousand shares of its Class B common stock outstanding at September 30, 2018 . Each share of Class B common stock has no economic rights but entitles its holder to one vote per share on all matters submitted to a vote of the stockholders of GSHD. Holders of Class A common stock and Class B common stock vote together as a single class on all matters presented to GSHD's shareholders for their vote or approval, except as otherwise required by applicable law, by agreement, or by GSHD's certificate of incorporation. Non-Controlling Interests Following the Offering, GSHD became the sole managing member of GF and, as a result, it consolidates the financial results of GF. GSHD reports a non-controlling interest representing the economic interest in GF held by the other members of GF. On a quarterly basis, GF makes distributions to the LLC Unit holders on a pro rata basis. For the three and nine months ended September 30, 2018 , GF made distributions of $1.4 million and $3.8 million , respectively, of which $0.9 million and $2.9 million , where made to Pre-IPO LLC Members, respectively. The remaining $0.5 million and $0.9 million , respectively, were made to GSHD and were eliminated in consolidation. Under the amended and restated Goosehead Financial, LLC Agreement, the Pre-IPO LLC Members have the right, from and after the completion of the Offering (subject to the terms of the amended and restated Goosehead Financial, LLC Agreement), to require GSHD to redeem all or a portion of their LLC Units for, at GSHD's election, newly-issued shares of Class A common stock on a one -for-one basis or a cash payment equal to the volume weighted average market price of one share of GSHD's Class A common stock for each LLC Unit redeemed (subject to customary adjustments, including for stock splits, stock dividends and reclassifications) in accordance with the terms of the amended and restated Goosehead Financial, LLC Agreement. Additionally, in the event of a redemption request by a Pre-IPO LLC Member, GSHD may, at its option, effect a direct exchange of cash or Class A common stock for LLC Units in lieu of such a redemption. Shares of Class B common stock will be cancelled on a one -for-one basis if GSHD, at the election of a Pre-IPO LLC Member, redeems or exchanges LLC Units of such Pre-IPO LLC Member pursuant to the terms of the amended and restated Goosehead Financial, LLC Agreement. Except for transfers to GSHD pursuant to the amended and restated Goosehead Financial, LLC Agreement or to certain permitted transferees, the Pre-IPO LLC Members are not permitted to sell, transfer or otherwise dispose of any LLC Units or shares of Class B common stock. The following table summarizes the ownership interest in GF as of September 30, 2018 (in thousands). September 30, 2018 LLC Units Ownership % Number of LLC Units held by GSHD 13,533 37.3% Number of LLC Units held by non-controlling interest holders 22,747 62.7% Number of LLC Units outstanding 36,280 100.0% The weighted average ownership percentages for the applicable reporting periods are used to attribute net income to GSHD and the non-controlling interest holders. The non-controlling interest holders' weighted average ownership percentage for the three and nine months ended September 30, 2018 was 62.7% . All net income prior to the Offering is attributed to non-controlling interest holders. During the quarter, the Company corrected a misclassification of $745 thousand of distributions from accumulated deficit to non-controlling interest to properly reflect the distributions made to Pre-IPO LLC Members during the second quarter of 2018. These amounts were previously shown as a change to accumulated deficit on the Company's quarterly report on Form 10-Q for the period ended June 30, 2018. Earnings Per Share The following table sets forth the calculation of basic earnings per share ("EPS") based on net income attributable to GSHD for the three and nine months ended September 30, 2018 , divided by the basic weighted average number of Class A common stock as of September 30, 2018 (in thousands, except per share amounts) . Diluted earnings per share of Class A common stock is computed by dividing net income attributable to GSHD by the weighted average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. The Company has not included the effects of conversion of Class B shares to Class A shares in the diluted EPS calculation using the "if-converted" method, because doing so has no impact on diluted EPS. Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Numerator: Income (loss) before taxes $ 1,000 $ (18,951 ) Less: income (loss) before taxes attributable to non-controlling interests 627 (10,246 ) Income (loss) before taxes attributable to GSHD 373 (8,705 ) Less: income tax expense attributable to GSHD 132 286 Net income (loss) attributable to GSHD (1) $ 241 $ (8,991 ) Denominator: Weighted average shares of Class A common stock outstanding - basic 13,533 13,533 Effect of dilutive securities: Stock options (2) 1,081 — Weighted average shares of Class A common stock outstanding - diluted $ 14,614 $ 13,533 Earnings per share of Class A common stock - basic $ 0.02 $ (0.66 ) Earnings per share of Class A common stock - diluted $ 0.02 $ (0.66 ) (1) Net income attributable to GSHD excludes all net income prior to the Offering. (2) 1,650 thousand stock options were excluded from the computation of diluted earnings per share of Class A common stock for the nine months ended September 30, 2018 because the effect would have been anti-dilutive, as GSHD recorded a net loss for the period. The following table sets forth the calculation of pro forma basic EPS based on pro forma net income attributable to GSHD for the three and nine months ended September 30, 2017 , divided by the pro forma basic weighted average number of Class A common stock as of September 30, 2017 ( in thousands, except per share amounts ). Pro forma diluted earnings per share of Class A common stock is computed by dividing pro forma net income attributable to GSHD by the pro forma weighted average number of shares of Class A common stock outstanding adjusted to give effect to pro forma potentially dilutive securities. Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017 Numerator: Net income $ 209 $ 8,300 Less: pro forma net income attributable to non-controlling interests 131 5,204 Pro forma income before taxes attributable to GSHD 78 3,096 Less: pro forma income tax expense 20 774 Pro forma net income attributable to GSHD $ 58 $ 2,322 Denominator: Pro forma weighted average shares of Class A common stock outstanding - basic 13,533 13,533 Pro forma effect of dilutive securities: Pro forma stock options 1,081 989 Pro forma weighted average shares of Class A common stock outstanding - diluted 14,614 14,522 Pro forma earnings per share of Class A common stock - basic $ — $ 0.17 Pro forma earnings per share of Class A common stock - diluted $ — $ 0.16 |
Equity-Based Compensation
