On Track to Deliver Strong Growth and Improved
Profitability in 2023
- First quarter 2023 Total Revenue increased 30% year-over-year
to $218.4 million
- First quarter 2023 Written Premium increased 18% year-over-year
to $182.9 million
- First quarter 2023 Membership, marketplace and other revenue
increased 63% year-over-year to $26.5
million
- First quarter 2023 Net Income (Loss) was $(15.0) million compared to $15.9 million in the prior year period
- First quarter 2023 Adjusted EBITDA of $6.7 million, an increase of $12.7 million compared to $(6.0) million in
the prior year period
TRAVERSE
CITY, Mich., May 9, 2023
/PRNewswire/ -- Hagerty, Inc. (NYSE: HGTY), an automotive lifestyle
brand and a leading specialty insurance provider focused on the
global automotive enthusiast market, today announced financial
results for the three months ended March 31, 2023.
"We are off to a strong start in 2023, delivering first quarter
revenue growth of 30%. These excellent results were powered by
robust written premium growth of 18% despite the volatile
macroeconomic environment," said McKeel
Hagerty, Chief Executive Officer of Hagerty. "We also
announced a restructuring that will further accelerate our path to
profitability, and as a result, we have raised our full year 2023
outlook for net income and Adjusted EBITDA."
Mr. Hagerty continued, "We continue to invest in the build-out
of Hagerty Marketplace and our online platform. Hagerty has
compiled the valuation data over the last four decades that
provides the transparency for our members to transact with
confidence as they shop for their special vehicles. The opportunity
within Marketplace is vast, and we will be disciplined in our
approach to balance growth with providing the customer support and
protection that bolsters our reputation as the trusted brand for
auto enthusiasts."
FIRST QUARTER 2023 FINANCIAL
HIGHLIGHTS
- First quarter Total Revenue increased 30% to $218.4 million compared to the prior year
period.
- First quarter Written Premium increased 18% to $182.9 million compared to the prior year
period.
- First quarter Commission and fee revenue grew 19% to
$74.6 million compared to the prior
year period.
- Policies in Force Retention was 88% as of March 31, 2023
compared to 89% as of March 31, 2022. Total insured vehicles
increased 7% year-over-year to 2.3 million compared to the prior
year period.
- First quarter Loss Ratio was 41.3% compared to 41.4% in the
prior year period.
- First quarter Earned premium increased 32% to $117.2 million compared to the prior year
period.
- Earned premium growth was driven by the 18% Written Premium
growth as well as the increased quota share to approximately 80%
compared to 70% in the prior year period.
- First quarter Membership, marketplace and other revenue
increased 63% to $26.5 million
compared to the prior year period.
- Broad Arrow Group helped drive $5.8
million in Marketplace revenue during the first
quarter.
- Hagerty Driver's Club (HDC) paid
members increased 6% to approximately 768,000 compared to 727,000
as of March 31, 2022.
- First quarter Operating Income (Loss) was $(16.5) million compared to $(13.0) million in the prior year period.
- The Company announced a restructuring charge of $5.5 million during the first quarter of 2023
associated with a reduction in force, reduced hiring plans and
additional cost containment initiatives. The Company anticipates
delivering incremental annualized cost savings of $20 to $25 million,
with approximately $15 million to be
realized in 2023.
- First quarter depreciation and amortization was $13.7 million compared to $7.1 million in the prior year period. The
increase was driven in part by the $3.6
million impairment of media content assets.
- First quarter Net Income (Loss) was $(15.0) million compared to $15.9 million in the prior year period.
- Net Income (Loss) includes the impact from the change in fair
value of warrant liabilities, the restructuring charge, as well as
the impairment of media content assets.
- First quarter Adjusted EBITDA was $6.7
million compared to $(6.0) million in the prior year
period.
- First quarter Basic and Diluted Earnings (Loss) per Share was
$(0.03).
- First quarter Adjusted EPS was $(0.04).
