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BRP Group, Inc. Announces Fourth Quarter and Full Year 2022 Results

- Fourth Quarter 2022 Revenue Grew 55% Year-Over-Year to $246.0 Million -

- Full Year 2022 Revenue Grew 73% Year-Over-Year to $980.7 Million -

- Fourth Quarter 2022 Organic Revenue Growth(1) of 26% -

- Full Year 2022 Organic Revenue Growth of 23% -

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 fourth quarter and full year ended December 31, 2022.

FOURTH QUARTER 2022 HIGHLIGHTS

  • Revenue increased 55% year-over-year to $246.0 million
  • Organic Revenue Growth was 26% year-over-year
  • GAAP net loss of $91.5 million and GAAP loss per share of $0.84
  • Adjusted Net Income(2) of $14.4 million, or $0.12(2) per fully diluted share
  • Adjusted EBITDA(3) grew 94% to $39.2 million
  • Adjusted EBITDA Margin(3) of 16%

“We closed out 2022 with another quarter of double-digit organic growth, which accelerated year over year both in the quarter and for the full year of 2022. This further showcases the strength and resilience of our business model and highlights BRP's ability to deliver clear value for Clients through our innovative solutions and trusted advice,” said Trevor Baldwin, Chief Executive Officer of BRP Group. “Our strong fourth quarter enabled us to generate full year organic growth of 23% despite the challenging macro environment, while continuing to meaningfully grow our adjusted diluted EPS for the year in the face of rising interest rates. As we progress through 2023, we remain confident in our belief that our unique approach, talented Colleagues and culture, diverse businesses and breadth of solutions for Clients position us well to nimbly navigate the current environment, grow our market share and continue to generate sustainable and profitable double-digit organic growth.”

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2022, cash and cash equivalents were $118.1 million and there was $1.3 billion of outstanding principal under the Company's credit facility. The Company had remaining availability for borrowing of $95.0 million under its revolving credit facility.

FULL YEAR 2022 HIGHLIGHTS

  • Revenue increased 73% year-over-year to $980.7 million
  • Pro Forma Revenue(4) grew 41% year-over-year to $1.0 billion
  • Organic Revenue Growth of 23% year-over-year
  • GAAP net loss of $76.7 million and GAAP loss per share of $0.74
  • Adjusted Net Income of $119.0 million, or $1.03 per fully diluted share
  • Adjusted EBITDA grew 74% to $196.5 million
  • Adjusted EBITDA Margin of 20%
  • Pro Forma Adjusted EBITDA(5) of $202.9 million and Pro Forma Adjusted EBITDA Margin(5) of 20%

WEBCAST AND CONFERENCE CALL INFORMATION

BRP Group will host a webcast and conference call to discuss fourth quarter 2022 results today at 4:30 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

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 1.2 million clients across the United States and internationally. For more information, please visit www.baldwinriskpartners.com.

FOOTNOTES

(1)

 

Organic Revenue for the three and twelve months ended December 31, 2021 used to calculate Organic Revenue Growth for the three and twelve months ended December 31, 2022 was $159.2 million and $567.5 million, respectively, which is adjusted to reflect revenues from Partnerships that have reached the twelve-month owned mark during the three and twelve months ended December 31, 2022. 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 loss attributable to BRP Group and reconciliation of Adjusted Diluted EPS to diluted loss per share, the most directly comparable GAAP financial measures, are 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 loss, the most directly comparable GAAP financial measure, is set forth in the reconciliation table accompanying this release.

(4)

 

Pro Forma Revenue is a non-GAAP measure. Reconciliation of Pro Forma Revenue to commissions and fees, the most directly comparable GAAP financial measure, is set forth in the reconciliation table accompanying this release.

(5)

 

Pro Forma Adjusted EBITDA and Pro Forma Adjusted EBITDA Margin are non-GAAP measures. Reconciliation of Pro Forma Adjusted EBITDA and Pro Forma Adjusted EBITDA to net 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. 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.