Equity-Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Equity-Based Compensation | Equity-Based Compensation A summary of equity-based compensation expense during the three and nine months ended September 30, 2018 and September 30, 2017 is as follows (in thousands) : Three Months Ended September 30 Nine Months Ended September 30 2018 2017 2018 2017 Class B unit compensation $ — $ 1,150 $ 26,134 $ 1,335 Stock options 345 — 604 — Equity-based compensation expense $ 345 $ 1,150 $ 26,738 $ 1,335 Class B unit compensation: Prior to the Offering, certain Pre-IPO LLC Members held non-vesting and non-voting Class B units. In accordance with accounting guidance, any dividends paid to Class B unit holders are recognized as compensation expense when declared, as the Class B non-vesting units are considered to be a non-substantive class of equity. Dividends paid to Class B unit holders prior to the Offering, included in employee compensation and benefits, totaled $0 and $122 thousand for the three and nine months ended September 30, 2018 , respectively, and $1,150 thousand and $1,335 thousand for the three and nine months ended September 30, 2017 , respectively. In connection with the Reorganization Transactions, immediately prior to the Offering, historical Class B interests in TWIHG and GM vested by converting to the Texas Wasatch Note and Goosehead Management Note, respectively, paid with a combination of proceeds from the Offering and shares of Class A common stock. This conversion changed the nature of the Class B interests from a profit sharing arrangement to a substantive class of equity and were expensed under the guidance of ASC 718. At the Offering price of $10.00 per share, GSHD incurred total compensation expense of $6.2 million in connection with the conversion, recognized in the second quarter of 2018. Class B interests in GF were also deemed vested by converting, along with all pre-offering Class A equity, on a one -to-one basis with the number of LLC units previously owned, to both LLC Units and shares of Class B common stock. This conversion changed the nature of the Class B interests from a profit sharing arrangement to a substantive class of equity and were expensed under the guidance of ASC 718. At the initial public offering price of $10.00 per share, the Company issued a total of 1,978 thousand LLC Units and shares of Class B common stock and incurred total compensation expense of $19.8 million as part of the conversion, recognized in the second quarter of 2018. Stock options: In connection with the IPO, GSHD granted 1,650 thousand options to directors and certain employees. The stock options were granted with a strike price of $10.00 per share (the initial public offering price). The 365 thousand director stock options vest quarterly over a three year period, and the 1,285 thousand employee stock options vest annually from 2020 to 2022. The grant date fair value was determined using the Black-Scholes valuation model using the following assumptions: Expected volatility 25 % Expected dividend yield — % Expected term (in years) 5.95 Risk-free interest rate 2.59 % GSHD will recognize the total compensation expense of $5.2 million related to such option grants on a straight-line basis over the requisite service period of the award recipient ( three years for directors and four years for certain employees). In April 2018, GSHD adopted the Omnibus Incentive Plan, which reserved 1,500 thousand shares of Class A Common Stock for delivery to directors, officers, and managing directors in connection with future awards granted under the plan. GSHD also adopted an Employee Stock Purchase Plan, which reserved 20 thousand shares of Class A Common Stock for delivery to employees. There were no shares outstanding on either of these plans at September 30, 2018 . |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company has two reportable segments: Corporate Channel and Franchise Channel. The Corporate Channel consists of company-owned and financed operations with employees who are hired, trained, and managed by Goosehead. The Franchise Channel network consists of franchisee operations that are owned and managed by individual business owners. These business owners have a contractual relationship with Goosehead to use the Company's processes, systems, and back-office support team to sell insurance and manage their business. In exchange, Goosehead is entitled to an initial franchise fee and ongoing royalty fees. Allocations of contingent commissions and certain operating expenses are based on reasonable assumptions and estimates primarily using revenue, headcount and other information. The Company’s chief operating decision maker uses net income before interest, income taxes, depreciation and amortization, adjusted to exclude equity-based compensation and other non-operating items, including, among other things, certain non-cash charges and certain non-recurring or non-operating gains or losses (“Adjusted EBITDA”) as a performance measure to manage resources and make decisions about the business. Summarized financial information concerning the Company’s reportable segments is shown in the following tables (in thousands) . There are no intersegment sales, only interest income and interest expense related to an intersegment line of credit, all of which eliminate in consolidation. The “Other” column includes any income and expenses not allocated to reportable segments and corporate-related items, including equity-based compensation, certain legal expenses and interest related to the note payable. Corporate Channel Franchise Channel Other Total Three months ended September 30, 2018: Revenues: Commissions and fees $ 9,372 $ 388 $ — $ 9,760 Franchise revenues — 6,180 — 6,180 Interest income — 114 — 114 Total 9,372 6,682 — 16,054 Operating expenses: Employee compensation and benefits, excluding equity-based compensation 5,218 3,393 — 8,611 General and administrative expenses 1,938 1,283 473 3,694 Bad debts 232 167 — 399 Total 7,388 4,843 473 12,704 Adjusted EBITDA 1,984 1,839 (473 ) 3,350 Other income (expense) (22 ) — — (22 ) Equity-based compensation — — (345 ) (345 ) Interest expense — — (1,631 ) (1,631 ) Depreciation and amortization (224 ) (128 ) — (352 ) Taxes — — (164 ) (164 ) Net income (loss) $ 1,738 $ 1,711 $ (2,613 ) $ 836 At September 30, 2018: Total Assets $ 14,222 $ 9,073 $ 7,904 $ 31,199 Corporate Channel Franchise Channel Other Total Three months ended September 30, 2017: Revenues: Commissions and fees $ 6,631 $ 61 $ — $ 6,692 Franchise revenues — 4,048 — 4,048 Interest income — 67 — 67 Total 6,631 4,176 — 10,807 Operating expenses: Employee compensation and benefits, excluding equity-based compensation 3,719 2,317 — 6,036 General and administrative expenses 1,305 708 129 2,142 Bad debts 177 98 — 275 Total 5,201 3,123 129 8,453 Adjusted EBITDA 1,430 1,053 (129 ) 2,354 Equity-based compensation — — (1,150 ) (1,150 ) Interest expense — — (674 ) (674 ) Depreciation and amortization (229 ) (92 ) — (321 ) Net income (loss) $ 1,201 $ 961 $ (1,953 ) $ 209 At September 30, 2017: Total Assets $ 7,187 $ 4,351 $ 2,800 $ 14,338 Corporate Channel Franchise Channel Other Total Nine months ended September 30, 2018: Revenues: Commissions and fees $ 25,753 $ 2,319 $ — $ 28,072 Franchise revenues — 17,060 — 17,060 Interest income — 299 — 299 Total 25,753 19,678 — 45,431 