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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 31, 2023

 

 

RYAN SPECIALTY HOLDINGS, INC.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

001-40645

86-2526344

(State or Other Jurisdiction
of Incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

 

 

 

 

 

155 North Wacker Drive, Suite 4000

 

 

Chicago, Illinois

 

60606

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 312 784-6001

 

 

 

,

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class

 

Trading
Symbol(s)

 


Name of each exchange on which registered

Class A Common Stock, $0.001 par value

 

RYAN

 

The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 


 

Item 2.02 Results of Operations and Financial Condition.

On February 27, 2024, Ryan Specialty Holdings, Inc. (the “Company”) issued a press release announcing its results of operations for the fourth quarter ended December 31, 2023. A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.

The information furnished herewith pursuant to Item 2.02 of this Current Report, including Exhibit 99.1, shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in this current report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 8.01 Other Events.

On February 27, 2024, the Company's board of directors (the "Board") declared a one-time special cash dividend of $0.23 per share on the Company's outstanding Class A common stock (the "Class A common stock"). In addition, the Board initiated a regular quarterly dividend of $0.11 per share on the outstanding Class A common stock. Both the special and regular quarterly dividend will be payable on March 27, 2024 to stockholders of record as of the close of business on March 13, 2024.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits are furnished herewith:

 

 

 

Exhibit No.

Description of Exhibit

99.1

Press Release dated February 27, 2024

104

Cover Page Interactive Data File (formatted as inline XBRL)

 

Cautionary Note Regarding Forward-Looking Statements

This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements, other than statements of historical fact included in this report, are forward-looking statements. Forward-looking statements give our current expectations relating to our financial condition, results of operations, plans, objectives, future performance, and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated costs, expenditures, cash flows, growth rates and financial results, any future dividends, or anticipated amount and timing of cost savings relating to the restructuring plan are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to, those relating to whether the Company will achieve the associated objectives with its Program, whether the costs and charges associated with restructuring initiatives will exceed current estimates and forecasts, its ability to realize expected savings and benefits in the amounts and at the times anticipated, changes in management’s assumptions, its ability to achieve anticipated financial results, risks associated with acquisitions, divestitures, joint ventures and strategic investments, outcomes of legal and regulatory matters, and changes in legislation or regulations. These and other risks, assumptions and uncertainties are described in Item 1A (Risk Factors) of the Company’s most recent Annual Report on Form 10-K and in other documents that the Company files or furnishes with the Securities and Exchange Commission. 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. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this report, whether as a result of new information, future events, changes in assumptions or otherwise.

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

RYAN SPECIALTY HOLDINGS, INC. (Registrant)

 

 

 

 

Date:

February 26, 2024

By:

/s/ Jeremiah R. Bickham

 

 

 

Jeremiah R. Bickham
Executive Vice President and Chief Financial Officer

 

 


 

 

 

 

 

img235980849_0.jpg 

RYAN SPECIALTY REPORTS FOURTH QUARTER 2023 RESULTS; INITIATES QUARTERLY DIVIDEND

- Total Revenue grew 22.5% year-over-year to $532.9 million -

- Organic Revenue Growth Rate of 16.0% year-over-year -

- Net Income of $58.5 million, or $0.18 per diluted share -

- Adjusted EBITDAC grew 24.6% year-over-year to $158.6 million -

- Adjusted Net Income increased 29.6% year over year to $95.7 million, or $0.35 per diluted share -

FEBRUARY 27, 2024 | CHICAGO, IL Ryan Specialty Holdings, Inc. (NYSE: RYAN) (“Ryan Specialty” or the “Company”), a leading international specialty insurance firm, today announced results for the fourth quarter ended December 31, 2023.

Fourth Quarter 2023 Highlights

Revenue grew 22.5% year-over-year to $532.9 million, compared to $435.0 million in the prior-year period
Organic Revenue Growth Rate* was 16.0%, compared to 10.3% in the prior-year period
Net Income grew 27.8% year-over-year to $58.5 million, compared to $45.8 million in the prior-year period. Diluted Earnings per Share was $0.18
Adjusted EBITDAC* increased 24.6% to $158.6 million, compared to $127.3 million in the prior-year period
Adjusted EBITDAC Margin* of 29.8%, compared to 29.3% in the prior-year period
Adjusted Net Income* increased 29.6% to $95.7 million, compared to $73.8 million in the prior-year period
Adjusted Diluted Earnings per Share* increased 29.6%% to $0.35, compared to $0.27 in the prior-year period

