Tiptree Inc. (NASDAQ:TIPT) (“Tiptree” or the “Company”), today
announced its financial results for the three months ended March
31, 2023.
First Quarter
($ in thousands, except per share
information)
2023
2022
Total revenues
$
381,625
$
324,903
Net income (loss) attributable to common
stockholders
$
(1,062
)
$
(960
)
Diluted earnings per share
$
(0.03
)
$
(0.03
)
Cash dividends paid per common share
$
0.05
$
0.04
Return on average equity
(1.1
)%
(0.9
)%
Non-GAAP:
(1)
Adjusted net income
$
17,284
$
15,452
Adjusted return on average equity
12.9
%
15.8
%
Book value per share
$
10.91
$
10.51
(1) See “—Non-GAAP Reconciliations” for a
discussion of non-GAAP financial measures. Adjusted net income is
presented before the impacts of non-controlling interests.
First Quarter 2023 Summary
- Revenues for the quarter of $381.6 million, an increase of
17.5% from Q1'22, driven by growth in Fortegra’s specialty
insurance lines. Excluding investment gains and losses, revenues
were up 16.1%.
- Net loss of $1.1 million compared to net loss of $1.0 million
in Q1'22, driven by growth in our insurance business, offset by
declines in our mortgage and shipping revenues.
- Adjusted net income of $17.3 million increased by 11.9% from
$15.5 million in Q1'22, driven by improvement in our insurance
operations. Adjusted return on average equity was 12.9% for the
quarter, with the year-over-year comparison impacted by the
investment in Fortegra in June 2022 from Warburg Pincus.
- Declared a dividend of $0.05 per share to stockholders of
record on May 22, 2023 with a payment date of May 30, 2023.
Segment Financial Highlights - First Quarter 2023
Insurance (The Fortegra Group):
First Quarter
($ in thousands)
2023
2022
Gross written premiums and premium
equivalents
$
750,329
$
600,855
Revenues
$
368,444
$
282,529
Income before taxes
$
19,445
$
14,682
Return on average equity
16.7
%
14.7
%
Combined ratio
91.3
%
90.5
%
Non-GAAP:
(1)
Adjusted net income
$
22,939
$
21,124
Adjusted return on average equity
26.1
%
28.2
%
(1) See “—Non-GAAP Reconciliations” for a
discussion of non-GAAP financial measures. Adjusted net income is
presented before the impacts of non-controlling interests.
- Gross written premiums and premium equivalents of $750.3
million, increased 24.9% for the quarter driven by growth in U.S.
specialty insurance lines and services businesses in U.S. and
Europe.
- Unearned premiums and deferred revenues grew to $2.1 billion,
up $319.6 million, or 18.3%, from Q1’22.
- Revenues increased 30.4% for the quarter driven by premium
growth in specialty E&S and admitted lines, and services
businesses in the U.S. and Europe. Excluding the impact of
investment gains and losses, revenues increased by 29.0% from
Q1’22.
- The combined ratio for the quarter was 91.3%, compared to 90.5%
in Q1'22, driven by consistent underwriting performance and the
scalability of Fortegra’s operating platform.
- Income before taxes for the quarter was $19.4 million, up $4.8
million. Return on equity of 16.7%, compared to 14.7% in Q1'22. The
increases were driven by growth in underwriting and fee revenues
and increased net investment income.
- Adjusted net income for the quarter was $22.9 million, up 8.6%
from Q1'22 with the improvement driven by revenue growth. Adjusted
return on average equity was 26.1%, compared to 28.2% in
Q1’22.
- In February 2023, Fortegra acquired Premia Solutions Limited,
one of the largest providers of automotive protection products in
the United Kingdom, for net cash consideration of approximately
$22.5 million.
Tiptree Capital:
First Quarter
($ in thousands)
2023
2022
Revenues
$
13,181
$
42,374
Income before taxes
$
(1,123
)
$
(3,385
)
Return on average equity
(1.8
)%
(5.8
)%
Non-GAAP:
(1)
Adjusted net income
$
560
$
972
Adjusted return on average equity
1.3
%
2.2
%
(1) See “—Non-GAAP Reconciliations” for a
discussion of non-GAAP financial measures. Adjusted net income is
presented before the impacts of non-controlling interests.
- Tiptree Capital loss before taxes was $1.1 million compared to
loss of $3.4 million in Q1’22, driven by a reduction in unrealized
investment losses, partially offset by declines in mortgage
operations and the sale of five vessels in 2022.