Operating expenses: Employee compensation and benefits, excluding equity-based compensation 13,872 9,036 — 22,908 General and administrative expenses 5,265 3,123 705 9,093 Bad debts 655 329 — 984 Total 19,792 12,488 705 32,985 Adjusted EBITDA 5,961 7,190 (705 ) 12,446 Other income (expense) (22 ) — — (22 ) Equity-based compensation — — (26,738 ) (26,738 ) Interest expense — — (3,598 ) (3,598 ) Depreciation and amortization (699 ) (340 ) — (1,039 ) Taxes — — (318 ) (318 ) Net income (loss) $ 5,240 $ 6,850 $ (31,359 ) $ (19,269 ) At September 30, 2018: Total Assets $ 14,222 $ 9,073 $ 7,904 $ 31,199 Corporate Channel Franchise Channel Other Total Nine months ended September 30, 2017: Revenues: Commissions and fees $ 18,698 $ 1,210 $ — $ 19,908 Franchise revenues — 11,499 — 11,499 Interest income — 169 — 169 Total 18,698 12,878 — 31,576 Operating expenses: Employee compensation and benefits, excluding equity-based compensation 9,836 6,458 — 16,294 General and administrative expenses 3,599 2,234 154 5,987 Bad debts 468 382 — 850 Total 13,903 9,074 154 23,131 Adjusted EBITDA 4,795 3,804 (154 ) 8,445 Other income (expense) — 3,541 — 3,541 Equity-based compensation — — (1,335 ) (1,335 ) Interest expense — — (1,734 ) (1,734 ) Depreciation and amortization (474 ) (143 ) — (617 ) Net income (loss) $ 4,321 $ 7,202 $ (3,223 ) $ 8,300 At September 30, 2017: Total Assets $ 7,187 $ 4,351 $ 2,800 $ 14,338 |
Litigation
Litigation | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | Litigation From time to time, GSHD may be involved in various legal proceedings, lawsuits and claims incidental to the conduct of the Company's business. The amount of any loss from the ultimate outcomes is not probable or reasonably estimable. It is the opinion of management that the resolution of outstanding claims will not have a material adverse effect on the financial position or results of operations of the Company. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company has evaluated subsequent events through November 6, 2018 , the date financial statements were available for issuance. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Combination | In connection with the Offering, both Goosehead Management, LLC (“GM”) and Texas Wasatch Insurance Holdings Group LLC (“TWIHG”) became wholly owned indirect subsidiaries of GF. Both GM and TWIHG are non-operating holding companies created to receive management fees from the operating entities TWIS and GIA. All intercompany accounts and transactions have been eliminated in consolidation of GF. |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all of the annual disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). However, in the opinion of management, these statements include all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the condensed consolidated financial position at September 30, 2018 , and the condensed consolidated results of operations, and cash flows for the three and nine months ended September 30, 2018 and 2017 . The interim period condensed consolidated financial statements should be read in conjunction with the Consolidated and Combined Financial Statements that are included in the Final Prospectus. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Accordingly, actual results could differ from those estimates as more information becomes known. |
Capitalized IPO Related Costs | Capitalized IPO Related Costs In connection with the Offering, the Company incurred costs which were recorded in other assets on the condensed consolidated balance sheet. Upon completion of the Offering, these deferred costs were charged against the proceeds from the Offering with a corresponding reduction to additional paid-in capital. |
Income Taxes | Income Taxes Prior to the Offering, GF was treated as a partnership for U.S. federal and applicable state and local income tax purposes. As a partnership, GF's taxable income or loss was included in the taxable income of its members. Accordingly, no income tax expense was recorded for federal and state and local jurisdictions for periods prior to the Offering. In connection with the Offering completed on May 1, 2018 , the Company became a taxable entity. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Statement of Cash Flows (ASU 2016-18) : This standard requires that the Statement of Cash Flows explain the changes during the period of cash and cash equivalents inclusive of amounts categorized as Restricted Cash. As such, upon adoption, the Company’s consolidated statement of cash flows will show the sources and uses of cash that explain the movement in the balance of cash and cash equivalents, inclusive of restricted cash, over the period presented. As an emerging growth company (“EGC”), the standard will become effective for the Company January 1, 2019 . The Company does not expect that this standard will have a material impact on the Company's Statement of Cash Flows. Statement of Cash Flows (ASU 2016-15) : This standard addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified and applies to all entities, including both business entities and not-for-profit entities that are required to present a statement of cash flows under Topic 230. The standard will become effective for the Company on January 1, 2019 . The Company has evaluated the impact of ASU 2016-15 and has determined the impact to be immaterial. The Company does not, at this time, engage in the activities being addressed by the standard. Revenue from Contracts with Customers (ASU 2014-09) : This standard supersedes the existing revenue recognition guidance and provides a new framework for recognizing revenue. The core principle of the standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new standard also requires significantly more comprehensive disclosures than the existing standard. Guidance subsequent to ASU 2014-09 has been issued to clarify various provisions in the standard, including principal versus agent considerations, identifying performance obligations, licensing transactions, as well as various technical corrections and improvements. This standard may be adopted using either a retrospective or modified retrospective method. According to the superseding standard ASU 2015-14 that deferred the effective dates of the preceding, and because the Company is filing as an emerging growth company, the standard will become effective for the Company January 1, 2019 , but the Company is not required to present the impacts of the standard until it files its annual report on Form 10-K for the fiscal year ended December 31, 2019. The Company is continuing to evaluate the impact this standard is expected to have on the consolidated financial statements and expects to adopt the modified retrospective method. The primary anticipated impacts of the new standard to the Company's revenues and expenses are as follows: Under the new guidance, the Company expects commission revenues will be recognized at the effective date of the policy, which will accelerate some revenues. Currently, commissions from insurance carriers, net of estimated cancellations, are recognized as revenue when the data necessary to reasonably determine