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Ryan Specialty Reports Second Quarter 2024 Results

- Total Revenue grew 18.8% year-over-year to $695.4 million -

- Organic Revenue Growth Rate* of 14.2% year-over-year -

- Net Income of $118.0 million, or $0.37 per diluted share -

- Adjusted EBITDAC* grew 27.6% year-over-year to $247.7 million -

- Adjusted Net Income increased 29.8% year-over-year to $160.6 million, or $0.58 per diluted share -

Ryan Specialty Holdings, Inc. (NYSE: RYAN) (“Ryan Specialty” or the “Company”), a leading international specialty insurance firm, today announced results for the second quarter ended June 30, 2024.

Second Quarter 2024 Highlights

  • Revenue grew 18.8% year-over-year to $695.4 million, compared to $585.1 million in the prior-year period
  • Organic Revenue Growth Rate* was 14.2% for the quarter, compared to 16.3% in the prior-year period
  • Net Income increased 40.8% year-over-year to $118.0 million, compared to $83.8 million in the prior-year period. Diluted Earnings per Share was $0.37
  • Adjusted EBITDAC* increased 27.6% to $247.7 million, compared to $194.2 million in the prior-year period
  • Adjusted EBITDAC Margin* of 35.6%, compared to 33.2% in the prior-year period
  • Adjusted Net Income* increased 29.8% to $160.6 million, compared to $123.7 million in the prior-year period
  • Adjusted Diluted Earnings per Share* increased 28.9% to $0.58, compared to $0.45 in the prior-year period
  • Capital return to shareholders and LLC unit holders was $18.6 million of regular dividends and distributions

“We delivered another fantastic quarter for our shareholders, once again driven by broad-based double-digit organic growth as well as significant margin expansion," said Patrick G. Ryan, Founder, Chairman and Chief Executive Officer of Ryan Specialty. "We generated 14.2% organic revenue growth and expanded Adjusted EBITDAC margin by 240 basis points year-over-year while growing Adjusted EPS by nearly 30%. Our consistent excellent performance is a testament to the relentless efforts of our entire team to execute for our clients and trading partners. We are also very excited about today's announcement to acquire US Assure, a leading program focused exclusively on the SME segment of builder’s risk insurance. This transaction meets all our M&A criteria – a strong cultural fit, strategic, and accretive – and aligns with our mission of providing innovative industry-leading solutions for insurance brokers, agents, and carriers. With clear positive momentum underway and a deep roster of proven leaders, I am further energized about our recently announced succession plan. As we look toward the remainder of 2024 and beyond, I remain incredibly optimistic about the long-term future of Ryan Specialty as Tim Turner takes the helm as CEO in October. We continue to be well positioned to deliver sustainable and differentiated profitable growth.”

Summary of Second Quarter 2024 Results

 

 

Three Months Ended June 30,

 

 

Change

 

 

Six Months Ended June 30,

 

 

Change

 

(in thousands, except percentages and per share data)

 

2024

 

 

2023

 

 

$

 

 

%

 

 

2024

 

 

2023

 

 

$

 

 

%

 

GAAP financial measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$

695,441

 

 

$

585,149

 

 

$

110,292

 

 

 

18.8

%

 

$

1,247,487

 

 

$

1,042,748

 

 

$

204,739

 

 

 

19.6

%

Net commissions and fees

 

 

680,248

 

 

 

573,020

 

 

 

107,228

 

 

 

18.7

 

 

 

1,218,135

 

 

 

1,020,533

 

 

 

197,602

 

 

 

19.4

 

Compensation and benefits

 

 

414,049

 

 

 

352,360

 

 

 

61,689

 

 

 

17.5

 

 

 

787,576

 

 

 

660,082

 

 

 

127,494

 

 

 

19.3

 

General and administrative

 

 

82,967

 

 

 

81,608

 

 

 

1,359

 

 

 

1.7

 

 

 

158,834

 

 

 

133,307

 

 

 

25,527

 

 

 

19.1

 

Total operating expenses

 

 

531,073

 

 

 

462,309

 

 

 

68,764

 

 

 

14.9

 

 

 

1,010,470

 

 

 

849,821

 

 

 

160,649

 

 

 

18.9

 

Operating income

 

 

164,368

 

 

 

122,840

 

 

 

41,528

 

 

 

33.8

 

 

 

237,017

 

 

 

192,927

 

 

 

44,090

 

 

 

22.9

 

Net income

 

 

118,038

 

 

 

83,817

 

 

 

34,221

 

 

 

40.8

 

 

 

158,715

 

 

 

120,274

 

 

 

38,441

 

 

 

32.0

 

Net income attributable to Ryan Specialty Holdings, Inc.

 

 

46,787

 

 

 

30,078

 

 

 

16,709

 

 

 

55.6

 

 

 

63,322

 

 

 

43,238

 

 

 

20,084

 

 

 

46.4

 

Compensation and benefits expense ratio (1)

 

 

59.5

%

 

 

60.2

%

 

 

 

 

 

 

 

 

63.1

%

 

 

63.3

%

 

 

 

 

 

 

General and administrative expense ratio (2)

 

 

11.9

%

 

 

13.9

%

 

 

 

 

 

 

 

 

12.7

%

 

 

12.8

%

 

 

 

 

 

 

Net income margin (3)

 

 

17.0

%

 

 

14.3

%

 

 

 

 

 

 

 

 

12.7

%

 

 

11.5

%

 

 

 

 

 

 

Earnings per share (4)

 

$

0.38

 

 

$

0.27

 

 

 

 

 

 

 

 

$

0.52

 

 

$

0.39

 

 

 

 

 

 

 

Diluted earnings per share (4)

 

$

0.37

 

 

$

0.26

 

 

 

 

 

 

 

 

