EX-99 2 ryan-ex99_1.htm EX-99.1 EX-99

 

 

 

 

RYAN SPECIALTY REPORTS FIRST QUARTER 2023 RESULTS

- Total Revenue grew 18.3% year-over-year to $457.6 million -

- Organic Revenue Growth Rate of 12.9% year-over-year -

- Net Income of $36.5 million, or $0.11 per diluted share -

- Adjusted EBITDAC grew 16.5% year-over-year to $125.0 million -

- Adjusted Net Income increased 10.9% year over year to $71.8 million, or $0.26 per diluted share -

MAY 4, 2023 | CHICAGO, IL — Ryan Specialty Holdings, Inc. (NYSE: RYAN) (“Ryan Specialty” or the “Company”), a leading international specialty insurance firm, today announced results for the first quarter ended March 31, 2023.

First Quarter 2023 Highlights

“The first quarter represents a strong start to the year, generating another quarter of double-digit organic growth in the face of a persistently challenging macro environment and further validating the resilience of our differentiated business model and platform,” said Patrick G. Ryan, Founder, Chairman and Chief Executive Officer of Ryan Specialty. “Our performance was driven by broad-based growth across the portfolio, led by Property where we continue to deliver for our clients in a historically hard market. Looking ahead, I remain confident that 2023 will be another strong year for our firm. We continue to be well positioned to expand our capabilities while generating sustainable and profitable growth for our investors.”

 

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Summary of First Quarter 2023 Results

 

		Three Months Ended March 31,								Change
(in thousands, except percentages and per share data)		2023				2022				$				%
GAAP financial measures
Total revenue		$	457,599			$	386,890			$	70,709				18.3	%
Compensation and benefits			307,722				274,274				33,448				12.2
General and administrative			51,699				42,361				9,338				22.0
Total operating expenses			387,512				343,501				44,011				12.8
Operating income			70,087				43,389				26,698				61.5
Net income			36,457				18,076				18,381				101.7
Net income attributable to Ryan Specialty Holdings, Inc.			13,160				6,911				6,249				90.4
Compensation and benefits expense ratio (1)			67.2	%			70.9	%
General and administrative expense ratio (2)			11.3	%			10.9	%
Net income margin (3)			8.0	%			4.7	%
Earnings per share (4)		$	0.12			$	0.07
Diluted earnings per share (4)		$	0.11			$	0.06
Non-GAAP financial measures*
Organic revenue growth rate			12.9	%			20.1	%
Adjusted compensation and benefits expense		$	285,885			$	241,331			$	44,554				18.5	%
Adjusted compensation and benefits expense ratio			62.5	%			62.4	%
Adjusted general and administrative expense		$	46,699			$	38,296			$	8,403				21.9	%
Adjusted general and administrative expense ratio			10.2	%			9.9	%
Adjusted EBITDAC		$	125,015			$	107,263			$	17,752				16.5	%
Adjusted EBITDAC margin			27.3	%			27.7	%
Adjusted net income		$	71,785			$	64,732			$	7,053				10.9	%
Adjusted net income margin			15.7	%			16.7	%
Adjusted diluted earnings per share		$	0.26			$	0.24

* 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.

 

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First Quarter 2023 Review*

Total revenue for the first quarter of 2023 was $457.6 million, an increase of 18.3% compared to $386.9 million in the prior-year period. This increase was primarily due to continued solid Organic revenue growth of 12.9%, driven by new client wins and expanded relationships with existing clients, coupled with continued expansion of the E&S market, revenue from acquisitions completed in the fourth quarter of 2022 and first quarter of 2023, and increased Fiduciary investment income.

Total operating expenses for the first quarter of 2023 were $387.5 million, a 12.8% increase compared to the prior-year period. This was primarily due to an increase in Compensation and benefits expense, which is heavily correlated to revenue growth, offset by a decline in Acquisition related long-term incentives as the final payments related to the All Risks LTIP plan were made in Q3 2022, and IPO related compensation as time passes and awards vest. General and administrative expense also increased compared to the prior-year period to accommodate revenue growth, including continued normalization of business travel and client entertainment.

Net income for the first quarter of 2023 increased 101.7% to $36.5 million, compared to $18.1 million in the prior-year period. The increase was mainly due to strong year-over-year revenue growth, lower IPO related charges, which were partially offset by higher Interest expense, net. Diluted earnings per share for the first quarter of 2023 was $0.11, compared to $0.06 in the prior-year period.

