Goosehead Insurance, Inc. Announces First Quarter 2021 Results - Growth Accelerates
- Revenue Growth Accelerated to 53% Over Prior-Year-Period to
- Core Revenue Growth Accelerated to 47% Over Prior-Year-Period to
- Total Written Premium Growth Accelerated to 49% over Prior Year Period -
- Total Franchises and Corporate Sales Headcount Growth Accelerated to 61% and 51%, Respectively -
- Raising 2021 Outlook for Total Written Premiums and Revenue -
First Quarter 2021 Highlights
- Total Revenues grew organically 53% to
$31.2 million in the first quarter of 2021 - Core Revenues* of
$26.7 million increased 47% - First quarter net loss of
$(1.1) million ; net loss attributable toGoosehead Insurance, Inc. of$(0.4) million or$(0.02) per basic share and$(0.02) per diluted share - First quarter Adjusted EBITDA* of
$2.1 million , up 73% from$1.2 million in the prior year. - First quarter Adjusted EPS* of
$0.03 per share. - Total written premiums placed increased 49% from the prior-year period to $319 million
- Policies in force grew 49% from the prior-year period to 788,000
- Corporate sales headcount of 363 was up 51% year-over-year
- Total franchises increased 61% compared to the prior year period to 1,628; operating franchises grew 45% compared to the prior-year period to 987
*Core Revenue, Adjusted EPS, and Adjusted EBITDA are non-GAAP measures. Reconciliations of Core Revenue to total revenues, Adjusted EBITDA to net income and Adjusted EPS to basic earnings per share, the most directly comparable financial measures presented in accordance with GAAP, are set forth in the reconciliation table accompanying this release.
“Our first quarter of 2021 demonstrated accelerating growth in our business yet again and a formidable and expanding competitive moat,” stated
First Quarter 2021 Results
For the first quarter of 2021, revenues were
Total operating expenses for the first quarter of 2021 were
Net loss for the first quarter of 2021 was
Liquidity and Capital Resources
During the first quarter, the Company generated
2021 Outlook
Based on our experience to date, the Company is raising its full-year 2021 outlook with respect to total written premiums and revenue:
- Total written premiums placed for 2021 are expected to be between
$1.50 billion and$1.56 billion , representing organic growth of 40% on the low end of the range to 45% on the high end of the range. Prior guidance issued was for organic premium growth between 38% and 44%. - Total revenues for 2021 are expected to be between
$146 million and$156 million , representing organic growth of 25% on the low end of the range to 33% on the high end of the range. This assumes continued strong growth in Core Revenue and a return in 2021 to a more normalized level of Ancillary Revenue following a record year in 2020. Prior guidance issued was for organic revenue growth between 23% and 32%.
Conference Call Information
Goosehead will host a conference call and webcast today at
The dial-in number for the conference call is (855) 327-6837 (toll-free) or (631) 891-4304 (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
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 economic effects of the COVID-19 pandemic, 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 captions “1A. Risk Factors” in Goosehead’s Annual Report on Form 10-K for the year ended
Contacts
Investor and Media Contact:
Phone: (214) 838-5290
Email: dan.farrell@goosehead.com; IR@goosehead.com; PR@goosehead.com
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended |
||||||||
2021 | 2020 | |||||||
Revenues: | ||||||||
Commissions and agency fees | $ | 17,534 | $ | 11,811 | ||||
Franchise revenues | 13,433 | 8,445 | ||||||
Interest income | 261 | 169 | ||||||
Total revenues | 31,228 | 20,425 | ||||||
Operating Expenses: | ||||||||
Employee compensation and benefits | 21,309 | 13,503 | ||||||
General and administrative expenses | 9,274 | 5,872 | ||||||
Bad debts | 447 | 309 | ||||||
Depreciation and amortization | 1,000 | 540 | ||||||
Total operating expenses | 32,030 | 20,224 | ||||||
Income from operations | (802 | ) | 201 | |||||
Other Income (Expense): | ||||||||
Other income | 20 | 66 | ||||||
Interest expense | (601 | ) | (604 | ) | ||||
Income before taxes | (1,383 | ) | (337 | ) | ||||
Tax expense (benefit) | (294 | ) | (41 | ) | ||||