Full Year 2023 Highlights

Revenue grew 20.4% year-over-year to $2,077.5 million, compared to $1,725.2 million in the prior-year
Organic Revenue Growth Rate* was 15.0%, compared to 16.4% in the prior-year
Net Income grew 19.1% year-over-year to $194.5 million, compared to $163.3 million in the prior-year
Diluted Earnings per Share was $0.52
Adjusted EBITDAC* increased 20.7% to $624.7 million, compared to $517.4 million in the prior-year
Adjusted EBITDAC Margin* of 30.1%, compared to 30.0% in the prior-year
Adjusted Net Income* increased 20.4% to $375.6 million, compared to $312.0 million in the prior-year
Adjusted Diluted Earnings per Share* increased 20.0% to $1.38, compared to $1.15 in the prior-year

 

1


 

 

 

 

 

“Our fourth quarter results capped off another great year, in which we delivered 15% organic revenue growth, 21% adjusted EBITDAC growth, and 20% adjusted EPS growth. Through a combination of our differentiated business model, industry leading talent, speed to market, innovative product development, and persistent dedication to our clients, we offer a winning formula for success,” said Patrick G. Ryan, Founder, Chairman and Chief Executive Officer of Ryan Specialty. “We were very pleased with the success we had in executing on our M&A strategy, as we had our second largest year in acquired revenue and announced our agreement to acquire Castel. These acquisitions expand our total addressable market and provide valuable products and solutions to our clients. Additionally, given our balance sheet strength, broad financial flexibility, and strong free cash flow, we are pleased to initiate a quarterly cash dividend program to return capital to and create additional value for our investors. The decision by our Board to initiate a cash dividend program reflects confidence in our ability to continue to drive sustainable, profitable growth, generate strong cash flow over the long term and execute on our robust M&A program. In summary, we produced excellent results in 2023, are well positioned for another strong year in 2024, and are confident in our ability to deliver value to investors for years to come.”

Summary of Fourth Quarter 2023 Results

 

 

 

Three Months Ended December 31,

 

 

Change

 

(in thousands, except percentages and per share data)

 

2023

 

 

2022

 

 

$

 

 

%

 

GAAP financial measures

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$

532,863

 

 

$

435,015

 

 

$

97,848

 

 

 

22.5

%

Compensation and benefits

 

 

331,735

 

 

 

270,542

 

 

 

61,193

 

 

 

22.6

 

General and administrative

 

 

73,586

 

 

 

57,120

 

 

 

16,466

 

 

 

28.8

 

Total operating expenses

 

 

436,526

 

 

 

355,766

 

 

 

80,760

 

 

 

22.7

 

Operating income

 

 

96,337

 

 

 

79,249

 

 

 

17,088

 

 

 

21.6

 

Net income

 

 

58,503

 

 

 

45,782

 

 

 

12,721

 

 

 

27.8

 

Net income attributable to Ryan Specialty Holdings, Inc.

 

 

22,846

 

 

 

17,895

 

 

 

4,951

 

 

 

27.7

 

Compensation and benefits expense ratio (1)

 

 

62.3

%

 

 

62.2

%

 

 

 

 

 

 

General and administrative expense ratio (2)

 

 

13.8

%

 

 

13.1

%

 

 

 

 

 

 

Net income margin (3)

 

 

11.0

%

 

 

10.5

%

 

 

 

 

 

 

Earnings per share (4)

 

$

0.19

 

 

$

0.16

 

 

 

 

 

 

 

Diluted earnings per share (4)

 

$

0.18

 

 

$

0.14

 

 

 

 

 

 

 

Non-GAAP financial measures*

 

 

 

 

 

 

 

 

 

 

 

 

Organic revenue growth rate

 

 

16.0

%

 

 

10.3

%

 

 

 

 

 

 

Adjusted compensation and benefits expense

 

$

310,416

 

 

$

252,571

 

 

$

57,845

 

 

 

23

%

Adjusted compensation and benefits expense ratio

 

 

58.3

%

 

 

58.1

%

 

 

 

 

 

 

Adjusted general and administrative expense

 

$

63,862

 

 

$

55,182

 

 

$

8,680

 

 

 

15.7

%

Adjusted general and administrative expense ratio

 

 

12.0

%

 

 

12.7

%

 

 

 

 

 

 

Adjusted EBITDAC

 

$

158,585

 

 

$

127,262

 

 

$

31,323

 

 

 

24.6

%

Adjusted EBITDAC margin

 

 

29.8

%

 

 

29.3

%

 

 

 

 

 

 

Adjusted net income

 

$

95,672

 

 

$

73,833

 

 

$

21,839

 

 

 

29.6

%

Adjusted net income margin

 

 

18.0

%

 

 

17.0

%

 

 

 

 

 

 

Adjusted diluted earnings per share

 

$

0.35

 

 

$

0.27

 

 

 

 

 

 

 

* 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 12, Earnings (Loss) Per Share” of the annual consolidated financial statements.

