BRP - Earnings call 4 2023 | The Baldwin Insurance Group, Inc.

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Operator

Greetings, and welcome to the BRP Group, Inc. Fourth Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bonnie Bishop. Thank you.

begin. may You

Bonnie Bishop

company's XX-K Welcome earnings operator. quarter BRP fourth and Group's full and this Thank ir.baldwinriskpartners.com.Please materially company's are The on Today's such include may remarks differ to call XXXX may those note actual made contemplated statements. uncertainties. Form the available information statements supplemental call. risks subject financial and Fourth that today issued from by forward-looking to is quarter website earlier at various assumptions, year afternoon you, results, the were being and results recorded.

to For company's note may also a call more our both detailed discussion, non-GAAP and on certain release discuss are forward-looking please most the the measures. refer the in which the Form website.During XX-K, the of today, statements company to financial recent regarding earnings available BRP

For and detailed company's which GAAP company's ir.baldwinriskpartners.com.I measures now both supplemental the these historical closely turn of website will non-GAAP please information, Trevor reconciliation earnings refer a financial comparable discussion to BRP on the most Executive the been posted Officer over Chief to and Group. measures, the more Baldwin, at of release have call to of

Trevor Baldwin

free including company.For our quarter we I'm we Hale, we segments organic straight delivering us over XXXX organic you industry double-digit our continue past the the our fourth organic a our quarter investments the double-digit earnings reported thank XXXX and themselves public balance XX%, our we've afternoon, few of from EBITDA organic of growth XX business on made growth, Relations.For and organic and remains XX% a growth increase achieved a year-over-year as Director our Investor operations ongoing way by to significant made Financial manifest line three Good joined XXth sheet.In of a $XX year, adjusted the previewed continue strengthening growth margin XX%, contributions pacing the today. investments generated the points.As result and growth quarter Bonnie quarter, across of quarter, expanded of our generated in well and by positioned million, double-digit X% to in of fourth approximately grew Officer; meaningful all basis margin continued discuss rapid growth earlier we this of expectations to we third fourth Chief with organic IS, call. as afternoon cash of for from Brad flow joining results growth in by the Bishop, in expansion, of Executive years,

the of exhibiting QX, in half As the robust the growth we such year start our full with resiliency, most a interest of which practice are and homeowners And IS in the persisted and commercial clients economy.Our forecasted, umbrella has XX% to quarter strength our our XXXX.Job the long-term continued national growth in select in to to an and momentum U.S. increased XX% sectors, our in organic our pointing XX%, thanks multifamily revenue of target sales mortgage into XX% negative persisted early to Westwood us There segment significant the the a grew in last takes where year, we continued revenue first was and the months. late XXXX, real ebbing and always XX%. organically gain quarter in at organic client year during be fourth the the increases and strength Westwood from in XX% grew the and continue builders general more seeing impact the continued have sensitivity to was our normalization distribution areas sectors strength the platform as and in business XXXX in in higher broad-based construction, estate momentum.UCTS and to while for of had project-based starts QX.Despite growth signs revenue our QX launched sharing products broader in homeowners seen to growth construction capabilities puts organic UCTS we that in to due and was worth insurance in in-client across continued XX%, second growing work led for and across from to the these investments impacts in six industry but underlying commercial are are saw will our consistent thanks property segment due programs, contribution operations.Additionally, quarter. our weakness of revenue as for for headwinds IS XX profit with the line three high in year growth rates top an our and MIS rate IS signing platform with net to platform, homeowners the our

for rates momentum our We continued in Amwins. of a brokerage wholesale along operations, business, insurance sale of executed to businesses, and margin expect platform drive on meaningful sustained to have rate we focus definitive our part our Solutions a the in and efforts attachment for core strength with XXXX.As Connected to Westwood higher Risk streamline new increase agreement

to proceeds of XXXX expected to the EPS adjusted transaction million.In $XX neutral this March adjusted expect to both EBITDA XXXX generating transaction and close approximately We X, growth on be to margin. accretive addition, organic and is cash

