Q2 2021 BRP Group Inc Earnings Call
[music].
Okay.
Greetings and welcome to the B R. P Group, Inc. Second quarter 2021earnings call.
At this time all participants are in a listen only mode.
Question on an extra session will follow the formal presentation if.
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As a reminder of this conference is being recorded it is now my pleasure to introduce your host Bonnie Bishop Executive director of Investor Relations. Thank you you may begin.
Welcome to the ERP group second quarter 2021 earnings call. Today's call is being reported second quarter 2021 financial result, 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 dotcom.
Please note that remarks made today may include forward looking statements, which are based on the expectations estimates and projections of management as of today, including certain expectations related to COVID-19, and other matters.
Forward looking statements are subject to various assumptions risks and uncertainties on a variety of factors that are difficult to predict on which may cause actual results to differ materially from those contemplated by such statements for more detailed discussion of those factors. Please refer to the company's earnings release for this quarter into our <unk>.
Most recent SEC filings, including our most recent form 10-K, all of which are available on the ERP 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 supplemental information flow.
The of which have been posted on the company's website at IR Dot Baldwin risk partners Dot com and can be found in the company's SEC filings I will now hand, the call over to Trevor Baldwin Chief Executive Officer of ERP Group.
Thank you Bonnie and good afternoon, everyone and thank you for joining us for our second quarter earnings call. We're excited to announce another record quarter highlighted by organic growth of 32 per cent and total revenue growth of 133% all of our segments grew organically at a double digit rate.
Including the middle market, which grew 26% its best organic quarterly performance in our history as a public company.
Of the MGA of the future demonstrated strong growth of 52% during the quarter continuing to execute multifamily. While also making continued progress on both blood and homeowners, which we believe will be important contributors to our growth into 2022 and beyond.
As a result of the strong momentum across our entire business. We currently expect high teens organic growth to the overall business in the third quarter above our target of 10% to 15% range on.
On the partnership front, we've continued to execute on our strategy of partnering with only the industry's very best independent firms our partnership with Rogers Gray announced during the quarter marks our fourth top 100 partnership in a span of 8 months significantly expands PRP group's presence in new England.
And complements our homeowners efforts within the MGA of the future earlier. This month. We also completed 4 additional partnerships. The 2 largest of which include founder shield and the capital group offering unique incremental capabilities that we plan to leverage broadly across the ERP.
Specifically foundry shield is a rapidly growing tech enabled and specialty focused digital broker joining our specialty platform. It is rare when we find another firm profitably growing at the same rate as our specialty business, which founder shield has done year to date.
Ratio of brings to the ERP of track record of growth and innovation that we anticipate will accelerate the deployment of tech enabled client interfaces and the integrated proprietary product across our platform, which we believe will be meaningful drivers of profitable growth for ERP well into the future.
Including all 10 partnerships announced year to date, our total annual revenue from 2021 announced partnership stands at $72.5 million looking across the balance of the year. Our pipeline remains very strong and continues to build as we continue to have multiple signed letters of intent per deal.
<unk> in a broad range of sizes in closing we're proud of the performance. We have delivered through the first half of 2021 and the significant momentum we are carrying into the third quarter. Our collective focus on the convergence of building a great home for amazing talent with ongoing thoughtful investment.
And technology continues to enable our ability to innovate and execute bar of clients and stakeholders at a high level to all of our colleagues who execute for our clients and stakeholders on a daily basis are huge. Thank you you are the reason our business continues to be in the strongest position it has been.
In our firm's history with that I will turn the call over to Brad to go into more detail on our Q2 results.
Thanks, Trevor and good afternoon to everyone on the call for the second quarter, we generated revenue growth of 133% to $119.7 million demonstrating again that our hybrid growth model, namely outsized organic growth combined with contributions from new partnerships is delivering strong results as the economic backdrop.
<unk> continues to improve.
We generated record setting organic growth of 32% on a year over year basis. Thanks, primarily to not only strong performance from our specialty segment, but also across all of our sectors and in particular the middle market.
We recorded a GAAP loss for the second quarter of $20.1 million or a loss of 22.
