Q1 2022 BRP Group Inc Earnings Call
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Greetings and welcome to the B R. P Group, Inc. First quarter 2022 earnings conference 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 then zero on your telephone keypad.
As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host Bonnie Bishop.
I'm the director of Investor Relations. Please go ahead.
Thank you operator welcome to the ERP groups first quarter 2022 earnings call today's call is being recorded.
First quarter 2022 financial results supplemental information and Form 10-Q were issued earlier. This afternoon and are available on the company's website at IR got 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 and which.
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 and putting our most recent Form 10-Q, all of which are available on the DRP 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 both of which have been posted on the company's website at IR Doc Baldwin risk partners Dotcom.
Tom I can be found in the company's SEC filings.
I will now hand, the call over to Trevor Baldwin Chief Executive Officer of ERP grip.
Thank you Bonnie and good afternoon, everyone and thank you for joining us for our first quarter of 2022 earnings call I will share a brief remarks, followed by Brad who will cover selected financial and business highlights from the quarter and then Brad Chris and I will take questions I want to start by thanking the amazing colleague.
And partners that PRP Q1 was a record quarter with broad based performance across our business highlighted by organic growth of 16% the highest first quarter organic growth rate. We have achieved since our IPO supported by double digit organic growth across all four segments and <unk>.
Total revenue growth of 59%.
We generated these results while investing significantly in the people and technology that we expect will drive accelerating innovation growth and profitability through 2022 and beyond.
To highlight the growth and transformation, we have achieved in recent years and the first quarter of 2022 alone we delivered more than 175% of the revenue we generated as a firm for all of 2019. The year. We went public adjusted EBITDA for this quarter with more than 150% greater.
And the adjusted EBITDA, we earned in all of 2019.
The MGA of the future demonstrated strong growth of 42% during the quarter. We continued to execute in multifamily now with over 1 million renters policies and master certificates enforce while also making continued progress on new products with our de Novo homeowners product now live in six states.
On April 29, we closed on the Westwood Insurance agency transaction, a strategic partnership we announced in the first quarter Westwood represents our largest partnership to date and more than doubles, our mainstreet segment by adding embedded distribution and a team dedicated to serving new homebuyers across America.
Through our relationships with many of the top homebuilders across the country.
Or at least through our MGA of the future platform, we entered into a program administrator agreement with <unk> the seller of Westwood to assume operation of <unk>, roughly $200 million builder sourced homeowners book of business. This agreement fast tracked MGA of the future homeowners growth with a preferred.
Outperforming book of business in summary, we believe ERP is now one of the industry's leading tech enabled personal lines brokerage and MGA businesses as measured in aggregate by policies in force revenue profitability and loss ratio performance.
Looking to 2022, our reputation as a destination employer is also being validated on the organic hiring front during the quarter organic hiring continued to accelerate as evidenced by our welcoming of more than 370 new colleagues.
Our total head count now stands at over 3300 up from over 2800 at the end of 2021, when including new colleagues from Westwood.
On the partnership front, we have added approximately $82 million of annualized revenue against our 2022 goal of $100 million to $150 million of acquired revenue or.
Our partnership team continues to pursue partnerships that closely aligned with <unk> culture enhance our go to market capabilities and elevate our reputation as the premier home for our industry's top professionals.
On that topic, we are excited to announce the addition of rich tallo as our Chief marketing Officer Rich brings over 20 years of insurance industry experience. Most recently as the executive Vice President marketing and communications for Chubb, where he deploy world class marketing and communications programs rich.
<unk> will lead our marketing communication strategy across the firm delivering programs designed to drive profitable growth and long term recognition for DRP.
Lastly, there has certainly been some volatility in the world and broader financial markets. Since our last call took place in early March against this backdrop, we are fortunate to be in the enviable position of having a growing and diversified business and an extremely resilient industry and.
While we are now currently prepared for recessionary economic environment. Later this year the strength of our franchise and underlying performance of our business has informed our increased outlook for 2020 to organic growth, which Brad will detail with them.
I will now turn the call over to Brad.
Thanks, Trevor and good afternoon to everyone joining us today for the first quarter, we generated revenue growth of 59% to $243 million, we generated organic growth in the first quarter of 16% with all four segments hitting double digit organic growth for the quarter.
We recorded GAAP net income for the first quarter of $45 million or income of 39 per fully diluted share.