such amounts is made available to the Company. For contingent commissions, the Company anticipates revenues will be estimated and recorded throughout the year as the underlying business is placed with the insurance carriers as opposed to the Company's historical recognition when the Company received cash, the related policy detail, or other carrier specific information from the insurance carrier, typically in the first quarter of the following year. The effect of this change will result in revenue being recognized more evenly throughout the year. Franchise revenues, including franchise fees are also likely to change under the new guidance. Currently, initial franchise fees are recognized as revenue in the month the agency owner or initial agency representative attends training. Under the new guidance, the Company anticipates these revenues will likely be recognized over a longer period of time. The Company also expects to recognize an asset for the costs to obtain and/or fulfill a contract and to amortize on a systematic basis that is consistent with the transfer of the services to which the asset relates. The Company intends to continue to evaluate the impact of ASU 2014-09 and intends to further clarify the expected impact of the adoption of the standard in its annual report on Form 10-K for the fiscal year ended December 31, 2018. Leases (ASU 2016-02) : This standard establishes a new lease accounting model, which introduces the recognition of lease assets and liabilities for those leases classified as operating leases under previous GAAP. It should be applied using a modified retrospective approach, with the option to elect various practical expedients. Early adoption is permitted. The standard will become effective for the Company January 1, 2020 . The Company is currently evaluating the impact this standard will have on the Company's consolidated financial statements. |
Framework for Measuring Fair Value | The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described as follows: • Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets. • Level 2—Significant other observable inputs other than Level 1 prices such as quoted prices in markets that are not active, quoted prices for similar assets or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset. • Level 3—Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. |
Franchise Fees Receivable (Tabl
Franchise Fees Receivable (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
Schedule of Franchise Fees Receivable | The balance of Franchise fees receivable included in Receivable from franchisees consisted of the following at September 30, 2018 and December 31, 2017 (in thousands) : September 30 December 31 2018 2017 Franchise fees receivable $ 3,711 $ 2,501 Less: Unamortized discount (1,300 ) (823 ) Less: Allowance for uncollectible franchise fees (482 ) (336 ) Total franchise fees receivable $ 1,929 $ 1,342 Activity in the allowance for uncollectible agency fees was as follows (in thousands) : Balance at December 31, 2016 $ 167 Charges to bad debts 468 Write offs (457 ) Balance at September 30, 2017 $ 178 Balance at December 31, 2017 $ 183 Charges to bad debts 655 Write offs (598 ) Balance at September 30, 2018 $ 240 |
Schedule of Allowance For Uncollectible Franchise Fees | Activity in the allowance for uncollectible franchise fees was as follows (in thousands) : Balance at December 31, 2016 $ 193 Charges to bad debts 382 Write offs (259 ) Balance at September 30, 2017 $ 316 Balance at December 31, 2017 $ 336 Charges to bad debts 329 Write offs (183 ) Balance at September 30, 2018 $ 482 |
Allowance for Uncollectible A_2
Allowance for Uncollectible Agency Fees (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
Schedule of Allowance for Uncollectible Agency Fees | The balance of Franchise fees receivable included in Receivable from franchisees consisted of the following at September 30, 2018 and December 31, 2017 (in thousands) : September 30 December 31 2018 2017 Franchise fees receivable $ 3,711 $ 2,501 Less: Unamortized discount (1,300 ) (823 ) Less: Allowance for uncollectible franchise fees (482 ) (336 ) Total franchise fees receivable $ 1,929 $ 1,342 Activity in the allowance for uncollectible agency fees was as follows (in thousands) : Balance at December 31, 2016 $ 167 Charges to bad debts 468 Write offs (457 ) Balance at September 30, 2017 $ 178 Balance at December 31, 2017 $ 183 Charges to bad debts 655 Write offs (598 ) Balance at September 30, 2018 $ 240 |
Note Payable (Tables)
Note Payable (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Interest Rate Dependent of Leverage Ratio | The interest rate for each leverage ratio tier are as follows: Leverage Ratio Interest Rate < 1.50x LIBOR + 175.0 bps > 1.50x LIBOR + 200.0 bps > 2.50x LIBOR + 225.0 bps > 3.50x LIBOR + 250.0 bps |
Schedule of Maturities of Note Payable | Maturities of the term note payable for the next four calendar years as of September 30, 2018 are as follows (in thousands) : Amount 2018 $ 500 2019 2,500 2020 4,000 2021 32,500 $ 39,500 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments | The following is a schedule of future minimum lease payments as of September 30, 2018 (in thousands) : Amount 2018 $ 331 2019 1,888 2020 2,588 2021 2,683 2022 2,551 2023-2029 14,043 $ 24,084 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Reconciliation of Income Tax Expense | A reconciliation of income tax expense computed at the U.S. federal statutory income tax rate to the income tax expense recognized is as follows (in thousands) : Three months ended Nine months ended September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017 Income (loss) before taxes $ 1,000 $ 209 $ (18,951 ) $ 8,300 Less: (income) prior to the Reorganization Transactions — (209 ) (4,389 ) (8,300 ) Income (loss) before taxes $ 1,000 $ — $ (23,340 ) $ — Income taxes at U.S. federal statutory rate $ 215 $ — $ (4,902 ) $ — Tax on income not subject to entity level federal income tax (147 ) — (382 ) — Permanent Differences: Non-deductible stock compensation costs — — 2,038 — Non-controlling interest 32 — 3,479 Other permanent differences 11 — 25 — State income tax, net of federal benefit 51 — 58 — Other Reconciling items: Other 2 — 2 — Income tax expense $ 164 $ — $ 318 $ — |
Schedule of Income before Income Taxes | A reconciliation of income tax expense computed at the U.S. federal statutory income tax rate to the income tax expense recognized is as follows (in thousands) : Three months ended Nine months ended September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017 Income (loss) before taxes $ 1,000 $ 209 $ (18,951 ) $ 8,300 Less: (income) prior to the Reorganization Transactions — (209 ) (4,389 ) (8,300 ) Income (loss) before taxes $ 1,000 $ — $ (23,340 ) $ — Income taxes at U.S. federal statutory rate $ 215 $ — $ (4,902 ) $ — Tax on income not subject to entity level federal income tax (147 ) — (382 ) — Permanent Differences: Non-deductible stock compensation costs — — 2,038 — Non-controlling interest 32 — 3,479 Other permanent differences 11 — 25 — State income tax, net of federal benefit 51 — 58 — Other Reconciling items: Other 2 — 2 — Income tax expense $ 164 $ — $ 318 $ — |