Per fully diluted share of.
Adjusted net income for the second quarter of 2021, which excludes share based compensation amortization and other 1 time expenses was $13.3 million or <unk> 14 per fully diluted share of.
A table reconciling GAAP net income to adjusted net income can be found on our earnings release, and our 10-Q filed with the SEC.
Adjusted EBITDA for the second quarter of 2021 raise of 143% to $20.4 million compared to $8.4 million in the prior year period.
Adjusted EBITDA margin was 17% for the second quarter of 2021 compared to 16% in the prior year period for.
For the third quarter, we anticipate an adjusted EBITDA margin of 14% to 15% this margin movement versus the prior year is timing related as a result of seasonality of the business changing giving our M&A success.
For the full year, we expect to achieve the high end of our previously communicated 150 to 200 basis point increase in adjusted EBITDA margin relative to last year at 18%.
With respect to a few kpis for the MGA, our renters policies enforce increased by over 39000 from March 31, 2021 to 605295 as of June 30, and as of August 6th policies in force of increased further to over 625000. Additionally.
On July 30, we set another new record from new policy sold in a day of 3472 policies eclipsing our previous daily high from last year by roughly 250 policies.
Since our last earnings call on May 10th we've also turned on an additional 500000 units, bringing the total unit count in which our renter solutions available to over $9 million.
Finally, we took advantage of our larger size and fantastic performance since October 2020 to upsize on improved pricing on our new 500 million term loan B in May and late last week executed of 75 million of upside to our revolving credit facility, providing us incremental capacity to better position us for are strong.
And growing partnership pipeline, while reducing our cost of capital.
With that 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 to reflect for a moment on the trajectory and momentum of our hybrid growth strategy has facilitated in a relatively short amount of time business insurance recently published their annual list of top 100 brokers on which the RP currently ranked number 19, when we launched our goal.
All of the top 10 in 10 in early 2018, we were ranked 81 of that same list based on 2017 results. This highlights just how powerful the combination of our consistent outsized organic growth supported with the partnership strategy of attracting only the very best independent firms has been as.
As we look ahead, we remain confident and uniquely well positioned to achieve our top 10 in 10 goal lastly, and importantly, I want to welcome all of the new colleagues that have joined us over the last quarter and Echo Trevor and thinking all of our colleagues for such an amazing job and executing for each other and our stakeholders.
With that I. Thank you for your time, and we'll now open up the call for Q&A operator.
Okay.
Thank you, ladies and gentlemen at this time.
We'll be conducting a question and answer session if you'd like to ask a question you May press star 1 on your telephone keypad a confirmation total indicate your line is in the question queue. You May Press Star 2 if you would like to remove your question from the Q4 participants using speaker equipment. It may be necessary to pick up your handset before pressing the star key.
Our first question comes from the line of Greg Peters with Raymond James. Please proceed with your question.
Hey, good afternoon.
Thank you for the relatively short.
Comments most of most of the companies, we listen to conference call as well.
For 20 plus minutes so it's appreciated.
It's hard.
Good evening.
Hi, good evening, so I.
1 of the <unk>.
<unk> as you know the markets having as the.
The substantial growth in organic and I think.
You've laid out obviously the third quarter is going to be another great quarter for you can you give us when you when you look at the second quarter results can you give us.
When we look at middle market and the.
Can you give us a sense of what's going on is it rate is exposure or is it new clients or probably all 3 of them, but give us a.
Give us some perspective of where where youre driving this the organic results from.
Yes, Greg happy too so a couple of things. So maybe just kind of lay the foundation for the question before kind of diving into more specific like 1 I think the momentum we have across our platform of PRP has never been better the strength of our franchise the collective capabilities of our people and the breadth of resources.
And client sector expertise is as strong as it's ever been so we're executing at the highest levels, we've seen and we're winning consistently in front of our clients, which is ultimately what's leading to the results that youre seeing here.
Specifically for the quarter organic growth was double digits across all 4 of our segments again, highlighting the strength of the franchise on the collective momentum we have across of our business. When we look at the relative contributors to organic growth as we've talked about in the past, we really view there to be kind of 4 <unk>.