Consolidated Statements of Comprehensive Loss

 

For the Three Months

Ended December 31,

 

For the Years

Ended December 31,

(in thousands, except share and per share data)

 

2022

 

 

2021

 

 

2022

 

 

2021

Revenues:

 

 

 

 

 

 

 

Commissions and fees

$

246,044

 

$

159,200

 

$

980,720

 

$

567,290

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Commissions, employee compensation and benefits

 

196,927

 

 

121,529

 

 

719,445

 

 

400,050

Other operating expenses

 

49,284

 

 

37,782

 

 

173,708

 

 

102,162

Amortization expense

 

21,826

 

 

14,845

 

 

81,738

 

 

48,720

Change in fair value of contingent consideration

 

43,116

 

 

22,033

 

 

32,307

 

 

45,196

Depreciation expense

 

1,311

 

 

868

 

 

4,620

 

 

2,788

Total operating expenses

 

312,464

 

 

197,057

 

 

1,011,818

 

 

598,916

 

 

 

 

 

 

 

 

Operating loss

 

(66,420)

 

 

(37,857)

 

 

(31,098)

 

 

(31,626)

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Interest expense, net

 

(25,324)

 

 

(8,468)

 

 

(71,072)

 

 

(26,899)

Other income, net

 

986

 

 

1,959

 

 

26,137

 

 

424

Total other expense

 

(24,338)

 

 

(6,509)

 

 

(44,935)

 

 

(26,475)

 

 

 

 

 

 

 

 

Loss before income taxes

 

(90,758)

 

 

(44,366)

 

 

(76,033)

 

 

(58,101)

Income tax expense

 

715

 

 

19

 

 

715

 

 

19

Net loss

 

(91,473)

 

 

(44,385)

 

 

(76,748)

 

 

(58,120)

Less: net loss attributable to noncontrolling interests

 

(42,983)

 

 

(21,738)

 

 

(34,976)

 

 

(27,474)

Net loss attributable to BRP Group

$

(48,490)

 

$

(22,647)

 

$

(41,772)

 

$

(30,646)

 

 

 

 

 

 

 

 

Comprehensive loss

$

(91,473)

 

$

(44,385)

 

$

(76,748)

 

$

(58,120)

Comprehensive loss attributable to noncontrolling interests

 

(42,983)

 

 

(21,738)

 

 

(34,976)

 

 

(27,474)

Comprehensive loss attributable to BRP Group

 

(48,490)

 

 

(22,647)

 

 

(41,772)

 

 

(30,646)

 

 

 

 

 

 

 

 

Basic and diluted loss per share

$

(0.84)

 

$

(0.41)

 

$

(0.74)

 

$

(0.64)

Basic and diluted weighted-average shares of Class A common stock outstanding

 

57,997,896

 

 

54,874,756

 

 

56,825,348

 

 

47,587,866

BRP GROUP, INC.

Consolidated Balance Sheets

 

 

December 31,

(in thousands, except share and per share data)

 

 

2022

 

 

2021

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

118,090

 

$

138,292

Restricted cash

 

 

112,381

 

 

89,445

Premiums, commissions and fees receivable, net

 

 

531,992

 

 

340,837

Prepaid expenses and other current assets

 

 

9,823

 

 

8,151

Due from related parties

 

 

113

 

 

1,668

Total current assets

 

 

772,399

 

 

578,393

Property and equipment, net

 

 

25,405

 

 

17,474

Right-of-use assets

 

 

96,465

 

 

81,646

Other assets

 

 

45,935

 

 

25,586

Intangible assets, net

 

 

1,099,918

 

 

944,467

Goodwill

 

 

1,422,060

 

 

1,228,741

Total assets

 

$

3,462,182

 

$

2,876,307

Liabilities, Mezzanine Equity and StockholdersEquity

 

 

 

 

Current liabilities:

 

 

 

 

Premiums payable to insurance companies

 

$

471,294

 

$

315,907

Producer commissions payable

 

 

53,927

 

 

