- Total Revenue grew 18.8% year-over-year to
$695.4 million -
- Organic Revenue Growth Rate* of 14.2%
year-over-year -
- Net Income of $118.0 million, or $0.37 per
diluted share -
- Adjusted EBITDAC* grew 27.6% year-over-year
to $247.7 million -
- Adjusted Net Income increased 29.8%
year-over-year to $160.6 million, or $0.58 per diluted share -
Ryan Specialty Holdings, Inc. (NYSE: RYAN) (“Ryan Specialty” or
the “Company”), a leading international specialty insurance firm,
today announced results for the second quarter ended June 30,
2024.
Second Quarter 2024 Highlights
- Revenue grew 18.8% year-over-year to $695.4 million, compared
to $585.1 million in the prior-year period
- Organic Revenue Growth Rate* was 14.2% for the quarter,
compared to 16.3% in the prior-year period
- Net Income increased 40.8% year-over-year to $118.0 million,
compared to $83.8 million in the prior-year period. Diluted
Earnings per Share was $0.37
- Adjusted EBITDAC* increased 27.6% to $247.7 million, compared
to $194.2 million in the prior-year period
- Adjusted EBITDAC Margin* of 35.6%, compared to 33.2% in the
prior-year period
- Adjusted Net Income* increased 29.8% to $160.6 million,
compared to $123.7 million in the prior-year period
- Adjusted Diluted Earnings per Share* increased 28.9% to $0.58,
compared to $0.45 in the prior-year period
- Capital return to shareholders and LLC unit holders was $18.6
million of regular dividends and distributions
“We delivered another fantastic quarter for our shareholders,
once again driven by broad-based double-digit organic growth as
well as significant margin expansion," said Patrick G. Ryan,
Founder, Chairman and Chief Executive Officer of Ryan Specialty.
"We generated 14.2% organic revenue growth and expanded Adjusted
EBITDAC margin by 240 basis points year-over-year while growing
Adjusted EPS by nearly 30%. Our consistent excellent performance is
a testament to the relentless efforts of our entire team to execute
for our clients and trading partners. We are also very excited
about today's announcement to acquire US Assure, a leading program
focused exclusively on the SME segment of builder’s risk insurance.
This transaction meets all our M&A criteria – a strong cultural
fit, strategic, and accretive – and aligns with our mission of
providing innovative industry-leading solutions for insurance
brokers, agents, and carriers. With clear positive momentum
underway and a deep roster of proven leaders, I am further
energized about our recently announced succession plan. As we look
toward the remainder of 2024 and beyond, I remain incredibly
optimistic about the long-term future of Ryan Specialty as Tim
Turner takes the helm as CEO in October. We continue to be well
positioned to deliver sustainable and differentiated profitable
growth.”
Summary of Second Quarter 2024 Results
Three Months Ended June
30,
Change
Six Months Ended June
30,
Change
(in thousands, except percentages and per
share data)
2024
2023
$
%
2024
2023
$
%
GAAP financial measures
Total revenue
$
695,441
$
585,149
$
110,292
18.8
%
$
1,247,487
$
1,042,748
$
204,739
19.6
%
Net commissions and fees
680,248
573,020
107,228
18.7
1,218,135
1,020,533
197,602
19.4
Compensation and benefits
414,049
352,360
61,689
17.5
787,576
660,082
127,494
19.3
General and administrative
82,967
81,608
1,359
1.7
158,834
133,307
25,527
19.1
Total operating expenses
531,073
462,309
68,764
14.9
1,010,470
849,821
160,649
18.9
Operating income
164,368
122,840
41,528
33.8
237,017
192,927
44,090
22.9
Net income
118,038
83,817
34,221
40.8
158,715
120,274
38,441
32.0
Net income attributable to Ryan Specialty
Holdings, Inc.
46,787
30,078
16,709
55.6
63,322
43,238
20,084
46.4
Compensation and benefits expense ratio
(1)
59.5
%
60.2
%
63.1
%
63.3
%
General and administrative expense ratio
(2)
11.9
%
13.9
%
12.7
%
12.8
%
Net income margin (3)
17.0
%
14.3
%
12.7
%
11.5
%
Earnings per share (4)
$
0.38
$
0.27
$
0.52
$
0.39
Diluted earnings per share (4)
$
0.37
$
0.26
$
0.49
$
0.37
Non-GAAP financial measures*
Organic revenue growth rate
14.2
%
16.3
%
14.0
%
15.1
%
Adjusted compensation and benefits
expense
$
383,960
$
329,641
$
54,319
16.5
%
$
713,982
$
615,526
$
98,456
16.0
%
Adjusted compensation and benefits expense
ratio
55.2
%
56.3
%
57.2
%
59.0
%
Adjusted general and administrative
expense
$
63,790
$
61,347
$
2,443
4.0
%
$
128,592
$
108,046
$
20,546
19.0
%
Adjusted general and administrative
expense ratio
9.2
%
10.5
%
10.3
%
10.4
%
Adjusted EBITDAC
$
247,691
$
194,161
$
53,530
27.6
%
$
404,913
$
319,176
$
85,737
26.9
%
Adjusted EBITDAC margin
35.6
%
33.2
%
32.5
%
30.6
%
Adjusted net income
$
160,554
$
123,727
$
36,827
29.8
%
$
255,971
$
195,512
$
60,459
30.9
%
Adjusted net income margin
23.1
%
21.1
%
20.5
%
18.7
%
Adjusted diluted earnings per share
$
0.58
$
0.45
$
0.93
$
0.72
* For a definition and a reconciliation of
Organic revenue growth rate, Adjusted compensation and benefits
expense, Adjusted compensation and benefits ratio, Adjusted general
and administrative expense, Adjusted general and administrative
expense ratio, Adjusted EBITDAC, Adjusted EBITDAC margin, Adjusted
net income, Adjusted net income margin, and Adjusted diluted
earnings per share to the most directly comparable GAAP measure,
see “Non-GAAP Financial Measures and Key Performance Indicators”
below.