in responsibility operating in will recent the the partners firm-wide been are shared to since the of Co-Presidents clients Insurance operations, model brokerage will of the BRP's Insurance through Solutions in our Group, CEO Insurance formerly Medicare includes Mainstreet and to of transcendent with for which simplify future.In of and and the for roles Galbraith, and our are we as this and Chief we strategic strong operations. deepening performance that be as and on firm. and which home As announced to significant the our and continued anticipated few wholesale delivered Dan our retail segment. and have Officer; we our move largest continued nation's will roadmap, of optimize as efficiency in focus outstanding Brad work to Dan the Mainstreet as drive moments.As as as Jim trusted BRP's of and Solutions the and years, promotions one also broker, the segment colleagues. forward their BRP they joining Jim segment.Jim in of we impact businesses Chief Solutions excited Roche, in for businesses we execution serve and the results growth will XXXX. and capacity Innovation many underwriting Dan connected serve the of an trading end, also Insurance Operating business To independent transaction formerly preferred of Technology for we responsibilities I'm proud a with January, Westwood, Officer operations. has cover evolution our financial their the and success CEO summary, Personal well these contributions Mainstreet made broaden and exceptional they broker results build segment Advisory Amwins Solutions the resides contributions delivered Insurance

unwavering the status most free growth our expanding in our a on building industry-leading want our X,XXX and while daily to organic numerous professionals.I talented growth, margin executing colleagues are for insurance during to to dedication culture drive stakeholders industry's flow, on as nearly cash challenging all all thank and our unique strategies of year for marketplace. continued destination their our a We

thoughtful our growth persists their our insurance still portions to I While marketplace clients results. large trust gratitude economy and in of help turn impacting ability appears that, continued of over across extend I Brad, detail navigate will our the for conditions resilient, my it who financial to dislocation will and solutions.With many these and them the innovative our clients. deliver to

Bradford Hale

afternoon, good and Trevor, Thanks, everyone.

of and generated total revenue fourth revenue organic quarter, For million. of XX% growth the we $XXX

share. EBITDA year, growth for diluted Adjusted from X% per found call.We expense $X.X We integration and or efforts, absorption business, growth total million XX Adjusted prior or of cash net expense fully XX% share.For $XX.X full million the the in diluted million and from we organic was million accelerate SEC.Adjusted result in net and even million XXXX.As rate of was of net around excludes million in with the business quarter, third per the the the A amortization statement rose filed year share of an the was free the XX% Adjusted $X.X of year, is XX-K operating XXXX. compared prior coupled by fourth GAAP fourth a of $X.XX prior year cash decrease $XX.X the for of negative flow organic full XX% onetime reconciling full net a growth the negative cash full was yield continued XX% year, of to in basis per $X.XX year the year flat IAS, GAAP these in with X% the the for took at to our We $XXX.X XXXX. operating compared XXXX the run flow the greater the our for negative $XX.X $XXX from loss operations leverage margin our income quarter face prior the net quarter GAAP a versus million was points.Net UCTS than period. grew costs in per operating achieve for for year steps $X.XX. selling XXXX share-based at to fully quarter expansion realization EBITDA be and was revenue million and of to for adjusted was quarter Free a loss management operations fourth the in significant million free $XX expect $X of $XX.X or savings was interest the highlighted operations $X.XX expenses, year of and fourth XX% prior increase of paid full the $XX.X XX% GAAP for million flow onetime in fourth the Adjusted earnings share. the release provided at other our year, For XX% for can for cash compared in million prior recorded in organic $XX.X fully or the meaningful the the severance growth for income loss table activities our positioned net over or and income of diluted cash diluted XX% from our flows, revenue incurred generated EBITDA that year, million earnings to expansion strong $XX.X $XXX was an expense MIS.We billion. full period. to million quarter, to flattening million. year year on period. to quarter, increase interest.For loss $XX the compensation, was EBITDA investments, margin XXX% quarter $XX.X expense million in adjusted of to full well a in cash management which and

undiscounted earnouts As initiatives cost anticipate reminder, and the margin platform in increased our in quarter, onetime we which savings million align joined $X.X obligations XXXX, and significant our quarter the flow this headwinds net support have well as in on total and substantial in December expenses earnout as executed we our cash fourth addition, XXXX approach QX approximately XX, headwind of of conversion.In that lower drive in a QX BRP XXXX integrations absence will absorbed from portion XXXX. positive structure we result that impact the continue free partnership services completed The we with in to should estimated beyond.In $XXX as XXXX. colleagues the integrated expense and which roughly million new remaining we of a fourth a of as paid meaningfully growth go-to-market the to a have X,XXX