35,971

Accrued expenses and other current liabilities

 

 

125,743

 

 

92,223

Related party notes payable

 

 

1,525

 

 

61,500

Current portion of contingent earnout liabilities

 

 

46,717

 

 

35,088

Total current liabilities

 

 

699,206

 

 

540,689

Revolving line of credit

 

 

505,000

 

 

35,000

Long-term debt, less current portion

 

 

809,862

 

 

814,614

Contingent earnout liabilities, less current portion

 

 

220,219

 

 

223,501

Operating lease liabilities, less current portion

 

 

87,692

 

 

71,357

Other liabilities

 

 

164

 

 

3,590

Total liabilities

 

 

2,322,143

 

 

1,688,751

Commitments and contingencies

 

 

 

 

Mezzanine equity:

 

 

 

 

Redeemable noncontrolling interest

 

 

487

 

 

269

Stockholders’ equity:

 

 

 

 

Class A common stock, par value $0.01 per share, 300,000,000 shares authorized; 61,447,368 and 58,602,859 shares issued and outstanding at December 31, 2022 and 2021, respectively

 

 

614

 

 

586

Class B common stock, par value $0.0001 per share, 100,000,000 shares authorized; 54,504,918 and 56,338,051 shares issued and outstanding at December 31, 2022 and 2021, respectively

 

 

5

 

 

6

Additional paid-in capital

 

 

704,291

 

 

663,002

Accumulated deficit

 

 

(96,764)

 

 

(54,992)

Stockholder notes receivable

 

 

(42)

 

 

(219)

Total stockholders’ equity attributable to BRP Group

 

 

608,104

 

 

608,383

Noncontrolling interest

 

 

531,448

 

 

578,904

Total stockholders’ equity

 

 

1,139,552

 

 

1,187,287

Total liabilities, mezzanine equity and stockholders’ equity

 

$

3,462,182

$

2,876,307

BRP GROUP, INC.

Consolidated Statements of Cash Flows

 

 

For the Years Ended December 31,

(in thousands)

 

 

2022

 

 

2021

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(76,748)

 

$

(58,120)

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

 

 

 

 

Depreciation and amortization

 

 

86,358

 

 

51,508

Change in fair value of contingent consideration

 

 

32,307

 

 

45,196

Share-based compensation expense

 

 

47,389

 

 

19,193

(Gain) loss on interest rate caps

 

 

(26,220)

 

 

123

Payment of contingent earnout consideration in excess of purchase price accrual

 

 

(49,926)

 

 

(4,825)

Amortization of deferred financing costs

 

 

5,120

 

 

3,506

Other fair value adjustments

 

 

135

 

 

311

Changes in operating assets and liabilities, net of effect of acquisitions:

 

 

 

 

Premiums, commissions and fees receivable, net

 

 

(183,006)

 

 

(64,501)

Prepaid expenses and other assets

 

 

(11,320)

 

 

(8,032)

Due to/from related parties

 

 

937

 

 

(1,649)

Right-of-use assets

 

 

(13,492)

 

 

(81,646)

Accounts payable, accrued expenses and other current liabilities

 

 

173,362

 

 

55,188

Operating lease liabilities

 

 

16,531

 

 

83,877

Other liabilities

 

 

(3,889)

 

 

Net cash provided by (used in) operating activities

 

 

(2,462)

 

 

40,129

Cash flows from investing activities:

 

 

 

 

Cash consideration paid for business combinations, net of cash received

 

 

(387,919)

 

 

(668,033)

Cash consideration paid for asset acquisitions

 

 

(3,356)

 

 

(3,212)

Capital expenditures, net

 

 

(21,979)

 

 

(5,321)

Investment in business ventures

 

 

(1,103)

 

 

(1,907)

Net cash used in investing activities

 

 

(414,357)

 

 

(678,473)

Cash flows from financing activities:

 

 

 

 

Proceeds from issuance of Class A common stock, net of underwriting discounts

 

 

 

 