2023 OUTLOOK - PIVOT TO PROFITABLE
GROWTH
Despite the uncertain macro environment, we are off to a strong
start to 2023 and are well positioned to deliver sustained
profitable growth over the coming years. We are confident that the
opportunities we have identified to monetize our addressable market
will expand our share, and we have thoughtfully prioritized our
growth initiatives in 2023 to significantly improve our
profitability and fund our purpose to save driving and fuel car
culture for future generations. For full year 2023, we
anticipate:
- Total Revenue growth of 22-26% powered by Written
Premium growth of 11-13%
- Sustain double-digit Written Premium growth trajectory
- Deliver an unmatched online and live Marketplace
experience
- Drive loyalty, referrals and incremental revenue and profit
from Membership
- Continued evolution into an Integrated Insurance
Business
- Increase Hagerty Re's quota
share reinsurance agreement in the U.S. and U.K. to ~80%
- Significantly improved profitability through Cost
Containment measures and Operational Efficiencies
- Net Income (Loss) of $(13)-$7
million
- Adjusted EBITDA of $55-$75
million
|
|
|
2023 Outlook
|
|
2023 Change
vs 2022
|
|
2022 Actuals
|
|
Low End Range
|
|
High End Range
|
|
Low End Range
|
|
High End Range
|
Total Revenue (in
thousands)
|
$787,588
|
|
$961,000
|
|
$993,000
|
|
22 %
|
|
26 %
|
Total Written Premium
(in thousands)
|
$776,664
|
|
$862,000
|
|
$878,000
|
|
11 %
|
|
13 %
|
Net Income (Loss)
(in thousands)
|
$2,403
|
|
$(13,000)
|
|
$7,000
|
|
$(15,403)
|
|
$4,597
|
Adjusted EBITDA (in
thousands)
|
$(1,940)
|
|
$55,000
|
|
$75,000
|
|
$56,940
|
|
$76,940
|
•
2023 Outlook as of the Company's fourth quarter earnings call on
March 14, 2023 was for net income (loss) of $(20,000) to $0 and
Adjusted EBITDA of $40,000 to $60,000
|
|
The definitions and reconciliations of non-GAAP financial
measures are provided under the heading Key Performance Indicators
and Certain Non-GAAP Financial Measures at the end of this press
release.
Conference Call Details
Hagerty will hold a conference call to discuss the financial
results today at 10:00 am Eastern
Time. A webcast of the conference call, including the
Company's Investor presentation highlighting first quarter 2023
financial results, will be available on Hagerty's investor
relations website at investor.hagerty.com. The dial-in for the
conference call is (877) 423-9813 (toll-free) or (201) 689-8573
(international). Please dial the number 10 minutes prior to the
scheduled start time.
A webcast replay of the call will be available at
investor.hagerty.com following the call.
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements include all statements that are
not historical facts. These forward-looking statements reflect
Hagerty's current expectations and projections with respect to its
expected future business and financial performance, including,
among other things: (i) expected operating results, such as revenue
growth and increases in earned premium; (ii) changes in the market
for Hagerty's products and services, (iii) Hagerty's plans to
expand market share, including planned investments and
partnerships; (iv) anticipated business objectives; and (v) the
strength of Hagerty's business model. These statements may be
preceded by, followed by or include the words "aim," "anticipate,"
"believe," "estimate," "expect," "forecast," "future," "goal,"
"intend," "likely," "outlook," "plan," "potential," "project,"
"seek," "target," "can," "could," "may," "should," "would," "will,"
the negatives thereof and other words and terms of similar
meaning.
A number of factors could cause actual results or outcomes to
differ materially from those indicated by these forward-looking
statements. These factors include, among other things, Hagerty's
ability to: (i) compete effectively within its industry and attract
and retain members; (ii) maintain key strategic relationships with
its insurance distribution and underwriting carrier partners; (iii)
prevent, monitor and detect fraudulent activity; (iv) manage risks
associated with disruptions, interruptions, outages with its
technology platforms or third-party services; (v) accelerate the
adoption of Hagerty's membership products as well as any new
insurance programs and products; (vi) manage the cyclical nature of
the insurance business including through any periods of recession,
economic downturn or inflation; (vii) address unexpected increases
in the frequency or severity of claims; (vii) comply with the
numerous laws and regulations applicable to Hagerty's business,
including state, federal and foreign laws relating to insurance and
rate increases, privacy, the internet and accounting matters; (ix)
manage risks associated with being a controlled company; and (x)
other risks and uncertainties indicated from time to time in
documents filed or to be filed with the Securities and Exchange
Commission (the "SEC") by Hagerty.