(1)
Compensation and benefits expense ratio is
defined as Compensation and benefits divided by Total revenue.
(2)
General and administrative expense ratio
is defined as General and administrative expense divided by Total
revenue.
(3)
Net income margin is defined as Net income
divided by Total revenue.
(4)
See “Note 10, Earnings Per Share” of the
unaudited quarterly consolidated financial statements.
Second Quarter 2024 Review*
Total revenue for the second quarter of 2024 was $695.4 million,
an increase of 18.8% compared to $585.1 million in the prior-year
period. This increase was primarily due to continued solid Organic
revenue growth of 14.2%, driven by new client wins and expanded
relationships with existing clients, coupled with continued
expansion of the E&S market, revenue from acquisitions
completed within the trailing twelve months ended June 30, 2024,
and increased Fiduciary investment income. We experienced growth
across the majority of our property and casualty lines.
Total operating expenses for the second quarter of 2024 were
$531.1 million, a 14.9% increase compared to the prior-year period.
This increase was primarily due to an increase in Compensation and
benefits expense compared to the prior-year period resulting from
higher compensation due to revenue growth and higher Restructuring
and related expenses associated with ACCELERATE 2025, partially
offset by savings associated with ACCELERATE 2025. General and
administrative expense also increased compared to the prior-year
period due to higher Acquisition-related expenses partially offset
by a decline in Restructuring and related expenses associated with
ACCELERATE 2025.
Net income for the second quarter of 2024 increased 40.8% to
$118.0 million, compared to $83.8 million in the prior-year period.
The increase was primarily due to stronger revenue growth compared
to the prior-year period.
Adjusted EBITDAC grew 27.6% to $247.7 million from $194.2
million in the prior-year period. Adjusted EBITDAC margin for the
quarter was 35.6%, compared to 33.2% in the prior-year period. The
increase in Adjusted EBITDAC was driven primarily by solid revenue
growth, partially offset by increased Adjusted compensation and
benefits expense, as well as higher Adjusted general and
administrative expense.
Adjusted net income for the second quarter of 2024 increased
29.8% to $160.6 million, compared to $123.7 million in the
prior-year period. Adjusted net income margin was 23.1%, compared
to 21.1% in the prior-year period. Adjusted diluted earnings per
share for the first quarter of 2024 increased 28.9% to $0.58,
compared to $0.45 in the prior-year period.
* For the definition of each of the
non-GAAP measures referred to above, as well as a reconciliation of
such non-GAAP measures to their most directly comparable GAAP
measures, see “Non-GAAP Financial Measures and Key Performance
Indicators” below.
Second Quarter 2024 Net Commissions and Fees by Specialty and
Revenue by Type
Growth in Net commissions and fees in all specialties was
primarily driven by solid organic growth.
Three Months Ended June
30,
(in thousands, except percentages)
2024
% of total
2023
% of total
Change
Wholesale Brokerage
$
444,129
65.3
%
$
381,616
66.6
%
$
62,513
16.4
%
Binding Authorities
80,630
11.8
69,775
12.2
10,855
15.6
Underwriting Management
155,489
22.9
121,629
21.2
33,860
27.8
Total Net commissions and fees
$
680,248
$
573,020
$
107,228
18.7
%
Six Months Ended June
30,
(in thousands, except percentages)
2024
% of total
2023
% of total
Change
Wholesale Brokerage
$
767,574
63.0
%
$
667,466
65.4
%
$
100,108
15.0
%
Binding Authorities
169,265
13.9
139,301
13.7
29,964
21.5
Underwriting Management
281,296
23.1
213,766
20.9
67,530
31.6
Total Net commissions and fees
$
1,218,135
$
1,020,533
$
197,602
19.4
%
The following tables sets forth our revenue by type of
commission and fees:
Three Months Ended June
30,
(in thousands, except percentages)
2024
% of total
2023
% of total
Change
Net commissions and policy fees
$
656,938
96.6
%
$
557,648
97.3
%
$
99,290
17.8
%
Supplemental and contingent
commissions
8,927
1.3
7,965
1.4
962
12.1
Loss mitigation and other fees
14,383
2.1
7,407
1.3
6,976
94.2
Total net commissions and fees
$
680,248
$
573,020
$
107,228
18.7
%
Six Months Ended June
30,
(in thousands, except percentages)
2024
% of total
2023
% of total
Change
Net commissions and policy fees
$
1,151,442
94.5
%
$
970,797
95.1
%
$
180,645
18.6
%
Supplemental and contingent
commissions
$
38,200
3.1
$
34,296
3.4
3,904
11.4
Loss mitigation and other fees
$
28,492
2.4
$
15,440
1.5
13,052
84.5
Total net commissions and fees
$
1,218,135
$
1,020,533
$
197,602
19.4
%
Liquidity and Financial Condition
As of June 30, 2024, the Company had Cash and cash equivalents
of $612.4 million and outstanding debt principal of $2.0 billion.
On July 30, 2024, the Company upsized its revolving credit facility
to $1.4 billion from $0.6 billion.
Quarterly Dividend
On August 1, 2024, the Company's board of directors (the
"Board") declared a regular quarterly dividend of $0.11 per share
on the outstanding Class A common stock. The regular quarterly
dividend will be payable on August 27, 2024 to stockholders of
record as of the close of business on August 13, 2024. A portion of
the dividend, $0.04 per share, will be funded by free cash flow
from Ryan Specialty, LLC and will be paid to all holders of the
Company's Class A common stock and the holders of the LLC Common
Units (as defined below).