269,375

Payment of common stock offering costs

 

 

 

 

(1,054)

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

 

 

(48,309)

 

 

(7,723)

Proceeds from revolving line of credit

 

 

512,000

 

 

420,210

Payments on revolving line of credit

 

 

(42,000)

 

 

(385,210)

Proceeds from long-term debt

 

 

 

 

441,430

Payments on long-term debt

 

 

(8,509)

 

 

(5,630)

Payments of debt issuance costs

 

 

(1,821)

 

 

(1,124)

Proceeds from the sales and settlements of interest rate caps

 

 

21,246

 

 

Purchase of interest rate caps

 

 

(3,838)

 

 

(6,461)

Tax distributions to BRP's LLC Members

 

 

(9,393)

 

 

Proceeds received from repayment of stockholder notes receivable

 

 

177

 

 

246

Net cash provided by financing activities

 

 

419,553

 

 

724,059

Net increase in cash and cash equivalents and restricted cash

 

 

2,734

 

 

85,715

Cash and cash equivalents and restricted cash at beginning of year

 

 

227,737

 

 

142,022

Cash and cash equivalents and restricted cash at end of year

 

$

230,471

 

$

227,737

NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA, Adjusted EBITDA Margin, Organic Revenue, Organic Revenue Growth, Adjusted Net Income, Adjusted Diluted Earnings Per Share (“EPS”), Pro Forma Revenue, Pro Forma Adjusted EBITDA, Pro Forma Adjusted EBITDA Margin 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, Organic Revenue Growth and Pro Forma Revenue), net income (loss) (for Adjusted EBITDA, Adjusted EBITDA Margin, Pro Forma Adjusted EBITDA and Pro Forma 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 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 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, 2021 are excluded from Organic Revenue for 2021. However, after June 1, 2022, results from June 1, 2021 to December 31, 2021 for such Partners are compared to results from June 1, 2022 to December 31, 2022 for purposes of calculating Organic Revenue Growth in 2022. 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. Reconciliation of guidance regarding Organic Revenue Growth to the most directly comparable GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity, and low visibility with respect to the commissions and fees generated for Organic Revenue, the non-GAAP metric from which Organic Revenue Growth is derived; in particular, the measures of commissions and fees generated from new Partners once they reach the twelve-month owned mark.

Adjusted Net Income is presented for the purpose of calculating Adjusted Diluted EPS. 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. Adjusted Diluted EPS is calculated as Adjusted Net Income divided by adjusted dilutive 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.

Pro Forma Revenue reflects GAAP revenue (commissions and fees), plus revenue from Partnerships in the unowned periods.

Pro Forma Adjusted EBITDA takes into account Adjusted EBITDA from Partnerships in the unowned periods and eliminates the effects of financing, depreciation and amortization. We define Pro Forma Adjusted EBITDA as pro forma 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 costs, including those related to raising capital. We believe that Pro Forma Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of expenses that do not relate to business performance, and that the presentation of this measure enhances an investor’s understanding of our financial performance.

Pro Forma Adjusted EBITDA Margin is Pro Forma Adjusted EBITDA divided by Pro Forma Revenue. Pro Forma Adjusted EBITDA Margin is a key metric used by management and our board of directors to assess our financial performance. We believe that Pro Forma Adjusted EBITDA Margin is an appropriate measure of operating performance because it eliminates the impact of 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 Pro Forma Adjusted EBITDA Margin is helpful in measuring profitability of operations on a consolidated level.

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.

