Goosehead Insurance, Inc. · NASDAQ:GSHD
Goosehead Insurance — Investor Presentation (March 2019)
26 slides from Goosehead Insurance's investor presentation, Mar 12, 2019
Slide 1: Investor Presentation March 2019
Investor Presentation March 2019
Slide 2: Disclaimer
Disclaimer This presentation may contain 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 information concerning our possible or assumed
Slide 3: Committed And Experienced Management Team
Committed And Experienced Management Team Mark Jones Michael Colby Mark Colby Co-Founder, Chairman President and Chief Financial Officer and CEO Chief Operating Officer Served as CEO since Joined Goosehead Joined Goosehead inception in 2003 Insurance in 2006 Insurance in 2012 and was promoted
Slide 4: Rapid and Responsible Organic Growth
Rapid and Responsible Organic Growth New Business and Renewal Premium Growth Corporate and Franchise Channel Premium Growth $600 $600 $500 $500 $400 $400 5 Year CAGR: 45% CAGR Since 2016 $300 10 Year CAGR: 35% $300 Corporate: 29% Franchise: 58% Premium volume ($mm) volume Premium Premium volume ($mm
Slide 5: Investment Highlights
Investment Highlights Disruptive model positioned to substantially grow in a massive and fragmented industry Outpaced revenue growth driven by strategically solving industry challenges Comprehensive value proposition for clients, agents and carriers Highly developed recruiting strategy with experien
Slide 6: Personal Insurance Market Large and Highly Fragmented
Personal Insurance Market Large and Highly Fragmented Industry historically has struggled to find the right way to best serve the needs of customers Independent Captive Agencies Carriers Direct To Agencies Owned By Carriers Customer Offers products from multiple Largely very small businesses Largely
Slide 7: Redefining the Industry
Redefining the Industry Personal lines property and casualty insurance broker Considerably differentiated business model serving the American consumer producing strong, sustained growth and profitability 7 corporate sales offices in Texas and Illinois; 646 franchise locations1 primarily in CA, TX, F
Slide 8: Compelling Business Model
Compelling Business Model Service Team Corporate Channel Handle cases from cradle to grave Franchise Channel Revenue generation focus Agents typically recruited High performing agents on directly out of college All fully licensed agents their current platform Display a high aptitude for Entr
Slide 9: Highly Developed Recruiting Strategy Supports Sustainable Outsized Growth
Highly Developed Recruiting Strategy Supports Sustainable Outsized Growth Corporate Channel Franchise Channel New college graduates with entrepreneurial spirit Highly effective producers who are seeking autonomy Driven by professional development and financial Entrepreneurially motivated to
Slide 10: Robust and Innovative Technology Platform Supports High Growth Business Model
Robust and Innovative Technology Platform Supports High Growth Business Model “Goosehead Insurance leverages Salesforce technology to transform how it serves it partners and customers. Creating innovative applications that bring greater intelligence and value to their industry, Goosehead is a disrup
Slide 11: Industry-Leading New Business Production For New and Seasoned Agents
Industry-Leading New Business Production For New and Seasoned Agents Compelling and proven sales focused model has resulted in industry-leading production New business per agent by tenure ($000s) 3.4x $146 $146 $86 1.5x $68 $64 $44 $43 Corporate Channel Franchise Channel Industry Best Practice < 2 y
Slide 12: Technology Drives Margins While Simultaneously Ensuring Client Satisfaction
Technology Drives Margins While Simultaneously Ensuring Client Satisfaction Technology enables Company to deliver service highly efficiently 2017 Service payroll Key service center metrics as a % of gross personal lines commissions Net Promoter Score 89 1 4.0x 29.0% Client hold times < 60 Seconds Ne
Slide 13: Best-In-Class Customer Service Drives High Revenue Retention
Best-In-Class Customer Service Drives High Revenue Retention Net Promoter Scores (NPS) above several of the most respected brands in the U.S.1 has resulted in stable and recurring revenue with a customer retention rate of 88% in 2018 100 89 2 90 2X 80 70 60 50 40 30 20 10 0 3 Industry Average Source