Full Year 2024 Outlook*
The Company is updating its full year 2024 outlook for Organic
Revenue Growth Rate and Adjusted EBITDAC Margin as follows:
- Organic Revenue Growth Rate guidance for full year 2024 is
between 13.0% – 14.0%, compared to the Company's prior guidance of
12.5% – 14.0%
- Adjusted EBITDAC Margin guidance for full year 2024 is between
32.0% – 32.5%*, compared to the Company's prior guidance of 31.0% –
31.5%
*This guidance incorporates the US Assure acquisition.
The Company is unable to provide a comparable outlook for, or a
reconciliation to, Total revenue growth rate or Net income margin
because it cannot provide a meaningful or accurate calculation or
estimation of certain reconciling items without unreasonable
effort. Its inability to do so is due to the inherent difficulty in
forecasting the timing of items that have not yet occurred and
quantifying certain amounts that are necessary for such
reconciliation, including variations in effective tax rate,
expenses to be incurred for acquisition activities, and other
one-time or exceptional items.
* For a definition of Organic revenue
growth rate, see “Organic Revenue Growth Rate Calculation
Methodology” above. For a definition of Adjusted EBITDAC margin,
see “Non-GAAP Financial Measures and Key Performance Indicators”
below.
Conference Call Information
Ryan Specialty will host a conference call today at 5:00 PM ET
to discuss these results. A live audio webcast of the conference
call will be available on the Company’s website at
ryanspecialty.com in its Investors section.
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 webcast replay of the call will be available on the Company’s
website at ryanspecialty.com in its Investors section for one year
following the call.
About Ryan Specialty
Founded in 2010, Ryan Specialty (NYSE: RYAN) is a service
provider of specialty products and solutions for insurance brokers,
agents, and carriers. Ryan Specialty provides distribution,
underwriting, product development, administration, and risk
management services by acting as a wholesale broker and a managing
underwriter with delegated authority from insurance carriers. Our
mission is to provide industry-leading innovative specialty
insurance solutions for insurance brokers, agents, and carriers.
Learn more at ryanspecialty.com.
Forward-Looking Statements
All statements in this release and in the corresponding earnings
call that are not historical are “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995 and involve substantial risks and uncertainties. For
example, all statements the Company makes relating to its estimated
and projected costs, expenditures, cash flows, growth rates and
financial results, its plans, anticipated amount and timing of cost
savings relating to the restructuring plan, or its plans and
objectives for future operations, growth initiatives, or strategies
and the statements under the caption “Full Year 2024 Outlook” are
forward-looking statements. Words such as “anticipate,” “estimate,”
“expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,”
“should,” “can have,” “likely” and variations of such words and
similar expressions are intended to identify such forward-looking
statements. All forward-looking statements are subject to risks and
uncertainties, known and unknown, that may cause actual results to
differ materially from those that the Company expected. Specific
factors that could cause such a difference include, but are not
limited to, those disclosed previously in the Company’s filings
with the Securities and Exchange Commission (“SEC”).
For more detail on the risk factors that may affect the
Company’s results, see the section entitled ‘‘Risk Factors’’ in our
most recent annual report on Form 10-K filed with the SEC, and in
other documents filed with, or furnished to, the SEC. Should one or
more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary
materially from those indicated or anticipated by such
forward-looking statements. Given these factors, as well as other
variables that may affect the Company’s operating results, you are
cautioned not to place undue reliance on these forward-looking
statements, not to assume that past financial performance will be a
reliable indicator of future performance, and not to use historical
trends to anticipate results or trends in future periods. The
forward-looking statements included in this press release and on
the related earnings call relate only to events as of the date
hereof. The Company does not undertake, and expressly disclaims,
any duty or obligation to update publicly any forward-looking
statement after the date of this release, whether as a result of
new information, future events, changes in assumptions, or
otherwise.
Non-GAAP Financial Measures and Key Performance
Indicators
In assessing the performance of the Company’s business, non-GAAP
financial measures are used that are derived from the Company’s
consolidated financial information, but which are not presented in
the Company’s consolidated financial statements prepared in
accordance with GAAP. The Company 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 positions, depreciation,
amortization, and certain other items that the Company believes are
not representative of its core business. The Company uses the
following non-GAAP measures for business planning purposes, in
measuring performance relative to that of its competitors, to help
investors to understand the nature of the Company's growth, and to
enable investors to evaluate the run-rate performance of the
Company. Non-GAAP financial measures should be viewed as
supplementing, and not as an alternative or substitute for, the
consolidated financial statements prepared and presented in
accordance with GAAP. The footnotes to the reconciliation tables
below should be read in conjunction with the unaudited consolidated
quarterly financial statements in the Company's Quarterly Report on
form 10-Q filed with the SEC. Industry peers may provide similar
supplemental information but may not define similarly-named metrics
in the same way and may not make identical adjustments.
Organic revenue growth rate: Organic revenue growth rate
represents the percentage change in Net commissions and fees, as
compared to the same period for the year prior, adjusted to
eliminate revenue attributable to acquisitions for the first twelve
months of ownership, and other items such as contingent commissions
and the impact of changes in foreign exchange rates.
Adjusted compensation and benefits expense: Adjusted
compensation and benefits expense is defined as Compensation and
benefits expense adjusted to reflect items such as (i) equity-based
compensation, (ii) acquisition and restructuring related
compensation expenses, and (iii) other exceptional or non-recurring
compensation expenses, as applicable. The most directly comparable
GAAP financial metric is Compensation and benefits expense.
Adjusted general and administrative expense: Adjusted
general and administrative expense is defined as General and
administrative expense adjusted to reflect items such as (i)
acquisition and restructuring related general and administrative
expenses, and (ii) other exceptional or non-recurring general and
administrative expenses, as applicable. The most directly
comparable GAAP financial metric is General and administrative
expense.
