HGTY - Earnings call transcript Q4 2021

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Operator

Greetings. Welcome to the Hagerty Full Year 2021 Earnings Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] A short video will be played to the webcast followed by prepared remarks from Hagerty. Presentation] [Audio/Video

Unidentified Company Representative

be and and for Call. the Full-Year that call ladies Hagerty us Please Company’s Thank the this Quarter on investor.hagerty.com. Fourth XXXX will corporate gentlemen. website afternoon, section joining you on note Investor at Good Relations webcast of simultaneously Earnings Conference

period Letter on also the IR Our first is Shareholder website. covering this posted

Joining Chief Financial Turcotte, Officer; and the Fred call today are McKeel Hagerty, Chief Executive Officer.

our our plans contain business including new like members; planned and to may prospects. to other remind the key statements Before our share, partnerships; existing related and including and start, market may regarding expectations to financial performance; expand forward-looking expected I ability and investments would considered operational we maintain our future our that and plans discussion regarding acquired be that concerning metrics to statements today statements business

words are XX, date. considered reflect we as expressions. subsequent We or often similar update identified statements of obligation undertake or statements. or as do Forward-looking today, to as only with anticipate, any we revise not any any we be believe and should view forward-looking of statements expect, These viewed such not our XXXX, March

and do cause and or the statements expectations. are to our of actual guarantee Forward-looking differ variety subject results certainties future promises a the performance to could not risks that materially from

on our website those evening, in other our on sec.gov. that this and the affect could available Investor contained results, XX-K the factors refer risks at important section a the discussion of to and SEC’s of is material For our actual file website which please Relations SEC Form with

stockholder of A that, measure with I'd measures Form year-over-year Relations turn all like call, the along Unless directly reconciliations with Copies on basis. non-GAAP in McKeel release, to over noted Finally, letter, comparisons GAAP to certain a during are be Investor refer financial investor we deck today's found our Hagerty. non-GAAP the website. these call which on included and earnings comparable on financial most our And to measures. is of can XX-K. call, discussion otherwise today's to will McKeel?

McKeel Hagerty

Hagerty, This Hagerty. earnings public I'm is Hello, our call of as McKeel first company. a CEO

took our company financials, So started it robust about the to bit I We're enduring approach or just We boats To XXX recurring million appreciation. and couldn't to business, we vehicles annual potential. ensure business much. XX% making investments passion XXs. for passion business, between year in wooden in without simply a the XXXX in our cars. a historical enthusiasts, more and deck. people consistently a of it an revenue. up their Over XX alone little to United around organization into you also media in XXX them, all much target, themselves XX% cars. vehicles we see willing a it special built declare the the to how all That's that enjoy they people My core scores tell right the fall what events lot in and vintage easier growth, of X% grow Hagerty and it or and been worth. North centered pastime our on more, to States dive before content, beneath contractual insurance side want We're returns But automotive there's than strong you'll took affair to X that Hagerty to and steady capitalize promoter track strength, and our delivers of driving express farther. financially now. value anyone more people to people America so and seller X% globe long with and in old have a to the company do. about? strength. It's enthusiast love people XXXX cars. Yes, on around XX love of was a boat record ensure parents all alone explain loved insurance they million We're annual lot We and was our find company already because sticky as a we financial making more stable what the was in we're and membership the that is the experiences, and helping a revenue than a about in growth more automotive a it how core expanded their favorite Then huge having bedrock went for vehicles in that's our deeper about revenue, with interest net dive room outstanding just all a million robust the they an also branding, than culture million strong on

my pastimes collection do spend generally I went morning how automobile? car friends time we benefits do human groups. of called up. investments growing Because that and more important car them steady asking, enriching income my that value. Why? more enthusiasts? joy. us with And in offer, car to I value simple spend the as do How that experience to discretionary experience since the their we you beloved wake COVID attached seeing cars? enhance need people, already the do hobbies, our things and the on an down more and people miles and on the driving bring commuting is many protect an objects That's of taught are pleasure on to powerful. status, share Because car We levels. our up other grow automobiles, earn. miles with Why freedom, incredibly in fun, down, People create we People products community, to more How Especially went self-expression, increases and people, double my COVID, The lifetime I I of that do automotive persistence, is competition, fact these knowledge? or investor? branded my what is upgrade or wallet