Adjusted EBITDA and Adjusted EBITDA Margin

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

 

 

For the Three Months

Ended December 31,

 

For the Years

Ended December 31,

(in thousands, except percentages)

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Commissions and fees

 

$

246,044

 

$

159,200

 

$

980,720

 

$

567,290

 

 

 

 

 

 

 

 

 

Net loss

 

$

(91,473)

 

$

(44,385)

 

$

(76,748)

 

$

(58,120)

Adjustments to net loss:

 

 

 

 

 

 

 

 

Amortization expense

 

 

21,826

 

 

14,845

 

 

81,738

 

 

48,720

Interest expense, net

 

 

25,324

 

 

8,468

 

 

71,072

 

 

26,899

Share-based compensation

 

 

21,324

 

 

7,272

 

 

47,389

 

 

19,193

Transaction-related Partnership and integration expenses

 

 

5,036

 

 

7,956

 

 

34,588

 

 

19,182

Change in fair value of contingent consideration

 

 

43,116

 

 

22,033

 

 

32,307

 

 

45,196

(Gain) loss on interest rate caps

 

 

(800)

 

 

(1,036)

 

 

(26,220)

 

 

123

Depreciation expense

 

 

1,311

 

 

868

 

 

4,620

 

 

2,788

Severance

 

 

120

 

 

390

 

 

1,255

 

 

871

Income tax provision

 

 

715

 

 

19

 

 

715

 

 

19

Other(1)

 

 

12,691

 

 

3,816

 

 

25,774

 

 

8,038

Adjusted EBITDA

 

$

39,190

 

$

20,246

 

$

196,490

 

$

112,909

Adjusted EBITDA Margin

 

 

16 %

 

 

13 %

 

 

20 %

 

 

20 %

__________

(1)

 

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

Organic Revenue and Organic Revenue Growth

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

 

 

For the Three Months

Ended December 31,

 

For the Years

Ended December 31,

(in thousands, except percentages)

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Commissions and fees

 

$

246,044

 

$

159,200

 

$

980,720

 

$

567,290

Partnership commissions and fees(1)

 

 

(46,059)

 

 

(75,888)

 

 

(280,660)

 

 

(272,272)

Organic Revenue

 

$

199,985

 

$

83,312

 

$

700,060

 

$

295,018

Organic Revenue Growth(2)

 

$

40,785

 

$

12,904

 

$

132,610

 

$

54,004

Organic Revenue Growth %(2)

 

 

26 %

 

 

18 %

 

 

23 %

 

 

22 %

__________

(1)

 

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

(2)

 

Organic Revenue for the three and twelve months ended December 31, 2021 used to calculate Organic Revenue Growth for the three and twelve months ended December 31, 2022 was $159.2 million and $567.5 million, respectively, which is adjusted to reflect revenues from Partnerships that reached the twelve-month owned mark during the three and twelve months ended December 31, 2022.

Adjusted Net Income and Adjusted Diluted EPS

The following table reconciles Adjusted Net Income to net loss attributable to BRP Group and reconciles Adjusted Diluted EPS to diluted loss per share attributable to BRP Group Class A common stock:

 

 

For the Three Months

Ended December 31,

 

For the Years

Ended December 31,

(in thousands, except per share data)

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Net loss attributable to BRP Group

 

$

(48,490)

 

$

(22,647)

 

$

(41,772)

 

$

(30,646)

Net loss attributable to noncontrolling interests

 

 

(42,983)

 

 

(21,738)

 

 

(34,976)

 

 

(27,474)

Amortization expense

 

 

21,826

 

 

14,845

 

 

81,738

 

 

48,720

Share-based compensation

 

 

21,324

 

 

7,272

 

 

47,389

 

 

19,193

Transaction-related Partnership and integration expenses

 

 

5,036

 

 

7,956

 

 

34,588

 

 

19,182

Change in fair value of contingent consideration

 

 

43,116

 

 

22,033

 

 

32,307

 

 

45,196

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

 

 

859

 

 

(1,036)

 

 

(24,012)

 

 

123

Amortization of deferred financing costs

 

 

1,226

 

 

1,205

 

 

5,120

 

 

3,506

Depreciation

 

 

1,311

 

 

868

 

 

4,620

 

 

2,788

Severance

 

 

120

 

 

390

 

 

1,255

 

 

871

Other(1)

 

 

12,691

 

 

3,816

 

 

25,774

 

 

8,038

Adjusted pre-tax income

 

 

16,036

 

 

12,964

 

