Goosehead Insurance, Inc. Announces Third Quarter 2022

– Total and Core Revenue Each Increased 38% and 39% over the Prior Year, Respectively –
– Total Written Premium Increased 42% to $616 million –
– Net Income of $3.0 million, decreased $2.3 million from a Year Ago –
– Adjusted EBITDA of $11.0 million was up 67% over the Prior-Year Period –
– Adjusted EBITDA Margin Increased over 320 Basis Points to 19% within the Third Quarter –
– Operating Franchises Increased 23% and Corporate Agent headcount decreased 18% –

WESTLAKE, Texas, Oct. 26, 2022 (GLOBE NEWSWIRE) — Goosehead Insurance, Inc. (“Goosehead” or the “Company”) (NASDAQ: GSHD), a quickly rising unbiased private strains insurance company, at the moment introduced outcomes for the third quarter ended September 30, 2022.

Third Quarter 2022 Highlights

• Total Revenues grew organically 38% over the prior-year interval to $57.7 million within the third quarter of 2022
• Third quarter Core Revenues* of $51.9 million elevated 39% over the prior-year interval
• Third quarter internet earnings of $3.0 million decreased 43%, EPS of $0.09 per share decreased 55% and adjusted EPS* of $0.24 per share declined 8%, over the prior-year interval
• Adjusted EBITDA* grew 67% over the prior-year interval to $11.0 million
• Adjusted EBITDA Margin* elevated 3 factors over the prior-year interval to 19%.  
• Total written premiums positioned for the third quarter elevated 42% over the prior-year interval to $616 million
• Policies in drive grew 31% from the prior-year interval to roughly 1,238,000
• Corporate gross sales headcount of 411 was down 18% year-over-year
• Total franchises elevated 17% in comparison with the prior-year interval to 2,287; working franchises grew 23% in comparison with the prior-year interval to 1,403

^*Core Revenue, Adjusted EPS, Adjusted EBITDA, and Adjusted EBITDA Margin are non-GAAP measures. Reconciliations of Core Revenue to complete revenues, Adjusted EBITDA to internet earnings and Adjusted EPS to fundamental earnings per share, probably the most immediately comparable monetary measures offered in accordance with GAAP, are set forth within the reconciliation desk accompanying this launch.

“We delivered excellent growth in revenue and earnings for the third quarter, further validating the strength and consistency of our platform in an increasingly challenging macro-economic environment,” acknowledged Mark E. Jones, Chairman and CEO. “In the third quarter premiums grew 42% with some increasing benefit from auto and home rates that could continue through this year and into 2023 given industry loss trends. Total revenues increased 38%, core revenues grew 39% and Adjusted EBITDA increased 67% with EBITDA margin up over 320 basis points. We are already beginning to see the emerging benefits from optimizing our resources to emphasize growth of our Franchise distribution and drive improvement in productivity of Corporate distribution. Franchise launches were up 57% in the quarter while the quality of our Franchises and pipeline continues to improve. We are ramping up our efforts to help an increasing number of franchises scale operations through producer additions and we are creating more opportunity for our highest quality corporate agents to become franchisees. We expect these efforts to result in continued strong growth of our approximately 2,500 total sales agents across both Corporate and Franchise distribution as we continue our march towards industry leadership in US Personal Lines.”

Third Quarter 2022 Results
For the third quarter of 2022, revenues had been $57.7 million, a rise of 38% in comparison with the corresponding interval in 2021. Core Revenues, a non-GAAP measure which excludes contingent commissions, preliminary franchise charges, curiosity earnings, and different earnings, had been $51.9 million, a 39% improve from $37.2 million within the prior-year interval. Core Revenues are probably the most dependable income stream for the Company, consisting of New Business Commissions, Agency Fees, New Business Royalty Fees, Renewal Commissions, and Renewal Royalty Fees. Core Revenue progress was pushed by progress in working franchises, rising premium charges, and powerful consumer retention of 88%. The Company grew complete written premiums, which we think about to be the main indicator of future income progress, by 42% within the third quarter.

