BRP - Earnings call transcript Q4 2019 | The Baldwin Insurance Group, Inc.

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Operator

Greetings. Welcome to BRP Group's Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Brad Hale, Chief Accounting Officer. you. Thank

proceed. may You

Bradford Hale

also and our By presentation, earnings to website which released operator, Relations the have of portion which everyone access prior our may and call, to announcement baldwinriskpartners.com. this found good you, on now, Investor afternoon. at should was be Thank and slide

Report and projections today. in not you and discussion of the to factors Form actual remarks, predict filed impact upon of on statements. statements materially The forward-looking include uncertainties filings the assumptions, that SEC our statements, are based our various Before could the future to should implied future everyone may discussion differ which on we and formal begin of statements undue as of that are Group. today XX-K remind expectations, to of subject estimates and forward-looking from are discussion our those difficult placed with the BRP not risks, cause need and I a other uncertainties condition to be or including all part to results today operating These performance more management refer guarantees therefore, and that the reliance of risks recent expressed We forward-looking results could our which them. of detailed financial in Annual our for are

any Also, to A slide at forward-looking measures. references or We filings. disclaim earnings our certain within measure GAAP on in include our except any can will applicable obligations our intentions announcement today website to most statements, found or reconciliation ir.baldwinriskpartners.com these revise extent of or the discussion posted required measures and update supplement earnings both to our SEC presentation, the to comparable by be law. non-GAAP

the this on of available website. addition, archived Investor our will and being Relations the an webcast is after version call call In portion be

Group. BRP Officer Trevor like Baldwin, to of would Chief introduce now I Executive

Trevor Baldwin

taking Brad, Welcome year in to our quarter fourth you, us the and to earnings Group. BRP good and interest Thank and join afternoon, your everyone. time XXXX full appreciate We call. your

on growth During provide performance, term and today's call, fourth investment. strategy, longer as brief quarter XXXX pipeline as well our our some and I'll highlights

Kris questions. Chief finally Accounting Officer, quarter Our and Officer, present will financial open And Chief our Wiebeck; then Financial the Hale and XXXX for line Brad results. we'll fourth

who go begin by of we saying our want Before clients, colleagues, with you much and are very our families taking the Thank partners, the analysts to today, all world join investors, this our us I to good and appreciated. to thoughts you, that time stakeholders facing these are and our challenging our is further, to stay wishes it our given your healthy. times the afternoon

executed term a us progress XXXX our long on and strategy. we was and company near despite for We year environment. as growth current very productive continue positioned making throughout the the XXXX active both to

platform hybrid growth Most the notably, growth For of our new double quarter, the the organic full full This performance XX% model, $XX.X of we growth year and generated quarter continues Future namely $XXX.X year from revenue strong to contributions was driven revenue revenue million. growth of and XX% combined to our revenue million with partnerships. to to fourth outperform. MGA by digit

our part the number, that revenue XXXX organic fourth officially of if was Future revenue in platform MGA becomes The beginning April it figures XX%. XX%. of quarter growth Future included to of MGA growth from X. of the the have been would the organic that Consider But growth you

any the near current to organic occur our and future, growth pandemic. due to We well the expect generating it sustainable toward subject may impact digit will significantly of challenges goal term into that contribute double

four just proprietary leverage BRP the renter's Future's built and the capabilities highly be We're XXX,XXX in products organization. reminder, a apply that with and policies to the in towards MGA entire other incredibly distributed portfolio a MGA and throughout end. at to As can eager force product developing other been year short efficient of years insurance nearly scalable has Technology

platform in With had respect to been, days meaningfully XXX,XXX, can where March has of policies was we over of March the new as ended over XXXX. where even just XXXX, count were during I that XX, how and effective the week we XX, Sunday, share numerous sold above policies force

million our to facility strengthened year cost credit lowering of performance, XXX by end addition significantly XXXX to solid and and senior sheet we full XXX the In fourth at revolving our balance our capital our quarter of points. upsizing basis

while ago, Asia, and million, in what We happening two XXX close acquisition partner that as closed this us our month leads which positioned throughout successfully pressures additional economic we facility XXXX requested one over beyond. increase to well to ago. was very we prudent, in Just weather weeks watching an and the on believe

regarding stronger and thoughtful remain but capacity choppy we to emerge given these a leverage, believe company. intention navigate borrowing our low to we well waters and capitalized as are balance sheet our our economic As