The forward-looking statements herein represent the judgment of
Hagerty as of the date of this release and Hagerty disclaims any
intent or obligation to publicly update or review any
forward-looking statement, whether as a result of new information,
future developments, or otherwise. This press release should be
read in conjunction with the information included in the Company's
other press releases, reports and other filings with the SEC.
Understanding the information contained in these filings is
important in order to fully understand Hagerty's reported financial
results and our business outlook for future periods.
About Hagerty, Inc. (NYSE: HGTY)
Hagerty is an automotive lifestyle brand committed to saving
driving and fueling car culture for future generations. The company
is a leading provider of specialty vehicle insurance, expert car
valuation data and insights, live and digital car auction services,
immersive events and automotive entertainment custom made for the
67 million Americans who self-describe as car enthusiasts. Hagerty
also operates in Canada and the UK
and is home to Hagerty Drivers Club, a community of more than
750,000 who can't get enough of cars. As a purpose-driven
organization, Hagerty Impact aims to be a catalyst for positive
change across the issues that matter most to our teams, our
members, the broader automotive community, our shareholders and the
planet at large. For more information, please visit www.hagerty.com
or connect with us on Facebook, Instagram and Twitter.
More information can be found at newsroom.hagerty.com.
Hagerty,
Inc. Condensed Consolidated Statements of
Operations (Unaudited)
|
|
|
Three months ended
March 31,
|
|
2023
|
|
2022
|
|
$ Change
|
|
% Change
|
|
|
|
|
|
|
|
|
REVENUE:
|
in thousands (except
percentages)
|
Commission and fee
revenue
|
$
74,612
|
|
$
62,461
|
|
$
12,151
|
|
19.5 %
|
Earned
premium
|
117,231
|
|
89,132
|
|
28,099
|
|
31.5 %
|
Membership,
marketplace and other revenue
|
26,509
|
|
16,218
|
|
10,291
|
|
63.5 %
|
Total
revenue
|
218,352
|
|
167,811
|
|
50,541
|
|
30.1 %
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
Salaries and
benefits
|
55,232
|
|
46,476
|
|
8,756
|
|
18.8 %
|
Ceding
commission
|
55,425
|
|
42,378
|
|
13,047
|
|
30.8 %
|
Losses and loss
adjustment expenses
|
48,412
|
|
36,919
|
|
11,493
|
|
31.1 %
|
Sales
expense
|
35,113
|
|
28,437
|
|
6,676
|
|
23.5 %
|
General and
administrative services
|
21,381
|
|
19,458
|
|
1,923
|
|
9.9 %
|
Depreciation and
amortization
|
13,743
|
|
7,147
|
|
6,596
|
|
92.3 %
|
Restructuring,
impairment and related charges, net
|
5,535
|
|
—
|
|
5,535
|
|
100.0 %
|
Total operating
expenses
|
234,841
|
|
180,815
|
|
54,026
|
|
29.9 %
|
OPERATING INCOME
(LOSS)
|
(16,489)
|
|
(13,004)
|
|
(3,485)
|
|
(26.8) %
|
Change in fair value
of warrant liabilities
|
(515)
|
|
31,686
|
|
(32,201)
|
|
(101.6) %
|
Interest and other
income (expense)
|
5,647
|
|
(684)
|
|
6,331
|
|
925.6 %
|
INCOME (LOSS) BEFORE
INCOME TAX EXPENSE
|
(11,357)
|
|
17,998
|
|
(29,355)
|
|
(163.1) %
|
Income tax benefit
(expense)
|
(3,668)
|
|
(2,030)
|
|
(1,638)
|
|
80.7 %
|
Income (loss) from
equity method investment, net of tax
|
—
|
|
(102)
|
|
102
|
|
(100.0) %
|
NET INCOME
