Earnings call transcript Q2 2023

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Operator

Greetings. Welcome to BRP Group, Inc.

Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please note, this conference is being recorded.

the Relations. to turn Director Bishop, now Investor of will conference Bonnie over Executive I you. Thank

may You begin.

Bonnie Bishop

being Thank Group earnings is second operator. quarter you, Welcome XXXX call. to Today's the BRP recorded. call

information, and quarter this and ir.baldwinriskpartners.com. available are results, at Second the website Form afternoon company's financial on were issued XX-Q earlier supplemental

statements. and today from actual company's results differ materially remarks Please forward-looking subject The note made that to uncertainties. statements contemplated by such those include may various assumptions, risks, may

to the our For regarding detailed XX-Q, a please refer earnings on to more in statements and both available company's most note the BRP are discussion, forward-looking Form website. the of release which recent

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

the most comparable please detailed company's release website to posted measures, more earnings closely the of refer company's the a been supplemental at which financial have discussion ir.baldwinriskpartners.com. of to information, measures on both and non-GAAP GAAP For reconciliation these and historical

Executive will now BRP the to call Group. over I Baldwin, turn Officer of Chief Trevor

Trevor Baldwin

thank Kris joined Officer; this Director Relations. Good afternoon, Brad Bishop, I'm earnings Strategy and Financial by Chief Bonnie you quarter second and Investor Officer; our Executive Hale, our afternoon call. Chief Wiebeck, of our joining for

XX%, the with driving of colleague to a The excellent revenue top an on growth our points XX% back with representing approximately prior continues EBITDA growth in comp our results client BRP had and organic of adjusted to across broad-based franchise the power strength basis on of XX% lines second and quarter bottom our both segments. of difficult XX%. show through XXX of increase million to a of margin year-over-year and $XX.X year

expense face or per and adjusted share our in up $X.XX cash in increase in $XX XXX% million the revenue quarter. interest approximate XX% an of Total XX% of was year-over-year earnings grew the

business outsized tailwinds Insurance Advisory benefit continuing areas. in certain organic rate new achieved growth strong exposure XX%, and wins from of to Solutions and

wins increased prior increased business wins compared and XX% for net XX%, quarter revenue to the new the year. business New revenue

centers insurance of and These experience experts June officially In around July, private capital, we centers and in contracting. are excellence announced three field. of built excellence with deep equity, new their in venture launched and government

across and talent solutions platform be BRP to tapped our expertise differentiated can provide specialized entire clients. to the Their and

We and our expect a specialization organic be component key to to sustained growing growth.

solutions platform, underlying Underwriting continued well, building again Future organically up and outperformance across capacity with strength MGA go-forward the technology accrue should broad-based grew of that performing to basis. the exceptionally on XX% business XX% the with and momentum a

ever was remains our partners new again growth business day robust. of pipeline June, was strong. which incredibly policies had and We for largest in distribution in And new surpassed renters July our already

premium outpace our and with builder program quarter quarter the XX% written and of second XXXX. continues non-builder Xx over quarter the QBE up expectations homeowners, with net first largest ever its had In we the versus what portfolio to in generated

Our strong trends. in from business, commercial benefit as to rate umbrella quarter business saw and renewal it continues new growth the strong also

launched successfully habitational quarter. last new On for And also net homeowners a which week. secured by focused high product new product the commercial end capacity worth new we program, we launching third the the anticipate of a front, property

rate and April the insurance rapidly XX%, our performance growth last since with of Westwood, Solutions has of favorable homes top back organic platform the which at revenue driven trends, business attachment on US, rates homebuilders in joining Insurance to continued sold durable of MainStreet new the BRP by delivered dynamics. personal new many higher strong embedded grown

the three-year as cycle. in fully technology the coming business we accretion Overall, well should talent lap continues concluded previously exceptionally reinvestment perform and our with broad-based trends that topline margin to strength growing quarters accelerate and

colleagues of We talent. focusing to year. net a our spend XXXX, per in approximately XXXX adding specifically more and on our in like investments than minute new number I'd X,XXX doubled colleagues

end third will to rate are payroll absorbed incremental of largely hiring ramping contributions have now expense platform, run the from up newer as the their are on business By year, of growth. our show in we beginning this colleagues And new quarter these the last year's wins.

now a have more new compared as normalized new more hiring hiring our year We pattern colleagues settled XXX through period. net colleagues prior fewer than year-to-date net the evidenced July, adding in into to by XXX than

past the of over our infrastructure investments the of expect growing to quarters XXXX. will colleagues contribute completion the half to and next two three-year contributions two greater deliver normalized and We scalability the and our for will significant accelerating from cycle onboarded first hiring platform of our into leverage begin materially and pace, in years accretion operating margin

newly I'm committee. Data and Digital cyber Lastly, Officer at and to technology Financial, His created in Muthukrishnan Board extensive and Directors. to value chairs Sathish Information risk served our Sathish of digital Ally technology he to pleased experience welcome add as are where transformation Chief BRP. tremendous will

thank the Casey, to recently retired Board want also Committee since and Board for Phil Chair IPO. as our as from BRP to contributions Audit I his member who a

