Q1 2021 BRP Group Inc Earnings Call
Greetings and welcome to the E. R. P group incorporated first quarter 2021 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note. This conference is being record.
I will now turn the conference over to your host Austin Rock director of strategy and partnership. Thank you you may begin.
Welcome to beer P group's first quarter 2021 earnings call. Today's call is being recorded first quarter 2021 financial results supplemental information and form 10-Q were issued earlier. This afternoon and are available on the company's website at IR Dot Baldwin risk partners Dot com.
Please note that remarks made today may include forward looking statements, including certain expectations related to COVID-19, and other matters forward looking statements are subject to risks and uncertainties and a variety of factors that may cause actual results to differ materially from those contemplated by such statements for a more detailed discussion of those factors.
Please refer to the company's earnings release for this quarter and to our most recent SEC filings, including our most recent form 10-K, all of which are available on the B R. P website.
During the call today. The company May also discuss certain non-GAAP financial measures for a reconciliation of these measures to the most closely comparable GAAP measures. Please refer to the company's earnings announcement and supplement our information both of which have been posted on the company's website at IR. The Baldwin risk partners Dot com and can be found in the company's S.
The SEC filings.
I will now hand, the call it the Trevor Baldwin Chief Executive Officer of B R. P group.
Thank you Austin and good afternoon, everyone welcome to our first quarter of 2021 earnings call. We appreciate your taking the time to join US and your interest in DRP group.
We had another very strong quarter in Q1 generating more revenue from that single quarter than we reported for the entire of full year of 2019 continued.
The momentum in the MGA of the future of led the way to this quarter's strong growth. We were also bolstered by strong early performance from the high quality partner firms. The joined US throughout 2020. In addition to accelerating trends during the quarter across all segments for our core commissions and fees, which excludes contingent.
And the other income.
For the quarter, we recorded total year over year of revenue growth of 182% of $153 million.
Organic revenue growth of 14 per cent the.
The MGA of the future group 56 per cent during the quarter and we remain incredibly excited about its trajectory given the momentum that has thus far of carried into the second quarter and as we head into the summer months historically, the MGA of the future of seasonally strongest part of the year.
We also successfully launched our new private flood insurance product in April.
Across the balance of our business momentum continues to build particularly as we begin to lap COVID-19 impacted months of 2020 as highlighted by double digit year over year organic core commission revenue growth, which excludes contingent in the other income during March and each of our operating.
Groups.
As a result of this momentum, which we saw continue into April we currently expect high teens organic growth for the overall business in the second quarter above our target of 10 to 15 per cent range.
On the partnership front.
Clothes deal activity was relatively light during the quarter as we anticipated partnership activity has picked up meaningfully and our pipeline continues to gain momentum because we have multiple signed letters of intent for deals in a broad range of sizes.
Currently we expect most of the deals under LOI today to have affected the closing dates in the third quarter.
We remain committed to carving out an exclusive niches of the partner of choice for the industry's premier independent firms, maintaining an incredibly tight filter for evaluating partnership opportunities.
We are focused only on firms, we believe to be of uniquely high quality with strong track records of organic growth because ultimately this year's partnerships accrued of next years of organic growth.
That's how we think about assessing the partnership opportunities philosophically, but it also describes how the organic growth calculation works, it's worth noting that several of our high quality partnerships from 2020 will enter the organic growth calculation in the next several months and the inclusion of firms like Rosenthal and <unk>.
When they did benefits in our organic growth calculation gives us added confidence in our organic growth expectations.
Finally, we remain steadfastly focused on continuing to thoughtfully invest for the future across our technology infrastructure and talent base to build on our recent success.
In closing.
Proud of the performance, we've been able to generate thus far in 2021 and the significant momentum we're carrying into the second quarter all of which is made possible by our exceptional colleagues, who continue to work tirelessly to deliver for our clients and stakeholders to all of her colleagues of huge. Thank you you are the <unk>.
Needs of our business continues to be in the strongest position. It has been in the firm's history with that I will turn the call over to Brad to go into more detail on our Q1 results.
Thanks, Trevor and good afternoon to everyone on the call for.
For the first quarter, we generated revenue growth of 182% to $152 8 million the.
The revenue growth was driven once again by our hybrid growth model, namely outsized organic growth combined with contributions from new partnerships.