Building blocks to that.
And so you would start with the <unk>.
Combined impact of insurance rate and underlying client exposure unit growth or contraction and for the quarter of the combined impact of rate and exposure of our organic growth was 7.5%, which is certainly helpful. But in the context of the 32% organic growth that we ultimately.
<unk> reported normalizes down to 25%, which is still an exceptional result, compared.
Compared to the industry's historical trends.
And so when you think about the other 2 drivers of organic growth, while it's retention of client revenues and I would say again is a relative.
Kind of symptom of the strength of our platform.
I'd say, we've seen retention tick up slightly and most of our businesses, but that's not going to be a meaningful driver may.
Maybe that impacts growth by 100 basis points, plus or minus and so really what's driving it is our ability to continue to write new business win market share and ultimately bring new clients onto the ERP platform at a rate that meaningfully exceeds generally what our peers are doing and that is the single larger.
Driver of organic growth for our business.
Okay.
That's that's great color.
<unk> with the 7.5 points rate and exposure versus the 32 total overall in.
Is it would you think about this going forward that 23, 24% of your organic would be continually defined by radian exposure with the balance being retention and new business is that of does that sort of a group.
So think about going forward.
I don't know that I'd think about it like that Greg because it's so and tied to kind of external environment or environmental factors right. So if you are in a relatively steady state economic environment, where GDP is growing 150 to 300 basis points of <unk>.
Generally speaking I wouldnt expect underlying exposure units to be of meaningful kind of drive or or headwind to organic growth.
<unk> plus of 150 or -150 basis points.
Right again, that's environmental and so.
In the current environment, we're certainly seeing meaningful positive rate trends now I'll caveat that the.
Right.
Is is kind of see escalating.
And we've seen that trend this quarter with that being said, we certainly expect continued positive rate action.
Through 2022 at this point potentially longer the.
The World is just becoming a riskier place.
<unk> got natural catastrophes that are generally impacting geographies that are more built out from a value of at risk perspective, you've got things like cyber who wear the exposure sets growing exponentially.
And then you've got the the impact in the near term of inflation you have the longer term impact of social inflation and the relative uncertainty that comes with that and so there's a lot of factors out there that we believe we're going to continue to drive.
Relatively healthy positive rate momentum for the next couple of years.
Makes sense.
The second question of have would be around M&A and recruiting.
Can you talk about.
How the pipeline looks today as we think out the next 6 to 12 months and then.
Related to that.
Given where we are.
With the economy in the state of employment can you talk about how your organic recruiting efforts are gone.
Absolutely so from an M&A perspective, Greg our partnership pipeline continues to be very strong continues to be made up of firms that are of the utmost highest quality and with really incredibly unique capabilities and resources I mean founder Shields of Great example of that the special.
Of the digital broker of approximately $10 million of revenue that on a year to date basis is growing greater than 50% and doing so profitably.
Built out on their technology stack, the tools to automate or bring a much more seamless approach to transacting property and casualty insurance for small to medium sized businesses and we believe we're going to be able to leverage their know how their capabilities and their technology stack broadly across our business in a manner of <unk>.
A lot of which we've leveraged the proprietary tech that we have at the MGA of the future to drive really meaningful growth and so.
That's the long winded way of saying, we're excited about the quality of our pipeline.
And we continue to feel good about the activity there from a recruiting standpoint, we're leaning in and of really really heavy manner. So as Ed mentioned earlier the strength of our franchise is at an all time high and that goes beyond just client execution and wins.
But importantly goes to colleagues as well and so the ability for us to attract really talented professionals across a range of areas of expertise and ultimate product lines has never been better we 5 ex the size of our recruiting team since last December and through the <unk>.
Midpoint of July of this year, we've added on an organic basis over 370, new hires into our team which is more than by a meaningful margin. The total new hires we made in all of 2020. So we're investing deeply in talent across our platform across all 4 segments and we're really excited.
About the momentum and the success that we're seeing there.
