Ryan Specialty Reports Fourth Quarter 2023 Results; Initiates Quarterly Dividend
Ryan Specialty Holdings, Inc. (NYSE: RYAN) reported strong financial results for the fourth quarter of 2023, with total revenue growing 22.5% year-over-year to $532.9 million and net income increasing by 27.8% to $58.5 million. The company also announced a quarterly cash dividend program to return capital to investors. Organic revenue growth rate stood at 16.0% year-over-year, highlighting the company's successful M&A strategy and growth prospects.
Positive
Total revenue grew 22.5% year-over-year to $532.9 million.
Organic revenue growth rate of 16.0% year-over-year.
Net income increased by 27.8% year-over-year to $58.5 million.
Adjusted EBITDAC grew 24.6% year-over-year to $158.6 million.
Adjusted Net Income increased 29.6% year over year to $95.7 million.
Initiated a quarterly cash dividend program to return capital to investors.
Successful execution of M&A strategy with acquisitions expanding total addressable market.
Strong balance sheet strength and financial flexibility.
Full year 2024 outlook: Organic Revenue Growth Rate guidance of 12.0% - 13.5% and Adjusted EBITDAC Margin guidance of 31.0% - 31.5%.
The reported financial results for Ryan Specialty Holdings, Inc. indicate robust performance, with significant year-over-year growth in key financial metrics such as Total Revenue , Net Income and Adjusted EBITDAC . The organic revenue growth rate of 16.0% is particularly noteworthy as it suggests the company is expanding its market share through internal initiatives rather than solely relying on acquisitions. The initiation of a quarterly dividend program signals confidence from the board in the company's future cash flows and financial health, which could be attractive to income-focused investors.
From a financial analysis standpoint, the increase in the Adjusted EBITDAC Margin suggests improved operational efficiency. However, it is important to monitor how much of the margin expansion is sustainable versus a result of temporary market conditions. The detailed breakdown of net commissions and fees by specialty provides insight into the company's diverse revenue streams and growth in specific service areas, which is useful for assessing the company's competitive positioning within the insurance sector.
Examining the broader insurance market, Ryan Specialty's performance can be seen as an indicator of the health of the specialty insurance sector. The company's growth in net commissions and fees across all specialties, particularly in the Wholesale Brokerage and Underwriting Management segments, reflects a strong demand for specialized insurance products. This could be due to an increase in complex risks requiring tailored insurance solutions, a trend that may continue with the evolution of new technologies and business practices.
Furthermore, the company's emphasis on M&A strategy and the expansion of its total addressable market through acquisitions such as Castel point to a strategic approach to growth. The ability to integrate these acquisitions effectively and leverage synergies will be crucial for maintaining the growth trajectory and ensuring that the increase in revenue translates to bottom-line performance.
The decision to initiate a dividend program may also reflect the company's strategic response to the current economic climate. In a low-interest-rate environment, the initiation of a dividend can be a sign of a maturing company that is shifting focus from high growth to returning value to shareholders. It will be important to observe how this strategy aligns with the company's long-term investment in growth initiatives, particularly in the face of potential economic headwinds such as inflationary pressures and changes in the regulatory landscape.
Moreover, the company's liquidity position, with Cash and cash equivalents of $838.8 million and the outlook for Organic Revenue Growth Rate and Adjusted EBITDAC Margin for 2024, suggest a stable financial footing. However, it would be prudent for investors to consider the impact of external economic factors on the company's future performance, including interest rate changes and global economic stability, which can influence investment income and claims costs in the insurance industry.
02/27/2024 - 04:15 PM
- Total Revenue grew 22.5% year-over-year to $532.9 million
- Organic Revenue Growth Rate of 16.0% year-over-year -
- Net Income of $58.5 million $0.18
- Adjusted EBITDAC grew 24.6% year-over-year to $158.6 million
- Adjusted Net Income increased 29.6% year over year to $95.7 million $0.35
CHICAGO --(BUSINESS WIRE)--
Ryan Specialty Holdings, Inc. (NYSE: RYAN) (“Ryan Specialty” or the “Company”), a leading international specialty insurance firm, today announced results for the fourth quarter ended December 31, 2023.
Fourth Quarter 2023 Highlights
Revenue grew 22.5% year-over-year to $532.9 million $435.0 million
Organic Revenue Growth Rate* was 16.0% , compared to 10.3% in the prior-year period
Net Income grew 27.8% year-over-year to $58.5 million $45.8 million $0.18
Adjusted EBITDAC* increased 24.6% to $158.6 million $127.3 million
Adjusted EBITDAC Margin* of 29.8% , compared to 29.3% in the prior-year period
Adjusted Net Income* increased 29.6% to $95.7 million $73.8 million
Adjusted Diluted Earnings per Share* increased 29.6% % to $0.35 $0.27
Full Year 2023 Highlights
Revenue grew 20.4% year-over-year to $2,077.5 million $1,725.2 million
Organic Revenue Growth Rate* was 15.0% , compared to 16.4% in the prior-year
Net Income grew 19.1% year-over-year to $194.5 million $163.3 million
Diluted Earnings per Share was $0.52
Adjusted EBITDAC* increased 20.7% to $624.7 million $517.4 million
Adjusted EBITDAC Margin* of 30.1% , compared to 30.0% in the prior-year
Adjusted Net Income* increased 20.4% to $375.6 million $312.0 million
Adjusted Diluted Earnings per Share* increased 20.0% to $1.38 $1.15
“Our fourth quarter results capped off another great year, in which we delivered 15% organic revenue growth, 21% adjusted EBITDAC growth, and 20% adjusted EPS growth. Through a combination of our differentiated business model, industry leading talent, speed to market, innovative product development, and persistent dedication to our clients, we offer a winning formula for success,” said Patrick G. Ryan, Founder, Chairman and Chief Executive Officer of Ryan Specialty. “We were very pleased with the success we had in executing on our M&A strategy, as we had our second largest year in acquired revenue and announced our agreement to acquire Castel. These acquisitions expand our total addressable market and provide valuable products and solutions to our clients. Additionally, given our balance sheet strength, broad financial flexibility, and strong free cash flow, we are pleased to initiate a quarterly cash dividend program to return capital to and create additional value for our investors. The decision by our Board to initiate a cash dividend program reflects confidence in our ability to continue to drive sustainable, profitable growth, generate strong cash flow over the long term and execute on our robust M&A program. In summary, we produced excellent results in 2023, are well positioned for another strong year in 2024, and are confident in our ability to deliver value to investors for years to come.”
