The Baldwin Insurance Group, Inc. · NASDAQ:BWIN
The Baldwin Insurance — BRP Group — Investor Day (November 2022)
57 slides from The Baldwin Insurance's investor day presentation, November 2022
Slide 1: BRP Group, Inc. Investor Day November 2022
BRP Group, Inc. Investor Day November 2022
Slide 2: Welcome & Opening Remarks
Bonnie Bishop Executive Director, Investor Relations Welcome & Opening Remarks
Slide 3: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. All statements other than statements of historical facts contained in this presentation, including our possible or assumed future results
Slide 4: Agenda
Agenda Welcome & Opening Remarks MGA of the Future Bonnie Bishop Jim Roche Executive Director, Investor Relations Chief Insurance Innovation Officer Company Overview and Strategy Financial Performance Trevor Baldwin Brad Hale Co-Founder & Chief Executive Officer Chief Financial Officer Middle Market
Slide 5: Company Overview and Strategy
Trevor Baldwin Co-Founder & Chief Executive Officer Company Overview and Strategy
Slide 6: Today's Objectives / Our Trajectory
Today’s Objectives Our Trajectory • State of the business • Significant organic growth momentum • Competitive positioning and business segment • Acceleration of EBITDA growth and free cash flow growth strategies generation • Update on recent strategic investments, capital • High-return capital deplo
Slide 7: Building the Brokerage of the Future
Building the Brokerage of the Future Our Mission Deliver tailored & holistic insurance and risk management insights and solutions to our clients Our Approach Focus on outsized Invest deeply in talent Innovate across the value organic growth and technology chain to best serve clients
Slide 8: Significant Outperformance and Transformation Since Our IPO
Significant Outperformance and Transformation Since Our IPO 2019 LTM Q3-2022 LTM Q3’22 vs. 2019 Total Pro Forma Revenue (1): $153M $966M +531% Organic Growth (2): 10% 22% +120% Pro Forma Adjusted EBITDA (3): $34M $201M +491% Adjusted EBITDA Margin (3): 21% 20% (5%) Pro Forma MGA of the Future Revenu
Slide 9: What Hasn't Changed Since Our IPO
What Hasn’t Changed Since Our IPO Disciplined and Effective Capital Industry Leading Organic Growth Allocation Meaningful Operating Leverage as Strong Business and Industry the Business Continues to Scale Fundamentals Unique Emerging Mid-Cap Organic Growth Story in Insurance Distribution
Slide 10: Four High-Performing Operating Groups
Four High-Performing Operating Groups Middle Market Specialty Mainstreet Medicare Pro Forma Revenue / $540M $272M $137M $45M % of Total 54% 27% 14% 5% Organic Revenue 14% 42% 25% 19% Growth Note: Financial data as of the last twelve months ended September 30, 2022. Operating Groups recorded intercom
Slide 11: Building a Business Around a Confluence of Talent and Technology
Building a Business Around a Confluence of Talent and Technology People Technology Enable Long-Term Competitive Advantage Powers Organic Revenue and EBITDA Growth • 3,000+ colleagues hired since our IPO • $200M+ revenue generated from embedded / tech-enabled distribution (3) • 100% of colleagues are
Slide 12: Yesterday's Partnerships Drive Tomorrow's Organic Growth
Yesterday’s Partnerships Drive Tomorrow’s Organic Growth… Partnership Strategy The Outcome: Making Great Businesses Better A very simple filter… …results in: Organic Growth: Pre- vs. Post-Partnership (2) • Cultural alignment • Quality over quantity 21.0% • Track record of outsized organic growth • L
Slide 13: Westwood Insurance Agency Partnership Off to a Fantastic Start
…Westwood Insurance Agency Partnership Off to a Fantastic Start Pro Forma Revenue ($ in millions) $97 +21% YoY Revenue Growth YTD 2022 $82 14 Embedded Relationships with Top-20 Builders 17 Years Average Tenure with Builder Partners (3) (1) (2) At Close Pro Forma LTM 9/30/22 Westwood Accelerated Our