We once again generated double digit organic revenue growth on a year over year basis recording 14% organic growth for the quarter. Thanks, primarily to particularly strong performance from our specialty segment driven by the MGA of the future as.
As well as accelerating trends during the quarter and all of our segment.
This was despite some headwinds in organic contingent income revenue across our middle market and mainstreet segments.
Given that partnerships are an important portion of our own ongoing growth strategy in our regulatory filings. We also provide revenue metrics on an unaudited pro forma basis.
Provides investors with the more apples to apples comparison is it part of 2021 partnerships had been acquired on January one 2021.
For the first quarter of 2021 unaudited pro forma revenue was $153 3 million.
And all of the pro forma information should not be relied upon as being indicative of the historical results. The wood had been obtained if the partnerships had occurred on that date, nor the results that may be obtained in the future.
GAAP net income for the first quarter was $30 6 million or 32 cents per fully diluted share.
Adjusted net income for the first quarter of 2021, which excludes share based compensation amortization and other one time expenses was $42 5 million or <unk> 44 per fully diluted share.
Table reconciling GAAP net income to adjusted net income can be found in our earnings release, and our 10-Q filed with the SEC.
Adjusted EBITDA for the first quarter of 2021 rose, 276% over the prior year period to $52 7 million.
As a reminder, in Q1 2020, we had $54 2 million in revenue.
We almost generated as much adjusted EBITDA. This Q1 is we did revenue last Q1.
Adjusted EBITDA margin was 35 per cent for the first quarter of 2021 compared to 26% in the prior year period.
As a reminder, our adjusted EBITDA margins are seasonal in nature with Q1 being the strongest quarter, we typically record lower margins throughout the balance of the year.
For the second quarter, we would anticipate an adjusted EBITDA margin of approximately 150 to 200 basis points lower than the 16% we experienced in the same quarter of 2020, which is entirely timing related as a result of the seasonality of the business changing given our M&A success for.
For the full year, we now expect 150 to 200 basis point margin increase in adjusted EBITDA margin relative to last year's 18 per cent.
Our MGA of the future platform continues to outperform growing 56% during the quarter compared to the prior year period.
The results were driven by continued growth in renters and supplemented by the master tenant liability product, we launched in the fourth quarter of 2020.
As a reminder, our master tenant liability product allows property managers true managers to identify tenants without renters insurance and obtain insurance for their units.
Particularly exciting product for us given our multifamily expertise and existing client bases across both of the MGA and our middle market business.
Also related to the MGA of the future we successfully launched our new private flood product in April and continued to work on the launch of our Florida homeowners product later this year.
We don't anticipate flooding her to begin meaningfully contributing to growth in the MGA until 2022, but as we've previously stated we believe our ability to launch additional products in the MGA continues to be a key component to our long term success and we will remain focused on doing so.
Within renters policies enforce increased by over 41000 from December 31, 2022, 566000 as of March 31, as compared to an increase of 27000 over the same period last year.
As of May eight policies in force of increased further to approximately 582000.
Since our last earnings call on March 11, we also turned on an additional 250000 units, bringing the total unit count and which are of renter solution is available to roughly $8 5 million, providing a nice runway for continued future growth.
Finally, we took advantage of our larger size and fantastic performance during a tough COVID-19 economy, coupled with our revolving lenders willingness and increased our leverage covenant to six times versus five times.
This gives us additional margin of safety and we thought accepting an offer to relax covenants as always in our shareholders' best interest.
I will now turn the call over to Chris.
Thanks, Brad and good afternoon to everyone on the call a few closing remarks before we hit the Q&A in summary, we're excited about the trends we were seeing in the business Q2 of started off with the potential to the one of our best if not the best quarters ever as a public company from an organic growth standpoint, and in terms of meaningful progress in our partnership pipeline.
We believe we are uniquely well positioned for a confluence of macroeconomic factors that should further support our relative performance, including a favorable insurance rate environment. The.
The continued reopening in the broader economy and the opportunity to be a beneficiary of anticipated tax legislation both of them that were not a significant corporate taxpayer over the near term and the potential partners wanting to sell in front of capital gains tax increase.
Thank you for your time, and we'll now open up the call for Q&A operator.
At this time, we'll be conducting a question and answer session. He would like to ask a question. Please press star one on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue for participants using speaker equipment it may be necessary.
Or you can pick up of your handset before pressing the star one moment, please while the poll for questions.
Our first question is from Elyse Greenspan of Wells Fargo. Please state your question.