Summary of Fourth Quarter 2023 Results
Three Months Ended
Change
(in thousands, except percentages and per share data)
2023
2022
$
%
GAAP financial measures
Total revenue
$
532,863
$
435,015
$
97,848
22.5
%
Compensation and benefits
331,735
270,542
61,193
22.6
General and administrative
73,586
57,120
16,466
28.8
Total operating expenses
436,526
355,766
80,760
22.7
Operating income
96,337
79,249
17,088
21.6
Net income
58,503
45,782
12,721
27.8
Net income attributable to Ryan Specialty Holdings, Inc.
22,846
17,895
4,951
27.7
Compensation and benefits expense ratio (1)
62.3
%
62.2
%
General and administrative expense ratio (2)
13.8
%
13.1
%
Net income margin (3)
11.0
%
10.5
%
Earnings per share (4)
$
0.19
$
0.16
Diluted earnings per share (4)
$
0.18
$
0.14
Non-GAAP financial measures*
Organic revenue growth rate
16.0
%
10.3
%
Adjusted compensation and benefits expense
$
310,416
$
252,571
$
57,845
23
%
Adjusted compensation and benefits expense ratio
58.3
%
58.1
%
Adjusted general and administrative expense
$
63,862
$
55,182
$
8,680
15.7
%
Adjusted general and administrative expense ratio
12.0
%
12.7
%
Adjusted EBITDAC
$
158,585
$
127,262
$
31,323
24.6
%
Adjusted EBITDAC margin
29.8
%
29.3
%
Adjusted net income
$
95,672
$
73,833
$
21,839
29.6
%
Adjusted net income margin
18.0
%
17.0
%
Adjusted diluted earnings per share
$
0.35
$
0.27
* For a definition and a reconciliation of Organic revenue growth rate, Adjusted compensation and benefits expense, Adjusted compensation and benefits ratio, Adjusted general and administrative expense, Adjusted general and administrative expense ratio, Adjusted EBITDAC, Adjusted EBITDAC margin, Adjusted net income, Adjusted net income margin, and Adjusted diluted earnings per share to the most directly comparable GAAP measure, see “Non-GAAP Financial Measures and Key Performance Indicators” below.
Compensation and benefits expense ratio is defined as Compensation and benefits divided by Total revenue.
General and administrative expense ratio is defined as General and administrative expense divided by Total revenue.
Net income margin is defined as Net income divided by Total revenue.
See “Note 12, Earnings (Loss) Per Share ” of the annual consolidated financial statements.
Ryan Specialty Initiates Quarterly Dividend
Today, Ryan Specialty’s board of directors (“Board”) declared a one-time special cash dividend of $0.23 $0.11
The special dividend of $0.23 $0.07 $0.04
Fourth Quarter 2023 Review*
Total revenue for the fourth quarter of 2023 was $532.9 million 22.5% compared to $435.0 million 16.0% , driven by new client wins and expanded relationships with existing clients, coupled with continued expansion of the E&S market, revenue from acquisitions completed within the trailing twelve months ended December 31, 2023, and increased Fiduciary investment income. We experienced growth across the majority of our property and casualty lines.
Total operating expenses for the fourth quarter of 2023 were $436.5 million 22.7% increase compared to the prior-year period. This increase was primarily due to an increase in Compensation and benefits expense compared to the prior year resulting from higher compensation due to revenue growth and higher Restructuring and related expenses associated with ACCELERATE 2025, partially offset by a decline in Acquisition related long-term incentive compensation. General and administrative expense also increased compared to the prior-year period due to an increase in professional services in connection with revenue generating activities, higher Acquisition-related expenses, higher Restructuring and related expenses associated with ACCELERATE 2025, and continued normalization of business travel and client entertainment.
Net income for the fourth quarter of 2023 increased 27.8% to $58.5 million $45.8 million
Adjusted EBITDAC grew 24.6% in the fourth quarter of 2023 to $158.6 million $127.3 million 29.8% , compared to 29.3% in the prior-year period. The increase in Adjusted EBITDAC was driven primarily by solid revenue growth and higher Fiduciary investment income, partially offset by increased Adjusted compensation and benefits expense, as well as higher Adjusted general and administrative expense.
Adjusted net income for the fourth quarter of 2023 increased 29.6% to $95.7 million $73.8 million 18.0% , compared to 17.0% in the prior-year period. Adjusted diluted earnings per share for the fourth quarter of 2023 increased 29.6% to $0.35 $0.27
* For the definition of each of the non-GAAP measures referred to above, as well as a reconciliation of such non-GAAP measures to their most directly comparable GAAP measures, see “Non-GAAP Financial Measures and Key Performance Indicators” below.
Fourth Quarter and Year to Date 2023 Net Commissions and Fees by Specialty
Growth in Net commissions and fees in all specialties was primarily driven by solid organic growth.
