Goosehead Insurance, Inc. Announces Second Quarter 2018 Results
- Revenues Grew 36% Over Prior-Year Period to
- Total Written Premiums Increased 52% Over Prior-Year Period -
- Corporate Sales Headcount Grew 74% Over Prior-Year Period -
- Total Operating Franchises Grew 58% Over Prior-Year Period -
Second Quarter 2018 Highlights
- Revenues grew 36% to
$14.8 million , from$10.9 million in the prior-year period. - Net loss attributable to
Goosehead Insurance, Inc. of$9.2 million , or$0.68 per share, primarily due to one-time non-cash Class B unit compensation expense related to the IPO. - Total Adjusted EBITDA* rose 27% to
$4.0 million , from$3.2 million in the prior-year period. - Total written premiums of
$132.6 million , a 52% increase from the prior-year period. - Policies in force were 282,369 as of
June 30, 2018 , a 49% increase compared to 189,208 as ofJune 30, 2017 , and a 12% increase from 251,972 as ofMarch 31, 2018 . - Corporate sales headcount rose to 148 as of
June 30, 2018 , a 74% increase fromJune 30, 2017 . - Total operating franchises stood at 385 as of
June 30, 2018 , a 58% increase fromJune 30, 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.
“We continued our strong momentum in the second quarter, generating additional robust revenue and Adjusted EBITDA growth,” stated
“During the quarter, we accelerated our Corporate sales hiring in order to take advantage of a high-quality recruiting pipeline, while adding 44 net new operating franchises,” added Mr. Jones. “By investing opportunistically in our human capital and ensuring our new recruits learn our industry-disrupting technology and sales blueprint, we believe we are positioned to increase our rate of winning new business and further fuel our growth. As we look to the remainder of 2018, we remain focused on our core Corporate and Franchise growth strategy, while continuing to provide our clients with the broadest choice for coverage and world-class service, which we believe should create sustainable long-term value for our shareholders.”
Second Quarter 2018 Results
For the second quarter of 2018, revenues were
Total written premium for the second quarter of 2018 grew 52% to
Total operating expenses for the second quarter of 2018 were
Net loss for the second quarter of 2018 was
Net loss attributable to
Total Adjusted EBITDA rose 27% for the second quarter of 2018 to
Corporate Channel
Revenues generated through the Corporate Channel in the second quarter of 2018 were
The Company had total corporate sales agent headcount of 148 at
Adjusted EBITDA for the Corporate Channel segment in the second quarter of 2018 was
Franchise Channel
Revenues generated through the Franchise Channel in the second quarter of 2018 were
As of
Adjusted EBITDA for the Franchise Channel in the second quarter of 2018 rose 75% to
Six Months 2018 Results
For the six months ended
Net loss for the six months ended
Total Adjusted EBITDA rose 49% for the six months ended
Liquidity and Capital Resources
As of
Subsequent Event
Goosehead also announced yesterday that it has refinanced its existing
Under the new agreement, borrowings initially accrue interest on amounts drawn at LIBOR plus 2.50%, a 300 basis point improvement from the retired debt’s accrued interest rate of LIBOR plus 5.50%. Interest rates past the initial period are based on the Company’s leverage ratio for the preceding period, but are capped at LIBOR plus 2.50%.
As of August 3, 2018, there was
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 webcast replay of the call will be available at http://ir.gooseheadinsurance.com for one year following the call.