(LOSS)
|
(15,025)
|
|
15,866
|
|
(30,891)
|
|
(194.7) %
|
Net loss (income)
attributable to non-controlling interest
|
12,926
|
|
11,641
|
|
1,285
|
|
11.0 %
|
NET INCOME (LOSS)
ATTRIBUTABLE TO
CONTROLLING INTEREST
|
$
(2,099)
|
|
$
27,507
|
|
$ (29,606)
|
|
(107.6) %
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share of Class A Common Stock:
|
|
|
|
|
|
|
|
Basic
|
$
(0.03)
|
|
$
0.33
|
|
|
|
|
Diluted
|
$
(0.03)
|
|
$
(0.01)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
of Class A Common Stock
outstanding:
|
|
|
|
|
|
|
|
Basic
|
83,227
|
|
82,433
|
|
|
|
|
Diluted
|
83,227
|
|
335,903
|
|
|
|
|
Hagerty,
Inc. Condensed Consolidated Balance
Sheets (Unaudited)
|
|
|
March 31,
2023
|
|
December
31,
2022
|
|
|
|
|
ASSETS
|
in thousands (except share
amounts)
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
63,367
|
|
$
95,172
|
Restricted cash and
cash equivalents
|
444,024
|
|
444,019
|
Accounts
receivable
|
62,843
|
|
58,255
|
Premiums
receivable
|
135,026
|
|
100,700
|
Commissions
receivable
|
15,978
|
|
60,151
|
Notes
receivable
|
33,716
|
|
25,493
|
Deferred acquisition
costs, net
|
113,686
|
|
107,342
|
Other current
assets
|
57,775
|
|
45,651
|
Total current
assets
|
926,415
|
|
936,783
|
Notes
receivable
|
12,707
|
|
11,934
|
Property and equipment,
net
|
24,617
|
|
25,256
|
Lease right-of-use
assets
|
80,462
|
|
82,398
|
Intangible assets,
net
|
102,786
|
|
104,024
|
Goodwill
|
115,041
|
|
115,041
|
Other long-term
assets
|
39,925
|
|
37,082
|
TOTAL ASSETS
|
$
1,301,953
|
|
$
1,312,518
|
LIABILITIES AND EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts payable,
accrued expenses and other current liabilities
|
$
75,186
|
|
$
77,049
|
Losses payable and
provision for unpaid losses and loss adjustment expenses
|
161,955
|
|
167,257
|
Commissions
payable
|
62,991
|
|
77,075
|
Due to
insurers
|
87,712
|
|
68,171
|
Advanced
premiums
|
34,506
|
|
17,084
|
Unearned
premiums
|
247,253
|
|
235,462
|
Contract
liabilities
|
25,662
|
|
25,257
|
Total current
liabilities
|
695,265
|
|
667,355
|
Long-term lease
liabilities
|
78,845
|
|
80,772
|
Long-term
debt
|
89,030
|
|
108,280
|
Warrant
liabilities
|
46,076
|
|
45,561
|
Deferred tax
liability
|
13,846
|
|
12,850
|
Contract
liabilities
|
18,669
|
|
19,169
|
Other long-term
liabilities
|
3,506
|
|
11,162
|
TOTAL
LIABILITIES
|
945,237
|
|
945,149
|
Commitments and
Contingencies
|
—
|
|
—
|
STOCKHOLDERS' EQUITY
|
|
|
|
Preferred stock,
$0.0001 par value (20,000,000 shares authorized, no shares issued
and
outstanding as of March 31, 2023 and December 31, 2022,
respectively)
|
—
|
|
—
|
Class A common stock,
$0.0001 par value (500,000,000 shares authorized, 83,338,436
and
83,202,969 issued and outstanding as of March 31, 2023 and
December 31, 2022, respectively)
|
8
|
|
8
|
Class V common stock,
$0.0001 par value (300,000,000 authorized, 251,033,906 shares
issued and outstanding as of March 31, 2023 and
December 31, 2022)
|
25
|
|
25
|
Additional paid-in
capital
|
554,049
|
|
549,034
|
Accumulated earnings
(deficit)
|
(491,701)
|
|
(489,602)
|
Accumulated other
comprehensive income (loss)
|
(272)
|
|
(213)
|
Total stockholders'
equity
|
62,109
|
|
59,252
|
Non-controlling
interest
|
294,607