$

0.49

 

 

$

0.37

 

 

 

 

 

 

 

Non-GAAP financial measures*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Organic revenue growth rate

 

 

14.2

%

 

 

16.3

%

 

 

 

 

 

 

 

 

14.0

%

 

 

15.1

%

 

 

 

 

 

 

Adjusted compensation and benefits expense

 

$

383,960

 

 

$

329,641

 

 

$

54,319

 

 

 

16.5

%

 

$

713,982

 

 

$

615,526

 

 

$

98,456

 

 

 

16.0

%

Adjusted compensation and benefits expense ratio

 

 

55.2

%

 

 

56.3

%

 

 

 

 

 

 

 

 

57.2

%

 

 

59.0

%

 

 

 

 

 

 

Adjusted general and administrative expense

 

$

63,790

 

 

$

61,347

 

 

$

2,443

 

 

 

4.0

%

 

$

128,592

 

 

$

108,046

 

 

$

20,546

 

 

 

19.0

%

Adjusted general and administrative expense ratio

 

 

9.2

%

 

 

10.5

%

 

 

 

 

 

 

 

 

10.3

%

 

 

10.4

%

 

 

 

 

 

 

Adjusted EBITDAC

 

$

247,691

 

 

$

194,161

 

 

$

53,530

 

 

 

27.6

%

 

$

404,913

 

 

$

319,176

 

 

$

85,737

 

 

 

26.9

%

Adjusted EBITDAC margin

 

 

35.6

%

 

 

33.2

%

 

 

 

 

 

 

 

 

32.5

%

 

 

30.6

%

 

 

 

 

 

 

Adjusted net income

 

$

160,554

 

 

$

123,727

 

 

$

36,827

 

 

 

29.8

%

 

$

255,971

 

 

$

195,512

 

 

$

60,459

 

 

 

30.9

%

Adjusted net income margin

 

 

23.1

%

 

 

21.1

%

 

 

 

 

 

 

 

 

20.5

%

 

 

18.7

%

 

 

 

 

 

 

Adjusted diluted earnings per share

 

$

0.58

 

 

$

0.45

 

 

 

 

 

 

 

 

$

0.93

 

 

$

0.72

 

 

 

 

 

 

 

* 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.

(1)   

Compensation and benefits expense ratio is defined as Compensation and benefits divided by Total revenue.

(2)   

General and administrative expense ratio is defined as General and administrative expense divided by Total revenue.

(3)   

Net income margin is defined as Net income divided by Total revenue.

(4)   

See “Note 10, Earnings Per Share” of the unaudited quarterly consolidated financial statements.

Second Quarter 2024 Review*

Total revenue for the second quarter of 2024 was $695.4 million, an increase of 18.8% compared to $585.1 million in the prior-year period. This increase was primarily due to continued solid Organic revenue growth of 14.2%, 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 June 30, 2024, and increased Fiduciary investment income. We experienced growth across the majority of our property and casualty lines.

Total operating expenses for the second quarter of 2024 were $531.1 million, a 14.9% 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 period resulting from higher compensation due to revenue growth and higher Restructuring and related expenses associated with ACCELERATE 2025, partially offset by savings associated with ACCELERATE 2025. General and administrative expense also increased compared to the prior-year period due to higher Acquisition-related expenses partially offset by a decline in Restructuring and related expenses associated with ACCELERATE 2025.

Net income for the second quarter of 2024 increased 40.8% to $118.0 million, compared to $83.8 million in the prior-year period. The increase was primarily due to stronger revenue growth compared to the prior-year period.

Adjusted EBITDAC grew 27.6% to $247.7 million from $194.2 million in the prior-year period. Adjusted EBITDAC margin for the quarter was 35.6%, compared to 33.2% in the prior-year period. The increase in Adjusted EBITDAC was driven primarily by solid revenue growth, partially offset by increased Adjusted compensation and benefits expense, as well as higher Adjusted general and administrative expense.

Adjusted net income for the second quarter of 2024 increased 29.8% to $160.6 million, compared to $123.7 million in the prior-year period. Adjusted net income margin was 23.1%, compared to 21.1% in the prior-year period. Adjusted diluted earnings per share for the first quarter of 2024 increased 28.9% to $0.58, compared to $0.45 in the prior-year period.

* 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.

Second Quarter 2024 Net Commissions and Fees by Specialty and Revenue by Type

Growth in Net commissions and fees in all specialties was primarily driven by solid organic growth.

 

 

Three Months Ended June 30,

 

 

 

 

 

 

 

(in thousands, except percentages)

 

2024

 

 

% of

total

 

 

2023

 

 

% of

total

 

 

Change

 

Wholesale Brokerage

 

$

444,129

 

 

 

65.3

%

 

$

381,616

 

 

 

66.6

%

 

$

62,513

 

 

 

16.4

%

Binding Authorities

 

 

80,630

 

 

 

11.8

 

 

 

69,775

 

 

 

12.2

 

 

 

10,855

 

 

 

15.6

 

Underwriting Management

 

 

155,489

 

 

 

22.9

 

 

 

121,629

 

 

 

21.2

 

 

 

33,860

 

 

 

27.8

 

Total Net commissions and fees

 

$

680,248

 

 

 

 

 

$

573,020

 

 

 

 

 

$

107,228

 

 

 

18.7

%

 

 

Six Months Ended June 30,

 

 

 

 

 

 

 

(in thousands, except percentages)

 

2024

 

 

% of

total

 

 

2023

 

 

% of

total

 

 

Change

 

Wholesale Brokerage

 

$

767,574

 

 

 

63.0

%

 

$

667,466

 

 

 

65.4

%

 

$

100,108

 

 

 

15.0

%

Binding Authorities

 

 

169,265

 

 

 

13.9

 