Slide 14: Wrap Up
Wrap Up On a revenue basis, the business today is over 6x as large as its size at IPO 3 years ago; organic growth has accelerated from 10% to 22% Recent investments in technology, talent and innovation have spring-loaded our organic growth and EBITDA generation potential With scale comes significant
Slide 15: Middle Market Evolution
Dan Galbraith Chief Operating Officer Middle Market Evolution
Slide 16: Middle Market At a Glance
Middle Market At a Glance KEY STATISTICS MIDDLE MARKET FOOTPRINT 14% ~2x 440+ ~2,100 Organic Growth (1) Organic Growth Rate Risk Advisors Colleagues (YTD Q3-2022) vs. Peers (1,2) Footprint at IPO Footprint Today LTM Pro Forma Revenue (3): Pro Forma Middle Market Revenue ($M) (3) $540M $540 Private R
Slide 17: Why We Win
Why We Win Integrated Operating Model Proprietary Client Engagement Tools • Integrated business increases • Access to best-in-class sales • RiskMap™ process yields high • Disciplined sales training and efficiency enablement tools win rates and enhanced client execution process drives • National valu
Slide 18: Deep Industry and Product Specialization
Deep Industry and Product Specialization • National specialized practices are becoming force multipliers across the BRP platform and boosting production in Middle Market Private Equity • National coverage model serves the middle market and increasingly • Formed through Partnership with bcp tech in f
Slide 19: Significant Investment in Advisors Contributes to Outsized Organic Growth
Significant Investment in Advisors Contributes to Outsized Organic Growth YTD September 2022 Run Rate Advisor Count by Tenure (1) Average New Business by Advisor Tenure (1,2) BRP: 3x+ <1 Year 1 - 2 Years 2 - 3 Years 3+ Years Industry 442 Average $262,594 BRP: ~1.7x 295 Industry 246 Average Industry
Slide 20: Guided Solutions (Mainstreet + Medicare)
David Smith President & Executive Operating Officer of Guided Solutions Guided Solutions (Mainstreet + Medicare)
Slide 21: Guided Solutions At a Glance
Guided Solutions At a Glance KEY STATISTICS X 22% 35+ 250+ 4,000+ Organic Growth (1) Embedded Distribution Mainstreet Risk Advisors Medicare Agents (2) (YTD Q3-2022) Partners LTM Pro Forma Revenue (3): Pro Forma Mainstreet + Medicare Revenue ($M) (3) ~$182M $182 Mainstreet Medicare Providing best-in
Slide 22: Winning Personal Lines Embedded Distribution
Winning Personal Lines Embedded Distribution Key Building Blocks ✓ Choice model Agency Model ✓ Ability to obtain / place coverage on 100% of opportunities ✓ Live consultation with advisors ✓ Custom integrations with distribution partners Technology Capabilities ✓ Embedded in primary transaction Buil
Slide 23: Westwood Brings Instant National Scale in Embedded Builder Channel
Westwood Brings Instant National Scale in Embedded Builder Channel ✓ Insurance agency partner for 14 of the top 20 homebuilders in the U.S. (70% market Agency Model share) ✓ Offering embedded in the home buying process Technology Capabilities ✓ Custom integrations w/ captive lender loan origination
Slide 24: Early Success in Organic National Expansion Strategy
Early Success in Organic National Expansion Strategy Key Mainstreet Statistics 2022 Investment in Organic National Expansion Strategy: ~$16M Pro Forma • Large investment in national expansion leadership team, world- Headcount States Revenue (1) class technology platform and advisors 2019 175+ 1 $29M
Slide 25: Wrap Up
Wrap Up Building blocks in place to accelerate execution of embedded distribution strategy Proprietary, embedded products add a significant growth lever to Mainstreet Westwood’s transformational access to sheltered distribution has jump-started embedded homeowners strategy National rollout ramping q
Slide 26: MGA of the Future
Jim Roche Chief Insurance Innovation Officer MGA of the Future
Slide 27: What Is the MGA of the Future?
