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BRP Group, Inc. Announces Third Quarter 2023 Results

- Third Quarter 2023 Revenue Grew 18% Year-Over-Year to $306.3 Million -

- Third Quarter 2023 Organic Revenue Growth(1) of 19% -

BRP Group, Inc. (“BRP Group” or the “Company”) (NASDAQ: BRP), an independent insurance distribution firm delivering tailored insurance solutions to a wide range of personal and commercial Clients, today announced its results for the third quarter ended September 30, 2023.

THIRD QUARTER 2023 HIGHLIGHTS

  • Revenue increased 18% year-over-year to $306.3 million
  • Organic Revenue Growth was 19% year-over-year
  • GAAP net loss of $32.0 million and GAAP diluted loss per share of $0.29
  • Adjusted Net Income(2) of $33.8 million, or $0.29(2) per fully diluted share
  • Adjusted EBITDA(3) grew 53% year-over-year to $64.0 million
  • Adjusted EBITDA Margin(3) of 21%, a 480 basis point increase compared to 16% in the prior-year period

“The robust underlying health, momentum and operating leverage in our business was evident in this quarter’s results, as we generated organic growth of 19% and approximately 480 basis points of margin accretion versus the third quarter of 2022, on the back of continued execution, growing contribution from prior investments and ongoing efforts to drive greater free cash flow from the business,” said Trevor Baldwin, Chief Executive Officer of BRP Group. “As a result, net cash from business operations grew by $39 million year over year despite a $36 million increase in cash paid for interest. Additionally, as a result of the growth in Adjusted EBITDA during the quarter, leverage now sits at 4.8x, representing meaningful progress over the last 12 months toward our goal of rapidly reducing leverage. We remain well positioned heading into 2024 and beyond to continue generating sustainable double-digit top line organic growth, durable and consistent margin accretion and creating long-term value for our shareholders.”

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2023, cash and cash equivalents were $79.0 million and the Company had $276.0 million of borrowing capacity under its revolving credit facility.

NINE MONTHS 2023 RESULTS

  • Revenue increased 27% year-over-year to $933.9 million
  • Organic Revenue Growth of 20% year-over-year
  • GAAP net loss of $101.5 million and GAAP diluted loss per share of $0.93
  • Adjusted Net Income of $114.9 million, or $0.98 per fully diluted share
  • Adjusted EBITDA grew 30% year-over-year to $204.6 million
  • Adjusted EBITDA Margin of 22% 

WEBCAST AND CONFERENCE CALL INFORMATION

BRP Group will host a webcast and conference call to discuss third quarter 2023 results today at 5:00 PM ET. A live webcast and a slide presentation of the conference call will be available on BRP Group’s investor relations website at ir.baldwinriskpartners.com. The dial-in number for the conference call is (877) 451-6152 (toll-free) or (201) 389-0879 (international). Please dial the number 10 minutes prior to the scheduled start time.

A webcast replay of the call will be available at ir.baldwinriskpartners.com for one year following the call.

ABOUT BRP GROUP, INC.

BRP Group (NASDAQ: BRP) is an independent insurance distribution firm delivering tailored insurance and risk management insights and solutions that give our Clients the peace of mind to pursue their purpose, passion and dreams. We are innovating the industry by taking a holistic and tailored approach to risk management, insurance and employee benefits, and support our Clients, Colleagues, Insurance Company Partners and communities through the deployment of vanguard resources and capital to drive our growth. BRP Group represents over two million Clients across the United States and internationally. For more information, please visit www.baldwinriskpartners.com.

FOOTNOTES

(1) Organic Revenue for the three and nine months ended September 30, 2022 used to calculate Organic Revenue Growth for the three and nine months ended September 30, 2023 was $255.7 million and $734.1 million, respectively, which is adjusted to reflect revenues from Partnerships that have reached the twelve-month owned mark during the three and nine months ended September 30, 2023. Organic Revenue and Organic Revenue Growth are non-GAAP measures. Reconciliation of Organic Revenue and Organic Revenue Growth to commissions and fees, the most directly comparable GAAP financial measure, is set forth in the reconciliation table accompanying this release.
(2) Adjusted Net Income and Adjusted Diluted EPS are non-GAAP measures. Reconciliation of Adjusted Net Income to net income (loss) attributable to BRP Group and reconciliation of Adjusted Diluted EPS to diluted earnings (loss) per share, the most directly comparable GAAP financial measures, is set forth in the reconciliation table accompanying this release.
(3) Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures. Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin to net income (loss), the most directly comparable GAAP financial measure, is set forth in the reconciliation table accompanying this release.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which represent BRP Group’s expectations or beliefs concerning future events. Forward-looking statements are statements other than historical facts and may include statements that address future operating, financial or business performance or BRP Group’s strategies or expectations. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” “outlook” or “continue,” or the negative of these terms or other comparable terminology. Forward-looking statements are based on management’s current expectations and beliefs and involve significant risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by these statements.

Factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include, but are not limited to, those described under the caption “Risk Factors” in BRP Group’s Annual Report on Form 10-K for the year ended December 31, 2022 and in BRP Group’s other filings with the SEC, which are available free of charge on the SEC's website at: www.sec.gov, including those risks and other factors relevant to the business, financial condition and results of operations of BRP Group. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. All forward-looking statements and all subsequent written and oral forward-looking statements attributable to BRP Group or to persons acting on behalf of BRP Group are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made, and BRP Group does not undertake any obligation to update them in light of new information, future developments or otherwise, except as may be required under applicable law.

BRP GROUP, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

 

 

 

For the Three Months

Ended September 30,

 

For the Nine Months

Ended September 30,

(in thousands, except share and per share data)

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenues:

 

 

 

 

 

 

 

 

Commissions and fees

 

$

306,270

 

 

$

259,368

 

 

$

933,907

 

 

$

734,676

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Commissions, employee compensation and benefits

 

 

220,469

 

 

 

195,920

 

 

 

676,659

 

 

 

522,518

 

Other operating expenses

 

 

47,165

 

 

 

47,212

 

 

 

141,254

 

 

 

124,424

 

Amortization expense

 

 

23,183

 

 

 

23,180

 

 

 

69,505

 

 

 

59,912

 

Change in fair value of contingent consideration

 

 

13,914

 

 

 

21,695

 

 

 

55,065

 

 

 

(10,809

)

Depreciation expense

 

 

1,453

 

 

 

1,216

 

 

 

4,250

 

 

 

3,309

 

Total operating expenses

 

 

306,184

 

 

 

289,223

 

 

 

946,733

 

 

 

699,354

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

86

 

 

 

(29,855

)

 

 

(12,826

)

 

 

35,322

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(30,580

)

 

 

(20,766

)

 

 

(87,600

)

 

 

(45,748

)

Other income (expense), net

 

 

(1,351

)

 

 

3,914

 

 

 

(193

)

 

 

25,151

 

Total other expense

 

 

(31,931

)

 

 

(16,852

)

 

 

(87,793

)

 

 

(20,597

)

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

(31,845

)

 

 

(46,707

)

 

 

(100,619

)

 

 

14,725

 

Income tax expense

 

 

161

 

 

 

 

 

 

904

 

 

 

 

Net income (loss)

 

 

(32,006

)

 

 

(46,707

)

 

 

(101,523

)

 

 

14,725

 

Less: net income (loss) attributable to noncontrolling interests

 

 

(14,377

)

 

 

(21,914

)

 

 

(45,865

)

 

 

8,007

 

Net income (loss) attributable to BRP Group

 

$

(17,629

)

 

$

(24,793

)

 

$

(55,658

)

 

$

6,718

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss)

 

$

(32,006

)

 

$

(46,707

)

 

$

(101,523

)

 

$

14,725

 

Comprehensive income (loss) attributable to noncontrolling interests

 

 

(14,377

)

 

 

(21,914

)

 

 

(45,865

)

 

 

8,007

 

Comprehensive income (loss) attributable to BRP Group

 

 

(17,629

)

 

 

(24,793

)

 

 

(55,658

)

 

 

6,718

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share

 

$

(0.29

)

 

$

(0.43

)

 

$

(0.93

)

 

$

0.12

 

Diluted earnings (loss) per share

 

$

(0.29

)

 

$

(0.43

)

 

$

(0.93

)

 

$

0.11

 

Weighted-average shares of Class A common stock outstanding - basic

 

 

60,549,080

 

 

 

57,282,132

 

 

 