Net income | (1,089 | ) | (296 | ) | ||||
Less: net income attributable to non-controlling interests | (693 | ) | (140 | ) | ||||
Net income attributable to |
$ | (396 | ) | $ | (156 | ) | ||
Earnings per share: | ||||||||
Basic | $ | (0.02 | ) | $ | (0.01 | ) | ||
Diluted | $ | (0.02 | ) | $ | (0.01 | ) | ||
Weighted average shares of Class A common stock outstanding | ||||||||
Basic | 18,375 | 15,564 | ||||||
Diluted | 18,375 | 15,564 |
Consolidated Supplemental Statements of Operations
(Unaudited)
(In thousands, except per share amounts
Three Months Ended |
||||||||
2021 | 2020 | |||||||
Revenues: | ||||||||
Core Revenue: | ||||||||
Renewal Commissions(1) | $ | 7,757 | $ | 5,733 | ||||
Renewal Royalty Fees(2) | 8,746 | 5,386 | ||||||
New Business Commissions(1) | 4,616 | 3,333 | ||||||
New Business Royalty Fees(2) | 3,157 | 2,048 | ||||||
Agency Fees(1) | 2,424 | 1,686 | ||||||
Total Core Revenue | 26,700 | 18,186 | ||||||
Cost Recovery Revenue: | ||||||||
Initial Franchise Fees(2) | 1,432 | 978 | ||||||
Interest Income | 261 | 169 | ||||||
Total Cost Recovery Revenue | 1,693 | 1,147 | ||||||
Ancillary Revenue: | ||||||||
Contingent Commissions(1) | 2,737 | 1,059 | ||||||
Other Income(2) | 98 | 33 | ||||||
Total Ancillary Revenue | 2,835 | 1,092 | ||||||
Total Revenues | 31,228 | 20,425 | ||||||
Operating Expenses: | ||||||||
Employee compensation and benefits | 21,309 | 13,503 | ||||||
General and administrative expenses | 9,274 | 5,872 | ||||||
Bad debts | 447 | 309 | ||||||
Depreciation and amortization | 1,000 | 540 | ||||||
Total operating expenses | 32,030 | 20,224 | ||||||
Income from operations | (802 | ) | 201 | |||||
Other Income (Expense): | ||||||||
Other income | 20 | 66 | ||||||
Interest expense | (601 | ) | (604 | ) | ||||
Income before taxes | (1,383 | ) | (337 | ) | ||||
Tax (benefit) expense | (294 | ) | (41 | ) | ||||
Net Income | (1,089 | ) | (296 | ) | ||||
Less: net income attributable to non-controlling interests | (693 | ) | (140 | ) | ||||
Net Income attributable to |
$ | (396 | ) | $ | (156 | ) | ||
Earnings per share: | ||||||||
Basic | $ | (0.02 | ) | (0.01 | ) | |||
Diluted | $ | (0.02 | ) | (0.01 | ) | |||
Weighted average shares of Class A common stock outstanding | ||||||||
Basic | 18,375 | 15,564 | ||||||
Diluted | 18,375 | 15,564 |
(1) Renewal Commissions, New Business Commissions, Agency Fees, and Contingent Commissions are included in "Commissions and agency fees" as shown on the Consolidated statements of operations within Goosehead’s Form 10-Q for the three months ended
(2) Renewal Royalty Fees, New Business Royalty Fees, Initial Franchise Fees, and Other Income are included in "Franchise revenues" as shown on the Consolidated statements of operations within Goosehead’s Form 10-Q for the three months ended
Segment Information
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended |
||||||||||||||||
Franchise Channel | Corporate Channel | Other | Total | |||||||||||||
Revenues: | ||||||||||||||||
Core Revenue: | ||||||||||||||||
Renewal Commissions(1) | $ | — | $ | 7,757 | $ | — | $ | 7,757 | ||||||||
Renewal Royalty Fees(2) | 8,746 | — | — | 8,746 | ||||||||||||
New Business Commissions(1) | — | 4,616 | — | 4,616 | ||||||||||||
New Business Royalty Fees(2) | 3,157 | — | — | 3,157 | ||||||||||||
Agency Fees(1) | — | 2,424 | — | 2,424 | ||||||||||||
Total Core Revenue | 11,903 | 14,797 | — | 26,700 | ||||||||||||
Cost Recovery Revenue: | ||||||||||||||||
Initial Franchise Fees(2) | 1,432 | — | — | 1,432 | ||||||||||||
Interest Income | 261 | — | — | 261 | ||||||||||||
Total Cost Recovery Revenue | 1,693 | — | — | 1,693 | ||||||||||||
Ancillary Revenue: | ||||||||||||||||
Contingent Commissions(1) | 2,116 | 621 | — | 2,737 | ||||||||||||
Other Income(2) | 98 | — | — | 98 | ||||||||||||
Total Ancillary Revenue | 2,214 | 621 | — | 2,835 | ||||||||||||
Total Revenues | 15,810 | 15,418 | — | 31,228 | ||||||||||||
Operating expenses: | ||||||||||||||||
Employee compensation and benefits, excluding equity based compensation | 7,569 | 11,799 | — | 19,368 | ||||||||||||
General and administrative expenses | 4,213 | 4,506 | 555 | 9,274 | ||||||||||||
Bad debts | 161 | 286 | — | 447 | ||||||||||||
Total Operating Expenses | 11,943 | 16,591 | 555 | 29,089 | ||||||||||||