Friday, we that in XX approximately XX cash of sheet. million XX, approximately with March unrestricted had last our on facility As on million balance outstanding

the Upshaw the turned have kick Lanier started This the generated two page completing Risk. beginning by annualized Highland revenue XXXX approximately know and at investors of ongoing year, partnerships and are economic on XX situation. million. We sharply we of XXXX on the focused We

solutions. launching the operating has Lanier Risk middle Central market platform was a to while wholesale in our a perfect rebrand Highland partnership connected our Florida, specialty for been us group for point complement risk to

which partnerships, AgencyRM million of our We significantly segment of XX growing also this generated business. annualized completed segment and enhanced and revenue over VibrantUSA, two Medicare

benefits seeing their in add until to will them full Medicare from we next significantly these in in see majority actual for the in partnerships we February, while large partnerships revenue January, As do the we our XXXX. revenue important is meaningful an recognized of these not from would companies to usually and but expect expect note, XXXX, to EBITDA inclusion January begin acquired not contributions thus

anticipated of first Thus, pace. the partnerships XX revenue that in our ahead generated we've annualized completed incremental quarter original of of over million XXXX,

number been outreach also of despite have environment. partnership pleased the the to or environment, the pipeline evaluate strong out us directly with monitor and have prudently to in economic continue the maintained reaching result, a since a very ROI current health and of We as which and light IPO. we our to And responding will prospects we current

that ongoing monitor ever on and remains situation. anticipated will we support point, target growth. focus our long investments success. our will Our still platform across strategic economic a we term year to To be BRP But changing and XXXX expect the growth firmly the obviously constantly of

into the we With and by and on accelerated and success more our timeline the future space on our early additional an momentum of expanding focus XXXX partnership original leasing to XXXX front, to for subleasing, new floors. able floor we contiguous were three floor market And we this Tampa well offices will our starting that by rent. below us additional giving occupy QX, get in from

We of partnership, our these XXXX, teams. originally XXXX. on have were into but also and investments two on QX and quarters planned both the forward we're decided based investments XXXX recruitment invested further first to the for These generating, activity pull integration we significant

beyond investing as to adding across further some Future as groups. force to to order organic MGA continue in investments our well its new make made our of talent incremental augment capabilities, digit and double platform in to our In will generate growth partnerships, sales we operating at sustained the

in an In colleagues currently Best-rated of market, Solution, launch where particular, dislocation is in adding important development. which note Homeowners the take that order solution in of will balance MGA the home risk. we A.M. to be the preparation no sheet we'll to also take Florida advantage Florida this for be in an It's

launched cloud additional technology as provide service our audit. MainStreet differentiated capabilities, as clients including content, self with as new MainStreet From platform pre a technology that perspective, we leverages advice, personalized to Guided renewal such based tech well

at looking We with moving much of also well long our for opportunities, as as very investments forward remain growth new partnership engaged term the business. in

current crisis and remain our on to laser see not and flexible be sense a our time, will normalcy, well to prudently believe focused becoming our top for a strategic This XX the for investing growth believe long, return while near pass margin us objectives sacrificing sheet a safety large we will allows be stakeholders. and toward our we as balance of we We of positioned broker. on when we of goal accomplish opportunities, executing in both and capacity

put the our of long these on our times, bullish persevere excited for for positioned lead value and run, the this the on are are well our shareholders. colleagues, ability ultimately, financially we recovery have to environment, emerging lead. in we American We and we the side future to resiliency current through to ourselves and long crisis. remain current our significant other businesses, collective fortunate believe we to opportunity term the acknowledge the In In generate of entrepreneurs

I'll additional fourth now to full the some Kris call quarter and turn through Brad, highlights. and over year will financial that, With walk who

Kristopher Wiebeck

Good afternoon, Trevor. This thank Kris everyone. and is Wiebeck, you,

year grew by compared organic million, million is from period. For to and the of $XX.X quarter the growth XXXX, $XX.X increase revenue which XX% comprised This the prior by of driven of to total in fees year revenue, was period. XX% fourth commissions in new we prior partnerships

have if a strategy, comparison, unaudited investors that on acquired been This Given partnerships revenue our important January our we XXXX. pro portion an including in basis. also partnerships regulatory forma our with ongoing growth an MSI metrics are of XXXX apples-to-apples on filings provide X, as provides more

results unaudited pro partnership date, relied the may on in pro being had historical should obtained prior XXXX obtained up Unaudited if was XX% indicative not be million from forma future. the forma nor the upon that the For results have as the information year. revenue been be of would that $XXX.X occurred that

million, $XX.X partnerships million in partnerships. fourth $X.X $XXX.X of benefits of bonuses. XXXX which not partners, primarily the in includes expenses well closed for the colleague XXXX. to million forma quarter revenue compared were as increase, for XXXX have Commissions, that include of the increase new XXXX quarter the It we only million to due does of accounted as $X.X $XX.X XXXX pro four fourth million the far so compensation additional of onboarding an The and of

offering fourth the an million as to and the public as was The of and increase in in fourth increase growth our public operating year-over-year as a initial of both company, associated million, for remainder and $X.X XXXX. $X.X the to with due well rent, incremental public new XXXX, cost sales related line were quarter operating primarily our organic costs a quarter professional partnerships Operating of from company. with expenses of operating expenses

