- Second quarter 2023 Total Revenue increased 27% to $261.2 million compared to the prior year period
and year-to-date 2023 Total Revenue increased 28% to $479.6 million compared to the prior year
period
- Second quarter 2023 Written Premium increased 16%
year-over-year to $275.9 million, and
year-to-date 2023 Written Premium increased 17% to $458.7 million compared to the prior year
period
- Second quarter 2023 Membership, marketplace and other revenue
increased 44% year-over-year to $23.6
million, and year-to-date 2023 Membership, marketplace and
other revenue increased 53% to $50.1
million compared to the prior year period
- Second quarter 2023 Net Income (Loss) increased 380% to
$15.5 million compared to the prior
year period, and year-to-date 2023 Net Income (Loss) decreased 95%
to $0.5 million compared to the prior
year period
- Second quarter 2023 Adjusted EBITDA of $34.4 million, an increase of $18.3 million compared to the prior year period,
and year-to-date 2023 Adjusted EBITDA of $41.1 million, an increase of $31.0 million compared to the prior year
period
- Raised $105 million of capital on
June 23, 2023, including $80.0 million of convertible preferred equity and
a $25.0 million commitment of
long-term financing for Hagerty Reinsurance Limited
TRAVERSE
CITY, Mich., Aug. 8, 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 and six months ended June 30, 2023.
"We delivered first half revenue growth of 28% as the Hagerty
ecosystem of products and services is resonating with car
enthusiasts. These excellent results were powered by robust
written premium growth of 17%, earned premium growth of 34%, and
membership and marketplace revenue growth of 53%," said
McKeel Hagerty, Chief Executive
Officer of Hagerty. "Our revenue engine is firing on all cylinders,
and we now expect full year 2023 revenue to grow 23-27%."
Mr. Hagerty continued, "Given the strong conversion of this
incremental revenue into profits, we have also increased our 2023
outlook for net income and Adjusted EBITDA. Our significantly
improved profitability, combined with the additional capital raised
from our strategic investors positions us well to invest in our
growth opportunities over the coming years and save driving and car
culture for future generations."
SECOND QUARTER 2023 FINANCIAL
HIGHLIGHTS
- Second quarter 2023 Total Revenue increased 27% to $261.2 million compared to the prior year period
and year-to-date 2023 Total Revenue increased 28% to $479.6 million compared to the prior year
period.
- Second quarter 2023 Written Premium increased 16% to
$275.9 million compared to the prior
year period, and year-to-date 2023 Written Premium increased 17% to
$458.7 million compared to the prior
year period.
- Second quarter 2023 Commission and fee revenue increased 15% to
$110.2 million compared to the prior
year period, and year-to-date 2023 Commission and fee revenue
increased 17% to $184.8 million
compared to the prior year period.
-
- Policies in Force Retention was 88% as of June 30, 2023 compared to 88.2% as of
June 30, 2022. Total insured vehicles
increased 9% year-over-year to 2.3 million compared to the prior
year period.
- Second quarter 2023 Loss Ratio was 42.0% compared to 41.0% in
the prior year period. Year-to-date 2023 Loss Ratio was 41.7%
compared to 41.2% in the prior year period.
- Second quarter 2023 Earned premium increased 35% to
$127.5 million compared to the prior
year period, and year-to-date 2023 Earned premium increased 34% to
$244.7 million compared to the prior
year period.
-
- Earned premium growth was driven by the strong Written Premium
growth as well as the increased quota share to approximately 80%
compared to 70% in the prior year period.
- Second quarter 2023 Membership, marketplace and other revenue
increased 44% year-over-year to $23.6
million compared to the prior year period, and year-to-date
2023 Membership, marketplace and other revenue increased 53% to
$50.1 million compared to the prior
year period.
-
- Broad Arrow Group helped drive $4.2
million in marketplace revenue during the second quarter
2023 and $10.0 million in marketplace
revenue year-to-date 2023.
- Hagerty Driver's Club (HDC) paid
members increased 7% to approximately 792,000 compared to 743,000
as of June 30, 2022.