Schedule of Components of Income Tax Expense | A reconciliation of income tax expense computed at the U.S. federal statutory income tax rate to the income tax expense recognized is as follows (in thousands) : Three months ended Nine months ended September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017 Income (loss) before taxes $ 1,000 $ 209 $ (18,951 ) $ 8,300 Less: (income) prior to the Reorganization Transactions — (209 ) (4,389 ) (8,300 ) Income (loss) before taxes $ 1,000 $ — $ (23,340 ) $ — Income taxes at U.S. federal statutory rate $ 215 $ — $ (4,902 ) $ — Tax on income not subject to entity level federal income tax (147 ) — (382 ) — Permanent Differences: Non-deductible stock compensation costs — — 2,038 — Non-controlling interest 32 — 3,479 Other permanent differences 11 — 25 — State income tax, net of federal benefit 51 — 58 — Other Reconciling items: Other 2 — 2 — Income tax expense $ 164 $ — $ 318 $ — |
Schedule of Deferred Tax Assets and Liabilities | The components of deferred tax assets and liabilities are as follows: September 30, 2018 December 31, 2017 Investment in partnership (36 ) — Net deferred tax asset (liability) $ (36 ) $ — |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Summary of Pro Forma Ownership Interest | The following table summarizes the ownership interest in GF as of September 30, 2018 (in thousands). September 30, 2018 LLC Units Ownership % Number of LLC Units held by GSHD 13,533 37.3% Number of LLC Units held by non-controlling interest holders 22,747 62.7% Number of LLC Units outstanding 36,280 100.0% |
Schedule of Calculation of EPS and Pro Forma EPS | The following table sets forth the calculation of basic earnings per share ("EPS") based on net income attributable to GSHD for the three and nine months ended September 30, 2018 , divided by the basic weighted average number of Class A common stock as of September 30, 2018 (in thousands, except per share amounts) . Diluted earnings per share of Class A common stock is computed by dividing net income attributable to GSHD by the weighted average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. The Company has not included the effects of conversion of Class B shares to Class A shares in the diluted EPS calculation using the "if-converted" method, because doing so has no impact on diluted EPS. Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Numerator: Income (loss) before taxes $ 1,000 $ (18,951 ) Less: income (loss) before taxes attributable to non-controlling interests 627 (10,246 ) Income (loss) before taxes attributable to GSHD 373 (8,705 ) Less: income tax expense attributable to GSHD 132 286 Net income (loss) attributable to GSHD (1) $ 241 $ (8,991 ) Denominator: Weighted average shares of Class A common stock outstanding - basic 13,533 13,533 Effect of dilutive securities: Stock options (2) 1,081 — Weighted average shares of Class A common stock outstanding - diluted $ 14,614 $ 13,533 Earnings per share of Class A common stock - basic $ 0.02 $ (0.66 ) Earnings per share of Class A common stock - diluted $ 0.02 $ (0.66 ) (1) Net income attributable to GSHD excludes all net income prior to the Offering. (2) 1,650 thousand stock options were excluded from the computation of diluted earnings per share of Class A common stock for the nine months ended September 30, 2018 because the effect would have been anti-dilutive, as GSHD recorded a net loss for the period. The following table sets forth the calculation of pro forma basic EPS based on pro forma net income attributable to GSHD for the three and nine months ended September 30, 2017 , divided by the pro forma basic weighted average number of Class A common stock as of September 30, 2017 ( in thousands, except per share amounts ). Pro forma diluted earnings per share of Class A common stock is computed by dividing pro forma net income attributable to GSHD by the pro forma weighted average number of shares of Class A common stock outstanding adjusted to give effect to pro forma potentially dilutive securities. Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017 Numerator: Net income $ 209 $ 8,300 Less: pro forma net income attributable to non-controlling interests 131 5,204 Pro forma income before taxes attributable to GSHD 78 3,096 Less: pro forma income tax expense 20 774 Pro forma net income attributable to GSHD $ 58 $ 2,322 Denominator: Pro forma weighted average shares of Class A common stock outstanding - basic 13,533 13,533 Pro forma effect of dilutive securities: Pro forma stock options 1,081 989 Pro forma weighted average shares of Class A common stock outstanding - diluted 14,614 14,522 Pro forma earnings per share of Class A common stock - basic $ — $ 0.17 Pro forma earnings per share of Class A common stock - diluted $ — $ 0.16 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Equity-Based Compensation Expense | A summary of equity-based compensation expense during the three and nine months ended September 30, 2018 and September 30, 2017 is as follows (in thousands) : Three Months Ended September 30 Nine Months Ended September 30 2018 2017 2018 2017 Class B unit compensation $ — $ 1,150 $ 26,134 $ 1,335 Stock options 345 — 604 — Equity-based compensation expense $ 345 $ 1,150 $ 26,738 $ 1,335 |
Schedule of Stock Options Valuation Assumptions | The grant date fair value was determined using the Black-Scholes valuation model using the following assumptions: Expected volatility 25 % Expected dividend yield — % Expected term (in years) 5.95 Risk-free interest rate 2.59 % |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | Corporate Channel Franchise Channel Other Total Three months ended September 30, 2018: Revenues: Commissions and fees $ 9,372 $ 388 $ — $ 9,760 Franchise revenues — 6,180 — 6,180 Interest income — 114 — 114 Total 9,372 6,682 — 16,054 Operating expenses: Employee compensation and benefits, excluding equity-based compensation 5,218 3,393 — 8,611 General and administrative expenses 1,938 1,283 473 3,694 Bad debts 232 167 — 399 Total 7,388 4,843 473 12,704 Adjusted EBITDA 1,984 1,839 (473 ) 3,350 Other income (expense) (22 ) — — (22 ) Equity-based compensation — — (345 ) (345 ) Interest expense — — (1,631 ) (1,631 ) Depreciation and amortization (224 ) (128 ) — (352 ) Taxes — — (164 ) (164 ) Net income (loss) $ 1,738 $ 1,711 $ (2,613 ) $ 836 At September 30, 2018: Total Assets $ 14,222 $ 9,073 $ 7,904 $ 31,199 Corporate Channel Franchise Channel Other Total Three months ended September 30, 2017: Revenues: Commissions and fees $ 6,631 $ 61 $ — $ 6,692 Franchise revenues — 4,048 — 4,048 Interest income — 67 — 67 Total 6,631 4,176 — 10,807 Operating expenses: Employee compensation and benefits, excluding equity-based compensation 3,719 2,317 — 6,036 General and administrative expenses 1,305 708 129 2,142 Bad debts 177 98 — 275 Total 5,201 3,123 129 8,453 Adjusted EBITDA 1,430 1,053 (129 ) 2,354 Equity-based compensation — — (1,150 ) (1,150 ) Interest expense — — (674 ) (674 ) Depreciation and amortization (229 ) (92 ) — (321 ) Net income (loss) $ 1,201 $ 961 $ (1,953 ) $ 209 At September 30, 2017: Total Assets $ 7,187 $ 