2


 

 

 

 

 

Ryan Specialty Initiates Quarterly Dividend

Today, Ryan Specialty’s board of directors (“Board”) declared a one-time special cash dividend of $0.23 per share on the Company's outstanding Class A common stock. In addition, the Board initiated a regular quarterly dividend of $0.11 per share on the Company's outstanding Class A common stock. Both the special and regular quarterly dividend will be payable on March 27, 2024 to stockholders of record as of the close of business on March 13, 2024.

The special dividend of $0.23 and $0.07 of the regular quarterly dividend will be funded by current and prior tax distributions from Ryan Specialty, LLC that are in excess of both the corporate income taxes payable by the Company as well as the Company's obligations pursuant to the Tax Receivable Agreement. The remaining $0.04 of the regular quarterly dividend will be funded by free cash flow from Ryan Specialty, LLC and will be payable to all holders of the Company's Class A common stock and the common units of Ryan Specialty, LLC. We intend to pay the regular cash dividend on a quarterly basis going forward, subject to market conditions, contractual agreements, and approval by our Board.

Fourth Quarter 2023 Review*

Total revenue for the fourth quarter of 2023 was $532.9 million, an increase of 22.5% compared to $435.0 million in the prior-year period. This increase was primarily due to continued solid Organic revenue growth of 16.0%, 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 December 31, 2023, and increased Fiduciary investment income. We experienced growth across the majority of our property and casualty lines.

Total operating expenses for the fourth quarter of 2023 were $436.5 million, a 22.7% 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 resulting from higher compensation due to revenue growth and higher Restructuring and related expenses associated with ACCELERATE 2025, partially offset by a decline in Acquisition related long-term incentive compensation. General and administrative expense also increased compared to the prior-year period due to an increase in professional services in connection with revenue generating activities, higher Acquisition-related expenses, higher Restructuring and related expenses associated with ACCELERATE 2025, and continued normalization of business travel and client entertainment.

Net income for the fourth quarter of 2023 increased 27.8% to $58.5 million, compared to $45.8 million in the prior-year period. The increase was mainly due to stronger year-over-year revenue growth.

Adjusted EBITDAC grew 24.6% in the fourth quarter of 2023 to $158.6 million from $127.3 million in the prior-year period. Adjusted EBITDAC margin for the quarter was 29.8%, compared to 29.3% 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 fourth quarter of 2023 increased 29.6% to $95.7 million, compared to $73.8 million in the prior-year period. Adjusted net income margin was 18.0%, compared to 17.0% in the prior-year period. Adjusted diluted earnings per share for the fourth quarter of 2023 increased 29.6% to $0.35, compared to $0.27 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.

 

3


 

 

 

 

 

Fourth Quarter and Year to Date 2023 Net Commissions and Fees by Specialty

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

 

Three Months Ended December 31,

 

 

Period over Period

 

(in thousands, except percentages)

 

2023

 

 

% of
total

 

 

2022

 

 

% of
total

 

 

Change

 

Wholesale Brokerage

 

$

342,718

 

 

 

66.1

%

 

$

287,968

 

 

 

67.4

%

 

$

54,750

 

 

 

19.0

%

Binding Authority

 

 

67,414

 

 

 

13.0

 

 

 

52,697

 

 

 

12.3

 

 

 

14,717

 

 

 

27.9

 

Underwriting Management

 

 

108,586

 

 

 

20.9

 

 

 

86,737

 

 

 

20.3

 

 

 

21,849

 

 

 

25.2

 

Total Net commissions and fees

 

$

518,718

 

 

 

 

 

$

427,402

 

 

 

 

 

$

91,316

 

 

 

21.4

%

 

 

Year Ended December 31,

 

 

Period over Period

 

(in thousands, except percentages)

 

2023

 

 

% of
total

 

 

2022

 

 

% of
total

 

 

Change

 

Wholesale Brokerage

 

$

1,319,056

 

 

 

65.1

%

 

$

1,129,241

 

 

 

66.0

%

 

$

189,815

 

 

 

16.8

%

Binding Authority

 

 

275,961

 

 

 

13.6

 

 

 

231,048

 

 

 

13.5

 

 

 

44,913

 

 

 

19.4

 

Underwriting Management

 

 

431,579

 

 

 

21.3

 

 

 

351,572

 

 

 

20.5

 

 

 

80,007

 

 

 

22.8

 

Total Net commissions and fees

 

$

2,026,596

 

 

 

 

 

$

1,711,861

 

 

 

 

 

$

314,735

 

 

 

18.4

%

Liquidity and Financial Condition

As of December 31, 2023, the Company had Cash and cash equivalents of $838.8 million and outstanding debt principal of $2.0 billion.