 

132,031

 

 

89,497

Adjusted income taxes(2)

 

 

1,587

 

 

1,283

 

 

13,071

 

 

8,860

Adjusted Net Income

 

$

14,449

 

$

11,681

 

$

118,960

 

$

80,637

 

 

 

 

 

 

 

 

 

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

 

 

57,998

 

 

54,875

 

 

56,825

 

 

47,588

Dilutive effect of non-vested restricted shares of Class A common stock

 

 

3,706

 

 

2,710

 

 

3,526

 

 

1,982

Exchange of Class B common stock(3)

 

 

54,579

 

 

55,638

 

 

55,450

 

 

51,811

Adjusted dilutive weighted-average shares outstanding

 

 

116,283

 

 

113,223

 

 

115,801

 

 

101,381

 

 

 

 

 

 

 

 

 

Adjusted Diluted EPS

 

$

0.12

 

$

0.10

 

$

1.03

 

$

0.80

 

 

 

 

 

 

 

 

 

Diluted loss per share

 

$

(0.84)

 

$

(0.41)

 

$

(0.74)

 

$

(0.64)

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

 

 

0.05

 

 

0.02

 

 

0.08

 

 

0.07

Other adjustments to loss per share

 

 

0.92

 

 

0.50

 

 

1.80

 

 

1.46

Adjusted income taxes per share

 

 

(0.01)

 

 

(0.01)

 

 

(0.11)

 

 

(0.09)

Adjusted Diluted EPS

 

$

0.12

 

$

0.10

 

$

1.03

 

$

0.80

___________

(1)

 

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

(2)

 

Represents corporate income taxes at 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.

Pro Forma Revenue

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

 

 

For the Three Months

Ended December 31,

 

For the Years

Ended December 31,

(in thousands, except percentages)

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Commissions and fees

 

$

246,044

 

$

159,200

 

$

980,720

 

$

567,290

Revenue for Partnerships in the unowned period(1)

 

 

 

 

10,773

 

 

33,768

 

 

152,030

Pro Forma Revenue

 

$

246,044

 

$

169,973

 

$

1,014,488

 

$

719,320

Pro Forma Revenue Growth

 

$

76,071

 

$

75,567

 

$

295,168

 

$

293,071

Pro Forma Revenue Growth %

 

 

45 %

 

 

80 %

 

 

41 %

 

 

69 %

___________

(1)

 

The adjustments for the three months ended December 31, 2021 reflect commissions and fees for Wood Guttman & Bogart Insurance Brokers, Construction Risk Partners, LLC, Brush Creek, LLC and Arcana Insurance Services, LP as if the Company had acquired the Partners on January 1, 2021. The adjustments for the year ended December 31, 2022 reflect commissions and fees for Westwood Insurance Agency, Venture Captive Management, LLC and National Health Plans & Benefits Agency, LLC as if the Company had acquired the Partners on January 1, 2022. The adjustments for the year ended December 31, 2021 reflect commissions and fees for LeaseTrack Services LLC/Effective Coverage LLC, Riley Financial, Inc. (operating as “Medicare Help Now”), Tim Altman, Inc. (operating as “Only Medicare Solutions”), Seniors’ Insurance Services of Washington, Inc., Mid-Continent Companies, Ltd., RogersGray Inc., EBSME, LLC, FounderShield LLC, The Capital Group, LLC, River Oak Risk, LLC, White Hill Plaza, Inc., Jacobson, Goldfarb & Scott, Inc, Wood Guttman & Bogart Insurance Brokers, Construction Risk Partners, LLC, Brush Creek, LLC and Arcana Insurance Services, LP as if the Company had acquired the Partners on January 1, 2021. This unaudited pro forma information should not be relied upon as being indicative of the historical results that would have been obtained if the acquisitions had occurred on that date, nor the results that may be obtained in the future.

