BRP - Earnings call transcript Q3 2021 | The Baldwin Insurance Group, Inc.

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Operator

Greetings. Welcome to the BRP Group, Inc.

Third Quarter 2021 Earnings Conference Call [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to your host, Bonnie Bishop, Director of Investor Relations.

begin. may You

Bonnie Bishop

to Call. Welcome Group's Quarter Third Thank call the is Earnings Today's being XXXX you. BRP recorded.

COVID-XX the expectations and Third projections of quarter were available ir.baldwinriskpartners.com. afternoon XX-Q statements, that include and remarks are and information related site made including and on Please today, are today note XXXX financial estimates other issued based as results, earlier on of supplemental expectations, company's to management at Web matters. certain forward-looking may Form which this the

statements are various such may by materially to predict are subject and differ a assumptions, contemplated which uncertainties Forward-looking difficult statements. risks variety cause and that to those and actual results of factors from to

company's recent site. for our which earnings and to For all filings, Form the SEC quarter BRP release Web factors, more a discussion the of this most detailed our available on of those XX-K, most including are recent to please refer

may the financial company During certain today, non-GAAP measures. call the also discuss

reconciliation filings. of the company's Chief For ir.baldwinriskpartners.com be BRP to hand Executive the most of information, site and supplemental company's on GAAP announcement call which Trevor now SEC Web found refer these both comparable to can the the a company's Baldwin, at been please earnings I posted measures, measures will Group. and to have the in closely over of Officer

Trevor Baldwin

and I with April scale Wood and at we partnership questions. September, of total new for results unique bringing strong in business. XXXX MGA select K&S to progress important XXX,XXX growth Innovation of of will resulted now Jim we Brad, HOX Insurance, homeowners, in position & continued presence also products industry. distribution be in partnership organic our which by with adds of us The continued MGA as of quality excited transformation as early our us business product driving of of the vision insurance innovation, well fastest we for MGA further role provides to Bogart, In while products firms during Insurance well We announced to for highlights in he in choice Gutmann and excited joining cover business Officer, to Multifamily that multifamily, growing our in beginning and XXXX, Goldfarb distributed across quarter, external is Middle will the growth state force, partnerships will believe and largest some promotions created this policies In highlighted revenue continuing suite growth he partner for driving look as our year-to-date, We and sixth President, and broadly. the Jacobson, the since technological and the Group BRP partnerships XXXX highest year believe addition the forward continued the contributions now top everyone, making in respected you the operations. beyond. our XXX%. in million. business of for & Market the quarter thank and Dallas stands two to who Future BRP these execute Good QX Co-Founders both Brian is welcome quarter, with announce top US. of have our continued them remarks, of more industry. and also distribution our XX% brief within the most Scott, in of November, both growth revenue the We're where over And and fifth to our since MGA responsible multifamily announced we annual where creation make responsible and family newly I and flood in to strong and BRP's network and of from Texas, within the afternoon, to We to their execution followed property casualty demonstrated our leadership XX% earnings MGA of Chief the now XXX another XXX for Roche and Markets and which take is is Group's be then Emerging to addition were third Thank and call. growth total Their business, announced the the you, BRP $XXX in also XXXX important in the immediate the California internal showcase XX by to partnership, the Kris for Including Bonnie. and and financial all partners. quarter. announced contributors partnering fantastic forward Schultz will our look our partnerships Brad, from our to our announce at expertise deep continued success. both for

$XXX the pipeline and of full next balance remains year, the million the upper the towards across very acquired our $XXX to end year XXXX. we year range anticipate for currently million communicated We of strong. Looking the into revenue have

colleagues quarter end the Finally, our whose total we in the XXXX partnerships XXX our best to colleagues In the through and quarter, we attracting through success business organic its asset third colleagues. in a of proud XXX the third and added most and X,XXX hiring, as talent, via valuable industry. the have headcount approximately at are is of the retaining brightest bringing

Our home industry's our been brand, never in professionals best for leading the has recognition, very is stronger.

innovating quarter our momentum deep scaling winning and of a we're our ability proud The pressing a level. executing a In industry rapidly have closing, share. and thoughtful technology on at momentum third and market We and and significant continue of we our are you. are fourth performance the of quarter. through the To delivered combination continue of our the with the capitalizing our for in huge all into this home to our carrying to clients advantages and set colleagues, creating the platforms talent for high into ongoing client capabilities investments investments leading XXXX momentum thank great we for has foundation and stakeholders

reason our business the With go call history. it the I'll to more firm's strongest on been our over position to in that, the Brad detail in are results. into the continues be turn to You QX has