BRP grateful shareholders. are guidance, and Phil's counsel We for Group and dedication to our

day pockets proud strength incredibly has enabled of for marketplace. The in results and clients insurance time of results the our am stakeholders. of our the a colleagues and in our grit challenge delivered perseverance for of outstanding day real colleagues continued I have during exhibit out

BRP is sustained enabling building have over competitors is past the to the thank hire rate new choose our the which clients with their number years few to The results. platform we which and in outlier at for continue one the clients and I renewals at their indication continued trust clients rate want over honor that confidence. to our us talent, invested our and technology

Brad, will who will over detail that, to I turn financial With our results. it

Bradford Hale

everyone. Thanks Trevor good afternoon and

For of to the second quarter, we generated revenue XX% $XXX million. growth

generated we higher segments Trevor with of in organic XX%, organic reporting quarter growth As growth all XX% three in quarter. the of generating mentioned, or the

by combat we four and continue business generate growth still to rising in stated de-levering rates. flow progress half free million paid expect and a from target interest flow the more that approximately operations $XX cash leverage We our made to reduce and as and QX, times working we down year-end by long-term In capital our cash our revolver will XXXX, range. generation within to organic net manage

net the share-based or quarter for earnings SEC. adjusted We with $X.XX fully loss GAAP was in share. $X.XX million quarter share. of $XX.X to income of a per the release A reconciling XX-Q loss net second second for onetime income excludes per table can filed net the GAAP be expenses, net our other found $XX our or million and recorded fully diluted and XXXX, diluted which compensation, amortization Adjusted

second to million, $XX.X year $XX.X This for rollover offset to by the impact period. in in the prior for year quarter rose can margin hires. of XXXX our attributed quarter EBITDA absorbing compared new organic growth period. million EBITDA to XX% margin XX% expansion the the XX% Adjusted Adjusted to was compared prior the be

largely made will our in more XXXX. investments back XXXX organic XXXX We be that into accretive we and growth away to of significant absorbing. in quarter margin Therefore, are one continued from now the half

for the expect we business For on which the an our mid-teens organic we expectation growth organic seeing the are QX. high growth based teens year-to-date, in year across full performance includes in XXXX, now

billion billion of to first $X.X full we year quarter billion, on call. the now of the $X.XX than higher to stated range $X.XX revenue we expect $X.XX Additionally, billion

EBITDA $XXX adjusted $X.XX And we be million adjusted our reaffirming are quarter the adjusted of expectation for million share. million. EBITDA between of to expect $XX $X.XX million third per we between to to and $XX to $XXX XXXX, Finally, to EPS

Operator? questions. take now will We

Operator

Instructions] [Operator you. Thank

Elyse from is question Fargo. proceed. Greenspan first Our Please with Wells

Elyse Greenspan

the -- of the comments, expect Hi, know tailwinds times, EBITDA thanks. you couple target year, revenue margins question, the half you you the prepared higher, My mentioned guys first margin to but raise be and EBITDA I didn't year. of for to the a in back the do from

if So is I higher hiring, that to from tailwinds your full wouldn't revenue being right you're why margins And employees be target potential? that there's to if right, closer EBITDA guess, higher?

Bradford Hale

it's really points. of Elyse, QX with XXX in margin Hey saw expansion the we Look, Brad. basis pleased we're

expansion at points the QX. of margin gave XXX If you QX, look we're basis through for minimum, guidance a we in expecting

we are as across margin expansion find -- we we in service business starting the admin So, to where really living the the that are lapping really we in leverage and significant really portrayed the in burden in see and made that QX, operating investments story we're XXXX comp.

We year-to-date. did the performance raise based on guidance revenue

organic strong see to that make we can in continue the confident us guidance. that trends We business hit

margin full portray. But show organic And expansion. we year of which the growth I we we going going in certain terms to it's of further and it's those can anticipate conservatism meaningful where for always even going a we got meaningful can into the results, that expansion hit we've year, to in get margin amount show if XXXX, EBITDA, number, think

Elyse Greenspan

the on So, the two guys maybe first you next into did operating year. you quarters from half right, next the margin, building the your higher to that is of benefit right, leverage and right, say, that, over expect

So, next do of tailwinds? And of think the four you all we once get we your XXXX, for margin months, where profile a QX the the you through quarters? XX for BRP do reflect upcoming view have the once next right, margin could of be

Trevor Baldwin

business going I this is mature We're in is excess in the I've start normal past the said We'll of Yes. would Trevor. yet. period you is projecting there. get guidance not profile tell Elyse, for providing of What to XXXX is time into at this margin Hey XX%. what margin the

based we mature And particularly and our is of kind technology our MGA, higher in amount peers. margin the the profile on believe, than of automation, meaningfully

you're begin in seeing the the first half pulling margin been the past pretty lever of We've hard year and flow of to or over the half XXXX. that going six the months back really so, on and through

done business to margin you've of that investing organic accustomed continuing our outlier to from that But in normal in course a growth also seeing results will talent ensure on we accretion in sustain thoughtfully that, then. grown way story means by the no the be that We're to more business. focus that kind

Elyse Greenspan

And this about that XXXX? then year. capital you. should a flexibility. we update have would at one And more be just one, M&A you in you activity return to So, M&A about on like last of great? target said end guys we be at an Thank then some obviously you'll the -- think Should think leverage overall, right?