 

 

139,301

 

 

 

13.7

 

 

 

29,964

 

 

 

21.5

 

Underwriting Management

 

 

281,296

 

 

 

23.1

 

 

 

213,766

 

 

 

20.9

 

 

 

67,530

 

 

 

31.6

 

Total Net commissions and fees

 

$

1,218,135

 

 

 

 

 

$

1,020,533

 

 

 

 

 

$

197,602

 

 

 

19.4

%

The following tables sets forth our revenue by type of commission and fees:

 

 

Three Months Ended June 30,

 

 

 

 

 

 

 

(in thousands, except percentages)

 

2024

 

 

% of

total

 

 

2023

 

 

% of

total

 

 

Change

 

Net commissions and policy fees

 

$

656,938

 

 

 

96.6

%

 

$

557,648

 

 

 

97.3

%

 

$

99,290

 

 

 

17.8

%

Supplemental and contingent commissions

 

 

8,927

 

 

 

1.3

 

 

 

7,965

 

 

 

1.4

 

 

 

962

 

 

 

12.1

 

Loss mitigation and other fees

 

 

14,383

 

 

 

2.1

 

 

 

7,407

 

 

 

1.3

 

 

 

6,976

 

 

 

94.2

 

Total net commissions and fees

 

$

680,248

 

 

 

 

 

$

573,020

 

 

 

 

 

$

107,228

 

 

 

18.7

%

 

 

Six Months Ended June 30,

 

 

 

 

 

 

 

(in thousands, except percentages)

 

2024

 

 

% of

total

 

 

2023

 

 

% of

total

 

 

Change

 

Net commissions and policy fees

 

$

1,151,442

 

 

 

94.5

%

 

$

970,797

 

 

 

95.1

%

 

$

180,645

 

 

 

18.6

%

Supplemental and contingent commissions

 

$

38,200

 

 

 

3.1

 

 

$

34,296

 

 

 

3.4

 

 

 

3,904

 

 

 

11.4

 

Loss mitigation and other fees

 

$

28,492

 

 

 

2.4

 

 

$

15,440

 

 

 

1.5

 

 

 

13,052

 

 

 

84.5

 

Total net commissions and fees

 

$

1,218,135

 

 

 

 

 

$

1,020,533

 

 

 

 

 

$

197,602

 

 

 

19.4

%

Liquidity and Financial Condition

As of June 30, 2024, the Company had Cash and cash equivalents of $612.4 million and outstanding debt principal of $2.0 billion. On July 30, 2024, the Company upsized its revolving credit facility to $1.4 billion from $0.6 billion.

Quarterly Dividend

On August 1, 2024, the Company's board of directors (the "Board") declared a regular quarterly dividend of $0.11 per share on the outstanding Class A common stock. The regular quarterly dividend will be payable on August 27, 2024 to stockholders of record as of the close of business on August 13, 2024. A portion of the dividend, $0.04 per share, will be funded by free cash flow from Ryan Specialty, LLC and will be paid to all holders of the Company's Class A common stock and the holders of the LLC Common Units (as defined below).

Full Year 2024 Outlook*

The Company is updating its full year 2024 outlook for Organic Revenue Growth Rate and Adjusted EBITDAC Margin as follows:

  • Organic Revenue Growth Rate guidance for full year 2024 is between 13.0% – 14.0%, compared to the Company's prior guidance of 12.5% – 14.0%
  • Adjusted EBITDAC Margin guidance for full year 2024 is between 32.0% – 32.5%*, compared to the Company's prior guidance of 31.0% – 31.5%

*This guidance incorporates the US Assure acquisition.

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, see “Organic Revenue Growth Rate Calculation Methodology” above. For a definition of 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 restructuring plan, or its plans and objectives for future operations, growth initiatives, or strategies and the statements under the caption “Full Year 2024 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”).

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 unaudited consolidated quarterly financial statements in the Company's Quarterly Report on form 10-Q 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 represents the percentage change in Net commissions and fees, as compared to the same period for the year prior, adjusted to eliminate revenue attributable to acquisitions for the first twelve months of ownership, and other items such as contingent commissions and the impact of changes in foreign exchange rates.

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, 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. In 2024, Acquisition-related expense includes a $2.0 million charge for the three months ended June 30, 2024 and a $4.5 million charge for the six months ended June 30, 2024 related to a deal-contingent foreign exchange forward contract associated with the Castel acquisition. The remaining charges in both years represent typical one-time diligence, transaction-related, and integration costs. Acquisition-related long-term incentive compensation arises from changes to long-term incentive plans associated with acquisitions. Restructuring and related expense consists 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 and other termination payments. See “Note 4, Restructuring” of the unaudited quarterly 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. Amortization and expense consists of charges related to discontinued prepaid incentive programs. For the three months ended June 30, 2024, Other non-operating loss (income) consisted of $0.4 million of TRA contractual interest and related expense offset by $0.2 million of sublease income. For the three months ended June 30, 2023, Other non-operating income included $0.2 million of TRA contractual interest and related expense offset by $0.1 million of sublease income. For the six months ended June 30, 2024, Other non-operating loss (income) consisted of $1.9 million of expense related to fees associated with our term loan repricing and $0.4 million of TRA contractual interest and related expense offset by $0.3 million of sublease income. For the six months ended June 30, 2023, Other non-operating income included sublease income offset by TRA contractual interest and related expense. Equity-based compensation reflects non-cash equity-based expense. Initial Public Offering (the "IPO") related expenses include compensation-related expense primarily related to the expense for new awards issued at IPO as well as expense related to the revaluation of existing equity awards at IPO. Total revenue less Adjusted compensation and benefits expense and Adjusted general and administrative expense is equivalent to Adjusted EBITDAC. For a breakout of compensation and general and administrative costs for each addback refer to the Adjusted compensation and benefits expense and Adjusted general and administrative expense tables below. The most directly comparable GAAP financial metric to Adjusted EBITDAC is Net income.