Full Year 2024 Outlook*

The Company is initiating its full year 2024 outlook for both Organic Revenue Growth Rate and Adjusted EBITDAC Margin as follows:

Organic Revenue Growth Rate guidance for full year 2024 to be between 12.0% - 13.5%
Adjusted EBITDAC Margin guidance for full year 2024 to be between 31.0% - 31.5%

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.

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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 ACCELERATE 2025 program, 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 failure to recruit and retain revenue producers; the impact of breaches in security that cause significant system or network disruptions; the impact of improper disclosure of confidential, personal or proprietary data; 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; the potential that the Company’s underwriting models contain errors or are otherwise ineffective; any damage to the Company’s reputation; the Company's failure to achieve the intended results of our restructuring program, ACCELERATE 2025; any failure to maintain the valuable aspects of our Company’s culture; the Company's inability to successfully recover upon experiencing a disaster or other business continuity problem; the impact of third parties that perform key functions of the Company's business operations acting in ways that harm our business; the cyclicality of, and the economic conditions in, the markets in which the Company operates; conditions that result in reduced insurer capacity; 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; decreases in current market share as a result of disintermediation within the insurance industry; impairment of goodwill; the impact on our operations and financial condition from the effects of a pandemic or the outbreak of a contagious disease and resulting governmental and societal responses; 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; 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; the impact of being unable to refinance the Company’s indebtedness; and risks relating to the Company's organizational structure that could result in conflicts of interest between the holders of the LLC units and the holders of our Class A common stock.

5


 

 

 

 

 

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 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.

6


 

 

 

 

 

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 (benefit), 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 consisted 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 5, Restructuring” of the annual 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 represented costs associated with the 2020 restructuring plan. Amortization and expense consisted of charges related to discontinued prepaid incentive programs. For the three months and year ended December 31, 2023, Other non-operating (income) loss included a $10.4 million charge related to the change in the TRA liability caused by a change in our blended state tax rates. For the three months and year ended December 31, 2022, Other non-operating (income) loss included income of $1.7 million and a $5.6 million charge, respectively, 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 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, vested Class C Incentive Units, and the effect of unvested equity awards were exchanged into shares of Class A common stock. The most directly comparable GAAP financial metric is Diluted earnings (loss) per share.

7


 

 

 

 

 

The reconciliations of the above non-GAAP measures to each of their most directly comparable GAAP financial measure are set forth in the reconciliation tables 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.

Contacts:

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

 

 

 

8


 

 

 

 

 

Consolidated Statements of Income (Unaudited)

 

 

Three Months Ended December 31,

 

 

Year Ended
December 31,

 

(in thousands, except percentages and per share data)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

Net commissions and fees

 

$

518,718

 

 

$

427,402

 

 

$

2,026,596

 

 

$

1,711,861

 

Fiduciary investment income

 

 

14,145

 

 

 

7,613

 

 

 

50,953

 

 

 

13,332

 

Total revenue

 

$

532,863

 

 

$

435,015

 

 

$

2,077,549

 

 

$

1,725,193

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

331,735

 

 

 

270,542

 

 

 

1,321,029

 

 

 

1,128,981

 

General and administrative

 

 

73,586

 

 

 

57,120

 

 

 

276,181

 

 

 

196,971

 

Amortization

 

 

27,674

 

 

 

25,038

 

 

 

106,799

 

 

 

103,601

 

Depreciation

 

 

2,468

 

 

 

1,787

 

 

 

9,038

 

 

 

5,690

 

Change in contingent consideration

 

 

1,063

 

 

 

1,279

 

 

 

5,421

 

 

 

442

 

Total operating expenses

 

$

436,526

 

 

$

355,766

 

 

$

1,718,468

 

 

$

1,435,685

 

OPERATING INCOME

 

$

96,337

 

 

$

79,249

 

 

$

359,081

 

 

$

289,508

 

Interest expense, net

 

 

29,667

 

 

 

29,367

 

 

 

119,507

 

 

 

104,829

 

Loss (income) from equity method investment in related party

 

 

(2,849

)

 

 

 

 

 

(8,731

)

 

 

414

 

Other non-operating (income) loss

 

 

10,343

 

 

 

(1,759

)

 

 

10,380

 

 

 

5,073

 

INCOME BEFORE INCOME TAXES

 

$

59,176

 

 

$

51,641

 

 

$

237,925

 

 

$

179,192

 

Income tax expense

 

 

673

 

 

 

5,859

 

 

 

43,445

 

 

 

15,935

 

NET INCOME

 

$

58,503

 

 

$

45,782

 

 