- Second quarter 2023 Operating Income (Loss) of $17.3 million compared to $2.4 million in the prior year period, and
year-to-date 2023 Operating Income (Loss) $0.8 million compared to $(10.6) million in the prior year period.
-
- Year-to-date 2023 results include restructuring charges of
$8.4 million primarily 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.
- Year-to-date 2023 depreciation and amortization was
$24.1 million compared to
$15.4 million in the prior year
period. The increase was driven in part by the $3.8 million impairment of media content assets
during the first half of the year.
- Second quarter 2023 Net Income (Loss) of $15.5 million compared to $(5.5) million in the prior year period, and
year-to-date 2023 Net Income (Loss) of $0.5
million compared to $10.3
million in the prior year period.
-
- Net Income (Loss) includes the impact from the change in fair
value of warrant liabilities, the restructuring charges, as well as
the impairment of media content assets.
- Second quarter 2023 Adjusted EBITDA of $34.4 million compared to $16.1 million in the prior year period, and
year-to-date 2023 Adjusted EBITDA of $41.1
million compared to $10.1
million in the prior year period.
- Second quarter 2023 Basic Earnings (Loss) per Share was
$0.03 and Diluted Earnings per Share
was $0.03, and year-to-date 2023
Basic Earnings per Share was $0.00
and year-to-date Diluted Earnings per Share was $0.00.
-
- Second quarter 2023 Adjusted EPS was $0.05, and year-to-date 2023 Adjusted EPS was
$0.01.
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 23-27% powered by Written Premium
growth of 13-15%
-
- 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. & U.K. to ~80%
- Significantly improved profitability through cost
containment measures and operational efficiencies
-
- Net Income (Loss) of $(12)-8
million
- Adjusted EBITDA of $60-80
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
|
|
$968,000
|
|
$1,000,000
|
|
23 %
|
|
27 %
|
Total Written Premium
(in thousands)
|
$776,664
|
|
$878,000
|
|
$894,000
|
|
13 %
|
|
15 %
|
Net Income (Loss)
(in thousands)
|
$2,403
|
|
$(12,000)
|
|
$8,000
|
|
$(14,403)
|
|
$5,597
|
Adjusted EBITDA (in
thousands)
|
$(1,940)
|
|
$60,000
|
|
$80,000
|
|
$61,940
|
|
$81,940
|
|
|
•
|
The Company's
outlook on the May 9, 2023 first quarter earnings call was for
Total Revenue growth of 22-26%, Written Premium growth of 11-13%,
Net Income of $(13)-7 million and Adjusted EBITDA of $55-75
million
|
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 second quarter and
year-to-date 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
U.K. and is home to Hagerty Drivers Club, a community of nearly
800,000 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, Twitter and
LinkedIn.
More information can be found at newsroom.hagerty.com.
Category: Financial
Source: Hagerty
Hagerty,
Inc. Condensed Consolidated Statements of
Operations (Unaudited)
|
|
|
Three months ended June
30,
|
|
2023
|
|
2022
|
|
$ Change
|
|
% Change
|
|
|
|
|
|
|
|
|
REVENUE:
|
