Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Hagerty First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Jay Koval. ahead. go Please

Jason Koval

Chief and us operator, quarter everyone. you McKeel Thank XXXX. Chief Patrick Thank Officer. Financial discuss good Hagerty's joining Hagerty, by morning to joined first Officer; results for and I'm McClymont, you, this morning, Executive for of the

this call, corporate company's refer website investor.hagerty.com. we During to that presentation the accompanying morning's section on available of conference is Hagerty's will an Investor Relations at

the accompanying slides are and letter website. covering stockholders period on release, to also this posted earnings IR Our

Our other along release X-K available our with there, filing is materials. also earnings press and

Today's metrics of discussion on contains the forward-looking described X statements and non-GAAP Slide as financial earnings presentation. further

a expected not that uncertainties of cause Forward-looking statements, of risks the They guarantees could our differ to actual expectations. and to financial performance. our future promises about materially variety or performance, from are including and future statements results subject business are

website our results, which Investor our discussion to of those a also could that For our by appendix of morning's supplemented reconciliations affect in the are with material factors the metrics filing. that at of and please on our refer X-K to measures important contains directly also non-GAAP sec.gov. most available and this presentation further filings the actual risks contained are comparable Relations GAAP SEC The

call And to with CEO. McKeel, I'll turn over that, the our Founder and

McKeel Hagerty

taking to join time appreciate our the Thanks, XXXX and you everyone. quarter earnings morning, Jay, call. We good first

significantly of have to Hagerty of I have of been the XXXX. have combination taken growth, three accomplished diligently couldn't delivering months momentum by team steps bottom-line we reengineer and of the improved margins. top-line business rates fueled months, X sustained be working last more the in and we high we Patrick processes our detail, will Over over with of goal first the what the but the prouder cover

contributing premium Hagerty start the total of in growth revenue quarter, by powered suite some first full quarter gains year, investor written in Slide revenue, key the year’s shares smallest, by XX% roughly and seasonally the encouraged anticipated strong our to We the of the are consumer while of a of X XX% products. the of our solid interest first quarter is we of deck XX%. highlights, including

In Reinsurance, due premium in of and premiums Hagerty our risk-taking the quota entity, growth XX% increased of to jumped our XX%. written share level

the have of risk with and underwriting associated strong We and our to assume continued premium capabilities. stable more

in XX% marketplace marketplace Membership, on by Slide membership, revenue as revenue, other of increase sponsorships. revenue, XX%, and other million X, seen jumped fueled including XX% a $X and

Farm as under policies to a XXXX. progress have continues our make steady teams momentum story, X, and the later the integrating, top-line side we XXXX. team has continued agreement XX-year And the In the Slide people short, with in on begin growth writing and to prepare side the State our shown powerful both on technology new into

ambitions, generations. the heightened the uncertain invest growth over saving two fueling about for help calls, driving talked environment. managing we economic have last profitability This discipline length us Now in our an culture in focus will cost deliver car to on necessary expenses and future at future our

loss. improvement efforts inflection million, significant first the prior over adjusted positive million EBITDA trajectory a These resulted as we period quarter of in in year’s our $XX a profit $X of delivered during $X million the

coming should that announced in over We cost an also drive restructuring quarters. the additional organizational savings early April

premium X; on and from gains revenue are high by our team deliver on to incremental short, executing initiatives sustained rates is of positioned including, and growth our XXXX double-digit shown we ambitions, Slide key well profitable marketplace. membership revenue delivering first, In and powered our on growth well written

growth year. the XX% for revenue total of reconfirming XX% are We to

containment cost efficiencies. the improving integrated evolution And a business our profitability into insurance business. significantly through third, operational continuing of and vertically Second, our

We are $XX million. on of EBITDA deliver profit for $XX adjusted the upgraded believe million XXXX to track we well to outlook

this of mobilized we in Our have short confident XXXX. feel list we around to priorities, teams to about and begun deliver have profitability the that pivot

Let Patrick financials the to to turn cover detail. more the call now me over in

Patrick McClymont

Thanks, good everyone. and McKeel, morning,

from Let's quarter X dig into shown the strong the Slides X. results and first on

line and including retention in McKeel a growth, As with growth rate quality year. increases. Hagerty's expectations strength equal Written in of and total can XX% increased count written delivered we from mentioned, insurance, XX%, for gains membership. to premium start the strong marketplace be the very seen revenue, XX% in core strong and business our premium new contributions brand in with