Amortization increase $X.X new with accordance the and partnerships quarter million year primarily million, of from purchased XXXX assets of intangible XXXX. capitalized due to during was fourth the in period capitalized for the prior accounts an $X.X expense customer

liability earn-out We our fourth quarter expense at contingent expenses XXXX the XXXX also incurred the million, quarter increase in group. to $XX.X million $X.X related interest XXXX. to quarter of was a one-time fourth specialty operating slight of compared a of Fourth

the interest concurrently full of outstanding public from portion accrued debt As offering, subordinated agreement. the a we our on with our and repaid and the initial debt proceeds closed

per of fully was to $X.XX loss $X.X loss for for to XXXX net income $XX.X expenses share. the quarter debt IPO, GAAP diluted of a $X.X the Adjusted or on GAAP related liability. million one-time share. of or related net of was per extinguishment the expenses a contingent $X.XX fourth earn-out million quarter XXXX net million and fourth loss one-time included

to of will XXXX grew for XX% a revenue now fourth or of quarter $X.X EBITDA XXXX to million Brad of the fourth XX% by provide fourth of $X.X fourth Adjusted XXXX. XXX% quarter in the to group. breakdown EBITDA for the quarter XXXX. quarter compared margin million Adjusted versus rose

Bradford Hale

and call. to Thanks, on good everyone the Kris, afternoon

segment increase XX%, our or million quarter, of fourth of middle market fourth the $X.X the quarter compared an reported $XX.X XXXX. revenue million, For to of

the by market grew For XX% XXXX full $XX.X to year, its from million. revenue middle

more revenue revenue group for of revenue QX by its XXXX million in the quarter to quarter fourth XXXX. XXXX compared $X.X growth which million, MSI fourth accounted of Specialty in the Our $XX.X for our April driven was revenue XXXX. partnership XXXX completed Specialty's generated quadrupling than in

XXX,XXX XXXX, XX, quarter force end on Future MGA the the increase the of December prior end year, seasonally as in of from during XXXX. was it MGA an Policies nearly nearly and the from platform of XXX,XXX, were the over weakest XX,XXX quarter up of policies the of

quarter. the MSI sequential year, increase an PIF in XX,XXX in same saw Last approximate

represented year this again So meaningful in acceleration growth. once

million XXXX. than its X For XXXX $XX.X on by the more of tripled year, $XX.X to revenue Specialty driven was revenue full acquired million, MSI it from contribution since April

increase fourth to quarter million XX% million, was XXXX. MainStreet Moving group, our XXXX fourth revenue $X.X compared of an of $X.X quarter to or the

by revenue its grew $XX.X to MainStreet XXXX year XX%, full the from For million.

$X.X to of revenue of business XXXX XXXX. growth. quarter fourth due the fourth up generated million, organic segment $X.X Medicare our Finally, was from quarter This million entirely

from to Medicare year $XX revenue For its the full XXXX million. by grew XX%

back call Kris. the turn now I'll to over

Kristopher Wiebeck

Brad. Thanks

objectives we've previously, on full As shift. of the focus noted given can rather on long business based timing partnerships manage growth quarter-to-quarter our our performance and term we than particularly year completed

results As such, we how and pro we are as year believe a to better forma our full are barometer executing.

the of XX from total IPO we XX.X potential four generate pipeline year and the annualized healthy consideration partners. partnerships revenue for In million. to cast and of partnerships announced generate for have we environment, a total Subsequent end, a to over million. These current interest continued and maintain completed

If year compared our growth partnerships. to organic contributions For revenue growth we from XXXX the would add XX% have XXXX, and organic of XX% the a Future our year of full $XXX.X from $XX.X XXXX million, partnerships, grew we XXXX growth rate the full by to attributable growth, to XX%. MGA revenue revenue been of to million and

rose the million year full finished year or XXXX, the For at year adjusted $XX.X and prior XX% adjusted the to million EBITDA $X.XX. $XX.X over EPS

the EBITDA was on X, January forma XXXX, pro assumes was million pro or which period, adjusted For revenue our and XXXX million $XX been unaudited unaudited XX%. have forma partnerships acquired $XXX.X same

Turning to our balance sheet.

we had year-end of term debt of XXXX million. of As million $XX.X long equivalents and cash $XX.X cash and

upsized fourth basis quarter, of while we our successfully credit points. capital $XXX by the facility to improving During cost our revolving million, XXX

now closed have [LOI] to the line this XX, environment of feature and regard March current pipeline, committed being On facility we million. and with a prudent accordion the our XXX on

cash leverage, to term liquidity of over net our the unrestricted we capacity long XXX out to believe revolver current execute and have We stands As of available our balance million plans. on environment. cash, today, in strategic access low sheet

the times. lead always the in business have term challenging for long and We managed to

of in our As terms we think that is XXXX, reminder EBITDA adjusted seasonal business a about margin. fairly

during the But QX is a did as quarter first segments impacting new the at QX hurricane like and expect believe impacted practice lower will our social we have ratios business payments loss quarter in lower QX they to margins anticipate pandemic. than to from strongest prior our Our of inflation the typically our in that segment margin our more be We a continues QX in early social we due country perspective. XXXX contingent quarter, expectation to margins to given if margin, creep for our loss may distancing seen in We partners. MainStreet years. have some carrier look