Adjusted EBITDA | 3,867 | (1,173 | ) | (555 | ) | 2,139 | ||||||||||
Other income (expense) | 20 | — | — | 20 | ||||||||||||
Equity based compensation | — | — | (1,941 | ) | (1,941 | ) | ||||||||||
Interest expense | — | — | (601 | ) | (601 | ) | ||||||||||
Depreciation and amortization | (647 | ) | (353 | ) | — | (1,000 | ) | |||||||||
Income tax benefit | — | — | 294 | 294 | ||||||||||||
Net income | $ | 3,240 | $ | (1,526 | ) | $ | (2,803 | ) | $ | (1,089 | ) | |||||
Total Assets | $ | 81,704 | $ | 29,295 | $ | 81,607 | $ | 192,606 |
(1) Renewal Commissions, New Business Commissions, Agency Fees, and Contingent Commissions are included in "Commissions and agency fees" as shown on the Consolidated statements of operations within Goosehead’s Form 10-Q for the three months ended
(2) Renewal Royalty Fees, New Business Royalty Fees, Initial Franchise Fees, and Other Income are included in "Franchise revenues" as shown on the Consolidated statements of operations within Goosehead’s Form 10-Q for the three months ended
Consolidated Balance Sheets
(Unaudited)
(In thousands, except per share amounts)
2021 | 2020 | |||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 30,797 | $ | 24,913 | ||||
Restricted cash | 1,158 | 1,323 | ||||||
Commissions and agency fees receivable, net | 4,895 | 18,604 | ||||||
Receivable from franchisees, net | 3,379 | 2,100 | ||||||
Prepaid expenses | 7,575 | 3,705 | ||||||
Total current assets | 47,804 | 50,645 | ||||||
Receivable from franchisees, net of current portion | 20,423 | 18,179 | ||||||
Property and equipment, net of accumulated depreciation | 17,671 | 16,650 | ||||||
Right-of-use asset | 23,033 | 22,513 | ||||||
Intangible assets, net of accumulated amortization | 639 | 549 | ||||||
Deferred income taxes, net | 77,753 | 73,363 | ||||||
Other assets | 5,283 | 3,938 | ||||||
Total assets | $ | 192,606 | $ | 185,837 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current Liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 7,179 | $ | 8,101 | ||||
Premiums payable | 1,158 | 1,323 | ||||||
Lease liability | 3,358 | 3,203 | ||||||
Contract liabilities | 4,744 | 4,233 | ||||||
Note payable | 4,000 | 3,500 | ||||||
Total current liabilities | 20,439 | 20,360 | ||||||
Lease liability, net of current portion | 33,310 | 32,933 | ||||||
Note payable, net of current portion | 78,474 | 79,408 | ||||||
Contract liabilities, net of current portion | 33,010 | 29,968 | ||||||
Liabilities under tax receivable agreement, net of current portion | 63,678 | 61,572 | ||||||
Total liabilities | 228,911 | 224,241 | ||||||
Class A common stock, |
184 | 183 | ||||||
Class B common stock, |
183 | 184 | ||||||
Additional paid in capital | 32,292 | 29,371 | ||||||
Accumulated deficit | (35,008 | ) | (34,614 | ) | ||||
Total stockholders' equity | (2,349 | ) | (4,876 | ) | ||||
Non-controlling interests | (33,956 | ) | (33,528 | ) | ||||
Total equity | (36,305 | ) | (38,404 | ) | ||||
Total liabilities and equity | $ | 192,606 | $ | 185,837 |
Reconciliation Non-GAAP Measures to GAAP
This release includes Core Revenue, Cost Recovery Revenue, Ancillary Revenue, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EPS that are not required by, nor presented in accordance with, generally accepted accounting principles in
These non-GAAP financial measures are defined by the Company as follows:
- "Core Revenue" is a supplemental measure of our performance and includes Renewal Commissions, Renewal Royalty Fees, New Business Commissions, New Business Royalty Fees, and Agency Fees. We believe that Core Revenue is an appropriate measure of operating performance because it summarizes all of our revenues from sales of individual insurance policies.
- "Cost Recovery Revenue" is a supplemental measure of our performance and includes Initial Franchise Fees and Interest Income. We believe that Cost Recovery Revenue is an appropriate measure of operating performance because it summarizes revenues that are viewed by management as cost recovery mechanisms.
- "Ancillary Revenue" is a supplemental measure of our performance and includes Contingent Commissions and Other Income. We believe that Ancillary Revenue is an appropriate measure of operating performance because it summarizes revenues that are ancillary to our core business.