59,791,435

 

 

 

56,430,095

 

Weighted-average shares of Class A common stock outstanding - diluted

 

 

60,549,080

 

 

 

57,282,132

 

 

 

59,791,435

 

 

 

59,895,371

 

 

BRP GROUP, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

 

(in thousands, except share and per share data)

 

September 30, 2023

 

December 31, 2022

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

78,965

 

 

$

118,090

 

Restricted cash

 

 

115,429

 

 

 

112,381

 

Premiums, commissions and fees receivable, net

 

 

595,359

 

 

 

531,992

 

Prepaid expenses and other current assets

 

 

12,370

 

 

 

9,936

 

Total current assets

 

 

802,123

 

 

 

772,399

 

Property and equipment, net

 

 

24,378

 

 

 

25,405

 

Right-of-use assets

 

 

88,586

 

 

 

96,465

 

Other assets

 

 

41,738

 

 

 

45,935

 

Intangible assets, net

 

 

1,044,824

 

 

 

1,099,918

 

Goodwill

 

 

1,421,849

 

 

 

1,422,060

 

Total assets

 

$

3,423,498

 

 

$

3,462,182

 

Liabilities, Mezzanine Equity and Stockholders Equity

 

 

 

 

Current liabilities:

 

 

 

 

Premiums payable to insurance companies

 

$

502,081

 

 

$

471,294

 

Producer commissions payable

 

 

65,855

 

 

 

53,927

 

Accrued expenses and other current liabilities

 

 

131,418

 

 

 

125,743

 

Related party notes payable

 

 

1,525

 

 

 

1,525

 

Current portion of contingent earnout liabilities

 

 

97,620

 

 

 

46,717

 

Total current liabilities

 

 

798,499

 

 

 

699,206

 

Revolving line of credit

 

 

324,000

 

 

 

505,000

 

Long-term debt, less current portion

 

 

969,711

 

 

 

809,862

 

Contingent earnout liabilities, less current portion

 

 

175,657

 

 

 

220,219

 

Operating lease liabilities, less current portion

 

 

81,510

 

 

 

87,692

 

Other liabilities

 

 

241

 

 

 

164

 

Total liabilities

 

 

2,349,618

 

 

 

2,322,143

 

Commitments and contingencies

 

 

 

 

Mezzanine equity:

 

 

 

 

Redeemable noncontrolling interest

 

 

333

 

 

 

487

 

Stockholders’ equity:

 

 

 

 

Class A common stock, par value $0.01 per share, 300,000,000 shares authorized; 64,229,313 and 61,447,368 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

 

642

 

 

 

614

 

Class B common stock, par value $0.0001 per share, 100,000,000 shares authorized; 52,486,094 and 54,504,918 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

 

5

 

 

 

5

 

Additional paid-in capital

 

 

742,553

 

 

 

704,291

 

Accumulated deficit

 

 

(152,422

)

 

 

(96,764

)

Stockholder notes receivable

 

 

 

 

 

(42

)

Total stockholders’ equity attributable to BRP Group

 

 

590,778

 

 

 

608,104

 

Noncontrolling interest

 

 

482,769

 

 

 

531,448

 

Total stockholders’ equity

 

 

1,073,547

 

 

 

1,139,552

 

Total liabilities, mezzanine equity and stockholders’ equity

 

$

3,423,498

 

 

$

3,462,182

 

 

BRP GROUP, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

For the Nine Months

Ended September 30,

(in thousands)

 

 

2023

 

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

Net income (loss)

 

$

(101,523

)

 

$

14,725

 

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

Depreciation and amortization

 

 

73,755

 

 

 

63,221

 

Change in fair value of contingent consideration

 

 

55,065

 

 

 

(10,809

)

Share-based compensation expense

 

 

46,637

 

 

 

26,065

 

(Gain) loss on interest rate caps

 

 

489

 

 

 

(25,420

)

Payment of contingent earnout consideration in excess of purchase price accrual

 

 

(22,639

)

 

 

(48,943

)

Amortization of deferred financing costs

 

 

3,577

 

 

 

3,894

 

Other loss

 

 

797

 

 

 

369

 

Changes in operating assets and liabilities:

 

 

 

 

Premiums, commissions and fees receivable, net

 

 

(63,367

)

 

 

