Goosehead Insurance, Inc. Announces Second Quarter 2023 Results

– Total Revenue Increased 31% over Prior Year Period to $69.3 million –

– Core Revenue Grew 27% over Prior Year Period to $61.0 million –

– Total Written Premium Increased 36% to $767 million –

– Net Income of $7.2 million versus Net Income of $2.4 million a year ago –

– Adjusted EBITDA of $23.1 million versus $12.5 million in the Prior Year Period –

WESTLAKE, Texas, July 26, 2023 (GLOBE NEWSWIRE) -- Goosehead Insurance, Inc. (“Goosehead” or the “Company”) ( GSHD), a rapidly growing independent personal lines insurance agency, today announced results for the second quarter ended June 30, 2023.

Second Quarter 2023 Highlights

• Total Revenues grew organically 31% over the prior-year period to $69.3 million in the second quarter of 2023
• Second quarter Core Revenues* of $61.0 million increased 27% over the prior-year period
• Second quarter net income of $7.2 million improved from net income of $2.4 million a year ago. EPS of $0.15 per share increased 825% and adjusted EPS* of $0.41 per share increased 161%, over the prior-year period
• Net income margin for the second quarter was 10%
• Adjusted EBITDA* of $23.1 million increased from $12.5 million in the prior-year period
• Adjusted EBITDA Margin* increased 9 percentage points over the prior-year period to 33%
• Total written premiums placed for the second quarter increased 36% over the prior-year period to $767.3 million
• Policies in force grew 21% from the prior-year period to approximately 1,427,000
• Corporate sales headcount of 280 was down 44% year-over-year
• Operating franchises remained steady with the prior-year period at 1,344
• Total franchise producers grew 3% from a year ago to 2,069

^{*Core Revenue, Adjusted EPS, Adjusted EBITDA, and Adjusted EBITDA Margin are non-GAAP measures. Reconciliations of Core Revenue to total revenues, Adjusted EPS to basic earnings per share and Adjusted EBITDA to net income, the most directly comparable financial measures presented in accordance with GAAP, are set forth in the reconciliation table accompanying this release.}

“We delivered outstanding second quarter results that demonstrate the tremendous strength and consistency of our business and the advantages of where we operate in the insurance value chain. For the quarter, premiums increased 36%, revenues were up 31%, core revenues grew 27%, and our adjusted EBITDA grew 85% with adjusted EBITDA margin expanding 900 basis points,” stated Mark E. Jones, Chairman and CEO. “The restructuring of our corporate sales team is now complete and is producing extraordinary results. We are excited to pivot back to growth in this distribution network. The heaviest lifting to improve the health of our franchise business is also complete, but we will continue fine tuning efforts over the next few quarters. We believe our actions should yield meaningful productivity gains over time. Our ongoing efforts to enhance quality across our producer force and recruiting process, and our continued investments and progress on industry leading technology will further expand our competitive moat, which we believe positions us to sustain high levels of revenue and earnings growth for many years. I want to thank our employees and franchise agents for their exceptional efforts as we drive our business forward on the path to industry leadership.”

Second Quarter 2023 Results
For the second quarter of 2023, revenues were $69.3 million, an increase of 31% compared to the corresponding period in 2022. Core Revenues, a non-GAAP measure which excludes contingent commissions, initial franchise fees, interest income, and other income, were $61.0 million, a 27% increase from $48.1 million in the prior-year period. Core Revenues are the most reliable revenue stream for the Company, consisting of New Business Commissions, Agency Fees, New Business Royalty Fees, Renewal Commissions, and Renewal Royalty Fees. Core Revenue growth was driven by improved productivity, strong client retention of 88%, and rising premium rates. The Company grew total written premiums, which we consider to be the leading indicator of future revenue growth, by 36% in the second quarter.

Total operating expenses, excluding equity-based compensation, depreciation and amortization and impairment expenses for the second quarter of 2023 were $46.2 million, up 14% from $40.5 million in the prior-year period. The increase from the prior period was due to larger employee compensation and benefits expenses related to investments in partnership, technology, marketing, and service functions. Equity-based compensation increased to $5.9 million for the period, compared to $5.2 million a year ago. Bad debt expense of $0.9 million decreased from $1.7 million a year ago due to reduced terminations of signed franchises that have yet to launch. General and Administrative expenses are also higher versus a year ago due to investments in technology, systems and marketing efforts to drive growth and continue to improve the client experience. During the second quarter of 2023, we consolidated some existing office space resulting in a one time, non-cash impairment charge of $3.6 million from the write-off of assets associated with those leases, and certain intangible assets. For more information about the non-cash impairment, see Note 2, Summary of Significant Accounting Policies, of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1. of the Company’s June 30, 2023 Form 10-Q.