at Hagerty. So, that's we who are

are We automotive more and market. attach a get of building intelligence entertainment It's goal of data a lovers devices large services, company themselves to the to. offerings, with these and growing they addressable massive an out help mechanical ecosystem car total and only

are and We grow long-term. into tap market to built for the this

that a question one cars look autonomous future of that been think becoming like Lastly, and number company, that vehicles? age since a in of EVs question is engage even with on a It's what we the levels. driving of raised of the the has started we or consistently process what publicly-listed we will valid

especially EVs history love of performance important of and we and extension the This those be they driving First, an and models will will built higher think aspirational be of future. automobiles with designs. the true the in

we stewards, that areas as Our culture has interest, save generations. roles world Therefore, an fun to our of organization to and is of large view enthusiast something will gradually. our the this as many of an automotive owning purpose future We drive. know for and driving competition car and stewards vehicles happen driving is joy of and

a to why was out So, so this to global we is set profitable important us. This public larger help on this is enough large mission organization and grow going to a enough purpose. why serve

move let's Now, to on the financials. Fred?

Fred Turcotte

you company. as by welcome all start I how McKeel. our to am public honored a to to sharing I of earnings you, Thank first call wanted

new to As XXXX, partners, I company. shown perspectives on of done you could wanted the company, time public it customers also the the dig we have to existing and of investors know, our analysts thank to and the financials, not into share the without get who to on know both and business. support and went taken Hagerty, team Hagerty and December interest their all X, and the have members, one our

mentioned runway product which us a total As ahead large long-term mission. and we There offerings. earlier, to purpose allow room our tremendous addressable several growing that us for we McKeel is will substantial growth stated and have a believe gives achieve market, across

in the We in automotive decade. earn utilizing discretionary for the world have ability Marketplace distribution monetize omni-channel platform and last built markets, and spend membership our and over ecosystem are across we our genuine to integrated have love passion to insurance, in of more and the confidence working cars our our the

Hagerty million. all a YouTube compared million our $XXX.X we we expanded pickup hours year, grew total to brand long-term increase which XX%, We has XX% for basis grown drive on Hagerty membership market-leading new continued we community growth persistent This growth, from Membership solid utilize XX% X by grew were in Hagerty grew Tools. XX% Pivoting Valuation XX% interaction paid compound XX%. Seattle, increased with our Hagerty and years. driven than vehicles subscribers, values adoption X.X continue increased which We $XX.X centers to a of other enjoying XX% the policies top-line to X.X XX% our We by on membership of our results X.X Delray benefiting of past revenue Total annual members retention business to three million Commission events our number HDC revenue million. financial million XX% content. to with in in and XXXX Toronto, insureds. of new of vehicle researched and McCall’s for automotive enthusiasts over X.X Washington; social digital Detroit million efficiently of the Florida; on revenue our Our media insured policy by by the fee and Concours increased to last million, of $XXX.X garage more provided And and basis. above X.X and that the a facilitate XXXX million Motorworks results, unique Canada. XXX,XXX Ontario, and and a rate are adding year-over-year The automotive to by list an new members d’Elegance. community locations social Beach, adding Amelia, the

quota premium Finally, earned our driven of continued and retention, XX% growth, expand million premium $XXX.X written U.S. contractual policy new grew share. by the to

under benefit to long-term Canada our share increasing and revenue in from underwriting of UK. U.S., contracts the continue our the We reinsurance

We grew of fee-based million service underwriting member members excited and per Written on pre-tax above subsidiary incremental In policies retained respectively. Re, generate was $XX million this our selling quota of is were the share as equity. new business solid XX% impact Hagerty underwriting use $XX offerings, Importantly, of pre-tax all performance 'XX by by million capitalized million extremely with insurance distribution $XXX.X $XX to 'XX XX% average channels. XXXX, XX% to expanded return year-over-year of existing implying $XX and premium realized and finished of increase renewing $XXX, their and this in in earn owned and the higher earnings top revenue ones. income. of income, we revenue with we Bermudian see we XXX% million earned XX% with a revenue on to product a our percentage and

last We pleased which very on are the policy with a very over XX%. We insurance with at annual compound XX% provide to strategy, three alongside the basis recurring these a Farm, growth State partner years. deepening growth. strong levels level long-term grew that our We extremely partners, to remained XX rate continue above rate national also our believe remain contractual such significant the as see of revenue partners, addition will pleased retention of of new penetration our top

