Goosehead Insurance, Inc. Announces Third Quarter 2018 Results
- Revenues Grew 49% Over Prior-Year Period to
- Total Written Premiums Increased 50% Over Prior-Year Period -
- Corporate Sales Headcount Expanded 55% Over Prior-Year Period -
- Total Operating Franchises Grew 59% Over Prior-Year Period -
Third Quarter 2018 Highlights
- Revenue growth of 49% - all organic - to
$16.1 million, from $10.8 millionin the prior-year period
- Net income attributable to
Goosehead Insurance, Inc.of $0.2 million, or $0.02per diluted share.
- Adjusted EPS* of
- Adjusted EBITDA* rose 42% to
$3.4 million, from $2.4 millionin the prior-year period.
- Total written premiums of
$140.3 million, a 50% increase from the prior-year period.
- Policies in force grew 50% to approximately 310,009 as of
September 30, 2018, compared to approximately 207,005 as of September 30, 2017, and increased 10% from approximately 282,369 as of June 30, 2018.
- Corporate sales headcount rose 55% year-over-year to 174 as of
September 30, 2018.
- Total operating franchises stood at 424 as of
September 30, 2018, a 59% increase from September 30, 2017.
*Adjusted EPS, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures. Reconciliation of Adjusted EBITDA to net income 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.
“We produced another quarter of strong organic growth in all of our key metrics, particularly with respect to our sales force, policies in force, total written premiums and revenue,” stated
“Beyond achieving success in our client acquisition and retention efforts, we continued to invest strategically in our talent and our technology - specifically enhancing our sales process, data analytics and artificial intelligence, cybersecurity and streamlining our overall footprint - to ensure we maintain our industry disrupting first-mover advantages,” added Mr. Jones. “As we look ahead, we remain steadfast in our overall strategy to invest in and grow our core Corporate and Franchise channels while continuing to provide our clients with the broadest choice for coverage and world-class service, which we believe should support sustained long-term value creation for our shareholders.”
Third Quarter 2018 Results
For the third quarter of 2018, revenues were
Total written premium for the third quarter of 2018 grew 50% to
Net income for the third quarter of 2018 was
Total Adjusted EBITDA rose 42% for the third quarter of 2018 to
Revenues generated through the Corporate Channel in the third quarter of 2018 were
The Company had total corporate sales agent headcount of 174 at
Adjusted EBITDA for the Corporate Channel segment in the third quarter of 2018 rose 39% to
Adjusted EBITDA margin for the Corporate Channel for the third quarter of 2018 was 21%, compared to 22% in the prior-year period, primarily due to the Company’s continued investment in growth by significantly increasing corporate sales agent headcount, which resulted in higher employee compensation and benefits. The additional investment was offset by the growth in new business, renewal revenues and contingent commissions.
Revenues generated through the Franchise Channel in the third quarter of 2018 were
Adjusted EBITDA for the Franchise Channel in the third quarter of 2018 rose 75% to
Nine Months 2018 Results
For the nine months ended
Net loss for the nine months ended
Total Adjusted EBITDA rose 47% for the nine months ended
Liquidity and Capital Resources
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.
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 550 operating and contracted franchise locations. For more information, please visit www.gooseheadinsurance.com.
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
Phone: (214) 838-5145
Sard Verbinnen & Co
Phone: (212) 687-8080
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
|Three Months Ended September 30||Nine Months Ended September 30|
|Commissions and agency fees||$||9,760||$||6,692||$||28,072||$||19,908|
|Employee compensation and benefits (including Class B unit compensation of $0 and $26,134 for the three and nine months ended September 30, 2018, respectively, and $1,150 and $1,335 for the three and nine months ended September 30, 2017, respectively)||8,956||7,186||49,646||17,629|
|General and administrative expenses||3,694||2,142||9,093||5,987|
|Depreciation and amortization||352||321||1,039||617|
|Total operating expenses||13,401||9,924||60,762||25,083|
|Income (loss) from operations||2,653||883||(15,331||)||6,493|
|Other Income (Expense):|
|Other income (expense)||(22||)||—||(22||)||3,541|
|Income (loss) before taxes||1,000||209||(18,951||)||8,300|
|Net income (loss)||836||209||(19,269||)||8,300|
|Less: net income (loss) attributable to non-controlling interests||595||209||(10,278||)||8,300|
|Net income (loss) attributable to Goosehead Insurance, Inc.||$||241||$||—||$||(8,991||)||$||—|
|Earnings per share:|
|Weighted average shares of Class A common stock outstanding|
|Pro forma net income:|
|Pro forma income before taxes attributable to Goosehead Insurance, Inc.||n/a||78||n/a||3,096|
|Pro forma income tax expense||n/a||$||(20||)||n/a||$||(774||)|
|Pro forma net income attributable to Goosehead Insurance, Inc.||n/a||$||58||n/a||$||2,322|
|Pro forma earnings per share:|
|Pro forma weighted average shares of Class A common stock outstanding:|
Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
|September 30||December 31|
|Cash and cash equivalents||$||18,067||$||4,948|
|Commissions and agency fees receivable, net||1,813||1,268|
|Receivable from franchisees, net||583||564|
|Total current assets||21,943||7,719|
|Receivable from franchisees, net of current portion||1,930||1,361|
|Property and equipment, net of accumulated depreciation||6,943||6,845|
|Intangible assets, net of accumulated amortization||253||216|
|Liabilities and Stockholders’ Equity|
|Accounts payable and accrued expenses||$||3,015||$||2,759|
|Total current liabilities||6,844||5,767|
|Deferred income taxes, net||36||—|
|Deferred rent, net of current portion||4,196||3,916|
|Note payable, net of current portion||46,644||48,156|
|Commitments and contingencies (see note 6)|
|Class A common stock, $.01 par value per share - 300,000 shares authorized, 13,533 shares issued and outstanding as of September 30, 2018, zero issued and outstanding as of December 31, 2017||135||—|
|Class B common stock, $.01 par value per share - 50,000 shares authorized, 22,747 issued and outstanding as of September 30, 2018, zero issued and outstanding as of December 31, 2017||227||—|
|Additional paid in capital||89,259||—|
|Total stockholders' equity and members' deficit||82,953||(41,133||)|
|Total liabilities and stockholders' equity||$||31,199||$||16,706|
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 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.