(97,126

)

Prepaid expenses and other current assets

 

 

(6,294

)

 

 

(11,087

)

Right-of-use assets

 

 

7,671

 

 

 

(15,076

)

Accounts payable, accrued expenses and other current liabilities

 

 

32,793

 

 

 

70,282

 

Operating lease liabilities

 

 

(4,162

)

 

 

16,992

 

Other liabilities

 

 

 

 

 

(3,740

)

Net cash provided by (used in) operating activities

 

 

22,799

 

 

 

(16,653

)

Cash flows from investing activities:

 

 

 

 

Capital expenditures

 

 

(14,157

)

 

 

(15,400

)

Cash consideration paid for asset acquisitions

 

 

(2,118

)

 

 

(3,356

)

Investment in business ventures

 

 

(673

)

 

 

(791

)

Cash consideration paid for business combinations, net of cash received

 

 

 

 

 

(387,919

)

Net cash used in investing activities

 

 

(16,948

)

 

 

(407,466

)

Cash flows from financing activities:

 

 

 

 

Payment of contingent earnout consideration up to amount of purchase price accrual

 

 

(26,808

)

 

 

(47,218

)

Proceeds from revolving line of credit

 

 

88,000

 

 

 

512,000

 

Payments on revolving line of credit

 

 

(269,000

)

 

 

(20,000

)

Proceeds from issuance of long-term debt

 

 

170,000

 

 

 

 

Payments on long-term debt

 

 

(6,815

)

 

 

(6,382

)

Payments of debt issuance costs

 

 

(4,447

)

 

 

(1,751

)

Proceeds from the sale and settlement of interest rate caps

 

 

7,893

 

 

 

19,587

 

Tax distributions to BRP LLC members

 

 

(408

)

 

 

(9,393

)

Proceeds from repayment of stockholder notes receivable

 

 

42

 

 

 

156

 

Distributions to VIEs

 

 

(385

)

 

 

 

Net cash provided by (used in) financing activities

 

 

(41,928

)

 

 

446,999

 

Net increase (decrease) in cash and cash equivalents and restricted cash

 

 

(36,077

)

 

 

22,880

 

Cash and cash equivalents and restricted cash at beginning of period

 

 

230,471

 

 

 

227,737

 

Cash and cash equivalents and restricted cash at end of period

 

$

194,394

 

 

$

250,617

 

NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA, Adjusted EBITDA Margin, Organic Revenue, Organic Revenue Growth, Adjusted Net Income, Adjusted Diluted Earnings Per Share (“EPS”) and adjusted net cash provided by operating activities (“free cash flow”) are not measures of financial performance under GAAP and should not be considered substitutes for GAAP measures, including commissions and fees (for Organic Revenue and Organic Revenue Growth), net income (loss) (for Adjusted EBITDA and Adjusted EBITDA Margin), net income (loss) attributable to BRP Group (for Adjusted Net Income), diluted earnings (loss) per share (for Adjusted Diluted EPS) or net cash provided by (used in) operating activities (for free cash flow), which we consider to be the most directly comparable GAAP measures. These non-GAAP financial measures have limitations as analytical tools, and when assessing our operating performance, you should not consider these non-GAAP financial measures in isolation or as substitutes for commissions and fees, net income (loss), net income (loss) attributable to BRP Group, diluted earnings (loss) per share, net cash provided by (used in) operating activities or other consolidated income statement data prepared in accordance with GAAP. Other companies in our industry may define or calculate these non-GAAP financial measures differently than we do, and accordingly, these measures may not be comparable to similarly titled measures used by other companies.

We define Adjusted EBITDA as net income (loss) before interest, taxes, depreciation, amortization, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, transaction-related Partnership and integration expenses, severance, and certain non-recurring items, including those related to raising capital. We believe that Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of income and expenses that do not relate to business performance, and that the presentation of this measure enhances an investor’s understanding of our financial performance.

Adjusted EBITDA Margin is Adjusted EBITDA divided by commissions and fees. Adjusted EBITDA Margin is a key metric used by management and our board of directors to assess our financial performance. We believe that Adjusted EBITDA Margin is an appropriate measure of operating performance because it eliminates the impact of income and expenses that do not relate to business performance, and that the presentation of this measure enhances an investor’s understanding of our financial performance. We believe that Adjusted EBITDA Margin is helpful in measuring profitability of operations on a consolidated level.