Alright, great. The final little detailed question for Brad or Chris I was just looking at your statement of cash flows and.
The net cash provided by operating activities.
Didn't grow as fast as the revenue or your operating results I'm wondering.
What's going on embedded in that.
<unk>.
If you will making the growth rate, so grew but a little bit lower than the than some of the other indicators that you reported.
Hey, Greg So as we've discussed previously we evaluate free cash flow net of the change in <unk> because of the fact that we hold fiduciary cash. So if you back out on AP, you actually get $13 million of free cash flow generation in the prior year. So 50.
$2 million. This year, we have 4 ex that number.
On a year over year basis.
Got it thanks for the answers.
Thanks, Greg.
Our next question comes from the line of Josh Shanker with Bank of America. Please proceed with your question.
Yes. Thank you very much for taking my question Congrats.
Congratulations on the quarter.
I'm trying to do some math and I'm, not maybe I'm doing it wrong, but.
Can you run through what org.
Organic growth was ex MGA of the future.
Thinking maybe 25% from doing that correctly.
So Josh we haven't specifically disclosed the ex MGA of the future what I would share is as an example of middle market organic growth was 26% of the quarter on all 4 of our segments were double digit, which I think just highlights the relative strength, we're seeing across our <unk>.
<unk>.
So I guess on.
Doing from Schlock math, maybe because.
I'm trying and it seems to me that you guys have had very good growth.
On the non MGA of the future business this quarter and I'm trying to make a comparison to what it was in <unk> true.
And figure out what what was going on with the reopening of the economy this quarter.
Certainly in the Medicare businesses, <unk> been able to probably reach out some clients, where you werent able to see for a while we sort of talk about like the the difference between the organic growth this quarter last quarter the quality the differences I guess, but what's going on yes.
<unk> third quarter.
Yes, happy to happy to do that Josh So as we think about the relative environmental differences from Q1 to Q2, I'd say, it's kind of broadly reopening of economies certainly the.
Resurgent in recovering business activity.
And people and our clients in general being much more kind of willing and open the meeting and frankly, making changes and changes to be ERP and a good way. So I think all of that is a positive when you think about the relative impact of the economic activity is.
As I had mentioned earlier, the Greg the combined impact of rate and exposure on our organic growth was plus 7.5%. So while that was a tailwind.
The real story is the underlying performance of our business and the ability to take take share from our competitors driving the new business. That's ultimately driving the organic growth results as we think about organic growth looking forward as I mentioned earlier in my remarks, we expect high teens organic.
Growth for the third quarter as a result of the momentum and the strength across our platform.
And feel really good about continuing to execute as we look forward through the balance of this year on into 2022 and beyond.
Is the difference between the third quarter organic projection into actual the easy comps for <unk> 'twenty.
Well, our organic growth in <unk> of 'twenty, I think was 19% so im not sure I would necessarily think of that as an easy comp.
<unk> was 20% so slightly harder I'd say look this just a little bit more uncertainty is the the delta variant.
Surges and that could undoubtedly create some choppiness in recovery and openness and the ability for our folks to get in front of prospects and clients and so I think youre continuing to see an appropriate amount of conservatism as a result of some of the uncertainty that remains.
The leaning into the relative momentum that we're seeing in our business and the strength that we're projecting that will carry forward to the balance of the year.
And in the MGA of the future.
I mean you.
It's always top of the net new customer net customer growth I don't know if it matters any 1 course of the next but maybe new channel partners can be.
A big the step up.
How is the recruitment for new channel partners going and do we expect the growth rate for that business accelerates or so huge now from the only decelerate from here.
Yes so.
The MGA of the future continues to perform at a really high level of specific to our <unk> business.
We've got a pipeline that's as strong as it's ever been relative to new technology Channel partners.
Recently took 1 live as recent as earlier this month in August.
When we look at the new policy transaction trends in that business Q2.
Was a record quarter relative to new new policies sold and.
In the history of the firm.
With with June being a record month in the history of the MGA per new policies issued that was then subsequently broken by a new record.