Adjusted compensation and benefits expense ratio:
Adjusted compensation and benefits expense ratio is defined as the
Adjusted compensation and benefits expense as a percentage of Total
revenue. The most directly comparable GAAP financial metric is
Compensation and benefits expense ratio.
Adjusted general and administrative expense ratio:
Adjusted general and administrative expense ratio is defined as the
Adjusted general and administrative expense as a percentage of
Total revenue. The most directly comparable GAAP financial metric
is General and administrative expense ratio.
Adjusted EBITDAC: Adjusted EBITDAC is defined as Net
income before Interest expense, net, Income tax expense,
Depreciation, Amortization, and Change in contingent consideration,
adjusted to reflect items such as (i) equity-based compensation,
(ii) acquisition-related expenses, and (iii) other exceptional or
non-recurring items, as applicable. Acquisition-related expense
includes one-time diligence, transaction-related, and integration
costs. In 2024, Acquisition-related expense includes a $2.0 million
charge for the three months ended June 30, 2024 and a $4.5 million
charge for the six months ended June 30, 2024 related to a
deal-contingent foreign exchange forward contract associated with
the Castel acquisition. The remaining charges in both years
represent typical one-time diligence, transaction-related, and
integration costs. Acquisition-related long-term incentive
compensation arises from changes to long-term incentive plans
associated with acquisitions. Restructuring and related expense
consists of compensation and benefits, occupancy, contractors,
professional services, and license fees related to the ACCELERATE
2025 program. The compensation and benefits expense included
severance as well as employment costs related to services rendered
between the notification and termination dates and other
termination payments. See “Note 4, Restructuring” of the unaudited
quarterly consolidated financial statements for further discussion
of ACCELERATE 2025. The remaining costs that preceded the
restructuring plan were associated with professional services costs
related to program design and licensing costs. Amortization and
expense consists of charges related to discontinued prepaid
incentive programs. For the three months ended June 30, 2024, Other
non-operating loss (income) consisted of $0.4 million of TRA
contractual interest and related expense offset by $0.2 million of
sublease income. For the three months ended June 30, 2023, Other
non-operating income included $0.2 million of TRA contractual
interest and related expense offset by $0.1 million of sublease
income. For the six months ended June 30, 2024, Other non-operating
loss (income) consisted of $1.9 million of expense related to fees
associated with our term loan repricing and $0.4 million of TRA
contractual interest and related expense offset by $0.3 million of
sublease income. For the six months ended June 30, 2023, Other
non-operating income included sublease income offset by TRA
contractual interest and related expense. Equity-based compensation
reflects non-cash equity-based expense. Initial Public Offering
(the "IPO") related expenses include compensation-related expense
primarily related to the expense for new awards issued at IPO as
well as expense related to the revaluation of existing equity
awards at IPO. Total revenue less Adjusted compensation and
benefits expense and Adjusted general and administrative expense is
equivalent to Adjusted EBITDAC. For a breakout of compensation and
general and administrative costs for each addback refer to the
Adjusted compensation and benefits expense and Adjusted general and
administrative expense tables below. The most directly comparable
GAAP financial metric to Adjusted EBITDAC is Net income.
Adjusted EBITDAC margin: Adjusted EBITDAC margin is
defined as Adjusted EBITDAC as a percentage of Total revenue. The
most directly comparable GAAP financial metric is Net income
margin.
Adjusted net income: Adjusted net income is defined as
tax-effected earnings before amortization and certain items of
income and expense, gains and losses, equity-based compensation,
acquisition related long-term incentive compensation,
acquisition-related expenses, costs associated with our IPO, and
certain exceptional or non-recurring items. The Company will be
subject to United States federal income taxes, in addition to
state, local, and foreign taxes, with respect to its allocable
share of any net taxable income of Ryan Specialty, LLC (together
with its parent New Ryan Specialty, LLC and their subsidiaries, the
“LLC”). For comparability purposes, this calculation incorporates
the impact of federal and state statutory tax rates on 100% of the
Company's adjusted pre-tax income as if the Company owned 100% of
Ryan Specialty, LLC. The most directly comparable GAAP financial
metric is Net income.
Adjusted net income margin: Adjusted net income margin is
defined as Adjusted net income as a percentage of Total revenue.
The most directly comparable GAAP financial metric is Net income
margin.
Adjusted diluted earnings per share: Adjusted diluted
earnings per share is defined as Adjusted net income divided by
diluted shares outstanding after adjusting for the effect if 100%
of the outstanding LLC Common Units (“LLC Common Units”), together
with the shares of Class B common stock, vested Class C Incentive
Units, and unvested equity awards were exchanged into shares of
Class A common stock as if 100% of unvested equity awards were
vested. The most directly comparable GAAP financial metric is
Diluted earnings per share.
The reconciliation of the above non-GAAP measures to each of
their most directly comparable GAAP financial measure is set forth
in the reconciliation table accompanying this release.
With respect to the Organic revenue growth rate and Adjusted
EBITDAC margin outlook presented in the “Full Year 2024 Outlook”
section of this press release, the Company is unable to provide a
comparable outlook for, or a reconciliation to, Total revenue
growth rate or Net income margin because it cannot provide a
meaningful or accurate calculation or estimation of certain
reconciling items without unreasonable effort. Its inability to do
so is due to the inherent difficulty in forecasting the timing of
items that have not yet occurred and quantifying certain amounts
that are necessary for such reconciliation, including variations in
effective tax rate, expenses to be incurred for acquisition
activities, and other one-time or exceptional items.