Three Months Ended December 31,
Period over Period
(in thousands, except percentages)
2023
% of
2022
% of
Change
Wholesale Brokerage
$
342,718
66.1
%
$
287,968
67.4
%
$
54,750
19.0
%
Binding Authority
67,414
13.0
52,697
12.3
14,717
27.9
Underwriting Management
108,586
20.9
86,737
20.3
21,849
25.2
Total Net commissions and fees
$
518,718
$
427,402
$
91,316
21.4
%
Year Ended December 31,
Period over Period
(in thousands, except percentages)
2023
% of
2022
% of
Change
Wholesale Brokerage
$
1,319,056
65.1
%
$
1,129,241
66.0
%
$
189,815
16.8
%
Binding Authority
275,961
13.6
231,048
13.5
44,913
19.4
Underwriting Management
431,579
21.3
351,572
20.5
80,007
22.8
Total Net commissions and fees
$
2,026,596
$
1,711,861
$
314,735
18.4
%
Liquidity and Financial Condition
As of December 31, 2023, the Company had Cash and cash equivalents of $838.8 million $2.0 billion
Full Year 2024 Outlook*
The Company is initiating its full year 2024 outlook for both Organic Revenue Growth Rate and Adjusted EBITDAC Margin as follows:
Organic Revenue Growth Rate guidance for full year 2024 to be between 12.0% - 13.5%
Adjusted EBITDAC Margin guidance for full year 2024 to be between 31.0% - 31.5%
The Company is unable to provide a comparable outlook for, or a reconciliation to, Total revenue growth rate or Net income margin because it cannot provide a meaningful or accurate calculation or estimation of certain reconciling items without unreasonable effort. Its inability to do so is due to the inherent difficulty in forecasting the timing of items that have not yet occurred and quantifying certain amounts that are necessary for such reconciliation, including variations in effective tax rate, expenses to be incurred for acquisition activities, and other one-time or exceptional items.
* For a definition of Organic revenue growth rate and Adjusted EBITDAC margin, see “Non-GAAP Financial Measures and Key Performance Indicators” below.
Conference Call Information
Ryan Specialty will host a conference call today at 5:00 PM ET to discuss these results. A live audio webcast of the conference call will be available on the Company’s website at ryanspecialty.com in its Investors section.
The dial-in number for the conference call is (877) 451-6152 (toll-free) or (201) 389-0879 (international). Please dial the number 10 minutes prior to the scheduled start time.
A webcast replay of the call will be available on the Company’s website at ryanspecialty.com in its Investors section for one year following the call.
About Ryan Specialty
Founded in 2010, Ryan Specialty (NYSE: RYAN) is a service provider of specialty products and solutions for insurance brokers, agents, and carriers. Ryan Specialty provides distribution, underwriting, product development, administration, and risk management services by acting as a wholesale broker and a managing underwriter with delegated authority from insurance carriers. Our mission is to provide industry-leading innovative specialty insurance solutions for insurance brokers, agents, and carriers. Learn more at ryanspecialty.com .
Forward-Looking Statements
All statements in this release and in the corresponding earnings call that are not historical are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and involve substantial risks and uncertainties. For example, all statements the Company makes relating to its estimated and projected costs, expenditures, cash flows, growth rates and financial results, its plans, anticipated amount and timing of cost savings relating to the ACCELERATE 2025 program, or its plans and objectives for future operations, growth initiatives, or strategies and the statements under the caption “Full Year 2023 Outlook” are forward-looking statements. Words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely” and variations of such words and similar expressions are intended to identify such forward-looking statements. All forward-looking statements are subject to risks and uncertainties, known and unknown, that may cause actual results to differ materially from those that the Company expected. Specific factors that could cause such a difference include, but are not limited to, those disclosed previously in the Company’s filings with the Securities and Exchange Commission (“SEC”) that include, but are not limited to: the Company’s potential failure to develop a succession plan for the senior management team, including Patrick G. Ryan; the Company’s failure to recruit and retain revenue producers; the impact of breaches in security that cause significant system or network disruptions; the impact of improper disclosure of confidential, personal or proprietary data; the potential loss of the Company’s relationships with insurance carriers or its clients, becoming dependent upon a limited number of insurance carriers or clients or the failure to develop new insurance carrier and client relationships; the potential that the Company’s underwriting models contain errors or are otherwise ineffective; any damage to the Company’s reputation; the Company's failure to achieve the intended results of our restructuring program, ACCELERATE 2025; any failure to maintain the valuable aspects of our Company’s culture; the Company's inability to successfully recover upon experiencing a disaster or other business continuity problem; the impact of third parties that perform key functions of the Company's business operations acting in ways that harm our business; the cyclicality of, and the economic conditions in, the markets in which the Company operates; conditions that result in reduced insurer capacity; significant competitive pressures in each of the Company’s businesses; decreases in the premiums or commission rates set by insurers, or actions by insurers seeking repayment of commissions; decreases in the amounts of supplemental or contingent commissions the Company receives; the Company’s inability to collect its receivables; decreases in current market share as a result of disintermediation within the insurance industry; impairment of goodwill; the impact on our operations and financial condition from the effects of a pandemic or the outbreak of a contagious disease and resulting governmental and societal responses; the inability to maintain rapid growth or to generate sufficient revenue to achieve and maintain profitability; the impact if the Company’s MGU programs are terminated or changed; the risks associated with the evaluation of potential acquisitions and the integration of acquired businesses as well as introduction of new products, lines of business and markets; the occurrence of natural or man-made disasters; being subject to E&O claims as well as other contingencies and legal proceedings; not being able to generate sufficient cash flow to service all of the Company’s indebtedness and being forced to take other actions to satisfy its obligations under such indebtedness; the impact of being unable to refinance the Company’s indebtedness; and risks relating to the Company's organizational structure that could result in conflicts of interest between the holders of the LLC units and the holders of our Class A common stock.