Brad Hale

joining Thanks, Trevor, to and good afternoon us everyone today.

or year diluted million. share release net $XX.X quarter basis, to share. third margin our also the performance we GAAP in third quarter all of reconciling A per segment, for our on of Middle period. the the for per during loss SEC. XXXX can based XX% the year-over-year XX% and filed excludes segments compensation, robust income adjusted to EBITDA $XX.X grew of strong fully with our Market, generated quarter. a quarter, expenses, XX% the We not the or the amortization prior Specialty For a table net $X.XX be and million of $X.XX quarter XX% was to Adjusted million earnings across net revenue $XXX.X quarter XXX% third for XX-Q to the and third Adjusted particular, from income other the growth onetime $XX.X in but compared recorded third operating growth a loss share. compared of which generated in only of growth organic thanks our found of period. EBITDA rose which GAAP in Adjusted of XXXX million year million XX% We to prior was loss XXXX, $XX.X for to

quarter, we XX% For margin to the EBITDA fourth adjusted anticipate an of XX%.

a related margin as The given the prior result year of is quarter third quarter in timing versus the M&A. changing, business success movement and seasonality of fourth our

to continue communicated in XX%. we end increase to to XXX XXX year, our of expect last full adjusted high the basis the For relative achieve margin to point year's EBITDA previously

organic mid we teens. anticipate For to currently growth quarter, the total the in fourth be

product nuances this, of roughly As of quarter compared execution the fourth to XXXX. the you of revenue we in the of to still will be recorded master flat we Despite of the last quarters MGA many we the due to Future. will anticipate year. effectively recall, Late launched year, QX in accounting contract revenue worth related and last two master master timing

However, QX MGA comp, XX% organic year-over-year. roughly of a because deceleration to in we accounting the XXXX of expect driven the higher growth onetime the

took to revenue to achieve and capital raise making gross backdrop On proceeds, well of markets $XXX in in this to we target next execute advantage strong on acquired positioned M&A to the million year of of million the front, our for us million capital $XXX remainder the $XXX year.

only nine what the $XXX At operated COVID forma we as most passed pro today. as in the short to environment annual two $XXX year extremely we time, accomplished public of As of through pro public our IPO, we've we proud a in tenure forma a period company, time have through particularly company. of our light million anniversary was our million compared of are during a revenue months just of

addition, an while profitability we basis long of to of reported above XX% and term stated XX%, In IPO time have goal increasing at annual meaningfully the the cash maintaining flow. on growth consistently free organic our

thank attracting and with for on and for independent generating continue I partnering top Q&A. well we'll you executing time, industry's positioned firms. our to call of your that, organic outsized are goal open the the We consistent up now With growth, best the talent Operator? very

Operator

first question [Operator Our with KBW. from Shields Meyer Instructions] is

Meyer Shields

pricing quarter's economic we growth organic impact a this can get of little bit growth. detail was hoping more I on P&C the and in

Trevor Baldwin

growth well. and rate prior basis what on we as X.X%, consistent that's as of about impact with exposure a consistent So impact's organic quarters, and with our and the XX% combined on been growth overall was think year-to-date the the

overall So while the results driver that certainly kind the a seeing. tailwind, of of not relative you're

Meyer Shields

of I to sense partnerships know us give came the the quarter? productivity particularly this past, people want up, get in you the ramp Can newer to anticipated the the but that via talked recruits of a we've in -- I opposed about as just

Trevor Baldwin

than as hires total having a talent you've adding in our we're which basis, roughly more XXX tremendous organic of remarks, XXXX. or our the year-end Meyer, So success as over XX% new heard with XX% on year-to-date of headcount of represents business our into

growth really spring outsized our those think about can investments the you future. for loading continued So business organic into

in about really ramp depends on role think business. the we time As it

manner On be sales and consistent kind a a would the generation results, someone highly year other a folks productive some with in from reminder, of of side productive period you standpoint. can the taking cycles, industry new days. green a overall effective longer is longer the which, more productivity around our about bring we of complex to where XX and street and business, them ramp highly from can parts our have to off business in them two In multiples of making three think as in

they're is. what that to of parts relative kind and period just it's So ramp what in the of business