expect it But XXXX of our significant revenue premiums I XXXX, and contingence with up will as late to a expect higher MainStreet half result in into do headwind first XXXX. that the core will XXXX. of starting in higher commission to want be should QX a a this at headwind, of the to we for XXXX MainStreet in be drive a headwind term note for start is end rate that in Homeowners expectation especially we increases Florida show short the as

long macro COVID-XX growth, to We our the to while more signs of be plans environment eye for an our towards current monitoring damaging invest term continue will overall the with economy. prudently will

very have with to fortunate revenue and even we growth. past recurring nice business are are our business streams able the a some to of segments new generate We week in resilient

with Our access recurring sheet revenue is and clean to capital. coupled balance business

costs to back a we've aggregators, debt more and borrowing if their access primarily know, the prices much to month, equity levered market they Finally, over much want them business model highly decrease suggesting who as for private for with meaningfully capital. past we compete of acquisitions you employ higher seen

current there an greater are is ever for health and the providing not timing the visibility environment. economic the acquisition of nature given outcome and of until range time, we this XXXX in environment, target the changing At

time, continue While at execute the prudently to and same on we to high plan capital allocate partnerships. quality

you thank open now for call With Q&A. I that, time. for Operator? up will I your the

Operator

question. ahead Our Instructions] of line with [Operator Meyer comes your question Please first go KBW. with from Shields the

Meyer Shields

– if recognition I past actually out? primarily wondering I for how for and looking is if is Thanks. general I'm give just it being can an think an in numbers give conducted update the business about anticipation us the not in slowdown. on us playing you anticipation could month coverage, of over you - how

Trevor Baldwin

thanks on your evening and the taking are appreciate Meyer, staying safe the to you and Yes. for question family time you get I hope healthy. and this and

So been we quite have majority to transition that a across to has business gone virtual operations. of And pleased vast that work environment share our seamless. I'm

I'll across some what reporting out four insights into give our segments, we're you operationally. look seeing we As

both revenues and the well new So to streams as business economic relationships generated. as events being business, as revenue the from from client renewal at we those, impact evaluate the we are current that look our coming new

in past seen we our range XX% As past we new At our meaningful continuing expected results, segment activity, renewal a And the we at to have look in two as to at example. Main weeks impact time is do back Street looking over while that's time, an the what business normalized as this we've rate anticipate not any over days. in would reporting new revenue. a in of a seven XX% the business slowdown we're

overall of in which result that Connected at Specialty look a the slowdown towards seen we Solutions going We've elevated is rate well sector environment. as at as healthcare are a actually primarily comprised sector. this the business, virus, professional time, the which activities the liability is a of amounts business wholesale oriented for our our as that When segment, of not result a of on Risk as

year-over-year for period future XXXX. that, roughly we've MGA new the the are days over seven same results the XX% our in past to in day seen addition seven business In up platform, been that

for results for being were up that business, month roughly of that said, new the February. XX% business with Now

really what slowdown, considering environment. a the results still is be good we to that believe overall but economic So

I business annual tend Medicare that's that business the because written also occurs enrollment majority revenue those the future the October Xth. lag of would our results the results business the in caution to tend new lag period to business, December the during new MGA of results XXth In new the recognition. – revenue vast from to

our being But we do do we've activities activity impact periods we a that enrollment to acceptable impacted to on ongoing business such said renewal any XX% there basis renewal continued at to all the XX%. With relatively things considered business and an there. in do, – new our enrollment roughly expect not level, seen

is potentially book impact. and business, where markets evaluating And our our most time middle industry is see past significant to this lot last spent weeks, our the segments. of business and we to would really of into diving over exposure the expect or a three weeks two We've various

not of at the most travel, are segments, million, about we of When so we overly industry renewal hospitality tune exposed including significant $X.X look and our to lodging, an in some the amount. book retail, exposed

while while we And to slowdown is the activity expect practicing do social nation new business distancing.

I have less We account talking that and business advisors one $XX,XXX one about was from ago, business. to email are new our continuing to up partners new over generating an I'm a of our received coming an hour than of share new of activity pleased and written by

to you an expect what we So, would to that, I in impact summary, do is tell new business. see

said, is this unfold. generating with to However, event initial being began business as levels activity at that exceeded the our expectations that

on because time it's our and clients fluid the expect, monitor might our health of priority first as to our real the continuing all in our are basis, stakeholders. very and safety is of a colleagues, We situation you and

Operator

proceed question. next Greg Raymond Peters comes of with your line from James. Our Please with question

Greg Peters

of A questions. couple other

to And the to You this quickly. and about expense. over investments. maybe making work weeks prepared couple about were from was your imagine some unplanned transition even an how you talked you able then Brad in Kris, of pretty last I and in mentioned, regards Trevor, transition home remarks, the

see may know can already couple talk terms pressures have for So about or been headwinds might of months you what next that not you kind you of in margin there? the