$

194,480

 

 

$

163,257

 

GAAP financial measures

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

532,863

 

 

$

435,015

 

 

$

2,077,549

 

 

$

1,725,193

 

Compensation and benefits

 

 

331,735

 

 

 

270,542

 

 

 

1,321,029

 

 

 

1,128,981

 

General and administrative

 

 

73,586

 

 

 

57,120

 

 

 

276,181

 

 

 

196,971

 

Net income

 

 

58,503

 

 

 

45,782

 

 

 

194,480

 

 

 

163,257

 

Compensation and benefits expense ratio

 

 

62.3

%

 

 

62.2

%

 

 

63.6

%

 

 

65.4

%

General and administrative expense ratio

 

 

13.8

%

 

 

13.1

%

 

 

13.3

%

 

 

11.4

%

Net income margin

 

 

11.0

%

 

 

10.5

%

 

 

9.4

%

 

 

9.5

%

Earnings per share

 

$

0.19

 

 

$

0.16

 

 

$

0.53

 

 

$

0.57

 

Diluted earnings per share

 

$

0.18

 

 

$

0.14

 

 

$

0.52

 

 

$

0.52

 

 

Non-GAAP Financial Measures (Unaudited)

Three Months Ended December 31,

 

 

Year Ended December 31,

 

(in thousands, except percentages and per share data)

2023

 

 

2022

 

 

2023

 

 

2022

 

Non-GAAP financial measures*

 

 

 

 

 

 

 

 

 

 

 

Organic revenue growth rate

 

16.0

%

 

 

10.3

%

 

 

15.0

%

 

 

16.4

%

Adjusted compensation and benefits expense

$

310,416

 

 

$

252,571

 

 

$

1,222,342

 

 

$

1,021,823

 

Adjusted compensation and benefits expense ratio

 

58.3

%

 

 

58.1

%

 

 

58.8

%

 

 

59.2

%

Adjusted general and administrative expense

$

63,862

 

 

$

55,182

 

 

$

230,467

 

 

$

185,956

 

Adjusted general and administrative expense ratio

 

12.0

%

 

 

12.7

%

 

 

11.1

%

 

 

10.8

%

Adjusted EBITDAC

$

158,585

 

 

$

127,262

 

 

$

624,740

 

 

$

517,414

 

Adjusted EBITDAC margin

 

29.8

%

 

 

29.3

%

 

 

30.1

%

 

 

30.0

%

Adjusted net income

$

95,672

 

 

$

73,833

 

 

$

375,582

 

 

$

311,991

 

Adjusted net income margin

 

18.0

%

 

 

17.0

%

 

 

18.1

%

 

 

18.1

%

Adjusted diluted earnings per share

$

0.35

 

 

$

0.27

 

 

$

1.38

 

 

$

1.15

 

 

9


 

 

 

 

 

Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)

 

December 31, 2023

 

 

December 31, 2022

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

838,790

 

 

$

992,723

 

Commissions and fees receivable – net

 

 

294,195

 

 

 

231,423

 

Fiduciary cash and receivables

 

 

3,131,660

 

 

 

2,611,647

 

Prepaid incentives – net

 

 

8,718

 

 

 

8,584

 

Other current assets

 

 

62,229

 

 

 

49,690

 

Total current assets

 

$

4,335,592

 

 

$

3,894,067

 

NON-CURRENT ASSETS

 

 

 

 

 

 

Goodwill

 

 

1,646,482

 

 

 

1,314,984

 

Customer relationships

 

 

572,416

 

 

 

457,131

 

Other intangible assets

 

 

38,254

 

 

 

29,313

 

Prepaid incentives – net

 

 

15,103

 

 

 

20,792

 

Equity method investment in related party

 

 

46,099

 

 

 

38,514

 

Property and equipment – net

 

 

42,427

 

 

 

31,271

 

Lease right-of-use assets

 

 

127,708

 

 

 

143,870

 

Deferred tax assets

 

 

383,816

 

 

 

396,814

 

Other non-current assets

 

 

39,312

 

 

 

56,987

 

Total non-current assets

 

$

2,911,617

 

 

$

2,489,676

 

TOTAL ASSETS

 

$

7,247,209

 

 

$

6,383,743

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

136,340

 

 

$

119,022

 

Accrued compensation

 

 

419,560

 

 

 

350,369

 

Operating lease liabilities

 

 

21,369

 

 

 

22,744

 

Short-term debt and current portion of long-term debt

 

 

35,375

 

 

 

30,587

 

Fiduciary liabilities

 

 

3,131,660

 

 

 

2,611,647

 

Total current liabilities

 

$

3,744,304

 

 

$

3,134,369

 

NON-CURRENT LIABILITIES

 