Operator

[Operator Wells Fargo. Elyse from Instructions] Our Greenspan next question is from

Elyse Greenspan

the organic fourth through outlook My first question flush for I just the growth just was -- to want quarter.

as the and So said, think, mid-teens reflects, I growth that I believe XX% you business. within MGA

double So kind pointed you guess, the QX. are assuming timing within would as that with in MGA, the within you that guide businesses you of out away I implied that be due digits from is to last well? but still

Trevor Baldwin

signed, One, business. growth a master to that the of for recorded away This contract yes, from worth in MGA. is the a as deceleration accounting still the revenue in just quarters So things. out to the two growth quarter. the master couple what was last in launched in implies pointing effectively business would is program digit product MGA year rate profile double the I nuances this we fourth in a no the when result of And -- way of a of tied we organic healthy point is the

despite lapping of we're revenue a compare overall the though so year. be to that still quarter even to the on And And still expect that, we we revenue kind worth MGA organic two generate master accounting headwind. growth XX% quarter’s we expect of flat related comp. a have Despite to year-over-year basis, for last that

So about overall growth really the feel we trajectory business. good the of

trends think As MGA new the overall, I incredibly strong. business remain about

pipeline, from distribution at providers a that units online over records setting perspective. As policies we represent we you that a our over of every look we think expect as of a course month enterprise issued at new pipeline were the the we were August, million go July sequentially have stage months And new that and of to really June, good XXXX. software at about X

positioned BRP in business. about of and has to we never all stronger Frankly, we're feel our part organic pipeline of our strong really generating that outsized across So the growth. pipeline is really good continue how been

Elyse Greenspan

normal relative XX% that we're to growth XXXX terms target? kind one the that you year, organic And you out end guys revenue from quarter of to typically of away given a have sense do the shake of so could the XX% how in or guys that

Trevor Baldwin

year years of would as guidance owned we'd organic we've But MGA including XX% on not organic the the with we're what XX% year two single going the call. the full it seeing we've our performance prior to year growth month been business year that public, period in end year-to-date is effectively guidance. updated full share you're if this I exceeded XX growth, 'XX XX% for until the to So in of and XX% every share

Elyse Greenspan

And then last one. one

next So you guys that to you million. million out at of be said the year had now you the for $XXX that put this $XXX of revenue year. to end million expected you'll that for I upper $XXX acquired $XXX know million

there's just within provided? range and XXXX, So a from forward are XXXX previously you M&A pipeline be still better it's or is that you pulling the it could some XXXX,

Brad Hale

just of pull XXXX our we're That communicated better seeing pipeline not a expectation. forward in XXXX. Elyse, previously a is

Operator

Our America. with next Shanker Bank Josh is question from of

Josh Shanker

it First for excluding was organic you've the Future? MGA the maybe question, business, said the What already. of growth

Trevor Baldwin

didn't that, We Josh. disclose

Josh Shanker

that I'm might be does sound about -- correct? approximately XX%,

Kris Wiebeck

Kris. it's Josh,

then we've wasn't was an do yet. four I specific think digits, gave usually Middle think point by we away. segments that of annual and three number one basis. segment double one were the I the Market We on that for and a detailed organic don't

Josh Shanker

some that that the And look tailwind COVID, a we a or year? lift year And XQ was when at 'XX I ago year weak there in difficult what of tailwind to from XQ guess, because growth the was difficult comps the there we any creating being and prior extent see XQ? do being like also rate, this

Trevor Baldwin

of and Our organic XX%. growth XX% in XQ XQ 'XX was and

But and kind that that sure comps. view easy growth year-to-date was certainly the the not I’d being recovery necessarily a as in reflected combined I about overall impact thinking for a you're a on that organic COVID to rate of relative So seeing you're there's exposure With X.XX%. uptick if units, quarter in bit results. it's underlying the those little of think, said, and the of I'm client level on exposure basis, X.X% sure,

the the organic story it's overall So not driver here. of

Josh Shanker

out I'm just course of if figure of I'm to how No, model no, to trying much trying it forward. is,

as trying goes that As I point tailwind? recon, XXX about think tailwind, goes that a is forward. point to basis a I'm away, that XXX basis it