Hi, Thanks, good evening.
First question.
I guess I'll start with on the margin side of.
So the margin came out and a good amount above the expectation. This quarter you guys were the 35 I think you had guided to around the 30, you can get on kind of you know spend a lot of a bit more time, explaining I guess, what I can think of.
The quarter and if the current quarter with better.
There is the potential for the out quarters of the here could potentially come in better than plan as well.
Hey, Elyse. Good evening. This is Trevor I'll I'll have the bread and.
To that.
Yes, I would say.
M&A continues to impact the seasonality of our business and as we said on the call. We expect the 150 to 200 basis points of margin expansion over our 2020 actual adjusted EBITDA margin for the full year of 2021, So I would not expect to see that continued margin expansion through the balance of the year.
Yeah.
Yeah.
Yes, that's it.
Okay. That's helpful. And then in terms of the organic you guys called out I think some continued headwinds yeah. It sounds like away from that the business is trending well on you know per how you've seen organic to start the quarter is there anything you can give us the the fact the GT sorry is there any way you can give us a sense of.
The headwinds that you saw in the first quarter and.
Headwinds persisting.
Embedded within your second quarter guide.
Hey, Hey, Elyse.
Feel like those headwinds are.
Fully behind US as a reminder of why of the loss ratio dependent contingencies hit in the first quarter. What I would say is we're seeing accelerating trends across our business in March and April which are the first two kind of months that are lapping COVID-19 periods in the prior year, specifically, saying.
Double digit organic growth of core commission revenue across all four of our operating groups in the in the month of March giving us a lot of confidence around the performance of the business and why we feel good setting an expectation of high teens organic growth for the second quarter, which is the highest expectation.
Set as a public company.
And so within that high teens.
For the second quarter of the organic what is that assuming all of them does it assuming youre maintaining the similar level of growth for the MGA of the future of their tests.
Some of it of assumption for that business embedded within the home.
I'd say.
There is a degree of conservatism across how we look at setting expectations across our business and we continue to feel really good about the MGA of the future of delivering on our 40% organic growth target for the year and that's how we think about setting expectations.
Okay. Thanks for the kind of.
Yes, Thanks Louise.
Our next question is from Meyer Shields of <unk>. Please state your question.
Great. Thanks, good afternoon, everyone.
Hey, Matt how are you.
Oh, I'm, sorry, I'm good how are your type of.
Doing well.
We talked to like the pieces of come into place for flood and Florida homeowners to become a more meaningful.
Growth driver because it sounds like that's expected in 2022 of them not disputing that low obviously, but I just don't understand what what has to happen internally and externally.
For growth really accelerate.
Yes, I'd say in there on the flood side, we successfully launched the product in April.
And you know, we're kind of fine tuning that product set of.
And continuing to expand the distribution across our internal distribution force and and as we sit here today remain very excited about the impact that will have on our business in 2022 and beyond.
You know the external market dynamics are such that the solutions kind of kind of gain a lot of traction on the AUM side I think we're in a similar scenario the primary.
Success factors getting the product launch we refiled the home product in April and have a.
Our are confident we'll be in a position to get that formally launched in the back half of the year positioning us incredibly well to provide a unique solution in the Florida marketplace is experiencing significant challenges as you well know.
So the summary is we have the distribution we feel like the product is built.
Very well to fit the needs and and the well received in the target clientele that we have and the external market dynamics are frankly going to create an environment where the.
The ability to sell that product is going to be significant.
Okay. No. That's very helpful. Thanks, again flip topics I know last quarter. There was some discussion about employment numbers.
Your insured clients.
Do we end up in terms of how that trended over the course of the the first quarter and maybe what you're seeing so far in the second.
Yeah. So I think you know how of that bleeds in as two of the three months in the first quarter. We're lapping non COVID-19 periods for January and February if I look at the combined impact of rate and exposure on our organic revenue results for the quarter. It was plus one 4%, but you should think about.
Rate pulling that way up and exposure being meaningfully negative and so that played out in January and February as we lap those COVID-19 periods as we lap our.
Non COVID-19 periods as we lapped our first COVID-19 period in March we saw the organic underlying kind of exposure trends in organic growth profile across our business accelerate meaningfully and we've seen that continue into April.
And so all of that pointing towards our drilling confidence around the outside of the performance that we will continue to see from the business over the balance of the year.
