Goosehead Insurance, Inc. Announces Second Quarter 2019 Results
- Revenues Grew 31% Over Prior-Year Period to
- Total Written Premiums Placed Increased 46% Over Prior-Year Period -
- Net Income Increased
- Adjusted EBITDA Rose 17% Over Prior-Year Period to
- Total Franchises Grew 55% Over Prior-Year Period -
Second Quarter 2019 Highlights
- Revenue grew organically 31% from the prior-year period to
$19.4 million . - Total written premiums placed increased 46% from the prior-year period to
$194.0 million , with growth more heavily weighted to the Franchise Channel. - Policies in force grew 45% to 408,000 as of
June 30, 2019 , compared to 282,000 as ofJune 30, 2018 . - Net income attributable to
Goosehead Insurance, Inc. of$0.9 million , or$0.06 per basic and diluted share. - Adjusted EBITDA* rose 17% from the prior-year period to
$4.7 million . - Corporate sales headcount of 213 was up 44% year-over-year.
- Total franchises increased 55% compared to the prior-year period to 765; total operating franchises grew 39% compared to the prior-year period to 535.
- Adjusted EPS* of
$0.07 per share.
*Adjusted EPS, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures. Reconciliation of net income to Adjusted EBITDA and basic earnings per share to Adjusted EPS, the most directly comparable financial measures presented in accordance with GAAP, are set forth in the reconciliation table accompanying this release.
“Our strong performance continued in the second quarter, setting us up for success in 2019 and beyond,” stated
“We also continued to deliver extraordinary service quality, as we sustained an 88% client retention rate and held our Net Promoter Score steady at 90,” continued Mr. Jones. “We are proud to have delivered another quarter of strong and profitable growth, and we feel like we are firing on all cylinders as we enter the back half of the year.”
Second Quarter 2019 Results
For the second quarter of 2019, revenues were
Total operating expenses for the second quarter of 2019 were
Net income for the second quarter of 2019 was
Total Adjusted EBITDA rose 17% from the prior-year period to
Corporate Channel
Revenues generated through the Corporate Channel in the second quarter of 2019 were
Adjusted EBITDA for the Corporate Channel segment in the second quarter of 2019 was
Adjusted EBITDA Margin for the Corporate Channel for the second quarter of 2019 was 22%, consistent with the prior-year period.
Franchise Channel
Revenues generated through the Franchise Channel in the second quarter of 2019 were
As of
Adjusted EBITDA for the Franchise Channel in the second quarter of 2019 increased 33% to
Six Months 2019 Results
For the six months ended
Net income for the six months ended
Total Adjusted EBITDA rose 56% for the six months ended
Liquidity and Capital Resources
As of
2019 Outlook
The Company is maintaining its full-year 2019 outlook with respect to written premiums and revenue:
- Total written premiums placed for 2019 between
$700 million and $725 million , representing organic growth of 38% on the low end of the range to 42% on the high end of the range. - Total revenues for 2019 between
$80 million and $85 million , representing organic growth of 33% on the low end of the range to 41% on the high end of the range.
The revenue outlook provided above assumes revenue is recognized under the accounting guidance provided by ASC 605. When the Company begins to report revenue under ASC 606 (ASU 2014-09) in its 2019 Annual Report on Form 10-K for the year ended
Conference Call Information
Goosehead will host a conference call and webcast today at
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 765 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 “1A. Risk Factors” in Goosehead’s Annual Report on Form 10-K for the year ended
Contacts
Investor Contact:
ICR
Phone: (214) 838-5145
E-mail: IR@goosehead.com
Media Contact:
Phone: (469) 480-4630
E-mail: PR@goosehead.com
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Commissions and agency fees | $ | 10,763 | $ | 8,716 | $ | 26,933 | $ | 18,312 | ||||||||
Franchise revenues | 8,475 | 5,969 | 15,303 | 10,880 | ||||||||||||
Interest income | 148 | 102 | 283 | 185 | ||||||||||||
Total revenues | 19,386 | 14,787 | 42,519 | 29,377 | ||||||||||||
Operating Expenses: | ||||||||||||||||
Employee compensation and benefits (including Class B unit compensation of $0 for the three and six months ended June 30, 2019 and $26,134 for the three and six months ended June 30, 2018) | 10,378 | 33,855 | 19,569 | 40,690 | ||||||||||||
General and administrative expenses | 4,201 | 3,025 | 8,631 | 5,399 | ||||||||||||
Bad debts | 482 | 306 | 883 | 586 | ||||||||||||
Depreciation and amortization | 452 | 350 | 875 | 687 | ||||||||||||
Total operating expenses | 15,513 | 37,536 | 29,958 | 47,362 | ||||||||||||
Income (loss) from operations | 3,873 | (22,749 | ) | 12,561 | (17,985 | ) | ||||||||||
Other Income (Expense): | ||||||||||||||||
Interest expense | (626 | ) | (972 | ) | (1,252 | ) | (1,968 | ) | ||||||||
Income (loss) before taxes | 3,247 | (23,721 | ) | 11,309 | (19,953 | ) | ||||||||||
Tax expense | 430 | 154 | 1,174 | 154 | ||||||||||||
Net income (loss) | 2,817 | (23,875 | ) | 10,135 | (20,107 | ) | ||||||||||