Consolidated Statements of Income (Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
(in thousands, except percentages and per
share data)
2024
2023
2024
2023
Revenue
Net commissions and fees
$
680,248
$
573,020
$
1,218,135
$
1,020,533
Fiduciary investment income
15,193
12,129
29,352
22,215
Total revenue
$
695,441
$
585,149
$
1,247,487
$
1,042,748
Expenses
Compensation and benefits
414,049
352,360
787,576
660,082
General and administrative
82,967
81,608
158,834
133,307
Amortization
30,541
24,368
58,529
49,553
Depreciation
2,273
2,177
4,353
4,369
Change in contingent consideration
1,243
1,796
1,178
2,510
Total operating expenses
$
531,073
$
462,309
$
1,010,470
$
849,821
Operating income
$
164,368
$
122,840
$
237,017
$
192,927
Interest expense, net
31,128
28,881
60,528
58,349
(Income) from equity method investment in
related party
(3,722
)
(1,616
)
(9,328
)
(3,611
)
Other non-operating loss (income)
233
108
1,985
(30
)
Income before income taxes
$
136,729
$
95,467
$
183,832
$
138,219
Income tax expense
18,691
11,650
25,117
17,945
Net income
$
118,038
$
83,817
$
158,715
$
120,274
GAAP financial measures
Total revenue
$
695,441
$
585,149
$
1,247,487
$
1,042,748
Net commissions and fees
680,248
573,020
1,218,135
1,020,533
Compensation and benefits
414,049
352,360
787,576
660,082
General and administrative
82,967
81,608
158,834
133,307
Net income
118,038
83,817
158,715
120,274
Compensation and benefits expense
ratio
59.5
%
60.2
%
63.1
%
63.3
%
General and administrative expense
ratio
11.9
%
13.9
%
12.7
%
12.8
%
Net income margin
17.0
%
14.3
%
12.7
%
11.5
%
Earnings per share
$
0.38
$
0.27
$
0.52
$
0.39
Diluted earnings per share
$
0.37
$
0.26
$
0.49
$
0.37
Non-GAAP Financial Measures (Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
(in thousands, except percentages and per
share data)
2024
2023
2024
2023
Non-GAAP financial measures
Organic revenue growth rate
14.2
%
16.3
%
14.0
%
15.1
%
Adjusted compensation and benefits
expense
$
383,960
$
329,641
$
713,982
$
615,526
Adjusted compensation and benefits expense
ratio
55.2
%
56.3
%
57.2
%
59.0
%
Adjusted general and administrative
expense
$
63,790
$
61,347
$
128,592
$
108,046
Adjusted general and administrative
expense ratio
9.2
%
10.5
%
10.3
%
10.4
%
Adjusted EBITDAC
$
247,691
$
194,161
$
404,913
$
319,176
Adjusted EBITDAC margin
35.6
%
33.2
%
32.5
%
30.6
%
Adjusted net income
$
160,554
$
123,727
$
255,971
$
195,512
Adjusted net income margin
23.1
%
21.1
%
20.5
%
18.7
%
Adjusted diluted earnings per share
$
0.58
$
0.45
$
0.93
$
0.72
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share
data)
June 30, 2024
December 31, 2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
612,437
$
838,790
Commissions and fees receivable – net
384,414
294,195
Fiduciary cash and receivables
4,051,029
3,131,660
Prepaid incentives – net
8,051
8,718
Other current assets
66,571
62,229
Total current assets
$
5,122,502
$
4,335,592
NON-CURRENT ASSETS
Goodwill
1,814,803
1,646,482
Customer relationships
618,323
572,416
Other intangible assets
54,468
38,254
Prepaid incentives – net
15,400
15,103
Equity method investment in related
party
58,664
46,099
Property and equipment – net
45,529
42,427
Lease right-of-use assets
122,212
127,708
Deferred tax assets
378,743
383,816
Other non-current assets
41,767
39,312
Total non-current assets
$
3,149,909
$
2,911,617
TOTAL ASSETS
$
8,272,411
$
7,247,209
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
liabilities
$
171,782
$
136,340
Accrued compensation
397,772
419,560
Operating lease liabilities
20,206
21,369
Tax Receivable Agreement liabilities
22,365
—
Short-term debt and current portion of
long-term debt
32,980
35,375
Fiduciary liabilities
4,051,029
3,131,660
Total current liabilities
$
4,696,134
$
3,744,304
NON-CURRENT LIABILITIES
Accrued compensation
61,974
24,917
Operating lease liabilities
149,411
154,457
Long-term debt
1,940,863
1,943,837
Tax Receivable Agreement liabilities
344,514
358,898
Other non-current liabilities
6,279
41,152
Total non-current liabilities
$
2,503,041
$
2,523,261
TOTAL LIABILITIES
$
7,199,175
$
6,267,565
STOCKHOLDERS’ EQUITY
Class A common stock ($0.001 par value;
1,000,000,000 shares authorized, 119,339,130 and 118,593,062 shares
issued and outstanding at June 30, 2024 and December 31, 2023,
respectively)
119
119
Class B common stock ($0.001 par value;
1,000,000,000 shares authorized, 141,164,071 and 141,621,188 shares
issued and outstanding at June 30, 2024 and December 31, 2023,
respectively)
142
142
Class X common stock ($0.001 par value;
10,000,000 shares authorized, 640,784 shares issued and 0
outstanding at June 30, 2024 and December 31, 2023)
—
—
Preferred stock ($0.001 par value;
500,000,000 shares authorized, 0 shares issued and outstanding at
June 30, 2024 and December 31, 2023)
—
—
Additional paid-in capital
478,130
441,997
Retained earnings
121,560
114,420
Accumulated other comprehensive income
5,903
3,076
Total stockholders’ equity attributable
to Ryan Specialty Holdings, Inc.