Adjusted EBITDA and Adjusted EBITDA Margin have important limitations as analytical tools. For example, Adjusted EBITDA and Adjusted EBITDA Margin:

  • do not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future;
  • do not reflect changes in, or cash requirements for, our working capital needs;
  • do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations;
  • do not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt;
  • do not reflect share-based compensation expense and other non-cash charges; and
  • exclude certain tax payments that may represent a reduction in cash available to us.

We calculate Organic Revenue based on commissions and fees for the relevant period by excluding investment income and the first twelve months of commissions and fees generated from new Partners. Organic Revenue Growth is the change in Organic Revenue period-to-period, with prior period results adjusted to include commissions and fees that were excluded in the prior period because the relevant Partners had not yet reached the twelve-month owned mark, but which have reached the twelve-month owned mark in the current period. For example, revenues from a Partner acquired on June 1, 2022 are excluded from Organic Revenue for 2022. However, after June 1, 2023, results from June 1, 2022 to December 31, 2022 for such Partners are compared to results from June 1, 2023 to December 31, 2023 for purposes of calculating Organic Revenue Growth in 2023. Organic Revenue Growth is a key metric used by management and our board of directors to assess our financial performance. We believe that Organic Revenue and Organic Revenue Growth are appropriate measures of operating performance as they allow investors to measure, analyze and compare growth in a meaningful and consistent manner.

We define Adjusted Net Income as net income (loss) attributable to BRP Group adjusted for depreciation, amortization, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, transaction-related Partnership and integration expenses, severance, and certain non-recurring costs that, in the opinion of management, significantly affect the period-over-period assessment of operating results, and the related tax effect of those adjustments. We believe that Adjusted Net Income is an appropriate measure of operating performance because it eliminates the impact of expenses that do not relate to business performance.

Adjusted Diluted EPS measures our per share earnings excluding certain expenses as discussed above and assuming all shares of Class B common stock were exchanged for Class A common stock on a one-for-one basis. Adjusted Diluted EPS is calculated as Adjusted Net Income divided by adjusted diluted weighted-average shares outstanding. We believe Adjusted Diluted EPS is useful to investors because it enables them to better evaluate per share operating performance across reporting periods.

We calculate free cash flow because we hold fiduciary cash designated for our Insurance Company Partners on behalf of our Clients and incur substantial earnout liabilities in conjunction with our Partnership strategy. Free cash flow is calculated as net cash provided by (used in) operating activities excluding the impact of: (i) the change in premiums, commissions and fees receivable, net; (ii) the change in accounts payable, accrued expenses and other current liabilities; and (iii) the payment of contingent earnout consideration in excess of purchase price accrual. We believe that free cash flow is an important financial measure for use in evaluating financial performance because it measures our ability to generate additional cash from our business operations.

Reconciliation of guidance regarding Adjusted EBITDA, Organic Revenue Growth, Adjusted Diluted EPS and free cash flow to the most directly comparable GAAP measures is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity, and low visibility with respect to commissions and fees, net income (loss), diluted earnings (loss) per share or other consolidated income statement data prepared in accordance with GAAP. The Company is currently unable to predict with a reasonable degree of certainty the type and extent of items that would be expected to impact these GAAP financial measures for these periods. The unavailable information could have a significant impact on the non-GAAP measures.

Adjusted EBITDA and Adjusted EBITDA Margin

The following table reconciles Adjusted EBITDA and Adjusted EBITDA Margin to net income (loss), which we consider to be the most directly comparable GAAP financial measure:

 

 

For the Three Months

Ended September 30,

 

For the Nine Months

Ended September 30,

(in thousands, except percentages)

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Commissions and fees

 

$

306,270

 

 

$

259,368

 

 

$

933,907

 

 

$

734,676

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(32,006

)

 

$

(46,707

)

 

$

(101,523

)

 

$

14,725

 

Adjustments to net income (loss):

 

 

 

 

 

 

 

 

Interest expense, net

 

 

30,580

 

 

 

20,766

 

 

 

87,600

 

 

 

45,748

 

Amortization expense

 

 

23,183

 

 

 

23,180

 

 

 

69,505

 

 

 

59,912

 