Total working bills, excluding equity-based compensation, depreciation and amortization, for the third quarter of 2022 had been $46.7 million, up 33% from $35.1 million within the prior-year interval. The improve from the prior interval was attributable to bigger worker compensation and advantages bills associated to investments in franchise recruiters, service brokers, and knowledge methods. Equity-based compensation elevated to $5.4 million for the interval, in comparison with $1.9 million a 12 months in the past. The change on this non-cash merchandise pertains to the Black-Scholes valuation of newly issued choices, which takes into consideration inventory worth on the grant date and historic volatility, amongst different inputs. Bad debt expense of $2.3 million elevated from $0.7 million a 12 months in the past attributable to elevated terminations of signed franchises which have but to launch. General and Administrative bills are additionally larger versus a 12 months in the past attributable to elevated actual property prices associated to 2021 workplace openings, software program bills, and elevated journey, meals, and leisure prices.

Net earnings within the third quarter of 2022 was $3.0 million, with the lower attributable to larger non-cash inventory compensation expense and decrease earnings tax profit. Net earnings attributable to Goosehead Insurance, Inc. for the third quarter of 2022 was $2.0 million, or $0.09 per fundamental and diluted share. Adjusted EPS for the third quarter of 2022, which excludes equity-based compensation, was $0.24 per share. Total Adjusted EBITDA was $11.0 million for the third quarter of 2022 in comparison with $6.6 million within the prior-year interval. Adjusted EBITDA Margin of 19% was up 3 factors within the quarter.

Liquidity and Capital Resources
As of September 30, 2022, the Company had money and money equivalents of $46.1 million. We had an unused line of credit score of $24.8 million as of September 30, 2022. Total excellent time period word payable stability was $95.6 million as of September 30, 2022.

2022 Outlook
The Company’s outlook for full 12 months 2022 is as follows:

• Total written premiums positioned for 2022 are anticipated to be between $2.176 billion and $2.215 billion, representing natural progress of 40% on the low finish of the vary to 42% on the excessive finish of the vary.
• Total revenues for 2022 are anticipated to be between $194 million and $205 million, representing natural progress of 28% on the low finish of the vary to 35% on the excessive finish of the vary, pushed by excessive ranges of Core Revenue progress partly offset by decrease than historic common contingent commissions of $7-10 million for the total 12 months 2022 as our carriers proceed to wrestle with their underwriting profitability.
• After a 12 months of historic investments in folks, know-how, and actual property, Adjusted EBITDA Margin is anticipated to increase for the total 12 months 2022.

Conference Call Information
Goosehead will host a convention name and webcast at the moment at 4:30 PM ET to debate these outcomes.

The dial-in quantity for the convention name is (855) 327-6837 (toll-free) or (631) 891-4304 (worldwide). Please dial the quantity 10 minutes previous to the scheduled begin time.

In addition, a reside webcast of the convention name can even be accessible on Goosehead’s investor relations web site at http://ir.gooseheadinsurance.com.

A webcast replay of the decision can be accessible at http://ir.gooseheadinsurance.com for one 12 months following the decision.

About Goosehead
Goosehead (NASDAQ: GSHD) is a quickly rising and modern unbiased private strains insurance company that distributes its services and products all through the United States.   Goosehead was based on the premise that the patron ought to be on the heart of our universe and that every thing we do ought to be directed at offering extraordinary worth by providing broad product selection and a world-class service expertise. Goosehead represents over 150 insurance firms that underwrite private strains and small business strains dangers, and its operations embrace a community of 12 company gross sales workplaces and a couple of,287 working and contracted franchise places. For extra data, please go to gooseheadinsurance.com.