Okay perfect. Thank you so much.
Thanks Mary.
Our next question is from Josh Shanker of Bank of America. Please state your question.
Hey, good evening, everybody how are you doing there.
Doing well, how 'bout yourself good good so I'm wondering.
What you can do and giving us some granularity on organic growth talking about.
Benefits of organic growth versus property and cash the organic growth organic growth from acquisitions you did in <unk>.
There are obviously the acquired premiums for you, but those business have been growing at what piece of they've been growing versus other.
The the pace of legacy businesses and whatnot, I mean, you're going to answer it anyway, you want but can you break it up into different sections, and then talk about the growth in different areas.
Yes, absolutely Josh will hit some of that I'm, not going to dive into kind of specifics between benefits and property and casualty, but what I can tell you is the trends are accelerating across all of our segments as we begin lapping the COVID-19 period.
As I mentioned earlier with mayor of the impact of rate and exposure on the business for the quarter was plus one 4% rate pulling that meaningfully up exposure of pulling it meaningfully down.
As we look at the core commission organic growth performance across the business and.
Stepping aside for Medicare It was high single digits to double digits across main street middle market and specialty.
And and accelerating in margin and in the April.
Feeling really good about the overall trends in that business I'd say specific to employee benefits January tends to be the heaviest renewal period for that part of our business.
That was lapping of non COVID-19 period, and so you could expect a meaningful amount of the exposure pull them would of been seen in that January period, but the overcome via the overall underlying growth in the business and client specific to the 2020 of partnerships.
We continue to be very pleased with the overall performance of those businesses performing at or above on a macro level, our budgeted expectations, which are double digits in nature. When I asked Brad to also just provide a little bit more granularity around the overall revenue.
And seasonality, we are saying in the 2020 partnerships.
Yeah. Thanks, Trevor if you look at our actuals for Q1 and compare that to the pro forma Q1 that we presented.
In our earnings supplement.
The combination of purchase accounting and phasing of revenue under 606 resulted in a timing difference of about $11 million, which we expect to show up.
In Q3, and Q4, but as Trevor mentioned, our new partnerships very excited about their performance. They performed in line with our expectations and our budget, which is reflective of double digit organic growth and Josh as a reminder, this is Chris the partnerships aren't going to hit actual organic growth until the 12 month anniversary.
But doing very well initially.
Thank you for the details of all can we talk a lot about client engagement and now we're in May and the economy is opening how is the day to day changing at the Baldwin and maybe it's the it's not coming from we were always fully engage but maybe clients are more engaged and more willing to.
Two of meat and whatnot, how are things evolving right now.
Yeah, Josh we're certainly seeing the world reopen.
Clients are more willing to get together in person, although those trends differ regionally across the country.
I would tell you is the Starkest change is that of the psychology of our clients and there is growing.
The momentum around the overall economic tailwind that are being provided by reopening.
And many of our clients being.
Very bullish on the trends in their overall businesses through the balance of the year.
At that point in particular is noteworthy because at.
The European insurance and financial services broadly.
We are levered meaningfully to the reopening the economy and as our clients begin to.
Re rate up their underlying exposure units that are used to price in and ultimately set of insurance cost that flow through in a positive manner for our overall business and so we.
We feel like where we are incredibly well positioned.
And levered to the growing tailwind that we're seeing.
Across the economy, and we're certainly sensing that positivity and the psychology of our clients broadly speaking.
If I can get one more in can we talk about the potential.
For that to play into the Medicare benefits business. I mean is there a been a benefit to the reopening of economy and though.
Those lines, obviously of a significant presence or I mean, I feel like those are non cyclical businesses, the non economically sensitive business or maybe I'm thinking about the thing correctly yeah.
I'd say, that's accurate Josh the Medicare business, historically has not been kind of positively or negatively correlated with the economy in a meaningful manner of what I would tell you is the way we go to market our Medicare business. It was negatively correlated to a pandemic environment, where our client constituency was not in a position to meet in person and get.
And so what we saw is people.
Stuck with the existing plans and there were less planned moves and changes during the AEP as the worlds begin begun reopening for the first quarter of the amount of activity, we're seeing across our agent base in the Medicare business has grown dramatically on a year over year basis, and we believe we're well positioned to be of a net winner of.
These reopening trends and the ability for people to get back out and.
And frankly reevaluate Medicare options in the coming selling season that they didn't do this year as the result of the pandemic environment.