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 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 LLC Common Units (“LLC Common Units”), together with the shares of Class B common stock, vested Class C Incentive Units, and unvested equity awards were exchanged into shares of Class A common stock as if 100% of unvested equity awards were vested. The most directly comparable GAAP financial metric is Diluted earnings per share.

The reconciliation of the above non-GAAP measures to each of their most directly comparable GAAP financial measure is set forth in the reconciliation table 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

June 30,

 

 

Six Months Ended

June 30,

 

(in thousands, except percentages and per share data)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Net commissions and fees

 

$

680,248

 

 

$

573,020

 

 

$

1,218,135

 

 

$

1,020,533

 

Fiduciary investment income

 

 

15,193

 

 

 

12,129

 

 

 

29,352

 

 

 

22,215

 

Total revenue

 

$

695,441

 

 

$

585,149

 

 

$

1,247,487

 

 

$

1,042,748

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

414,049

 

 

 

352,360

 

 

 

787,576

 

 

 

660,082

 

General and administrative

 

 

82,967

 

 

 

81,608

 

 

 

158,834

 

 

 

133,307

 

Amortization

 

 

30,541

 

 

 

24,368

 

 

 

58,529

 

 

 

49,553

 

Depreciation

 

 

2,273

 

 

 

2,177

 

 

 

4,353

 

 

 

4,369

 

Change in contingent consideration

 

 

1,243

 

 

 

1,796

 

 

 

1,178

 

 

 

2,510

 

Total operating expenses

 

$

531,073

 

 

$

462,309

 

 

$

1,010,470

 

 

$

849,821

 

Operating income

 

$

164,368

 

 

$

122,840

 

 

$

237,017

 

 

$

192,927

 

Interest expense, net

 

 

31,128

 

 

 

28,881

 

 

 

60,528

 

 

 

58,349

 

(Income) from equity method investment in related party

 

 

(3,722

)

 

 

(1,616

)

 

 

(9,328

)

 

 

(3,611

)

Other non-operating loss (income)

 

 

233

 

 

 

108

 

 

 

1,985

 

 

 

(30

)

Income before income taxes

 

$

136,729

 

 

$

95,467

 

 

$

183,832

 

 

$

138,219

 

Income tax expense

 

 

18,691

 

 

 

11,650

 

 

 

25,117

 

 

 

17,945

 

Net income

 

$

118,038

 

 

$

83,817

 

 

$

158,715

 

 

$

120,274

 

GAAP financial measures

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$

695,441

 

 

$

585,149

 

 

$

1,247,487

 

 

$

1,042,748

 

Net commissions and fees

 

 

680,248

 

 

 

573,020

 

 

 

1,218,135

 

 

 

1,020,533

 

Compensation and benefits

 

 

414,049

 

 

 

352,360

 

 

 

787,576

 

 

 

660,082

 

General and administrative

 

 

82,967

 

 

 

81,608

 

 

 

158,834

 

 

 

133,307

 

Net income

 

 

118,038

 

 

 

83,817

 

 

 

158,715

 

 

 

120,274

 

Compensation and benefits expense ratio

 

 

59.5

%

 

 

60.2

%

 

 

63.1

%

 

 

63.3

%

General and administrative expense ratio

 

 

11.9

%

 

 

13.9

%

 

 

12.7

%

 

 

12.8

%

Net income margin

 

 

17.0

%

 

 

14.3

%

 

 

12.7

%

 

 

11.5

%

Earnings per share

 

$

0.38

 

 

$

0.27

 

 

$

0.52

 

 

$

0.39

 

Diluted earnings per share

 

$

0.37

 

 

$

0.26

 

 

$

0.49

 

 

$

0.37

 

Non-GAAP Financial Measures (Unaudited)

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

(in thousands, except percentages and per share data)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Non-GAAP financial measures

 

 

 

 

 

 

 

 

 

 

 

 

Organic revenue growth rate

 

 

14.2

%

 

 

16.3

%

 

 

14.0

%

 

 

15.1

%

Adjusted compensation and benefits expense

 

$

383,960

 

 

$

329,641

 

 

$

713,982

 

 

$

615,526

 

Adjusted compensation and benefits expense ratio

 

 

55.2

%

 

 

56.3

%

 

 

57.2

%

 

 

59.0

%

Adjusted general and administrative expense

 

$

63,790

 

 

$

61,347

 

 

$

128,592

 

 

$

108,046

 

Adjusted general and administrative expense ratio

 

 

9.2

%

 

 

10.5

%

 

 

10.3

%

 

 

10.4

%

Adjusted EBITDAC

 

$

247,691

 

 

$

194,161

 

 

$

404,913

 

 

$

319,176

 

Adjusted EBITDAC margin

 

 

35.6

%

 

 

33.2

%

 

 

32.5

%

 

 

30.6

%

Adjusted net income

 

$

160,554

 

 

$

123,727

 

 

$

255,971

 

 

$

195,512

 

Adjusted net income margin

 

 

23.1

%

 

 

21.1

%

 

 

20.5

%

 

 

18.7

%

Adjusted diluted earnings per share

 

$

0.58

 

 

$

0.45

 

 

$

0.93

 

 

$

0.72

 

Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)

 

June 30,

2024

 

 

December 31,

2023

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

612,437

 

 

$

838,790

 

Commissions and fees receivable – net

 

 

384,414

 

 

 

294,195

 

Fiduciary cash and receivables

 

 

4,051,029

 

 

 

3,131,660

 

Prepaid incentives – net

 

 

8,051

 

 

 

8,718

 

Other current assets

 

