HGTY - Earnings call transcript Q1 2024

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Operator

Greetings. Welcome to the Hagerty First Quarter 2024 Earnings Call. [Operator Instructions]. Please note, this conference is being recorded. At this time, I'll now turn the conference over to Jay Koval, Investor Relations. Mr. begin. now may you Koval,

Jason Koval

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

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

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

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

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

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

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

I the with call turn will And that, over to McKeel.

McKeel Hagerty

cars it Northern begin best are rates winter in compounding for in season. and the and to join Hagerty's is blooming be we the up time and deliver XXXX our insurance to chill time high provider does, First us have advantage firing to of America, profitable America us. and collectible and Jay, of the us, taking to utilized that of us. define of Plants Earnings year. We Hagerty morning, in are but a as of The the good is years Call. XXXX you Thanks, position competitive we To come. leading driving behind across cars North The is love appreciate to the everyone. key vehicles Quarter may does not differentiate North growth insurance the much Michigan approach

So has engaged better for our thanking positioned and results been by is Hagerty aligned of people strategic car start let to employees. our deliver highly never growth team around This stockholders. me ambitions X,XXX well great

Let quarter results on Slide us results. for revenue first This gains XX%, underwriting strong dig X. premium includes into key the by fueled our highlights jumped written commission and shown

increased business pull is the are period value national rate consistent major to rates Those of losses. Insurance Our following share to also X%. down people they causing gains as proposition the XX%. risk-taking loss count. rates premium in their look due it average brand as our in to than shop us fuel by well XX%. our mid- to Hagerty for XX% This a for year's ever. of direct-to-consumer there from most revenue new quota are ratios elevated increase and helps increase Marketplace single-digit to higher carriers power last below seeing other Earned out a we high growth premium This thing business. jumped and grew insurance average XX% written is more Reinsurance and entity, Membership, good us

week. at and in $XX a at in quarter auction. Marketplace to off million This Mesa doubled cars listed we was growth our sales number powered on by than Marketplace Air over start to our of we as more Porsche with Costa live sale sales with the Amelia the increased marketplace the Water XX% last steadily in great online second is

profitability. Moving to

adjusted X,XXX this income year, in improvement EBITDA. in and a million margins in operating During basis our resulting jumped $XX the net million jump first points, a of X months $XX

revenue by of total You a we may million. million $XX recall adjusted increase significantly $XX net XX% that improving of and profitability year-over-year EBITDA income delivering while grew in XXXX, in

marked the margin as quarter Hagerty's thoughtfully of The continuation expansion first of reengineered XXXX business our story we processes. have

of multiyear this how operating work Hagerty few Slide X sustained for positions leverage. shares a examples

First, marketing to our team data customers. traditionally better funds to reallocated performance we Activating are of search our efficiently we new surge insurance deliver and into leveraging to seasons assets, strong social acquire the shoulder slower shoppers. have increasingly ads effectively the

data are million from our consumer have a is fan expectations. build policyholders. investing base unaided beyond to XXth With suggests Keepers that long the Flame. also around additional television anniversary advertising response the outperforming this XX%, awareness in runway We our campaign, of our far we campaign brand X.X of Early current

service. we more to effectively, to processing members are growth. to for freeing process and been our opportunities changes continued member making our reducing to addition leveraging center member serve There straight-through efficiency resources have in and Second, of and times ample improve tools up speed increase automation to handle service AI

that moved to identified our our organization. ability incentivize structure quarterly performers. have within team a top we increases recognize third, also our have savings And MSC bonus We claims and potential to

extremely stable are million $XXX loss combined of While behind ratio proud totaled under Hagerty's last our year, seating consistently adjustments commission. we and second largest of XX% losses expense

put, great Simply for experiences position minimal containment cost are with resources to initiatives we flow-through in-house to leakage. revenue Hagerty coming profits of our claims deliver of for So adding rates our these over years. team the incremental complement and into claims high efforts help customers

our seasoned XXXX from loyalty X are This referrals. referrals. first, ratios lower is including: Hagerty profitable and to improving given loss and a highly way of of costs priorities, we policies acquisition can grow we represents reminder lower a renewals the drive Slide

margin and are experience the cost-effective as we up. way, scale member leveraging fuel efficient expansion in we a technology enhancing to Second,

Marketplace vehicle marketplace, underwriting CNIC includes Insurance continue ramping launch X per post XX% of better And finance and will per views to cohort. Hagerty flexibility cars place control vehicle and industry-leading acquisition XX%. fourth, day XXXXs to building profits and This we and preferred selling over sell our Third, the our the rates is increasing of ] most we an into collectible sell-through now and to online which per product up bids with vehicles. including are trusted serve Company [ Enthusiast+ vehicle our the and buy,

substantial off with start the invest over that We great grow revenue stronger are generation in for rates years. to position the of advantage our cash in even create will leadership mid-teens to coming in to growth. and competitive margins ability XXXX a flow shareholders lengthen allow and confident our us are and in value the profit Improved

first the in outlook XXXX and Let turn call me quarter over more Patrick now results to financial the run through to detail.