Adjusted net income for the first quarter of 2022, which excludes share based compensation amortization and other one time expenses was 58 million or <unk> 50 per fully diluted share.
A 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 2022 rose, 37% to $73 million compared to $53 million in the prior year period adjusted.
Adjusted EBITDA margin was 30% for the first quarter of 2022 compared to 35% in the prior year period. As a reminder, our adjusted EBITDA margins are seasonal in nature with Q1 being the strongest quarter.
Seasonality does shift year over year as a result of partnerships completed during the prior year, which was the primary driver of the margin decrease from Q1 2021 to Q1 2022 as well as an acceleration of certain planned investments into our technology teams and main street business in preparation for the transaction closing in.
Integration of the Westwood business into ERP.
Our quarterly earnings supplement available on our IR website now includes organic growth by segment for the quarter. As a reminder, we are focused on long term sustainable double digit growth as evidenced by our last two years organic growth of 16% and 22%, we do not run the business to achieve specific quarterly results, which.
Can vary sometimes significantly quarter to quarter.
On the capital front, we expanded the capacity of our revolving credit facility from $475 million to $600 million increased our total net leverage ratio covenant to seven times and extended the maturity date to April one 2027.
This gives us an additional margin of safety and leaves us well positioned to execute on M&A and achieve our goal of $100 million to $150 million in acquired revenue in 2022.
As you heard from US last quarter, we believe our share price today represents the largest gap between actual and intrinsic value that has existed since our IPO and as such currently do not have an appetite to raise common equity in the near term. We will continue to look at debt and preferred equity options if attractive as we did in Q1.
And plan to responsibly manage our leverage down through cash flow growth and margin expansion also we think it is worth mentioning based on dialogue with data providers and Etfs that are major data provider mistakenly underreported, our public float by approximately 27 million shares for two months between late February and April .
Of this year and the flow through to Index fund rebalancing and funds that track certain indices may have created significant selling of DRP stock as a result.
A few items regarding expectations for Q2, and the full year 2022 <unk>.
First for the second quarter of 2022, given the strong performance across our business, we expect to generate organic growth in the high teens. Additionally, because of changes to the seasonality of our business as a result of 2021 partnership activity and the closing of Westwood, We will provide some additional color beyond what we would normally provide.
For our historical pro forma revenue and initial Q2 projections.
Including the Westwood partnership as of $3 31 pro forma LTM revenue is approximately $835 million.
Currently we expect revenue for Q2 2022 to be approximately $220 million and for adjusted EBITDA margins for the second quarter to be 100 to 150 basis points higher than the 17% in the second quarter of 'twenty one.
For the full year of 2022 on the back of significant investments made in the business last year and into 2022 and despite what we believe may be a recessionary economic environment. Later this year, we are increasing our expectations for organic growth for the full year to mid to high teens, we have begun.
Lawing the nearly $50 million investment we mentioned on our last earnings call with a concentration in our MGA of the future and main street businesses, primarily in key colleague editions and technology development.
These investments create new products and teams that should be contributors to 2022 organic growth an important catalyst for 2023 organic growth.
Despite this large investment in new teams and solutions as seen in Q1, we still expect an additional 50 to 100 basis point increase in the adjusted EBITDA margin for the full year above last year's 20% consistent with the expectation we had on our last call in March.
In summary, we are excited about our record first quarter 2022 results and the momentum we have carried into Q2 I Echo Trevor. Thank you to our colleagues who have been the driving force and propelling us to new Heights and positioning US for continued strong performance with that I. Thank you for your time and we'll now open up the call for Q&A operator.
Thank you.
At this time, we will be conducting a question and answer session. If you would like to ask a question. Please press Star then one on your telephone keypad, a confirmation tone will indicate your line is in the question queue you've.
You May press Star two if you would like to move your questions on the queue.
<unk> using speaker equipment, it may be necessary to pick up your handset before pressing the keys.
One moment, please while we poll for questions.
And the first question will come from Elyse Greenspan with Wells Fargo. Please go ahead.
Hi, Thanks.
My first question you guys mentioned.
Celebration.
Sure.
Thanks.
That was reflected in the first quarter margin can you give us a sense I mean, I think that's embedded by just the seasonality in the margin walk for the year, but can you just give us a sense of how much was actually accelerated in the first quarter.
