• Goosehead Insurance, Inc. Announces Second Quarter 2023 Results

    المصدر: Nasdaq GlobeNewswire / 26 يوليو 2023 16:00:20   America/New_York

    – Total Revenue Increased 31% over Prior Year Period to $69.3 million

    Core Revenue Grew 27% over Prior Year Period to $61.0 million 

    Total Written Premium Increased 36% to $767 million 

    – Net Income of $7.2 million versus Net Income of $2.4 million a year ago –

    Adjusted EBITDA of $23.1 million versus $12.5 million in the Prior Year Period –

    WESTLAKE, Texas, July 26, 2023 (GLOBE NEWSWIRE) -- Goosehead Insurance, Inc. (“Goosehead” or the “Company”) (NASDAQ: GSHD), a rapidly growing independent personal lines insurance agency, today announced results for the second quarter ended June 30, 2023.

    Second Quarter 2023 Highlights

    • Total Revenues grew organically 31% over the prior-year period to $69.3 million in the second quarter of 2023
    • Second quarter Core Revenues* of $61.0 million increased 27% over the prior-year period
    • Second quarter net income of $7.2 million improved from net income of $2.4 million a year ago. EPS of $0.15 per share increased 825% and adjusted EPS* of $0.41 per share increased 161%, over the prior-year period
    • Net income margin for the second quarter was 10%
    • Adjusted EBITDA* of $23.1 million increased from $12.5 million in the prior-year period
    • Adjusted EBITDA Margin* increased 9 percentage points over the prior-year period to 33%
    • Total written premiums placed for the second quarter increased 36% over the prior-year period to $767.3 million
    • Policies in force grew 21% from the prior-year period to approximately 1,427,000
    • Corporate sales headcount of 280 was down 44% year-over-year
    • Operating franchises remained steady with the prior-year period at 1,344
    • Total franchise producers grew 3% from a year ago to 2,069

    *Core Revenue, Adjusted EPS, Adjusted EBITDA, and Adjusted EBITDA Margin are non-GAAP measures. Reconciliations of Core Revenue to total revenues, Adjusted EPS to basic earnings per share and Adjusted EBITDA to net income, the most directly comparable financial measures presented in accordance with GAAP, are set forth in the reconciliation table accompanying this release.

    “We delivered outstanding second quarter results that demonstrate the tremendous strength and consistency of our business and the advantages of where we operate in the insurance value chain. For the quarter, premiums increased 36%, revenues were up 31%, core revenues grew 27%, and our adjusted EBITDA grew 85% with adjusted EBITDA margin expanding 900 basis points,” stated Mark E. Jones, Chairman and CEO. “The restructuring of our corporate sales team is now complete and is producing extraordinary results. We are excited to pivot back to growth in this distribution network. The heaviest lifting to improve the health of our franchise business is also complete, but we will continue fine tuning efforts over the next few quarters. We believe our actions should yield meaningful productivity gains over time. Our ongoing efforts to enhance quality across our producer force and recruiting process, and our continued investments and progress on industry leading technology will further expand our competitive moat, which we believe positions us to sustain high levels of revenue and earnings growth for many years. I want to thank our employees and franchise agents for their exceptional efforts as we drive our business forward on the path to industry leadership.”

    Second Quarter 2023 Results
    For the second quarter of 2023, revenues were $69.3 million, an increase of 31% compared to the corresponding period in 2022. Core Revenues, a non-GAAP measure which excludes contingent commissions, initial franchise fees, interest income, and other income, were $61.0 million, a 27% increase from $48.1 million in the prior-year period. Core Revenues are the most reliable revenue stream for the Company, consisting of New Business Commissions, Agency Fees, New Business Royalty Fees, Renewal Commissions, and Renewal Royalty Fees. Core Revenue growth was driven by improved productivity, strong client retention of 88%, and rising premium rates. The Company grew total written premiums, which we consider to be the leading indicator of future revenue growth, by 36% in the second quarter.