in thousands (except
percentages)
|
Commission and fee
revenue
|
$ 110,187
|
|
$
95,506
|
|
$
14,681
|
|
15.4 %
|
Earned
premium
|
127,482
|
|
94,100
|
|
33,382
|
|
35.5 %
|
Membership,
marketplace and other revenue
|
23,575
|
|
16,411
|
|
7,164
|
|
43.7 %
|
Total
revenue
|
261,244
|
|
206,017
|
|
55,227
|
|
26.8 %
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
Salaries and
benefits
|
53,572
|
|
53,271
|
|
301
|
|
0.6 %
|
Ceding
commission
|
60,350
|
|
45,255
|
|
15,095
|
|
33.4 %
|
Losses and loss
adjustment expenses
|
53,564
|
|
38,620
|
|
14,944
|
|
38.7 %
|
Sales
expense
|
41,941
|
|
37,455
|
|
4,486
|
|
12.0 %
|
General and
administrative services
|
21,318
|
|
20,729
|
|
589
|
|
2.8 %
|
Depreciation and
amortization
|
10,397
|
|
8,300
|
|
2,097
|
|
25.3 %
|
Restructuring,
impairment and related charges, net
|
2,849
|
|
—
|
|
2,849
|
|
100.0 %
|
Total operating
expenses
|
243,991
|
|
203,630
|
|
40,361
|
|
19.8 %
|
OPERATING INCOME
(LOSS)
|
17,253
|
|
2,387
|
|
14,866
|
|
622.8 %
|
Change in fair value
of warrant liabilities
|
(1,754)
|
|
(5,400)
|
|
3,646
|
|
67.5 %
|
Interest and other
income (expense)
|
3,770
|
|
(353)
|
|
4,123
|
|
1,168.0 %
|
INCOME (LOSS) BEFORE
INCOME TAX EXPENSE
|
19,269
|
|
(3,366)
|
|
22,635
|
|
672.5 %
|
Income tax benefit
(expense)
|
(3,730)
|
|
(2,138)
|
|
(1,592)
|
|
74.5 %
|
Income (loss) from
equity method investment, net of tax
|
—
|
|
(39)
|
|
39
|
|
100.0 %
|
NET INCOME
(LOSS)
|
15,539
|
|
(5,543)
|
|
21,082
|
|
380.3 %
|
Net loss (income)
attributable to non-controlling interest
|
(13,134)
|
|
7
|
|
(13,141)
|
|
(187,728.6) %
|
NET INCOME (LOSS)
ATTRIBUTABLE TO CLASS A COMMON STOCKHOLDERS
|
$
2,405
|
|
$
(5,536)
|
|
$
7,941
|
|
(143.4) %
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share of Class A Common Stock:
|
|
|
|
|
|
|
|
Basic
|
$
0.03
|
|
$
(0.07)
|
|
|
|
|
Diluted
|
$
0.03
|
|
$
(0.07)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
of Class A Common Stock outstanding:
|
|
|
|
|
|
|
|
Basic
|
84,371
|
|
82,452
|
|
|
|
|
Diluted
|
85,563
|
|
82,452
|
|
|
|
|
Hagerty,
Inc. Condensed Consolidated Statements of
Operations (Unaudited)
|
|
|
|
Six months ended June
30,
|
|
2023
|
|
2022
|
|
$ Change
|
|
% Change
|
|
|
|
|
|
|
|
|
REVENUE:
|
in thousands (except
percentages and per share amounts)
|
Commission and fee
revenue
|
$ 184,799
|
|
$ 157,967
|
|
$
26,832
|
|
17.0 %
|
Earned
premium
|
244,713
|
|
183,232
|
|
61,481
|
|
33.6 %
|
Membership,
marketplace and other revenue
|
50,084
|
|
32,629
|
|
17,455
|
|
53.5 %
|
Total
revenue
|
479,596
|
|
373,828
|
|
105,768
|
|
28.3 %
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
Salaries and
benefits
|
108,804
|
|
99,747
|
|
9,057
|
|
9.1 %
|
Ceding
commission
|
115,775
|
|
87,633
|
|
28,142
|
|
32.1 %
|
Losses and loss
adjustment expenses
|
101,976
|
|
75,539
|
|
26,437
|
|
35.0 %
|
Sales
expense
|
77,054
|
|
65,892
|
|
11,162
|
|
16.9 %
|
General and
administrative services
|
42,699
|
|
40,187
|
|
2,512
|
|
6.3 %
|
Depreciation and
amortization
|
24,140
|
|
15,447
|
|
8,693
|
|
56.3 %
|