 

66,571

 

 

 

62,229

 

Total current assets

 

$

5,122,502

 

 

$

4,335,592

 

NON-CURRENT ASSETS

 

 

 

 

 

 

Goodwill

 

 

1,814,803

 

 

 

1,646,482

 

Customer relationships

 

 

618,323

 

 

 

572,416

 

Other intangible assets

 

 

54,468

 

 

 

38,254

 

Prepaid incentives – net

 

 

15,400

 

 

 

15,103

 

Equity method investment in related party

 

 

58,664

 

 

 

46,099

 

Property and equipment – net

 

 

45,529

 

 

 

42,427

 

Lease right-of-use assets

 

 

122,212

 

 

 

127,708

 

Deferred tax assets

 

 

378,743

 

 

 

383,816

 

Other non-current assets

 

 

41,767

 

 

 

39,312

 

Total non-current assets

 

$

3,149,909

 

 

$

2,911,617

 

TOTAL ASSETS

 

$

8,272,411

 

 

$

7,247,209

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

171,782

 

 

$

136,340

 

Accrued compensation

 

 

397,772

 

 

 

419,560

 

Operating lease liabilities

 

 

20,206

 

 

 

21,369

 

Tax Receivable Agreement liabilities

 

 

22,365

 

 

 

 

Short-term debt and current portion of long-term debt

 

 

32,980

 

 

 

35,375

 

Fiduciary liabilities

 

 

4,051,029

 

 

 

3,131,660

 

Total current liabilities

 

$

4,696,134

 

 

$

3,744,304

 

NON-CURRENT LIABILITIES

 

 

 

 

 

 

Accrued compensation

 

 

61,974

 

 

 

24,917

 

Operating lease liabilities

 

 

149,411

 

 

 

154,457

 

Long-term debt

 

 

1,940,863

 

 

 

1,943,837

 

Tax Receivable Agreement liabilities

 

 

344,514

 

 

 

358,898

 

Other non-current liabilities

 

 

6,279

 

 

 

41,152

 

Total non-current liabilities

 

$

2,503,041

 

 

$

2,523,261

 

TOTAL LIABILITIES

 

$

7,199,175

 

 

$

6,267,565

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Class A common stock ($0.001 par value; 1,000,000,000 shares authorized, 119,339,130 and 118,593,062 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively)

 

 

119

 

 

 

119

 

Class B common stock ($0.001 par value; 1,000,000,000 shares authorized, 141,164,071 and 141,621,188 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively)

 

 

142

 

 

 

142

 

Class X common stock ($0.001 par value; 10,000,000 shares authorized, 640,784 shares issued and 0 outstanding at June 30, 2024 and December 31, 2023)

 

 

 

 

 

 

Preferred stock ($0.001 par value; 500,000,000 shares authorized, 0 shares issued and outstanding at June 30, 2024 and December 31, 2023)

 

 

 

 

 

 

Additional paid-in capital

 

 

478,130

 

 

 

441,997

 

Retained earnings

 

 

121,560

 

 

 

114,420

 

Accumulated other comprehensive income

 

 

5,903

 

 

 

3,076

 

Total stockholders’ equity attributable to Ryan Specialty Holdings, Inc.

 

$

605,854

 

 

$

559,754

 

Non-controlling interests

 

 

467,382

 

 

 

419,890

 

Total stockholders’ equity

 

$

1,073,236

 

 

$

979,644

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

8,272,411

 

 

$

7,247,209

 

Consolidated Statements of Cash Flows (Unaudited)

 

 

Six Months Ended June 30,

 

(in thousands)

 

2024

 

 

2023

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net income

 

$

158,715

 

 

$

120,274

 

Adjustments to reconcile net income to cash flows provided by operating activities:

 

 

 

 

 

 

(Income) from equity method investment in related party

 

 

(9,328

)

 

 

(3,611

)

Amortization

 

 

58,529

 

 

 

49,553

 

Depreciation

 

 

4,353

 

 

 

4,369

 

Prepaid and deferred compensation expense

 

 

6,355

 

 

 

4,374

 

Non-cash equity-based compensation

 

 

38,205

 

 

 

36,528

 

Amortization of deferred debt issuance costs

 

 

6,436

 

 

 

6,080

 

Amortization of interest rate cap premium

 

 

3,477

 

 

 

3,477

 

Deferred income tax expense

 

 

15,314

 

 

 

11,853

 

Loss on Tax Receivable Agreement

 

 

372

 

 

 

216

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Commissions and fees receivable – net

 

 

(79,592

)

 

 

(67,525

)

Accrued interest liability

 

 

(62

)

 

 

(330

)

Other current and non-current assets

 

 

4,017

 

 

 

15,862

 

Other current and non-current accrued liabilities

 

 

(52,503

)

 

 

(36,284

)

Total cash flows provided by operating activities

 

$

154,288

 

 

$

144,836

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Business combinations – net of cash acquired and cash held in a fiduciary capacity

 

 

(214,093

)

 

 

(103,927

)

Capital expenditures

 

 

(22,605

)

 

 

(5,362

)

Repayments of prepaid incentives

 

 

 

 

 

15

 

Total cash flows used in investing activities

 

$

(236,698

)

 

$

(109,274

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Repayment of term debt

 

 

(8,250

)

 

 

(8,250

)

Payment of contingent consideration

 

 

 

 

 

(4,477

)

Tax distributions to non-controlling LLC Unitholders

 

 

(44,610

)

 

 

(34,529

)

Receipt of taxes related to net share settlement of equity awards

 

 

4,478

 

 

 

1,895

 

Taxes paid related to net share settlement of equity awards

 

 

(4,586

)

 

 

(1,895

)

Dividends paid to Class A common shareholders

 

 

(53,022

)

