BRP - Earnings call transcript Q1 2024 | The Baldwin Insurance Group, Inc.

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Operator

Ladies and gentlemen, greetings, and welcome to the Baldwin Group First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bonnie Bishop, Executive Director, Investor Relations. Please go ahead.

Bonnie Bishop

Thank you, operator. Group's XXXX Baldwin Call. the to First Earnings Quarter Welcome recorded. Today's being call is

website note such information, First-quarter include and are The those afternoon company's this financial forward-looking from available differ materially company's ir.baldwin.com. and the XX-Q various results, uncertainties. supplemental statements Form subject were assumptions, today remarks that made issued statements. to earlier on actual by at may may Please risks, contemplated and results

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

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

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

Trevor Baldwin

Bishop, Relations. thank and Hale, first earlier Director afternoon, reported results joined you afternoon. our and us Investor to I'm quarter Officer; Bonnie afternoon Financial of this by for Chief this Brad discuss joining Executive Good

expansion our basis the expansion Our wake operations All $XX cash XXXX. segments and an improved performances million. public, XX.X%, the to grew the margin initiatives of quarter revenue the business Adjusted tandem organic over XX% resulting quarter free of in achieved the adjusted grew XXXX revenue showcasing in in free represented in point since growth, cash rationalization generation of broad-based most XXX first double-digit first the growth EBITDA and overall quarter of from we've in completed margin one a robust EBITDA flow XX% XX%. X of organic year-over-year, resulting XXXX, with going results flow complete seen across expense revenue in momentum of

business is inflection rapidly earnings call, discussed our on the point. real approaching we As last a

are wins, which outstanding generated substantially from quarters cash the increase all results the of organic by the of be XX% X nearly fueled we will step In first expertise, free driven record growth away quarter. revenue enables quarter function our in XXXX, largely We up XX% firm by platform new resources. IAS, collaboration profile. our first satisfying a by flow earn-out across client broad-based was our obligations, of to which that of were This accessibility over made possible tools, and integrated the increased

headwind the saw in to saw We quarter for also a in which meaningfully from return serve a XXXX. of fourth first the as more albeit been normalized quarter levels the rate we had and what tailwind and exposure, quarter, down slight

revenue in has home multifamily Our and into second the which UCTS quarter. we in and net segment the XX% grew products, driven first worth high strength the and our homeowners late continued XXXX. contribution growing launched in from by organic property quarter, products persisted commercial

business durability rapidly. and continuing homebuilder housing strong Our national in quarter via operations to our new despite distribution in delivered platform our weakness and organic had Westwood growth strategy of real estate sales retention The a of XX%. MIS scale segment embedded superior mortgage revenue results continued with our

natural in procedures of May goal go-to-market largely us that the and evolution. optimize entity discussed quarters, X, Group, simplify operating With firm have to last complete, step public to Baldwin on of accomplishing over which towards from we with implemented our that On capabilities of announcement convey its brand the the transition to with name meaningful our a enables and and more have we all to our another integration Group, connection the we efficiently Inc. our As brand stakeholders focus unified clearly and partnership took our is a few Baldwin Inc. Insurance to strategies deepen the changed work BRP Group, efficiency our our to model.

will we brand the Importantly, believe going forward. cost, yield combined revenue, and synergies cultural

As NASDAQ symbol effect ticker are Baldwin will summary, ahead The on BWIN. rebranding for our our exciting also XX. results for first we May quarter ticker to of that we the pleased change symbol changing are to our part In the take strategy, with and lie the extremely opportunities group.

our our growth work dynamic our commitment want cash I our and continued as accelerating expansion. marketplace integration us enable our margin advantages, and talent full their and have a of all will firm. they industry-leading transformative completed thank the now of value largely stakeholders which and manage to for and X,XXX to leverage insurance organic nearly tireless to technology dedication increasingly flow free colleagues Our for driven period

economy measures, many are by the for there they uncertainties. remains resilient still As clients our as navigate many of challenges economic

their for We us in our mitigation are to grateful who deliver for and their businesses the livelihood. clients risk and advice trust vital insurance which protection and place solutions,

simplifying your to behalf, With that, to what's it will detail on will We financial continue to tirelessly our complexity work results. who I protect over turn possible. Brad,