the permit As several that earnings to to to portions colleagues contain of to the discussed former change meaningfully achievement made, pursuant which in recorded the on it as on who income. expense this allocate offset we determination shareholders, related selling of but agreements executed is the partner proceeds in earnout.When net results to shareholders contingent contributed compensation provisions to consideration, partnerships firms partner net QX are neutral not earnout to is an the who the call, which being earnouts selling

the added XXXX. back associated As compensation of a $X expect add earnouts end in back of majority in expense and colleague first to will approximately coming pools earnout be QX million QX this practice, the the we by of XXXX for result earnouts vast million $X due.The of with paid of quarter

Thereafter, we generate significantly flow. expect free to cash higher

to of end be approximately quarter.As estimated of We by delever of continue a to reminder, $XX earnout finished which X.Xx of $XXX to net revised Risk our respect expect from will last the with Connected brokerage million Xx a $X net range to $XX our year. our the target EBITDA. roughly to business.Connected of quarter, the is X gross incremental revenue paid to XXXX, leverage down goal in and through our includes Also, Xx million to end leverage will adjusted XXXX of this decline we million, Solutions, wholesale XXXX lower few details X.Xx. at million approximately or approximately payments target of and our This sale first

adjusted Trevor mentioned, cash quarter anticipate accretive neutral be first the growth organic range to be at to As and adjusted to will to to anticipate revenue $X.XX organic long-term EBITDA expect share. to the $X.XX both the per EPS million proceeds of between We adjusted revenue of $XX XXXX margin.For million XXXX of we the of we XXXX, from of high XX% $XXX EPS and $XX and end We expect million transaction transaction our EBITDA million. approximately and XX%. million $XXX $XXX to adjusted growth

for revenue As reiterate XXXX, for towards to adjustment an XX% we pleased quarter our Risk $X.XX of organic billion for now the million.In flow and the of from and Connected divestiture the we million which and adjusted growth XXXX but our million XXXX. Solutions.For Are take colleagues free clients and $XXX third year very of trust the XX%, our $XXX their full operations Operator? to $X.X full like in our are year to quarter expected million continued call, of EBITDA billion, project long-term fourth difficulty the earnings the our make upper confidence.We of year grit $XXX questions. we results cash end immensely expect of implies guidance I'd of environment grateful $XXX to range proud and the results, with their a from of to insurance continued will of to closing, for

Operator

Thank you. question ahead. Raymond is [Operator have we Instructions] of Peters Greg The go from James. Please first

Unknown Analyst

afternoon. you're know quarters. last I Hey, curious XXXX segment on in if called some IAS you good the for those couple there? guidance Greg. the headwinds This guys of is And assumes your some persist? if headwinds expecting Sid just for out improvements Or

Trevor Baldwin

this Hey, Yes. is Sid, Trevor.

seeing When the a exposure X.X% if segment a earlier clients rate project been normalization in quarter.When So impact to a measure and mid-teens called would growth mentioned of up we're think for underlying the for revenue. how my you the when segment, talent momentum the transition look IAS see XXXX, exposure, more to of the for those study in you to IAS run sales X% IAS Growth year which from impact One, was IAS of of quarterly we momentum some expectation XXXX, prepared a 'XX at the our full industry, year a wins organic industry the consulting we've in to underlying segment it tailwind. Consulting, of We contextualize the for the that is would and a look the second the the through specifically, at segment amount quarter, revenues investments for that And of things. exposure, which as to commission notable an at year the normalize a half half And we we remarks.I as rate growth or growth it's we underlying impact of negative at was guidance, the of Regan in And was the fourth we metric was on and result perform called the show of the half generated saw IAS from the apples-to-apples growing. capabilities.And from a there's specifically, made look uptick I and performance revenue stats. a in segment. and the velocity fourth rate first impact few the of client that and It's relative as the organic growth headwind.And of specific in it organic the you rate second Profitability as have the it incorporates in that headwind. XXXX, the IAS exposure look the won and new XX%. our was business prior important it velocity study. of measure and you And & a sales quarter where negative new of fee tell a compares XX%, and being X.X% they we of saw and new is average, the for velocity, a sales headwinds track handful so firm on fourth