- Mortgage loss before taxes was $2.6 million, as compared to
income of $4.3 million in Q1'22, with the decrease driven by
declines in origination volumes and negative marks on the MSR asset
in 2023 compared to positive marks in 2022.
- Total Tiptree Capital book value, including corporate net
assets, was $220.5 million as of Q1’23.
Corporate:
Corporate includes expenses of the holding company for interest
expense, employee compensation and benefits, audit and professional
fees, and public company and other expenses. For the quarter,
corporate expenses were $10.1 million compared to $12.2 million in
Q1'22. The decrease was driven by lower interest expense as we
repaid our corporate holding company borrowings in June 2022.
Non-GAAP
Management uses Adjusted net income and Adjusted return on
average equity as measurements of operating performance. Management
believes these measures provide supplemental information useful to
investors as they are frequently used by the financial community to
analyze financial performance and comparison among companies.
Management uses Adjusted net income and adjusted return on average
equity as part of its capital allocation process and to assess
comparative returns on invested capital. Adjusted net income
represents income before taxes, less provision (benefit) for income
taxes, and excluding the after-tax impact of various expenses that
we consider to be unique and non-recurring in nature, stock-based
compensation, net realized and unrealized gains (losses), and
intangibles amortization associated with purchase accounting.
Adjusted net income and Adjusted return on average equity are
presented before the impacts of non-controlling interests. Adjusted
net income and Adjusted return on average equity are not
measurements of financial performance or liquidity under GAAP and
should not be considered as an alternative or substitute for GAAP
net income. See “Non-GAAP Reconciliations” for a reconciliation of
these measures to their GAAP equivalents.
Earnings Conference Call
Tiptree will host a conference call on Thursday, May 4, 2023 at
9:00 a.m. Eastern Time to discuss its Q1 2023 financial results. A
copy of our investor presentation, to be used during the conference
call, as well as this press release, will be available in the
Investor Relations section of the Company’s website, located at
www.tiptreeinc.com.
The conference call will be available via live or archived
webcast at http://www.investors.tiptreeinc.com. To listen to a live
broadcast, go to the site at least 15 minutes prior to the
scheduled start time in order to register, download and install any
necessary audio software. To participate in the telephone
conference call, please dial 1-877-407-4018 (domestic) or
1-201-689-8471 (international). Please dial in at least five
minutes prior to the start time.
A replay of the call will be available from Thursday, May 4,
2023 at 12:00 p.m. Eastern Time, until midnight Eastern on
Thursday, May 11, 2023. To listen to the replay, please dial
1-844-512-2921 (domestic) or 1-412-317-6671 (international),
Passcode: 13737264.
About Tiptree
Tiptree Inc. (NASDAQ: TIPT) allocates capital to select small
and middle market companies with the mission of building long-term
value. Established in 2007, we have a significant track record
investing in the insurance sector and across a variety of other
industries, including mortgage origination, specialty finance and
shipping. With proprietary access and a flexible capital base, we
seek to uncover compelling investment opportunities and support
management teams in unlocking the full value potential of their
businesses. For more information, please visit tiptreeinc.com and
follow us on LinkedIn.
Forward-Looking
Statements
This release contains “forward-looking statements” which involve
risks, uncertainties and contingencies, many of which are beyond
the Company’s control, which may cause actual results, performance,
or achievements to differ materially from anticipated results,
performance, or achievements. All statements contained in this
release that are not clearly historical in nature are
forward-looking, and the words “anticipate,” “believe,” “estimate,”
“expect,” “intend,” “may,” “might,” “plan,” “project,” “should,”
“target,” “will,” or similar expressions are intended to identify
forward-looking statements. Such forward-looking statements
include, but are not limited to, statements about the Company’s
plans, objectives, expectations for our businesses and intentions.
The forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties and other
factors, many of which are beyond our control, are difficult to
predict and could cause actual results to differ materially from
those expressed or forecast in the forward-looking statements. Our
actual results could differ materially from those anticipated in
these forward-looking statements as a result of various factors,
including, but not limited to those described in the section
entitled “Risk Factors” in the Company’s Annual Report on Form
10-K, and as described in the Company’s other filings with the
Securities and Exchange Commission. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as to the date of this release. The factors described
therein are not necessarily all of the important factors that could
cause actual results or developments to differ materially from
those expressed in any of our forward-looking statements. Other
unknown or unpredictable factors also could affect our
forward-looking statements. Consequently, our actual performance
could be materially different from the results described or
anticipated by our forward-looking statements. Given these
uncertainties, you should not place undue reliance on these
forward-looking statements. Except as required by the federal
securities laws, we undertake no obligation to update any
forward-looking statements.