    Total operating expenses, excluding equity-based compensation, depreciation and amortization and impairment expenses for the second quarter of 2023 were $46.2 million, up 14% from $40.5 million in the prior-year period. The increase from the prior period was due to larger employee compensation and benefits expenses related to investments in partnership, technology, marketing, and service functions. Equity-based compensation increased to $5.9 million for the period, compared to $5.2 million a year ago. Bad debt expense of $0.9 million decreased from $1.7 million a year ago due to reduced terminations of signed franchises that have yet to launch. General and Administrative expenses are also higher versus a year ago due to investments in technology, systems and marketing efforts to drive growth and continue to improve the client experience. During the second quarter of 2023, we consolidated some existing office space resulting in a one time, non-cash impairment charge of $3.6 million from the write-off of assets associated with those leases, and certain intangible assets. For more information about the non-cash impairment, see Note 2, Summary of Significant Accounting Policies, of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1. of the Company’s June 30, 2023 Form 10-Q.

    Net income in the second quarter of 2023 was $7.2 million versus net income of $2.4 million a year ago, with the improvement due to strong revenue growth and expense discipline. Earnings per share and Net Income Margin for the first quarter of 2023 were $0.15 and 10%, respectively. Adjusted EPS for the second quarter of 2023, which excludes equity-based compensation and impairment expense, was $0.41 per share. Total Adjusted EBITDA was $23.1 million for the second quarter of 2023 compared to $12.5 million in the prior-year period. Adjusted EBITDA Margin of 33% was up 9 percentage points in the quarter.

    Liquidity and Capital Resources
    As of June 30, 2023, the Company had cash and cash equivalents of $19.1 million. We had an unused line of credit of $49.8 million as of June 30, 2023. Total outstanding term note payable balance was $81.3 million as of June 30, 2023.

    2023 Outlook
    The Company is raising its outlook for full year 2023 as follows:

    • Total written premiums placed for 2023 are expected to be between $2.87 billion and $2.99 billion, representing organic growth of 30% on the low end of the range to 35% on the high end of the range.
    • Total revenues for 2023 are expected to be between $260 million and $267 million, representing organic growth of 24% on the low end of the range to 28% on the high end of the range.
    • Adjusted EBITDA Margin is expected to expand for the full year 2023. Adjusted EBITDA margin and a reconciliation to the most comparable GAAP metric are not provided because they cannot be calculated without unreasonable effort.

    Conference Call Information
    Goosehead will host a conference call and webcast today at 4:30 PM ET to discuss these results.

    The dial-in number for the conference call is (855) 327-6837 (toll-free) or (631) 891-4304 (international). Please dial the number 10 minutes prior to the scheduled start time.

    In addition, a live webcast of the conference call will also be available on Goosehead’s investor relations website at http://ir.goosehead.com.

    A webcast replay of the call will be available at http://ir.goosehead.com for one year following the call.

    About Goosehead

    Goosehead (NASDAQ: GSHD) is a rapidly growing and innovative independent personal lines insurance agency that distributes its products and services through corporate and franchise locations throughout the United States. Goosehead was founded on the premise that the consumer should be at the center of our universe and that everything we do should be directed at providing extraordinary value by offering broad product choice and a world-class service experience. Goosehead represents over 150 insurance companies that underwrite personal and commercial lines. For more information, please visit goosehead.com or goosehead.com/become-a-franchisee.

    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 Goosehead’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 Goosehead’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, conditions impacting insurance carriers or other parties with which Goosehead does business, the loss of one or more key executives or an inability to attract and retain qualified personnel and the failure to attract and retain highly qualified franchisees. These risks and uncertainties also include, but are not limited to, those described under the captions “1A. Risk Factors” in Goosehead’s Annual Report on Form 10-K for the year ended December 31, 2022 and in Goosehead’s other filings with the SEC, which are available free of charge on the Securities Exchange Commission'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 Goosehead or to persons acting on behalf of Goosehead 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 Goosehead 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.