Trevor Baldwin

Absolutely. Yes. Greg, for thanks the question.

foresight prepared how into to want us some us prepared associated hours work fortunate to XX on an are they've environment, seamless say team. a they’ve So, handed very virtual we have with technology move this margin that less Kris new constructed over And first, our environment than to to operating around the was infrastructure, o and How how rapidly overall technology notice. incredible With to a additional commentary. with provide occurrence. expense regards I I'd

Kristopher Wiebeck

a Good. Thanks, It's Trevor. good question.

fortunately, you shutting done lot headquartered we've said, a being us hurricane know Trevor planning of Florida, our As for cat in down.

ahead whether are cloud-based in and So other be emails, where would data I it we and our of phones sells. than think potentially technology,

we and incremental. So, have some certainly,

margin harder people. of little on think it's partnership is, effort to side, to the generate I biggest difference be to terms places meet going in the new the flying outbound a on

right? segments of team. you are and And terms the that in in new so, They the executive to our market lot certainly fortunate of but someone we're same really well new them middle goes execute able on a on are met some with business, - side of have person business, historically

of And from little a really so bit margin what a it's we're thinking slowdown. that's probably is, generated

we be made, So really of XXXX overall growth environment. investments of that some nice economic to anticipating the another in have year kind we've

of we to much we're this are early shutdown. But we still it, and how what that The It's we for And of out did lot to with and versus folks more tell, handling QX do from out country as us extent not think expected. retrenching our was have calling long we that original expectations. a or will on shutdown the right, might depends making how be leverage of we think it of that's it different margin of a worth a - QX bit, little of mentioned have it. get kind expected, why that otherwise otherwise we're probably the quite what we're going investments rest kind I

Greg Peters

that of pause I'll ask even everyone resets it and button should targets and what that And tries is question color of being around one hit deals? sort incorporate around appreciate partnerships. figure response. outlook I that some kind and out other just Right. lot be like of they these might financial maybe a potential that buyers to feels a strategies the are as in by and there

mentioned, And cautious closing I - as on deals more right like your What's you hitting the the just but these this video obviously, you're It I'm also travel side seems see you missing pause now. can't to something? thought I'd view obviously people, about get but button, be you your maybe might impression, conferencing.

Trevor Baldwin

push This is largest Trevor. way forward Great we're the and of we're which partnership question. approaching we are by are the continuing I the think, of we to way, making sure potential streams our with. the the businesses And our and appropriately are is, to revenue be the base that is partner diligent< the looking we organization in pipeline, history client of the that durability to prudently

to are current to we forward, the economic and risks focusing in light economic the niches those that? around to to particular how on more and you product evaluate being businesses cautious in or that potential anything to our with Kris, that would are resistant current prudent going so be And pressures. efforts environment have defensible lines but move we the segments add industry of partners continuing

Kristopher Wiebeck

Yes.

is see, to on call, look what's of the how its bit reaction think, market, wait certainly, that I of I we compete and lot in especially impacts just kind little right, the a the broader private at the mentioned other a what and the is, Greg, going set market. see buyers you against - let's of equity

our leverage I in call, facility. really of the terms balance sheet effectively, What IPO. the are just of timing the on with on mentioned fortunate We feel done less our like than we credit debt. we Xx we've net Again,

few really we're to good those standpoint capital So opportunity a the in months. extend next over

making in do – being we take of expect are And – Trevor ourselves think optimistic, we take everything. for of really that certainly, We're and we do to right the just prudent said, now position ourselves in. opportunity. and to that we're shareholders as We advantage fortunate find financially. we diligence But would the care to given we thankful position want us the sure find

Trevor Baldwin

Yes.

business final brokerage viewpoint about ago, that us, there's most we that you changes on as economic kind building really guess, on the - current for if I that thought so with a it's the first is, focused business give of a days the long nothing really good I'd for Greg, So, class bought a we're then climate platform. part, XX

take be a our construct really are particularly those we partnerships advantage base. best-in-class of exposures sure opportunity how prudent diligent and and lot partner organization. exist done inside downside client to to just the and that the and individuals assessing potential of build get firms the best-in-class And want around we're of being thoughtful, to We going with to the making

Operator

Our with Greenspan your proceed of Elyse Wells next Please comes from question with line Fargo. question.