Change in fair value of contingent consideration

 

 

13,914

 

 

 

21,695

 

 

 

55,065

 

 

 

(10,809

)

Share-based compensation

 

 

14,598

 

 

 

8,388

 

 

 

46,637

 

 

 

26,065

 

Transaction-related Partnership and integration expenses

 

 

3,774

 

 

 

12,128

 

 

 

18,007

 

 

 

29,552

 

Depreciation expense

 

 

1,453

 

 

 

1,216

 

 

 

4,250

 

 

 

3,309

 

Severance

 

 

875

 

 

 

260

 

 

 

3,373

 

 

 

1,135

 

Income tax provision

 

 

161

 

 

 

 

 

 

904

 

 

 

 

(Gain) loss on interest rate caps

 

 

818

 

 

 

(4,151

)

 

 

489

 

 

 

(25,420

)

Other(1)

 

 

6,659

 

 

 

5,109

 

 

 

20,289

 

 

 

13,083

 

Adjusted EBITDA

 

$

64,009

 

 

$

41,884

 

 

$

204,596

 

 

$

157,300

 

Adjusted EBITDA Margin

 

 

21

%

 

 

16

%

 

 

22

%

 

 

21

%

__________

(1)

Other addbacks to Adjusted EBITDA include certain expenses that are considered to be non-recurring or non-operational, including certain recruiting costs, professional fees, litigation costs and bonuses. In 2022, these addbacks also included certain expenses related to remediation efforts.

Organic Revenue and Organic Revenue Growth

The following table reconciles Organic Revenue and Organic Revenue Growth to commissions and fees, which we consider to be the most directly comparable GAAP financial measure:

 

 

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

(in thousands, except percentages)

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Commissions and fees

 

$

306,270

 

 

$

259,368

 

 

$

933,907

 

 

$

734,676

 

Partnership commissions and fees(1)

 

 

(985

)

 

 

(85,638

)

 

 

(44,696

)

 

 

(234,601

)

Investment income

 

 

(2,038

)

 

 

 

 

 

(4,601

)

 

 

 

Organic Revenue

 

$

303,247

 

 

$

173,730

 

 

$

884,610

 

 

$

500,075

 

Organic Revenue Growth(2)

 

$

47,523

 

 

$

38,014

 

 

$

150,471

 

 

$

91,825

 

Organic Revenue Growth %(2)

 

 

19

%

 

 

28

%

 

 

20

%

 

 

22

%

__________

(1)

Includes the first twelve months of such commissions and fees generated from newly acquired Partners.

(2)

Organic Revenue for the three and nine months ended September 30, 2022 used to calculate Organic Revenue Growth for the three and nine months ended September 30, 2023 was $255.7 million and $734.1 million, respectively, which is adjusted to reflect revenues from Partnerships that have reached the twelve-month owned mark during the three and nine months ended September 30, 2023.

Adjusted Net Income and Adjusted Diluted EPS

The following table reconciles Adjusted Net Income to net income (loss) attributable to BRP Group and reconciles Adjusted Diluted EPS to diluted earnings (loss) per share, which we consider to be the most directly comparable GAAP financial measures:

 

 

For the Three Months

Ended September 30,

 

For the Nine Months

Ended September 30,

(in thousands, except per share data)

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net income (loss) attributable to BRP Group

 

$

(17,629

)

 

$

(24,793

)

 

$

(55,658

)

 

$

6,718

 

Net income (loss) attributable to noncontrolling interests

 

 

(14,377

)

 

 

(21,914

)

 

 

(45,865

)

 

 

8,007

 

Amortization expense

 

 

23,183

 

 

 

23,180

 

 

 

69,505

 

 

 

59,912

 

Change in fair value of contingent consideration

 

 

13,914

 

 

 

21,695

 

 

 

55,065

 

 

 

(10,809

)

Share-based compensation

 

 

14,598

 

 

 

8,388

 

 

 

46,637

 

 

 

26,065

 

Transaction-related Partnership and integration expenses

 

 

3,774

 

 

 

12,128

 

 

 

18,007

 

 

 

29,552

 

(Gain) loss on interest rate caps, net of cash settlements

 

 

3,771

 

 

 

(3,602

)

 

 

8,382

 

 

 

(24,871

)

Depreciation

 