- “Adjusted EPS” is a supplemental measure of the Company’s performance, defined as earnings per share before non-recurring or non-operating income and expenses, adjusted to include assumed income taxes related to Class B non-controlling interest. The Company believes that Adjusted EPS is useful as an additional means to evaluate its operating performance when reviewed in conjunction with its GAAP financial statements.
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.
|Three months ended
|Nine months ended
|Net income (loss)||$||836||$||209||$||(19,269||)||$||8,300|
|Depreciation and amortization||352||321||1,039||617|
|Other (income) expense||22||—||22||(3,541||)|
|Adjusted EBITDA Margin(1)||21||%||22||%||27||%||27||%|
(1) Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Total Revenue (
The following tables show a reconciliation from basic earnings per share to Adjusted EPS (non-GAAP basis) for the three and nine months ended
|Three months ended September 30, 2018|
|Earnings per share - basic (GAAP)||$||0.02|
|Add: origination fees from previous debt immediately recognized upon refinance(1)||0.02|
|Add: equity-based compensation(2)||0.01|
|Less: Estimated taxes assuming Class B shares were fully converted to Class A(3)||(0.01||)|
|Adjusted EPS (non-GAAP)||0.05|
(1) Calculated as the origination fees of previous debt immediately recognized upon refinance divided by sum of Class A and Class B shares [
(2) Calculated as equity-based compensation divided by sum of Class A and Class B shares [
(3) Calculated as net income attributable to non-controlling interests, excluding taxes directly attributable to non-controlling interest, times the effective tax rate of controlling interests, divided by the weighted average Class B shares for the period [(
|Nine months ended September 30, 2018|
|Earnings per share - basic (GAAP)||$||(0.66||)|
|Add: income prior to the Reorganization Transactions(4)||0.12|
|Less: estimated controlling interest taxes on income prior to Reorganization Transactions(5)||(0.03||)|
|Add: origination fees from previous debt immediately recognized upon refinance(5)||0.02|
|Add: equity-based compensation(6)||0.74|
|Less: Estimated taxes assuming Class B shares were fully converted to Class A(7)||(0.01||)|
|Adjusted EPS (non-GAAP)||$||0.18|
(4) Calculated as the income prior to the Reorganization Transactions divided by the sum of Class A and Class B shares [
(5) Calculated as the income prior to the Reorganization Transactions, times the controlling interest percentage at the time of IPO, times the assumed effective tax rate of 25%, divided by the count of Class A shares at the time of the IPO [
(6) Calculated as the origination fees of previous debt immediately recognized upon refinance divided by sum of Class A and Class B shares [
(7) Calculated as equity-based compensation divided by the sum of Class A and Class B shares [
(8) Calculated as net loss attributable to non-controlling interests, excluding taxes directly attributable to non-controlling interest, times the effective tax rate of controlling interests, divided by the weighted average Class B shares for the period [(
Key Performance Indicators
|September 30, 2018||June 30, 2018||September 30, 2017|
|Corporate sales agents < 1 year tenured||102||93||65|
|Corporate sales agents > 1 year tenured||72||55||47|
|Operating franchises < 1 year tenured (TX)||36||45||60|
|Operating franchises > 1 year tenured (TX)||165||159||124|
|Operating franchises < 1 year tenured (Non-TX)||157||130||56|
|Operating franchises > 1 year tenured (Non-TX)||66||51||27|
|Policies in Force (in thousands)||310||282||207|
|September 30, 2018||June 30, 2018||September 30, 2017|
|Total Written Premium (in thousands)||$||140,296||$||132,649||$||93,836|
|Net Promoter Score ("NPS")||88||87||86|
Source: Goosehead Insurance, Inc.