Trevor Baldwin

would of be to pulling I'd rate of certainly I mean, south us to up be I would to expect inside it which and now. impact that It both XXX exposure, combined points. need of expect be right kind

about we're we're of on capitalize I'd overall growth impact on repricing think that. is basis. it's our as that kind some into business, product a of year, So topics relevant does certainly and you And thinking with as the about be going economy, inside that. how up set the coming about the the of as relatively being year-to-date expect impact of to of economy you And our bullish monthly while something more we what's the effectively we're relative kind kind inflation continued on pressures on the the number, XXXX, economic X.X% inflation think environment. say to

And continue navigate so the us helping our and positioning growth challenges associated capturing current the well clients environment. to with

Operator

question is next Raymond James. Greg with Our Peters from

Alex Bolton

as and product for LeaseTrack the is wondering as might an play This give well into unit I in calling was plays Greg that its if master can you update how and Alex into on Peters. penetration? Bolton how traction, that

Trevor Baldwin

really the to Alex. So continues product well, master perform

this to to QX we this worth or we I product quarters’ the fact revenue the quarter stat recognized despite expect flat is effectively revenue of master the that I the flat. year, in that be MGA, of coming to be last and for quarter would in think point two

so penetration been the in a system are by uptick ingredient today. is success that really seeing. that's So our a growth the contributing overall has certainly that favorable we're units LeaseTrack good. software and that live to brought That being powered key the to us in to that across And they're

Alex Bolton

to you was the future come. update I if can into then provide thinking products, And on years out wondering flood any homeowners,

Trevor Baldwin

our to make growth be good the on MGA the of to continue and on combined we progress that and they we XXXX. organic basis in flood our So a will expect both contributors home products meaningful

Operator

Phillips question is Michael Stanley. next Morgan from with Our

Michael Phillips

I how to maybe components, guess, two out the into much want X.X% would rate parse you versus exposure? that was

Trevor Baldwin

don't we basis. you combined reported on to So break nuanced drivers. some really so why the building that's as differences But of really about think it It growth, tough gets there, we detail out. there's of four out organic a blocks the

is what's So revenue. retention prior of the year first relative

be the in result than tend better a our specializations. communicated and we've as to past, of line average service slightly we model in industry As to

being to So of a our you can a not us slight our think relative about driver but that peers meaningful results. outsized benefit to

about You that then exposure. of combined can impact the think rate and

being the exposure that our product is being revenues the Both And which pricing yielding headcount basis, to relative on So on the side. impact certainly, values compression of insurance inventory, rate, nature. then the a that things and and today factors X.X%. that underlying of of relative expansion clients tailwinds combined the or are us of in to reflective environment of rating

higher. naturally assume rate relative I market the the we're and think seeing based number you in economy in the you're that that the hearing would on be news would

However, what is past to me tend -- behaviors. have I buying clients think their insurance would alter and heard our you the from in

to spend inside buying they're certain less work limits So constraints insurance. maybe continuing budgetary but they're relative can what or on taking larger to deductibles they

retention, you exposure, is for that's some balance why you business, pressure of to and what that organic expect add then organic notable to the there. otherwise be see XX% in quarter would see that that's going the to so growth. the and most all far continues year on you're rate you our outsized growth And take so the new the downward after to XX% the bridging up for But driver

Michael Phillips

I I from and asking low, but thought makes limits they're changes on because sense what on what force doing in what what actually was deductibles the the seeing That's you're a little sounded and all.

So kind bulk the on business, then or the see as five whatever. term think other MGA skills years kind terms sound plus in asking? Do longer they look guess, the longer of coming did the little ways you from I there a out surface. question, still Future I that about of you use of And in benefits its guess, base are of Where or other have you I'm of of that'd areas? is to in current renters, term, kind the guys what and

Trevor Baldwin

We from a and out coming business. years five expect products small renters revenue to one of of to be piece plethora overall be new the

Operator

is Singzon JPMorgan. question next with from Our Pablo

Pablo Singzon

I business about first second down the sequential my looking So to business. I ex quarter growth talk And what about Specialty about guess, the drove, I could in that wondering question -- of least was business slowed the XX%. if you I’m and the the relatively biggest is XX% what is quarter, component there -- at third as weak ex about I'm my by MGA quarters? think, in it at grew grew numbers, that MGA?