$
605,854
$
559,754
Non-controlling interests
467,382
419,890
Total stockholders’ equity
$
1,073,236
$
979,644
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
8,272,411
$
7,247,209
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June
30,
(in thousands)
2024
2023
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income
$
158,715
$
120,274
Adjustments to reconcile net income to
cash flows provided by operating activities:
(Income) from equity method investment in
related party
(9,328
)
(3,611
)
Amortization
58,529
49,553
Depreciation
4,353
4,369
Prepaid and deferred compensation
expense
6,355
4,374
Non-cash equity-based compensation
38,205
36,528
Amortization of deferred debt issuance
costs
6,436
6,080
Amortization of interest rate cap
premium
3,477
3,477
Deferred income tax expense
15,314
11,853
Loss on Tax Receivable Agreement
372
216
Changes in operating assets and
liabilities, net of acquisitions:
Commissions and fees receivable – net
(79,592
)
(67,525
)
Accrued interest liability
(62
)
(330
)
Other current and non-current assets
4,017
15,862
Other current and non-current accrued
liabilities
(52,503
)
(36,284
)
Total cash flows provided by operating
activities
$
154,288
$
144,836
CASH FLOWS FROM INVESTING
ACTIVITIES
Business combinations – net of cash
acquired and cash held in a fiduciary capacity
(214,093
)
(103,927
)
Capital expenditures
(22,605
)
(5,362
)
Repayments of prepaid incentives
—
15
Total cash flows used in investing
activities
$
(236,698
)
$
(109,274
)
CASH FLOWS FROM FINANCING
ACTIVITIES
Repayment of term debt
(8,250
)
(8,250
)
Payment of contingent consideration
—
(4,477
)
Tax distributions to non-controlling LLC
Unitholders
(44,610
)
(34,529
)
Receipt of taxes related to net share
settlement of equity awards
4,478
1,895
Taxes paid related to net share settlement
of equity awards
(4,586
)
(1,895
)
Dividends paid to Class A common
shareholders
(53,022
)
—
Distributions to non-controlling LLC
Unitholders
(11,250
)
—
Payment of accrued return on Ryan Re
preferred units
(1,965
)
—
Net change in fiduciary liabilities
191,396
198,073
Total cash flows provided by financing
activities
$
72,191
$
150,817
Effect of changes in foreign exchange
rates on cash, cash equivalents, and cash and cash equivalents held
in a fiduciary capacity
(2,010
)
(657
)
NET CHANGE IN CASH, CASH EQUIVALENTS,
AND CASH AND CASH EQUIVALENTS HELD IN A FIDUCIARY CAPACITY
$
(12,229
)
$
185,722
CASH, CASH EQUIVALENTS, AND CASH AND
CASH EQUIVALENTS HELD IN A FIDUCIARY CAPACITY—Beginning
balance
1,756,332
1,767,385
CASH, CASH EQUIVALENTS, AND CASH AND
CASH EQUIVALENTS HELD IN A FIDUCIARY CAPACITY—Ending
balance
$
1,744,103
$
1,953,107
Reconciliation of cash, cash
equivalents, and cash and cash equivalents held in a fiduciary
capacity
Cash and cash equivalents
612,437
965,987
Cash and cash equivalents held in a
fiduciary capacity
1,131,666
987,120
Total cash, cash equivalents, and cash
and cash equivalents held in a fiduciary capacity
$
1,744,103
$
1,953,107
Reconciliation of Organic Revenue Growth Rate
Three Months Ended June
30,
Six Months Ended June
30,
(in thousands, except percentages)
2024
2023
2024
2023
Current period Net commissions and fees
revenue
$
680,248
$
573,020
$
1,218,135
$
1,020,533
Less: Current period contingent
commissions
(5,396
)
(4,502
)
(29,899
)
(26,136
)
Net Commissions and fees revenue
excluding contingent commissions
$
674,852
$
568,518
$
1,188,236
$
994,396
Prior period Net commissions and fees
revenue
$
573,020
$
490,227
$
1,020,533
$
876,908
Less: Prior year contingent
commissions
(4,502
)
(6,730
)
(26,136
)
(21,939
)
Prior period Net commissions and fees
revenue excluding contingent commissions
$
568,518
$
483,498
$
994,396
$
854,970
Change in Net commissions and fees revenue
excluding contingent commissions
$
106,334
$
85,021
$
193,840
$
139,427
Less: Mergers and acquisitions Net
commissions and fees revenue excluding contingent commissions
(25,735
)
(6,053
)
(54,274
)
(11,486
)
Impact of change in foreign exchange
rates
(64
)
13
(426
)
852
Organic revenue growth
(Non-GAAP)
$
80,535
$
78,981
$
139,140
$
128,793
Net commissions and fees revenue growth
rate (GAAP)
18.7
%
16.9
%
19.4
%
16.4
%
Less: Impact of contingent commissions
(1)
—
0.7
0.1
(0.1
)
Net commissions and fees revenue
excluding contingent commissions growth rate (2)
18.7
%
17.6
%
19.5
%
16.3
%
Less: Mergers and acquisitions Net
commissions and fees revenue excluding contingent commissions
(3)
(4.5
)
(1.3
)
(5.5
)
(1.3
)
Impact of change in foreign exchange rates
(4)
—
—
—
0.1
Organic Revenue Growth Rate
(Non-GAAP)
14.2
%
16.3
%
14.0
%
15.1
%
(1)
Calculated by subtracting Net commissions
and fees revenue growth rate from net commissions and fees revenue
excluding contingent commissions growth rate.
(2)
Calculated by dividing the change in Total
net commissions & fees revenue excluding contingent commissions
by prior year net commissions and fees excluding contingent
commissions.
(3)
Calculated by taking the mergers and
acquisitions net commissions and fees revenue excluding contingent
commissions, representing the first 12 months of net commissions
and fees revenue generated from acquisitions, divided by prior
period net commissions and fees revenue excluding contingent
commissions.