That was approximately 15% higher in the month of July so momentum continues to be very strong. There. In addition to that we've invested deeply in technology and talent to expand our capabilities across our new breath of product lines, including homeowners and flood specifically.
We recently brought on a gentleman named <unk> Patel, who is spearheading our national homeowners ambitions as we look to quickly build out of team capable of building and launching of 50 state of homeowners solution to tackle the $100 billion plus market that that represents across the U S. So we're excited.
About the momentum I think we continue to feel good about the relative growth trajectory that we have.
And.
Would not look to update the from what we've discussed in prior quarters.
Thank you very much.
Thanks, Jeff Our next question Arrow.
The next question comes from the line of Elyse Greenspan with Wells Fargo. Please proceed with your questions.
Hi, Thanks, Good evening My first question on the.
<unk>.
Bye bye.
Wow, just under 73 million announced on sales.
This year the goal.
120, the ones at the I know there was talk of a lot of momentum towards the end of the year when theres more certainty on tax reform.
The sound bullish about what's on the pipeline.
The sense.
How do you think of the year, we will stack up relative to that guidance.
Yes. Thanks, good evening of the lease we continue to feel really good about that 120 to $1.50 target for the year.
Okay, and do you think it will be more.
Alright, all of it right now, but do you think it will be more Q4 Q3 heavy relative to win.
Yeah, I'll start to come in or maybe even between the 2.
Yes.
M&A timing has some lumpiness to it elyse and so what I would tell you is it feels like announcements will likely be late Q3.
But probably most of the effective dates.
The the transactions occurring in Q4.
Okay. That's helpful.
And then.
In terms of.
Just thinking about organic growth.
Well 1.
The follow up.
Question.
Or.
Hi, Ian from FERC.
1 of our which way, but also the guidance for it.
This quarter came on as well.
So is there a sense it sounds like Theres just from conservatism of the Delta V oriented uncertainty in the economy.
The economy or have you seen have you seen anything on your business in July that would cause you to think things are smaller markets.
That is a level of conservatism.
I think that that's higher than we normally guide on organic growth.
Yeah, I think at least 1 I would highlight the high teens is certainly above our long term range of 10% to 15% I think Q2, there was certainly a little bit of a kind of rebound of the fact of the world Reopens and so.
There is a little bit of of catch up there and then there's certainly I think an appropriate amount of conservatism as a result of some of the potential choppiness and uncertainty relative to the Delta variant.
But in no way should that signal that we feel like there is a deceleration of the business. We feel really good about the momentum and carrying that forward through the balance of the year and beyond.
Okay, and then on the margin side.
The Q&A.
Better.
Yes.
Yes, the full year.
Yes.
And it sounds like you're still keeping the full year guide.
Good morning.
Given that the.
Shaun Mara on when you set some seasonality of the M&A can you just help us kind of.
Now the margin.
Sure.
Yeah, Hey lease of the business outperformance in the first half of the year, namely the organic and the total revenue.
Has allowed us to guide to the high end of our previously communicated range.
But we're also able to lean heavier into multiple reinvestments in the business ahead of our plan to drive growth well into the future, which is why we're not expanding that that range, yes on at least to put a little bit of a finer point on that for Ya you Shouldnt think about the investments we're leaning into being a result of keeping up.
With the growth like the business is doing that normal course, you should think about the investments we're leaning into being.
Really kind of.
New areas of capabilities and product lines, but but innovative solutions that we believe will we will be able to launch and drive future growth with in a meaningful manner and so namely Patel on his team.
Leading up our homeowners initiatives and ambitions across the 50 states solution being a great example of that.
We're going to scale up of nearly 50 person homeowners team inside the MGA by the end of the year as an example.
Okay. That's helpful. Thanks for the color.
Thanks Luis.
Our next question comes from the line of Pablo things on with Jpmorgan. Please proceed with your question.
Hi, Thanks.
The first question ahead of this can you just give us the latest the cash balance adjusted for the recent movements from that and then your thoughts on whether that's enough to fund.
Our partnerships in 2022, and if not higher he then thinking about the mix between equity and debt to fund incremental cash you might.