Trevor Baldwin

area to the quarter strong. liability second in you liability is view medical result, professional, really across the specialization cyber And mean specialized business, quarter I XX% quarter exceptional wholesale seeing broadly about third liabilities, with we're you their and in wouldn't plus so is that with relative lines. and That as of really management, percent organic excited the XX weak industry. XX% referenced such what business the we think largest can had we pleased being professional E&S So be we're to an professional that

Pablo Singzon

hear comp. for a I year. question, second XQ, organic be Market off last could on on you I'd fourth XX% what interested MGA an given Middle think, comp potentially be thoughts much the you'll your so for comments to your XX% easier I grew then quarter. lapping quarter, with against the happen And that appreciate into And this growth

X% it down think was year. I last

Trevor Baldwin

for We expect fourth the Market business in the quarter. strong organic Middle growth

Pablo Singzon

hires. showing as Next guess, asking another Are your one guess, the up in other just to more way I with so in follow-up the in investments And margins productive, fully Trevor, they should those regarding from those, of or anything, the I margin the we do expenses had like that hires become associated burden? P&L, words, hiring? question is, fully I expect the some organic -- comments was accretion if now show on

Trevor Baldwin

XXX said we on the of the will the to we future. making given in expansion points basis growth spring and we which in revenue lead We're meaningful investments business, business, call, expect our end load future the as expect continue outperformance communicated that high to Pablo, that, the to into the margin expansion. XXX to previously

Pablo Singzon

last And for me. one

just how deals fair it's to that including Does think have wondering this up for evaluate potential changes how I say general I sort accretion? partnerships? multiples changes of for you going of in you So that how, of that everyone, the been BRP. threshold in expect or sort partnerships? Just price environment how to you margin growth terms your evaluate reach recurrence or the guess, today was I

Kris Wiebeck

we're for positioned. think evident think organic really we're choice. mean, quarter I quarter those to where the we're returns And on be we publish continue to pleased those focused be think select a to we happy have are best those fantastic. businesses growth prices that we're businesses continue of we're what expect very partner the that competitive We really it's And partners in we after partners. I and to in us, to do and and the best shareholder join

Operator

Klauber Adam is Blair. next with William Our from question

Adam Klauber

follow-up in margin to a like you continue the margin It sounds Yes, future. the up the on to question. expect go

to going had margin you you not give the numbers, us in going asking drive -- go if up should why forward? like If XXXX, to had but to margin two factors expansion for I'm what's

Trevor Baldwin

reflected today. in the would overall I the fully the of coming in the business there that's factor on, or investment put and you mean, note see the is that out making biggest revenue ahead I talent the in we're margin

reflects year. third started into where we've we base over that XX% hired organically So the a roughly business the the through on people of quarter XXX

think productive those to that those our about online highly business. folks on as to powering absorbing And significant where sit the become going inside can in going revenue, generating to today, going fully investments And the we those to be system growth and cost organic come they're accretive see our the we're business for so years forward. you and come of people

Adam Klauber

the look So should main forward? factor at going that's we

Trevor Baldwin

I mean if of look is business, you at this base XX% payroll. our expense

impact So the to only is way payroll. margin

We execution have to you that the that's talent for lead outsized belief in ultimately, to continued deeply clients. invest our and going

Our continue continue absorbing to future competitors, clients business investments will our made take from our we'll line the honor that us with their share growing renewals business. and top and those win and to and into we've

Adam Klauber

cash, operating a in through activities? know, Do then provided by by to as don't you there's is and operating activity in, that be A flow quarter liabilities, operating assets that's change cash expect year. provided can sort part out. quarter free driven lot being flat lot with cash by of obviously last I better, is quarter fourth And as of that of far

Brad Hale

the nail just numbers, flow Page me cash statement Adam, let from our XX-Q. So down of XX, the

flow So as at out you hold and net AP that cash we pointed we of of that because look fiduciary and out, before. the fact pointed cash AR operating we

some bit. more little material a represents do Both that conversion as substantial to actually flow so year million we that million prepaid increase. ratio we conversion expenses brought incurred pretty EBITDA. free this generated down quarter, those this of year-to-date adjusted $XX you well So cash last from $XX that, if year compared XX% In a

in do prior the the quarter in expect expansion continued to that we cash So of free flow year. relation fourth

Operator

question-and-answer We Trevor for will closing session, CEO, have to turn and I end reached remarks. Baldwin of the the the call now over

Trevor Baldwin

and and with speaking you us for our forward results, Thank at to look interest you evening again year-end. joining all your this in we

Operator

concludes may participation. you conference, lines Thank disconnect your for and This this your today's time. at you

The Baldwin Insurance Group, Inc. (BWIN) 9 Nov 212021 Q3 Earnings call transcript