Importantly, at ratio year-over-year XX%. stable our loss remained

have increases a loss implement premium to as We able earned been of level. to percentage pricing at costs this keep

in testament XXX,XXX. lovers value-added Drivers numerous paid XX% also provides this see a our increase community are as to members. members We HDC for new car increased We to is services Club, our to think joining count an the member Hagerty through delighted

Summarizing, relationships, We owned events vehicle continue premium revenue club our and sources expand and media organic and expect from contractual increasing to Social, benefit new XXXX. from insurance Hagerty + distribution offerings growth enthusiasts Garage revenue higher share, we quota partnerships, from our locations. in service to storage our

Turning to profitability.

to be to For negative redeemable, outstanding, an of million $XX.X XXXX. of attributable year V average we $XX.X operating shares, of loss financial Net $XX.X compared excluding of was of loss full as redeemable are $XX.X non-controlling A million year common $X.XX, versus million shares earlier. Class XXXX, in a stock shares the income based million income reported net to per operating statements. was weighted on treated which our our a interest in share required Class Earnings

marked We by affected our Our non-recurring adversely and a organizational associated value expenses structure. listing York recorded Exchange audited private and Up-C unique our related which treated Stock rules with loss required our equity of financial XXXX $XX.X are full fair were and and liabilities to public year reported under be statements. million results New GAAP several to as market warrants, versus to in

plan. with determination long-term charge executive in connection recorded We also for incentive of $X.X a accelerated our million existing vesting one-time

connection been a addition, EBITDA disposal In million. incurred we losses million with loss a project, And recording for capitalized have other adjustments our certain in non-recurring in third-party digital management $X.X included transformation we our software. on retired policy $X.X and system These results. of adjusted system,

included members the for service agency State and platforms and Farm the incurred agency of initiative. in with million Dublin, State member we our to not the for existing believe Importantly, of underlying expenses the scale In partner new digital accommodate increases development, the the and reporting include viewed be management, Farm integration partnership partnership to legacy We to should investments XXXX to in new in that policies new capabilities. Marketplace made adjusted costs. the team these costs order internal additional of and a in these systems. command, center order increased that, These pre-revenue EBITDA, were up service new distribution sales, launch expenses onboard initiatives XX%. to example, level Hagerty stand In infrastructure and by existing to and enforced areas, scale exclusive the of accommodate business XXXX network $XX Ohio, of in performance non-recurring substantial distribution add operations design, and insurance and new

revenue Our in was costs, contribution relationship costs of analyze pay or profit contribution total reinvesting XX% and and as grows. margin to XXXX. use revenue margin and/or available We the growth fixed is costs volume amount exceeds the that variable between to

on measure basis EBITDA XXXX. it result a and as from operating non-recurring Our of items We adjusted the supplemental removes was important adjusted impact consistent operations. not $XX.X an performance EBITDA which are of core million a in believe direct is our

We measure forward. expect well to as use contribution going this as margin

provides gained are balance positioned with XX/XX/XX. on credit we $XXX of for flexibility at believe renegotiated syndicated long-term we additional facility, by and million our invest increased XX/XX/XX sheet our additional growth funds well an million which unrestricted ahead, to Looking of in $XXX as cash

areas as together to our insurance, We new experiential continue all and membership invest platforms. sales, will and marketplace in we knit service

plan remain completed State platform transformation view and Drivers is on digital the by to in Our be by in XXX,XXX XXXX, opportunities. adds growth policies about would all both new to launch as of plus end Club in delays timing revenue expect and XX XXXX. premium in the scale, the renewal with our opportunity. excited We Farm of State membership Farm We significant Hagerty and areas commence of related, business we these late extremely late relationship XXXX. substantially and written the states

leverage bottom-line, the operating revenue is XXXX, to through realize partnerships these more we Marketplace and to relates it after and to As to expect to $XX flow $XX starts million have support operationalized as we top-line million to increased earnings. spent

full We year indicators. the across key XXXX have provided several for performance guidance

annual on provide Going updates forward, with to quarterly we intend our guidance progress.

helps. provided your and Hagerty. We hope to working months Thanks the with it back look over years supplement, We your investors believe support you also in We financial information thesis investor and McKeel. to have now, all on ahead. additional assist will the our analyst for turn time supplemental when and it which And of their I'll developing community Hagerty. we forward