4,351 $ 2,800 $ 14,338 Corporate Channel Franchise Channel Other Total Nine months ended September 30, 2018: Revenues: Commissions and fees $ 25,753 $ 2,319 $ — $ 28,072 Franchise revenues — 17,060 — 17,060 Interest income — 299 — 299 Total 25,753 19,678 — 45,431 Operating expenses: Employee compensation and benefits, excluding equity-based compensation 13,872 9,036 — 22,908 General and administrative expenses 5,265 3,123 705 9,093 Bad debts 655 329 — 984 Total 19,792 12,488 705 32,985 Adjusted EBITDA 5,961 7,190 (705 ) 12,446 Other income (expense) (22 ) — — (22 ) Equity-based compensation — — (26,738 ) (26,738 ) Interest expense — — (3,598 ) (3,598 ) Depreciation and amortization (699 ) (340 ) — (1,039 ) Taxes — — (318 ) (318 ) Net income (loss) $ 5,240 $ 6,850 $ (31,359 ) $ (19,269 ) At September 30, 2018: Total Assets $ 14,222 $ 9,073 $ 7,904 $ 31,199 Corporate Channel Franchise Channel Other Total Nine months ended September 30, 2017: Revenues: Commissions and fees $ 18,698 $ 1,210 $ — $ 19,908 Franchise revenues — 11,499 — 11,499 Interest income — 169 — 169 Total 18,698 12,878 — 31,576 Operating expenses: Employee compensation and benefits, excluding equity-based compensation 9,836 6,458 — 16,294 General and administrative expenses 3,599 2,234 154 5,987 Bad debts 468 382 — 850 Total 13,903 9,074 154 23,131 Adjusted EBITDA 4,795 3,804 (154 ) 8,445 Other income (expense) — 3,541 — 3,541 Equity-based compensation — — (1,335 ) (1,335 ) Interest expense — — (1,734 ) (1,734 ) Depreciation and amortization (474 ) (143 ) — (617 ) Net income (loss) $ 4,321 $ 7,202 $ (3,223 ) $ 8,300 At September 30, 2017: Total Assets $ 7,187 $ 4,351 $ 2,800 $ 14,338 |
Organization - Narrative (Detai
Organization - Narrative (Details) $ / shares in Units, shares in Thousands, $ in Millions | May 02, 2018 | May 01, 2018USD ($)voteclass$ / sharesshares | Sep. 30, 2018votelocationfranchise | Sep. 30, 2017locationfranchise | Sep. 30, 2018votelocationfranchise | Sep. 30, 2017locationfranchise |
Subsidiary, Sale of Stock [Line Items] | ||||||
Corporate-owned locations | location | 7 | 6 | 7 | 6 | ||
Franchise locations sold | franchise | 52 | 33 | ||||
Operating franchise locations | franchise | 424 | 267 | 424 | 267 | ||
Franchises purchased | franchise | 0 | 0 | 0 | 0 | ||
Number of classes | class | 2 | |||||
Vote per share | vote | 1 | |||||
Conversion ratio | 1 | |||||
Class A Common Stock | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Vote per share | vote | 1 | 1 | ||||
Class B Common Stock | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Vote per share | vote | 1 | 1 | ||||
Initial Public Offering | Class A Common Stock | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Shares issued (in shares) | 9,810 | |||||
Share price (in dollars per share) | $ / shares | $ 10 | |||||
Over-Allotment Option | Class A Common Stock | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Shares issued (in shares) | 1,280 | |||||
Goosehead Insurance Holding, LLC | Texas Wasatch Insurance Services, L.P. | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Ownership interest | 99.60% | |||||
Goosehead Insurance Holding, LLC | Goosehead Insurance Agency, LLC | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Ownership interest | 100.00% | |||||
Pre-IPO LLC Members | Goosehead Financial, LLC | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Ownership interest | 62.70% | |||||
Goosehead Insurance, Inc. | Goosehead Financial, LLC | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Ownership interest | 37.30% | |||||
Pre-IPO LLC Members | Class B Common Stock | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Shares issued (in shares) | 22,747 | |||||
Goosehead Management, LLC And Texas Wasatch Insurance Holdings Group LLC | Class A Common Stock | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Shares issued (in shares) | 3,724 | |||||
Goosehead Management Note and Texas Wasatch Note | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Principal amount of debt | $ | $ 114 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
IPO related costs included in other assets | $ 0 | $ 170 |
Franchise Fees Receivable - Bal
Franchise Fees Receivable - Balance of Franchise Fees Receivable (Details) - Franchise Fees Receivable - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Franchise fees receivable | $ 3,711 | $ 2,501 | ||
Less: Unamortized discount | (1,300) | (823) | ||
Less: Allowance for uncollectible franchise fees | (482) | (336) | $ (316) | $ (193) |
Total franchise fees receivable | $ 1,929 | $ 1,342 |
Franchise Fees Receivable - Rol
Franchise Fees Receivable - Roll-Forward of Allowance (Details) - Franchise Fees Receivable - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Financing Receivable, Allowance for Credit Losses [Roll Forward] | ||
Beginning balance | $ 336 | $ 193 |
Charges to bad debts | 329 | 382 |
Write offs | (183) | (259) |
Ending balance | $ 482 | $ 316 |
Allowance for Uncollectible A_3
Allowance for Uncollectible Agency Fees - Roll-Forward of Allowance (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||||
Bad debt expense | $ 399 | $ 275 | $ 984 | $ 850 |
Agency Fees | ||||
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||||
Beginning balance | 183 | 167 | ||
Bad debt expense | 655 | 468 | ||
Write offs | (598) | (457) | ||
Ending balance | $ 240 | $ 178 | $ 240 | $ 178 |
Note Payable - Narrative (Detai
Note Payable - Narrative (Details) - USD ($) | Aug. 03, 2018 | Sep. 30, 2018 | Sep. 30, 2018 | Aug. 02, 2018 |
Debt Instrument [Line Items] | ||||
Aggregate principal amount | $ 39,500,000 | $ 39,500,000 | ||
Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Letter of credit | 2,500,000 | 2,500,000 | ||
Line of Credit | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing availability | $ 13,000,000 | $ 3,000,000 | ||
Additional commitments | 50,000,000 | |||
Revolver balance | 10,000,000 | 10,000,000 | ||
Remaining borrowing availability | 500,000 | 500,000 | ||
Interest expense | 72,000 | 72,000 | ||
Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Principal amount of debt | 40,000,000 | $ 50,000,000 | ||
Debt issuance costs | 606,000 | $ 606,000 | ||
Amortization period | 3 years | |||
Aggregate principal amount | 39,500,000 | $ 39,500,000 | ||
Quarterly payments, first twelve months | 500,000 | |||
Quarterly payments, next twelve months | 750,000 | |||
Quarterly payments, last twelve months | $ 1,250,000 | |||
Write off of loan origination fees | $ 871,000 | |||
LIBOR | Line of Credit | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 2.50% | |||
LIBOR | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 2.50% |
Note Payable - Schedule of Matu
Note Payable - Schedule of Maturities of Note Payable (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Debt Disclosure [Abstract] | |
2,018 | $ 500 |
2,019 | 2,500 |
2,020 | 4,000 |
2,021 | 32,500 |
Note payable outstanding | $ 39,500 |
Note Payable - Leverage (Detail
Note Payable - Leverage (Details) | Aug. 03, 2018 |
Less than 1.50 | |
Debt Instrument [Line Items] | |
Leverage ratio | 1.50 |
Less than 1.50 | LIBOR | |
Debt Instrument [Line Items] | |
Basis spread on variable rate | 1.75% |