Yeah. Good evening lease Brad do you want to take that one yes.
Hey, good evening lease we did make a decision late in the first quarter to accelerate certain investments in both talent and technology.
Really to prepare for the <unk> program administration agreement and to be able to flip live on that agreement.
In conjunction with the closing of the Westwood transaction.
We are confident these investments will contribute to both in year growth and margin.
With a full payback in 2022, which is why we've kept our full year margin EBIT guidance flat to what we communicated in March <unk> basically that would bridge you up to about a 32% EBITDA margin.
And while it was.
Margin degradation in quarter, it's because we haven't flipped the program administrator agreement on yet, but as that goes live it fully aaron's into productivity effect of basically immediately.
Okay, and then you guys mentioned.
Being prepared for a recession.
You also.
Kind of your.
Your guide.
As you know.
Gave a pretty positive view for the second quarter. So can you just give us a sense of how you think the recession to impact your businesses.
Yes.
Do you think about that.
They'll be thinking you can get into recession in UK.
Double digit organic growth throughout all of you.
Yeah, Great question Elyse so.
Based on some kind of early signs, we're seeing conversations we're having with certain clients that are beginning to see and feel some slight waning and consumer demand. We expect that economic activity is going to pull back and.
In the back half of the year, despite that and as a result of the investments we've been making certainly in that habitation will side of our business.
We believe we're going to see accelerating growth through the through the balance of the year as evidenced by the increased outlook on organic growth. We expect we will see broad based double digit organic growth across our business. Despite this ah I think we'll certainly see pockets.
We're.
There is an impact relative to underlying client exposure units.
But suspect that that will be broadly overcome by rate.
And and.
And some of the what we're seeing relative to.
Increases in payroll expenses of client accounts increased values.
<unk> et cetera, and so we're spending time, ensuring that our teams are prepared to provide thoughtful advice to our clients during that type of an environment.
Our experience would suggest that.
When we.
We enter into kind of economic pullback.
Clients tend to be more open minded to having conversations with new a new insurance consultants and providers and we tend to take share and those types of markets.
So we feel really good about our positioning.
Similar to how we were able to perform through 2020 during that pulled back we feel like we'll be able to serve as a true kind of stability.
And be able to provide.
Fantastic.
Advice and backstop for our clients.
And then thanks, Pat Ryan and then just one last one.
Any update to the full year M&A outlook.
You can tell us on the pipeline.
Yeah.
A few things one I'll just provide a couple of data points are off this and partners you know published some data recently announced.
Announced M&A transactions in the brokerage space were down somewhat meaningfully in Q1.
The lowest first quarter announced transaction rates since 2016, not overly surprising considering the amount of M&A that got pulled into last year, but considering kind of the broader economic environment. The volatility that we're seeing and we're being very thoughtful about how we deploy capital.
<unk>.
We've always had and will continue to have a very high bar.
The type of transaction that is going to be accretive into our business over both the near and long term.
And as a result of those broader conditions I would expect us to be probably on the lower end of our expected range from an M&A perspective.
Okay. Thanks, Kevin.
Yeah.
The next question will come from Greg Peters from Raymond James. Please go ahead.
Hey, good afternoon, everyone.
I would probably like to follow up on <unk> question regarding.
The potential for a more challenging macro.
Job environment.
Ken can you give us some context about.
Your middle market business in terms of exposure to industries and.
And then maybe.
So include some comments about certainly how the positive rate environment seems to be a nice tailwind for that business too.
Yeah happy to do that Greg.
So when when you look at our middle market business broadly.
We're overly exposed to higher growth industries in higher growth geographies. So as you think about the largest areas of focus.
Real estate, it's technology, it's health care.
It's construction, particularly with a focus on infrastructure and so.
While there is pockets of those industry sectors that could feel some weakness.
As we kind of look across our client base, we feel very well positioned.
Additionally, as I mentioned earlier, our experience would suggest and in an environment, where there's more economic volatility or pullback.
We tend to take share because clients tend to be a bit more open minded about having a conversation entertaining a new perspective service provider and as we've talked about in the past our go to market approach the way in which we take our highly consultative process to engage with those prospective clients.
Enables us a win rate that far exceeds the industry. So this is the type of environment, where not only is our client base somewhat defensible relative to kind of industry broadly, but our business is set up to.