XX%. to XX% premiums. grew strong total in to $XX the in revenue in from $X increase $XX stable growth written paid premium an single-tier members, XX% increased quota million growth another to to and transition at premium XX%. fee benefiting And other and ratio additional at loss $XX Earned revenue. and million, marketplace membership new an and to increase revenue million written XX% a $XXX a the to driven due in Commission marketplace grew in remained Membership, our our million, reinsurance by contractual quarter share XX-point

other shown Slide $XX period. to million, which operating the well quarter, operating in the to implemented plans reported as loss compared in a cost profitability, we on of $X million the reduced that in a containment and to restructuring hiring This margins charge reduction X, drive of $XX initiatives. as prior loss Turning quarter a force included loss related higher million fourth we

the and service the in as profitability fixed reducing $XX our X additional our continued customers, embarked expect of member coming our customers to in evolution to areas to the Focus well as acquire through channels. claims $XX refining infrastructure total direct is $XX the behind wholesale restructuring our during the should over months cost and underwriting serve the cost realize This on million and balance result business we XXXX. center, new included years including drive cost to model of million, significantly ago we savings which that annualized of improved million roughly to

of $X assets media of our the quarter Operating in amortization million majority related the also the revenue. lower-than-anticipated incorporates advertising loss of to write-down from accelerated

bring content While Hagerty an effective direct as monetization we way less customers will ecosystem. the this expect leverage drive continue Hagerty in across to high-quality and we new engagement Media, from to

for Class million loss earlier. our (sic) swing million million], The based private shares [$XX net GAAP quarter stock related Net of loss $XX warrants. adjustment the weighted share was was value average change XX a the to $XX year-over-year in driven net in fair a $XX the compared gain public year million $X.XX was to and loss of our primarily outstanding. on per A million by

cost quarter year focused improvement period. balance million, the of we the disciplined growth, continued of EBITDA in is loss prior The this in the $X and a million the trajectory compared Our fourth a to adjusted expect improvement over XXXX. and in approach year-over-year continue improved adjusted was positive EBITDA our $XX see initiatives, $X result over with to million

on Let Slide XXXX shown outlook me on to move now XX. our

McKeel the to As start written powered strong premium mentioned, growth total of the by XX%. year, given growth to reconfirming of XX% are we XX% to for our XX% revenue outlook

of track increases rate products million Our XXXX, services. in provide are Hagerty add growing on and a loaded, creating members brand and enthusiast base to auto to locked X.XX another and is

equivalent X% return the to recent full savings accelerate year Moving million, increased We adjusted incorporates and EBITDA our margins. This $XX the additional X% EBITDA restructuring should million to from now double-digit P&L. expect outlook down to of margins. to $XX the expected

way well we on toward profitable summary, are XXXX our growth. In achieving for our plan

of strength We This coming XX the Promoter back-of-the-house continue share recipe judiciously of have customer brand seen Score do significantly in profitability. gain XX%. over that impact and Net not retention service and margins removed costs our allow and as to should deliver improved us and years excellent our to

With the that, let's to your call now open questions.

Operator

go with Mark question comes Thank Please Your you. ahead. [Operator Truist. Instructions] first from Hughes

Mark Hughes

Good change momentum in might on compared timing Farm the morning. discussed to you. XQ Thank what Any Yes. State have the quarter you this or call?

McKeel Hagerty

we're we're And launching question. to technical April, between the in year. feeling be great states still on X and going down complete that we're a the code It's teams integration path. Mark. We this quite our yet were continuing in the confident Thanks,

the the the get at and the think be the half X And which this change. to I year, intention teams they to the and in momentum be be growing teams, their those continue no really is committed business, to going The piece. will with We're states. So key good it, Farm keep the the then really. continues of to State going But own question, that program. very accelerating momentum so are between and running is second up really, year excited us. for about

Mark Hughes

steady. see I kind it the ratio you you're seeing your from as could dynamic versus of inflation, then, the very play Any impact price inflation just loss out? about talk And here

McKeel Hagerty

few nice were pieces loss talked year. Yes. about some this Mark, really before, some of this seeing combination a have we increased But tricky seen cost. costs we year, in might last of stabilization we've

it's of of combination course managing working seem due coming rate a valuations of process be just is the and very it to expenses claim Some to effectively. through but through, also

about feeling good So really we're our targets here. quite

Mark Hughes

Yes. out the range? hit need million. that And higher high see that play $XX variables What end order needs in EBITDA $XX in again, to range? you to pretty the to gave of that do, range some a million of the you of to guidance, order good to happen of What end are