Adjusted EBITDAC grew 16.5% to $125.0 million from $107.3 million in the prior-year period. Adjusted EBITDAC margin for the quarter was 27.3%, compared to 27.7% in the prior-year period. The increase in Adjusted EBITDAC was driven primarily by solid revenue growth and higher Fiduciary investment income, partially offset by increased Adjusted compensation and benefits expense, as well as higher Adjusted general and administrative expense.

Adjusted net income for the first quarter of 2023 increased 10.9% to $71.8 million, compared to $64.7 million in the prior-year period. Adjusted net income margin was 15.7%, compared to 16.7% in the prior-year period. Adjusted diluted earnings per share for the first quarter of 2023 increased 8.3% to $0.26, compared to $0.24 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.

First Quarter 2023 Revenue by Specialty

Growth in Net commissions and fees in all specialties was primarily driven by solid organic growth.

		Three Months Ended March 31,
(in thousands, except percentages)		2023				% of total				2022				% of total				Change
Wholesale Brokerage		$	285,850				63.9	%		$	244,827				63.3	%		$	41,023				16.8	%
Binding Authorities			69,526				15.5				62,993				16.3				6,533				10.4
Underwriting Management			92,137				20.6				78,861				20.4				13,276				16.8
Total Net commissions and fees		$	447,513							$	386,681							$	60,832				15.7	%

Liquidity and Financial Condition

As of March 31, 2023, the Company had Cash and cash equivalents of $704.7 million and outstanding debt principal of $2.0 billion.

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Full Year 2023 Outlook*

The Company is updating its full year 2023 outlook for Organic Revenue Growth Rate and maintaining its full year 2023 outlook for Adjusted EBITDAC Margin as follows:

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 and 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 or its plans and objectives for future operations, growth initiatives, or strategies and the statements under the caption “Full Year 2023 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”) that include, but are not limited to: the Company’s potential failure to develop a succession plan for the senior management team, including Patrick G. Ryan; the Company’s

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failure to recruit and retain revenue producers; the cyclicality of, and the economic conditions in, the markets in which the Company operates; conditions that result in reduced insurer capacity; the potential loss of the Company’s relationships with insurance carriers or its clients, becoming dependent upon a limited number of insurance carriers or clients or the failure to develop new insurance carrier and client relationships; significant competitive pressures in each of the Company’s businesses; decreases in the premiums or commission rates set by insurers, or actions by insurers seeking repayment of commissions; decreases in the amounts of supplemental or contingent commissions the Company receives; the Company’s inability to collect its receivables; the potential that the Company’s underwriting models contain errors or are otherwise ineffective; any damage to the Company’s reputation; decreases in current market share as a result of disintermediation within the insurance industry; impairment of goodwill; the inability to maintain rapid growth or to generate sufficient revenue to achieve and maintain profitability; the impact if the Company’s MGU programs are terminated or changed; the risks associated with the evaluation of potential acquisitions and the integration of acquired businesses as well as introduction of new products, lines of business and markets; the occurrence of natural or man-made disasters; being subject to E&O claims as well as other contingencies and legal proceedings; the impact on the Company’s operations and financial condition from the effects of the current COVID-19 pandemic; the impact of breaches in security that cause significant system or network disruptions; not being able to generate sufficient cash flow to service all of the Company’s indebtedness and being forced to take other actions to satisfy its obligations under such indebtedness; and the impact of being unable to refinance the Company’s indebtedness.

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 audited consolidated financial statements in our Annual Report on form 10-K 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 is defined as the percentage change in Total revenue, as compared to the prior-year period, adjusted for revenue attributable to acquisitions during their first 12 months

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of the Company’s ownership, and other adjustments such as contingent commissions, Fiduciary investment income, and the impact of changes in foreign exchange rates. The most directly comparable GAAP financial metric is Total revenue growth rate.

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. Acquisition related long-term incentive compensation arises from long-term incentive plans associated with acquisitions. In 2023, 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. 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. In 2022, Restructuring and related expense represent costs associated with the 2020 restructuring plan. Amortization and expense consists of charges related to discontinued prepaid incentive programs. For the three months ended March 31, 2023, Other non-operating loss (income) includes sublease income. For the three months ended March 31, 2022, Other non-operating loss (income) includes a charge related to the change in the TRA liability caused by a change in our blended state tax rates. Equity-based compensation reflects non-cash equity-based expense. IPO related expenses include general and administrative expense associated with the preparations for Sarbanes-Oxley compliance, tax, and accounting advisory services and compensation-related expense primarily related to the revaluation of existing equity awards at IPO as well as expense for new awards issued 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

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compensation, acquisition-related expenses, costs associated with our Initial Public Offering (the “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 non-voting common interest units of New Ryan Specialty, LLC (“LLC Common Units”), together with the shares of Class B common stock, were exchanged into shares of Class A common stock and the effect of unvested equity awards. 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 2023 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.