Restructuring,
impairment and related charges, net
|
8,384
|
|
—
|
|
8,384
|
|
100.0 %
|
Total operating
expenses
|
478,832
|
|
384,445
|
|
94,387
|
|
24.6 %
|
OPERATING INCOME
(LOSS)
|
764
|
|
(10,617)
|
|
11,381
|
|
107.2 %
|
Change in fair value
of warrant liabilities
|
(2,269)
|
|
26,286
|
|
(28,555)
|
|
(108.6) %
|
Interest and other
income (expense)
|
9,417
|
|
(1,037)
|
|
10,454
|
|
1,008.1 %
|
INCOME (LOSS) BEFORE
INCOME TAX EXPENSE
|
7,912
|
|
14,632
|
|
(6,720)
|
|
(45.9) %
|
Income tax benefit
(expense)
|
(7,398)
|
|
(4,168)
|
|
(3,230)
|
|
77.5 %
|
Income (loss) from
equity method investment, net of tax
|
—
|
|
(141)
|
|
141
|
|
100.0 %
|
NET INCOME
(LOSS)
|
514
|
|
10,323
|
|
(9,809)
|
|
(95.0) %
|
Net loss (income)
attributable to non-controlling interest
|
(208)
|
|
11,648
|
|
(11,856)
|
|
(101.8) %
|
NET INCOME (LOSS)
ATTRIBUTABLE TO CLASS A COMMON STOCKHOLDERS
|
$
306
|
|
$
21,971
|
|
$ (21,665)
|
|
(98.6) %
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share of Class A Common Stock:
|
|
|
|
|
|
|
|
Basic
|
$
—
|
|
$
0.27
|
|
|
|
|
Diluted
|
$
—
|
|
$
(0.02)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
of Class A Common Stock outstanding:
|
|
|
|
|
|
|
|
Basic
|
83,820
|
|
82,443
|
|
|
|
|
Diluted
|
84,424
|
|
334,702
|
|
|
|
|
Hagerty,
Inc. Condensed Consolidated Balance Sheets
(Unaudited)
|
|
|
June 30,
2023
|
|
December 31,
2022
|
|
|
|
|
ASSETS
|
in thousands (except
share amounts)
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
114,252
|
|
$
95,172
|
Restricted cash and
cash equivalents
|
518,109
|
|
444,019
|
Accounts
receivable
|
76,794
|
|
58,255
|
Premiums
receivable
|
193,268
|
|
100,700
|
Commissions
receivable
|
42,317
|
|
60,151
|
Notes
receivable
|
30,991
|
|
25,493
|
Deferred acquisition
costs, net
|
140,098
|
|
107,342
|
Other current
assets
|
63,929
|
|
45,651
|
Total current
assets
|
1,179,758
|
|
936,783
|
Notes
receivable
|
11,885
|
|
11,934
|
Property and equipment,
net
|
23,399
|
|
25,256
|
Lease right-of-use
assets
|
77,640
|
|
82,398
|
Intangible assets,
net
|
103,826
|
|
104,024
|
Goodwill
|
115,060
|
|
115,041
|
Other long-term
assets
|
40,962
|
|
37,082
|
TOTAL ASSETS
|
$
1,552,530
|
|
$
1,312,518
|
LIABILITIES,
TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts payable,
accrued expenses and other current liabilities
|
$
78,686
|
|
$
77,049
|
Losses payable and
provision for unpaid losses and loss adjustment expenses
|
172,133
|
|
167,257
|
Commissions
payable
|
101,739
|
|
77,075
|
Due to
insurers
|
128,622
|
|
68,171
|
Advanced
premiums
|
34,173
|
|
17,084
|
Unearned
premiums
|
303,585
|
|
235,462
|
Contract
liabilities
|
29,661
|
|
25,257
|
Total current
liabilities
|
848,599
|
|
667,355
|
Long-term lease
liabilities
|
77,084
|
|
80,772
|
Long-term
debt
|
80,841
|
|
108,280
|
Warrant
liabilities
|
47,830
|
|
45,561
|
Deferred tax
liability
|
16,501
|
|
12,850
|
Contract
liabilities
|
18,336
|
|
19,169
|
Other long-term
liabilities
|
5,370
|
|
11,162
|
TOTAL
LIABILITIES
|
1,094,561
|
|
945,149
|
Commitments and
Contingencies