For more detail on the risk factors that may affect the Company’s results, see the section entitled ‘‘Risk Factors’’ in our most recent annual report on Form 10-K filed with the SEC, and in other documents filed with, or furnished to, the SEC. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Given these factors, as well as other variables that may affect the Company’s operating results, you are cautioned not to place undue reliance on these forward-looking statements, not to assume that past financial performance will be a reliable indicator of future performance, and not to use historical trends to anticipate results or trends in future periods. The forward-looking statements included in this press release and on the related earnings call relate only to events as of the date hereof. The Company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions, or otherwise.
Non-GAAP Financial Measures and Key Performance Indicators
In assessing the performance of the Company’s business, non-GAAP financial measures are used that are derived from the Company’s consolidated financial information, but which are not presented in the Company’s consolidated financial statements prepared in accordance with GAAP. The Company considers these non-GAAP financial measures to be useful metrics for management and investors to facilitate operating performance comparisons from period to period by excluding potential differences caused by variations in capital structures, tax positions, depreciation, amortization, and certain other items that the Company believes are not representative of its core business. The Company uses the following non-GAAP measures for business planning purposes, in measuring performance relative to that of its competitors, to help investors to understand the nature of the Company's growth, and to enable investors to evaluate the run-rate performance of the Company. Non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, the consolidated financial statements prepared and presented in accordance with GAAP. The footnotes to the reconciliation tables below should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K filed with the SEC. Industry peers may provide similar supplemental information but may not define similarly-named metrics in the same way and may not make identical adjustments.
Organic revenue growth rate: Organic revenue growth rate is defined as the percentage change in Total revenue, as compared to the prior-year period, adjusted for revenue attributable to acquisitions during their first 12 months of the Company’s ownership, and other adjustments such as contingent commissions, Fiduciary investment income, and the impact of changes in foreign exchange rates. The most directly comparable GAAP financial metric is Total revenue growth rate.
Adjusted compensation and benefits expense: Adjusted compensation and benefits expense is defined as Compensation and benefits expense adjusted to reflect items such as (i) equity-based compensation, (ii) acquisition and restructuring related compensation expenses, and (iii) other exceptional or non-recurring compensation expenses, as applicable. The most directly comparable GAAP financial metric is Compensation and benefits expense.
Adjusted general and administrative expense: Adjusted general and administrative expense is defined as General and administrative expense adjusted to reflect items such as (i) acquisition and restructuring related general and administrative expenses, and (ii) other exceptional or non-recurring general and administrative expenses, as applicable. The most directly comparable GAAP financial metric is General and administrative expense.
Adjusted compensation and benefits expense ratio: Adjusted compensation and benefits expense ratio is defined as the Adjusted compensation and benefits expense as a percentage of Total revenue. The most directly comparable GAAP financial metric is Compensation and benefits expense ratio.
Adjusted general and administrative expense ratio: Adjusted general and administrative expense ratio is defined as the Adjusted general and administrative expense as a percentage of Total revenue. The most directly comparable GAAP financial metric is General and administrative expense ratio.
Adjusted EBITDAC: Adjusted EBITDAC is defined as Net income before Interest expense, net, Income tax expense (benefit), Depreciation, Amortization, and Change in contingent consideration, adjusted to reflect items such as (i) equity-based compensation, (ii) acquisition-related expenses, and (iii) other exceptional or non-recurring items, as applicable. Acquisition-related expense includes one-time diligence, transaction-related, and integration costs. Acquisition-related long-term incentive compensation arises from long-term incentive plans associated with acquisitions. In 2023, Restructuring and related expense consisted of compensation and benefits, occupancy, contractors, professional services, and license fees related to the ACCELERATE 2025 program. The compensation and benefits expense included severance as well as employment costs related to services rendered between the notification and termination dates. See “Note 5, Restructuring” of the annual consolidated financial statements for further discussion of ACCELERATE 2025. The remaining costs that preceded the restructuring plan were associated with professional services costs related to program design and licensing costs. In 2022, Restructuring and related expense represented costs associated with the 2020 restructuring plan. Amortization and expense consisted of charges related to discontinued prepaid incentive programs. For the three months and year ended December 31, 2023, Other non-operating (income) loss included a $10.4 million $1.7 million $5.6 million
Adjusted EBITDAC margin : Adjusted EBITDAC margin is defined as Adjusted EBITDAC as a percentage of Total revenue. The most directly comparable GAAP financial metric is Net income margin.
Adjusted net income : Adjusted net income is defined as tax-effected earnings before amortization and certain items of income and expense, gains and losses, equity-based compensation, acquisition related long-term incentive compensation, acquisition-related expenses, costs associated with our Initial Public Offering (the “IPO”), and certain exceptional or non-recurring items. The Company will be subject to United States federal income taxes, in addition to state, local, and foreign taxes, with respect to its allocable share of any net taxable income of Ryan Specialty, LLC (together with its parent New Ryan Specialty, LLC and their subsidiaries, the “LLC”). For comparability purposes, this calculation incorporates the impact of federal and state statutory tax rates on 100% of the Company's adjusted pre-tax income as if the Company owned 100% of Ryan Specialty, LLC. The most directly comparable GAAP financial metric is Net income.
Adjusted net income margin : Adjusted net income margin is defined as Adjusted net income as a percentage of Total revenue. The most directly comparable GAAP financial metric is Net income margin.