    Contacts
    Investor Contact:
    Dan Farrell
    Goosehead Insurance - VP Capital Markets
    Phone: (214) 838-5290
    Email: dan.farrell@goosehead.com; IR@goosehead.com

    PR Contact:
    Mission North for Goosehead Insurance
    Email: goosehead@missionnorth.com; PR@goosehead.com


    Goosehead Insurance, Inc.
    Condensed Consolidated Statements of Operations
    (Unaudited)
    (In thousands, except per share amounts)

      Three Months Ended
    June 30,
     Six Months Ended
    June 30,
       2023   2022   2023   2022 
    Revenues:        
    Commissions and agency fees $31,173  $26,265  $56,657  $46,274 
    Franchise revenues  37,687   26,427   69,761   47,377 
    Interest income  417   330   814   649 
    Total revenues  69,277   53,022   127,232   94,300 
    Operating Expenses:        
    Employee compensation and benefits  37,483   31,659   74,365   63,143 
    General and administrative expenses  17,332   12,378   33,188   25,902 
    Bad debts  900   1,660   2,555   2,456 
    Depreciation and amortization  2,372   1,658   4,465   3,234 
    Total operating expenses  58,087   47,355   114,573   94,735 
    Income (loss) from operations  11,190   5,667   12,659   (435)
    Other Income (Expense):        
    Interest expense  (1,709)  (1,114)  (3,440)  (1,997)
    Income (loss) before taxes  9,481   4,553   9,219   (2,432)
    Tax expense  2,301   2,164   2,220   562 
    Net income (loss)  7,180   2,389   6,999   (2,994)
    Less: net income (loss) attributable to non-controlling interests  3,514   2,047   3,414   (1,050)
    Net income (loss) attributable to Goosehead Insurance, Inc. $3,666  $342  $3,585  $(1,944)
    Earnings per share:        
    Basic $0.15  $0.02  $0.15  $(0.10)
    Diluted $0.15  $0.02  $0.15  $(0.10)
    Weighted average shares of Class A common stock outstanding        
    Basic  23,689   20,454   23,448   20,348 
    Diluted  24,333   21,245   23,981   20,348 


    Goosehead Insurance, Inc.
    Condensed Consolidated Statements of Operations
    (Unaudited)
    (In thousands, except per share amounts)

      Three months ended
    June 30,
     Six Months Ended
    June 30,
       2023   2022   2023   2022 
    Revenues:        
    Core Revenue:        
    Renewal Commissions(1) $18,541  $14,541  $34,359  $24,748 
    Renewal Royalty Fees(2)  27,552   18,870   50,304   32,872 
    New Business Commissions(1)  6,257   6,730   11,774   12,097 
    New Business Royalty Fees(2)  6,267   4,821   11,909   9,113 
    Agency Fees(1)  2,404   3,114   4,634   5,751 
    Total Core Revenue  61,021   48,076   112,980   84,581 
    Cost Recovery Revenue:        
    Initial Franchise Fees(2)  3,287   2,591   6,350   4,887 
    Interest Income  417   330   814   649 
    Total Cost Recovery Revenue  3,704   2,921   7,164   5,536 
    Ancillary Revenue:        
    Contingent Commissions(1)  3,971   1,880   5,890   3,678 
    Other Franchise Revenues(2)  581   145   1,198   505 
    Total Ancillary Revenue  4,552   2,025   7,088   4,183 
    Total Revenues  69,277   53,022   127,232   94,300 
    Operating Expenses:        
    Employee compensation and benefits, excluding equity-based compensation  31,611   26,486   61,873   52,182 
    General and administrative expenses, excluding impairment  13,704   12,378   29,560   25,902 
    Bad debts  900   1,660   2,555   2,456 
    Total  46,215   40,524   93,988   80,540 
    Adjusted EBITDA  23,062   12,498   33,244   13,760 
    Adjusted EBITDA Margin  33%  24%  26%  15%
             
