BRP Group, Inc.(US:BWIN)2025-08-05 20:32PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) Unaudited condensed consolidated financial statements for June 30, 2025, report total assets of $3.74 billion, revenues of $792.2 million, and net income attributable to Baldwin of $10.8 million, reflecting retrospective changes in fiduciary asset presentation Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $1,239,709 | $1,026,490 | | Goodwill | $1,420,583 | $1,412,369 | | Total assets | $3,738,985 | $3,534,731 | | Total current liabilities | $1,007,489 | $1,056,434 | | Long-term debt, less current portion | $1,494,712 | $1,398,054 | | Total liabilities | $2,688,616 | $2,525,934 | | Total stockholders' equity | $1,049,924 | $1,008,344 | Condensed Consolidated Statements of Comprehensive Income Highlights (in thousands, except per share data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total revenues | $792,216 | $720,207 | | Operating income | $83,957 | $50,716 | | Net income attributable to Baldwin | $10,775 | $4,021 | | Diluted earnings per share | $0.15 | $0.06 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(80,704) | $21,346 | | Net cash (used in) provided by investing activities | $(46,201) | $35,602 | | Net cash provided by financing activities | $197,838 | $76,265 | | Net increase in cash and cash equivalents | $70,933 | $133,213 | - Beginning January 1, 2025, the company changed its balance sheet presentation for fiduciary assets and liabilities, recasting prior period amounts by separating fiduciary cash, receivables, and liabilities from other accounts4647 Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, business combinations, and segment information, highlighting the MultiStrat Group acquisition for $24.6 million, establishment of a captive insurance operation, and January 2025 debt refinancing, with operations across IAS, UCTS, and MIS segments - The company acquired MultiStrat Group for an aggregate purchase price of $24.6 million, including $8.8 million in contingent earnout consideration, during the six months ended June 30, 2025686975 - Effective January 1, 2025, the company's captive insurance operation (MSI Cell) began participating as a quota share reinsurer on two MGA programs, generating $9.8 million in assumed premium earned for the six months ended June 30, 202563148150 - On January 10, 2025, the company amended its credit facility, adding $100.0 million of incremental term B loans and increasing the total senior secured first lien term loan facility to $935.8 million93 Disaggregated Revenues by Major Source (Six Months Ended June 30, in thousands) | Revenue Source | 2025 | 2024 | | :--- | :--- | :--- | | Commission revenue | $638,105 | $602,780 | | Profit-sharing revenue | $44,300 | $42,972 | | Consulting and service fee revenue | $47,531 | $38,754 | | Policy fee and installment fee revenue | $37,664 | $27,250 | | Assumed premium earned | $9,805 | $0 | | Other income | $9,375 | $3,443 | | Investment income | $5,436 | $5,008 | | Total revenues | $792,216 | $720,207 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's performance, highlighting a 10% revenue increase driven by organic growth, segment results, non-GAAP measures, and liquidity, with a strategy focused on organic growth and MGA platform expansion, maintaining sufficient liquidity with $105.7 million cash and $474 million available on the revolving facility Results of Operations For the six months ended June 30, 2025, total revenues increased 10% to $792.2 million and operating income grew 66% to $84.0 million, driven by a 10% rise in commissions and fees from organic growth, MSI platform performance, and new Captive business, while operating expenses rose 6% due to Captive losses and higher professional fees Consolidated Results of Operations Highlights (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Total revenues | $792,216 | $720,207 | 10% | | Total operating expenses | $708,259 | $669,491 | 6% | | Operating income | $83,957 | $50,716 | 66% | | Income before income taxes | $20,442 | $10,384 | 97% | - Commissions and fees for H1 2025 increased by $71.6 million (10%), driven by $68.9 million in organic growth from new/renewal business, MSI outperformance, and the new Captive business, partially offset by a $5.8 million revenue decrease from the divested Wholesale Business170 - Other operating expenses for H1 2025 increased by $21.8 million, primarily due to $8.8 million in incurred losses and LAE from the new Captive business, $5.5 million in higher professional fees, and $3.1 million in rebranding-related marketing costs178 Non-GAAP Financial Measures The company uses non-GAAP measures like Adjusted EBITDA, Organic Revenue Growth, and Adjusted Diluted EPS to assess performance, with Adjusted EBITDA increasing to $199.3 million and Adjusted Diluted EPS rising to $1.06 for the six months ended June 30, 2025 Adjusted EBITDA Reconciliation (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net income (loss) | $19,757 | $8,233 | | Adjustments | $179,550 | $168,341 | | Adjusted EBITDA | $199,307 | $176,574 | | Adjusted EBITDA margin | 25% | 25% | Organic Revenue Growth (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Commissions and fees (GAAP) | $786,780 | $715,199 | | Organic revenue | $784,800 | $715,199 | | Organic revenue growth % | 11% | 17% | Adjusted Diluted EPS Reconciliation (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net income (loss) attributable to Baldwin | $10,775 | $4,021 | | Adjusted net income | $126,068 | $106,255 | | Adjusted diluted weighted-average shares | 118,770 | 117,800 | | Adjusted diluted EPS | $1.06 | $0.90 | Operating Group Results For H1 2025, IAS revenues grew 5% to $410.9 million, UCTS revenues increased 20% to $272.7 million driven by MSI and new Captive business, and MIS revenues grew 4% to $144.4 million - IAS: H1 2025 revenue grew 5% to $410.9 million, with core commission growth driven by 18% sales velocity, partially offset by a 230 bps headwind from softening property insurance rates200203 - UCTS: H1 2025 revenue grew 20% to $272.7 million, with core commission growth of 23% (excluding divested Wholesale Business) driven by MSI outperformance (+$30.8 million), Capacity Solutions group (+$8.0 million), and the new Captive business (+$9.8 million)212215 - MIS: H1 2025 revenue grew 4% to $144.4 million, primarily due to a $3.6 million increase in profit-sharing revenue from improved loss ratios, with core commissions increasing by $2.0 million225228 Liquidity and Capital Resources The company maintains strong liquidity with $105.7 million cash and $474 million available on its Revolving Facility as of June 30, 2025, with primary needs including organic growth and debt service, and total contractual obligations of $2.44 billion, primarily $2.33 billion in debt - As of June 30, 2025, the company had $105.7 million in cash and cash equivalents and $474 million available under its Revolving Facility248 Contractual Obligations and Commitments as of June 30, 2025 (in thousands) | Obligation Type | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating leases | $93,656 | $21,288 | $38,507 | $26,793 | $7,068 | | Debt obligations payable | $2,325,951 | $131,682 | $254,483 | $354,695 | $1,585,091 | | Undiscounted estimated contingent earnout | $21,509 | $7,552 | $13,957 | $0 | $0 | | Total | $2,444,468 | $161,378 | $308,643 | $382,288 | $1,592,159 | - Net cash used in operating activities was $80.7 million for H1 2025, a significant increase from the $21.3 million provided in H1 2024, primarily due to a $64.7 million increase in payments of contingent earnout consideration261262 Quantitative and Qualitative Disclosures about Market Risk The company is exposed to market risk, primarily interest rate changes on its variable-rate debt, with $1.04 billion outstanding as of June 30, 2025, where a 100 basis point SOFR increase would raise annual interest expense by $10.4 million - The company's primary market risk is interest rate risk on its variable-rate debt under the 2024 Credit Facility268 - As of June 30, 2025, a 100 basis point increase in the SOFR rate would result in an estimated $10.4 million increase in annual interest expense on the $1.04 billion of outstanding variable-rate debt270 Controls and Procedures Management, including the CEO and CFO, concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025272 - No material changes to the company's internal control over financial reporting occurred during the quarter ended June 30, 2025273 PART II. OTHER INFORMATION Legal Proceedings The company is appealing a Delaware court's invalidation of certain 2019 Stockholders Agreement provisions and a related $2.4 million attorneys' fee award, with potential losses estimated between $0 and $2.4 million - The company is appealing a Delaware Court of Chancery opinion that invalidated certain provisions of its 2019 Stockholders Agreement123 - The company has also appealed a related $2.4 million award for attorneys' fees, with potential losses estimated between $0 and $2.4 million, a significant portion of which may be covered by insurance123 Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - The report refers to the risk factors outlined in the Annual Report on Form 10-K for the year ended December 31, 2024, indicating no material changes275 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities, repurchasing 106,955 shares of Class A common stock at an average price of $43.67 per share during Q2 2025 to cover employee tax withholding obligations - There were no sales of unregistered securities during the period276 Issuer Repurchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 104,278 | $43.74 | | May 2025 | 2,580 | $40.75 | | June 2025 | 97 | $40.40 | | Total | 106,955 | $43.67 | Other Information During the quarter ended June 30, 2025, no directors or officers adopted or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements - No directors or officers adopted or terminated any Rule 10b5-1 trading plans during the second quarter of 2025280 Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including CEO and CFO certifications and XBRL data files