Ryan Specialty Holdings, Inc announced results for the third quarter ended September 30, 2022.
Third Quarter 2022 Highlights
• Revenue grew 16.8% year-over-year to $412.0 million, compared to $352.8 million in the prior-year period
• Organic Revenue Growth Rate* was 13.7% for the quarter, compared to 28.9% in the prior-year period
• Net Income increased to $29.3 million, compared to a net loss of $32.6 million in the prior-year period. Diluted
Earnings per Share was $0.09
• Adjusted EBITDAC* increased 11.2% to $116.8 million, compared to $105.0 million in the prior-year period
• Adjusted EBITDAC Margin* of 28.4%, compared to 29.8% in the prior-year period
• Adjusted Net Income* increased 5.7% to $66.6 million, compared to $62.9 million in the prior-year period
• Adjusted Diluted Earnings per Share* for the third quarter of 2022 was $0.25, compared to $0.24 in the prior-
year period
“Ryan Specialty yet again validated our differentiated business model by delivering strong results in the face of an increasingly challenging economic environment,” said Patrick G. Ryan, Founder, Chairman and Chief Executive Officer of Ryan Specialty. “Another quarter of double-digit organic growth and healthy profitability is a testament to the unrelenting effort of our teammates to innovate and provide best-in-class solutions for existing and new clients. We also continued to add top talent to our team in the quarter, as we further enhanced our reputation as a destination of choice. With our strong balance sheet, our resilient business model and our focus on the growing E&S market, we are well positioned to skillfully navigate through this challenging economic environment and continue generating long-term value for our investors."
Third Quarter 2022 Review
Total revenue for the third quarter of 2022 was $412.0 million, an increase of 16.8% compared to $352.8 million in the prior-year period. This increase was primarily due to continued strong Organic revenue growth of 13.7%, driven by new client wins and expanded relationships with existing clients, coupled with continued expansion of the E&S market, revenue from acquisitions completed in the fourth quarter of 2021 and increased fiduciary income.
Total operating expenses for the third quarter of 2022 were $350.7 million, a 0.8% decrease compared to the prior- year period. This was primarily due to significant reduction in IPO-related compensation expense, partially offset by an increase in Compensation and benefits expense, which is heavily correlated to revenue growth. General and administrative expense also increased compared to the prior-year period to accommodate revenue growth, including continued normalization of business travel and client entertainment.
Net income for the third quarter of 2022 increased to $29.3 million, compared to a net loss of $32.6 million in the prior-year period. The increase was mainly due to strong year-over-year revenue growth, as well as IPO related expenses and Other non-operating loss (income) in the prior-year quarter that did not recur in the third quarter of 2022, partially offset by higher interest and income tax expense. Diluted earnings per share for the third quarter of 2022 was $0.09, compared to a loss of $0.16 in the prior-year period. Adjusted EBITDAC of $116.8 million grew 11.2% from $105.0 million in the prior-year period. Adjusted EBITDAC margin for the quarter was 28.4%, compared to 29.8% in the prior-year period. The increase in Adjusted EBITDAC was driven primarily by strong 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 third quarter of 2022 rose 5.7% to $66.6 million, compared to $62.9 million in the prior- year period. Adjusted net income margin was 16.2%, compared to 17.8% in the prior-year period. Adjusted diluted earnings per share for the third quarter of 2022 was $0.25, compared to $0.24 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.
Third Quarter 2022 Revenue by Specialty
Growth in Net commissions and fees in all specialties was primarily driven by strong organic growth.
Liquidity and Financial Condition
As of September 30, 2022, the Company had Cash and cash equivalents of $833.1 million and outstanding debt principal of $2.0 billion.
Full Year 2022 Outlook
Considering current and developing market factors impacting the binding of project-based construction and M&A transactional liability policies, along with observed shifts in the market for public company D&O insurance, the Company is adjusting its full year 2022 outlook for Organic revenue growth rate:
• Organic revenue growth rate guidance range for the full year 2022 is now 14.5 – 16.0%, compared to the Company’s prior guidance range of 16.5% - 18.0%.
The Company is also updating its full year 2022 outlook for Adjusted EBITDAC margin:
• Adjusted EBITDAC margin guidance range for the full year 2022 is now 29.5% - 30.0%, compared to the Company’s prior guidance range of 29.0% - 30.0%.
* For a definition of Organic revenue growth rate and Adjusted EBITDAC margin as well as an explanation of the Company’s inability to provide reconciliations of these forward-looking non-GAAP measures, see “Non-GAAP Financial Measures and Key Performance Indicators” below.
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