Alright, well thank you for all the answers.
And good luck with the reopening.
Thanks, Josh.
Our next question is from Pablo <unk> of Jpmorgan. Please state your question.
Hi.
I just wanted to follow up on your comments about organic growth. The specifically on the commercial side I think for where you had mentioned you expect the double teens growth for all segments in the second quarter and the context of my question is that if you look at.
The growth that you posted last year and this is based on my tracking you posted 16% organic in the middle market. So youre, saying you think you can grow double digits off of that level. That's the first question.
Yes, we do.
Okay and the.
Then the second question.
Was on.
I guess so.
This quarter the week of segments, where Medicare at main Street, you sort of a question of what happened in Medicare and I presume I was the.
Is happening in your markets right sort of us opening up pretty well on main street was it mostly just the contingents or.
Yes, I know you're by the third.
Piece of pay selling and people not being able to show up in the sort of thing.
No. It's purely of contingent story Pablo I mean, the majority of our business has done over the phone or electronically and main street and so.
And that's showing through in the underlying.
Core Commission organic trends, we saw for the quarter and frankly in the April.
Okay.
And then the last one for me could you just comment I guess broadly in the deal environment, where multiples now.
Yes.
I guess do you think youre still seeing value out there vis vis what you are willing to pay in.
Just general competitive environment for deals overall.
Yeah, So pablo the M&A environment.
<unk> is highly competitive pricing continues to be a relative high similar to where it was in the fourth quarter. What I would tell you as activity has picked up meaningfully our pipeline is robust and we have partnership opportunities under LOI across a range of sizes, what I would say is where we see value in opera.
Attunity is in growth and we think growth is as miss valued.
And that has candidly of function of the types of buyers that are most prolific in our space.
Valuing kind of near term.
The margin.
Rather than than growth and so we feel like there is significant opportunity for us to continue to find meaningful arbitrage the.
Our focus on growth and pricing that effectively to create real long term shareholder value.
Thanks for your answers.
Thanks Pablo.
Our next question is from Dan Shannon of Jefferies. Please state your question.
Hi, Thanks, good evening the.
Question is of little follow up on the on the M&A backdrop in the last quarter, you talked about confidence around the $120 million to $150 million in.
Deployments this year and just thinking about what you said and confirming that you are the most of the deals that are either LOI or in the pipeline today are more third or fourth quarter weighted is that three of the thing thats a bit of of air pocket here in the first half of the year.
Yes, that's exactly the way to think about it Dan.
As we had talked about.
For the first quarter and it has been relatively light and we expect the second quarter from of closings perspective to be relatively light, but our pipeline is robust activities meaningfully picked up and we're in dialogue with an.
<unk> slate of very high quality organizations that we believe would be a really good fit with the <unk> organization and brings significant value and growth opportunities.
Great and then just to clarify.
I heard correctly on the margin outlook for <unk> is.
It's going to be lower than the last quarter I am sorry 2020.
Margin and wanted to just clarify why that would be.
Yes, we continue to see seasonality shift in our business as a result of M&A and as we communicated on the yearend call continuing to make meaningful investment in the business.
So thats the reason for the shift in.
But to clarify then are our outlook for the full year margin remain as frankly tightened on the bottom end up 50 basis points to 150 to 200 basis point margin accretion over last year's results.
Understood. Okay. Thank you.
Thanks, Dan.
Our next question is from Greg Peters of Raymond James Please state your question.
Hi, good afternoon, the first question.
We're hearing about pockets of labor shortages and we're hearing also about inflationary pressures and I'm just curious.
All of the trouble you might think these items will affect our customers and the affect your business as we think about the next several quarters.
Hey, Greg good.
Good evening, so what I would tell you is we are definitely hearing from our clients around challenge is finding talent.
Around supply chain challenges and I think that's certainly creating some near term inflation pressure around wages and ultimately around products.
I'd tell you specific to our businesses. We've done we've spent a lot of time positioning ourselves as the destination for the industry's top talent and that is paying off in spades as of April 23rd We've hired 180, new people organically into the business. This year of compares to <unk>.
For new hires for the same time period last year, so specific to our business, while finding top tier talent is always a challenge we feel like our reputation as a premier destination in the industry.
The way, we behave and frankly stay true to our core values during the pandemic.
Have all positioned us incredibly well.