 

 

 

 

 

Accrued compensation

 

 

24,917

 

 

 

10,048

 

Operating lease liabilities

 

 

154,457

 

 

 

151,944

 

Long-term debt

 

 

1,943,837

 

 

 

1,951,900

 

Tax Receivable Agreement liabilities

 

 

358,898

 

 

 

295,347

 

Other non-current liabilities

 

 

41,152

 

 

 

22,323

 

Total non-current liabilities

 

$

2,523,261

 

 

$

2,431,562

 

TOTAL LIABILITIES

 

$

6,267,565

 

 

$

5,565,931

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Class A common stock ($0.001 par value; 1,000,000,000 shares authorized, 118,593,062 and 112,437,825 shares issued and outstanding at December 31, 2023 and 2022, respectively)

 

 

119

 

 

 

112

 

Class B common stock ($0.001 par value; 1,000,000,000 shares authorized, 141,621,188 and 147,214,275 shares issued and outstanding at December 31, 2023 and 2022, respectively)

 

 

142

 

 

 

147

 

Class X common stock ($0.001 par value; 10,000,000 shares authorized, 640,784 shares issued and 0 outstanding at December 31, 2023 and 2022)

 

 

 

 

 

 

Preferred stock ($0.001 par value; 500,000,000 shares authorized, 0 shares issued and outstanding at December 31, 2023 and 2022)

 

 

 

 

 

 

Additional paid-in capital

 

 

441,997

 

 

 

418,123

 

Retained earnings

 

 

114,420

 

 

 

53,988

 

Accumulated other comprehensive income

 

 

3,076

 

 

 

6,035

 

Total stockholders' equity attributable to Ryan Specialty Holdings, Inc.

 

$

559,754

 

 

$

478,405

 

Non-controlling interests

 

 

419,890

 

 

 

339,407

 

Total stockholders' equity

 

$

979,644

 

 

$

817,812

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

7,247,209

 

 

$

6,383,743

 

 

10


 

 

 

 

 

Consolidated Statements of Cash Flows (Unaudited)

 

 

Year Ended December 31,

 

(in thousands)

 

2023

 

 

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net income

 

$

194,480

 

 

$

163,257

 

Adjustments to reconcile net income to cash flows provided by operating activities:

 

 

 

 

 

 

Loss (income) from equity method investment in related party

 

 

(8,731

)

 

 

414

 

Amortization

 

 

106,799

 

 

 

103,601

 

Depreciation

 

 

9,038

 

 

 

5,690

 

Prepaid and deferred compensation expense

 

 

12,192

 

 

 

28,831

 

Non-cash equity-based compensation

 

 

69,743

 

 

 

77,480

 

Amortization of deferred debt issuance costs

 

 

12,172

 

 

 

12,054

 

Amortization of interest rate cap premium

 

 

6,955

 

 

 

4,636

 

Deferred income tax expense (benefit)

 

 

7,134

 

 

 

8,986

 

Deferred income tax expense from common control reorganizations

 

 

18,356

 

 

 

 

Loss on extinguishment of existing debt

 

 

 

 

 

 

Loss on Tax Receivable Agreement

 

 

11,170

 

 

 

5,553

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Commissions and fees receivable – net

 

 

(44,185

)

 

 

(20,370

)

Accrued interest liability

 

 

934

 

 

 

7,776

 

Other current assets and accrued liabilities

 

 

40,360

 

 

 

(63,659

)

Other non-current assets and accrued liabilities

 

 

40,786

 

 

 

1,265

 

Total cash flows provided by operating activities

 

$

477,203

 

 

$

335,514

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Business combinations - net of cash acquired and cash held in a fiduciary capacity

 

 

(446,682

)

 

 

 

Asset acquisitions

 

 

 

 

 

(7,714

)

Repayments of prepaid incentives

 

 

228

 

 

 

337

 

Capital expenditures

 

 

(29,776

)

 

 

(15,043

)

Total cash flows used in investing activities

 

$

(476,230

)

 

$

(22,420

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Proceeds from senior secured notes

 

 

 

 

 

394,000

 

Payment of interest rate cap premium, net

 

 

 

 

 

(23,326

)

Repayment of term debt

 

 

(16,500

)

 

 

(16,500

)

Debt issuance costs paid

 

 

 

 

 

(2,369

)

Finance lease and other costs paid

 

 

 

 

 

(36

)

Payment of contingent consideration

 

 

(4,477

)

 

 

(6,241

)

Purchase of remaining interest in Ryan Re

 

 

 

 

 

 

Repurchase of preferred equity

 

 

 

 

 

 

Tax distributions to LLC unitholders

 

 

(71,674

)

 

 