Patrick McClymont

everyone. Thank you, and morning, good

underwriting quarter of shown we X year premium line the million, stable Slide In in gains written on X. in and $XXX results premium with on increased XX% prior count total Membership, fee growth jumped million. new other dig gains to to XX%. the of quarter, in and robust compared first Commission produced XX% $XX XX% and us revenue first written and Marketplace million, XX% retention to $XX Let XX% results. the improved revenue business delivered into revenue to

quota with Garage to delivered marketplace third rate. XX% from XX% the a highly Our customers the during team of sell-through Broad We ensuring a results. combined thanks came vehicles. internal at partially and year Loss reinsurance Amelia + the Arrow results of garage quarter with results $XXX special more dissolved Recall, and consistent written and premium historical levels. to stable by strong premium of $XX million, Earned million grew material to our produce underwriting experience Lower and we results, gains higher last profit impact ratio share. XX.X% drivers. sales joint predictable decades refocus offset social Social resources excellent venture driven at on

shown now jumped points. and year million operating operating as only over Turning million, into the prior cost seasonally profit We decisively We period X,XXX basis operating Slide due X.X% to improvement $XX to activities. of salaries an grew our benefits a quarter declined on X. with weak margin. reported X% black margins historically first profitability, and a X% reduction G&A moved $XX the of quarter

of long-term program into State as the launch including expansion Our ] is the even to our Classic+ Farm continue margin impressive [ invest opportunities, move we and as on more XXXX. delivered the the growth stacked in XXXX, improvement $XX in product the This of $XX rollout X-year Adjusted a Enthusiast+ $XX we $XX million. of in EBITDA to is of resulting increased improvement EBITDA million in million. quarter first of million year-over-year top

base net aggregate, excludes million improvement income capital Significantly his equating EBITDA member service income of operating $XX value center year Adjusted in basis, the to of million of our million, a and In we Hagerty at marketing $XXX of of of a income and there our as net surpassed we margins believe million. continue private to compared the our $X reduced and in model. we the around An This EBITDA quarter Re. $XX drove quarter business remarks XX%. by On to generated to from net margins net than efforts, the income more the initiatives loss EBITDA Note XX%, more trailing mentioned we a interest is public a margin million fair McKeel XX-month and $XX in delivered $XX come $X this in our improved earlier. million increase includes in the first optimize million much net adjusted delivered income. growing also that warrants claims.

and after end million Dramatically long-term $XXX minus earnings stock is on for the and Net collectible of the in loans cash customers million outstanding. position basic weighted to on that has was $XX only flow profitable share negative to XX based are $XX million income of by A shares $X.XX of at preferred collateralized GAAP cash and per of positive diluted cars. Class the attribution accretion of million noncontrolling with million $XX a leverage attributable to net cash back the our Class created was A debt the quarter interest of debt, common portfolio shareholders million improving average $X of common stock. earnings

XXXX me outlook Let reaffirmed our shown up wrap on Slide with X.

the XX%, best-in-class the automotive growth. of reaffirm growth high year value the in Given contemplated low to XX% expertise line single and start value, we proposition guaranteed XXXX built around member powered relative XX% rates to by growth digits, increases for of full premium. top revenue our in fuel in to guidance year our rate Hagerty's written outlook, excellent favorable XX%

higher million, on revenue $XX are EBITDA XXX% are $XX growth, to line is deliver adjusted to cash We XXXX technology position margins expect and the EBITDA margin best and XX%. $XXX of people our and net in In leverage the growth strong Farm and State adjusted But income revenue high to XX% XX% XXX% plan to to XXXX. now summary, even we we operating of in track launch With call XX% ]. from well to [ XXXX yet XXXX to of up and expansion XXXX $XXX up us let as for our into flow incremental up production, for as to investments rates margins as million, come Enthusiast+ questions. bottom rates the to as XX% to your that, and million us million we ramps open executing well with on

Operator

[Operator Truist Instructions]. Hughes question is line Mark of And Securities. the our from with first

Mark Hughes

talked rate prospects other your about like You for single How grow strategies initiatives a count attractive the seems pretty to and marketing policy think growth? about say. your we market, to as digits, lot posture the performance you broader low relative policy count. should It

Patrick McClymont

million answered and XX this new year. year, we it. Yes, you most think I so far north we're question customers. had pleased Last asking the of of

lot something be We're pretty a We what through little of be XX% of that about market as a ahead shopping described, But expect right bit we from benefiting think we're now to got and this we're up is will of first year pace we driving same low prices is in single relative prices insurance increase that marketplace to quarter. the you meaningful year. our kind the this that, digits activity in only that a as daily driver neighborhood. are in a seeing up

