Market Overview

BRP Group, Inc. Announces Third Quarter 2019 Results

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- Revenue Grows 107% Year-Over-Year to $38.4 Million -
- Completed Initial Public Offering in October 2019 -

TAMPA, Fla., Dec. 02, 2019 (GLOBE NEWSWIRE) -- BRP Group, Inc. ("BRP Group" or the "Company") (NASDAQ:BRP), a rapidly growing independent insurance distribution firm delivering tailored insurance solutions, today announced its results for the quarter ended September 30, 2019.

THIRD QUARTER 2019 AND SUBSEQUENT EVENT HIGHLIGHTS

  • Revenue more than doubled over the prior-year period to $38.4 million
  • Net loss of $2.3 million
  • Produced Organic Revenue Growth(1) of 12% over the prior-year period
  • "MGA of the Future" revenue(2) grew 43% to $12.2 million, compared to $8.5 million in the prior-year period
  • Adjusted EBITDA(3) grew over 100% to $7.4 million compared to the prior-year period
  • Adjusted EBITDA Margin(3) of 19%, compared to 18% in the prior-year period
  • Closed three Partner acquisitions for $33.5 million
  • Completed initial public offering in October 2019, raising approximately $242 million in net proceeds

(1) Organic Revenue for the three months ended September 30, 2018 used to calculate Organic Revenue Growth for the three months ended September 30, 2019 was $18.6 million, which is adjusted to reflect revenues from Partnerships that reach the 12-month owned mark during the three months ended September 30, 2019.  Organic Revenue is a non-GAAP measure.  Reconciliation of Organic Revenue to commissions and fees, the most directly comparable GAAP financial measure, is set forth in the reconciliation table accompanying this release.

(2) "MGA of the Future" was acquired by the Company on April 1, 2019 and as a result is not included in the Organic Revenue Growth calculation above because it has not reached the twelve-month owned mark.  Since "MGA of the Future" was not acquired by the Company until April 1, 2019, the revenue of "MGA of the Future" for the prior-year period is not included in the consolidated results of operations for the Company for such period and the 43% revenue growth rate was calculated including periods during which "MGA of the Future" was not owned by the Company.

(3) Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures. Reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure, is set forth in the reconciliation table accompanying this release.

"With our revenue more than doubling year-over-year, our third quarter results reflect the ongoing successful onboarding of all of our Partners and the benefits we are deriving from the integration of our ‘MGA of the Future' platform," said Trevor Baldwin, Chief Executive Officer of BRP Group. "Importantly, beyond the growth generated from our new Partnerships, we produced a double-digit increase in organic revenue, further validating our ability to provide the right innovative tools and solutions necessary to ensure our team can succeed and provide best-in-class service to our clients. In addition, we reached an important milestone in our Company's evolution as we successfully completed our initial public offering, significantly strengthening our balance sheet and positioning us to further expand our market share over the long-term and build the next great national insurance brokerage and consulting platform."

"As we move forward, we remain keenly focused on growth, maintaining a robust pipeline of potential Partnership opportunities, and building the preeminent destination in our industry," added Mr. Baldwin.  "Additionally, through our ‘MGA of the Future' platform, we will continue to identify and develop new, exclusive insurance solutions, such as our successful renter's insurance initiative, that leverage our proprietary technology to provide a premier experience for both our team and our clients.  This quarter represents another positive step toward our goal of becoming a top 10 broker in the next 10 years while generating significant long-term value for our shareholders."

THIRD QUARTER 2019 RESULTS

Revenues for the third quarter of 2019 grew over 100% to $38.4 million, an increase of $19.8 million compared to the third quarter of 2018, primarily attributable to the Company's 2019 Partnerships and organic growth.  Organic Revenue grew 12% over the prior-year period to $20.9 million.

Commissions, employee compensation and benefits expenses for the third quarter of 2019 were $26.8 million, an increase of $14.4 million compared to the third quarter of 2018, primarily as a result of incurring $12.3 million of expense associated with onboarding new Partners. The additional year-over-year increase is in line with organic growth.

Operating expenses for the third quarter of 2019 were $6.3 million, an increase of $2.7 million compared to the third quarter of 2018, primarily due to expenses related to the Company's initial public offering, as well as additional operating expenses from new Partners such as increases in rent, software costs, professional fees, travel, and other expenses related to those new Partners, and continued investments in shared services, including accounting, marketing and human resources, to support the Company's growth.

Amortization expense for the third quarter of 2019 was $3.1 million, an increase of $2.4 million compared to the third quarter of 2018, primarily due to amortization related to intangible assets capitalized in connection with the MSI Partnership in April 2019 and purchased customer accounts capitalized in connection with the Lykes Partnership in March 2019.

Interest expense, net for the third quarter of 2019 was $3.8 million, an increase of $2.5 million compared to the third quarter of 2018. Interest expense, net increased as a result of higher total debt balances resulting from draws on the Company's Credit Agreements to fund cash consideration for Partnerships in 2019, a higher interest rate on the Villages Credit Agreement that went into effect in March 2019 (the Villages Credit Agreement was subsequently repaid in October 2019), and higher amortization of deferred financing costs.

Adjusted EBITDA for the third quarter of 2019 grew $4.1 million, or 125%, to $7.4 million, compared to the third quarter of 2018.  Adjusted EBITDA Margin increased to 19% for the third quarter of 2019, compared to 18% for the third quarter of 2018.