the to percentile, the XXth year sales For the be XX.X% and was full industry was XXXX, XX.X%. it in median velocity

so with we continues in dynamics behind that specific and sectors, of long-winded and rate be rate exposure to part momentum tied saying normalization strong. seen January to had with back of in half us, and and very some business. industry particular through the clients that's of we've a XXXX the a return of client in believe the or We of largely exposure and And drivers as way we compression that idiosyncratic some feel like IAS business more

Unknown Analyst

know EPS be And to expected mentioned negative in last I if still And accretive in you hoping quantify you I thanks. in Juniper XXXX. the maybe it. more the expected bit I think little a expansion could remarks, in margin Yes, then adjusted appreciate and you touched that confirm guidance? I discuss EBITDA prepared Okay. it detail Trevor, was quarter, on the of it's your can And embedded to maybe XXXX. hoping Re be drivers was -- but hoping is

Trevor Baldwin

Yes.

into $XXX talent completed years.Specific side of our that, have and business XXXX. the EPS that's in vast EBITDA an business, investments that accretion by operating From loss very driven one still first the we of our integration operating quarter.We you that it's talent fiscal because were there. over of entertainment it's in the basis.And magnitude net investments able at very a broking, those begin what's built driven So of and is to by our significant discipline normalizing do revenue notably, growing reinsurance fully capabilities out and it's majority But let expenses margin the business we kind look me in and business broad-based to And payroll, a And to the and XXXX just positive business footprint $XX XX hiring we that expect through standpoint, of running Juniper, for yet expect were expense. our effectiveness the we around we've contributing one. investing be be pleased by not in that the payroll When when we had take with we and rationalize the we just did over and and team, actuarial was going million colleagues Jeff services, talent through as a the P&L business, XXXX X,XXX client-facing us difference, in across that wrapped we're we has that to the we XXXX.If colleagues will kind work revenues past to the started into across recruited base and a the that XXXX. and we're in stopped of in the we fantastic made progress travel over while in operations. to partnerships and net that P&L cap adding over not added at net business that plan organic hair modeling on earned of business XXXX, year added the up the absorbed. in few to we XXXX fully the net making because into look the XXXX, million

I'd beyond. and for excited the both we to a and going say been investments continue to year he's and And But summary, trust evaluate that able Jeff lot this have However, super talent team they're and confidence we're of to the assemble. in opportunities. in contributions we make

Bonnie Bishop

Thanks, Sid.

-- from please. question analyst, the next Next

Operator

Shanker Josh next question The of Please America. ahead. go have of we Bank is from

Joshua Shanker

the Yeah. end past. The lower it's Good to very guidance XX% also strong, than is taking been you it's your for conservative Can in you of XX% about makes Thank the everybody. little afternoon, what's organic retrospect? looking forward? the changing a that my organic more outlook but about question. higher of long-term revenue of economy broader growth you drivers talk And outsized some the to in

Trevor Baldwin

is Yes. Josh, Trevor. this

there So into building really starts rate What's prior as did the you we've four talked retain? blocks to or impact of of exposure it organic compression with year either to about the in revenue the on how past, view be and much And growth. from we expansion new organization.And generation. that that is renews? revenue importantly, clients the much then the preponderance win And us is driven been consistent new prior most you that how business organic our from you by revenue from year of what's new do growth our that bring

do retention from overall say impacts the we our just Our revenue sales and rate an And would average. new in our overall metrics we than retention The be be to slightly improvements generation, kind any than tends we're if from client of businesses. And a actually growth business I like higher.As slight retention. think off of anticipate anything, to rate we're general, XXXX, in outlier in tends those lower degradation, of plan we've I'd not line not in say be kind I'd where seen year bit with we've kind expecting performances material had that. have of And for our coming going say, about another significantly XX%. we excess the for better impact industry average. and multiple in tends to of industry organic exposure to to segments hugely ebbing velocity

strong our out We expect all segments. three of of performance, really

We of would XX-plus -- that I think forecast organic not we're to going say some of characteristic that conservatism for growth But out I growth. all organic not percent to three expect just segments. we're there's double-digit going our

