Q1 2024 BRP Group Inc Earnings Call

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Operator: Ladies and gentlemen, greetings and welcome to the Baldwin Group First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bonnie Bishop, Executive Director, Investor Relations.

Ladies and gentlemen, greetings and welcome to the Baldwin groups first quarter 'twenty 'twenty four earnings conference call.

Operator: At this time all participants are in a listen only mode.

Operator: A brief question and answer session will follow the formal presentation.

Operator: If anyone should require operator assistance during the conference. Please press star and fetal on the telephone keypad.

Operator: As a reminder, this conference is being recorded.

Operator: It is now my pleasure to introduce your host Bonnie Bishop Executive Director Investor Relations. Please go ahead.

Bonnie Bishop: Thank you, operator. Welcome to the Baldwin Group's first quarter 2024 earnings call. Today's call is being recorded. First quarter financial results, supplemental information, and Form 10-Q were issued earlier this afternoon and are available on the company's website at ir.baldwin.com. Please note that remarks made today may include forward-looking statements subject to various assumptions, risks, and uncertainties. The company's actual results may differ materially from those contemplated by such statements. For a more detailed discussion, please refer to the note regarding forward-looking statements in the company's earnings release and our most recent Form 10Q, both of which are available on the Baldwin website.

Bonnie Bishop: Thank you operator welcome to the Baldwin groups first quarter 'twenty 'twenty four earnings call today's call is being recorded.

Bonnie Bishop: Quarter financial result, supplemental information and Form 10-Q.

Bonnie Bishop: Earlier this afternoon and are available on the company's website at IR Dot Baldwin dotcom.

Bonnie Bishop: Please note that remarks made today may include forward looking statements are subject to various assumptions risks and uncertainties the.

Bonnie Bishop: The company's actual results may differ materially from those contemplated by such statements.

Bonnie Bishop: For a more detailed discussion please refer to the note regarding forward looking statements in the company's earnings release.

Bonnie Bishop: Our most recent Form 10-Q, both of which are available on the ballroom website.

Bonnie Bishop: During the call today, the company may also discuss certain non-GAAP financial measures. For more detailed discussion of these non-GAAP financial measures and historical reconciliation to the most closely comparable GAAP measures, please refer to the company's earnings release and supplemental information, both of which have been posted on the company's website at ir.baldwin.com. I will now turn the call over to Trevor Baldwin, Chief Executive Officer of the Baldwin Group.

Bonnie Bishop: During the call today the company May also discuss certain non-GAAP financial measures.

Trevor L. Baldwin: For more detailed discussion of these non-GAAP financial measure and historical reconciliation to the most closely comparable GAAP measure.

Trevor L. Baldwin: Please refer to the company's earnings release, and supplemental information both of which have been posted on the company's website at IR Dot Baldwin dotcom.

Bonnie Bishop: I will now turn the call over to Trevor Baldwin Chief Executive Officer of the Baldwin Group.

Trevor L. Baldwin: Good afternoon, and thank you for joining us to discuss our first quarter results, which were reported earlier this afternoon. I'm joined this afternoon by Brad Hale, Chief Financial Officer, and Bonnie Bishop, Executive Director of Investor Relations.

Trevor L. Baldwin: Good afternoon, and thank you for joining us to discuss our first quarter results reported earlier this afternoon.

Trevor L. Baldwin: I'm joined this afternoon by Brad Hale, Chief Financial Officer, and Bonnie Bishop Executive Director of Investor Relations.

Trevor L. Baldwin: Our first quarter 2024 results represented one of the most complete performances we've seen across the business since going public, showcasing broad-based revenue momentum in tandem with robust margin expansion and improved free cash flow generation in the wake of the Expense Rationalization Initiative completed in 2023. All three of our segments achieved double-digit organic revenue growth, resulting in overall organic revenue growth of 16%. Adjusted EBITDA grew 29% year-over-year, resulting in an adjusted EBITDA margin of 26.7%, a 280 basis point expansion over the first quarter of 2023. Free cash flow from operations grew 51% in the quarter to $53 million.

Trevor L. Baldwin: Our first quarter 2024 results represented one of the most complete performances, we've seen across the business since going public.

Trevor L. Baldwin: Showcasing broad based revenue momentum in tandem with robust margin expansion and improve free cash flow generation in the wake of the expense rationalization initiatives completed in 2023.

Trevor L. Baldwin: All three of our segments achieved double digit organic revenue growth, resulting in overall organic revenue growth of 16%.

Trevor L. Baldwin: Adjusted EBITDA grew 29% year over year.

Trevor L. Baldwin: Bolting and an adjusted EBITDA margin of 26, 7%, a 280 basis point expansion over the first quarter of 2023 and free cash flow from operations grew 51% in the quarter to $53 million.

Trevor L. Baldwin: As we discussed on our last earnings call, the business is rapidly approaching a real inflection. We are four quarters away from satisfying substantially all our outstanding earn-out obligations, the result of which will be a step function increase in our pre-cash flow profile. In IES, we generated organic revenue growth of 11% in the first quarter. This was largely fueled by record new client wins, which were up nearly 90% over the first quarter of 2023, driven by increased collaboration across the firm, made possible by our integrated platform that enables broad-based accessibility to expertise, tools, and resources.