 

 

 

Distributions to non-controlling LLC Unitholders

 

 

(11,250

)

 

 

 

Payment of accrued return on Ryan Re preferred units

 

 

(1,965

)

 

 

 

Net change in fiduciary liabilities

 

 

191,396

 

 

 

198,073

 

Total cash flows provided by financing activities

 

$

72,191

 

 

$

150,817

 

Effect of changes in foreign exchange rates on cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity

 

 

(2,010

)

 

 

(657

)

NET CHANGE IN CASH, CASH EQUIVALENTS, AND CASH AND CASH EQUIVALENTS HELD IN A FIDUCIARY CAPACITY

 

$

(12,229

)

 

$

185,722

 

CASH, CASH EQUIVALENTS, AND CASH AND CASH EQUIVALENTS HELD IN A FIDUCIARY CAPACITY—Beginning balance

 

 

1,756,332

 

 

 

1,767,385

 

CASH, CASH EQUIVALENTS, AND CASH AND CASH EQUIVALENTS HELD IN A FIDUCIARY CAPACITY—Ending balance

 

$

1,744,103

 

 

$

1,953,107

 

Reconciliation of cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity

 

 

 

 

 

 

Cash and cash equivalents

 

 

612,437

 

 

 

965,987

 

Cash and cash equivalents held in a fiduciary capacity

 

 

1,131,666

 

 

 

987,120

 

Total cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity

 

$

1,744,103

 

 

$

1,953,107

 

Reconciliation of Organic Revenue Growth Rate

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(in thousands, except percentages)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Current period Net commissions and fees revenue

 

$

680,248

 

 

$

573,020

 

 

$

1,218,135

 

 

$

1,020,533

 

Less: Current period contingent commissions

 

 

(5,396

)

 

 

(4,502

)

 

 

(29,899

)

 

 

(26,136

)

Net Commissions and fees revenue

excluding contingent commissions

 

$

674,852

 

 

$

568,518

 

 

$

1,188,236

 

 

$

994,396

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior period Net commissions and fees revenue

 

$

573,020

 

 

$

490,227

 

 

$

1,020,533

 

 

$

876,908

 

Less: Prior year contingent commissions

 

 

(4,502

)

 

 

(6,730

)

 

 

(26,136

)

 

 

(21,939

)

Prior period Net commissions and fees revenue

excluding contingent commissions

 

$

568,518

 

 

$

483,498

 

 

$

994,396

 

 

$

854,970

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in Net commissions and fees revenue

excluding contingent commissions

 

$

106,334

 

 

$

85,021

 

 

$

193,840

 

 

$

139,427

 

Less: Mergers and acquisitions Net commissions and fees revenue excluding contingent commissions

 

 

(25,735

)

 

 

(6,053

)

 

 

(54,274

)

 

 

(11,486

)

Impact of change in foreign exchange rates

 

 

(64

)

 

 

13

 

 

 

(426

)

 

 

852

 

Organic revenue growth (Non-GAAP)

 

$

80,535

 

 

$

78,981

 

 

$

139,140

 

 

$

128,793

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net commissions and fees revenue growth rate (GAAP)

 

 

18.7

%

 

 

16.9

%

 

 

19.4

%

 

 

16.4

%

Less: Impact of contingent commissions (1)

 

 

 

 

 

0.7

 

 

 

0.1

 

 

 

(0.1

)

Net commissions and fees revenue

excluding contingent commissions growth rate (2)

 

 

18.7

%

 

 

17.6

%

 

 

19.5

%

 

 

16.3

%

Less: Mergers and acquisitions Net commissions and fees revenue excluding contingent commissions (3)

 

 

(4.5

)

 

 

(1.3

)

 

 

(5.5

)

 

 

(1.3

)

Impact of change in foreign exchange rates (4)

 

 

 

 

 

 

 

 

 

 

 

0.1

 

Organic Revenue Growth Rate (Non-GAAP)

 

 

14.2

%

 

 

16.3

%

 

 

14.0

%

 

 

15.1

%

(1)   

Calculated by subtracting Net commissions and fees revenue growth rate from net commissions and fees revenue excluding contingent commissions growth rate.

(2)   

Calculated by dividing the change in Total net commissions & fees revenue excluding contingent commissions by prior year net commissions and fees excluding contingent commissions.

(3)   

Calculated by taking the mergers and acquisitions net commissions and fees revenue excluding contingent commissions, representing the first 12 months of net commissions and fees revenue generated from acquisitions, divided by prior period net commissions and fees revenue excluding contingent commissions.

(4)   

Calculated by taking the change in foreign exchange rates divided by prior period net commissions and fees revenue excluding contingent commissions.

Reconciliation of Adjusted Compensation and Benefits Expense to Compensation and Benefits Expense

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

(in thousands, except percentages)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Total revenue

 

$

695,441

 

 

$

585,149

 

 

$

1,247,487

 

 

$

1,042,748

 

Compensation and benefits expense

 

$

414,049

 

 

$

352,360

 

 

$

787,576

 

 

$

660,082

 

Acquisition-related expense

 

 

(1,160

)

 

 

(769

)

 

 

(1,386

)

 

 

(1,785

)

Acquisition related long-term incentive compensation

 

 

(2,891

)

 

 

(574

)

 

 

(1,264

)

 

 

(1,152

)

Restructuring and related expense

 

 

(3,799

)

 

 

(1,139

)

 

 

(29,983

)

 

 

(1,869

)

Amortization and expense related to discontinued prepaid incentives

 

 

(1,344

)

 

 

(1,588

)

 

 

(2,756

)

 

 

(3,222

)

Equity-based compensation

 

 

(12,756

)

 

 

(8,191

)

 

 

(22,271

)

 

 

(14,826

)