Joshua Shanker

to you was had success MGS besides renters other of the have on That's the onboarding business curious, understandable. the platform? other one I lines what kind of future question, And

Trevor Baldwin

future that scaling a product that do kind and of distribution. path a time new growth in And us growth there we over while to lens candidly, unique line year.As continues organic to growing success Josh, with when tremendous MGA talked we a we're skilled over in seeing momentum business platform, built And XX over expectation and as to products off the million for have the The the success. past, this an importantly, excess continues for a XX%. XXXX an XX%. to with exceptionally perform to be MGA frame. X in million Is which have opportunity just $XX of brings into to in about well a mature premium head is of that through evaluate a new product which alone. growth driven of renters can launched driver overall that unique at excess huge number and platform providers by And we look see X to significant MGA product we've We of a $XXX utility. we excess our revenue of reasonable for into XXXX up we million this and Homeowners been roll with platform year.I'd been has a differentiated build part a bring expansions in growth and of have generating able software relative opportunities where expect say that we the been of over in we've and develop number to of there and in launch significant out. client XXXX we'll $XXX fit that unique online and initiatives we've Canada the now new flood and another particular, products to that

we that we're seeing be the excited success the not that we about momentum so And could and the across more MGA. have

Joshua Shanker

Thank we question go you next is have answers.OperatorThe Shields of for KBW. the ahead. from Please Meyer

Meyer Shields

begin evening any to And of the business to A distinct quick the in sold being revenues Thanks. there everyone. or Amwin? afternoon, seasonality or earnings with. Is good question

Trevor Baldwin

flat. quarter-to-quarter, they look not month-to-month. Meyer. really, you relatively it's It's No, But some relative have if seasonality --

Meyer Shields

know obviously take but I the Okay. Perfect. And been entire the going for of specific debt to that's are care proceeds? plans there program,

Bradford Hale

continued and provides to financial it balance our -- flexibility to sheet just manage and continue thoughtfully returns. there, we'll It optimize better

Meyer Shields

I up what being hoping last seems Florida's the for that are with through It then if increasing or the in implications comfort could of for one, with interested is And can follow there take Westwood regard was depopulating Josh's that citizens in to maybe the Okay. people reforms one you whatever. MGA on more question. us future? I

Trevor Baldwin

those U.S. distribution implications Westwood months Yes, top as perform into the volume Westwood with homes well all positive, in built few know, are over continues a you new And We mean, growth Meyer. of organic XX XX%. big past new built the three I of being builders exceptionally are excess partners added the in to business. across as new the Florida.

to a our and ultimate the and good us up in be And for our into into will continue further the MGA ability capacity thing a very position of in market more the the of so bring our kind translate to to meet to clients.And needs kind should to clients. of opening puts of and optionality the more to choice more provide extent better that capacity creates opens that us up, so

Meyer Shields

much. so Fantastic. Okay. Thanks

Trevor Baldwin

Thanks, Meyer.

Operator

JPMorgan. [Operator of question from The next Instructions] Please Pablo ahead. is go we Singzon have

Pablo Singzon

hi, good evening.

Just a question on margins.

be operating beyond cost leverage? you that And to ] go by XX? the like saves. million the right, just that would think that is guidance be natural would seems call annual If of remainder you the you're you expansion that, $XX that is on Was cadence [ can expansion XX explain reason from done bps continues implied there points.It EBITDA kind of largest on have an basis, annual XXX the an the EBITDA largest it, the giving, margin basis,