Contacts:

Investor Relations Noah Angeletti SVP, Head of Investor Relations & Treasurer Ryan Specialty IR@ryanspecialty.com Phone: (312) 784-6152	Media Relations Alice Phillips Topping SVP, Chief Marketing & Communications Officer Ryan Specialty Alice.Topping@ryansg.com Phone: (312) 635-5976

 

 

 

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Consolidated Statements of Income (Unaudited)

		Three Months Ended March 31,
(in thousands, except percentages and per share data)		2023				2022
Revenue
Net commissions and fees		$	447,513			$	386,681
Fiduciary investment income			10,086				209
Total revenue		$	457,599			$	386,890
Expenses
Compensation and benefits			307,722				274,274
General and administrative			51,699				42,361
Amortization			25,185				26,663
Depreciation			2,192				1,211
Change in contingent consideration			714				(1,008	)
Total operating expenses		$	387,512			$	343,501
Operating income		$	70,087			$	43,389
Interest expense, net			29,468				21,752
Loss (income) from equity method investment in related party			(1,995	)			543
Other non-operating loss (income)			(138	)			7,521
Income before income taxes		$	42,752			$	13,573
Income tax expense (benefit)			6,295				(4,503	)
Net income		$	36,457			$	18,076
GAAP financial measures
Revenue		$	457,599			$	386,890
Compensation and benefits			307,722				274,274
General and administrative			51,699				42,361
Net income		$	36,457			$	18,076
Compensation and benefits expense ratio			67.2	%			70.9	%
General and administrative expense ratio			11.3	%			10.9	%
Net income margin			8.0	%			4.7	%
Earnings per share		$	0.12			$	0.07
Diluted earnings per share		$	0.11			$	0.06

Non-GAAP Financial Measures (Unaudited)

		Three Months Ended March 31,
(in thousands, except percentages and per share data)		2023				2022
Non-GAAP financial measures
Organic revenue growth rate			12.9	%			20.1	%
Adjusted compensation and benefits expense		$	285,885			$	241,331
Adjusted compensation and benefits expense ratio			62.5	%			62.4	%
Adjusted general and administrative expense		$	46,699			$	38,296
Adjusted general and administrative expense ratio			10.2	%			9.9	%
Adjusted EBITDAC		$	125,015			$	107,263
Adjusted EBITDAC margin			27.3	%			27.7	%
Adjusted net income		$	71,785			$	64,732
Adjusted net income margin			15.7	%			16.7	%
Adjusted diluted earnings per share		$	0.26			$	0.24

 

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Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)		March 31, 2023				December 31, 2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	704,746			$	992,723
Commissions and fees receivable – net			234,557				231,423
Fiduciary cash and receivables			2,475,185				2,611,647
Prepaid incentives – net			8,348				8,584
Other current assets			46,086				49,690
Total current assets		$	3,468,922			$	3,894,067
NON-CURRENT ASSETS
Goodwill			1,379,202				1,314,984
Other intangible assets			514,568				486,444
Prepaid incentives – net			19,425				20,792
Equity method investment in related party			41,166				38,514
Property and equipment – net			31,832				31,271
Lease right-of-use assets			141,619				143,870
Deferred tax assets			402,476				396,814
Other non-current assets			47,750				56,987
Total non-current assets		$	2,578,038			$	2,489,676
TOTAL ASSETS		$	6,046,960			$	6,383,743
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities			73,976				119,022
Accrued compensation			158,017				350,369
Operating lease liabilities			20,447				22,744
Tax Receivable Agreement liabilities			16,516				—
Short-term debt and current portion of long-term debt			22,459				30,587
Fiduciary liabilities			2,475,185				2,611,647
Total current liabilities		$	2,766,600			$	3,134,369
NON-CURRENT LIABILITIES
Accrued compensation			16,325				10,048
Operating lease liabilities			151,406				151,944
Long-term debt			1,950,329				1,951,900
Deferred tax liabilities			618				562
Tax Receivable Agreement liabilities			287,113				295,347
Other non-current liabilities			22,971				21,761
Total non-current liabilities		$	2,428,762			$	2,431,562
TOTAL LIABILITIES		$	5,195,362			$	5,565,931
STOCKHOLDERS' EQUITY
Class A common stock ($0.001 par value; 1,000,000,000 shares authorized, 113,233,651 and 112,437,825 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively)			113				112
Class B common stock ($0.001 par value; 1,000,000,000 shares authorized, 146,421,917 and 147,214,275 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively)			146				147
Class X common stock ($0.001 par value; 10,000,000 shares authorized, 640,784 shares issued and 0 outstanding at March 31, 2023 and December 31, 2022)			—				—
Preferred stock ($0.001 par value; 500,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2023 and December 31, 2022)			—				—
Additional paid-in capital			436,898				418,123
Retained earnings			67,148				53,988
Accumulated other comprehensive income			4,283				6,035
Total stockholders' equity attributable to Ryan Specialty Holdings, Inc.		$	508,588			$	478,405
Non-controlling interests			343,010				339,407
Total stockholders' equity		$	851,598			$	817,812
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	6,046,960			$	6,383,743