Patrick McClymont

would good midpoint premium-related wind feel Patrick, sales. of of you range. confident range written particularly good was about bit again. We now. behind revenue, our little and a It to started standpoint I It's Mark, a feel from year say with that sort quarter. the a we've good talk We to Sure. the right the the first in revenue of

going us need be move range. Not that enough we that but So within we should that the guidance, to that. we're give we does it good about declare feel that confidence to

written basis, premium start of customers, a to to So it to which to continues on new so are a both off far deliver this deliver year. good continue go-forward growth,

keep but that and seasonally the so quarter got First advantage. the are quarters we've quarters, slow, to third haymaking pushing is second

as cost the did one everything year. So quarter. then exercise at down we're during P&L, doing possible you right? we last work a the costs, did we're on make being end first And that to focused sure very the We another of

the trying which our increase the put P&L range. would and in likelihood hit we're that of to us midpoint plan, the So insulate that we right

and to but the lining top early to too It's the just up declare more pretty I near pushing. now. it's the right So well going we'll in bottom think range, that of keep the we're be year

Operator

Peters Please question, with James. Raymond go ahead. Greg Next

Sid Schultz

This is on Sid Greg. morning. Good for

underwriting to any to last to comments of in wanted year? Just the quarter, to results. severity or back I frequency first guess, compared clarify wanted, year see I the the your see you in did just go the end changes

McKeel Hagerty

are cars talk way in first is other resting our the the in for think of seasonal, seen year we've and what most these would about better wonderful business places. the quarters. to in us to that relative typically it I Keep be mind during quarter first so

we And right and so predicted kind had last when look in relative what ratio. it's middle the year so to the of at we year terms and loss of in we're it before,

opposed towards with line Our in coming skewed mix side is what we physical the of to heavily liability. That's things, expected. damage property as had

assume I to as-expected to So we're historical with start consistent results. an off should think you year, that the

Operator

[Edward Riley] Please with question, [ph] Next [indiscernible]. go ahead.

Unidentified Analyst

looks here. marketplace New It growing like to nicely. the is story

a broad segment forward? share talk level, customer this acquisition maybe at you strategy can could how increase and Just about market within you going

McKeel Hagerty

to nice you, talk and to Thank you.

distinct we that. of marketplace kind of groups consists of three think our of how So

a and auction that's and fun a we our really great with very sales couple year bottom-line is much So which that strategy, results. and have of really business. client-based And exciting midyear exciting launched that live delivered top last

team sell acquire something they're these auction. to clients, often, there cars, that the there's just cars. to can group place working sale those out it's them them between we transactions or that a done live And kind cars, of robust wants a when selling. a that, in and So Broad take Arrow get customer helping at also buying whether it live find private a them Group, knows auction, There's helping when they acquired aspect with very

their Porsche North We're Experience start that off with at to excited do official a XXth in the We're June America Atlanta great anniversary the sale in really to there. Center. partner Porsche

then, private just So idea that's And Monterey we'll marquee ago. we And course available, year. sales. Island thing what events treaty a the becomes collection more Amelia there. during Again, may of the maybe had of couple is the a real we our auction. that have client-focused, the auction here our on large and focus Same that's a We a side. build with couple months out

is of us sell we're auction would platforms describe There brand, the that just emphasizing they making We as really that on with types. strategy, people, where cars of information because coming believe trust have really beta strategy paying be what they are these out and to our The differentiated can is scalable transparency when you that digital number kind we piece available there of delivering most valuation as we're buy as much ours the and the test going of and a out get great sure and marketplace still, I they're as really that the [indiscernible] for. digital buy something possible of mode.

we're So seeing and digital volume to up we've scaling start already And channel. going quarters of the ahead. started in months put business and more to years through that more coming the

it's help to our whether channels buy and our just marketing And we're social short us working other channels live to group. we -- or main also sell digital. XXX,XXX So have using members. all and for going paid marketing of to at cars, be on those them of That's with acquire new auctions We're them so customers. our or

within remind cars last billion you're kind what bought more new outside happening sold concerned this is you concerned addressable $XX value thing member less of that a about worth to XXX,XXX what's our I'd that and year, market the total there with a targeting what's one of scale members group. to our world, We're that's transactional first. our story in since And from over over our cool happening and and standpoint. thing about of inside about of the is we're

Unidentified Analyst

given just Okay. challenges Great. see then, recently, maintaining Score any And Promoter initiatives Net cost taken you've that that. you the do for going Thanks in forward?