What Is the MGA of the Future? A platform for the development, distribution and administration of a diverse and growing suite of proprietary insurance products Distribution Select Capacity Providers Embedded Partners Commercial Personal Specialty Select Balance Sheets Select Owned Activities: • Unde
Slide 28: MGA of the Future At a Glance
MGA of the Future At a Glance MSI BRP at IPO (Q3’22 LTM) (FY2019 (6)) KEY STATISTICS Pro Forma Revenue (7): $228M $153M Organic Growth (8): 61% 10% ~$660M Top 5 10+ < 50% Net Written Largest Non-Carrier # Insurance Aggregate $51M $34M Pro Forma EBITDA (9): Premium (1) Owned MGA in the US (2) Product
Slide 29: MGA of the Future Evolution
MGA of the Future Evolution $660M Diverse and Growing Suite of Product Capabilities +Admitted Home (42 states) +E&S Home $318M (14 states) +Residential Flood +REI Master +Admitted Home Property $77M $117M (1 state) 5+ products in +Umbrella + Master +Mgmt. Liability development Renters 2019 2020 2021
Slide 30: Distribution Is King
Distribution Is King Differentiated Distribution Strategy ✓ Proprietary Tech Platform Enabled Differentiated Access ✓ Bespoke Product Capabilities Embedded (~65%) Internal (~10%... and growing) Strategic External (~25%) Tech-enabled point of sale solutions Strategic collaboration with BRP retail age
Slide 31: Investments to Propel Sustainable Outsized Growth
Investments to Propel Sustainable Outsized Growth ~$5M ~$8M ~$10M Underwriting & New Growth Infrastructure / Homeowners Product Development Scalability $125M homeowners written Anticipate 3-5 new product IT/Development, Data & Analytics premium / $22.5M homeowners launches in 2023 and other infrastr
Slide 32: Near Term Opportunities
Near Term Opportunities Continued Growth in Homeowners New Product / Private Flood Multi-Family (E&S + Admitted) Program incubation Total Addressable Market: 44M $120B $42B $2.1T Rental Units (1) Premium (2) Premium (3) P&C Premium (4) Internal BRP Total 18M ~$700M+ $30M+ ~$4B P&C Addressable Market
Slide 33: Financial Performance
Brad Hale Chief Financial Officer Financial Performance
Slide 34: Key Messages
Key Messages Continuing track record of exceptional operational and financial execution Strengthening our balance sheet through EBITDA growth and free cash flow generation Investing to drive efficiencies and sustainable long-term profitable growth with a disciplined, return-focused capital allocatio
Slide 35: Track Record of Strong Financial Performance
Track Record of Strong Financial Performance Revenue ($M) Adj. EBITDA ($M) (1) Adj. EBITDA Margin (1) Adj. Diluted EPS (1) Organic Weighted Growth (1) Avg. S/O (M) $894 $178 $1.01 21% 20% 20% $0.80 18% $567 $113 $0.46 $241 $44 $0.27 $138 $29 2019 2020 2021 2022 Q3 2019 2020 2021 2022 Q3 2019 2020 20
Slide 36: Investing in Organic Growth to Drive Long-Term Value Creation
Investing in Organic Growth to Drive Long-Term Value Creation EBITDA Comparison ($M) Assumes two businesses have $100M in revenue at Year 0 $101 Slightly longer pay back period for growth investments... Company B: 35% margins, 3% organic growth $44 $47 $35 $39 ... but there is a Company A: $25 subst
Slide 37: Capital Allocation Evolution
Capital Allocation Evolution Through Q2 2022 Today Significant Capital Deployed Toward Partnerships Focus on Internal Investment • Selected Partners to accelerate organic growth • Able to fund organic growth investments with internally generated cash flow (outside capital not required) • Immediate s