|
—
|
|
—
|
TEMPORARY
EQUITY(1)
|
|
|
|
Preferred stock,
$0.0001 par value (20,000,000 shares authorized, 8,483,561 Series A
Convertible Preferred Stock issued and outstanding as of
June 30, 2023 and no shares issued and outstanding as of
December 31, 2022)
|
79,159
|
|
—
|
STOCKHOLDERS'
EQUITY
|
|
|
|
Class A Common Stock,
$0.0001 par value (500,000,000 shares authorized, 84,405,625 and
83,202,969 issued and outstanding as of June 30, 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 June 30, 2023 and
December 31, 2022)
|
25
|
|
25
|
Additional paid-in
capital
|
556,595
|
|
549,034
|
Accumulated earnings
(deficit)
|
(489,296)
|
|
(489,602)
|
Accumulated other
comprehensive income (loss)
|
83
|
|
(213)
|
Total stockholders'
equity
|
67,415
|
|
59,252
|
Non-controlling
interest
|
311,395
|
|
308,117
|
Total
equity
|
378,810
|
|
367,369
|
TOTAL LIABILITIES,
TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY
|
$
1,552,530
|
|
$
1,312,518
|
|
|
|
|
(1) The
Series A Convertible Preferred Stock is recorded within Temporary
Equity because it has equity conversion and cash redemption
features.
|
Hagerty,
Inc. Condensed Consolidated Statements of Cash
Flows (Unaudited)
|
|
|
Six months
ended
June 30,
|
|
2023
|
|
2022
|
|
|
|
|
OPERATING
ACTIVITIES:
|
in
thousands
|
Net income
(loss)
|
$
514
|
|
$
10,323
|
Adjustments to
reconcile net income (loss) to net cash from operating
activities:
|
|
|
|
Change in fair value of
warrant liabilities
|
2,269
|
|
(26,286)
|
Depreciation and
amortization expense
|
24,140
|
|
15,447
|
Provision for deferred
taxes
|
3,480
|
|
2,553
|
Impairment of operating
lease right-of-use assets
|
1,147
|
|
—
|
Loss on disposals of
equipment, software and other assets
|
1,668
|
|
361
|
Share-based
compensation expense
|
8,222
|
|
4,307
|
Other
|
958
|
|
229
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts, premiums and
commission receivable
|
(93,549)
|
|
(54,294)
|
Deferred acquisition
costs
|
(32,756)
|
|
(23,307)
|
Losses payable and
provision for unpaid losses and loss adjustment expenses
|
4,876
|
|
14,570
|
Commissions
payable
|
24,664
|
|
14,795
|
Due to
insurers
|
60,174
|
|
52,486
|
Advanced
premiums
|
17,043
|
|
15,032
|
Unearned
premiums
|
68,123
|
|
49,395
|
Other assets and
liabilities, net
|
(20,416)
|
|
(15,686)
|
Net Cash Provided by
Operating Activities
|
70,557
|
|
59,925
|
INVESTING
ACTIVITIES:
|
|
|
|
Capital
expenditures
|
(16,251)
|
|
(21,520)
|
Acquisitions, net of
cash acquired
|
(7,084)
|
|
(13,520)
|
Purchase of previously
held equity method investment
|
—
|
|
(15,250)
|
Issuance of notes
receivable
|
(11,015)
|
|
—
|
Collection of notes
receivable
|
6,235
|
|
—
|
Purchase of fixed
income securities
|
(6,172)
|
|
(2,448)
|
Maturities of fixed
income securities
|
2,964
|
|
1,216
|
Other investing
activities
|
22
|
|
(1,639)
|
Net Cash Used in
Investing Activities
|
(31,301)
|
|
(53,161)
|
FINANCING
ACTIVITIES:
|
|
Payments on long-term
debt
|
(99,250)
|
|
(91,500)
|
Proceeds from long-term
debt
|
71,590
|
|
42,000
|
Proceeds from issuance