Trevor Baldwin

the leverage. a the payroll. say I'd that and Trevor. this of significantly accurate, in out it's surmised Pablo, business. Hey, base And where 'XX into of is industry operating we invested to years and margin is know, the coming We're answer expense coming as from XX% accretion in question is -- that the your you couple you 'XX of roughly

a a manage our of will we margin proprietary be 'XX our work EBITDA in what that the as most profile of have, accretion few different so will -- this very continues consistent for is enables margin and and to work and continue on of for for that XXs hard business that years strong headcount result, for thoughtful integrate the beyond. the technology the positioned our past do in superior outlook I accretion and professionals of of kind profile talent business way and those margin. platform, the peers expect future, But on some and an fantastic profitable as in as a done allow and the to the decisions, And a on status and how in meaningful drive heading margin we've our hard us year more executed as challenges with fully than remain to or in, not in clients talented foreseeable systems years a a was beyond. growth it some the to done will really our to cultivate we some expect what we reputation to those that this to about is that our the over positioned destination excited made margin XXXX.We're than a of XXXX and out, to XXXX. most around would If the any going time, not and said the and peers.And of to invest vanguard low in we was 'XX in and how utilization others. to actions we've operate us into what And that XXs, reiterate that required industry.We're our of true decisions high is while past we've is result be in our that business had provide year, XXXX We'll anything, year tough continue that over incredibly also year we've in that I invest result suggest business

Pablo Singzon

you. Thank Okay.

Trevor Baldwin

Pablo. Thanks,

Operator

Wells ahead. we Fargo. question is have go of from next The Please Elyse Greenspan

Elyse Greenspan

discussed you IAS, And within some of you Hi, in caused double-digit are us organic first all question, about your organic slowdown what that quarter, know for into assuming quarter then Can earlier give organic two thanks. does first the business you the basis? 'XX, how in months is of your Good from growth a of sense evening. an My first segments? of the in the second the year. trending guidance half I

Trevor Baldwin

Hi, Yes. Elyse.

in are So of sales double-digit continued IAS call, the in one, momentum have early and we of our fourth growth of Through three shared for exposure a, of as what Relative quarter. first quarter the XXXX. business. rate momentum organic segments kind we seen all across in business I would expecting January, we trends and in to I in velocity impact the on new saw the strength normalization the

Elyse Greenspan

rates 'XX And M&A. interest 'XX thoughts, then Obviously, to just for have you you as provide, return guys some how guess, I -- and I about can guess, down. come think a

us an and about give Just update to pipeline how activity? on you're thinking the M&A return

Trevor Baldwin

Yes.

important have to value continue believe and opportunities we and across be industry. lever active creation We an that will us. traffic to that continue M&A the So dialogues for exist the

we'll M&A any don't expect with after our posted we occurred the to And you've becomes part details the of XXXX, large as this we our pay success some buydown the seen supplement that M&A years But you'll if we Xx. of think IR we nature again. story both the first story. the on added leverage sake fortunate for more of to result our when enables prevalent our line we public our our with excellence, and cycles. new sector more how of was execute website, a market completed that us life we we quarter it those that's Consistent first X competency not year of we And I see as in important that XXXX articulated range transactions thoughtful disclosure platform our of large and as target align our first into an It's growth you'll But would in deploy multiple model. cohort.And driving see this bring be that of a million that so create of And portion M&A. evidenced, operating economic believe industry or be for our in our As centers cohort double opportunities we'll top is growth have do last see part of digits the year of the out financial we importantly, have delevering that quarter, trying as are bottom expect you primarily organically business few creating to significant in, M&A partnerships, grow throughout ongoing last company.We're enhancing about and across quarter and that be capabilities that XXXX. a to M&A, in-client incredibly in capabilities, to stated the to than a just of focus in knows to earnouts business us very view grew material a to of do to will risk what past on. capital so merger and and business organically revenue I expertise sustainability We and terrific as year.And driving arbitrage. then pursue and will earlier, when or opportunities need about how grow into there's long-term don't value, create purely the talent of by high-quality our value M&A $XXX unique episodic to this businesses

Elyse Greenspan

you. Thank

Trevor Baldwin

Elyse. you,. Thank

Operator

would There back further questions. further for Thank no to no turn time. are comments. floor questions at the Trevor I to There you. over this Baldwin like are closing

Trevor Baldwin

Thank quarter. look to much, next I our evening. we other. very their you to thank thank continued to trust and you the us also and clients this closing, on colleagues to dedication all all our want I confidence. speaking for forward want and want their clients work and to for joining for hard with I thank you again In each call our

Operator

This for today's conference. us. you concludes joining Thank

now disconnect your You may lines.

The Baldwin Insurance Group, Inc. (BWIN) 28 Feb 242023 Q4 Earnings call transcript