(39,883

)

Equity repurchases from pre-IPO unitholders

 

 

 

 

 

 

Repurchase of Class A common stock in the IPO

 

 

 

 

 

 

Repurchase of pre-IPO LLC Units and payment of Alternative TRA Payments

 

 

 

 

 

 

Issuance of Class A common stock in the IPO, net of offering costs paid

 

 

 

 

 

 

Repayment of unsecured promissory notes

 

 

 

 

 

 

Receipt of taxes related to net share settlement of equity awards

 

 

7,811

 

 

 

7,168

 

Taxes paid related to net share settlement of equity awards

 

 

(8,785

)

 

 

(7,168

)

Payment of Tax Receivable Agreement liabilities

 

 

(16,206

)

 

 

(8,309

)

Net change in fiduciary liabilities

 

 

97,221

 

 

 

17,420

 

Total cash flows provided by (used in) financing activities

 

$

(12,610

)

 

$

314,756

 

Effect of changes in foreign exchange rates on cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity

 

 

584

 

 

 

(126

)

NET CHANGE IN CASH, CASH EQUIVALENTS, AND CASH AND CASH EQUIVALENTS HELD IN A FIDUCIARY CAPACITY

 

$

(11,053

)

 

$

627,724

 

CASH, CASH EQUIVALENTS, AND CASH AND CASH EQUIVALENTS HELD IN A FIDUCIARY CAPACITY—Beginning balance

 

 

1,767,385

 

 

 

1,139,661

 

CASH, CASH EQUIVALENTS, AND CASH AND CASH EQUIVALENTS HELD IN A FIDUCIARY CAPACITY—Ending balance

 

$

1,756,332

 

 

$

1,767,385

 

Reconciliation of cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity

 

 

 

 

 

 

Cash and cash equivalents

 

$

838,790

 

 

$

992,723

 

Cash and cash equivalents held in a fiduciary capacity

 

 

917,542

 

 

 

774,662

 

Total cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity

 

$

1,756,332

 

 

$

1,767,385

 

 

11


 

 

 

 

 

Reconciliation of Organic Revenue Growth Rate to Total Revenue Growth Rate

 

 

Three Months Ended

 

 

Year Ended

 

 

December 31,

 

 

December 31,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Total Revenue Growth Rate (GAAP) (1)

 

 

22.5

%

 

 

14.9

%

 

 

20.4

%

 

 

20.4

%

Less: Mergers and Acquisitions (2)

 

 

(4.3

)

 

 

(2.2

)

 

 

(2.8

)

 

 

(2.8

)

Change in Other (3)

 

 

(2.2

)

 

 

(2.4

)

 

 

(2.6

)

 

 

(1.2

)

Organic Revenue Growth Rate (Non-GAAP)

 

 

16.0

%

 

 

10.3

%

 

 

15.0

%

 

 

16.4

%

 

(1)
For the three months ended December 31, 2023, December 31, 2023 revenue of $532.9 million less December 31, 2022 revenue of $435.0 million is a $97.8 million period-over-period change. The change, $97.8 million, divided by the December 31, 2022 revenue of $435.0 million, is a total revenue change of 22.5%. For the three months ended December 31, 2022, December 31, 2022 revenue of $435.0 million less December 31, 2021 revenue of $378.5 million is a $56.5 million period-over-period change. The change, $56.5 million, divided by the December 31, 2021 revenue of $378.5 million, is a total revenue change of 14.9%. For the year ended December 31, 2023, December 31, 2023 revenue of $2,077.5 million less December 31, 2022 revenue of $1,725.2 million is a $352.4 million period-over-period change. The change, $352.4 million, divided by December 31, 2022 revenue of $1,725.2 million, is a total revenue change of 20.4%. For the year ended December 31, 2022, December 31, 2022 revenue of $1,725.2 million less December 31, 2021 revenue of $1,432.8 million is a $292.4 million period-over-period change. The change, $292.4 million, divided by the December 31, 2021 revenue of $1,432.8 million, is a total revenue change of 20.4%.
(2)
The acquisitions adjustment excludes net commission and fees revenue generated during the first 12 months following an acquisition. The total adjustment for the three months ended December 31, 2023 and 2022 was $18.6 million and $8.5 million, respectively. The total adjustment for the year ended December 31, 2023 and 2022 was $48.2 million and $40.0 million, respectively.
(3)
The other adjustments exclude the period-over-period change in contingent commissions, fiduciary investment income, and foreign exchange rates. The total adjustment for the three months ended December 31, 2023 and 2022 was $9.6 million and $8.9 million, respectively. The total adjustment for the year ended December 31, 2023 and 2022 was $44.6 million and $16.0 million, respectively.