Yeah, Hey, Pablo this is Trevor let me tackle the the partnership funding and then I'll ask Brad to.
Point to some of the specific metrics you were talking about so.
Relative to our pipeline in M&A.
We feel good about our ability to fund our targeted M&A for the year based on cash and available debt on the balance sheet and to the extent that we exceed those numbers will certainly have to evaluate our capital options.
And as the business continues to grow and scale. So does our free cash flow on EBITDA and ability to leverage that so we continue to feel good about executing on our partnership strategy into the future and we will continue to evaluate capital options as they make sense.
Yes, so cash balance as of the end of the quarter is roughly $225 million.
As you saw us disclose look we're constantly vigilant about our capital structure.
And that led us to the upsize of the <unk> in may as well as the revolver last week, which continues to assist in our partnership strategy.
Okay.
Got it.
And then just on organic growth.
Your results in the Midland market. This is the surprising to me at least just because if you look the last year second quarter of last year as us your toughest comp for that the right and it seems like from what you are suggesting that you expect growth in the middle market and the other segments of slow sequentially, even when comps.
You get a bit easier right. So.
If I could just.
I guess ask of the same question other way right.
Why would you know.
Why would the reasonable to assume that given that actually.
The quarter is the strongest quarter of last year, and I guess logically.
If the momentum continues.
Obviously, putting.
Recognize the cabinets for the about the variant of the economy something out of it but it just seems like the day the momentum versus less.
Where should sustain and even I guess growth stronger from here just given the comps developed and remember the fourth quarter of last year. I think you had a negative comp into the market right. So if you could just sort of speak of that Trevor I should see here of how youre thinking about.
How growth for the second half of the year might develop.
So Pablo we feel really good about high teens organic growth for the third quarter at this point, we're not providing any specificity to our thoughts for Q4.
But there is a healthy and appropriate conservatism relative to some of the choppiness and uncertainty from the Delta variant with all of that being said the momentum in our business is real and we feel really good about our ability to execute and with.
The outsized organic growth in Q2.
As I mentioned earlier, there is a little bit of kind of a rebound of the fact as the as the world. It reopened a lot was able to get done with.
Clients and prospects that have been in dialogue on been in conversation with our professionals.
Got it and then the last 1 from me just the question about I guess, 2 new ventures of yours right. So the first of all of us.
Sheila if I just wanted to confirm I understood you correctly Trevor.
So it seems like founder shield, they're mainly marketed the are startups in the VC back firms, but from what you are seeing it seems like there are plans III expanded the just the broader small commercial market.
Yes, that's exactly right Pablo.
Okay, Alright, and then the.
Second question under the same topic of new ventures.
If im doing my math correctly, I think millennial probably hit close to 90 million of revenues this year.
Any sense on how big of homeowners are of flood could be like.
And obviously like the for exact number but.
The <unk> into the future.
In the future and recognizing the homeowners is a much bigger market.
The state rollout right, but would it be reasonable to sort of.
Take that the relationship and apply to what Youre doing the millennials right just recognizing the tumors is much bigger market.
Yes, I think thats exactly the way to think about of Pablo as we think about our goals and ambitions here, it's about leveraging the tech in our go to market strategies that we've developed across the MGA for renters and deploying that into the homeowners marketplace. We think it is a massive opportunity the market Tam is multiples of what renters is.
And our tech is already built to support that product set we are building out the bench of experts and we feel like we're going to be able to make meaningful progress in the coming years around building, a really big business in that particular line.
Alright, Thanks for your answers and good luck with the rest of the year.
Thanks, Bob.
As a reminder of the star 1 to ask a question. Our next question comes from the line of Meyer Shields with <unk>. Please proceed with your question.
Great. Thanks, a couple of really small ones first I think Brad mentioned I didn't catch the details on element of timing.
When providing the outlook for the third quarter.
Adjusted EBITDA margin was hoping I can get them to review that.
Yes so.
Given the change in our business mix as a result of M&A.
And the phasing of revenue recognition.
We are communicating is that the timing of margins can change year to year.