|
|
308,117
|
Total
equity
|
356,716
|
|
367,369
|
TOTAL LIABILITIES AND
EQUITY
|
$
1,301,953
|
|
$
1,312,518
|
Hagerty,
Inc. Condensed Consolidated Statements of Cash
Flows (Unaudited)
|
|
|
Three months
ended
March 31,
|
|
2023
|
|
2022
|
|
|
|
|
OPERATING ACTIVITIES:
|
in thousands
|
Net income
(loss)
|
$
(15,025)
|
|
$
15,866
|
Adjustments to
reconcile net income (loss) to net cash from operating
activities:
|
|
|
|
Change in fair value of
warrant liabilities
|
515
|
|
(31,686)
|
Depreciation and
amortization expense
|
13,743
|
|
7,147
|
Provision for deferred
taxes
|
937
|
|
462
|
Loss on disposals of
equipment, software and other assets
|
472
|
|
198
|
Stock-based
compensation expense
|
4,113
|
|
—
|
Other
|
593
|
|
152
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts, premiums and
commission receivable
|
3,777
|
|
19,950
|
Deferred acquisition
costs
|
(6,344)
|
|
(3,459)
|
Losses payable and
provision for unpaid losses and loss adjustment expenses
|
(5,302)
|
|
2,520
|
Commissions
payable
|
(14,084)
|
|
(14,765)
|
Due to
insurers
|
19,510
|
|
16,362
|
Advanced
premiums
|
17,422
|
|
15,559
|
Unearned
premiums
|
11,791
|
|
6,272
|
Other assets and
liabilities, net
|
(20,390)
|
|
(25,564)
|
Net Cash Provided by
Operating Activities
|
11,728
|
|
9,014
|
INVESTING ACTIVITIES:
|
|
|
|
Purchases of property,
equipment and software
|
(8,133)
|
|
(10,532)
|
Acquisitions, net of
cash acquired
|
(6,076)
|
|
(6,028)
|
Purchase of previously
held equity method investment
|
—
|
|
(15,250)
|
Issuance of notes
receivable
|
(7,833)
|
|
—
|
Collection of notes
receivable
|
415
|
|
—
|
Purchase of fixed
income securities
|
(4,348)
|
|
—
|
Maturities of fixed
income securities
|
1,150
|
|
—
|
Other investing
activities
|
22
|
|
13
|
Net Cash Used in
Investing Activities
|
(24,803)
|
|
(31,797)
|
FINANCING ACTIVITIES:
|
|
Payments on long-term
debt
|
(47,250)
|
|
(41,500)
|
Proceeds from long-term
debt
|
27,871
|
|
22,500
|
Contribution from
non-controlling interest
|
500
|
|
—
|
Net Cash Used in
Financing Activities
|
(18,879)
|
|
(19,000)
|
Effect of exchange rate
changes on cash and cash equivalents and restricted cash
and cash equivalents
|
154
|
|
6
|
|
|
|
|
Change in cash and cash
equivalents and restricted cash and cash equivalents
|
(31,800)
|
|
(41,777)
|
Beginning cash and cash
equivalents and restricted cash and cash equivalents
|
539,191
|
|
603,972
|
Ending cash and cash
equivalents and restricted cash and cash equivalents
|
$
507,391
|
|
$
562,195
|
|
Hagerty, Inc.
Key Performance
Indicators and Certain Non-GAAP Financial Measures
Key Performance Indicators
The tables below present a summary of our Key Performance
Indicators, including important operational metrics, as well as
certain GAAP and non-GAAP financial measures as of and for the
periods presented. We use these Key Performance Indicators to
evaluate our business, measure our performance, identify trends
against planned initiatives, prepare financial projections and make
strategic decisions. We believe these Key Performance Indicators
are useful in evaluating the Company's performance when read
together with our Condensed Consolidated Financial Statements
prepared in accordance with GAAP.