Greater than 1.50 | |
Debt Instrument [Line Items] | |
Leverage ratio | 1.50 |
Greater than 1.50 | LIBOR | |
Debt Instrument [Line Items] | |
Basis spread on variable rate | 2.00% |
Greater than 2.50 | |
Debt Instrument [Line Items] | |
Leverage ratio | 2.50 |
Greater than 2.50 | LIBOR | |
Debt Instrument [Line Items] | |
Basis spread on variable rate | 2.25% |
Greater than 3.50 | |
Debt Instrument [Line Items] | |
Leverage ratio | 3.50 |
Greater than 3.50 | LIBOR | |
Debt Instrument [Line Items] | |
Basis spread on variable rate | 2.50% |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2,018 | $ 331 |
2,019 | 1,888 |
2,020 | 2,588 |
2,021 | 2,683 |
2,022 | 2,551 |
2023-2029 | 14,043 |
Future minimum payments | $ 24,084 |
Income Taxes (Details)
Income Taxes (Details) | Sep. 30, 2018USD ($) |
Income Tax Disclosure [Abstract] | |
Uncertain tax positions | $ 0 |
Income Taxes Schedule of Reconc
Income Taxes Schedule of Reconciliation of Income Tax Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Income (loss) before taxes | $ 1,000 | $ 209 | $ (18,951) | $ 8,300 |
Less: (income) prior to the Reorganization Transactions | 0 | (209) | (4,389) | (8,300) |
Income (loss) before taxes | 1,000 | 0 | (23,340) | 0 |
Income taxes at U.S. federal statutory rate | 215 | 0 | (4,902) | 0 |
Tax on income not subject to entity level federal income tax | (147) | 0 | (382) | 0 |
Non-deductible stock compensation costs | 0 | 0 | 2,038 | 0 |
Non-controlling interest | 32 | 0 | 3,479 | |
Other permanent differences | 11 | 0 | 25 | 0 |
State income tax, net of federal benefit | 51 | 0 | 58 | 0 |
Other | 2 | 0 | 2 | 0 |
Income tax expense | $ 164 | $ 0 | $ 318 | $ 0 |
Income Taxes Schedule of Deferr
Income Taxes Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Investment in partnership | $ (36) | $ 0 |
Net deferred tax asset (liability) | $ (36) | $ 0 |
Other income (expense) - Narrat
Other income (expense) - Narrative (Details) $ in Millions | 1 Months Ended |
Jun. 30, 2017USD ($) | |
Other Income and Expenses [Abstract] | |
Gain on transaction | $ 3.5 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) $ in Thousands | May 01, 2018vote | Sep. 30, 2018USD ($)voteshares | May 01, 2018USD ($)vote | Sep. 30, 2018USD ($)voteshares | Sep. 30, 2018USD ($)voteshares | Dec. 31, 2017shares |
Class of Stock [Line Items] | ||||||
Vote per share | vote | 1 | 1 | ||||
Ownership interest held by non-controlling interest holders | 62.70% | 62.70% | 62.70% | |||
Dividends | $ 1,278 | $ 1,645 | ||||
Class A Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Common stock shares outstanding (in shares) | shares | 13,533,000 | 13,533,000 | 13,533,000 | 0 | ||
Vote per share | vote | 1 | 1 | 1 | |||
Class B Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Common stock shares outstanding (in shares) | shares | 22,747,000 | 22,747,000 | 22,747,000 | 0 | ||
Vote per share | vote | 1 | 1 | 1 | |||
LLC Units | ||||||
Class of Stock [Line Items] | ||||||
Distributions | $ 1,400 | $ 3,800 | ||||
Conversion ratio | 1 | |||||
Noncontrolling Interest | ||||||
Class of Stock [Line Items] | ||||||
Dividends | $ 1,645 | |||||
Noncontrolling Interest | Restatement Adjustment | ||||||
Class of Stock [Line Items] | ||||||
Dividends | 745 | |||||
Accumulated deficit | Restatement Adjustment | ||||||
Class of Stock [Line Items] | ||||||
Dividends | (745) | |||||
Pre-IPO LLC Members | LLC Units | ||||||
Class of Stock [Line Items] | ||||||
Distributions | 900 | 2,900 | ||||
Goosehead Insurance, Inc. | LLC Units | ||||||
Class of Stock [Line Items] | ||||||
Distributions | $ 500 | $ 900 |
Stockholders' Equity - Pro Form
Stockholders' Equity - Pro Forma Ownership Interest (Details) shares in Thousands | Sep. 30, 2018shares |
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | |
Pro forma number of LLC Units outstanding (in shares) | 36,280 |
Ownership interest held by non-controlling interest holders | 62.70% |
Ownership interest | 100.00% |
Parent | |
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | |
Pro forma number of LLC Units outstanding (in shares) | 13,533 |
Noncontrolling Interest | |
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | |
Pro forma number of LLC Units outstanding (in shares) | 22,747 |
Goosehead Financial, LLC | |
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | |
Ownership interest held by Goosehead Insurance, Inc. | 37.30% |
Stockholders' Equity - Pro Fo_2
Stockholders' Equity - Pro Forma Basic EPS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Pro forma earnings per share: | ||||
Income (loss) before taxes | $ 1,000 | $ 209 | $ (18,951) | $ 8,300 |
Less: income (loss) before taxes attributable to non-controlling interests | 627 | (10,246) | ||
Income (loss) before taxes attributable to GSHD | 373 | (8,705) | ||
Less: pro forma income tax expense | 164 | $ 0 | 318 | $ 0 |
Less: income tax expense attributable to GSHD | 132 | 286 | ||
Net loss attributable to Goosehead Insurance, Inc. | $ 241 | $ (8,991) | ||
Weighted average shares of Class A common stock outstanding - basic (in shares) | 13,533,000 | 13,533,000 | ||
Pro forma weighted average shares of Class A common stock outstanding - basic (in shares) | 13,533,000 | 13,533,000 | ||
Effect of dilutive securities (in shares) | 1,081,000 | 0 | ||
Weighted average shares of Class A common stock outstanding - diluted (in shares) | 14,614,000 | 13,533,000 | ||
Pro forma weighted average shares of Class A common stock outstanding - diluted (in shares) | 14,614,000 | 14,522,000 | ||
Earnings per share of Class A common stock - basic (in dollars per share) | $ 0.02 | $ (0.66) | $ (0.66) | |
Pro forma earnings per share of Class A common stock - basic (in dollars per share) | 0 | $ 0.17 | ||
Earnings per share of Class A common stock - diluted (in dollars per share) | $ 0.02 | $ (0.66) | ||
Pro forma earnings per share of Class A common stock - diluted (in dollars per share) | $ 0 | $ 0.16 | ||
Pro Forma | ||||
Pro forma earnings per share: | ||||
Less: income (loss) before taxes attributable to non-controlling interests | $ 131 | $ 5,204 | ||
Income (loss) before taxes attributable to GSHD | 78 | 3,096 | ||
Less: pro forma income tax expense | 20 | 774 | ||
Net loss attributable to Goosehead Insurance, Inc. | $ 58 | $ 2,322 | ||
Effect of dilutive securities (in shares) | 1,081,000 | 989,000 | ||
Employee Stock Option | ||||
Pro forma earnings per share: | ||||
Antidilutive securities excluded (in shares) | 1,649,866 | 1,650,000 |
Equity-Based Compensation - Nar
Equity-Based Compensation - Narrative (Details) $ / shares in Units, shares in Thousands, $ in Thousands | May 01, 2018$ / sharesshares | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Apr. 30, 2018shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Equity-based compensation expense | $ | $ 345 | $ 1,150 | $ 26,738 | $ 1,335 | |||
Class B Common Stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Dividends | $ | 0 | 1,150 | 122 | 1,335 | |||
Equity-based compensation expense | $ | 0 | $ 6,200 | 1,150 | 26,134 | 1,335 | ||
LLC Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Conversion ratio | 1 | ||||||
