Hagerty, Inc. · NYSE:HGTY
Hagerty — Q1 2024 Earnings Presentation
20 slides from Hagerty's earnings presentation, May 7, 2024
Slide 1: Speakers
SPEAKERS: McKeel Hagerty | Chief Executive Onfene Patrick McClymont | Chief Financial Officer
Slide 2: Forward Looking Statements / Non-GAAP Financial Measures
FORWARD LOOKING STATEMENTS / NON-GAAP FINANCIAL MEASURES This presentation contains statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts. The
Slide 3: Q1 2024 results summary: revenue growth and improved profitability
Total Revenue growth of 24% Commission and Fee growth of 19% Written Premium growth of 19% » Added 59,000 new customers in the quarter Membership, Marketplace and other revenue growth of 18% » Marketplace growth of 58% Significantly improved profitability » Improved operating margin by 1,210 bps » N
Slide 4: Resetting cost base and driving margin improvement
Reset Hagerty’s cost base through Beginning to implement changes to restructurings and began to evaluate business processes to drive sustained business process improvements to reductions in cost to acquire and cost drive sustained margin improvement. to serve. » Operating income margins expanded » P
Slide 5: Strategic priorities: loyalty, member experience, Marketplace, insurance offerings
» Further improve loyalty to drive renewals and referrals » Enhance member experience in a cost effective and efficient way » Build Hagerty Marketplace into the most trusted and preferred place to buy, sell and finance collector cars » Expand insurance offerings, particularly in the post-1980s colle
Slide 6: First Quarter Financial Highlights
FIRST QUARTER Financial Highlights GROWTH PERSISTENCE PROFITABILITY $272M A11% $12M $8M Total Revenue Operating Income Net Income Loss Ratio +24% +29M +23M $218M $27M_ § $(0.04) Written Premium Adjusted EBITDA? Basic Earnings +19% +21M (Loss) Per Share And a 1,210 bps improvement in operating margin
Slide 7: Revenue by category: commission and fee, membership, Hagerty Re
Commission + fee revenue (+19%) » Written premium growth of 19% » Policies in Force retention of 89% Membership, marketplace + other revenue (+18%) » Membership revenue growth of 7% » Marketplace revenue growth of 58% Earned premium in Hagerty Re (+29%) » Contractual quota share2 ~80% in 2024
Slide 8: Net Income and Adjusted EBITDA trends
1 Q1 2022 Net Income includes a $32 million gain as a result of a decrease in fair value of warrant liabilities, Q1 2023 Net Income includes a $1 million loss and Q1 2024 includes a $6 million loss as a result of an increase in fair value of warrant liabilities. 2 See Appendix for additional informa
Slide 9: 2024 Outlook
IN THOUSANDS 2023 RESULTS 2024 OUTLOOK ($) 2024 OUTLOOK (%) Total Written Premium $907,175 $1,025,000 - $1,034,000 13% - 14% Total Revenue $1,000,213 $1,150,000 - $1,170,000 15% - 17% Net Income1 $28,179 $61,000 - $70,000 116% - 148% Adjusted EBITDA2 $88,162 $124,000 - $135,000 41% - 53% HAGERTY Q1
Slide 10: Appendix
APPENDIX
Slide 11: Total Loss Performance
Hagerty U.S. Auto Premium Growth vs. Industry Top 100 Hagerty U.S. Auto Loss Performance vs. Industry Top 100 Total Percentage Growth Total Loss Performance Hagerty’s full year 2022 loss ratio of 45.3% includes the $10.0 million impact from Hurricane Ian (2.5%) as well as the increased U.S. liabilit
Slide 12: Total U.S. Auto Written Premium and annual growth
Total U.S. Auto Written Premium U.S. Auto Written Premium Annual Growth
Slide 13: Written Premium Growth Fueled by New Members
WRITTEN PREMIUM GROWTH FUELED BY NEW MEMBERS Strong and growing New Business Count EBB Globa! New Business Count 300,000 250,000 200,000 150,000 100,000 50,000 2014 2015 2016 2017 2018 2019 =. 2020 2021 2022 =2023 HAGERTY Q12024 | 13
Slide 14: Post 1980 Vehicles Becoming More Impactful for Growth
POST 1980 VEHICLES BECOMING MORE IMPACTFUL FOR GROWTH 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 Hagerty Penetration and U.S. Auto Insured Vehicle Count [Bl Pre 1980 vehicle Count [1 Post 1980 Vehicle Count 7% annual growth in pre 1980s 18% annual growth in post 1980s 2012 2013
Slide 15: Total Revenue and Operating Income by quarter
Total Revenue Operating Income 5 YEAR AVERAGE 5 YEAR AVERAGE 80% 70% 67% 60% 50% 51% 40% 30% 20% 15% 10% 0 (10%) (20%) (30%) (40%) (34%) (50%) $ IN THOUSANDS Q1 Q2 Q3 Q4 Total $ IN THOUSANDS Q1 Q2 Q3 Q4 Total 2019 78,479 109,722 111,472 97,601 397,274 2019 (5,808) 13,247 9,258 (6,149) 10,548 2020 10
Slide 16: Revenue by category by quarter
$ IN MILLIONS Commission + fee revenue1 Earned premium in Hagerty Re Membership, marketplace + other revenue 152 147 110 140 103 127 96 117 89 112 86 107 78 94 75 64 33 31 27 24 24 21 20 16 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2022 2022 2022 2023 2023 2023 2023 202
Slide 17: Net income to Adjusted EBITDA reconciliation
IN THOUSANDS Q1 2023 Q2 2023 - Q4 2023 Q1 2024 TTM Net income (loss) ($15,025) $43,204 $8,199 $51,403 Interest and other income (expense)1 (5,647) (17,174) (7,244) (24,418) Income tax expense 3,668 12,925 5,129 18,054 Depreciation and amortization 13,743 32,066 10,560 42,626 EBITDA (3,261) 71,021 16
Slide 18: Earnings per share reconciliation
IN THOUSANDS (EXCEPT PER SHARE AMOUNTS) Q1 2024 Q1 2023 Numerator: Net income (loss) available to Class A Common Stockholders1 $(3,189) $(2,099) Undistributed earnings allocated to Series A Convertible Preferred Stock — — Accretion of Series A Convertible Preferred Stock 1,838 — Net income (loss) at
Slide 19: 2024 outlook Adjusted EBITDA reconciliation
IN THOUSANDS 2024 Low 2024 High Net Income $61,000 $70,000 Interest and Other (Income) Expense (1) (18,000) (18,000) Income Tax (Benefit) Expense 17,250 19,250 Depreciation and Amortization 46,000 46,000 Change in Fair Value of Warrant Liabilities — — Share-based Compensation Expense 17,750 17,750 A
Slide 20: Never Stop Driving
Never Stop Driving HAGERTY