 

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Consolidated Statements of Cash Flows (Unaudited)

		Three Months Ended March 31,
(in thousands)		2023				2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	36,457			$	18,076
Adjustments to reconcile net income to cash flows used for operating activities:
Loss (gain) from equity method investment in related party			(1,995	)			543
Amortization			25,185				26,663
Depreciation			2,192				1,211
Prepaid and deferred compensation expense			2,212				9,684
Non-cash equity-based compensation			17,879				23,248
Amortization of deferred debt issuance costs			3,039				2,811
Amortization of interest rate cap premium			1,739				—
Deferred income tax expense (benefit)			2,875				(8,251	)
Loss on Tax Receivable Agreement			—				7,718
Change (net of acquisitions) in:
Commissions and fees receivable – net			(1,212	)			20,543
Accrued interest liability			(4,743	)			2,877
Other current assets and accrued liabilities			(250,299	)			(164,924	)
Other non-current assets and accrued liabilities			7,460				(5,669	)
Total cash flows used for operating activities		$	(159,211	)		$	(65,470	)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures			(2,793	)			(2,224	)
Business combinations – net of cash acquired and cash held in a fiduciary capacity			(102,059	)			—
Prepaid incentives issued – net of repayments			—				(497	)
Total cash flows used for investing activities		$	(104,852	)		$	(2,721	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from senior secured notes			—				394,000
Repayment of term debt			(4,125	)			(4,125	)
Debt issuance costs paid			—				(1,803	)
Finance lease and other costs paid			—				(6	)
Payment of contingent consideration			(4,477	)			—
Tax distributions to LLC Unitholders			(264	)			(187	)
Receipt of taxes related to net share settlement of equity awards			404				105
Taxes paid related to net share settlement of equity awards			(404	)			(105	)
Net change in fiduciary liabilities			(20,754	)			(79,148	)
Total cash flows (used for) provided by financing activities		$	(29,620	)		$	308,731
Effect of changes in foreign exchange rates on cash, cash equivalents, and cash held in a fiduciary capacity			85				816
NET CHANGE IN CASH, CASH EQUIVALENTS, AND CASH HELD IN A FIDUCIARY CAPACITY		$	(293,598	)		$	241,356
CASH, CASH EQUIVALENTS, AND CASH HELD IN A FIDUCIARY CAPACITY—Beginning balance			1,767,385				1,139,661
CASH, CASH EQUIVALENTS, AND CASH HELD IN A FIDUCIARY CAPACITY—Ending balance		$	1,473,787			$	1,381,017
Reconciliation of cash, cash equivalents, and cash held in a fiduciary capacity
Cash and cash equivalents			704,746				706,370
Cash held in a fiduciary capacity			769,041				674,647
Total cash, cash equivalents, and cash held in a fiduciary capacity		$	1,473,787			$	1,381,017

 

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Reconciliation of Organic Revenue Growth Rate to Total Revenue Growth Rate

		Three Months Ended March 31,
		2023				2022
Total revenue growth rate (GAAP) (1)			18.3	%			24.2	%
Less: Mergers and acquisitions (2)			(1.6	)			(3.4	)
Change in other (3)			(3.8	)			(0.7	)
Organic revenue growth rate (Non-GAAP)			12.9	%			20.1	%

 

 

Reconciliation of Adjusted Compensation and Benefits Expense to Compensation and Benefits Expense