To really take share nicely.
Okay.
Thanks.
<unk>.
A couple.
Small detailed questions, but I was wondering.
If.
I don't want to get too hung up on our quarter's results, but if you could talk to us about.
The variances in free cash flow.
In the first quarter versus last year or maybe more.
Maybe you don't get caught up in as much.
Detailed but talk to us about your outlook for free cash flow for 2022.
Yeah, Hey, Greg good evening.
The decrease you're seeing year over year.
Was largely the result of the organic investment in.
In talent and technology that we've been speaking about over the prior quarters as well as the acceleration I mentioned to a lease in her previous question on margin.
In order for us to get online and ready to serve the program administration agreement.
In conjunction with the closing of Westwood, we do expect that trend to reverse in the back half of this year as our investment initiatives contribute to growth and margin in the back half as well as free cash flow.
Makes sense.
With the Westwood acquisition, that's going to go all into main street is that correct.
And and.
As a follow on to just because that was a big transaction for you can you give us an update.
Where you are in terms of debt to EBITDA and I know.
Just remind us where your longer term targets are.
Yeah, Hey, Greg happy to take that one the Westwood partnership with transaction closed at the end of April we could not be more excited about that.
We've shared in the past it really accelerates our strategic roadmap on the embedded.
Homeowners side of our business and so we're thrilled to welcome Alan and the entire Westwood team to the ERP family.
From a balance sheet perspective, we are in the mid fives from a debt to EBITDA perspective, as we've mentioned in the past, we expect and plan to Delever the balance sheet responsibly through a combination of growth in the business margin expansion in the free cash flow generation that the business continues to generate.
Over the course of the coming years.
Got it just is it just a clarification for the for the Westwood I know, you're happy about that but thats all I should assume that that acquired revenue all.
Follows into the mainstream business correct or most of the acquired revenue all will flow into the mainstream segment correct now the MGA separately has a program administrator agreement with <unk>, but that is separate from the Westwood transaction.
Does that go into specialty or does that stay in main street that goes into specialty.
Got it.
Thank you very much for the answers.
Thanks, Greg.
The next question will be from Weston Bloomer from UBS. Please go ahead.
Hi, Good evening. My first question is on the Westwood acquisition.
Can you just help us frame the economic sensitivity of that business, maybe just how it performed during 2020 during COVID-19 or how should we think about that 82 million of acquired revenue as it flows through the <unk>.
Model before it hits your organic thank you.
Yeah, Hey, worsen.
So happy to talk about that one the Westwood business has a multi decade history of significant stability throughout economic environments.
And in fact as you look at the product mix inside that business today more than 80% of their policies enforce our homeowners policies and when you think about our homeowners policy.
That is not generally an optional purchase.
Thing that is oftentimes put in place when you buy a home that's required in order to get a mortgage and oftentimes the premium payments are escrowed as a part of that mortgage payment and so the stability and the existing book of business is very strong and.
In the current environment.
<unk> also got a positive rate impact to that renewal trail that as an additional tailwind and while you may see.
New home starts could slow down as a result of increasing mortgage costs.
That we would expect to have a de minimis impact on the overall growth trajectory of the business as a result of how that flows and relative to renewal revenue and rate to drive ultimate growth based on conversations we've had with homebuilders and others in that supply chain and value chain.
If if many of the homebuilders quit taking new home orders today they'd need to continue building homes for at least another six months just to choose through the existing contracted demand that they have so we feel good about not only how that business is positioned to perform.
Throughout economic cycles, but in particular.
Feel good about the defensive nature of the revenue streams and the type of increasing interest rate environment that we're headed into.
Okay.
Got it. Thank you and then my next is on.
The investments that Youre, making the business I know you've had around $12 million remaining on your $30 million program from 'twenty, one and announced the $50 million program is there a way to quantify kind of where those numbers stand <unk> year to date I know it has accelerated but curious if you have those numbers.
So we haven't provided specific disclosure west and what I can tell you is we're on track and slightly ahead in the areas, where we accelerated and you can think about it being kind of broadly pro rata.
Across the year relative to impact.
And so as you think about as an example.
Combination of 50 in the 12 do you think about prior year pro forma EBITDA margin of 37% compared to this year's 30, the acceleration of certain investments in order to position us to catch.
The <unk> program administrator agreement bridging up to 32 and the balance of that annualized number of bridges you to the 37.