Initial public offering related expense

 

 

(8,139

)

 

 

(10,458

)

 

 

(15,934

)

 

 

(21,702

)

Adjusted compensation and benefits expense (1)

 

$

383,960

 

 

$

329,641

 

 

$

713,982

 

 

$

615,526

 

Compensation and benefits expense ratio

 

 

59.5

%

 

 

60.2

%

 

 

63.1

%

 

 

63.3

%

Adjusted compensation and benefits expense ratio

 

 

55.2

%

 

 

56.3

%

 

 

57.2

%

 

 

59.0

%

(1)   

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

June 30,

 

 

Six Months Ended

June 30,

 

(in thousands, except percentages)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Total revenue

 

$

695,441

 

 

$

585,149

 

 

$

1,247,487

 

 

$

1,042,748

 

General and administrative expense

 

$

82,967

 

 

$

81,608

 

 

$

158,834

 

 

$

133,307

 

Acquisition-related expense

 

 

(15,008

)

 

 

(4,232

)

 

 

(23,219

)

 

 

(6,406

)

Restructuring and related expense

 

 

(4,169

)

 

 

(16,029

)

 

 

(7,023

)

 

 

(18,855

)

Adjusted general and administrative expense (1)

 

$

63,790

 

 

$

61,347

 

 

$

128,592

 

 

$

108,046

 

General and administrative expense ratio

 

 

11.9

%

 

 

13.9

%

 

 

12.7

%

 

 

12.8

%

Adjusted general and administrative expense ratio

 

 

9.2

%

 

 

10.5

%

 

 

10.3

%

 

 

10.4

%

(1)   

Adjustments made to General and administrative expense are described in the definition of Adjusted EBITDAC in “Non-GAAP Financial Measures and Key Performance Indicators.”

Reconciliation of Adjusted EBITDAC to Net Income

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

(in thousands, except percentages)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Total revenue

 

$

695,441

 

 

$

585,149

 

 

$

1,247,487

 

 

$

1,042,748

 

Net income

 

$

118,038

 

 

$

83,817

 

 

$

158,715

 

 

$

120,274

 

Interest expense, net

 

 

31,128

 

 

 

28,881

 

 

 

60,528

 

 

 

58,349

 

Income tax expense

 

 

18,691

 

 

 

11,650

 

 

 

25,117

 

 

 

17,945

 

Depreciation

 

 

2,273

 

 

 

2,177

 

 

 

4,353

 

 

 

4,369

 

Amortization

 

 

30,541

 

 

 

24,368

 

 

 

58,529

 

 

 

49,553

 

Change in contingent consideration

 

 

1,243

 

 

 

1,796

 

 

 

1,178

 

 

 

2,510

 

EBITDAC

 

$

201,914

 

 

$

152,689

 

 

$

308,420

 

 

$

253,000

 

Acquisition-related expense

 

 

16,168

 

 

 

5,001

 

 

 

24,605

 

 

 

8,191

 

Acquisition related long-term incentive compensation

 

 

2,891

 

 

 

574

 

 

 

1,264

 

 

 

1,152

 

Restructuring and related expense

 

 

7,968

 

 

 

17,168

 

 

 

37,006

 

 

 

20,724

 

Amortization and expense related to discontinued prepaid incentives

 

 

1,344

 

 

 

1,588

 

 

 

2,756

 

 

 

3,222

 

Other non-operating loss (income)

 

 

233

 

 

 

108

 

 

 

1,985

 

 

 

(30

)

Equity-based compensation

 

 

12,756

 

 

 

8,191

 

 

 

22,271

 

 

 

14,826

 

IPO related expenses

 

 

8,139

 

 

 

10,458

 

 

 

15,934

 

 

 

21,702

 

(Income) from equity method investments in related party

 

 

(3,722

)

 

 

(1,616

)

 

 

(9,328

)

 

 

(3,611

)

Adjusted EBITDAC (1)

 

$

247,691

 

 

$

194,161

 

 

$

404,913

 

 

$

319,176

 

Net income margin

 

 

17.0

%

 

 

14.3

%

 

 

12.7

%

 

 

11.5

%

Adjusted EBITDAC margin

 

 

35.6

%

 

 

33.2

%

 

 

32.5

%

 

 

30.6

%

(1)   

Adjustments made to Net income are described in the definition of Adjusted EBITDAC in “Non-GAAP Financial Measures and Key Performance Indicators.”

Reconciliation of Adjusted Net Income to Net Income

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

(in thousands, except percentages)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Total revenue

 

$

695,441

 

 

$

585,149

 

 

$

1,247,487

 

 

$

1,042,748

 

Net income

 

$

118,038

 

 

$

83,817

 

 

$

158,715

 

 

$

120,274

 

Income tax expense

 

 

18,691

 

 

 

11,650

 

 

 

25,117

 

 

 

17,945

 

Amortization

 

 

30,541

 

 

 

24,368

 

 

 

58,529

 

 

 

49,553

 

Amortization of deferred debt issuance costs (1)

 

 

3,027

 

 

 

3,041

 

 

 

6,436

 

 

 

6,080

 

Change in contingent consideration

 

 

1,243

 

 

 

1,796

 

 

 

1,178

 

 

 

2,510

 

Acquisition-related expense

 

 

16,168

 

 

 

5,001

 

 

 

24,605

 

 

 

8,191

 

Acquisition related long-term incentive compensation

 

 

2,891

 

 

 

574

 

 

 

1,264

 

 

 

1,152

 

Restructuring and related expense

 

 

7,968

 

 

 

17,168

 

 

 

37,006

 

 

 

20,724

 

Amortization and expense related to discontinued prepaid incentives

 

 

1,344

 

 

 

1,588

 

 

 

2,756

 

 

 

3,222

 