Slide 38: Margin by Business Segment
Margin by Business Segment LTM Q3-2022 De Novo LTM Q3-2022 Adjusted EBITDA Commentary Investments Organic Growth (% Margin) (1) Sales leadership and experienced advisor $119M hiring. Does not include $25-$30M Middle Market: ~$14M 14% (22%) investment in national infrastructure (loss control, claims
Slide 39: Balance Sheet Review
Balance Sheet Review Summary of Outstanding Debt Maturity Profile • $840M TLB Term Loan B Revolving Credit Facility Contingent Liabilities / Earnouts • L+350 bps (50 bps floor) ($ in millions) $1,331 • $527M drawn on Revolver (as of 9/30) • S+310 bps (at current net leverage) • Maintenance covenant:
Slide 40: Expect Strong 2023 Despite Challenging Environment
Expect Strong 2023 Despite Challenging Environment Total Organic Adjusted 2023 Year End Revenue Growth EBITDA Net Leverage $1.14 – $1.17 Billion High End of 10 – 15% $250 – $260 Million Near 4.5x
Slide 41: Key Takeaways
Key Takeaways Continuing track record of exceptional operational and financial execution Naturally strengthening our balance sheet through EBITDA growth and free cash flow generation Investing to drive efficiencies and sustainable long-term profitable growth with a disciplined, return-focused capita
Slide 42: BRP Group, Inc. Investor Day November 2022
BRP Group, Inc. Investor Day November 2022
Slide 43: Appendix
Appendix «BRP
Slide 44: Experienced Management Team with a Track Record of Success
Experienced Management Team with a Track Record of Success Trevor Baldwin Kris Wiebeck Brad Hale David Smith Erin King Rajasekhar Kalahasthi Co-Founder & CEO Chief Strategy Officer & Chief Financial Officer President & EOO, Chief Colleague Officer Chief Digital & Former CFO Mainstreet & Medicare Inf
Slide 45: Accomplished Board of Directors
Accomplished Board of Directors Skills Matrix (2) Executive Leadership: 100% Human Capital Management: 91% Lowry Baldwin Trevor Baldwin Jay Cohen Ellyn Shook Myron Williams Barbara Matas Founding Partner & Co-Founder & Former Managing Director Chief Leadership and Former Sales Strategy and Former Ch
Slide 46: Industry Leading Organic Revenue Growth, Opportunity For Margin Expansion
Industry Leading Organic Revenue Growth, Opportunity For Margin Expansion Organic Revenue Growth (1) Total Revenue Growth 22% 22% 135% 2021 YTD Q3'2022 2021 YTD Q3'2022 80% 9% 9% 10% 10% 9% 8% 8% 7% 6% 26% 3% 13% 17% 16% 15% 10% 7% 4% 3% (2%) Peer #1 Peer #2 Peer #3 Peer #4 Peer #5 Peer #1 Peer #2 P
Slide 47: Reconciliations
Reconciliations «BRP
Slide 48: Organic and Pro Forma Revenue Growth Reconciliation
Organic and Pro Forma Revenue Growth Reconciliation Total Organic Revenue Growth FY FY FY Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 LTM LTM 2019 2020 2021 2020 2021 2021 2021 2021 2022 2022 2022 9/30/2021 9/30/2022 Commissions and fees $137.8 $240.9 $567.3 $69.6 $152.8 $119.7 $135.6 $159.2 $242.8 $232.5 $259.4 $477.7
Slide 49: Segment-Level Organic Revenue Growth Reconciliation
Segment-Level Organic Revenue Growth Reconciliation Middle Market Organic Revenue Growth (1) Specialty Organic Revenue Growth (1) (1) Includes the first twelve months of such commissions and fees generated from newly acquired Partners.