Got it and my last one also on the margin if I just do rough math on the employee on the hires that you made in the quarter and take a look at total commissions.
Clay content, then it looks like there was like a 10% delta between those two numbers, which implies higher wage inflation.
So just kind of curious how you are baking wage inflation in your forward projections and what impact that had in the quarter versus the investments you made.
So it's I would not.
Say that it's a direct result.
The result of wage inflation, what youre seeing is that we've brought on a tremendous amount of new professionals that have not yet become productive revenue generators inside the system.
So as we've talked about in the past depending on the business that can be as fast as 90 days or as long as three years and.
Typically more on the two to three year side and so as these people come on.
It takes a couple of years for them to earn into productivity, where you would see that comp and benefits ratio normalize.
Think about how we're positioned relative to wage inflation roughly half of our compensation.
Is variable in nature tied to the topline revenue of the business and as you think about our workforce and the amount of people that we've hired and on an organic basis over the past couple of years relative to our total population who have come in at market, we feel like where we.
We're significantly better positioned than many of our peers across the industry because of kind of the relative recency with which their comp has been set as they came into our system.
Got it. Thank you I appreciate the color.
Yep. Thanks Weston.
The next question will be from Yaron <unk> from Jefferies. Please go ahead.
Thank you and good afternoon.
First question.
Just going back to a potential recessionary environment, how do you see that impacting.
The acquisition pipeline.
So you don't it's a good question right now what we would tell you is that we have a pretty meaningful pipeline of opportunities and were just being particularly thoughtful about what makes sense and the relative timing.
Think what we know is that the private market tends to lag the public market by six to 12 months relative to kind of a pricing resetting.
And so oftentimes.
As that's occurring you see a slowdown as people have to kind of re rationalize where pricing is relative to what maybe the market was commanding.
You know pre.
Previously.
With all that being said.
This industry is incredibly resilient it has a history of outperforming through economic downturns over the course of both the most recent two examples of that in 2020 in 2008 and as a result of that.
Investor demand has continued to grow and Theres 50 capitalized buyers in our space right now.
So I would not sit here and prognosticate that we're going to see it.
Any material.
No.
A precipitous drop off in and relative valuation I do think that.
There will become a growing filter around quality.
And that's the approach we've always taken.
And with that in mind.
Looking at the five five times.
Debt to adjusted EBITDA ratio that you have in the seven times debt covenant.
I guess, how willing would you be.
Stretch a bit further.
For attractive acquisitions.
In the near term.
We would not look to go above six times.
Okay.
Thank you.
The next question will be from Mike Phillips from Morgan Stanley . Please go ahead.
Hi, This is actually a small job on my follow ups. Most of my questions have already been asked.
One high level question, just one on wealth management.
P&C puzzle of almost.
Any potential for inflationary pressures on loss cost trends.
Saw deceleration of pricing or maybe perhaps caused some reacceleration just curious what you guys are seeing there.
Yeah, Mike I think there is a likelihood that that's going to occur I mean, you're certainly seeing that in personal auto I expect we will see a growing trend in homeowners there.
And I think there's aspects of that theyre going to be begin flowing into the traditional commercial.
<unk> product lines as well.
You know I know there's been some recent discussion around the impact of social inflation as the court systems turned back on.
So.
I think you know while I wouldn't sit here and tell you that I've got 100% conviction that inflation is going to reverse the kind of the slow rate <unk> that we have seen.
I think there is a meaningful chance that that could occur over the course of the next 12 months.
Great. Thank you that was all my questions.
Thanks, Mike.
And the next question is from Pablo <unk> with JP Morgan. Please go ahead.
Hi.
So on the MGM was wondering if you could offer some perspective on how the different business lines contributed to growth this quarter.
Specifically are the newer lines they flooded in homeowners of reading the numbers and then any commentary on specialty X MSI. We're I think organic was in the mid single digits.
Yeah, Hey, Pablo I'll give you a few high level remarks, and ask Chris to provide some more specifics I mean broadly what I would tell you is that the organic growth.
At the MGA is accelerating and you know when you look at year over year organic growth for the first quarter.
And the comps.
That we're going after it's been really terrific performance, particularly with master kind of turning on for the first time in the first quarter of 2021.
We reached a fantastic milestone with over 1 million <unk>, four and master policies in force.