Slide 14: Meaningful Growth Opportunity
Meaningful Growth Opportunity Continued Technology Continued Corporate Upgrades Channel Recruiting Pre-2018 Territories New Territories in 2018 New Territories Targeted in 2019 Continued Improvements in National Rollout of Productivity and Franchise Channel Customer Service 13
Slide 15: Continued Corporate Channel Recruiting
Continued Corporate Channel Recruiting After working for more than three years, the typical Goosehead corporate agent earns more than $150k annually Goosehead has a highly developed process for recruiting new agents which we have continually refined over the last 10+ years. Additional college camp
Slide 16: National Rollout Of Franchise Channel
National Rollout Of Franchise Channel Pipeline Growth Production Ramp-up National Implications Other 26,000 $59 7.2% MI 3,000 34% PA 3,000 $44 Growth NC 3,000 FL 4,000 IL 6,000 CA 10,000 TX 10,000 2017 2018 Total Leads as of December 2018: 65,000 Market share of homeowners insurance in new mortgage
Slide 17: Strong Revenue Growth And Stable Margins
Strong Revenue Growth And Stable Margins Total revenue ($mm) $60.1 $42.7 $31.5 3 2016 2017 2018 Adj. EBITDA Margin4 25.8% 25.1% 24.5% Renewal revenue 1 New business revenue 1 Initial franchise fees 2 Contingent commissions Other income 1 Includes royalty fees; 2 Related to the training and onboardin
Slide 18: Outpacing The Industry In Growth With A Clear Path To Margin Expansion
Outpacing The Industry In Growth With A Clear Path To Margin Expansion 2018 Organic revenue growth 2018 Adjusted EBITDA margins 41% 25% 25% 4% Public Brokerage 1 Public Brokerage Average Average Source: Public filings; 1 Represents 2018 Adjusted EBITDA margin; see Appendix for GAAP reconciliation. N
Slide 19: Compelling Economics Drive Growth And Visibility – Corporate Channel
Compelling Economics Drive Growth And Visibility – Corporate Channel Allowing agents to focus solely on selling creates a clear path to continued organic growth and revenue visibility Revenue (to Goosehead) $297 $7 $25 $218 $5 $100 $25 $128 88% retention¹ $3 $100 $25 $165 88% retention¹ $100 $88 Yea
Slide 20: Compelling Economics Drive Growth And Visibility - Franchise Channel
Compelling Economics Drive Growth And Visibility - Franchise Channel Service model enables and incentivizes franchises to focus all of their time on new business Franchise # of Gross Revenue 700 Channel Tenure franchises $265 Profile $188 $100 > 4 years 48 600 3 - 4 years 37 $100 88% $100 retention1
Slide 21: The Loaded Gun
The Loaded Gun 18,000,000 $17.0M 5% 16,000,000 13% 14,000,000 12,000,000 22% $11.1M 5% 10,000,000 21% 8,000,000 $6.9M Royalty Revenue ($) 9% 6,000,000 59% 4,000,000 $3.5M 74% 91% 2,000,000 100% - 2015 2016 2017 2018 Year franchise launched 2015 and prior 2016 2017 2018 20
Slide 22: Margins Increase Mechanically As New Business Becomes Renewal Business
Margins Increase Mechanically As New Business Becomes Renewal Business New and renewal business costs New Renewal Business Business Commissions to agents / franchisees >50% lower for renewal business (net revenue) ● ◑ Critical to both new and renewal Client service salaries and bonuses business;
Slide 23: Investments In People Will Result In Long-Term Growth And Margin Expansion
Investments In People Will Result In Long-Term Growth And Margin Expansion Making significant investments today to ensure growth and profitability is sustainable for years to come Agent Head Count Agent New Business Productivity Agent Compensation Other Costs 167 Client Service $146 $146 111 $86 Tra
Slide 24: Investment Highlights
Investment Highlights Disruptive model positioned to substantially grow in a massive and fragmented industry Outpaced revenue growth driven by strategically solving industry challenges Comprehensive value proposition for clients, agents and carriers Highly developed recruiting strategy with experien
Slide 25: Appendix
Appendix
Slide 26: Non-GAAP Adjusted EBITDA Reconciliation
Non-GAAP Adjusted EBITDA Reconciliation 2017 2018 Net Income $ 8.7 $ (18.7) Other (Income) Expense (3.5) 0.2 Interest Expense 2.5 4.3 Depreciation and Amortization 0.9 1.5 Equity Compensation 2.2 27.1 Income Tax Expense - 0.4 Adjusted EBITDA $ 10.7 $ 14.8 Adjusted EBITDA Margin 25.1% 24.5% Note: Fin
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