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

 

 

Three Months Ended

 

 

Year Ended

 

 

December 31,

 

 

December 31,

 

(in thousands, except percentages)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Total Revenue

 

$

532,863

 

 

$

435,015

 

 

$

2,077,549

 

 

$

1,725,193

 

Compensation and Benefits Expense

 

$

331,735

 

 

$

270,542

 

 

$

1,321,029

 

 

$

1,128,981

 

Acquisition-related expense

 

 

(856

)

 

 

 

 

 

(4,186

)

 

 

(122

)

Acquisition related long-term incentive compensation (1)

 

 

6,036

 

 

 

88

 

 

 

4,334

 

 

 

(22,093

)

Restructuring and related expense

 

 

(9,244

)

 

 

 

 

 

(22,651

)

 

 

(724

)

Amortization and expense related to discontinued prepaid
   incentives

 

 

(1,648

)

 

 

(1,663

)

 

 

(6,441

)

 

 

(6,738

)

Equity-based compensation

 

 

(7,940

)

 

 

(5,380

)

 

 

(31,047

)

 

 

(23,390

)

IPO related expenses

 

 

(7,667

)

 

 

(11,016

)

 

 

(38,696

)

 

 

(54,091

)

Adjusted Compensation and Benefits Expense (2)

 

$

310,416

 

 

$

252,571

 

 

$

1,222,342

 

 

$

1,021,823

 

Compensation and Benefits Expense Ratio

 

 

62.3

%

 

 

62.2

%

 

 

63.6

%

 

 

65.4

%

Adjusted Compensation and Benefits Expense Ratio

 

 

58.3

%

 

 

58.1

%

 

 

58.8

%

 

 

59.2

%

(1)
In the fourth quarter of 2023, Acquisition related long-term incentive compensation includes a $6.8 million expense reversal related to the claw back of an All Risks LTIP payment from a terminated employee.

12


 

 

 

 

 

(2)
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

 

 

Year Ended

 

 

December 31,

 

 

December 31,

 

(in thousands, except percentages)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Total Revenue

 

$

532,863

 

 

$

435,015

 

 

$

2,077,549

 

 

$

1,725,193

 

General and Administrative Expense

 

$

73,586

 

 

$

57,120

 

 

$

276,181

 

 

$

196,971

 

Acquisition-related expense

 

 

(6,891

)

 

 

(1,710

)

 

 

(19,088

)

 

 

(4,477

)

Restructuring and related expense

 

 

(2,833

)

 

 

 

 

 

(26,626

)

 

 

(4,993

)

IPO related expenses

 

 

 

 

 

(228

)

 

 

 

 

 

(1,545

)

Adjusted General and Administrative Expense (1)

 

$

63,862

 

 

$

55,182

 

 

$

230,467

 

 

$

185,956

 

General and Administrative Expense Ratio

 

 

13.8

%

 

 

13.1

%

 

 

13.3

%

 

 

11.4

%

Adjusted General and Administrative Expense Ratio

 

 

12.0

%

 

 

12.7

%

 

 

11.1

%

 

 

10.8

%

(1)
Adjustments made to General and administrative expense are described in definition of Adjusted EBITDAC in “Non-GAAP Financial Measures and Key Performance Indicators.”

Reconciliation of Adjusted EBITDAC to Net Income

 

 

Three Months Ended

 

 

Year Ended

 

 

December 31,

 

 

December 31,

 

(in thousands, except percentages)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Total Revenue

 

$

532,863

 

 

$

435,015

 

 

$

2,077,549

 

 

$

1,725,193

 

Net Income

 

$

58,503

 

 

$

45,782

 

 

$

194,480

 

 

$

163,257

 

Interest expense, net

 

 

29,667

 

 

 

29,367

 

 

 

119,507

 

 

 

104,829

 

Income tax expense

 

 

673

 

 

 

5,859

 

 

 

43,445

 

 

 

15,935

 

Depreciation

 

 

2,468

 

 

 

1,787

 

 

 

9,038

 

 

 

5,690

 

Amortization

 

 

27,674

 

 

 

25,038

 

 

 

106,799

 

 

 

103,601

 

Change in contingent consideration

 

 

1,063

 

 

 

1,279

 

 

 

5,421

 

 

 

442

 

EBITDAC

 

$

120,048

 

 

$

109,112

 

 

$

478,690

 

 

$

393,754

 

Acquisition-related expense

 

 

7,747

 

 

 

1,710

 

 

 

23,274

 

 

 

4,599

 

Acquisition related long-term incentive compensation (1)

 

 

(6,036

)

 

 

(88

)

 

 

(4,334

)

 

 

22,093

 

Restructuring and related expense

 

 

12,077