|
Three months
ended
March 31,
|
|
2023
|
|
2022
|
Operational Metrics
|
|
|
|
Total Written Premium
(in thousands)
|
$
182,850
|
|
$
154,790
|
Loss Ratio
|
41.3 %
|
|
41.4 %
|
New Business Count
(Insurance)
|
51,762
|
|
47,514
|
|
|
|
|
GAAP Measures
|
|
|
|
Total Revenue (in
thousands)
|
$
218,352
|
|
$
167,811
|
Operating Income
(Loss) (in thousands)
|
$
(16,489)
|
|
$
(13,004)
|
Net Income (Loss)
(in thousands)
|
$
(15,025)
|
|
$
15,866
|
Basic Earnings (Loss)
Per Share
|
$
(0.03)
|
|
$
0.33
|
|
|
|
|
Non-GAAP Financial Measures
|
|
|
|
Adjusted EBITDA (in
thousands)
|
$
6,705
|
|
$
(5,959)
|
Adjusted Earnings
(Loss) Per Share
|
$
(0.04)
|
|
$
(0.04)
|
|
|
|
March 31,
2023
|
|
December 31,
2022
|
Operational Metrics
|
|
|
|
Policies in
Force
|
1,335,008
|
|
1,315,977
|
Policies in Force
Retention
|
87.9 %
|
|
88.0 %
|
Vehicles in
Force
|
2,275,387
|
|
2,234,461
|
HDC Paid Member
Count
|
767,872
|
|
752,754
|
Net Promoter Score
(NPS)
|
83
|
|
83
|
|
Non-GAAP Financial Measures
Adjusted EBITDA
We define Adjusted EBITDA as consolidated Net income (loss)
excluding interest and other income (expense), income tax (expense)
benefit, and depreciation and amortization, adjusted to exclude (i)
restructuring, impairment and related charges, net; (ii) changes in
fair value of warrant liabilities; (iii) stock-based compensation
expense; (iv) when applicable, the net gain or loss from asset
disposals; and (v) when applicable, certain other unusual
items.
We present Adjusted EBITDA because we consider it to be an
important supplemental measure of the Company's performance and
believe it is frequently used by securities analysts, investors,
and other interested parties in the evaluation of companies in our
industry. Management uses Adjusted EBITDA as a measure of the
operating performance of our business on a consistent basis,
as it removes the impact of items not directly resulting from our
core operations.
By providing this non-GAAP financial measure, together with a
reconciliation to net income (loss), which is the most comparable
GAAP measure, we believe we are enhancing investors' understanding
of our business and our results of operations, as well as assisting
investors in evaluating how well we are executing our strategic
initiatives. However, Adjusted EBITDA has limitations as an
analytical tool, and should not be considered in isolation, or as
an alternative to, or a substitute for net income (loss) or other
financial statement data presented in our Condensed Consolidated
Financial Statements as indicators of financial performance.
Hagerty's Adjusted EBITDA may be determined or calculated
differently than similarly titled measures of other companies in
our industry, which could reduce the usefulness of this non-GAAP
financial measure when comparing our performance to that of other
companies.
The following table reconciles Adjusted EBITDA for the three
months ended March 31, 2023 and 2022 to the most directly
comparable GAAP measure, which is Net income (loss):
|
|
Three months
ended
March 31,
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
in thousands
|
Net income
(loss)
|
$
(15,025)
|
|
$
15,866
|
Interest and other
(income) expense
|
(5,647)
|
|
684
|
Income tax (benefit)
expense
|
3,668
|
|
2,030
|
Depreciation and
amortization
|
13,743
|
|
7,147
|
Restructuring,
impairment and related charges, net
|
5,535
|
|
—
|
Change in fair value
of warrant liabilities
|
515
|
|
(31,686)
|
Stock-based
compensation expense
|
3,916
|
|
—
|
Adjusted
EBITDA
|
$
6,705
|
|
$
(5,959)
|
|
|
|
|
|
The following table reconciles Adjusted EBITDA for the year
ended December 31, 2023 Outlook to the most directly
comparable GAAP measure, which is Net income (loss):
|
|
2023 Low
|
|
2023 High
|
|
|
|
|
|
|
|
in thousands
|
Net income
(loss)
|
$
(13,000)
|
|
$
7,000
|
Interest and other
(income) expense
|
(10,750)
|
|
(10,750)
|
Income tax (benefit)
expense
|
14,300
|
|
14,300
|
Depreciation and
amortization
|
41,700
|
|
41,700
|
Restructuring,
impairment and related charges, net
|
5,535
|
|
5,535
|
Change in fair value
of warrant liabilities
|
515
|
|
515
|
Stock-based
compensation expense
|
16,700
|
|
16,700
|
Adjusted
EBITDA
|
$
55,000
|
|
$
75,000
|
|
|
|
|
|
Adjusted EPS
We define Adjusted Earnings (Loss) Per Share ("Adjusted EPS") as
consolidated Net income (loss) attributable to both our controlling
and non-controlling interest, less the change in fair value of our
warrants divided by our outstanding and total potentially dilutive
securities. The total potentially dilutive securities includes (1)
the weighted-average issued and outstanding shares of Class A
Common Stock; (2) all issued and outstanding non-controlling
interest Hagerty Group Units; (3) all unexercised warrants; and (4)
all unissued stock-based compensation awards.