    Interest expense  (1,709)  (1,114)  (3,440)  (1,997)
    Depreciation and amortization  (2,372)  (1,658)  (4,465)  (3,234)
    Tax expense  (2,301)  (2,164)  (2,220)  (562)
    Equity-based compensation  (5,872)  (5,173)  (12,492)  (10,961)
    Impairment expense  (3,628)     (3,628)   
    Net Income (Loss) $7,180  $2,389  $6,999  $(2,994)
    Net Income (Loss) Margin  10%  5%  6%  (3)%

    (1) Renewal Commissions, New Business Commissions, Agency Fees, and Contingent Commissions are included in "Commissions and agency fees" as shown on the Condensed Consolidated statements of operations within Goosehead’s Form 10-Q for the three and six months ended June 30, 2023 and 2022.
    (2) Renewal Royalty Fees, New Business Royalty Fees, Initial Franchise Fees, and Other Franchise Revenues are included in "Franchise revenues" as shown on the Condensed Consolidated statements of operations within Goosehead’s Form 10-Q for the three and six months ended June 30, 2023 and 2022.


    Goosehead Insurance, Inc.
    Condensed Consolidated Balance Sheets
    (Unaudited) 
    (In thousands, except per share amounts)

      June 30, December 31,
       2023   2022 
    Assets    
    Current Assets:    
    Cash and cash equivalents $19,131  $28,743 
    Restricted cash  1,790   1,644 
    Commissions and agency fees receivable, net  10,459   14,440 
    Receivable from franchisees, net  9,489   4,932 
    Prepaid expenses  12,046   4,334 
    Total current assets  52,915   54,093 
    Receivable from franchisees, net of current portion  15,446   23,835 
    Property and equipment, net of accumulated depreciation  33,176   35,347 
    Right-of-use asset  41,177   44,080 
    Intangible assets, net of accumulated amortization  12,384   4,487 
    Deferred income taxes, net  164,549   155,318 
    Other assets  3,532   4,193 
    Total assets $323,179  $321,353 
    Liabilities and Stockholders’ Equity    
    Current Liabilities:    
    Accounts payable and accrued expenses $14,238  $15,958 
    Premiums payable  1,790   1,644 
    Lease liability  8,468   6,627 
    Contract liabilities  5,207   6,031 
    Note payable  8,125   6,875 
    Total current liabilities  37,828   37,135 
    Lease liability, net of current portion  61,662   64,947 
    Note payable, net of current portion  72,449   86,711 
    Contract liabilities, net of current portion  30,992   40,522 
    Liabilities under tax receivable agreement  133,696   125,662 
    Total liabilities  336,627   354,977 
    Class A common stock, $0.01 par value per share - 300,000 shares authorized, 23,900 shares issued and outstanding as of June 30, 2023, 23,034 shares issued and outstanding as of December 31, 2022  237   228 
    Class B common stock, $0.01 par value per share - 50,000 shares authorized, 13,795 issued and outstanding as of June 30, 2023, 14,471 shares issued and outstanding as of December 31, 2022  139   146 
    Additional paid in capital  86,859   70,866 
    Accumulated deficit  (57,565)  (60,570)
    Total stockholders' equity  29,670   10,670 
    Non-controlling interests  (43,118)  (44,294)
    Total equity  (13,448)  (33,624)
    Total liabilities and equity $323,179  $321,353 


    Goosehead Insurance, Inc.
    Reconciliation Non-GAAP Measures to GAAP

    This release includes Core Revenue, Cost Recovery Revenue, Ancillary Revenue, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EPS that are not required by, nor presented in accordance with, generally accepted accounting principles in the United States (“GAAP”). The Company refers to these measures as “non-GAAP financial measures.” The Company uses these non-GAAP financial measures when planning, monitoring and evaluating its performance and considers these non-GAAP financial measures to be useful metrics for management and investors to facilitate operating performance comparisons from period to period by excluding potential differences caused by variations in capital structures, tax position, depreciation, amortization and certain other items that the Company believes are not representative of its core business. The Company uses Core Revenue, Cost Recovery Revenue, Ancillary Revenue, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EPS for business planning purposes and in measuring its performance relative to that of its competitors.