Adjusted diluted earnings per share: Adjusted diluted earnings per share is defined as Adjusted net income divided by diluted shares outstanding after adjusting for the effect if 100% of the outstanding non-voting common interest units of New Ryan Specialty, LLC (“LLC Common Units”), together with the shares of Class B common stock, vested Class C Incentive Units, and the effect of unvested equity awards were exchanged into shares of Class A common stock. The most directly comparable GAAP financial metric is Diluted earnings (loss) per share.
The reconciliations of the above non-GAAP measures to each of their most directly comparable GAAP financial measure are set forth in the reconciliation tables accompanying this release.
With respect to the Organic revenue growth rate and Adjusted EBITDAC margin outlook presented in the “Full Year 2024 Outlook” section of this press release, the Company is unable to provide a comparable outlook for, or a reconciliation to, Total revenue growth rate or Net income margin because it cannot provide a meaningful or accurate calculation or estimation of certain reconciling items without unreasonable effort. Its inability to do so is due to the inherent difficulty in forecasting the timing of items that have not yet occurred and quantifying certain amounts that are necessary for such reconciliation, including variations in effective tax rate, expenses to be incurred for acquisition activities, and other one-time or exceptional items.
Consolidated Statements of Income (Unaudited)
Three Months Ended
Year Ended
(in thousands, except percentages and per share data)
2023
2022
2023
2022
REVENUE
Net commissions and fees
$
518,718
$
427,402
$
2,026,596
$
1,711,861
Fiduciary investment income
14,145
7,613
50,953
13,332
Total revenue
$
532,863
$
435,015
$
2,077,549
$
1,725,193
EXPENSES
Compensation and benefits
331,735
270,542
1,321,029
1,128,981
General and administrative
73,586
57,120
276,181
196,971
Amortization
27,674
25,038
106,799
103,601
Depreciation
2,468
1,787
9,038
5,690
Change in contingent consideration
1,063
1,279
5,421
442
Total operating expenses
$
436,526
$
355,766
$
1,718,468
$
1,435,685
OPERATING INCOME
$
96,337
$
79,249
$
359,081
$
289,508
Interest expense, net
29,667
29,367
119,507
104,829
Loss (income) from equity method investment in
(2,849
)
—
(8,731
)
414
Other non-operating (income) loss
10,343
(1,759
)
10,380
5,073
INCOME BEFORE INCOME TAXES
$
59,176
$
51,641
$
237,925
$
179,192
Income tax expense
673
5,859
43,445
15,935
NET INCOME
$
58,503
$
45,782
$
194,480
$
163,257
GAAP financial measures
Revenue
$
532,863
$
435,015
$
2,077,549
$
1,725,193
Compensation and benefits
331,735
270,542
1,321,029
1,128,981
General and administrative
73,586
57,120
276,181
196,971
Net income
58,503
45,782
194,480
163,257
Compensation and benefits expense ratio
62.3
%
62.2
%
63.6
%
65.4
%
General and administrative expense ratio
13.8
%
13.1
%
13.3
%
11.4
%
Net income margin
11.0
%
10.5
%
9.4
%
9.5
%
Earnings per share
$
0.19
$
0.16
$
0.53
$
0.57
Diluted earnings per share
$
0.18
$
0.14
$
0.52
$
0.52
Non-GAAP Financial Measures (Unaudited)
Three Months Ended
Year Ended December 31,
(in thousands, except percentages and per share data)
2023
2022
2023
2022
Non-GAAP financial measures*
Organic revenue growth rate
16.0
%
10.3
%
15.0
%
16.4
%
Adjusted compensation and benefits expense
$
310,416
$
252,571
$
1,222,342
$
1,021,823
Adjusted compensation and benefits expense ratio
58.3
%
58.1
%
58.8
%
59.2
%
Adjusted general and administrative expense
$
63,862
$
55,182
$
230,467
$
185,956
Adjusted general and administrative expense ratio
12.0
%
12.7
%
11.1
%
10.8
%
Adjusted EBITDAC
$
158,585
$
127,262
$
624,740
$
517,414
Adjusted EBITDAC margin
29.8
%
29.3
%
30.1
%
30.0
%
Adjusted net income
$
95,672
$
73,833
$
375,582
$
311,991
Adjusted net income margin
18.0
%
17.0
%
18.1
%
18.1
%
Adjusted diluted earnings per share
$
0.35
$
0.27
$
1.38
$
1.15
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)
December 31, 2023
December 31, 2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
838,790
$
992,723
Commissions and fees receivable – net
294,195
231,423
Fiduciary cash and receivables
3,131,660
2,611,647
Prepaid incentives – net
8,718
8,584
Other current assets
62,229
49,690
Total current assets
$
4,335,592
$
3,894,067
NON-CURRENT ASSETS
Goodwill
1,646,482
1,314,984
Customer relationships
572,416
457,131
Other intangible assets
38,254
29,313
Prepaid incentives – net
15,103
20,792
Equity method investment in related party
46,099
38,514
Property and equipment – net
42,427
31,271
Lease right-of-use assets
127,708
143,870
Deferred tax assets
383,816
396,814
Other non-current assets
39,312
56,987
Total non-current assets
$
2,911,617
$
2,489,676
TOTAL ASSETS
$
7,247,209
$
6,383,743
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities
$
136,340
$
119,022
Accrued compensation
419,560
350,369
Operating lease liabilities
21,369
22,744
Short-term debt and current portion of long-term debt
35,375
30,587
Fiduciary liabilities
3,131,660
2,611,647
Total current liabilities
$
3,744,304
$
3,134,369
NON-CURRENT LIABILITIES
Accrued compensation
24,917
10,048
Operating lease liabilities
154,457
151,944
Long-term debt
1,943,837
1,951,900
Tax Receivable Agreement liabilities
358,898
295,347
Other non-current liabilities
41,152
22,323
Total non-current liabilities
$
2,523,261
$
2,431,562
TOTAL LIABILITIES
$
6,267,565
$
5,565,931
STOCKHOLDERS' EQUITY
Class A common stock ($0.00 1
119
112
Class B common stock ($0.00 1
142
147
Class X common stock ($0.00 1
—
—
Preferred stock ($0.00 1
—
—
Additional paid-in capital
441,997
418,123
Retained earnings
114,420
53,988
Accumulated other comprehensive income
3,076
6,035
Total stockholders' equity attributable to Ryan Specialty Holdings, Inc.