In the third quarter of 2022, we began removing (1) the change
in fair value of our warrants and (2) the revaluation gain on
previously held equity method investment from consolidated Net
income (loss) attributable to both our controlling and
non-controlling interest for purposes of calculating Adjusted EPS.
For comparability, references to prior period non-GAAP measures
have been updated to show the effect of removing the change in the
fair value of our warrants from Adjusted EPS. We believe this
updated presentation of Adjusted EPS enhances investors'
understanding of our financial performance from activities
occurring in the ordinary course of our business.
The most directly comparable GAAP measure is basic earnings per
share ("Basic EPS"), which is calculated as Net income (loss)
attributable to controlling interest divided by the weighted
average of Class A Common Stock outstanding during the period.
We present Adjusted EPS because we consider it to be an
important supplemental measure of our operating performance and
believe it is used by investors and securities analysts in
evaluating the consolidated performance of other companies in our
industry. We also believe that Adjusted EPS, which compares our
consolidated Net income (loss) (which includes our controlling and
non-controlling interest) with our outstanding and potentially
dilutive shares, provides useful information to investors regarding
our performance on a fully consolidated basis.
Management uses Adjusted EPS:
- as a measurement of operating performance of our business on a
fully consolidated basis;
- to evaluate the performance and effectiveness of our
operational strategies; and
- as a preferred predictor of core operating performance,
comparisons to prior periods and competitive positioning.
We caution investors that Adjusted EPS is not a recognized
measure under GAAP and should not be considered in isolation or as
a substitute for, or superior to, the financial information
prepared and presented in accordance with GAAP, including Basic
EPS, and that Adjusted EPS, as we define it, may be defined or
calculated differently by other companies. In addition, Adjusted
EPS has limitations as an analytical tool and should not be
considered as a measure of profit or loss per share.
The following table reconciles Adjusted EPS to the most directly
comparable GAAP measure, which is Basic EPS:
|
|
Three months ended
March 31,
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
in thousands (except per share
amounts)
|
Numerator:
|
|
|
|
Net income (loss)
attributable to controlling interest(1)
|
$
(2,099)
|
|
$
27,507
|
Net income (loss)
attributable to non-controlling interest
|
(12,926)
|
|
(11,641)
|
Consolidated net income
(loss)
|
(15,025)
|
|
15,866
|
Change in fair value
of warrant liabilities
|
515
|
|
(31,686)
|
Adjusted consolidated
net income (loss)(2)
|
$
(14,510)
|
|
$
(15,820)
|
|
|
|
|
Denominator:
|
|
|
|
Weighted average
shares of Class A Common Stock outstanding —
basic(1)
|
83,227
|
|
82,433
|
Total potentially
dilutive securities outstanding:
|
|
|
|
Conversion of
non-controlling interest Hagerty Group Units to
Class A Common
Stock
|
255,640
|
|
251,034
|
Total warrants
outstanding
|
19,484
|
|
19,484
|
Total unissued
stock-based compensation awards
|
6,870
|
|
—
|
Potentially dilutive
shares outstanding
|
281,994
|
|
270,518
|
Fully dilutive shares
outstanding(2)
|
365,221
|
|
352,951
|
|
|
|
|
|
Basic EPS = (Net income
(loss) attributable to controlling interest / Weighted-
average shares of Class A Common Stock
outstanding)(1)
|
$
(0.03)
|
|
$
0.33
|
|
|
|
|
|
Adjusted EPS =
(Adjusted consolidated net income (loss) / Fully dilutive
shares
outstanding)(2)
|
$
(0.04)
|
|
$
(0.04)
|
|
|
|
|
|
(1)
Numerator and Denominator of the GAAP measure Basic EPS
|
(2)
Numerator and Denominator of the non-GAAP measure Adjusted
EPS
|
View original
content:https://www.prnewswire.com/news-releases/hagerty-reports-first-quarter-2023-results-301818751.html
SOURCE Hagerty