Net income in the second quarter of 2023 was $7.2 million versus net income of $2.4 million a year ago, with the improvement due to strong revenue growth and expense discipline. Earnings per share and Net Income Margin for the first quarter of 2023 were $0.15 and 10%, respectively. Adjusted EPS for the second quarter of 2023, which excludes equity-based compensation and impairment expense, was $0.41 per share. Total Adjusted EBITDA was $23.1 million for the second quarter of 2023 compared to $12.5 million in the prior-year period. Adjusted EBITDA Margin of 33% was up 9 percentage points in the quarter.

Liquidity and Capital Resources
As of June 30, 2023, the Company had cash and cash equivalents of $19.1 million. We had an unused line of credit of $49.8 million as of June 30, 2023. Total outstanding term note payable balance was $81.3 million as of June 30, 2023.

2023 Outlook
The Company is raising its outlook for full year 2023 as follows:

• Total written premiums placed for 2023 are expected to be between $2.87 billion and $2.99 billion, representing organic growth of 30% on the low end of the range to 35% on the high end of the range.
• Total revenues for 2023 are expected to be between $260 million and $267 million, representing organic growth of 24% on the low end of the range to 28% on the high end of the range.
• Adjusted EBITDA Margin is expected to expand for the full year 2023. Adjusted EBITDA margin and a reconciliation to the most comparable GAAP metric are not provided because they cannot be calculated without unreasonable effort.

Conference Call Information
Goosehead will host a conference call and webcast today at 4:30 PM ET to discuss these results.

The dial-in number for the conference call is (855) 327-6837 (toll-free) or (631) 891-4304 (international). Please dial the number 10 minutes prior to the scheduled start time.

In addition, a live webcast of the conference call will also be available on Goosehead’s investor relations website at http://ir.goosehead.com.

A webcast replay of the call will be available at http://ir.goosehead.com for one year following the call.

About Goosehead

Goosehead ( GSHD) is a rapidly growing and innovative independent personal lines insurance agency that distributes its products and services through corporate and franchise locations throughout the United States. Goosehead was founded on the premise that the consumer should be at the center of our universe and that everything we do should be directed at providing extraordinary value by offering broad product choice and a world-class service experience. Goosehead represents over 150 insurance companies that underwrite personal and commercial lines. For more information, please visit goosehead.com or goosehead.com/become-a-franchisee.

Forward-Looking Statements

This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which represent Goosehead’s expectations or beliefs concerning future events. Forward-looking statements are statements other than historical facts and may include statements that address future operating, financial or business performance or Goosehead’s strategies or expectations. In some cases, you can identify these statements by forward-looking words such as “may”, “might”, “will”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “projects”, “potential”, “outlook” or “continue”, or the negative of these terms or other comparable terminology. Forward-looking statements are based on management’s current expectations and beliefs and involve significant risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by these statements.

Factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include, but are not limited to, conditions impacting insurance carriers or other parties with which Goosehead does business, the loss of one or more key executives or an inability to attract and retain qualified personnel and the failure to attract and retain highly qualified franchisees. These risks and uncertainties also include, but are not limited to, those described under the captions “1A. Risk Factors” in Goosehead’s Annual Report on Form 10-K for the year ended December 31, 2022 and in Goosehead’s other filings with the SEC, which are available free of charge on the Securities Exchange Commission's website at: www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. All forward-looking statements and all subsequent written and oral forward-looking statements attributable to Goosehead or to persons acting on behalf of Goosehead are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made, and Goosehead does not undertake any obligation to update them in light of new information, future developments or otherwise, except as may be required under applicable law.

Contacts
Investor Contact:
Dan Farrell
Goosehead Insurance - VP Capital Markets
Phone: (214) 838-5290
Email: [email protected]; [email protected]

PR Contact:
Mission North for Goosehead Insurance
Email: [email protected]; [email protected]

Goosehead Insurance, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)

Goosehead Insurance, Inc.