NINE MONTHS ENDED SEPTEMBER 30, 2019 RESULTS

Revenues for the nine months ended September 30, 2019 increased 72% to $101.3 million, compared to $59.0 million in the same period of 2018, attributable to the Company's 2019 Partnerships, which comprised $29.6 million in revenues, new organic growth and a full nine months of contribution from the Company's 2018 Partnerships.  Organic Revenue for the nine months ended September 30, 2019 grew 9% over the prior-year period to $64.5 million.

Total operating expenses for the nine months ended September 30, 2019 was $87.8 million, compared to $50.2 million in the same period of 2018, primarily due to additional commissions, employee compensation and benefits expenses related to the completion of Partnerships during 2018 and 2019, as well as increased operating and amortization expense.

Adjusted EBITDA for the nine months ended September 30, 2019 rose 68% to $22.6 million, compared to $13.4 million in the same period of 2018. Adjusted EBITDA Margin was 22% for the nine months ended September 30, 2019, compared to 23% for the same period of 2018.

OPERATING GROUP RESULTS

($mm) For the three months ended September 30,   For the nine months ended September 30,
Revenue   2019   2018   % change     2019   2018 % change
Middle Market $ 12.836 $ 7.978   60.9 %   $ 41.482 $ 26.320 57.6 %
Specialty   16.732   3.579   367.5 %     32.497   9.856 229.7 %
MainStreet   6.642   5.020   32.3 %     18.942   15.710 20.6 %
Medicare   2.173   1.963   10.7 %     8.360   7.138 17.1 %
Total $ 38.383 $ 18.539   107.0 %   $ 101.281 $ 59.024 71.6 %
               
Net Income              
Middle Market $ 0.295 $ (0.783 ) NA   $ 10.475 $ 2.943 256.1 %
Specialty   2.191   0.752   191.4 %     1.590   0.883 80.1 %
MainStreet   1.015   0.979   3.7 %     4.596   3.869 18.8 %
Medicare   0.388   0.468   -17.1 %     2.833   2.322 22.0 %
Total $ 3.889 $ 1.416   174.6 %   $ 19.494 $ 10.017 94.6 %

Note: totals may not foot due to rounding

Middle Market Operating Group

Revenues for the third quarter of 2019 grew 61% over the prior-year period to $12.8 million, primarily due to an increase of $3.5 million attributable to Lykes and Fiduciary Partners acquired in 2019 and an increase of $0.6 million attributable to the Middle Market Partners acquired in 2018.

Revenues for the nine months ended September 30, 2019 grew 58% over the prior-year period to $41.5 million, primarily due to an increase of $7.0 million attributable to Lykes and Fiduciary Partners acquired in 2019 and an increase of $6.0 million attributable to the Middle Market Partners acquired in 2018.

Specialty Operating Group

Revenues for the third quarter of 2019 increased 368% over the prior-year period to $16.7 million, resulting from organic growth and the MSI Partnership completed in April 2019, which accounted for $12.2 million of third quarter 2019 revenues.

Revenues for the nine months ended September 30, 2019 grew over 200% compared to the prior-year period to $32.5 million, primarily resulting from the MSI Partnership completed in April 2019. This accounted for $21.7 million of nine month 2019 revenues, with the remaining increase attributable to organic growth. 

The MSI Partnership's policies in force grew by 35% year-over-year to 355,744 at September 30, 2019 from 263,363 at September 30, 2018.  Since the MSI Partnership was not completed until April 2019, the 35% policies in force growth was calculated including periods during which MSI was not owned by the Company.

MainStreet Operating Group

Revenues for the third quarter of 2019 grew 32% over the prior-year period to $6.6 million. The Foundation Insurance Partnership completed in August 2019 accounted for $0.9 million of the increase, with the remainder primarily attributable to organic growth.

Revenues for the nine months ended September 30, 2019 grew 21% over the prior-year period to $18.9 million, primarily attributable to organic growth.  The Foundation Insurance Partnership completed in August 2019 also accounted for $0.9 million of the increase.

Medicare Operating Group

Revenues for the third quarter of 2019 rose 11% over the prior-year period to $2.2 million, driven by organic growth.

Revenues for the nine months ended September 30, 2019 rose 17% over the prior-year period to $8.4 million, driven by organic growth.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2019, cash and cash equivalents were $11.1 million, and there was $193.4 million of long-term debt outstanding.

On October 28, 2019, the Company sold an aggregate 18,859,300 shares of its Class A common stock, including 2,459,300 shares pursuant to the underwriters' over-allotment, which subsequently settled on November 26, 2019.  The shares were sold at an initial public offering price of $14.00 per share and the Company received approximately $241.9 million in net proceeds after deducting underwriting discounts, commissions and offering expenses.  The Company used a portion of the proceeds from the offering to repay outstanding related party indebtedness and accrued interest under the Villages Credit Agreement of $89.0 million and concurrently closed the Villages Credit Agreement.

On November 25, 2019, the Company repaid a portion of its revolving lines of credit in the amount of $65.0 million.

WEBCAST AND CONFERENCE CALL INFORMATION

BRP Group will host a webcast and conference call to discuss third quarter 2019 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 replay will be available following the end of the call through Monday, December 16, 2019, by telephone at (844) 512-2921 (toll-free) or (412) 317-6671 (international), passcode 13696964. 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, Inc. (NASDAQ:BRP) is a rapidly growing 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 represents over 400,000 clients across the United States and internationally, with over 40 offices in four states. For more information, please visit www.baldwinriskpartners.com.

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 significa

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