Other non-operating loss (income)

 

 

233

 

 

 

108

 

 

 

1,985

 

 

 

(30

)

Equity-based compensation

 

 

12,756

 

 

 

8,191

 

 

 

22,271

 

 

 

14,826

 

IPO related expenses

 

 

8,139

 

 

 

10,458

 

 

 

15,934

 

 

 

21,702

 

(Income) from equity method investments in related party

 

 

(3,722

)

 

 

(1,616

)

 

 

(9,328

)

 

 

(3,611

)

Adjusted income before income taxes (2)

 

$

217,317

 

 

$

166,144

 

 

$

346,468

 

 

$

262,538

 

Adjusted income tax expense (3)

 

 

(56,763

)

 

 

(42,417

)

 

 

(90,497

)

 

 

(67,026

)

Adjusted net income

 

$

160,554

 

 

$

123,727

 

 

$

255,971

 

 

$

195,512

 

Net income margin

 

 

17.0

%

 

 

14.3

%

 

 

12.7

%

 

 

11.5

%

Adjusted net income margin

 

 

23.1

%

 

 

21.1

%

 

 

20.5

%

 

 

18.7

%

(1)   

Interest expense, net includes amortization of deferred debt issuance costs.

(2)   

Adjustments made to Net income are described in the definition of Adjusted EBITDAC in “Non-GAAP Financial Measures and Key Performance Indicators.”

(3)   

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 six months ended June 30, 2024, this calculation of adjusted income 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 six months ended June 30, 2023, this calculation of adjusted income 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

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Earnings per share of Class A common stock – diluted

 

$

0.37

 

 

$

0.26

 

 

$

0.49

 

 

$

0.37

 

Less: Net income attributed to dilutive shares and substantively vested RSUs (1)

 

 

(0.20

)

 

 

(0.02

)

 

 

(0.26

)

 

 

(0.02

)

Plus: Impact of all LLC Common Units exchanged for Class A shares (2)

 

 

0.27

 

 

 

0.07

 

 

 

0.36

 

 

 

0.10

 

Plus: Adjustments to Adjusted net income (3)

 

 

0.15

 

 

 

0.15

 

 

 

0.36

 

 

 

0.28

 

Plus: Dilutive impact of unvested equity awards (4)

 

 

(0.01

)

 

 

(0.01

)

 

 

(0.02

)

 

 

(0.01

)

Adjusted diluted earnings per share

 

$

0.58

 

 

$

0.45

 

 

$

0.93

 

 

$

0.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Share count in '000)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of Class A common stock outstanding – diluted

 

 

271,219

 

 

 

123,846

 

 

 

270,570

 

 

 

123,685

 

Plus: Impact of all LLC Common Units exchanged for Class A shares (2)

 

 

 

 

 

143,835

 

 

 

 

 

 

143,627

 

Plus: Dilutive impact of unvested equity awards (4)

 

 

4,446

 

 

 

4,252

 

 

 

4,821

 

 

 

4,546

 

Adjusted diluted earnings per share diluted share count

 

 

275,665

 

 

 

271,933

 

 

 

275,391

 

 

 

271,857

 

(1)   

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 June 30, 2024 and 2023, this removes $52.2 million and $2.0 million of Net income, respectively, on 271.2 million and 123.8 million Weighted-average shares of Class A common stock outstanding - diluted, respectively. For the six months ended June 30, 2024 and 2023, this removes $69.9 million and $3.0 million of Net income, respectively, on 270.6 million and 123.7 million Weighted-average shares of Class A common stock outstanding - diluted, respectively. See “Note 10, Earnings Per Share” of the unaudited quarterly consolidated financial statements.

(2)   

For comparability purposes, this calculation incorporates the Net income that would be distributable 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 June 30, 2024 and 2023, this includes $71.3 million and $53.7 million of Net income, respectively, on 271.2 million and 267.7 million Weighted-average shares of Class A common stock outstanding - diluted, respectively. For the six months ended June 30, 2024 and 2023, this includes $95.4 million and $77.0 million of Net income, respectively, on 270.6 million and 267.3 million Weighted-average shares of Class A common stock outstanding - diluted, respectively. For the three months ended June 30, 2023, 143.8 million weighted average outstanding LLC Common Units were considered dilutive and included in the 267.7 million Weighted-average shares of Class A common stock outstanding - diluted within Diluted EPS. For the six months ended June 30, 2023, 143.6 million weighted average outstanding LLC Common Units were considered dilutive and included in the 267.3 million Weighted-average shares of Class A common stock outstanding - diluted within Diluted EPS. See “Note 10, Earnings Per Share” of the unaudited quarterly consolidated financial statements.

(3)   

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 271.2 million and 267.7 million Weighted-average shares of Class A common stock outstanding - diluted for the three months ended June 30, 2024 and 2023, respectively, and on 270.6 million and 267.3 million Weighted-average shares of Class A common stock outstanding- diluted for the six months ended June 30, 2024 and 2023, respectively.

(4)   

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 over the period, less any unvested equity awards determined to be dilutive within the Diluted EPS calculation disclosed in “Note 10, Earnings Per Share” of the unaudited quarterly consolidated financial statements. For the three months ended June 30, 2024 and 2023, 4.4 million and 4.3 million shares were added to the calculation, respectively. For the six months ended June 30, 2024 and 2023, 4.8 million and 4.5 million shares were added to the calculation, respectively.

 

Contacts

Investor Relations

Nicholas Mezick

Director, Investor Relations

Ryan Specialty

IR@ryanspecialty.com

Phone: (312) 784-6152

Media Relations

Alice Phillips Topping

SVP, Chief Marketing & Communications Officer

Ryan Specialty

Alice.Topping@ryanspecialty.com

Phone: (312) 635-5976

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