Slide 50: Segment-Level Organic Revenue Growth Reconciliation (Cont'd)
Segment-Level Organic Revenue Growth Reconciliation (Cont’d) Mainstreet Organic Revenue Growth (1) Medicare Organic Revenue Growth (1) (1) Includes the first twelve months of such commissions and fees generated from newly acquired Partners.
Slide 51: Segment-Level Pro Forma Revenue Growth Reconciliation
Segment-Level Pro Forma Revenue Growth Reconciliation Middle Market Pro Forma Revenue Growth FY FY FY Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 LTM LTM 2019 2020 2021 2020 2021 2021 2021 2021 2022 2022 2022 9/30/2021 9/30/2022 Commissions and fees revenue $56.4 $103.4 $363.8 $34.1 $110.6 $76.1 $80.1 $97.1 $171.4 $131
Slide 52: Segment-Level Pro Forma Revenue Growth Reconciliation (Cont'd)
Segment-Level Pro Forma Revenue Growth Reconciliation (Cont’d) Mainstreet Pro Forma Revenue Growth FY FY FY Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 LTM LTM 2019 2020 2021 2020 2021 2021 2021 2021 2022 2022 2022 9/30/2021 9/30/2022 Commissions and fees revenue $25.5 $30.4 $34.3 $6.4 $8.2 $8.6 $8.8 $8.8 $9.3 $29.4 $3
Slide 53: Total Pro Forma Adjusted EBITDA Reconciliation
Total Pro Forma Adjusted EBITDA Reconciliation Total Pro Forma Adjusted EBITDA FY Q4 Q1 Q2 Q3 LTM 2019 2021 2022 2022 2022 9/30/2022 Pro forma commissions and fees $152.6 $197.8 $266.2 $242.2 $260.1 $966.3 Pro forma net income (loss) (22.9) (38.2) 43.0 15.1 (46.1) (26.2) Adjustments to net income (l
Slide 54: Total Adjusted EBITDA Reconciliation
Total Adjusted EBITDA Reconciliation Total Adjusted EBITDA FY FY FY Q4 Q1 Q2 Q3 LTM 2019 2020 2021 2021 2022 2022 2022 9/30/2022 Commissions and fees $137.8 $240.9 $567.3 $159.2 $242.8 $232.5 $259.4 $893.9 Net income (loss) (22.5) (29.9) (58.1) (44.4) 44.8 16.6 (46.7) (29.7) Adjustments to net incom
Slide 55: Total Adjusted Net Income and Adjusted Earnings Per Share Reconciliation
Total Adjusted Net Income and Adjusted Earnings Per Share Reconciliation Total Adjusted Net Income and Adjusted Earnings Per Share FY FY FY Q4 Q1 Q2 Q3 LTM 2019 2020 2021 2021 2022 2022 2022 9/30/2022 Net income (loss) attributable to BRP Group, Inc. ($8.7) ($15.7) ($30.6) ($22.6) $22.9 $8.6 ($24.8)
Slide 56: MGA of the Future Pro Forma Revenue and Organic Growth Reconciliation
MGA of the Future Pro Forma Revenue and Organic Growth Reconciliation Total Pro Forma Revenue FY FY FY Q4 Q1 Q2 Q3 LTM 2019 2020 2021 2021 2022 2022 2022 9/30/2022 Commissions and fees revenue $31.2 $58.0 $107.2 $39.1 $41.1 $62.6 $84.1 $226.9 (1) Commissions and fees for Partnerships in the unowned
Slide 57: MGA of the Future Pro Forma Adjusted EBITDA
MGA of the Future Pro Forma Adjusted EBITDA Total Pro Forma Adjusted EBITDA (1) Q4 Q1 Q2 Q3 LTM 2021 2022 2022 2022 9/30/2022 Pro forma commissions and fees $39.7 $41.1 $62.6 $84.1 $227.6 Pro forma net income 7.8 6.1 8.2 10.0 32.2 Adjustments to net income: Depreciation 0.1 0.1 0.1 0.1 0.5 Amortizat