Elyse Greenspan

question first My probably discussed questions. to the in topics prior goes back some the of

But, kind months we take I months new to now a bit a we think of as out together slow a like, of potential least it about hear it slow couple it think seems you based further and degree you assuming So, slowing, about little we business but you things about can down, put at as like slowdown, right down. there. of a a on just are talked couple guess, on a certain economic it hold for what couple of months

So a how a quarter, at that think people second playbook like and the It tempered the we they'll down to of last see being? what are for get couple this the do then, seems about growth months just organic half, playing time seemed calling was back in slow good least as should like you how in out? flip the could side the amount improve be to on

Trevor Baldwin

you safe hope I Trevor in appreciate is This and dialing and you're healthy. staying and

be couple at to we during the second otherwise going rate is on months the whether look have quarter. as would at a business expected So, new believe the to. the to impact generate of our a have slowdown We primary impact our business ability - few

be a the rate? to result to seven that don't at, We by current question impacted example, If of on Street be that evidence as at areas able anything, generate rates as the in with business, environment. anticipate The that remains in past continue as we Main open renewals meaningfully have. what is, will look other focus new business. retention the believe people increase an days our so that And we should we could

in of sales And leadership, been light the so, investments teams made playbook, reorient we and our fortunate tremendous helping sales job marketing in doing our really that feel have a and that, clients ensure times. of to and really and prospective our we're time and them sales branding trying real that insights deliver generate can that risk and meaningful develop advisors and to our during having in with content enablement to dialogue these conversations clients information and

that, of we'll of level to we times on be to normalized degree be not new growing the while, should continue we otherwise a and business modicum result focus able the our to us would have business believe allow a that will to during able be long-term. maintain expected As certainly, to to

it's see growth reasonable of organic a the think in expect and most take we QX to we middle hit would the believe in that that as to current result we're impact segment. market environment I to likely a our significant

stakeholders. liquidity the focused continue today in on is proprietary business the health new business most that and a involved. And particular, owners are very colleagues welfare model activity, of challenging to managing much and prospective their the client of fairly As challenges developing leaders, of result solvency, our and segment in thing, immediate engagement business

So, changing top an insurance brokers of necessarily not mind.

we some of Although, earlier, conversations. have those having and successful out they pointed been

of ensure recovery you strategies sit and are reevaluate to would anything we're recovery is real this. on situation to take continuing what we're good there overall, really and the of positioning where advantage the be we'll position fast in in is that. we our we other a believe to But time to fluid the a QX, that side add? lead business But in if Kris, our

Kristopher Wiebeck

No.

Elyse Greenspan

Thanks. pro XXXX XX%. margin, right, in was of forma margin And at terms around so your then the

and second right is period. there half Assuming pointed comparable margin would QX be sounds slowdown, the could the like weaker over at improvement potentially the quarter given back it show the the and but

all like the to of level feel so improvement to that together a So year slowdown, even the that we margin that you on some with put see given could and investments pro forma XXXX see when slowdown number? the

Trevor Baldwin

a up down margins in we QX little whether because the bit, back year. certainly, see just a Elyse, going ends now, year, be shutdown. right say of flat of I'd think the the it improvement being to we Whether What

then, probably probably when more the we more little QX about what after QX have we think exactly call, information probably six weeks and happened visibility. now. well, I do bit should that's We'll a reassess from

on and going So to probably just in to data. hold to some would few It's weeks want very assumption. I better want we'll be next have certainly don't that, fluid too big I an of make

Elyse Greenspan

this quarter in the, my like was like, then that adjusted recorded forward? the quick anything think last the there low we of And seems questions. and number tax It tax was on in modeling Okay. two one-off how going numbers, and about rate pretty question, rate should

Bradford Hale

is this Brad. Elyse,

for that than less time, rate, the of tax an believe why well, extended rate of effective statutory period a we would which is something, So we around paying be using XX%. we're

there effective or to is we rate believe In so us actual terms for time. noted cash a allowance, couple make going that long be we're that But a range of in rate, rate, an effectively component a tax full valuation of XX% that terms to which in of zero. is it

the to is of if XX% so because or retain, of their up the range. that in is, minimal structure, pretty partnership, fee you're earnings earnings significant C-Corp’s portion One a allocating the

strategy new a taxable historical partners our to pretty we've continuing And lead us on amortization significant acquisitions would two, acted which position. to the in go-forward of acquire

time yes, forward, going that of look adjusted as at about ourselves be it consistent an period So, going as rates an basis. for you – we believe pretty think to we that extended on

Operator

JPMorgan. Pablo comes question next proceed Please of Our question. with Singzon with your from line

Pablo Singzon

and Hi, Kris. Trevor

M&A your deals equity. was BRP’s price obviously partners was being influences wondering strategy transaction? current up how stock the of financing with appreciate you your pipeline. question structuring I comments So guess the did the and first you just I for how on given perhaps end

Kristopher Wiebeck

a different. really LOI, things I so for a when XX that Pablo put Sure, LOI that put I little the two think go, we it under will world under buckets things in was are days

think own partners of shrunk I the so, use as ours don't prospective significantly would has it, as business their market. And

like things collars introduce can it necessarily a share share you count was so, maybe price. And or versus stated

path And been all there you have and then close forward. to that, a and I on if going terms people relatively want think good seems we a impacted, realizing, like be to reasonable be to are

We alignment we're as view think that business forward, view value think for today's we incentives. you are of share I the intrinsic important building. don't it long-term about going equity is the reflective prices provides of

shares today, definitely so, just or we're have price. at would prices we into but prices, but issuing multiple And to for them transfer about make share that other upfront current up not the excited a higher if it’s having than lower

Pablo Singzon

so this think EBITDA I question. deal help for And us you then, M&A another the so Lanier just and focusing [Highland Upshaw] contribution the close should those? far so Risk guess year, Can related on financial about

Kristopher Wiebeck

Yes.

