Goosehead Insurance, Inc. Announces First Quarter 2018 Results
- Revenues Grew 47% Over Prior-Year Period to
- Net Income Increased 66% Over Prior-Year Period to
- Adjusted EBITDA Growth of 74% Over Prior-Year Period to
- Completed Initial Public Offering in May 2018 -
First Quarter 2018 Highlights
- Total written premiums of
$100.9 million , a 43% increase from the prior-year period
- Policies in force were 251,972 as of
March 31, 2018 , a 33% increase compared to 189,677 as ofMarch 31, 2017 , and an 11% increase from 227,764 as ofDecember 31, 2017 .
- Corporate sales headcount stood at 121 as of
March 31, 2018 , a 61% increase fromMarch 31, 2017
- Total number of operating franchises stood at 341 as of
March 31, 2018 , a 55% increase fromMarch 31, 2017 .
Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures. Reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure presented in accordance with GAAP is set forth in the reconciliation table accompanying this release.
“2018 began with another strong quarter of outperformance as we built upon the success of our previous year, and we are excited to keep the momentum going in the second quarter with the successful completion of our IPO,” stated
“We’ve been able to sustain our extraordinary growth by continuing to leverage our business model of separating our sales functions from our service functions and leveraging our unique technology platform,” continued Mr. Jones. “As a result, our overall productivity is enhanced as our salespeople concentrate solely on winning new business while our service team ensures our clients receive best-in-class service. We believe this results in strong client retention and provides us with visible and recurring higher-margin renewal revenue, which ultimately translates to increased profitability. Moving forward, we will continue to focus on expanding our reach in both our Corporate and Franchise channels and providing our clients with the broadest choice for coverage and world-class service, while creating long-term value for our shareholders.”
First Quarter 2018 Results
For the first quarter of 2018, revenues were
Total written premium for the first quarter of 2018 grew 43% to
Total operating expenses for the first quarter of 2018 grew 39% to
Net income for the first quarter of 2018 increased 66% to
Total Adjusted EBITDA rose 74% for the first quarter of 2018 to
Corporate Channel
Revenues generated through the Corporate Channel in the first quarter of 2018 were
The Company had total corporate sales agent headcount of 121 at
Adjusted EBITDA for the Corporate Channel segment in the first quarter of 2018 was
Franchise Channel
Revenues generated through the Franchise Channel in the first quarter of 2018 was
As of
Adjusted EBITDA for the Franchise Channel in the first quarter of 2018 was
Liquidity and Capital Resources
The Company completed its initial public offering of 9,809,500 shares of Class A common stock (including full exercise of the underwriters’ overallotment option) on
Conference Call Information
Goosehead will host a conference call and webcast today at
The dial-in number for the conference call is (844) 898-2795 (toll-free) or (210) 874-7848 (international). Please dial the number 10 minutes prior to the scheduled start time.
In addition, a live webcast of the conference call will also be available on Goosehead’s investor relations website at http://ir.gooseheadinsurance.com.
A replay will be available following the end of the call through
About Goosehead
Goosehead (NASDAQ:GSHD) is a rapidly growing and innovative independent personal lines insurance agency that distributes its products and services throughout the United States. Goosehead was founded on the premise that the consumer should be at the center of our universe and that everything we do should be directed at providing extraordinary value by offering broad product choice and a world-class service experience. Goosehead represents over 80 insurance companies that underwrite personal lines and small commercial lines risks, and its operations include a network of seven corporate sales offices and over 400 operating and contracted franchise locations. For more information, please visit www.gooseheadinsurance.com.
Forward-Looking Statements
This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which represent Goosehead’s expectations or beliefs concerning future events. Forward-looking statements are statements other than historical facts and may include statements that address future operating, financial or business performance or Goosehead’s strategies or expectations. In some cases, you can identify these statements by forward-looking words such as “may”, “might”, “will”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “projects”, “potential”, “outlook” or “continue”, or the negative of these terms or other comparable terminology. Forward-looking statements are based on management’s current expectations and beliefs and involve significant risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by these statements.
Factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include, but are not limited to, conditions impacting insurance carriers or other parties with which Goosehead does business, the loss of one or more key executives or an inability to attract and retain qualified personnel and the failure to attract and retain highly qualified franchisees. These risks and uncertainties also include, but are not limited to, those described under the caption “Risk Factors” in Goosehead’s prospectus relating to its Registration Statement on Form S-1 (Registration Number 333-224080) filed with the
Contacts
Investor Contact:
ICR
Phone: (214) 838-5145
E-mail: IR@goosehead.com
Media Contact:
Sard Verbinnen & Co
Phone: (212) 687-8080
E-mail: PR@goosehead.com
(Unaudited)
Three Months Ended March 31 | |||||||
2018 | 2017 | ||||||
Revenues: | |||||||
Commissions and agency fees | $ | 9,595,576 | $ | 6,361,846 | |||
Franchise revenues | 4,910,528 | 3,481,116 | |||||
Interest income | 82,777 | 47,987 | |||||
Total revenues | 14,588,881 | 9,890,949 | |||||
Operating Expenses: | |||||||
Employee compensation and benefits | 6,835,424 | 4,867,647 | |||||
General and administrative expenses | 2,373,622 | 1,833,599 | |||||
Bad debts | 279,688 | 251,882 | |||||
Depreciation and amortization | 336,935 | 137,657 | |||||
Total operating expenses | 9,825,669 | 7,090,785 | |||||
Income from operations | 4,763,212 | 2,800,164 | |||||
Other Income (Expense): | |||||||
Interest expense | (995,402 | ) | (532,715 | ) | |||
Net Income | $ | 3,767,810 | $ | 2,267,449 | |||
Pro forma earnings per share: | |||||||
Basic | $ | 0.08 | $ | 0.05 | |||
Diluted | $ | 0.08 | $ | 0.05 | |||
(Unaudited)
March 31 | December 31 | ||||||
2018 | 2017 | ||||||
Assets | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 6,331,916 | $ | 4,947,671 | |||
Restricted cash | 609,632 | 417,911 | |||||
Commissions and agency fees receivable, net | 1,767,765 | 1,268,172 | |||||
Receivable from franchisees, net | 579,681 | 564,087 | |||||
Prepaid expenses | 740,050 | 521,362 | |||||
Other assets | 3,213,348 | — | |||||
Total current assets | 13,242,392 | 7,719,203 | |||||
Receivable from franchisees, net of current portion | 1,679,478 | 1,360,686 | |||||
Property and equipment, net of accumulated depreciation | 6,866,621 | 6,845,121 | |||||
Intangible assets, net of accumulated amortization | 235,878 | 216,468 | |||||
Other assets | 179,075 | 565,191 | |||||
Total assets | $ | 22,203,444 | $ | 16,706,669 | |||
Liabilities and Members’ Equity | |||||||
Current Liabilities: | |||||||
Accounts payable and accrued expenses | $ | 4,925,944 | $ | 2,759,241 | |||
Premiums payable | 609,632 | 417,911 | |||||
Unearned revenue | 775,050 | 1,062,050 | |||||
Dividends payable | — | 550,000 | |||||
Deferred rent | 460,674 | 477,818 | |||||
Note payable | 500,000 | 500,000 | |||||
Total current liabilities | 7,271,300 | 5,767,020 | |||||
Deferred rent, net of current portion | 4,217,549 | 3,916,257 | |||||
Note payable, net of current portion | 48,079,733 | 48,156,340 | |||||
Total liabilities | 59,568,582 | 57,839,617 | |||||
Commitments and contingencies | |||||||
Members’ deficit | (37,365,138 | ) | (41,132,948 | ) | |||
Total liabilities and members’ deficit | $ | 22,203,444 | $ | 16,706,669 | |||
Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin to Net Income
This release includes Adjusted EBITDA and Adjusted EBITDA Margin that are not required by, or presented in accordance with, generally accepted accounting principles in
These non-GAAP financial measures are defined by the Company as follows:
- “Adjusted EBITDA” is a supplemental measure of the Company’s performance and is defined as net income before interest, income taxes, depreciation and amortization, adjusted to exclude Class B unit compensation and other non-operating items. The Company believes that Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of items that do not relate to business performance.
- “Adjusted EBITDA Margin” is net income before interest, income taxes, depreciation and amortization, adjusted to exclude Class B unit compensation and other non-operating items, divided by total revenue excluding other non-operating items. Adjusted EBITDA Margin is helpful in measuring profitability of operations on a consolidated and combined level.
While the Company believes that these non-GAAP financial measures are useful in evaluating its business, this information should be considered as supplemental in nature and is not meant as a substitute for revenues or net income, in each case as recognized in accordance with GAAP. In addition, other companies, including companies in the Company’s industry, may calculate such measures differently, which reduces their usefulness as comparative measures.
Three months ended March 31, | |||||||
Consolidated and Combined: | 2018 | 2017 | |||||
Net income | $ | 3,767,810 | $ | 2,267,449 | |||
Interest expense | 995,402 | 532,715 | |||||
Depreciation and amortization | 336,935 | 137,657 | |||||
Adjusted EBITDA | $ | 5,100,147 | $ | 2,937,821 | |||
Adjusted EBITDA Margin(1) | 35 | % | 30 | % | |||
(1) Consolidated and combined Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Total Revenue ($5,100,147/$14,588,881) and ($2,937,821/$9,890,949) for the three months ended March 31, 2018 and 2017. | |||||||
Key Performance Indicators
March 31, 2018 | March 31, 2017 | December 31, 2017 | |||||||||
Corporate sales agents < 1 year tenured | 66 | 42 | 58 | ||||||||
Corporate sales agents > 1 year tenured | 55 | 33 | 53 | ||||||||
Operating franchises < 1 year tenured (TX) | 49 | 65 | 60 | ||||||||
Operating franchises > 1 year tenured (TX) | 149 | 104 | 131 | ||||||||
Operating franchises < 1 year tenured (Non-TX) | 105 | 32 | 70 | ||||||||
Operating franchises > 1 year tenured (Non-TX) | 38 | 19 | 31 | ||||||||
Policies in Force | 251,972 | 189,677 | 227,764 | ||||||||
Client Retention | 88 | % | 87 | % | 88 | % | |||||
Premium Retention | 94 | % | 93 | % | 94 | % | |||||
Three Months Ended | |||||||||||
March 31, 2018 | March 31, 2017 | December 31, 2017 | |||||||||
Total Written Premium | $ | 100,948,381 | $ | 70,712,609 | $ | 90,282,116 | |||||
Net Promoter Score ("NPS") | 87 | 85 | 86 |
Source: Goosehead Insurance, Inc.