Forward-Looking Statements
This press launch could include varied “forward-looking statements” inside the that means of the Private Securities Litigation Reform Act of 1995, which signify Goosehead’s expectations or beliefs regarding future occasions. Forward-looking statements are statements apart from historic information and will embrace statements that handle future working, monetary or business efficiency or Goosehead’s methods or expectations. In some instances, you’ll be able to determine these statements by forward-looking phrases reminiscent of “may”, “might”, “will”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “projects”, “potential”, “outlook” or “continue”, or the damaging of those phrases or different comparable terminology. Forward-looking statements are based mostly on administration’s present expectations and beliefs and contain important dangers and uncertainties that might trigger precise outcomes, developments and business selections to vary materially from these contemplated by these statements.

Factors that might trigger precise outcomes or efficiency to vary from the expectations expressed or implied in such forward-looking statements embrace, however should not restricted to, situations impacting insurance carriers or different events with which Goosehead does business, the financial results of the COVID-19 pandemic, the lack of a number of key executives or an incapacity to draw and retain certified personnel and the failure to draw and retain extremely certified franchisees. These dangers and uncertainties additionally embrace, however should not restricted to, these described underneath the captions “1A. Risk Factors” in Goosehead’s Annual Report on Form 10-Okay for the 12 months ended December 31, 2021 and in Goosehead’s different filings with the SEC, which can be found freed from cost on the Securities Exchange Commission’s web site at: www.sec.gov. Should a number of of those dangers or uncertainties materialize, or ought to underlying assumptions show incorrect, precise outcomes could fluctuate materially from these indicated. All forward-looking statements and all subsequent written and oral forward-looking statements attributable to Goosehead or to individuals appearing on behalf of Goosehead are expressly certified of their entirety by reference to those dangers and uncertainties. You mustn’t place undue reliance on forward-looking statements. Forward-looking statements converse solely as of the date they’re made, and Goosehead doesn’t undertake any obligation to replace them in mild of recent data, future developments or in any other case, besides as could also be required underneath relevant legislation.

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 hundreds, besides per share quantities)

Goosehead Insurance, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In hundreds, besides per share quantities)

(1) Renewal Commissions, New Business Commissions, Agency Fees, and Contingent Commissions are included in “Commissions and agency fees” as proven on the Condensed Consolidated statements of operations inside Goosehead’s Form 10-Q for the three and 9 months ended September 30, 2022 and 2021.
(2) Renewal Royalty Fees, New Business Royalty Fees, Initial Franchise Fees, and Other Franchise Revenues are included in “Franchise revenues” as proven on the Condensed Consolidated statements of operations inside Goosehead’s Form 10-Q for the three and 9 months ended September 30, 2022 and 2021.

Goosehead Insurance, Inc.
Condensed Consolidated Balance Sheets
(Unaudited) 
(In hundreds, besides per share quantities)

Goosehead Insurance, Inc.
Reconciliation Non-GAAP Measures to GAAP

This launch consists of Core Revenue, Cost Recovery Revenue, Ancillary Revenue, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EPS that aren’t required by, nor offered in accordance with, usually accepted accounting rules within the United States (“GAAP”). The Company refers to those measures as “non-GAAP financial measures.” The Company makes use of these non-GAAP monetary measures when planning, monitoring and evaluating its efficiency and considers these non-GAAP monetary measures to be helpful metrics for administration and buyers to facilitate working efficiency comparisons from interval to interval by excluding potential variations brought on by variations in capital constructions, tax place, depreciation, amortization and sure different gadgets that the Company believes should not consultant of its core business. The Company makes use of Core Revenue, Cost Recovery Revenue, Ancillary Revenue, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EPS for business planning functions and in measuring its efficiency relative to that of its opponents.