And our And job really we're so doing that's just good funnel. a top of converting. the people then at putting more

year this expect And an to growth last basis, on so had similar -- what absolute year. we to we have similar

Mark Hughes

and point X Is step have function day. that effect a per And where maybe the activity you there? the a network over, there's steady the then described where something is Or the it -- takes some a is the inflection in build? in cars there more of potential model? in Marketplace, you that Is

McKeel Hagerty

-- if the this and of we rate your and sell-through Well, But if now, really you thanks, to cars marketplace into one dump too and quite that Yes, and with the balance mix actually supply drops, and go steady as Mark. cars it's you wait between the have lower. on of a the live for part list to go it's auctions. then McKeel. build, of be demand delicate demand many listed wanting

And there. they're that with really pleased out features coming really And the the there of weeks team digital just out yes, adding once mean, past this X okay, the marketplace, that at greater sort are so steady to out acceleration we're product the start is our it's But of build I building should teams -- steady this big have in this you this great phase we the first build, customer base. out supply point. there and this steady we future get every sitting thinking, seeing of

steady build excited for we're now. future, So it's for but the a

Mark Hughes

what's then update And the on Yes. State Farm? latest

McKeel Hagerty

Lots additional on of going sides, we're about before live very, it's we're on in the X those before. lot talked X latest a So ahead which well we've phase. continuing the in states, little of very State add lots just the work and bit update we and through is start-up are both states, going of And but states, testing can actually Farm plan. with a optimism to

X So more also we're a first was but we're states now, are here. happy tests in that right We well. it the going lot so wish these

Operator

[Operator of JPMorgan. line question The Pablo with next from Singzon the Instructions]. is

Pablo Singzon

what price of outlook? you is -- I insured last that embedded up that increases -- growth in contributed than And premium are XX level values assumption your sustainable? Do points year. quarter, growth what in right? and current was this current revenue more think Growth from is you this And think premium

Patrick McClymont

Yes.

been now, us, key then the just growth, and as new on changes customer customer be And strong. kind the of months balance of split contributing are then it's low growth. after answered in is new value. between For has digits drivers mid-single of remained right have we call, into value to previous all the premium. the and kind in momentum going rate growth changes X And X-plus sort to And year,

year, and look as We're we're this very we we so with And for comfortable that. of very guidance. balance the affirmed our comfortable

[ that XXXX. and core going and XXXX. and growth get which as 'XX we the be As is XXXX and State we of In XXXX. it though kind right looks also product then accelerating continue beyond 'XX Enthusiast+ early we'll growth in business, now, into what our of the will talked in until ] in ramp-up And Farm, selling we begins which start about, the not to earnest were

new years down. core should X higher of And even So very underlying that those to have continue X growth nothing believe because that's growth us and we leads the those see that, slowing attractive business, in programs. to

Pablo Singzon

thoughts of how the but how might new ramp on market the sort size And a Enthusiast full you're [ in it's a not way then up today, It's potential few years. 'XX? business classic that your on tapping of beginning of yet car will big to product, obviously, product, next sort the ] part ramp any that that

Patrick McClymont

pace take to deliberate is going a it of appropriate an it to sort We're product. because new and

we'll we'll out. it a sure is states X is of of next XXXX. won't add that some to so excited way. evolution of states want then the that existing thoughtful but fully it, use be course part got we're My make learning new. guess we the incremental We're and we've products, year. in XXXX, kind We'll we of so the It's over product do launching we've it make to right. and rolled make our an until And right, sure start And the got that be initially in early sure to pricing do about

Operator

of over the the remarks. session. reached call question-and-answer to Hagerty turn the McKeel I'll have closing end for We

McKeel Hagerty

All Thank all operator, you, and in for Hagerty. to and right. thanks interest you continued support of your

business have to X model just We the beginning decades, and differentiated carefully its that built highly a is last hit over stride.

members help we their and enjoy price protect, vehicles. As buy, sell

delivers Scores high insurance of our omnichannel supports Promoter retention call, last our growth. members. of our from excellent revenue on happy and business profitability through commissionable the mentioned I distribution As Membership rates Net

in Marketplace into preferred rapidly are and investing growing significant platform Hagerty trusted the market. build to resources We this

And continue underwriting profits. the collectible as our penetrate million towards high and United we rates growth increasing maintain over us we States. the flexibility further cars control to evolution our multiyear also allows of written our This XX in premium

be long-term fun stop of d'Elegance an expansion. margin should growth we XX you Until We to all. Greenwich of will company see the the on hosting be Concours for then, color for will entire hope in-person May We weekend never we where event share Connecticut, investors a positioning more in how for driving. lot as the Greenwich, there and are on

Operator

will conclude conference. today's This

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

Hagerty (HGTY) 7 May 242024 Q1 Earnings call transcript