McKeel Hagerty

you, minutes the I spend will growth put just some in more With few described Thank come. initiatives years already describing will Fred Fred. them to and accelerate numbers, State a in context. will Farm, the that I months strategic

our from of growth partnerships portion substantial large sticky insurance with companies. a that note to important it's First, already comes

of are with treat it our proprietary the claims automobile the no partnerships in the for them We service, handle with but it many handled these we largest. taken be to latest manage. providing that a insurance claims right products to value handling valuation just their the enthusiasts core by the business us be specialty difficult individually well we are department would books that cross-selling cars providing with so is all Therefore, market from for coverage protected, of know they State years, partnerships, and Hagerty. of on and enthusiast to For have Farm while will and these largest have, launch. time services, a to get unique typical cars also have valuations tools, car worked our of special needs of leader the these to companies our

rolling new book of became also a largest this during we be to in the actively will our growth to in the program. source our the combination is engaging State and agents It year more to also addition in over intended In policies, Farm we'll State policies their history. later XX,XXX in XXX,XXX the company's single Hagerty access business of note than significant while, the all initial write offering All XXXX. important provide commence Drivers It Farm Club. to clients be Hagerty investor is that will to

this, CEO, have of a seat, part other they than by their Board which none Michael is Tipsord. served As

Farm Our forward deep partnership. of contract relationship look year a with XX years has State and we to many

The covered second automotive initiative to move wanted in I the marketplace. investor deck our an into as is discuss,

team an our venture anchor will going world, estimated a Broad we sold quietly of our marketplace Valuation automotive of Group. rental in While Arrow in bought large. and with veterans joint In investment newly the strategy out new pieces members company peer-to-peer billion like with vehicles. our Automotive the our our filled rolling XXXX is business, Broad move Tools $X.X The insurance A things team a very next number with forward respected opportunity structure. from auction marketplace our our been of Hagerty have Intelligence initiatives through in for commenced alone, highly Arrow a DriveShare, created and us January and

that buying and develop and Our with our on selling Arrow and tools data use to advantages intention partnership integrity, experiences and trust, to focus Broad is transparency. our

out will and deck, contemplated activities many activities the coming in indicated months and the internal There amplify. are synergies years. already marketplace Some draw while several are roll that our of also in will upon the others

activities, nicely offerings, buying to digital impact and addition Hagerty into media ties also membership, innovation, and selling, events, ESG as our In our activities. as Marketplace well

an we Finally, drive gain ahead. our These include type our initiatives we for the such company users growth also the because closing, more it on on media have and and and enthusiast is like the recently growing our effort announced passion Polyphony a generations, insurance also offerings, of to in appetite next millions but reinsurance events, reach of years will a the offerings us the is our video to gaming of that vehicles world growth In in digital space expanding with relationships, exciting flight create increasing Studios in to underwriting the often because game This the engage that on. innovations mileage-based the economics quota platform many car built segments, is first labs our from platforms, version on-ramps overlooked Gran in foray Hagerty of the help more month partnership into more by and the also In underserved. more latest a Sony that membership PlayStation or be active economy of very is large X. vehicle to and implied the Turismo more on and in to more embedded our other shares world. interactive best-selling so was

insurance in of space a we invest provides the to and do to in and offerings. membership larger what platform ecosystem a strong to grow history and expand Our

profile opportunity to and public advantage. We to reason, for our the haul a Hagerty better people long community went plans aim for accelerate to serve who scale. to the do higher As at large vast public of use a this a our simple have we cars. to love the company, a and

We you. for are drive. the ready Thank

Operator

I any call I to questions back the Instructions] management. [Operator over seeing not this and turn time at will am

Unidentified Company Representative

in did We operator. a the questions management. IR receive inbox you, Thank few actually for

will Why economics -- of XXXX? question. first late changed? is the question first a they The any Farm And was Can the one State delayed? three have assure in part that you launch

McKeel Hagerty

and for one Thank important a great question, an you. us. It's

very First of that XXXX. confident one. We're late in take the we’ll the partnership all, let second me launch

foremost, this this product, we work Although of right. get to But to partnership, the large we that's there's of a us. streams very to size deliver had important first knew set it and

of are sort deliver made licenses, new that One, So the brand be reasons are delay them. is for a We filings, long-term who members. Farm Farm thing. sometimes big major for this a partnership. a The that of really making that's future to and State we commitment And the bit commitment Those all made we sure experience were insurance the highest than longer State to reasons. requires little that big a our committed a why their will company possible take world filings of couple to within us. expected. state forms, customers,

partnerships, are offering world We technical have back happen. this But integrations these -- Drivers of this so around us, as really how the Club, complex Hagerty of is lot types done very, new offering unique know for the a and of program feeds and very the we forth. Farm with which data very billing, it's between can that State all as going well