$
559,754
$
478,405
Non-controlling interests
419,890
339,407
Total stockholders' equity
$
979,644
$
817,812
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
7,247,209
$
6,383,743
Consolidated Statements of Cash Flows (Unaudited)
Year Ended December 31,
(in thousands)
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$
194,480
$
163,257
Adjustments to reconcile net income to cash flows provided by operating activities:
Loss (income) from equity method investment in related party
(8,731
)
414
Amortization
106,799
103,601
Depreciation
9,038
5,690
Prepaid and deferred compensation expense
12,192
28,831
Non-cash equity-based compensation
69,743
77,480
Amortization of deferred debt issuance costs
12,172
12,054
Amortization of interest rate cap premium
6,955
4,636
Deferred income tax expense (benefit)
7,134
8,986
Deferred income tax expense from common control reorganizations
18,356
—
Loss on extinguishment of existing debt
—
—
Loss on Tax Receivable Agreement
11,170
5,553
Changes in operating assets and liabilities, net of acquisitions:
Commissions and fees receivable – net
(44,185
)
(20,370
)
Accrued interest liability
934
7,776
Other current assets and accrued liabilities
40,360
(63,659
)
Other non-current assets and accrued liabilities
40,786
1,265
Total cash flows provided by operating activities
$
477,203
$
335,514
CASH FLOWS FROM INVESTING ACTIVITIES
Business combinations - net of cash acquired and cash held in a fiduciary capacity
(446,682
)
—
Asset acquisitions
—
(7,714
)
Repayments of prepaid incentives
228
337
Capital expenditures
(29,776
)
(15,043
)
Total cash flows used in investing activities
$
(476,230
)
$
(22,420
)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from senior secured notes
—
394,000
Payment of interest rate cap premium, net
—
(23,326
)
Repayment of term debt
(16,500
)
(16,500
)
Debt issuance costs paid
—
(2,369
)
Finance lease and other costs paid
—
(36
)
Payment of contingent consideration
(4,477
)
(6,241
)
Purchase of remaining interest in Ryan Re
—
—
Repurchase of preferred equity
—
—
Tax distributions to LLC unitholders
(71,674
)
(39,883
)
Equity repurchases from pre-IPO unitholders
—
—
Repurchase of Class A common stock in the IPO
—
—
Repurchase of pre-IPO LLC Units and payment of Alternative TRA Payments
—
—
Issuance of Class A common stock in the IPO, net of offering costs paid
—
—
Repayment of unsecured promissory notes
—
—
Receipt of taxes related to net share settlement of equity awards
7,811
7,168
Taxes paid related to net share settlement of equity awards
(8,785
)
(7,168
)
Payment of Tax Receivable Agreement liabilities
(16,206
)
(8,309
)
Net change in fiduciary liabilities
97,221
17,420
Total cash flows provided by (used in) financing activities
$
(12,610
)
$
314,756
Effect of changes in foreign exchange rates on cash, cash equivalents, and cash and cash equivalents held
584
(126
)
NET CHANGE IN CASH, CASH EQUIVALENTS, AND CASH AND CASH EQUIVALENTS HELD IN A FIDUCIARY
$
(11,053
)
$
627,724
CASH, CASH EQUIVALENTS, AND CASH AND CASH EQUIVALENTS HELD IN A FIDUCIARY CAPACITY—
1,767,385
1,139,661
CASH, CASH EQUIVALENTS, AND CASH AND CASH EQUIVALENTS HELD IN A FIDUCIARY CAPACITY—Ending
$
1,756,332
$
1,767,385
Reconciliation of cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity
Cash and cash equivalents
$
838,790
$
992,723
Cash and cash equivalents held in a fiduciary capacity
917,542
774,662
Total cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity
$
1,756,332
$
1,767,385
Reconciliation of Organic Revenue Growth Rate to Total Revenue Growth Rate
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Total Revenue Growth Rate (GAAP) (1)
22.5
%
14.9
%
20.4
%
20.4
%
Less: Mergers and Acquisitions (2)
(4.3
)
(2.2
)
(2.8
)
(2.8
)
Change in Other (3)
(2.2
)
(2.4
)
(2.6
)
(1.2
)
Organic Revenue Growth Rate (Non-
16.0
%
10.3
%
15.0
%
16.4
%
For the three months ended December 31, 2023, December 31, 2023 revenue of $532.9 million $435.0 million $97.8 million $97.8 million $435.0 million 22.5% . For the three months ended December 31, 2022, December 31, 2022 revenue of $435.0 million $378.5 million $56.5 million $56.5 million $378.5 million 14.9% . For the year ended December 31, 2023, December 31, 2023 revenue of $2,077.5 million $1,725.2 million $352.4 million $352.4 million $1,725.2 million 20.4% . For the year ended December 31, 2022, December 31, 2022 revenue of $1,725.2 million $1,432.8 million $292.4 million $292.4 million $1,432.8 million 20.4% .