Trevor Baldwin

Yes.

opportunities live. continue and remain So, opportunistic keep around and of we that kind our of to pipeline active

below flow down four business the de-levering Our of half months. over long-term be funded the we've a through free our the liabilities earn-out that priority got will range And next and XX turns. remains course of cash

will that range four to of, and At our materially, the call a below materially perspective point, from position of in target with kind M&A be is financial de-lever half flexibility to further leverage. likely turns absent three different any a business going it, a very of

the on towards certainly M&A us And so expect depending about that the to But that opportunities very in, based that going business being environment to and XXXX. more around of of deal present for is trading. we would XXXX be seeing. thinking quality those opportunities end and value the and the find where ourselves I are begin intentional situational, into on deals we're the flow

Bradford Hale

on Elyse, trajectory projected. to add that, to we just And we are the leverage that

are a believe X.X we'll be X.XX guidance half based a five a a approximately of QX, being the QX of down QX. for as to we've from We like four I in and previously. path in and the range And I on times, provided times the at by end with half communicated QX,

So year the we're as targets progresses. those meeting

to certainly, liabilities talked we've in track over get But As to earn-out on market, leverage we've address profile the to Trevor got that getting we've the about months. we're to got next there. the terms of mentioned, XX

Elyse Greenspan

Thank you.

Operator

is proceed. Our Meyer Shields Please KBW. question from next with

Meyer Shields

because been that an of I saw expenses guess, some surprised little a going a I I on Thanks. doing recently. adjusted expense M&A had us I on partnership. because uptick are about in haven't at and latter I couple one you the walk guess EBITDA. transaction-related least through we calculating hoping in could out what's And was severance was questions you there?

Bradford Hale

lot weren't looked business. of Brad. line in primarily a HR colleague necessary we've those back where And and migrated had system. we this in we at administrative had primarily the We excess post took Yes, and item we this action the really quarter. agency our in some integration resources as We management to finance office IES single accounting integration that did work severance and a working on basis, a post been were have is function

continue our that there to point Trevor's of capital to future, an reduction funding redeployed about previously, we've for organic growth we force customer-facing some of we that colleagues. back-office some into but the aggressive did To as take roles amongst have and be a opportunity

to continued the Westwood. have of particularly integration-related MGA transaction-related, the and terms In of the experience side costs, we primarily with in business

public know, company. a carve-out was a of you Westwood As

We anticipated given been anticipated, than we see even continue that It albeit worth has fantastic the that expensive to be expensive. more business. integration Westwood performance that, it we the would XXX% in

the integration expenses throughout that than the it by is integration say the Meyer, next those more associated largely Westwood anticipated but side, the midpoint year, has I'd and been through believe we TSA we'll we we're period. positive of expensive be with

Meyer Shields

helpful. Okay, so that’s you Thank much. very

Operator

Instructions] [Operator

from proceed. with question next Please Our is Pablo Singzon JPMorgan.

Pablo Singzon

afternoon. good us Hi, earn-outs year? to you pay expect Can in cash of you please out remind the this

Bradford Hale

you Did say up? broke you sorry, year, this Pablo, I'm

Pablo Singzon

Yes, this year.

Bradford Hale

In to in million million anticipated in to of $XX year, about there's we another it's paying QX earn-out $XX anticipate million million Yes. about And $XX XXXX. payments. $XX that

Pablo Singzon

up right? but basically in terms of pick at payouts, So, I'm And the think second my year $XX I of numbers of payout? Okay. you're here, be off a million about in half the implying the looking year-to-date, might

Trevor Baldwin

that's correct. Yes,

Pablo Singzon

And I any Perfect. same the lines the question severance a guess, expense. Okay. along then of, and

So, line other to XXXX? Do Do it over there's -- is that at it's think about you mostly expense. of done I million? and year-to-date, of end running that expect $XX think do year by I Brad most be shows into think this expect and think you or mitigation call -- this you the I a most

Bradford Hale

a Yes, as the the I health substantially do that's decrease we're lot expect the be by of expect and some integration that on outside back I that integration well. mostly as of largely folks are But on of integration and done come this that to Westwood into line MGA-related end Again, focused we doing, year. going to temporary XXXX.

Pablo Singzon

you. Thank right. All

Operator

[Operator Instructions]

turn like back Trevor no over There call are for closing remarks. would to I to this more questions at time. the Baldwin

Trevor Baldwin

joining to thank our In want on I closing, dedication all the and clients delivering colleagues want call for for for continued to their our I and us you thank this confidence. I to our X,XXX thank for also their to trust stakeholders. evening. want

So, all much thank you evening. speaking we next and very with Good you forward look quarter. to

Operator

conclude will This you. today's Thank teleconference.

disconnect You you your your thank time may lines and participation. at for this

The Baldwin Insurance Group, Inc. (BWIN) 9 Aug 232023 Q2 Earnings call transcript