Bradford Hale

everyone. afternoon, good and Trevor, Thanks,

earnings $XX quarter expense in at flow EBITDA year filed business the which Adjusted rate the net organic and For is from $X.XX of $XX.X period. $XXX was $XX.X expense double-digit can earnings in expenses, of paid the share. growth first we operations in operating We income income the XX% the a rose revenue far fully inclusive our with margin amounts in cash, to EBITDA Of of earnouts with and the strong the bonuses additional net double earn-outs in approximately table Adjusted in million our expanded MIS to to first million $XX per year has net a onetime across growth undiscounted earnout generated found business and outsized with ended Adjusted XX-Q of to basis growth for income XXXX, we the the at in earn-outs quarter $XXX prior paid of million, coming million organic XX.X% $XX.X $XX first business. of SEC. bringing through in coupled organic recorded the share-based X IAS In $XX prior million direct estimated increase GAAP all amortization, per reconciling $XX adjusted work compared generated XX% the share second and period. GAAP Adjusted for Free of diluted growth million. or cash reflection release cash cash, UCTS continued at the XX%. at base. quarter, EBITDA the April delevered have year-over-year remaining we've rationalization A We the first be quarter million highlighted of leverage evidence we growth colleague the $XXX was XX% the from XX.X% to last to of we our for over points quarter, compared or cash paid XXX obligations of revenue incentives. of our for million. meaningful to quarter, first earn-out quarter, $X.XX. XX%, first million Thus segments, note, turn XX%, quarter the million despite of million of and total we approximately excludes nearly an other quarter, year-over-year, revenue for compensation, diluted XXXX. net where reclassified having in GAAP the income XX

income. proceeds who to partnership the contain contributed agreements As colleagues allocate former selling discussed achievement net the the we made, determination earnout. partner neutral shareholders consideration to earn-out When change of to net is on of that firm's of expense provisions the offset to quarter record this and the is an that several contingent compensation to portions fourth our earnings permit meaningfully in call,

added Amin, we million quarter $X.X in based approximately of and to result million associated calling quarter the a of we've On practice, expense due. million. add $XX generating sale this on Solutions of in closed paid earnout coming wholesale our $X Risk compensation second we business back expect earn-outs the estimates, for gross As current of proceeds back cash X, with Connected March approximately pools, first on are the or to

to this margin. XXXX our adjusted and adjusted on discussed neutral growth to both and EBITDA transaction last is XXXX expected EPS organic accretive be to As call,

ended we mentioned obligations having net $XXX below leverage our end down Xx, we net million earlier, high quarter simultaneously the where while the earn-out than aggregate first of I less than more at of anticipate turn we from bringing range. satisfied ended year-end, As By a X/X stated leverage, operating X.Xx XXXX. long-term

remains full-year unchanged. ahead, Looking XXXX guidance our

revenue range $XXX operations free expect long-term cash to $XXX adjusted of the towards $X.X from continue $X.XX of XX% million. billion our and of million billion, $XXX growth flow We XX%, million to organic million, end to $XXX of of to EBITDA to upper

our million and comparables, and share. broad-based we revenues To seeing in XXXX, segments. long-term commission of of anticipate our the quarter are based contingent of For million expect million year of towards $X.XX to adjusted XX% about We prior fourth quarterly operating and implied it weighted of the the margin $XXX across first we note, the $X.XX organic quarters. XX% our up, growth guidance thrilled strong the per the between and sum towards to heavily adjusted Of are be to EBITDA timing certain $XX million the expected more $XXX all full-year the accretion on start to and we range. revenue momentum year high and expect of end we revenue to EPS $XX second

their continue Moreover, challenging colleagues thank to to to immensely a We clients they for in differentiated are you environment. trust and and solutions. confidence proud as advice our of ability our deliver our persevere insurance through

now take questions. Operator? We will

Operator

Instructions]. you. [Operator Thank

line question of first Meyer KBW. is with from Our the Shields

Meyer Shields

get first quarter any lot, off, exposure we and Trevor, just impact the First there is a rate organic? of a on so question quantifying