Pro Forma Adjusted EBITDA and Pro Forma Adjusted EBITDA Margin

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

 

 

For the Three Months

Ended December 31,

 

For the Years

Ended December 31,

(in thousands, except percentages)

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Pro forma revenue

 

$

246,044

 

$

169,973

 

$

1,014,488

 

$

719,320

 

 

 

 

 

 

 

 

 

Net loss

 

 

(91,473)

 

 

(44,385)

 

 

(76,748)

 

 

(58,120)

Net income (loss) for Partnerships in the unowned period(1)

 

636

 

 

5,421

 

 

(2,069)

 

 

29,078

Pro forma net loss

 

 

(90,837)

 

 

(38,964)

 

 

(78,817)

 

 

(29,042)

Adjustments to pro forma net loss:

 

 

 

 

 

 

 

 

Amortization expense

 

 

21,826

 

 

16,451

 

 

88,537

 

 

68,805

Interest expense, net

 

 

24,688

 

 

9,333

 

 

72,789

 

 

39,852

Share-based compensation

 

 

21,324

 

 

7,272

 

 

47,389

 

 

19,193

Transaction-related Partnership and integration expenses

 

 

5,036

 

 

7,956

 

 

34,588

 

 

19,182

Change in fair value of contingent consideration

 

 

43,116

 

 

22,033

 

 

32,307

 

 

45,196

(Gain) loss on interest rate caps

 

 

(800)

 

 

(1,036)

 

 

(26,220)

 

 

123

Depreciation expense

 

 

1,311

 

 

868

 

 

4,620

 

 

2,788

Severance

 

 

120

 

 

390

 

 

1,255

 

 

871

Income tax provision

 

 

715

 

 

19

 

 

715

 

 

19

Other

 

 

12,691

 

 

3,816

 

 

25,774

 

 

8,038

Pro Forma Adjusted EBITDA

 

$

39,190

 

$

28,138

 

$

202,937

 

$

175,025

Pro Forma Adjusted EBITDA Margin

 

 

16 %

 

 

17 %

 

 

20 %

 

 

24 %

___________

(1)

 

The adjustments for the three months ended December 31, 2021 reflect net income (loss) for Wood Guttman & Bogart Insurance Brokers, Construction Risk Partners, LLC, Brush Creek, LLC and Arcana Insurance Services, LP as if the Company had acquired the Partners on January 1, 2021. The adjustments for the year ended December 31, 2022 reflect net income (loss) for Westwood Insurance Agency, Venture Captive Management, LLC and National Health Plans & Benefits Agency, LLC as if the Company had acquired the Partners on January 1, 2022. The adjustments for the year ended December 31, 2021 reflect net income (loss) for LeaseTrack Services LLC/Effective Coverage LLC, Riley Financial, Inc. (operating as “Medicare Help Now”), Tim Altman, Inc. (operating as “Only Medicare Solutions”), Seniors’ Insurance Services of Washington, Inc., Mid-Continent Companies, Ltd., RogersGray Inc., EBSME, LLC, FounderShield LLC, The Capital Group, LLC, River Oak Risk, LLC, White Hill Plaza, Inc., Jacobson, Goldfarb & Scott, Inc, Wood Guttman & Bogart Insurance Brokers, Construction Risk Partners, LLC, Brush Creek, LLC and Arcana Insurance Services, LP as if the Company had acquired the Partners on January 1, 2021. This unaudited pro forma information should not be relied upon as being indicative of the historical results that would have been obtained if the acquisitions had occurred on that date, nor the results that may be obtained in the future.

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 Years

Ended December 31,

(in thousands)

 

 

2022

 

 

2021

Net cash provided by (used in) operating activities

 

$

(2,462)

 

$

40,129

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

 

 

 

 

Payment of contingent earnout consideration in excess of purchase price accrual

 

 

49,926

 

 

4,825

Change in premiums, commissions and fees receivable, net

 

 

183,006

 

 

64,501

Change in accounts payable, accrued expenses and other current liabilities

 

 

(173,362)

 

 

(55,188)

Free cash flow

 

$

57,108

 

$

54,267

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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