(4)
Calculated by taking the change in foreign
exchange rates divided by prior period net commissions and fees
revenue excluding contingent commissions.
Reconciliation of Adjusted Compensation and Benefits Expense
to Compensation and Benefits Expense
Three Months Ended June
30,
Six Months Ended June
30,
(in thousands, except percentages)
2024
2023
2024
2023
Total revenue
$
695,441
$
585,149
$
1,247,487
$
1,042,748
Compensation and benefits
expense
$
414,049
$
352,360
$
787,576
$
660,082
Acquisition-related expense
(1,160
)
(769
)
(1,386
)
(1,785
)
Acquisition related long-term incentive
compensation
(2,891
)
(574
)
(1,264
)
(1,152
)
Restructuring and related expense
(3,799
)
(1,139
)
(29,983
)
(1,869
)
Amortization and expense related to
discontinued prepaid incentives
(1,344
)
(1,588
)
(2,756
)
(3,222
)
Equity-based compensation
(12,756
)
(8,191
)
(22,271
)
(14,826
)
Initial public offering related
expense
(8,139
)
(10,458
)
(15,934
)
(21,702
)
Adjusted compensation and benefits
expense (1)
$
383,960
$
329,641
$
713,982
$
615,526
Compensation and benefits expense
ratio
59.5
%
60.2
%
63.1
%
63.3
%
Adjusted compensation and benefits
expense ratio
55.2
%
56.3
%
57.2
%
59.0
%
(1)
Adjustments made to Compensation and
benefits expense are described in the definition of Adjusted
EBITDAC in “Non-GAAP Financial Measures and Key Performance
Indicators.”
Reconciliation of Adjusted General and Administrative Expense
to General and Administrative Expense
Three Months Ended June
30,
Six Months Ended June
30,
(in thousands, except percentages)
2024
2023
2024
2023
Total revenue
$
695,441
$
585,149
$
1,247,487
$
1,042,748
General and administrative
expense
$
82,967
$
81,608
$
158,834
$
133,307
Acquisition-related expense
(15,008
)
(4,232
)
(23,219
)
(6,406
)
Restructuring and related expense
(4,169
)
(16,029
)
(7,023
)
(18,855
)
Adjusted general and administrative
expense (1)
$
63,790
$
61,347
$
128,592
$
108,046
General and administrative expense
ratio
11.9
%
13.9
%
12.7
%
12.8
%
Adjusted general and administrative
expense ratio
9.2
%
10.5
%
10.3
%
10.4
%
(1)
Adjustments made to General and
administrative expense are described in the definition of Adjusted
EBITDAC in “Non-GAAP Financial Measures and Key Performance
Indicators.”
Reconciliation of Adjusted EBITDAC to Net Income
Three Months Ended June
30,
Six Months Ended June
30,
(in thousands, except percentages)
2024
2023
2024
2023
Total revenue
$
695,441
$
585,149
$
1,247,487
$
1,042,748
Net income
$
118,038
$
83,817
$
158,715
$
120,274
Interest expense, net
31,128
28,881
60,528
58,349
Income tax expense
18,691
11,650
25,117
17,945
Depreciation
2,273
2,177
4,353
4,369
Amortization
30,541
24,368
58,529
49,553
Change in contingent consideration
1,243
1,796
1,178
2,510
EBITDAC
$
201,914
$
152,689
$
308,420
$
253,000
Acquisition-related expense
16,168
5,001
24,605
8,191
Acquisition related long-term incentive
compensation
2,891
574
1,264
1,152
Restructuring and related expense
7,968
17,168
37,006
20,724
Amortization and expense related to
discontinued prepaid incentives
1,344
1,588
2,756
3,222
Other non-operating loss (income)
233
108
1,985
(30
)
Equity-based compensation
12,756
8,191
22,271
14,826
IPO related expenses
8,139
10,458
15,934
21,702
(Income) from equity method investments in
related party
(3,722
)
(1,616
)
(9,328
)
(3,611
)
Adjusted EBITDAC (1)
$
247,691
$
194,161
$
404,913
$
319,176
Net income margin
17.0
%
14.3
%
12.7
%
11.5
%
Adjusted EBITDAC margin
35.6
%
33.2
%
32.5
%
30.6
%
(1)
Adjustments made to Net income are
described in the definition of Adjusted EBITDAC in “Non-GAAP
Financial Measures and Key Performance Indicators.”
Reconciliation of Adjusted Net Income to Net Income
Three Months Ended June
30,
Six Months Ended June
30,
(in thousands, except percentages)
2024
2023
2024
2023
Total revenue
$
695,441
$
585,149
$
1,247,487
$
1,042,748
Net income
$
118,038
$
83,817
$
158,715
$
120,274
Income tax expense
18,691
11,650
25,117
17,945
Amortization
30,541
24,368
58,529
49,553
Amortization of deferred debt issuance
costs (1)
3,027
3,041
6,436
6,080
Change in contingent consideration
1,243
1,796
1,178
2,510
Acquisition-related expense
16,168
5,001
24,605
8,191
Acquisition related long-term incentive
compensation
2,891
574
1,264
1,152
Restructuring and related expense
7,968
17,168
37,006
20,724
Amortization and expense related to
discontinued prepaid incentives
1,344
1,588
2,756
3,222
Other non-operating loss (income)
233
108
1,985
(30
)
Equity-based compensation
12,756
8,191
22,271
14,826
IPO related expenses
8,139
10,458
15,934
21,702
(Income) from equity method investments in
related party
(3,722
)
(1,616
)
(9,328
)
(3,611
)
Adjusted income before income taxes
(2)
$
217,317
$
166,144
$
346,468
$
262,538
Adjusted income tax expense (3)
(56,763
)
(42,417
)
(90,497
)
(67,026
)
Adjusted net income
$
160,554
$
123,727
$
255,971
$
195,512
Net income margin
17.0
%
14.3
%
12.7
%
11.5
%
Adjusted net income margin
23.1
%
21.1
%
20.5
%
18.7
%
(1)
Interest expense, net includes
amortization of deferred debt issuance costs.