These non-GAAP monetary measures are outlined by the Company as follows:

• “Core Revenue” is a supplemental measure of our efficiency and consists of Renewal Commissions, Renewal Royalty Fees, New Business Commissions, New Business Royalty Fees, and Agency Fees. We consider that Core Revenue is an applicable measure of working efficiency as a result of it summarizes all of our revenues from gross sales of particular person insurance insurance policies.
• “Cost Recovery Revenue” is a supplemental measure of our efficiency and consists of Initial Franchise Fees and Interest Income. We consider that Cost Recovery Revenue is an applicable measure of working efficiency as a result of it summarizes revenues which can be seen by administration as value restoration mechanisms.
• “Ancillary Revenue” is a supplemental measure of our efficiency and consists of Contingent Commissions and Other Income. We consider that Ancillary Revenue is an applicable measure of working efficiency as a result of it summarizes revenues which can be ancillary to our core business.
• “Adjusted EBITDA” is a supplemental measure of the Company’s efficiency. We consider that Adjusted EBITDA is an applicable measure of working efficiency as a result of it eliminates the influence of things that don’t relate to business efficiency. Adjusted EBITDA is outlined as internet earnings (probably the most immediately comparable GAAP measure) earlier than curiosity, earnings taxes, depreciation and amortization, adjusted to exclude equity-based compensation and different non-operating gadgets, together with, amongst different issues, sure non-cash expenses and sure non-recurring or non-operating positive aspects or losses.
• “Adjusted EBITDA Margin” is Adjusted EBITDA as outlined above, divided by complete income excluding different non-operating gadgets. Adjusted EBITDA Margin is useful in measuring profitability of operations on a consolidated degree.
• “Adjusted EPS” is a supplemental measure of our efficiency, outlined as earnings per share (probably the most immediately comparable GAAP measure) earlier than non-recurring or non-operating earnings and bills. Adjusted EPS is a helpful measure to administration as a result of it eliminates the influence of things that don’t relate to business efficiency and helps measure our profitability on a consolidated degree.

While the Company believes that these non-GAAP monetary measures are helpful in evaluating its business, this data ought to be thought of as supplemental in nature and isn’t meant as an alternative to revenues, internet earnings, or earnings per share, in every case as acknowledged in accordance with GAAP. In addition, different firms, together with firms within the Company’s business, could calculate such measures otherwise, which reduces their usefulness as comparative measures.

The following tables present a reconciliation from complete revenues to Core Revenue, Cost Recovery Revenue, and Ancillary Revenue (non-GAAP foundation) for the three and 9 months ended September 30, 2022 and 2021 (in hundreds):

(1) Renewal Commissions, New Business Commissions, Agency Fees, and Contingent Commissions are included in “Commissions and agency fees” as proven on the Condensed Consolidated statements of operations.
(2) Renewal Royalty Fees, New Business Royalty Fees, Initial Franchise Fees, and Other Franchise Revenues are included in “Franchise revenues” as proven on the Condensed Consolidated statements of operations.

The following tables present a reconciliation from internet earnings to Adjusted EBITDA and Adjusted EBITDA Margin (non-GAAP foundation) for the three and 9 months ended September 30, 2022 and 2021 (in hundreds):

(1) Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Total Revenue ($10,992/$57,687), and ($6,581/$41,681) for the three months ended September 30, 2022 and 2021, respectively. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Total Revenue ($24,752/$151,987), and ($15,490/$111,082) for the 9 months ended September 30, 2022 and 2021, respectively.

The following tables present a reconciliation from fundamental earnings per share to Adjusted EPS (non-GAAP foundation) for the three and 9 months ended September 30, 2022 and 2021. Note that totals could not sum attributable to rounding:

(1) Calculated as equity-based compensation divided by sum of weighted common Class A and Class B shares [$5.4 million/(20.9 million + 16.4 million)] for the three months ended September 30, 2022 and [$1.9 million/ (19.6 million + 17.3 million)] for the three months ended September 30, 2021. Calculated as equity-based compensation divided by sum of weighted common Class A and Class B shares [$16.4 million/(20.5 million + 16.7 million)] for the 9 months ended September 30, 2022 and [$5.6 million/ (18.9 million + 17.9 million)] for the 9 months ended September 30, 2021.

Goosehead Insurance, Inc.

Key Performance Indicators