The acquisitions adjustment excludes net commission and fees revenue generated during the first 12 months following an acquisition. The total adjustment for the three months ended December 31, 2023 and 2022 was $18.6 million $8.5 million $48.2 million $40.0 million
The other adjustments exclude the period-over-period change in contingent commissions, fiduciary investment income, and foreign exchange rates. The total adjustment for the three months ended December 31, 2023 and 2022 was $9.6 million $8.9 million $44.6 million $16.0 million
Reconciliation of Adjusted Compensation and Benefits Expense to Compensation and Benefits Expense
Three Months Ended
Year Ended
December 31,
December 31,
(in thousands, except percentages)
2023
2022
2023
2022
Total Revenue
$
532,863
$
435,015
$
2,077,549
$
1,725,193
Compensation and Benefits Expense
$
331,735
$
270,542
$
1,321,029
$
1,128,981
Acquisition-related expense
(856
)
—
(4,186
)
(122
)
Acquisition related long-term incentive compensation (1)
6,036
88
4,334
(22,093
)
Restructuring and related expense
(9,244
)
—
(22,651
)
(724
)
Amortization and expense related to discontinued prepaid
(1,648
)
(1,663
)
(6,441
)
(6,738
)
Equity-based compensation
(7,940
)
(5,380
)
(31,047
)
(23,390
)
IPO related expenses
(7,667
)
(11,016
)
(38,696
)
(54,091
)
Adjusted Compensation and Benefits Expense (2)
$
310,416
$
252,571
$
1,222,342
$
1,021,823
Compensation and Benefits Expense Ratio
62.3
%
62.2
%
63.6
%
65.4
%
Adjusted Compensation and Benefits Expense Ratio
58.3
%
58.1
%
58.8
%
59.2
%
In the fourth quarter of 2023, Acquisition related long-term incentive compensation includes a $6.8 million
Adjustments made to Compensation and benefits expense are described in the definition of Adjusted EBITDAC in “Non-GAAP Financial Measures and Key Performance Indicators.”
Reconciliation of Adjusted General and Administrative Expense to General and Administrative Expense
Three Months Ended
Year Ended
December 31,
December 31,
(in thousands, except percentages)
2023
2022
2023
2022
Total Revenue
$
532,863
$
435,015
$
2,077,549
$
1,725,193
General and Administrative Expense
$
73,586
$
57,120
$
276,181
$
196,971
Acquisition-related expense
(6,891
)
(1,710
)
(19,088
)
(4,477
)
Restructuring and related expense
(2,833
)
—
(26,626
)
(4,993
)
IPO related expenses
—
(228
)
—
(1,545
)
Adjusted General and Administrative Expense (1)
$
63,862
$
55,182
$
230,467
$
185,956
General and Administrative Expense Ratio
13.8
%
13.1
%
13.3
%
11.4
%
Adjusted General and Administrative Expense Ratio
12.0
%
12.7
%
11.1
%
10.8
%
Adjustments made to General and administrative expense are described in definition of Adjusted EBITDAC in “Non-GAAP Financial Measures and Key Performance Indicators.”
Reconciliation of Adjusted EBITDAC to Net Income
Three Months Ended
Year Ended
December 31,
December 31,
(in thousands, except percentages)
2023
2022
2023
2022
Total Revenue
$
532,863
$
435,015
$
2,077,549
$
1,725,193
Net Income
$
58,503
$
45,782
$
194,480
$
163,257
Interest expense, net
29,667
29,367
119,507
104,829
Income tax expense
673
5,859
43,445
15,935
Depreciation
2,468
1,787
9,038
5,690
Amortization
27,674
25,038
106,799
103,601
Change in contingent consideration
1,063
1,279
5,421
442
EBITDAC
$
120,048
$
109,112
$
478,690
$
393,754
Acquisition-related expense
7,747
1,710
23,274
4,599
Acquisition related long-term incentive compensation
(6,036
)
(88
)
(4,334
)
22,093
Restructuring and related expense
12,077
—
49,277
5,717
Amortization and expense related to discontinued
1,648
1,663
6,441
6,738
Other non-operating loss (income)
10,343
(1,759
)
10,380
5,073
Equity-based compensation
7,940
5,380
31,047
23,390
IPO related expenses
7,667
11,244
38,696
55,636
(Income) / loss from equity method investments in
(2,849
)
—
(8,731
)
414
Adjusted EBITDAC (2)
$
158,585
$
127,262
$
624,740
$
517,414
Net Income Margin
11.0
%
10.5
%
9.4
%
9.5
%
Adjusted EBITDAC Margin
29.8
%
29.3
%
30.1
%
30.0
%
In the fourth quarter of 2023, Acquisition related long-term incentive compensation includes a $6.8 million
Adjustments made to Net income are described in definition of Adjusted EBITDAC in “Non-GAAP Financial Measures and Key Performance Indicators.”
Reconciliation of Adjusted Net Income to Net Income
Three Months Ended
Year Ended
December 31,
December 31,
(in thousands, except percentages)
2023
2022
2023
2022
Total Revenue
$
532,863
$
435,015
$
2,077,549
$
1,725,193
Net Income
$
58,503
$
45,782
$
194,480
$
163,257
Income tax expense
673
5,859
43,445
15,935
Amortization
27,674
25,038
106,799
103,601
Amortization of deferred debt issuance costs (1)
3,047
3,037
12,172
12,054
Change in contingent consideration
1,063
1,279
5,421
442
Acquisition-related expense
7,747
1,710
23,274
4,599
Acquisition related long-term incentive
(6,036
)
(88
)
(4,334
)
22,093
Restructuring and related expense
12,077
—
49,277
5,717
Amortization and expense related to discontinued
1,648
1,663
6,441
6,738
Other non-operating loss (income)
10,343
(1,759
)
10,380
5,073
Equity-based compensation
7,940
5,380
31,047
23,390
IPO related expenses
7,667
11,244
38,696
55,636
(Income) / loss from equity method investments in
(2,849
)
—
(8,731
)
414
Adjusted Income before Income Taxes (2)
$
129,497
$
99,145
$
508,367
$
418,949
Adjusted tax expense (3)
(33,825
)
(25,312
)
(132,785
)
(106,958
)
Adjusted Net Income
$
95,672
$
73,833
$
375,582
$
311,991
Net Income Margin
11.0
%
10.5
%
9.4
%
9.5
%
Adjusted Net Income Margin
18.0
%
17.0
%
18.1
%
18.1
%
Interest expense, net includes amortization of deferred debt issuance costs.
