BRP(BRP) - 2024 Q3 - Quarterly Results

Financial Performance Summary The company demonstrated strong financial performance in Q3 and the first nine months of 2024, marked by significant revenue growth, improved profitability metrics, and a solid liquidity position Third Quarter 2024 Performance The Baldwin Group reported strong third-quarter 2024 results, highlighted by an 11% increase in total revenue to $338.9 million and robust 14% organic revenue growth Q3 2024 Financial Highlights (Year-over-Year, in Millions) | Metric | Q3 2024 | Growth vs. Q3 2023 | | :--- | :--- | :--- | | Total Revenue | $338.9 Million | 11% | | Organic Revenue Growth | 14% | - | | GAAP Net Loss | $14.5 Million | - | | GAAP Diluted Loss Per Share | $0.13 | - | | Adjusted Diluted EPS | $0.33 | 14% | | Adjusted EBITDA | $72.8 Million | 14% | | Pro Forma Adjusted EBITDA | $72.8 Million | 18% | | Adjusted EBITDA Margin | 21.5% | 60 bps expansion | - CEO Trevor Baldwin attributed the strong quarter to the business model's resiliency and a relentless focus on operational effectiveness and efficiency, positioning the company for sustained long-term growth and margin expansion[2] Nine Months 2024 Performance For the first nine months of 2024, the company achieved a 13% increase in revenue to $1.1 billion, with organic revenue growing by 16% Nine Months 2024 Financial Highlights (Year-over-Year, in Billions) | Metric | Nine Months 2024 | Growth vs. Nine Months 2023 | | :--- | :--- | :--- | | Total Revenue | $1.1 Billion | 13% | | Organic Revenue Growth | 16% | - | | GAAP Net Loss | $6.2 Million | - | | GAAP Diluted Loss Per Share | $0.07 | - | | Adjusted Diluted EPS | $1.23 | 26% | | Adjusted EBITDA | $249.3 Million | 22% | | Adjusted EBITDA Margin | 23.5% | 160 bps expansion | | Adjusted Free Cash Flow | $99.2 Million | 31% | Liquidity and Capital Resources As of September 30, 2024, The Baldwin Group maintained a solid liquidity position, holding $181.8 million in cash and cash equivalents and having access to an additional $600.0 million through its revolving credit facility - The company's liquidity as of September 30, 2024, consisted of: - Cash and cash equivalents: $181.8 million - Borrowing capacity under revolving credit facility: $600.0 million[3] Consolidated Financial Statements The consolidated financial statements reflect improved revenue and narrowed net losses, stable assets and liabilities, and significantly increased operating cash flows for the nine months ended September 30, 2024 Condensed Consolidated Statements of Comprehensive Loss For Q3 2024, total revenues increased to $338.9 million while net loss improved to $14.5 million, and for the nine-month period, revenues grew to $1.06 billion with net loss significantly narrowing to $6.2 million, aided by a $39.0 million gain on divestitures Statement of Comprehensive Loss Highlights (in thousands) | Metric | Q3 2024 | Q3 2023 | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $338,938 | $306,270 | $1,059,145 | $933,907 | | Operating Income (Loss) | $15,406 | $86 | $66,122 | $(12,826) | | Net Loss | $(14,475) | $(32,006) | $(6,242) | $(101,523) | | Diluted Loss Per Share | $(0.13) | $(0.29) | $(0.07) | $(0.93) | Condensed Consolidated Balance Sheets As of September 30, 2024, The Baldwin Group's balance sheet showed total assets of $3.54 billion, a slight increase from year-end 2023, with total liabilities remaining stable at approximately $2.5 billion and stockholders' equity growing to $1.04 billion Balance Sheet Summary (in thousands) | Account | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $181,759 | $116,209 | | Total Assets | $3,539,040 | $3,501,937 | | Total Liabilities | $2,502,431 | $2,483,055 | | Total Stockholders' Equity | $1,036,234 | $1,018,488 | Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2024, net cash provided by operating activities significantly increased to $85.7 million, investing activities generated $25.6 million primarily from divestitures, and financing activities provided $6.4 million, reversing prior year's cash usage Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $85,708 | $22,799 | | Net cash provided by (used in) investing activities | $25,609 | $(16,948) | | Net cash provided by (used in) financing activities | $6,436 | $(41,928) | | Net increase (decrease) in cash | $117,753 | $(36,077) | Non-GAAP Financial Measures and Reconciliations The company utilizes various non-GAAP financial measures, including Adjusted EBITDA and Organic Revenue Growth, to provide a clearer view of core operational performance through detailed reconciliations from GAAP results Explanation of Non-GAAP Measures The company supplements GAAP results with non-GAAP measures like Adjusted EBITDA and Organic Revenue Growth, which management believes offer a clearer understanding of core operating performance by excluding non-recurring and non-operational items - Adjusted EBITDA is defined as net income adjusted for interest, taxes, depreciation, amortization, and other non-recurring or non-operational items to measure business performance[23] - Organic