Tiptree Inc.
Condensed Consolidated Balance
Sheets
($ in thousands, except share data)
As of
March 31, 2023
December 31,
2022
Assets:
Investments:
Available for sale securities, at fair
value, net of allowance for credit losses
$
810,445
$
611,980
Loans, at fair value
72,382
64,843
Equity securities
111,089
85,776
Other investments
84,570
73,025
Total investments
1,078,486
835,624
Cash and cash equivalents
412,004
538,065
Restricted cash
13,926
12,782
Notes and accounts receivable, net
502,615
502,311
Reinsurance receivables
1,297,440
1,176,090
Deferred acquisition costs
504,336
498,925
Goodwill
206,636
186,608
Intangible assets, net
130,609
117,015
Other assets
161,906
172,143
Total assets
$
4,307,958
$
4,039,563
Liabilities and Stockholders’
Equity
Liabilities:
Debt, net
$
347,461
$
259,366
Unearned premiums
1,403,213
1,357,436
Policy liabilities and unpaid claims
639,808
567,193
Deferred revenue
665,513
649,150
Reinsurance payable
345,139
305,097
Other liabilities and accrued expenses
365,267
367,748
Total liabilities
$
3,766,401
$
3,505,990
Stockholders’ Equity:
Preferred stock: $0.001 par value,
100,000,000 shares authorized, none issued or outstanding
$
—
$
—
Common stock: $0.001 par value,
200,000,000 shares authorized, 36,734,948 and 36,385,299 shares
issued and outstanding, respectively
37
36
Additional paid-in capital
382,502
382,645
Accumulated other comprehensive income
(loss), net of tax
(33,093
)
(39,429
)
Retained earnings
51,201
54,113
Total Tiptree Inc. stockholders’
equity
400,647
397,365
Non-controlling interests:
Fortegra preferred interests
77,679
77,679
Common interests
63,231
58,529
Total non-controlling interests
140,910
136,208
Total stockholders’ equity
541,557
533,573
Total liabilities and stockholders’
equity
$
4,307,958
$
4,039,563
Tiptree Inc.
Condensed Consolidated Statements of
Operations
($ in thousands, except share data)
Three Months Ended
March 31,
2023
2022
Revenues:
Earned premiums, net
$
265,330
$
208,416
Service and administrative fees
92,032
71,835
Ceding commissions
3,645
2,537
Net investment income
5,109
3,167
Net realized and unrealized gains
(losses)
2,177
17,204
Other revenue
13,332
21,744
Total revenues
381,625
324,903
Expenses:
Policy and contract benefits
141,675
104,446
Commission expense
146,450
117,423
Employee compensation and benefits
40,798
56,455
Interest expense
6,465
10,199
Depreciation and amortization
5,253
6,156
Other expenses
32,811
31,176
Total expenses
373,452
325,855
Income (loss) before taxes
8,173
(952
)
Less: provision (benefit) for income
taxes
5,022
(86
)
Net income (loss)
3,151
(866
)
Less: net income (loss) attributable to
non-controlling interests
4,213
94
Net income (loss) attributable to
common stockholders
$
(1,062
)
$
(960
)
Net income (loss) per common
share:
Basic earnings per share
$
(0.03
)
$
(0.03
)
Diluted earnings per share
$
(0.03
)
$
(0.03
)
Weighted average number of common
shares:
Basic
36,522,946
34,229,011
Diluted
36,522,946
34,229,011
Dividends declared per common share
$
0.05
$
0.04
Tiptree Inc. Non-GAAP Reconciliations
(Unaudited)
Non-GAAP Financial Measures — Adjusted
net income and Adjusted return on average equity
The Company defines Adjusted net income as income before taxes,
less provision (benefit) for income taxes, and excluding the
after-tax impact of various expenses that we consider to be unique
and non-recurring in nature, including merger and acquisition
related expenses, stock-based compensation, net realized and
unrealized gains (losses) and intangibles amortization associated
with purchase accounting. We use adjusted net income as an internal
operating performance measure in the management of business as part
of our capital allocation process. We believe adjusted net income
provides useful supplemental information to investors as it is
frequently used by the financial community to analyze financial
performance between periods and for comparison among companies.