		Three Months Ended March 31,
(in thousands, except percentages)		2023				2022
Total revenue		$	457,599			$	386,890
Compensation and benefits expense		$	307,722			$	274,274
Acquisition-related expense			(1,016	)			(58	)
Acquisition related long-term incentive compensation			(578	)			(7,697	)
Restructuring and related expense			(730	)			(158	)
Amortization and expense related to discontinued prepaid incentives			(1,634	)			(1,782	)
Equity-based compensation			(6,635	)			(6,804	)
Initial public offering related expense			(11,244	)			(16,444	)
Adjusted compensation and benefits expense (1)		$	285,885			$	241,331
Compensation and benefits expense ratio			67.2	%			70.9	%
Adjusted compensation and benefits expense ratio			62.5	%			62.4	%

 

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Reconciliation of Adjusted General and Administrative Expense to General and Administrative Expense

		Three Months Ended March 31,
(in thousands, except percentages)		2023				2022
Total revenue		$	457,599			$	386,890
General and administrative expense		$	51,699			$	42,361
Acquisition-related expense			(2,174	)			(451	)
Restructuring and related expense			(2,826	)			(2,966	)
Initial public offering related expense			—				(648	)
Adjusted general and administrative expense (1)		$	46,699			$	38,296
General and administrative expense ratio			11.3	%			10.9	%
Adjusted general and administrative expense ratio			10.2	%			9.9	%

 

Reconciliation of Adjusted EBITDAC to Net Income

		Three Months Ended March 31,
(in thousands, except percentages)		2023				2022
Total revenue		$	457,599			$	386,890
Net income		$	36,457			$	18,076
Interest expense, net			29,468				21,752
Income tax expense (benefit)			6,295				(4,503	)
Depreciation			2,192				1,211
Amortization			25,185				26,663
Change in contingent consideration			714				(1,008	)
EBITDAC		$	100,311			$	62,191
Acquisition-related expense			3,190				509
Acquisition related long-term incentive compensation			578				7,697
Restructuring and related expense			3,556				3,124
Amortization and expense related to discontinued prepaid incentives			1,634				1,782
Other non-operating loss (income)			(138	)			7,521
Equity-based compensation			6,635				6,804
IPO related expenses			11,244				17,092
(Income) / loss from equity method investments in related party			(1,995	)			543
Adjusted EBITDAC (1)		$	125,015			$	107,263
Net income margin			8.0	%			4.7	%
Adjusted EBITDAC margin			27.3	%			27.7	%

 

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Reconciliation of Adjusted Net Income to Net Income

		Three Months Ended March 31,
(in thousands, except percentages)		2023				2022
Total revenue		$	457,599			$	386,890
Net income		$	36,457			$	18,076
Income tax expense (benefit)			6,295				(4,503	)
Amortization			25,185				26,663
Amortization of deferred debt issuance costs (1)			3,039				2,811
Change in contingent consideration			714				(1,008	)
Acquisition-related expense			3,190				509
Acquisition related long-term incentive compensation			578				7,697
Restructuring and related expense			3,556				3,124
Amortization and expense related to discontinued prepaid incentives			1,634				1,782
Other non-operating loss (income)			(138	)			7,521
Equity-based compensation			6,635				6,804
IPO related expenses			11,244				17,092
(Income) / loss from equity method investments in related party			(1,995	)			543
Adjusted income before income taxes (2)		$	96,394			$	87,111
Adjusted tax expense (3)			(24,609	)			(22,379	)
Adjusted net income		$	71,785			$	64,732
Net income margin			8.0	%			4.7	%
Adjusted net income margin			15.7	%			16.7	%

 

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Reconciliation of Adjusted Diluted Earnings per Share to Diluted Earnings per Share

		Three months ended March 31,
		2023				2022
Earnings per share of Class A common stock – diluted		$	0.11			$	0.06
Less: Net income attributed to dilutive shares and substantively vested RSUs (1)			(0.06	)			(0.03	)
Plus: Net income attributed to non-controlling interests (2)			0.09				0.04
Plus: Adjustments to Adjusted net income (3)			0.13				0.18
Plus: Dilutive impact of unvested equity awards (4)			(0.01	)			(0.01	)
Adjusted diluted earnings per share		$	0.26			$	0.24
(Share count in '000)
Weighted-average shares of Class A common stock outstanding – diluted			266,978				264,121
Plus: Dilutive impact of unvested equity awards (4)			4,670				5,632
Adjusted diluted earnings per share diluted share count			271,648				269,753

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