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 490 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: Goosehead-SVC@sardverb.com
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||
Revenues: | ||||||||||||||
Commissions and agency fees | $ | 8,716,016 | $ | 6,854,232 | $ | 18,311,592 | $ | 13,216,078 | ||||||
Franchise revenues | 5,969,392 | 3,969,912 | 10,879,920 | 7,451,028 | ||||||||||
Interest income | 102,304 | 54,486 | 185,081 | 102,473 | ||||||||||
Total revenues | 14,787,712 | 10,878,630 | 29,376,593 | 20,769,579 | ||||||||||
Operating Expenses: | ||||||||||||||
Employee compensation and benefits (including Class B unit compensation of $26,134,271 for the three and six months ended June 30, 2018 and $184,613 for the three and six months ended 2017) | 33,854,619 | 5,575,415 | 40,690,044 | 10,443,062 | ||||||||||
General and administrative expenses | 3,025,695 | 2,011,268 | 5,399,317 | 3,844,867 | ||||||||||
Bad debts | 305,965 | 323,208 | 585,654 | 575,090 | ||||||||||
Depreciation and amortization | 350,548 | 158,177 | 687,483 | 295,834 | ||||||||||
Total operating expenses | 37,536,827 | 8,068,068 | 47,362,498 | 15,158,853 | ||||||||||
(Loss) Income from operations | (22,749,115) | 2,810,562 | (17,985,905) | 5,610,726 | ||||||||||
Other Income (Expense): | ||||||||||||||
Other Income | — | 3,540,932 | — | 3,540,932 | ||||||||||
Interest expense | (972,158) | (527,038) | (1,967,560) | (1,059,753) | ||||||||||
(Loss) Income before taxes | (23,721,273) | 5,824,456 | (19,953,465) | 8,091,905 | ||||||||||
Income tax expense | 154,093 | — | 154,093 | — | ||||||||||
Net (Loss) Income | (23,875,366) | 5,824,456 | (20,107,558) | 8,091,905 | ||||||||||
Less: net (loss) income attributable to non-controlling interests | (14,640,985) | 5,824,456 | (10,873,177) | 8,091,905 | ||||||||||
Net (Loss) Income attributable to Goosehead Insurance, Inc. | $ | (9,234,381) | $ | — | $ | (9,234,381) | $ | — | ||||||
Earnings per share: | ||||||||||||||
Basic | $ | (0.68) | n/a | $ | (0.68) | n/a | ||||||||
Diluted | $ | (0.68) | n/a | $ | (0.68) | n/a | ||||||||
Weighted average shares of Class A common stock outstanding | ||||||||||||||
Basic | 13,533,267 | n/a | 13,533,267 | n/a | ||||||||||
Diluted | 13,533,267 | n/a | 13,533,267 | n/a | ||||||||||
Pro forma net income: | ||||||||||||||
Pro forma income before taxes attributable to Goosehead Insurance, Inc. | n/a | 2,172,659 | n/a | 3,018,471 | ||||||||||
Pro forma income tax expense | n/a | $ | (519,266) | n/a | $ | (721,415) | ||||||||
Pro forma net income attributable to Goosehead Insurance, Inc. | n/a | $ | 1,653,393 | n/a | $ | 2,297,056 | ||||||||
Pro forma earnings per share: | ||||||||||||||
Basic | n/a | $ | 0.12 | n/a | $ | 0.17 | ||||||||
Diluted | n/a | $ | 0.12 | n/a | $ | 0.16 | ||||||||
Pro forma weighted average shares of Class A common stock outstanding: | ||||||||||||||
Basic | n/a | 13,533,267 | n/a | 13,533,267 | ||||||||||
Diluted | n/a | 14,329,293 | n/a | 14,329,293 | ||||||||||
Condensed Consolidated Balance Sheets
(Unaudited)
June 30 | December 31 | |||||||
2018 | 2017 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 18,938,455 | $ | 4,947,671 | ||||
Restricted cash | 616,414 | 417,911 | ||||||
Commissions and agency fees receivable, net | 1,958,539 | 1,268,172 | ||||||
Receivable from franchisees, net | 396,922 | 564,087 | ||||||
Prepaid expenses | 937,826 | 521,362 | ||||||
Total current assets | 22,848,156 | 7,719,203 | ||||||
Receivable from franchisees, net of current portion | 1,841,844 | 1,360,686 | ||||||
Property and equipment, net of accumulated depreciation | 6,934,029 | 6,845,121 | ||||||