(2)
Adjustments made to Net income are
described in the definition of Adjusted EBITDAC in “Non-GAAP
Financial Measures and Key Performance Indicators.”
(3)
The Company is subject to United States
federal income taxes, in addition to state, local, and foreign
taxes, with respect to our allocable share of any net taxable
income of the LLC. For the three and six months ended June 30,
2024, this calculation of adjusted income tax expense is based on a
federal statutory rate of 21% and a combined state income tax rate
net of federal benefits of 5.12% on 100% of our adjusted income
before income taxes as if the Company owned 100% of the LLC. For
the three and six months ended June 30, 2023, this calculation of
adjusted income tax expense is based on a federal statutory rate of
21% and a combined state income tax rate net of federal benefits of
4.53% on 100% of our adjusted income before income taxes as if the
Company owned 100% of the LLC.
Reconciliation of Adjusted Diluted Earnings per Share to
Diluted Earnings per Share
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Earnings per share of Class A common
stock – diluted
$
0.37
$
0.26
$
0.49
$
0.37
Less: Net income attributed to dilutive
shares and substantively vested RSUs (1)
(0.20
)
(0.02
)
(0.26
)
(0.02
)
Plus: Impact of all LLC Common Units
exchanged for Class A shares (2)
0.27
0.07
0.36
0.10
Plus: Adjustments to Adjusted net income
(3)
0.15
0.15
0.36
0.28
Plus: Dilutive impact of unvested equity
awards (4)
(0.01
)
(0.01
)
(0.02
)
(0.01
)
Adjusted diluted earnings per
share
$
0.58
$
0.45
$
0.93
$
0.72
(Share count in '000)
Weighted-average shares of Class A common
stock outstanding – diluted
271,219
123,846
270,570
123,685
Plus: Impact of all LLC Common Units
exchanged for Class A shares (2)
—
143,835
—
143,627
Plus: Dilutive impact of unvested equity
awards (4)
4,446
4,252
4,821
4,546
Adjusted diluted earnings per share
diluted share count
275,665
271,933
275,391
271,857
(1)
Adjustment removes the impact of Net
income attributed to dilutive awards and substantively vested RSUs
to arrive at Net income attributable to Ryan Specialty Holdings,
Inc. For the three months ended June 30, 2024 and 2023, this
removes $52.2 million and $2.0 million of Net income, respectively,
on 271.2 million and 123.8 million Weighted-average shares of Class
A common stock outstanding - diluted, respectively. For the six
months ended June 30, 2024 and 2023, this removes $69.9 million and
$3.0 million of Net income, respectively, on 270.6 million and
123.7 million Weighted-average shares of Class A common stock
outstanding - diluted, respectively. See “Note 10, Earnings Per
Share” of the unaudited quarterly consolidated financial
statements.
(2)
For comparability purposes, this
calculation incorporates the Net income that would be distributable
if all LLC Common Units (together with shares of Class B common
stock) and vested Class C Incentive Units were exchanged for shares
of Class A common stock. For the three months ended June 30, 2024
and 2023, this includes $71.3 million and $53.7 million of Net
income, respectively, on 271.2 million and 267.7 million
Weighted-average shares of Class A common stock outstanding -
diluted, respectively. For the six months ended June 30, 2024 and
2023, this includes $95.4 million and $77.0 million of Net income,
respectively, on 270.6 million and 267.3 million Weighted-average
shares of Class A common stock outstanding - diluted, respectively.
For the three months ended June 30, 2023, 143.8 million weighted
average outstanding LLC Common Units were considered dilutive and
included in the 267.7 million Weighted-average shares of Class A
common stock outstanding - diluted within Diluted EPS. For the six
months ended June 30, 2023, 143.6 million weighted average
outstanding LLC Common Units were considered dilutive and included
in the 267.3 million Weighted-average shares of Class A common
stock outstanding - diluted within Diluted EPS. See “Note 10,
Earnings Per Share” of the unaudited quarterly consolidated
financial statements.
(3)
Adjustments to Adjusted net income are
described in the footnotes of the reconciliation of Adjusted net
income to Net income in “Adjusted Net Income and Adjusted Net
Income Margin” on 271.2 million and 267.7 million Weighted-average
shares of Class A common stock outstanding - diluted for the three
months ended June 30, 2024 and 2023, respectively, and on 270.6
million and 267.3 million Weighted-average shares of Class A common
stock outstanding- diluted for the six months ended June 30, 2024
and 2023, respectively.
(4)
For comparability purposes and to be
consistent with the treatment of the adjustments to arrive at
Adjusted net income, the dilutive effect of unvested equity awards
is calculated using the treasury stock method as if the
weighted-average unrecognized cost associated with the awards was
$0 over the period, less any unvested equity awards determined to
be dilutive within the Diluted EPS calculation disclosed in “Note
10, Earnings Per Share” of the unaudited quarterly consolidated
financial statements. For the three months ended June 30, 2024 and
2023, 4.4 million and 4.3 million shares were added to the
calculation, respectively. For the six months ended June 30, 2024
and 2023, 4.8 million and 4.5 million shares were added to the
calculation, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240801250381/en/
Investor Relations Nicholas Mezick Director, Investor
Relations Ryan Specialty IR@ryanspecialty.com Phone: (312)
784-6152
Media Relations Alice Phillips Topping SVP, Chief
Marketing & Communications Officer Ryan Specialty
Alice.Topping@ryanspecialty.com Phone: (312) 635-5976
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