McKeel Hagerty

with Score believe the your of the while think that to buy now, members, fact most the one high The very Net interactions not how is us to our Promoter not think of metrics them XX, we Net services. Score, it's we are only friends something leading important customers mean we're metric, important you. thank to come are our Well, this where is financial us a compare Promoter XX, that us, use to having of to tells right that's to you. having because I majority that to I you their telling from our clients, or

hold Score tailwinds into year, we've So heading the we're strong our with seen like our Promoter Net really just of seeing this growth.

and basis. has not our one It gone more serve to cost-saving initiatives, on restructuring, our day-to-day And limited to recognize members where it's with was important we've that frontline been positions this in much in and our ability strategy. a supervisory new hiring

focused Score our we're on Promoter member, the and that So need deliver help growth. Net to we

Patrick McClymont

actually We've the pulled data.

was so a in an from XX low high kind And ago profit the double-digit and was of X, this single, profitable X, perspective. of to tune still XXs NPS years margins the company

of we've celebrating for And the think as it that so comes focus delivering to is, there's When keen value line the really and change. a and we're changed. doesn't focus that infrastructure. customer that hasn't to we back efficiencies. What focused on front deliver focused customer it scenes, on do on, going continue of on what behind the we it house, that we'll comes the customer have for that's to When to how -- delivering to really

Operator

Instructions] comes [Operator go with Singzon Next Pablo JPMorgan. ahead. from question Please

Pablo Singzon

XX% year. reason Any for the the implying a guidance full down carry the quarters of to in growth year about XX% growth should to over step premium Your rest subsequent why the the for is not year? through this XX%

Patrick McClymont

seasonality and the flow through. It's increases also rate how

started terms I what so bit our year written premium expected through that influenced on increases call, sales, much And we exactly better about with in of a renewals. that the little than a said we of when growth, pretty little then And it's think rate is bit wind in so did as influenced, earlier we the different states. through flow line, obviously the has flows much, not how in because but by behind

XX% comfortable think makes when year so with range Right estimate point based good behind a plan a the now we very course the middle sales. wind rate you of we'll hopefully, XX% the the now that our and it still over of it's And for that out little range. with with increases, seasonality feel seasonality. the continue to sense. on to that more But I have And

Pablo Singzon

loss year. then that higher the last set moving just Does to the it. Got the liability you quarter XX% reflect ratio. And up this

I quarter. was think it third in the

are those Just check through picks loss that that wanted the ratio carrying reported. to in current you

Patrick McClymont

Yes.

and So took of terms an reserves environment, did we last going inflation on was the reflect in year, social for what in increase the liability. That inflation. inflationary

logic how that baked so And is we're accruals. loss the into setting ratio

well. the were take towards in keep weighted rate liability Now rate increases the And side. we increases as heavily did mind,

and increase that about loss back offsetting we've is for gets the the that the ratio to that's talked XXs it so And low us right business.

Pablo Singzon

for which think, then In last income, line the what's about the where the year. breakdown curious I provided million And Can the in was $XX I Understood. Yes. outlook press about one you you that you. about of very of helpful. a other is for me. income projecting, you're Thank talk one release, line? the there,

Patrick McClymont

It's essentially and have we own the got cash. restricted right? earnings on we've cash both So our our then cash,

Some based some very the invested where entity. curve. of now the that's within we've what made had sure rate rates, And more end previously we've that MGA in just earning part, significantly but we're the HagertyRe, is. it's for what's the the most investments than of interest at on adjusted with happened our we And short that's of appropriately, curve

in what right the we're earning. of now mid-Xs sort of terms it's think in I

Operator

closing over further Thank McKeel turn floor for questions. to are you. to no There like the I remarks. would

McKeel Hagerty

X some make never tough to you, on we you Well, your growth recently I believe capitalize decisions announced latent the had One work Hagerty over from hard and business including the thank model. to Hagerty's for Team have to Affinity last better positioned the Thank months, been restructuring. we've dedication. operator, and

we're over for reinvest the Our auto services coming high driving. importantly, the to growing enjoy with executing passion these base continue years, help scale thank their creates that and the to sustaining for invest for to and you, us. customer will to needed that enthusiast in growth benefits us profits create products And rapidly continuing the support and allows rates of stakeholders, that the cars and discipline fun our

the Connecticut and time afternoon event One look more more to spend X Greenwich, in June fast our our an Friday to note, on for of is forward with approaching, Concours on you of d'Elegance opportunity investor the item Greenwich. in we plan We and hosting person.

the never on then, more be details So us. lookout Until for from driving. stop

Operator

This concludes today's teleconference.

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

Hagerty (HGTY) 9 May 232023 Q1 Earnings call transcript