-- the piece of changed. contract the have XX deep It’s same. So guess is, a remains but The sticky, year any I contract. the economics final

are We to other. each it. are excited committed about They

And about are We it. economics have not the changed. excited

agents, was well which it business last actually again, talking And now to When XX,XXX I that the bit Fred the policies larger, is will and XXX,XXX first think Drivers State also converting, little the addition this as now XXX,XXX is always or we as and thing have opportunity is through more. to new a Farm's note about good mentioned offer thing. I we in it's year, Club. to mentioned as started Hagerty a opportunity

about confident very XXXX. the end So of

Unidentified Company Representative

anticipate able implement pricing you There is, Club XXXX? delays? the increase And the being to in question, is drove second which Hagerty Drivers price what do

McKeel Hagerty

Hagerty Club key of is question. our such strategy. growth great part a Drivers Another overall

very that be make to very in able members these adjustments we going of to for XXXX. Net high a launching to not persistence pricing to confident wanting to more Score, and and to main price The like we we reasons could sure year, us the are be sensitive unless our the maintain in is Promoter make unique We earlier about were move are really Drivers for launch, talk were about we add world so marketplace. last Club key which was it value. that waiting the our automotive big we to add in just we to the to Hagerty that don't add didn't value

which the baked in us changes, fully features. So, due pricing and build for are marketplace value are to our projections our into outlook, of here, create some those more waiting largely to

Unidentified Company Representative

XXXX Another also, impacted Can question that off received. of the both leverage? on seems by lot that on to outlook us be side. a roll a XXXX the such was outlook And operating give of the for revenue can more be year XXXX end and bit the you detail incurring of you will expense strong expenses a that are revenue?

Fred Turcotte

take one. I can you. that Thank

We about Farm that XXXX. you a guidance, end should to by well Marketplace onboard are increases say projections. we of XXXX as can of the providing the State majority prior State When off not spend included our and think we but revenue, roll Hagerty XXXX the pricing as had Farm, in

are so, And of the adjusting we our each outlook. delay with XXXX those, of

improvement for in deck do EPS we the an guidance perspective, to to a we of you'll see XXXX. will growth and make for growth number this longer-term. side, investments slide incremental On our that is XX% generate huge provide time see XX% the feel we expense a of XX, on perfect slide runway growth of as EPS range per From

Unidentified Company Representative

about the that And opportunities next two excited most to was the three over are What you received. final years? question

McKeel Hagerty

We're that one. is for sure a that's future. company big, Well, relationship, that getting and that a We're excited the many, to public in we're State It's and brings to the running long, the a all of launch, making. and a excited years important up growth Farm ready be company us. to many take about getting advantage fun sticky

running bringing with getting So into to going awesome. be is us and them partnership absolutely and up that

remarks a that addressable we're side. rolling the that a pipeline well. can ways growth start about in new announced, been and I’ve and us. is for large process that standpoint that mentioned approaching have negotiating very -- it There been very large from named. highlighted opportunity, Marketplace, very in with as partnerships the that important are to that new not the excited we're are on transactional of strategic we just start total can my of work that And make very we confident features, market that in it's we're So going haven't out initiative additional

on so working we're those. And

excited I'm So more the members. those That's our an over periods space. coming about how we events. media, of passion time, automotive engage more It's

so have out cases some properties reach And to in and very those create passionate with building to partnering working more car there, build more intimacy to audiences we our and keep greater members. with and contact loving

Unidentified Company Representative

further no have we Operator, questions.

now remarks. over So, for I turn closing it to management will

McKeel Hagerty

All to been thank very much. right, well, you It's fun of this. for us prepare for all

about Hagerty. the excited future We are of really

long haul upward. very the we forward attention and And we're we for and and to and you hope scale. you time and for building appreciate onward for much investing greater your materials the said, I you put As thank

Operator

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

Hagerty (HGTY) 25 Mar 222021 Q4 Earnings call transcript