Less: net income (loss) attributable to non-controlling interests | 1,914 | (14,641 | ) | 6,760 | (10,873 | ) | ||||||||||
Net income (loss) attributable to Goosehead Insurance Inc. | $ | 903 | $ | (9,234 | ) | $ | 3,375 | $ | (9,234 | ) | ||||||
Earnings (loss) per share: | ||||||||||||||||
Basic | $ | 0.06 | (0.68 | ) | $ | 0.23 | (0.68 | ) | ||||||||
Diluted | $ | 0.06 | (0.68 | ) | $ | 0.22 | (0.68 | ) | ||||||||
Weighted average shares of Class A common stock outstanding | ||||||||||||||||
Basic | 14,876 | 13,533 | 14,545 | 13,533 | ||||||||||||
Diluted | 16,065 | 13,533 | 15,685 | 13,533 | ||||||||||||
Dividends declared per share | — | — | 0.41 | — | ||||||||||||
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except per share amounts)
June 30, | December 31, | |||||||
2019 | 2018 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 8,427 | $ | 18,635 | ||||
Restricted cash | 579 | 376 | ||||||
Commissions and agency fees receivable, net | 2,392 | 2,016 | ||||||
Receivable from franchisees, net | 1,429 | 703 | ||||||
Prepaid expenses | 1,221 | 1,109 | ||||||
Total current assets | 14,048 | 22,839 | ||||||
Receivable from franchisees, net of current portion | 2,517 | 2,048 | ||||||
Property and equipment, net of accumulated depreciation | 8,417 | 7,575 | ||||||
Intangible assets, net of accumulated amortization | 413 | 248 | ||||||
Deferred income taxes, net | 12,498 | 1,958 | ||||||
Other assets | 199 | 130 | ||||||
Total assets | $ | 38,092 | $ | 34,798 | ||||
Liabilities and Members’ Equity | ||||||||
Current Liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 3,177 | $ | 3,978 | ||||
Premiums payable | 579 | 376 | ||||||
Unearned revenue | 495 | 530 | ||||||
Deferred rent | 502 | 428 | ||||||
Note payable | 3,000 | 2,500 | ||||||
Total current liabilities | 7,753 | 7,812 | ||||||
Deferred rent, net of current portion | 5,516 | 4,548 | ||||||
Note payable, net of current portion | 44,554 | 45,947 | ||||||
Liabilities under tax receivable agreement, net of current portion | 10,817 | 1,694 | ||||||
Total liabilities | 68,640 | 60,001 | ||||||
Commitments and contingencies (see note 7) | ||||||||
Class A common stock, $.01 par value per share - 300,000 shares authorized, 15,013 shares issued and outstanding as of June 30, 2019, 13,800 shares issued and outstanding as of December 31, 2018 | 150 | 138 | ||||||
Class B common stock, $.01 par value per share - 50,000 shares authorized, 21,275 issued and outstanding as of June 30, 2019, 22,486 shares issued and outstanding as of December 31, 2018 | 212 | 224 | ||||||
Additional paid in capital | 85,221 | 88,811 | ||||||
Accumulated deficit | (9,165 | ) | (6,578 | ) | ||||
Total stockholders' equity | 76,418 | 82,595 | ||||||
Non-controlling interests | (106,966 | ) | (107,798 | ) | ||||
Total equity | (30,548 | ) | (25,203 | ) | ||||
Total liabilities and stockholders' equity | $ | 38,092 | $ | 34,798 | ||||
Reconciliation of Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EPS to Net Income
This release includes Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EPS 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. 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.
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 net income to Adjusted EBITDA and Adjusted EBITDA Margin for the three and six months ended
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income (loss) | $ | 2,817 | $ | (23,875 | ) | $ | 10,135 | $ | (20,107 | ) | ||||||
Interest expense | 626 | 972 | 1,252 | 1,968 | ||||||||||||
Depreciation and amortization | 452 | 350 | 875 | 687 | ||||||||||||
Tax expense | 430 | 154 | 1,174 | 154 | ||||||||||||
Equity-based compensation | 368 | 26,394 | 735 | 26,394 | ||||||||||||
Adjusted EBITDA | $ | 4,693 | $ | 3,995 | $ | 14,171 | $ | 9,096 | ||||||||
Adjusted EBITDA Margin(1) | 24 | % | 27 | % | 33 | % | 31 | % |
(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 and six months ended
Three Months Ended June 30, 2019: | ||||
Earnings per share - basic (GAAP) | $ | 0.06 | ||
Add: equity-based compensation(1) | 0.01 | |||
Adjusted EPS (non-GAAP) | $ | 0.07 |
(1) Calculated as equity-based compensation divided by sum of Class A and Class B shares [
Six Months Ended June 30, 2019: | ||||
Earnings per share - basic (GAAP) | $ | 0.23 | ||
Add: equity-based compensation(1) | 0.02 | |||
Adjusted EPS (non-GAAP) | $ | 0.25 |
(1) Calculated as equity-based compensation divided by sum of Class A and Class B shares [
Key Performance Indicators
June 30, | December 31, | June 30, | |||||||
2019 | 2018 | 2018 | |||||||
Corporate sales agents < 1 year tenured | 118 | 90 | 93 | ||||||
Corporate sales agents > 1 year tenured | 95 | 77 | 55 | ||||||
Operating franchises < 1 year tenured (TX) | 24 | 36 | 45 | ||||||
Operating franchises > 1 year tenured (TX) | 177 | 166 | 159 | ||||||
Operating franchises < 1 year tenured (Non-TX) | 185 | 168 | 130 | ||||||
Operating franchises > 1 year tenured (Non-TX) | 149 | 87 | 51 | ||||||
Policies in Force | 408,000 | 334,000 | 282,000 | ||||||
Client Retention | 88 | % | 88 | % | 88 | % | |||
Premium Retention | 92 | % | 94 | % | 94 | % | |||
QTD Written Premium Placed (in thousands) | $ | 194,028 | $ | 135,119 | $ | 132,649 | |||
Net Promoter Score ("NPS") | 90 | 89 | 87 |
Source: Goosehead Insurance, Inc.