Pablo Singzon

Yes.

Kristopher Wiebeck

So I ahead. think yes, go

Pablo Singzon

Yes.

I'm if revenue, correct EBITDA getting can deals fusion EBITDA maybe speak from factoring to see million of implies obviously the or can’t high I which you about $XX So $X needed growth guess but you maybe the multiples, those I'm can outside? – and pretty wrong, you're million me revenue

Kristopher Wiebeck

you the I again, that to we show we business. hey, of website. encourage provide of had analysts, we disclosure asked a if post to saying of investors go us done and earnings have the so things, own some We've to more Yes the the all look us some some disclosures couple supplement at

basis, that annual growth broke so, And an in we have by and supplement. segment out earnings organic on that's

feedback investors And there. that's call in that you'll got so we some and larger from response after the some last of the to find

of question to there page, of have find closed we deals is you'll the the breakdown other your a things on we One last year-to-date.

required over on annualized of little generally a the revenue that's that $X annual EBITDA, partners is adjusted million $XX see what quality on we've over million is. estimated you'll and of a little of revenue what earnings and of work. And closed terms based In our EBITDA acquired

that under our thinking that a Again, Medicare based of those recognized us, about on in will that's EBITDA Trevor of have way deal rec. rev not the that the would historical be we're different that it's note was operated kind good sense deal most in did deals. information guaranteed, of visibility little that's how but January for that

adding into or And you'll so, the see that that XXXX, XXXX. of but QX expect of in January wouldn't up show meaningfully of rest XXXX we

that probably guidance. provide there table some will think I better But

of these themselves don't of lot at about when financials, you businesses that, think like a it much salary the look audit pay you is One when a they their owners historical things you make times when looks actual the money.

You pull that salary been out distributions. there have really profit might

see paying the And profits himself that they're the public of equal to a to you they're part year. end when than at independently the company at when and margins they're owner EBITDA running was bonus of tend owned a higher

Pablo Singzon

seems your just me, then stress of it that And And a This market enough the it see you so short-term last question the wise, to comments, fair revenue under small from right and amount intact. large disruption. your assume your Trevor, slowdown? from like from clients businesses now are least in withstand fair stream impact size middle like are is economic mostly renewal to a seems at

Trevor Baldwin

operations ideas with the hospitality are and exactly that hard that's without so can survive certainly them It's that right. side other are with now. really in Pablo and and to to in say solutions of on to lodging we're Yes, we're experiencing restaurant, up industries continue distress this. they working mitigate costs We that come to insurance right creative have not times clients that financial hard clients

getting financial But developed our of us actual give of we client we We really what's across going so the business. clients the real fortunate to size inside feel market, feel overall the that can base, happening weekly relative good about makeup about impact intelligence we're strength. some a that reporting when to look that's how as industry to on really that overall middle our stay segments we our client from. and in And we've come time on basis top

be on of we there economic a how and impact, tough that clients believe do our we'll we industries while relatively we're Pablo, position based they feel these summary operate mix to an will be able in, fortunate the in in whether But times.

Pablo Singzon

question a on from just in just final business. where good me, the for the Thanks answer. insurance an get to renters' then from geographically? and growth And are We those policies coming figure insight facility

Trevor Baldwin

states. country do in Pablo. really all business across They're We coming from the XX all

think a about As think that's mix Florida, to urban business. relative a to population you Texas, Where have states. concentrations amount policy of good way significant it’s the going are see we the be places population mix the about United of where like California across of States you

Operator

line [Operator Dan of with question Fannon questions. comes with your Instructions] Jefferies. next Our from Please proceed

Dan Fannon

in slowdown the side. revenue the the of some quarter topics the on talk follow-up second and previous a most quarter in on been Just of has of potential third slowdown or all

of elevated spending. some to some or – period in time that you you some at to Trevor look in extended your in as potential costs, there, what a think the revenues curtail curious expenses I what But So, of are some forward talked costs remarks if could and you for time pulling quarter think, some offset is kind of revenue internally, depressed would of couple prepared beyond slowdown or fourth months look you about spend?