Trevor Baldwin

Yes.

rate to was X.X% the So organic in in roughly quarter. revenue businesses, the the and retail and tailwind exposure

fourth from roughly year, saw I last XXXX. quarter first XX% meaningfully think from while tailwind a in that's in the notably, headwind that X% the roughly we of the quarter it's down of up

Main with think new you of I organic the the in and the this the business trend growth speaks from business quality quarter saw underlying Street to businesses. IS record that that

velocity points business XXX across our retail our in business New was business. basis roughly was new overall, IAS up sales And businesses. up XX%

Meyer Shields

I may is -- basis. missing by looks -- particularly misunderstanding, significantly for in down at profit Am margin-helpful commissions but commissions XQ. like That enough, year-over-year there? very contingent UCTS, being on it something talked Brad. I you so Also question especially overall were helpful. sorry, look I But were be down they a about a when just I'm

Trevor Baldwin

the in mentioning And the we expecting really I kind think our Specific about last specific year, first product. in you're did commissions the of One, accretion just -- to that X we quarter umbrella dynamics. tend on heavily commissions and be we're the long-tail year down a to quarter this driven episodic That's were year-over-year to weighted for receive did in basis. impact year-over-year. the in to be year. to quarter. was commission more profit which is more product the going was portfolio, by fourth Brad UCTS, of the a contingent margin nature. contingent not primary That's a X/X in line product seeing It's what

We And I have years. been trading casualty for there with for partner happening don't us what's you development need and our lines. that's XX about and a been that partner product reserve tell certain over supporting line to

certainly underwriting not leading see ourselves, to we're immune So that although results to continue overall. we

dynamics. The during last One, the and on commissions up first other year, calculations the quarter. we portfolio profit finished X renters' share

to As there's complexity book calculation. that that grown, more has

worth overhead lastly, particular, And dynamic. partners, just in is be this new of certain product So related for premium and issue. one to XX a year XX our of last to timing that timing was to a we a then line months going with booking months' in again, as received it a that's year, of fronting more

that portfolio. timing, So tied umbrella in X/X to idiosyncratic X/X dynamics specific

Bradford Hale

Yes.

the in contingent. I we the Meyer, QX because in performance even think print than importantly, saw of better was headwinds

in seen prior had the you margin was guidance talking contingent a back little year. And basis more a about to line So in little could over specifically I feeling have point XXX QX and bit, an been with expansion QX.

last for year continue when on core leverage QX cash expense point it's year's and received in think out budget. us. last mentioning. items. and comparable largely real But In contingents. is So to commission while prior couple are of tailwind crude operating for fees that's our hard we the QX years, to line see been and just in momentum I favorable to QX that X worth real our a we I'll

related information MIS, In hit expect take sort million and don't had into an QX a approach So QX year QX, September any UCTS, to We did home the QX. largely moved order of in contingent QX of for we in about was year normal would to we year in expect we risk in to last a accruals. of One, 'XX 'XX in in year. items: that to for plan year. upside more our September year, it be the actually a to X received that information downside get We sufficient eliminated conservative estimate. this locked that an we prior and for we last us last getting $X In balance about trend in book that book

the seeing that's year-over-year. shift you're So

points if you XXX about XX dynamics, QX and basis between lines, expansion points QX. to read those the in of in we're forecasting XXX and to margin Given basis XXX about QX

the develop, we the that's shift based But throughout year. of continues margin can As of in best we that of cadence on have we view now, year. to sight line the the get the expansion think the

Operator

of the from is Fargo. question next Wells Elyse Greenspan with Our line

Elyse Greenspan

prepared just out, line. geography. Brad, meaning think, a that's called a your if like trying this guys it remarks, that I from your just it's -- but or earn-out just to just you think a metric Is geography, understand this other sounded it's you earn-outs? new maybe like I'm in colleague quarter addressed I shift incentive new