In relation of prior year. So we were trying to set of basis to what we expect for this third quarter versus last third quarter and communicated the 14% to 15% expectation of EBITDA margin for this third quarter.
In may of that.
Nothing to do with anything internally at the business. It's purely as a result of the kind of phasing of revenue changing as a result of the M&A that occurred in the prior year period.
Okay, Yes, that's what the 1.
On the to make sure that I understood that there was no revenue timing that impacted the issues.
I know you don't include acquisitions.
The revenues.
Revenues in the organic growth number is it reasonable for us to assume that the the.
The growth in recent.
The recent partnerships the.
The accelerated to the same extent that legacy ERP organic in the quarter.
Yes, great question so the.
The first thing I would tell you is that the performance of our new partner firms that are not yet included in the organic growth calculation continues to meet and exceed our expectations and I would point you to the earnings supplement that should be up on our IR website and on page 3 of that deck.
Which.
As a new slide of key performance metrics at the very bottom.
Of that chart, you will see total revenue of businesses owned as of 12, 31, 2020, and we put this in there to really highlight for investors. The overall performance of our business, including new partners on a like for like basis, and so what youll see for the quarter.
Is that the total business revenue accelerated on a year over year basis at a rate of approximately 32% and the other thing I would point out is if you look to the year to date.
The 16, but I would point you to sub note 7 and if you'll recall from the Q1 earnings call. There was of revenue timing as a result of acquisition accounting.
That caused the $11 million to basically get booked in the opening balance sheets and things of that nature and so if you normalize for that that year to date growth number is in excess of 20%, which I think really highlights. The fact that the overall performance of the business, including new partner firms.
As is frankly, performing at similar levels and outsized levels.
Okay, Yeah, that's a lot of.
The line is actually tremendously helpful. Thank you for pointing it out.
With regard to cover shield should we think of that as just.
A new way for our new go to market platform or are there elements of covered feel that all of the other commercial brokerage businesses within the ERP can adopt and whether that promotes faster growth or higher margin.
So the answer to that is yes, they're foundry shield is not only developed a highly successful and profitable growth strategy and they are using their unique go to market methodology thats enabled them to win a significant share of VC and high growth startup clientele, but in the.
Additionally of that as a result of their focus on small and rapidly growing clients they've built out of technology stack that enables them to build innovation and delightful experiences into the overall insurance procurement process and so we're going to be focused on is not only pour.
During more capital into that business to accelerate what they are doing really well already but then leveraging the tech in their innovation across our platform.
The drive profitability and better client experience for all of our small business clients. In addition to that they've already built in proprietary product that is connected kind of directly through their attack and so we've layered that in with the MGA to continue to be able to build out proprietary products.
Delivering more effective and bespoke solutions to our clients that truly meet their needs. So we're very excited about it.
Okay, and then last question I promise is there any way of ballpark on how long. It takes the year to date recruits to be productive at least both of them that our clients of anything.
It's.
Different answers for different parts of our business mayor.
I'd say the longer side of that is in our middle market business, where it's a more technical.
Sales and generally a longer sales cycle, and we tend to have those folks kind of up and running.
6 months, but kind of doing so.
With mentors that are kind of riding along with them.
And the other examples of folks we're recruiting in that are highly experienced they are coming from competitive organizations that are plugging in day, 1 and becoming highly productive.
Our folks that we're recruiting in the kind of new de Novo parts of our business. We are building out our of the homeowners strategy. As an example, where we're bringing in a team that is highly experienced with a lot of expertise that can hit the ground running pretty quickly. So it's a it's a range depending on the role and the part of our business.
But in general it is.
Measured in months not years.
Okay perfect. Thank you so much.
Thanks, Matt.
There are no further questions in the queue I would like to hand, the call back to management for closing remarks.
Thank you we appreciate everybody joining us this evening for our second quarter earnings call and I, just want to reiterate and provide a huge thank you to all of our colleagues. They have put us in this incredible position and the strength and momentum of our platform and our franchise has never been better. So thank you and we look forward to seeing everyone.
Take care.
Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.