Kristopher Wiebeck

is a couple this that I'll of Kris. Dan, take things.

before QX the already to this expenditures QX made up large in the economy. affect in – and of way Some we showed a in

do it We on for that So, pulled type the but something of to good QX. get deal decided integration it stuff. in we it's I sublease, type didn't to team partnership, leasing space, more think that a forward is

we're our structure, expense fortunate that, commission that is our pay advisors. of expense a we as to far As lot expense in

the And that's to revenue. variable expense that relates

of that tick we advisor with. so, not taking of kind of terms have sales natural team a and down do immediately, in shared not with revenue. up loss being show We And start team that XXX% our to we're this our

So us component some our allows P&L that's cost to maintain that in variable fortunate, margin. us it gives

than down million. we $XX And today approximately, cash we cash, the drew or and million more cutting. I transition would we for let at orders very months We're looked shelter certainly we a while, start three cost that according a given months, slowdown, with, operate place at a normally us to you commitment, look as balance full at you unrestricted in of upsize its If look would today, If operating an nature. extra we to a $XX will for operate know that six sheet commitment. long the cash from with

But a revenue given business, you slowdown kind really operate look feel we to more expense from it’s if things time yes, if to a exposure. would nature, tough cash. make not at prudent longer, it’s little can in immediately bit it with of pulled good months If our like down have shape probably we're felt given like we’d we recurring more. the have financial at kind to of again. variable decisions, Three We now

that have We analysis. done

costs would We a pretty out things the of could the list we the But have to we impact think it’s of effectively, of don't business $XX that million million $X in cut business terribly long-term. that assuming to we'll provide future to lead. be away because to have recovery, wouldn't us a we're going costs do right and in a that are position growth, going to help want we those

doing the So good be really right in like but to financial a work we place. we're we're prudent, now feel

I all the our in helped to us leverage backed. public equity of think we're the and compared really private of industry peers, IPO The with lowest that. net the timing

out play a bit others. time how more little to have And so, some probably things we see and

Dan Fannon

just quick below that. the XX%. to for close you - a thank obviously margin is the and follow-up, on supplemental based the Understood, yours And disclosure and EBITDA acquired

in understated. sense generally business compared a terms profiles typical a what would give get you margin as be or how as Can us of into you that public them? core you've up these they that integrate to You mark highlighted businesses of realm that those your are the acquired

Kristopher Wiebeck

sample again think I a right. no it's size, Yes, small

seen some And our XX%. that businesses think, analysts used a at north XX% I So, and operate margin a the bring XX%. that lot might us well of have we've operate might of

historically, look pretty accurate. you that's If

in One wholesale nice fairly does a space, of bit these lower it's revenue a have our in business of generally wholesale is margin. businesses the which little

over few years. past exceptionally quickly growing been they've And the

say of reward and and live you we're in to with kind long growing will lower run. margin rates. pay have going hey, we We're of, businesses some in teen going organic that faster you it, shareholders to the nice investing the so, keep high if business And can double-digit, keep and the that growing growth for

a could bit probably margin size. think in more it's just businesses. is little get a I existing probably there that small we So, the sample

are you from where now be quarters look value. in these back, we’ll three also think about they're shareholder that and long-term and lot than margin this going you of probably a set. accretive situation the a you deals, to found sample look excited If we incremental we’re But at have deals and the year

Operator

from ahead comes question line question. your Singzon go with Please Pablo next with the of Our JPMorgan.

Pablo Singzon

concerned York So, this government of Trevor mix right. I it’s local want response and as They're a this guess in based on Because play confirm current sort to Kris is just bit have call. response I COVID to your far on I of New comments as a think COVID been state the shutdown.

Texas, of and are I where are understand confirm could a think it very just if based sort in think middle. and in change, on shutdown? I obviously things you provided you but like, the fluid of sort in mix I that? things Florida, outlook just be the sort today might it's somewhere current is of

Trevor Baldwin

there. and Yes, is out as of kind of giving orders you the current in current real a realities state in on insights that the result shutdown are giving we're that our time that business of based you Pablo. we're place confirmed shelter seeing and feedback are The we're

Kristopher Wiebeck

clients of look in add order right. have respond New healthcare, have to this, service. benefit state be the financial Pablo, York, be if even services, Whether is the under it who and most healthcare would brokerage provider. helping, regulations at if And key plans, essential I to whether employee you folks even throughout they businesses key insurance We're an in it ours

of be effective kind And of out of for clients, for terms is and economy our so, colleagues get and allowing home our work business of restraints we're to one insurance key people pillars done. those that go can in from the very thankful

are So standpoint than legal others, from that allowed some to even we are in a more tend operations. some we jurisdictions find have shutdown that to

Operator

answer and And closing I to turn would we back like floor the over Ladies Trevor any have and for end of remarks. to Mr. the question gentlemen, reached Baldwin our session.

Trevor Baldwin

this thank families, all stay shareholders, the I in to just this to may give evening times. to of to stay time all join Thank colleagues, and Group. healthy take you you our this all I interest you BRP our who and time during for you, us well all your our to safe want of operator. And of and call. took thank Also want for our stakeholders difficult wishes your of these

And with and place we of hopefully first good all being look you more quarter Thank and our citizens. talking country forward report, you for for to evening. much the our and a positive in

Operator

teleconference. today’s concludes This

day. your disconnect lines this Thank a You participation your have you time. for wonderful now at and may

The Baldwin Insurance Group, Inc. (BWIN) 24 Mar 202019 Q4 Earnings call transcript