    These non-GAAP financial measures are defined by the Company as follows:

    • "Core Revenue" is a supplemental measure of our performance and includes Renewal Commissions, Renewal Royalty Fees, New Business Commissions, New Business Royalty Fees, and Agency Fees. We believe that Core Revenue is an appropriate measure of operating performance because it summarizes all of our revenues from sales of individual insurance policies.
    • "Cost Recovery Revenue" is a supplemental measure of our performance and includes Initial Franchise Fees and Interest Income. We believe that Cost Recovery Revenue is an appropriate measure of operating performance because it summarizes revenues that are viewed by management as cost recovery mechanisms.
    • "Ancillary Revenue" is a supplemental measure of our performance and includes Contingent Commissions and Other Income. We believe that Ancillary Revenue is an appropriate measure of operating performance because it summarizes revenues that are ancillary to our core business.
    • "Adjusted EBITDA" is a supplemental measure of the Company's performance. We believe that Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of items that do not relate to business performance. Adjusted EBITDA is defined as net income (the most directly comparable GAAP measure) before interest, income taxes, depreciation and amortization, adjusted to exclude equity-based compensation and other non-operating items, including, among other things, certain non-cash charges and certain non-recurring or non-operating gains or losses.
    • "Adjusted EBITDA Margin" is Adjusted EBITDA as defined above, divided by total revenue excluding other non-operating items. Adjusted EBITDA Margin is helpful in measuring profitability of operations on a consolidated level.
    • "Adjusted EPS" is a supplemental measure of our performance, defined as earnings per share (the most directly comparable GAAP measure) before non-recurring or non-operating income and expenses. Adjusted EPS is a useful measure to management because it eliminates the impact of items that do not relate to business performance and helps measure our profitability on a consolidated level.

    While the Company believes that these non-GAAP financial measures are useful in evaluating its business, this information should be considered as supplemental in nature and is not meant as a substitute for revenues, net income, or earnings per share, in each case as recognized in accordance with GAAP. In addition, other companies, including companies in the Company’s industry, may calculate such measures differently, which reduces their usefulness as comparative measures.

    The following tables show a reconciliation from total revenues to Core Revenue, Cost Recovery Revenue, and Ancillary Revenue (non-GAAP basis) for the three and six months ended June 30, 2023 and 2022 (in thousands):

     Three Months Ended
    June 30,
     Six Months Ended
    June 30,
      2023   2022   2023   2022 
    Total Revenues$69,277  $53,022  $127,232  $94,300 
            
    Core Revenue:       
    Renewal Commissions(1)$18,541  $14,541  $34,359  $24,748 
    Renewal Royalty Fees(2) 27,552   18,870   50,304   32,872 
    New Business Commissions(1) 6,257   6,730   11,774   12,097 
    New Business Royalty Fees(2) 6,267   4,821   11,909   9,113 
    Agency Fees(1) 2,404   3,114   4,634   5,751 
    Total Core Revenue 61,021   48,076   112,980   84,581 
    Cost Recovery Revenue:       
    Initial Franchise Fees(2) 3,287   2,591   6,350   4,887 
    Interest Income 417   330   814   649 
    Total Cost Recovery Revenue 3,704   2,921   7,164   5,536 
    Ancillary Revenue:       
    Contingent Commissions(1) 3,971   1,880   5,890   3,678 
    Other Franchise Revenues(2) 581   145   1,198   505 
    Total Ancillary Revenue 4,552   2,025   7,088   4,183 
    Total Revenues$69,277  $53,022  $127,232  $94,300 

    (1) Renewal Commissions, New Business Commissions, Agency Fees, and Contingent Commissions are included in "Commissions and agency fees" as shown on the Condensed Consolidated statements of operations.
    (2) Renewal Royalty Fees, New Business Royalty Fees, Initial Franchise Fees, and Other Franchise Revenues are included in "Franchise revenues" as shown on the Condensed Consolidated statements of operations.