Revenue Growth is calculated by excluding commissions and fees from new acquisitions for the first twelve months and from divestitures, allowing for a consistent comparison of underlying growth[26] - Adjusted Free Cash Flow is defined as net cash from operations adjusted for changes in certain working capital accounts and contingent earnout payments to measure cash generation from business operations[33] Reconciliation of Adjusted EBITDA Reconciliation from GAAP Net Loss to Adjusted EBITDA shows $72.8 million for Q3 2024 and $249.3 million for the nine-month period, with major adjustments including interest expense, amortization, and share-based compensation Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Period | Net Loss | Adjustments | Adjusted EBITDA | | :--- | :--- | :--- | :--- | | Q3 2024 | $(14,475) | $87,226 | $72,751 | | Q3 2023 | $(32,006) | $96,015 | $64,009 | | Nine Months 2024 | $(6,242) | $255,567 | $249,325 | | Nine Months 2023 | $(101,523) | $306,119 | $204,596 | Reconciliation of Organic Revenue The company's organic revenue, adjusted for acquisitions and divestitures, reached $335.2 million in Q3 2024, growing 14%, and $1.05 billion for the first nine months of 2024, increasing 16% Organic Revenue Growth Calculation (in thousands) | Period | Commissions and Fees | Organic Revenue | Organic Revenue Growth % | | :--- | :--- | :--- | :--- | | Q3 2024 | $335,210 | $335,210 | 14% | | Nine Months 2024 | $1,050,409 | $1,050,409 | 16% | Reconciliation of Adjusted Net Income and Adjusted Diluted EPS Adjusted Net Income for Q3 2024 was $38.5 million, leading to an Adjusted Diluted EPS of $0.33, a 14% increase, while for the nine-month period, Adjusted Diluted EPS grew 26% to $1.23 Reconciliation to Adjusted Net Income and Adjusted Diluted EPS (in thousands, except per share data) | Metric | Q3 2024 | Q3 2023 | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Net loss attributable to Baldwin (in thousands) | $(8,377) | $(17,629) | $(4,356) | $(55,658) | | Adjusted net income (in thousands) | $38,528 | $33,756 | $144,783 | $114,933 | | Adjusted diluted EPS | $0.33 | $0.29 | $1.23 | $0.98 | Reconciliation of Pro Forma Adjusted EBITDA Pro Forma Adjusted EBITDA, excluding 2024 divestitures, was $72.8 million for Q3 2024, an 18% increase, and $247.7 million for the nine-month period, growing 24%, reflecting the ongoing business performance Reconciliation to Pro Forma Adjusted EBITDA (in thousands) | Period | Revenues | Pro Forma Revenue | Net Loss | Pro Forma Adjusted EBITDA | | :--- | :--- | :--- | :--- | :--- | | Q3 2024 | $338,938 | $338,938 | $(14,475) | $72,751 | | Q3 2023 | $306,270 | $296,447 | $(32,006) | $61,658 | | Nine Months 2024 | $1,059,145 | $1,052,885 | $(6,242) | $247,728 | | Nine Months 2023 | $933,907 | $906,777 | $(101,523) | $199,667 | Reconciliation of Adjusted Free Cash Flow For the nine months ended September 30, 2024, Adjusted Free Cash Flow increased 31% to $99.2 million, derived by adjusting net cash from operating activities for specific working capital and contingent earnout payments Reconciliation to Adjusted Free Cash Flow for Nine Months Ended Sep 30 (in thousands) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $85,708 | $22,799 | | Adjustments | $13,527 | $53,213 | | Adjusted free cash flow | $99,235 | $76,012 | Other Information This section provides an overview of The Baldwin Group's business, important disclaimers regarding forward-looking statements, and details for accessing the Q3 2024 earnings conference call About The Baldwin Group The Baldwin Group (NASDAQ: BWIN) is an independent insurance distribution firm providing customized risk management, insurance, and employee benefits solutions to over two million clients globally, driving growth through expertise and capital - The company is an independent insurance distribution firm providing bespoke solutions for risk management, insurance, and employee benefits[7] - The Baldwin Group serves more than two million clients in the U.S. and internationally[7] Forward-Looking Statements This press release contains forward-looking statements based on current management expectations, subject to significant risks and uncertainties that could cause material differences in actual results, with readers advised to consult SEC filings for detailed risk factors - The report contains forward-looking statements that are not historical facts and involve significant risks and uncertainties[13] - Investors are directed to the "Risk Factors" section of the company's Form 10-K and other SEC filings for more information on potential risks[14] Conference Call Information The Baldwin Group scheduled a webcast and conference call for November 4, 2024, at 5:00 PM ET to discuss Q3 2024 financial results, with access to the live webcast, presentation, and replay available on its investor relations website - A conference call to discuss Q3 2024 results was scheduled for 5:00 PM ET on the day of the release[5] - A live webcast, presentation, and replay are available on Baldwin's investor relations website at ir.baldwin.com[5][6]