- "Adjusted EBITDA" is a supplemental measure of the Company's performance. We believe 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 is defined as net income (the most directly comparable GAAP measure) before interest, income taxes, depreciation and amortization, adjusted to exclude equity-based compensation and other non-operating items, including, among other things, certain non-cash charges and certain non-recurring or non-operating gains or losses.
- "Adjusted EBITDA Margin" is Adjusted EBITDA as defined above, divided by total revenue excluding other non-operating items. Adjusted EBITDA Margin is helpful in measuring profitability of operations on a consolidated level.
- "Adjusted EPS" is a supplemental measure of our performance, defined as earnings per share (the most directly comparable GAAP measure) before non-recurring or non-operating income and expenses. Adjusted EPS is a useful measure to management because it eliminates the impact of items that do not relate to business performance and helps measure our profitability on a consolidated 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, net income, or earnings per share, 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.
The following tables show a reconciliation from total revenues to Core Revenue, Cost Recovery Revenue, and Ancillary Revenue (non-GAAP basis) for the three months ended
Three Months Ended |
|||||||
2021 | 2020 | ||||||
Total Revenues | $ | 31,228 | $ | 20,425 | |||
Core Revenue: | |||||||
Renewal Commissions(1) | $ | 7,757 | $ | 5,733 | |||
Renewal Royalty Fees(2) | 8,746 | 5,386 | |||||
New Business Commissions(1) | 4,616 | 3,333 | |||||
New Business Royalty Fees(2) | 3,157 | 2,048 | |||||
Agency Fees(1) | 2,424 | 1,686 | |||||
Total Core Revenue | 26,700 | 18,186 | |||||
Cost Recovery Revenue: | |||||||
Initial Franchise Fees(2) | 1,432 | 978 | |||||
Interest Income | 261 | 169 | |||||
Total Cost Recovery Revenue | 1,693 | 1,147 | |||||
Ancillary Revenue: | |||||||
Contingent Commissions(1) | 2,737 | 1,059 | |||||
Other Income(2) | 98 | 33 | |||||
Total Ancillary Revenue | 2,835 | 1,092 | |||||
Total Revenues | $ | 31,228 | $ | 20,425 |
(1) Renewal Commissions, New Business Commissions, Agency Fees, and Contingent Commissions are included in "Commissions and agency fees" as shown on the Consolidated statements of operations.
(2) Renewal Royalty Fees, New Business Royalty Fees, Initial Franchise Fees, and Other Income are included in "Franchise revenues" as shown on the Consolidated statements of operations.
The following tables show a reconciliation from net income to Adjusted EBITDA and Adjusted EBITDA Margin (non-GAAP basis) for the three months ended
Three Months Ended |
||||||||||
2021 | 2020 | |||||||||
Net income (loss) | $ | (1,089 | ) | $ | (296 | ) | ||||
Interest expense | 601 | 604 | ||||||||
Depreciation and amortization | 1,000 | 540 | ||||||||
Tax expense (benefit) | (294 | ) | (41 | ) | ||||||
Equity-based compensation | 1,941 | 498 | ||||||||
Other income (expense, including state franchise tax) | (20 | ) | (66 | ) | ||||||
Adjusted EBITDA | $ | 2,139 | $ | 1,239 | ||||||
Adjusted EBITDA Margin(1) | 7 | % | 6 | % |
(1) Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Total Revenue (
The following tables show a reconciliation from basic earnings per share to Adjusted EPS (non-GAAP basis) for the three months ended
Three Months Ended |
||||||||
2021 | 2020 | |||||||
Earnings per share - basic (GAAP) | $ | (0.02 | ) | $ | (0.01 | ) | ||
Add: equity-based compensation(1) | 0.05 | 0.01 | ||||||
Adjusted EPS (non-GAAP) | $ | 0.03 | $ | — |
(1) Calculated as equity-based compensation divided by sum of weighted average Class A and Class B shares [
Key Performance Indicators
Corporate sales agents < 1 year tenured | 200 | 207 | 130 | |||||||||
Corporate sales agents > 1 year tenured | 163 | 157 | 111 | |||||||||
Operating franchises < 1 year tenured (TX) | 47 | 43 | 22 | |||||||||
Operating franchises > 1 year tenured (TX) | 192 | 185 | 181 | |||||||||
Operating franchises < 1 year tenured (Non-TX) | 313 | 285 | 233 | |||||||||
Operating franchises > 1 year tenured (Non-TX) | 435 | 378 | 243 | |||||||||
Policies in Force | 788,000 | 713,000 | 530,000 | |||||||||
Client Retention | 88 | % | 88 | % | 88 | % | ||||||
Premium Retention | 90 | % | 89 | % | 90 | % | ||||||
QTD Written Premium (in thousands) | $ | 318,895 | $ | 285,209 | $ | 214,137 | ||||||
Net Promoter Score ("NPS") | 92 | 92 | 89 |
Source: Goosehead Insurance, Inc.