Adjustments made to Net income are described in definition of Adjusted EBITDAC in “Non-GAAP Financial Measures and Key Performance Indicators.”
The Company is subject to United States federal income taxes, in addition to state, local, and foreign taxes, with respect to our allocable share of any net taxable income of the LLC. For the three and twelve months ended December 31, 2023, this calculation of adjusted tax expense is based on a federal statutory rate of 21% and a combined state income tax rate net of federal benefits of 5.12% on 100% of our adjusted income before income taxes as if the Company owned 100% of the LLC. For the three and twelve months ended December 31, 2022, this calculation of adjusted tax expense is based on a federal statutory rate of 21% and a combined state income tax rate net of federal benefits of 4.53% on 100% of our adjusted income before income taxes as if the Company owned 100% of the LLC.
Reconciliation of Adjusted Diluted Earnings per Share to Diluted Earnings per Share
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Earnings per share of Class A common stock – diluted
$
0.18
$
0.14
$
0.52
$
0.52
Less: Net income attributed to dilutive shares and
—
(0.08
)
(0.03
)
(0.29
)
Plus: Impact of all LLC Common Units exchanged for
0.04
0.10
0.24
0.38
Plus: Adjustments to Adjusted net income (3)
0.14
0.10
0.67
0.56
Plus: Dilutive impact of unvested equity awards (4)
(0.01
)
(0.00
)
(0.02
)
(0.02
)
Adjusted diluted earnings per share
$
0.35
$
0.27
$
1.38
$
1.15
(Share count in '000s)
Weighted-average shares of Class A common stock
128,295
267,771
125,745
265,750
Plus: Impact of all LLC Common Units exchanged for
140,632
—
142,384
—
Plus: Dilutive impact of unvested equity awards (4)
3,534
2,871
4,137
4,731
Adjusted diluted earnings per share diluted share
272,461
270,642
272,266
270,481
Adjustment removes the impact of Net income attributed to dilutive awards and substantively vested RSUs to arrive at Net income attributable to Ryan Specialty Holdings, Inc. For the three months ended December 31, 2023 and 2022, this removes $0.4 million $20.8 million $4.2 million $76.3 million , Earnings (Loss) Per Share” of the annual consolidated financial statements.
For comparability purposes, this calculation incorporates the Net income that would be outstanding if all LLC Common Units (together with shares of Class B common stock) and vested Class C Incentive Units were exchanged for shares of Class A common stock. For the three months ended December 31, 2023 and 2022, this includes $35.7 million $27.9 million $133.4 million $102.2 million , Earnings (Loss) Per Share” of the annual consolidated financial statements.
Adjustments to Adjusted net income are described in the footnotes of the reconciliation of Adjusted net income to Net income in “Adjusted Net Income and Adjusted Net Income Margin” on 268.9 million and 267.8 million Weighted-average shares of Class A common stock outstanding - diluted for the three months ended December 31, 2023 and 2022, respectively, and on 268.1 million and 265.8 million shares of Weighted-average shares of Class A common stock outstanding - diluted for the twelve months ended December 31, 2023 and 2022, respectively.
For comparability purposes and to be consistent with the treatment of the adjustments to arrive at Adjusted net income, the dilutive effect of unvested equity awards is calculated using the treasury stock method as if the weighted average unrecognized cost associated with the awards was $0 , Earnings (Loss) Per Share” of the annual consolidated financial statements. For the three months ended December 31, 2023 and 2022, 3.5 million and 2.9 million shares were added to the calculation, respectively, and for the year ended December 31, 2023 and 2022, 4.1 million and 4.7 million shares were added to the calculation, respectively.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240226090127/en/
Investor Relations
Nicholas Mezick
IR@ryanspecialty.com
Media Relations
Alice Phillips Topping
Alice.Topping@ryanspecialty.com
Source: Ryan Specialty Holdings, Inc.
What was Ryan Specialty Holdings, Inc.'s total revenue for the fourth quarter of 2023?
Ryan Specialty Holdings, Inc.'s total revenue for the fourth quarter of 2023 was $532.9 million.
What was the organic revenue growth rate for Ryan Specialty Holdings, Inc. in the fourth quarter of 2023?
Ryan Specialty Holdings, Inc.'s organic revenue growth rate in the fourth quarter of 2023 was 16.0%.
What was the net income of Ryan Specialty Holdings, Inc. in the fourth quarter of 2023?
Ryan Specialty Holdings, Inc.'s net income in the fourth quarter of 2023 was $58.5 million.
What was the Adjusted EBITDAC for Ryan Specialty Holdings, Inc. in the fourth quarter of 2023?
Ryan Specialty Holdings, Inc.'s Adjusted EBITDAC in the fourth quarter of 2023 was $158.6 million.
What is the ticker symbol for Ryan Specialty Holdings, Inc.?
The ticker symbol for Ryan Specialty Holdings, Inc. is RYAN.