of preferred stock, net of issuance costs
|
79,159
|
|
—
|
Contribution from
non-controlling interest
|
600
|
|
1,000
|
Proceeds from issuance
of common stock under employee stock purchase plan
|
906
|
|
—
|
Net Cash Provided by
(Used in) Financing Activities
|
53,005
|
|
(48,500)
|
Effect of exchange rate
changes on cash and cash equivalents and restricted cash and cash
equivalents
|
909
|
|
(787)
|
|
|
|
|
Change in cash and cash
equivalents and restricted cash and cash equivalents
|
93,170
|
|
(42,523)
|
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
|
$
632,361
|
|
$
561,449
|
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
June 30,
|
|
Six months
ended
June 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Operational
Metrics
|
|
|
|
|
|
|
|
Total Written Premium
(in thousands)
|
$
275,895
|
|
$
237,697
|
|
$
458,745
|
|
$
392,487
|
Loss Ratio
|
42.0 %
|
|
41.0 %
|
|
41.7 %
|
|
41.2 %
|
New Business Count
— Insurance
|
80,140
|
|
74,922
|
|
131,902
|
|
122,436
|
|
|
|
|
|
|
|
|
GAAP
Measures
|
|
|
|
|
|
|
|
Total Revenue (in
thousands)
|
$
261,244
|
|
$
206,017
|
|
$
479,596
|
|
$
373,828
|
Operating Income
(Loss) (in thousands)
|
$
17,253
|
|
$ 2,387
|
|
$
764
|
|
$
(10,617)
|
Net Income (Loss)
(in thousands)
|
$
15,539
|
|
$
(5,543)
|
|
$
514
|
|
$
10,323
|
Basic Earnings (Loss)
Per Share
|
$
0.03
|
|
$ (0.07)
|
|
$
—
|
|
$
0.27
|
|
|
|
|
|
|
|
|
Non-GAAP Financial
Measures
|
|
|
|
|
|
|
|
Adjusted EBITDA (in
thousands)
|
$
34,367
|
|
$
16,065
|
|
$
41,072
|
|
$
10,106
|
Adjusted Earnings
(Loss) Per Share
|
$
0.05
|
|
$
—
|
|
$
0.01
|
|
$ (0.04)
|
|
|
June 30,
2023
|
|
December 31,
2022
|
Operational
Metrics
|
|
|
|
Policies in
Force
|
1,365,718
|
|
1,315,977
|
Policies in Force
Retention
|
88.0 %
|
|
88.0 %
|
Vehicles in
Force
|
2,319,953
|
|
2,234,461
|
HDC Paid Member
Count
|
791,895
|
|
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) share-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 and
six months ended June 30, 2023 and 2022 to the most directly
comparable GAAP measure, which is Net income (loss):
|
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
in
thousands
|
Net income
(loss)
|
$
15,539
|
|
$
(5,543)
|
|
$
514
|
|
$
10,323
|
Interest and other
(income) expense
|
(3,770)
|
|
353
|
|
(9,417)
|
|
1,037
|
Income tax (benefit)
expense
|
3,730
|
|
2,138
|
|
7,398
|
|
4,168
|
Depreciation and
amortization
|
10,397
|
|
8,300
|
|
24,140
|
|
15,447
|
Restructuring,
impairment and related charges, net
|
2,849
|
|
—
|
|
8,384
|
|
—
|
Change in fair value of
warrant liabilities
|
1,754
|
|
5,400
|
|
2,269
|
|
(26,286)
|
Share-based
compensation expense
|
4,018
|
|
4,307
|
|
7,934
|
|
4,307
|
Other unusual
items(1)
|
(150)
|
|
1,110
|
|
(150)
|
|
1,110
|
Adjusted
EBITDA
|
$
34,367
|
|
$
16,065
|
|
$
41,072
|
|
$
10,106
|
|
|
|
|
|
|
|
|
|
(1)
|
Other unusual items
includes a net legal settlement recovery recognized in the three
and six months ended June 30, 2023 and non-restructuring severance
expense recognized in the three and six months ended June 30,
2022.