    The following tables show a reconciliation from net income to Adjusted EBITDA and Adjusted EBITDA Margin (non-GAAP basis) for the three and six months ended June 30, 2023 and 2022 (in thousands):

      Three Months Ended
    June 30,
     Six Months Ended
    June 30,
       2023   2022   2023   2022 
    Net loss $7,180  $2,389  $6,999  $(2,994)
    Interest expense  1,709   1,114   3,440   1,997 
    Depreciation and amortization  2,372   1,658   4,465   3,234 
    Tax expense  2,301   2,164   2,220   562 
    Equity-based compensation  5,872   5,173   12,492   10,961 
    Impairment expense  3,628      3,628    
    Adjusted EBITDA $23,062  $12,498  $33,244  $13,760 
    Net Income Margin(1)  10%  5%  6%  (3)%
    Adjusted EBITDA Margin(2)  33%  24%  26%  15%

    (1) Net Income Margin is calculated as Net Income divided by Total Revenue ($7,180/$69,277) and ($2,389/$53,022) for the three months ended June 30, 2023 and 2022. Net Income Margin is calculated as Net Income divided by Total Revenue ($6,999/$127,232) and ($(2,994)/$94,300) for the six months ended June 30, 2023 and 2022
    (2) Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Total Revenue ($23,062/$69,277), and ($12,498/$53,022) for the three months ended June 30, 2023 and 2022, respectively. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Total Revenue ($33,244/$127,232), and ($13,760/$94,300) for the six months ended June 30, 2023 and 2022.

    The following tables show a reconciliation from basic earnings per share to Adjusted EPS (non-GAAP basis) for the three and six months ended June 30, 2023 and 2022. Note that totals may not sum due to rounding:

      Three Months Ended
    June 30,
     Six Months Ended
    June 30,
       2023   2022   2023   2022 
    Earnings per share - basic (GAAP) $0.15  $0.02  $0.15  $(0.10)
    Add: equity-based compensation(1)  0.16   0.14   0.33   0.30 
    Add: impairment expense(2)  0.10      0.10    
    Adjusted EPS (non-GAAP) $0.41  $0.16  $0.58  $0.20 

    (1) Calculated as equity-based compensation divided by sum of weighted average Class A and Class B shares [$5.9 million/(23.7 million + 13.9 million)] for the three months ended June 30, 2023 and [$5.2 million/ (20.5 million + 16.7 million)] for the three months ended June 30, 2022. Calculated as equity-based compensation divided by sum of weighted average Class A and Class B shares [$12.5 million/(23.4 million + 14.1 million)] for the six months ended June 30, 2023 and [$11.0 million/ (20.3 million + 16.8 million)] for the six months ended June 30, 2022.
    (2) Calculated as impairment expense divided by sum of weighted average Class A and Class B shares [$3.6 million/(23.7 million + 13.9 million)] for the three months ended June 30, 2023. Calculated as impairment expense divided by sum of weighted average Class A and Class B shares [$3.6 million/(23.4 million + 14.1 million)] for the six months ended June 30, 2023.

    Goosehead Insurance, Inc.
    Key Performance Indicators

      June 30, 2023 December 31, 2022 June 30, 2022
    Corporate sales agents < 1 year tenured  146   165   312 
    Corporate sales agents > 1 year tenured  134   155   191 
    Operating franchises < 1 year tenured (TX)  64   71   67 
    Operating franchises > 1 year tenured (TX)  251   236   231 
    Operating franchises < 1 year tenured (Non-TX)  284   401   354 
    Operating franchises > 1 year tenured (Non-TX)  745   705   692 
    Total franchise producers  2,069   2,101   2,005 
    Policies in Force  1,427,000   1,284,000   1,181,000 
    Client Retention  88%  88%  89%
    Premium Retention  103%  100%  95%
    QTD Written Premium (in thousands) $767,253  $584,575  $565,961 
    Net Promoter Score ("NPS")  91   90   90 

     


    Primary Logo

شارك على،