Adjusted net income should not be viewed as a substitute for income
before taxes calculated in accordance with GAAP, and other
companies may define adjusted net income differently. Adjusted net
income is presented before the impacts of non-controlling
interests.
We define Adjusted return on average equity as Adjusted net
income expressed on an annualized basis as a percentage of average
beginning and ending stockholder’s equity during the period. We use
Adjusted return on average equity as an internal performance
measure in the management of our operations because we believe it
gives our management and other users of our financial information
useful insight into our results of operations and our underlying
business performance. Adjusted return on average equity should not
be viewed as a substitute for return on average equity calculated
in accordance with GAAP, and other companies may define adjusted
return on average equity differently.
Three Months Ended March 31,
2023
Tiptree Capital
($ in thousands)
Insurance
Mortgage
Other
Corporate
Total
Income (loss) before taxes
19,445
(2,565
)
1,442
(10,149
)
$
8,173
Less: Income tax (benefit) expense
(4,747
)
613
(263
)
(625
)
(5,022
)
Less: Net realized and unrealized gains
(losses)
4,607
1,443
323
—
6,373
Plus: Intangibles amortization (1)
3,894
—
—
—
3,894
Plus: Stock-based compensation expense
33
—
—
2,282
2,315
Plus: Non-recurring expenses
2,125
—
—
—
2,125
Plus: Non-cash fair value adjustments
(118
)
—
—
—
(118
)
Less: Tax on adjustments (2)
(2,300
)
(344
)
(89
)
2,277
(456
)
Adjusted net income
$
22,939
$
(853
)
$
1,413
$
(6,215
)
$
17,284
Adjusted net income
$
22,939
$
(853
)
$
1,413
$
(6,215
)
17,284
Average stockholders’ equity
$
351,953
$
53,768
$
114,219
$
17,626
537,566
Adjusted return on average equity
26.1
%
(6.3
)%
4.9
%
NM%
12.9
%
Three Months Ended March 31,
2022
Tiptree Capital
($ in thousands)
Insurance
Mortgage
Other
Corporate
Total
Income (loss) before taxes
$
14,682
$
4,266
$
(7,651
)
$
(12,249
)
$
(952
)
Less: Income tax (benefit) expense
(3,664
)
(978
)
1,794
2,934
86
Less: Net realized and unrealized gains
(losses)
6,643
(6,314
)
8,851
—
9,180
Plus: Intangibles amortization (1)
3,946
—
3,946
Plus: Stock-based compensation expense
2,319
—
3,839
6,158
Plus: Non-recurring expenses
23
133
156
Plus: Non-cash fair value adjustments
1,514
1,514
Less: Tax on adjustments (2)
(2,825
)
1,470
(2,113
)
(1,168
)
(4,636
)
Adjusted net income
$
21,124
$
(1,556
)
$
2,528
$
(6,644
)
$
15,452
Adjusted net income
$
21,124
$
(1,556
)
$
2,528
$
(6,644
)
$
15,452
Average stockholders’ equity
$
299,113
$
58,962
$
117,744
$
(84,152
)
$
391,667
Adjusted return on average equity
28.2
%
(10.6
)%
8.6
%
NM%
15.8
%
Notes
(1)
Specifically associated with acquisition
purchase accounting. See Note (8) Goodwill and Intangible Assets,
net, of the Company’s Form 10-Q for the period ended March 31,
2023.
(2)
Tax on adjustments represents the tax
applied to the total non-GAAP adjustments and includes adjustments
for non-recurring or discrete tax impacts. For the three months
ended March 31, 2023, included in the adjustment is an add-back of
$2.3 million related to deferred tax expense from the WP
Transaction.
Non-GAAP Financial Measures — Book
value per share
Management believes the use of this financial measure provides
supplemental information useful to investors as book value is
frequently used by the financial community to analyze company
growth on a relative per share basis. The following table provides
a reconciliation between total stockholders’ equity and total
shares outstanding, net of treasury shares.
($ in thousands, except per share
information)
As of March 31,
2023
2022
Total stockholders’ equity
$
541,557
$
383,153
Less: Non-controlling interests
140,910
16,520
Total stockholders’ equity, net of
non-controlling interests
$
400,647
$
366,633
Total common shares outstanding
36,735
34,878
Book value per share
$
10.91
$
10.51
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230502006250/en/
Tiptree Inc. Investor Relations, 212-446-1400
ir@tiptreeinc.com
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