|
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)
|
$
(12,000)
|
|
$
8,000
|
Interest and other
(income) expense
|
(13,500)
|
|
(13,500)
|
Income tax (benefit)
expense
|
14,300
|
|
14,300
|
Depreciation and
amortization
|
43,047
|
|
43,047
|
Restructuring,
impairment and related charges, net
|
8,383
|
|
8,383
|
Change in fair value
of warrant liabilities
|
2,270
|
|
2,270
|
Share-based
compensation expense
|
17,500
|
|
17,500
|
Adjusted
EBITDA
|
$
60,000
|
|
$
80,000
|
|
|
|
|
|
Adjusted EPS
We define Adjusted Earnings (Loss) Per Share ("Adjusted EPS") as
consolidated Net income (loss), less the change in fair value of
our warrants divided by our outstanding and total potentially
dilutive securities, which includes (i) the weighted-average issued
and outstanding shares of Class A Common Stock; (ii) all issued and
outstanding non-controlling interest Hagerty Group
Units; (iii) all unexercised warrants; (iv) all unissued
share-based compensation awards; and (v) all issued and outstanding
shares of the Series A Convertible Preferred Stock.
In the third quarter of 2022, we began removing (i) the change
in fair value of our warrants and (ii) the revaluation gain on
previously held equity method investment from consolidated Net
income (loss) 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)
available to Class A Common Stockholders divided by the weighted
average number of Class A Common Stock shares 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 securities analysts, investors and other
interested parties in evaluating the consolidated performance of
other companies in our industry. We also believe that Adjusted EPS,
which compares our consolidated Net income (loss) 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
June 30,
|
|
Six months
ended
June 30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
in thousands (except
per share amounts)
|
Numerator:
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Class A Common
Stockholders(1)
|
$
2,405
|
|
$
(5,536)
|
|
$
306
|
|
$
21,971
|
Net income (loss)
attributable to non-controlling interest
|
13,134
|
|
(7)
|
|
208
|
|
(11,648)
|
Consolidated net income
(loss)
|
15,539
|
|
(5,543)
|
|
514
|
|
10,323
|
Change in fair value
of warrant liabilities
|
1,754
|
|
5,400
|
|
2,269
|
|
(26,286)
|
Adjusted consolidated
net income (loss)(2)
|
$
17,293
|
|
$
(143)
|
|
$
2,783
|
|
$ (15,963)
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
Weighted average shares
of Class A Common Stock outstanding — basic(1)
|
84,371
|
|
82,452
|
|
83,820
|
|
82,443
|
Total potentially
dilutive securities outstanding:
|
|
|
|
|
|
|
|
Conversion of
non-controlling interest Hagerty Group Units to Class A Common
Stock
|
255,499
|
|
251,034
|
|
255,499
|
|
251,034
|
Conversion of Series A
Convertible Preferred Stock to Class A Common Stock
|
6,785
|
|
—
|
|
6,785
|
|
—
|
Total warrants
outstanding
|
19,484
|
|
19,484
|
|
19,484
|
|
19,484
|
Total unissued
share-based compensation awards
|
7,022
|
|
6,851
|
|
7,022
|
|
6,851
|
Potentially dilutive
shares outstanding
|
288,790
|
|
277,369
|
|
288,790
|
|
277,369
|
Fully dilutive shares
outstanding(2)
|
373,161
|
|
359,821
|
|
372,610
|
|
359,812
|
|
|
|
|
|
|
|
|
|
Basic EPS = (Net income
(loss) available to Class A Common Stockholders / Weighted-average
shares of Class A Common Stock
outstanding)(1)
|
$
0.03
|
|
$
(0.07)
|
|
$
—
|
|
$
0.27
|
|
|
|
|
|
|
|
|
|
Adjusted EPS =
(Adjusted consolidated net income (loss) / Fully dilutive shares
outstanding)(2)
|
$
0.05
|
|
$
—
|
|
$
0.01
|
|
$
(0.04)
|
|
|
|
|
|
|
|
|
|
(1)
|
Numerator and
Denominator of the GAAP measure Basic EPS
|
(2)
|
Numerator and
Denominator of the non-GAAP measure Adjusted EPS
|
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SOURCE Hagerty