 

1,453

 

 

 

1,216

 

 

 

4,250

 

 

 

3,309

 

Amortization of deferred financing costs

 

 

1,244

 

 

 

1,420

 

 

 

3,577

 

 

 

3,894

 

Severance

 

 

875

 

 

 

260

 

 

 

3,373

 

 

 

1,135

 

Other(1)

 

 

6,659

 

 

 

5,109

 

 

 

20,289

 

 

 

13,083

 

Adjusted pre-tax income

 

 

37,465

 

 

 

23,087

 

 

 

127,562

 

 

 

115,995

 

Adjusted income taxes(2)

 

 

3,709

 

 

 

2,286

 

 

 

12,629

 

 

 

11,484

 

Adjusted Net Income

 

$

33,756

 

 

$

20,801

 

 

$

114,933

 

 

$

104,511

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock outstanding - diluted

 

 

60,549

 

 

 

57,282

 

 

 

59,791

 

 

 

59,895

 

Dilutive effect of unvested stock awards

 

 

3,941

 

 

 

3,675

 

 

 

3,931

 

 

 

 

Exchange of Class B common stock(3)

 

 

52,862

 

 

 

55,151

 

 

 

53,367

 

 

 

55,743

 

Adjusted diluted weighted-average shares outstanding

 

 

117,352

 

 

 

116,108

 

 

 

117,089

 

 

 

115,638

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted EPS

 

$

0.29

 

 

$

0.18

 

 

$

0.98

 

 

$

0.90

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share

 

$

(0.29

)

 

$

(0.43

)

 

$

(0.93

)

 

$

0.11

 

Effect of exchange of Class B common stock and net income (loss) attributable to noncontrolling interests per share

 

 

0.02

 

 

 

0.03

 

 

 

0.06

 

 

 

0.02

 

Other adjustments to earnings (loss) per share

 

 

0.59

 

 

 

0.60

 

 

 

1.96

 

 

 

0.87

 

Adjusted income taxes per share

 

 

(0.03

)

 

 

(0.02

)

 

 

(0.11

)

 

 

(0.10

)

Adjusted Diluted EPS

 

$

0.29

 

 

$

0.18

 

 

$

0.98

 

 

$

0.90

 

___________

(1)

Other addbacks to Adjusted Net Income include certain expenses that are considered to be non-recurring or non-operational, including certain recruiting costs, professional fees, litigation costs and bonuses. In 2022, these addbacks also included certain expenses related to remediation efforts.

(2)

Represents corporate income taxes at an assumed effective tax rate of 9.9% applied to adjusted pre-tax income.

(3)

Assumes the full exchange of Class B common stock for Class A common stock pursuant to the Amended LLC Agreement.

Adjusted Net Cash Provided by Operating Activities (“Free Cash Flow”)

The following table reconciles free cash flow to net cash provided by (used in) operating activities, which we consider to be the most directly comparable GAAP financial measure:

 

 

For the Nine Months

Ended September 30,

(in thousands)

 

 

2023

 

 

 

2022

 

Net cash provided by (used in) operating activities

 

$

22,799

 

 

$

(16,653

)

Adjustments to net cash provided by (used in) operating activities:

 

 

 

 

Change in premiums, commissions and fees receivable, net

 

 

63,367

 

 

 

97,126

 

Change in accounts payable, accrued expenses and other current liabilities

 

 

(32,793

)

 

 

(70,282

)

Payment of contingent earnout consideration in excess of purchase price accrual

 

 

22,639

 

 

 

48,943

 

Free cash flow

 

$

76,012

 

 

$

59,134

 

 

COMMONLY USED DEFINED TERMS

The following terms have the following meanings throughout this press release unless the context indicates or requires otherwise:

Amended LLC Agreement

 

Third Amended and Restated Limited Liability Company Agreement of Baldwin Risk Partners, LLC, as amended

Clients

 

Our insureds

Colleagues

 

Our employees

GAAP

 

Accounting principles generally accepted in the United States of America

Insurance Company Partners

 

Insurance companies with which we have a contractual relationship

Partners

 

Companies that we have acquired, or in the case of asset acquisitions, the producers

Partnerships

 

Strategic acquisitions made by the Company

SEC

 

U.S. Securities and Exchange Commission

 

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