To be of net beneficiary of continuing to attract incredible talent and an increase the.
The intellectual capital the cash.
Capabilities and Knowhow that we have across our platform.
Great.
Second question I had is more technical.
But I did observe that there was pressure on your free cash flow in the first quarter.
Relative to a year ago, I assume theres, some timing differences, but maybe you could.
Give us some color around what happened with free cash flow.
In the first quarter and what we should be thinking about free cash flow for the full year or whether you want to talk about it in the context of conversion ratio or do you want to talk about it in the context of what you did last year and if you expect it to grow.
For some additional perspective around that would be helpful.
Yes, Greg this is Brad so we look at cash flow from operations net.
Net of AR and AP because of the fact that we hold fiduciary cash on our balance sheet. So timing of receipt of payment of the fiduciary cash can have a large impact on our operating cash flows which you have seen this quarter.
When removing that and our AP cash flow impact.
Our free cash flow for the quarter was $44 million.
Which is an 80% free cash flow conversion from adjusted EBITDA.
We've communicated in the past that we would expect that to be approximately 70% conversion for the full year.
So that's how you can be thinking about.
Alright, thanks for the answers.
Thanks, Craig.
Our next question is from Elyse Greenspan of Wells Fargo. Please state your question.
Hey, Lee.
Hi, Thanks for taking the follow up I guess I wanted to come back on line.
Thank you mentioned you changed your confidence.
I'll take the leverage.
Times versus the normal five times so again.
It sounds like the deal activity could be more elevated on later this year. So is that just to give you the flexibility to the public upon.
<unk>.
Materialize later in 2021.
Hey, Lisa it's Brad So we're significantly larger business now with continued outperformance.
So we believed it was prudent to take the relaxed covenant that was offered by our banking group. This.
This gives us more flexibility to take leverage of both above four five times for a short period of time to get a large deal done. However, we still plan to operate the business at three 5% of four times and I'll, let Chris comment a little on the M&A assets, yes.
For at least I would just add on my kind of quick comments at the end of the prepared remarks.
We're really excited about Q2, both on the organic side and on what's coming down the partnership pipeline and I think added flexibility in situations like that is always key.
And then it also sounds like the $1 25 to 150 of M&A for the year is still the guidance Mike.
It might be more weighted.
To the queue.
Or is that a correct statement.
Yes, we remain confident in the M&A outlook, the lease and we would expect it to be.
Awaiting that heavily skewed to Q3 and Q4.
Okay, and then you mentioned.
You've got the pipeline.
<unk>.
I think you said something about NOI range of sizes.
I know you don't typically by like one of go into all of the detail of but as the way to give us the size.
Smaller larger deals like kind of.
What size deals are embedded within the pipelines of all.
Yeah, we just don't want to get too much but obviously, we've done some large deals last year and I think the pipeline this year, where we sit right now as well as deals under a low I would reflect some of the stuff we did last year.
Okay. Thank you had conversations with.
Potential buyers.
Given that theory.
All of the economy is getting better that things are being rolled out and what kind of on the flip side of COVID-19 has the discussions around the deal changed meaning like you.
More and more paid upfront.
Analysis of you've seen kind of a switch in payment for kids.
Perhaps.
Question, you were talking about the questions you guys had about a year ago anyway for turnkey.
Yeah, I mean, I mean, if I'm comparing to a year ago, yes valuations of ticked up if I'm comparing to the third and fourth quarter I'd say, it's relatively the same.
Now remember a year ago of lease we were and kind of for the peak of uncertainty relative to COVID-19 and what the impact that was going to have on.
The insurance brokerage industry, and the economy broadly, but relative to kind of the the type of discussions and the tenor of those conversations very consistent with what we're seeing in Q3 and Q4, if anything I'd just say there is growing confidence.
From potential sellers around the ability to.
Achieve results that are in the upper end of the potential earn out results as a result of the broader economic.
Economic and rate environment that the persist.
Okay. That's helpful. Thanks for thanks for the color.
Thanks Elyse.
We have reached the end of the question and answer session I will now turn the call back over to Trevor Baldwin for closing remarks.
Thank you everyone for joining us for our Q1 2021 earnings call.
This evening.
We remain incredibly excited around the.
The position of our businesses and for the balance of the year, we believe we're well positioned and levered to reopening and to the growing economic tailwind that we're seeing across our client base and we look forward to talking with you soon take care.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and have a great evening.