Intangible assets, net of accumulated amortization | 241,286 | 216,468 | ||||||
Other assets | 149,806 | 565,191 | ||||||
Total assets | $ | 32,015,121 | $ | 16,706,669 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current Liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 4,305,386 | $ | 2,759,241 | ||||
Premiums payable | 616,414 | 417,911 | ||||||
Unearned revenue | 510,000 | 1,062,050 | ||||||
Dividends payable | — | 550,000 | ||||||
Deferred rent | 420,850 | 477,818 | ||||||
Note payable | 500,000 | 500,000 | ||||||
Total current liabilities | 6,352,650 | 5,767,020 | ||||||
Deferred income taxes, net | 90,532 | — | ||||||
Deferred rent, net of current portion | 4,252,020 | 3,916,257 | ||||||
Note payable, net of current portion | 48,004,034 | 48,156,340 | ||||||
Total liabilities | 58,699,236 | 57,839,617 | ||||||
Commitments and contingencies (see note 6) | ||||||||
Members’ deficit | — | (41,132,948 | ) | |||||
Class A common stock, $.01 par value per share - 300,000,000 shares authorized, 13,533,267 shares issued and outstanding as of June 30, 2018, zero issued and outstanding as of December 31, 2017 | 135,333 | — | ||||||
Class B common stock, $.01 par value per share - 50,000,000 shares authorized, 22,746,667 issued and outstanding as of June 30, 2018, zero issued and outstanding as of December 31, 2017 | 227,467 | — | ||||||
Additional paid in capital | 89,033,692 | — | ||||||
Accumulated deficit | (7,558,112 | ) | — | |||||
Total stockholders' equity and members' deficit | 81,838,380 | (41,132,948 | ) | |||||
Non-controlling interests | (108,522,495 | ) | — | |||||
Total equity | (26,684,115 | ) | (41,132,948 | ) | ||||
Total liabilities and stockholders' equity | $ | 32,015,121 | $ | 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 equity-based 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 equity-based 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 June 30, | Six months ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net (loss) income | $ | (23,875,366 | ) | $ | 5,824,456 | $ | (20,107,558 | ) | $ | 8,091,905 | ||||||
Interest expense | 972,158 | 527,038 | 1,967,560 | 1,059,753 | ||||||||||||
Depreciation and amortization | 350,548 | 158,177 | 687,483 | 295,834 | ||||||||||||
Income tax expense | 154,093 | — | 154,093 | — | ||||||||||||
Equity-based compensation | 26,393,999 | 184,613 | 26,393,999 | 184,613 | ||||||||||||
Other income | — | (3,540,932 | ) | — | (3,540,932 | ) | ||||||||||
Adjusted EBITDA | $ | 3,995,432 | $ | 3,153,352 | $ | 9,095,577 | $ | 6,091,173 | ||||||||
Adjusted EBITDA Margin(1) | 27 | % | 29 | % | 31 | % | 29 | % |
(1) Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Total Revenue (
Key Performance Indicators
June 30, 2018 | March 31, 2018 | June 30, 2017 | ||||||||||
Corporate sales agents < 1 year tenured | 93 | 66 | 51 | |||||||||
Corporate sales agents > 1 year tenured | 55 | 55 | 34 | |||||||||
Operating franchises < 1 year tenured (TX) | 45 | 49 | 68 | |||||||||
Operating franchises > 1 year tenured (TX) | 159 | 149 | 110 | |||||||||
Operating franchises < 1 year tenured (Non-TX) | 130 | 105 | 46 | |||||||||
Operating franchises > 1 year tenured (Non-TX) | 51 | 38 | 20 | |||||||||
Policies in Force | 282,369 | 251,972 | 189,208 | |||||||||
Client Retention | 88 | % | 88 | % | 88 | % | ||||||
Premium Retention | 95 | % | 94 | % | 94 | % | ||||||
June 30, 2018 | March 31, 2018 | June 30, 2017 | ||||||||||
Total Written Premium | $ | 132,648,674 | $ | 100,948,381 | $ | 87,494,689 | ||||||
Net Promoter Score ("NPS") | 87 | 87 | 86 |
Source: Goosehead Insurance, Inc.