LLC Units And Common Class B | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Equity-based compensation expense | $ | $ 19,800 | ||||||
Shares issued (in shares) | shares | 1,978 | ||||||
Employee Stock Option | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Equity-based compensation expense | $ | 345 | $ 0 | 604 | $ 0 | |||
Shares issued (in shares) | shares | 1,650 | ||||||
Grant price (in dollars per share) | $ / shares | $ 10 | ||||||
Compensation cost | $ | $ 5,200 | $ 5,200 | |||||
Employee stock purchase plan | Class A Common Stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares available for grant (in shares) | shares | 20 | ||||||
Omnibus Incentive Plan | Class A Common Stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares available for grant (in shares) | shares | 1,500 | ||||||
Director | Employee Stock Option | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares issued (in shares) | shares | 365 | ||||||
Award vesting period | 3 years | ||||||
Period for recognition | 3 years | ||||||
Employee | Employee Stock Option | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares issued (in shares) | shares | 1,285 | ||||||
Period for recognition | 4 years | ||||||
Initial Public Offering | Class A Common Stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share price (in dollars per share) | $ / shares | $ 10 |
Equity-Based Compensation - Sch
Equity-Based Compensation - Schedule of Equity-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Jun. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Equity-based compensation expense | $ 345 | $ 1,150 | $ 26,738 | $ 1,335 | |
Class B Common Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Equity-based compensation expense | 0 | $ 6,200 | 1,150 | 26,134 | 1,335 |
Employee Stock Option | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Equity-based compensation expense | $ 345 | $ 0 | $ 604 | $ 0 |
Equity-Based Compensation - S_2
Equity-Based Compensation - Schedule of Stock Options Valuation Assumptions (Details) - Employee Stock Option | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility | 25.00% |
Expected dividend yield | $ 0 |
Expected term (in years) | 5 years 11 months 12 days |
Risk-free interest rate | 2.59% |
Segment Information - Schedule
Segment Information - Schedule of Segment Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)segment | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Segment Reporting [Abstract] | |||||
Number of reportable segments | segment | 2 | ||||
Revenues: | |||||
Revenues | $ 16,054 | $ 10,807 | $ 45,431 | $ 31,576 | |
Operating Expenses: | |||||
Employee compensation and benefits, excluding equity-based compensation | 8,611 | 6,036 | 22,908 | 16,294 | |
General and administrative expenses | 3,694 | 2,142 | 9,093 | 5,987 | |
Bad debts | 399 | 275 | 984 | 850 | |
Total operating expenses | 12,704 | 8,453 | 32,985 | 23,131 | |
Adjusted EBITDA | 3,350 | 2,354 | 12,446 | 8,445 | |
Other income (expense) | (22) | 0 | (22) | 3,541 | |
Equity-based compensation | (345) | (1,150) | (26,738) | (1,335) | |
Interest expense | (1,631) | (674) | (3,598) | (1,734) | |
Depreciation and amortization | (352) | (321) | (1,039) | (617) | |
Taxes | (164) | 0 | (318) | 0 | |
Net income (loss) | 836 | 209 | (19,269) | 8,300 | |
Total Assets | 31,199 | 14,338 | 31,199 | 14,338 | $ 16,706 |
Operating Segments | Corporate Channel | |||||
Revenues: | |||||
Revenues | 9,372 | 6,631 | 25,753 | 18,698 | |
Operating Expenses: | |||||
Employee compensation and benefits, excluding equity-based compensation | 5,218 | 3,719 | 13,872 | 9,836 | |
General and administrative expenses | 1,938 | 1,305 | 5,265 | 3,599 | |
Bad debts | 232 | 177 | 655 | 468 | |
Total operating expenses | 7,388 | 5,201 | 19,792 | 13,903 | |
Adjusted EBITDA | 1,984 | 1,430 | 5,961 | 4,795 | |
Other income (expense) | (22) | (22) | 0 | ||
Equity-based compensation | 0 | 0 | 0 | 0 | |
Interest expense | 0 | 0 | 0 | 0 | |
Depreciation and amortization | (224) | (229) | (699) | (474) | |
Taxes | 0 | 0 | |||
Net income (loss) | 1,738 | 1,201 | 5,240 | 4,321 | |
Total Assets | 14,222 | 7,187 | 14,222 | 7,187 | |
Operating Segments | Franchise Channel | |||||
Revenues: | |||||
Revenues | 6,682 | 4,176 | 19,678 | 12,878 | |
Operating Expenses: | |||||
Employee compensation and benefits, excluding equity-based compensation | 3,393 | 2,317 | 9,036 | 6,458 | |
General and administrative expenses | 1,283 | 708 | 3,123 | 2,234 | |
Bad debts | 167 | 98 | 329 | 382 | |
Total operating expenses | 4,843 | 3,123 | 12,488 | 9,074 | |
Adjusted EBITDA | 1,839 | 1,053 | 7,190 | 3,804 | |
Other income (expense) | 0 | 0 | 3,541 | ||
Equity-based compensation | 0 | 0 | 0 | 0 | |
Interest expense | 0 | 0 | 0 | 0 | |
Depreciation and amortization | (128) | (92) | (340) | (143) | |
Taxes | 0 | 0 | |||
Net income (loss) | 1,711 | 961 | 6,850 | 7,202 | |
Total Assets | 9,073 | 4,351 | 9,073 | 4,351 | |
Other | |||||
Revenues: | |||||
Revenues | 0 | 0 | 0 | 0 | |
Operating Expenses: | |||||
Employee compensation and benefits, excluding equity-based compensation | 0 | 0 | 0 | 0 | |
General and administrative expenses | 473 | 129 | 705 | 154 | |
Bad debts | 0 | 0 | 0 | 0 | |
Total operating expenses | 473 | 129 | 705 | 154 | |
Adjusted EBITDA | (473) | (129) | (705) | (154) | |
Other income (expense) | 0 | 0 | 0 | ||
Equity-based compensation | (345) | (1,150) | (26,738) | (1,335) | |
Interest expense | (1,631) | (674) | (3,598) | (1,734) | |
Depreciation and amortization | 0 | 0 | 0 | 0 | |
Taxes | (164) | (318) | |||
Net income (loss) | (2,613) | (1,953) | (31,359) | (3,223) | |
Total Assets | 7,904 | 2,800 | 7,904 | 2,800 | |
Commissions and agency fees | |||||
Revenues: | |||||
Revenues | 9,760 | 6,692 | 28,072 | 19,908 | |
Operating Expenses: | |||||
Total Assets | 14,338 | 14,338 | |||
Commissions and agency fees | Operating Segments | Corporate Channel | |||||
Revenues: | |||||
Revenues | 9,372 | 6,631 | 25,753 | 18,698 | |
Operating Expenses: | |||||
Total Assets | 7,187 | 7,187 | |||
Commissions and agency fees | Operating Segments | Franchise Channel | |||||
Revenues: | |||||
Revenues | 388 | 61 | 2,319 | 1,210 | |
Operating Expenses: | |||||
Total Assets | 4,351 | 4,351 | |||
Commissions and agency fees | Other | |||||
Revenues: | |||||
Revenues | 0 | 0 | 0 | 0 | |
Operating Expenses: | |||||
Total Assets | 2,800 | 2,800 | |||
Franchise revenues | |||||
Revenues: | |||||
Revenues | 6,180 | 4,048 | 17,060 | 11,499 | |
Franchise revenues | Operating Segments | Corporate Channel | |||||
Revenues: | |||||
Revenues | 0 | 0 | 0 | 0 | |
Franchise revenues | Operating Segments | Franchise Channel | |||||
Revenues: | |||||
Revenues | 6,180 | 4,048 | 17,060 | 11,499 | |
Franchise revenues | Other | |||||
Revenues: | |||||
Revenues | 0 | 0 | 0 | 0 | |
Interest income | |||||
Revenues: | |||||
Revenues | 114 | 67 | 299 | 169 | |
Interest income | Operating Segments | Corporate Channel | |||||
Revenues: | |||||
Revenues | 0 | 0 | 0 | 0 | |
Interest income | Operating Segments | Franchise Channel | |||||
Revenues: | |||||
Revenues | 114 | 67 | 299 | 169 | |
Interest income | Other | |||||
Revenues: | |||||
Revenues | $ 0 | $ 0 | $ 0 | $ 0 |