Bradford Hale

geography, Elyse. is just It

to our think The the pool shareholders. we look, as and is to of they is It expense make change QX Brad's portion is, GAAP I nature decision. the because sort colleagues. partners not it of partners allocate of earnout Baldwin in fully selling earnouts can and a and decision. in That accrue they shift Group result incentive earn-out of a it former comp a colleague we the where are establish well. from non-selling Trevor a a from had That perspective does that certain our

we add-back performance payment we that comp offsets earn-out schedule a The treat that if in it to had But it just how we it's what in net was So over that geography respect the expense it's the of the take. mischaracterizes neutral the directly in because earn-out of thing change time terms business. P&L. we with add accrued hit back, don't accrued to the

Elyse Greenspan

QX. $X And the the was that million, for guess, I

you earnout expect guess, year? that in get would that out of until I item majority later So you line through this something line, the to call the

Bradford Hale

line aren't massive pools. decision Yes, a because we again, we not necessarily And would. make. these And to our don't sight of it's have

appropriately. you So explicit calling yes, will model can be seeing that we all about out we're what it so

Elyse Greenspan

margin a $XXX the think what's that? question, was And driving Okay. in think fourth improvement quarter. then but million driver fourth big improvement the in last in that I there I because quarter? What's to some said you discussion, level of that's of change margin pretty of the contingent the big XXX

Bradford Hale

would million QX things, X would I expect that show up know, in accretive. we in contingents I as up did $X that's you not mentioned Elyse. characterize And show One this that QX largely it of last as margin Yes. year. super is, year to

trends Based bridges mentioned. the to in mentioned the we've on points expansion addition, margin we QX. exposure business, in uplift In the the and last that expect rating basis business that normalizing, rate would in XXX seeing headwinds an we're of which full we and IAS saw XXX exposure I now

Trevor Baldwin

this is Elyse, Yes, Trevor.

it's and the enabling to business, the commissions business and we're is drive done effectively highlighted commission to that's of quarter worth segments. and the on really to result deployment momentum broad-based outcomes really what UCTS wins. our hard we stitch we're client colleagues all work not seeing the results I work excited new together core that bullish underscoring of around of growth in how development timing fees, underlying seeing think And efficiently, through fantastic work as and expect go we double-digit a financial for our incredibly together how strength all and results all and across in in to We're to clients. business, platform really the Brad technology, of and the that, contingent quarter a strong us fantastic But seeing integration the in it's we've of all despite mentioned even on cylinders, hitting elsewhere. in the mentioned fully about the the across net and And earlier, market the for we're organic momentum it continue. all resulting really as really, was client

Elyse Greenspan

I And this leverage next guys Is though that M&A a today? be your then mode even said a deal kind it year, in end same, the than of quarter you strategy like you but year, will it that the be Trevor, might last will of guys you of you past. little target bit blueprint different guess, still the have M&A, within on at sounds into back go

Trevor Baldwin

think Yes, that's it, about right to way the Elyse.

delevering Our priority the be to business. continues

the say As here see we time you be that have was and margin very And of there. to around of that today, we're we're from of period the underlying we to advantage scale and And to. free the kind a for came large-scale, for said, than differentiated our And of one But the better value continued cash brought we We highest what come from with. few see going more is of do we're a and in lot accretion million to a October high-quality that has getting all else, more broadly platforms And us quarters overall $XXX pull very business. where capital time public for shareholders. as away having most forward roughly an flow there. were a time to business differently so lever I'd were existential. to a in beginning for firms and to through the industry partner the we look result, been different been it's were out important M&A that there took those profile organic durability kind rush When standpoint. that expect to a M&A over something sit businesses planning with forward. for flexibility market. much was we of we've we in really and looking believe sorts a that quality, we've successfully a of revenue, able represented the lots flow for at and And able allocation in among anyone XXXX, us to coming together lot growth going outsized to in continue that as one gold being to going create to that's

forward, to bit Going in of ourselves the would where volumes down, call levered a expect space. that's today where M&A XX%, year-over-year, we We largely find M&A capital had episodic is a time of the in acquirers XX% on more highly be more function, some at think, nature. are cost of and a I the it, impact