And we're very encouraged by the progress that we're seeing on the homeowners side, which has begun contributing to results and we believe will be contributing meaningfully to results in the second quarter. As a result of the success, we're having rolling it out across multiple states, but Chris you want to provide some more commentary there.
Yes, sure I would say for Q1 home was relatively de Minimis as far as adding to the results, which I think.
As indicated we expect to turn on in Q2, what we can say is even last week and early this week third days now where home is 10% to 15% of new premiums sold throughout the MGA.
So turning on well we were six states live yesterday, I think we've turned to more on today for the non <unk> home right. The home product that we've been building out and so that is kind of anecdotal evidence to us that it's starting to ramp up and we would see that continue.
Through Q2 and into Q3 and Q4.
Especially given what's going on in the Florida market and having to admitted products that are on and we can now sell in Florida, We think we'd probably time that right in terms of entering the market at a time when there is a lot of pain and we would look for our results to accelerate there.
Yes.
Thanks for that.
Second question is for Trevor.
In the past.
He had offered the relative contributions of exposure and a great the growth in.
In middle market.
I was wondering if you could talk to those factors in the first quarter and how you expect them to trend through the balance of the year.
And I guess the context of the question is that if you look at what the commercial underwriters have reported.
<unk> has been going down slowly, but then exposure has been picking up and I was wondering if we can do the same and what do you think might unfold for the balance of the year.
Yeah, Great question, so the impact of rate and exposure on a combined basis. Our results was 4% in the first quarter.
What I would tell you anecdotally is that.
Rate is becoming.
A slowing contributor to that exposure as a growing contributor to that as a result.
Primarily of the inflation that we're seeing in the economy.
And I would expect that we will continue to see mid to low single digit tailwind from the combined impact of rate and exposure to the balance of the year.
Got it and then last for me.
We get along the lines of a couple of questions that have been asked already but as we're thinking about your financial position a year or two out.
Was wondering if you could give us if you could give us a sense of how quickly you expect to delever from private and a half a day it.
It seems like your financing program will cover partnerships this year, but.
That's clear for 'twenty, three and beyond thank you.
Yes.
We expect to be able to continue to delever the business responsibly over the course of the next cut.
A couple of years to our longer term target range.
Got it thanks Robert.
Thanks Pablo.
And again, if you have a question. Please press Star then one.
The next question is from Meyer Shields from <unk>. Please go ahead.
Thanks, Joe.
If I can go to your earlier comments anticipating a slowdown how should we think about the timing of.
Some sort of GDP contraction and where it actually emerges in revenues.
So I guess may or help me more specifically on the question Youre asking about the timing of.
Pullback in GDP and what the direct corollary is to our revenue streams.
Yeah, I'm thinking in the past I guess, we'd assume something like a three to six month lag between.
Economic inflection and where it shows up on the broker revenues, but I don't know if you saw that impression or how it looks with to be our people.
Yeah. So historically, what I would say is that there is that lag as you see the pull through come in.
Premiums and policies are audited out.
I would tell you, though as a result of 606 accounting.
Policies that you would begin to see that.
Impacts more immediately because you're.
In many cases, recognizing the full annual revenue at the date of renewal on a policy and so as soon as you begin to see some of that GDP slowdown in your clients are coming.
And they are renewing programs with lower exposure units as a result of that youre going to see the direct flow through in that in real time.
And I would expect we would see as a result of more real time impact as I articulated earlier, we expect.
And that we will be able to fully grow through that impact as a result of both the.
Client industry sectors that we spend a lot of time in and kind of how our businesses broadly positioned to take share in that type of an environment.
Okay. That's very helpful. Thank you.
Second question.
In the past, we've talked about the timing of potential M&A.
I was wondering if there was any update that you can provide as far as that.
No specific updates may rather than.
Think I would expect us to continue to periodically announced new partnership opportunities somewhat ratably over the balance of the year.
Okay perfect. Thank you.
Thanks Amir.
Ladies and gentlemen, we have reached the end of the question and answer session and I would like to turn the call back over to Trevor Baldwin for any closing remarks.
Thank you and I want to thank everyone for joining US today, we look forward to speaking with you next quarter want to provide a particular shout out and thank you to all of our colleagues for all their hard work in serving our clients and helping us achieve these amazing results this quarter take care.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
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