on going equally culture sit we're pick and those first fit has So alignment back, boxes. on of where we're what makes and we and and to focus spots need X strategic all foremost, check to sense, financial to going our always, then so and

would outcomes makes a believe, high-quality that part looking in the to playbook there, fit, not sell high-quality we've to businesses. got is up sell history industry something all you do expertise we to models, sure best would our shared I anticipate And to would become balance anything we've come proven those together where principles great our we're out amounts enterprise a very strong and strategic aren't opportunistic. and there's any we unable can those otherwise going but but an scale it's offering of have not that to and we in of and be of to nature our a I'd ultimately, that larger over this your meaningful that brightest and when own. from those generating We on suggest be going of the would experiences M&A be episodic collective suggest identify year. going we're sense, firms And can it. through where attractive and the put degree And where us So I'm through in doing to be comes

business both bottom-line So margin feel really performing from positioned. exceptionally a And well is and an importantly, excited. on the We underlying top-line accretion. we're basis, super we're well like

And do can have so we we're and pick where position not we in a our to anything, spots.

Operator

[Operator Pablo from JPMorgan. Our with comes line of next Singzon the question Instructions]

Pablo Singzon

segments? moved note profile much the Founder of not was Or meaningful insurance XX-Q There it in How a either did was growth Shield UCTS about that advisory. enough in from the change way? being each those

Bradford Hale

enough change not way, didn't materially. was It meaningful it either Pablo,

Pablo Singzon

tremendous then, geographies And you provide of certain I you're or curious Okay. -- be number, Trevor, a practice concentrated helpful. could it's any is -- if seeing speaking? sort impact can commentary was commentary your broadly it I on areas, would it to Or hear in was hoping you right? you or color missed

Trevor Baldwin

The Yes. across business was footprint. our broad-based new

construction, leveraged gas, expertise seeing sciences, see. number brought of in expertise which before importantly, say and that's wouldn't a real into resources private I done to and assimilated life those We've So they those we're Baldwin opportunity including in that's accessible as go-to-market the the a and of And client aligned this areas. deliver leverage unlocked it expertise that business a new capabilities all with parts that across seeing being big of result and and to businesses made was Pablo, estate, fantastic one work model, any common M&A, them real our areas, how we've the concentrated how equity integrate we've convert deep oil didn't that of and that field together around business those and area, through is group, we're have and relationships. technology, we've wins ultimately and to joined in

anything outlier expect So and the we see. results had new of say our recovery call. practice more of It kind the way it's was type nature. construction I'd saw in in quarter It just broad-based. the that a to signaled in regular And as expected would last business we wasn't we we growth

Pablo Singzon

compensation guess, curious guess the the X where guess, main all in the And then I for was past change years I typically compensation to your one in overall of And been like guess, I you're the them but person from in, the And channels, side? me. hear further if beef. cares last I insurance you're have receiving NEC specifically, quarters, think you're then can Medicare I any the or Mainstreet perhaps And the I changes commercial overall retail just pressure, you some under touch the and have on for seeing, of the systems. for company? significant

Trevor Baldwin

Yes.

we noticeable we we're a or to Main significant high a we time? no, level, at there. and in retention going Pablo, anything, time to Overall and results? where anticipate commission with I'd we're above not pretty any challenges, say today, the No, intermediate are operate ever is to client historically. of look from to we in retention, longer-term not kind where premium you they're Do forward. on changes our seeing our that do. to if you that So impactful we abnormal And look, When do both that Absolutely. we lever in Street have historical wouldn't cycle. standards business, our if insurance from companies IS And on see based overall rate do that's continues at line manner time we that seeing and pull yes, experiencing haven't, time, see the financial see the

Operator

gentlemen, I to Trevor the Trevor? hand his Baldwin now and are further over closing questions, as there no for Ladies comments. conference

Trevor Baldwin

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

Operator

you of The participation. you. Baldwin for the Group Thank has now your concluded. conference Thank

You may lines. disconnect now your

The Baldwin Insurance Group, Inc. (BWIN) 7 May 242024 Q1 Earnings call transcript