Trevor L. Baldwin: As we discussed on our last earnings call. The business is rapidly approaching a real inflection point, we're four quarters away from satisfying substantially all of our outstanding earn out obligation. The result of which will be a step function increase of our free cash flow profile.

Trevor L. Baldwin: And I as we generated organic revenue growth of 11% in the first quarter.

Trevor L. Baldwin: This was largely fueled by record new client wins, which were up nearly 90% over the first quarter of 2023, driven by increased collaboration across the firm made possible by our integrated platform that enables broad based accessibility.

Trevor L. Baldwin: Pretty good.

Trevor L. Baldwin: Oh and resources.

Trevor L. Baldwin: We also saw rate and exposure, which had been a headwind in the fourth quarter, return to more normalized levels and serve as a slight tailwind for the quarter, albeit down meaningfully from what we saw in the first quarter of 2023.

Trevor L. Baldwin: We also saw rate and exposure, which had been a headwind in the fourth quarter returned to more normalized level in <unk>.

Trevor L. Baldwin: Serve as a slight tailwind for the quarter, albeit down meaningfully from what we saw in the first quarter of 2023.

Trevor L. Baldwin: Our UCTF segment grew organic revenue 21% in the first quarter, driven by continued strength in our multifamily and home products, which has persisted into the second quarter, and growing contribution from the commercial property and high net worth homeowners products we launched in late 2023. Our MIS segment had a strong quarter with organic revenue growth of 24 percent. The durability of our embedded home builder distribution strategy via our Westwood platform delivered superior new business and retention results despite continued weakness in housing sales and our national mortgage and real estate operation continuing to scale rapidly.

Trevor L. Baldwin: Our <unk> segment grew organic revenue, 21% in the first quarter driven by continued strength in our multifamily and home products, which has persisted into the second quarter.

Trevor L. Baldwin: And growing contribution from the commercial property and high net worth homeowners products, we launched in late 2023.

Trevor L. Baldwin: Our <unk> segment had a strong quarter with organic revenue growth of 24%.

Trevor L. Baldwin: Our ability of our embedded homebuilder distribution strategy.

Trevor L. Baldwin: Westwood platform delivered superior new business and retention result, despite continued weakness in housing sale.

Trevor L. Baldwin: Our national mortgage and real estate operation continuing to scale rapidly.

Trevor L. Baldwin: As we have discussed over the last few quarters, we have implemented strategies and procedures to deepen our focus on efficiency and to simplify and optimize our operating model. On May 1st, we took another meaningful step towards accomplishing that goal with the announcement of our brand transition to Baldwin, in connection with which our public entity changed its name from Brp Group, Inc. to the Baldwin Insurance Group. With our partnership integration work largely complete, a unified go-to-market brand that enables us to more clearly and efficiently convey the capabilities of our firm to all of our stakeholders is, I believe, a natural thing to do.

Trevor L. Baldwin: As we have discussed over the last few quarters, we have implemented strategies and procedures to deepen our focus on efficiency and simplify and optimize our operating model.

Trevor L. Baldwin: On May 1st we took another meaningful step towards accomplishing that goal with the announcement of our brand transition to the Baldwin group in connection with which our public entity changed its name from the ERP Group, Inc. Is a Boe.

Trevor L. Baldwin: <unk> Insurance Group, Inc.

Trevor L. Baldwin: With our partnership integration work largely complete.

Trevor L. Baldwin: Unified go to market brand that enables us to more clearly and efficiently convey the capabilities of our firm to all of our stakeholders is a natural evolution.

Trevor L. Baldwin: Importantly, we believe the combined brand will yield revenue, cost, and cultural synergies going forward. As part of our rebranding strategy, we are also changing our NASDAQ ticker symbol to BWIN. The ticker symbol change will take effect on May 20.

Trevor L. Baldwin: We believe the combined brand will yield revenue cost and cultural synergies going forward.

Trevor L. Baldwin: As part of our rebranding strategy. We're also changing our NASDAQ ticker symbol to B W. I N. The ticker symbol change will take effect on May 20.

Trevor L. Baldwin: In summary, we are extremely pleased with our results for the first quarter and for the exciting opportunities that lie ahead for Baldwin. Our largely completed integration work will now enable us to increasingly leverage the full value of our talent and technology advantages, which have driven our continued industry-leading organic growth and accelerating margin and free cash flow expansion. I want to thank our nearly 4,000 colleagues for their tireless dedication and commitment to all of our stakeholders as they manage a dynamic insurance marketplace and transformative period for our firm, as the economy remains resilient by many measures.

Trevor L. Baldwin: In summary, we are extremely pleased with our results for the first quarter and for the exciting opportunities that lie ahead for the Baldwin group.

Trevor L. Baldwin: Our largely completed integration work will now enable us to increasingly leverage the full value of our talent and technology advantages, which have driven our continued industry, leading organic growth and accelerating margin and free cash flow expansion.

Trevor L. Baldwin: I want to thank our nearly 4000 colleagues for their tireless dedication and commitment to all of our stakeholders as they manage a dynamic insurance marketplace and transformative period for our firm.

Trevor L. Baldwin: As the economy remains resilient by many measures there are still challenges for many of our clients as they navigate economic uncertainty.

Trevor L. Baldwin: There are still challenges for many of our clients as they navigate economic uncertainty. We are grateful for our clients who place their trust in us for advice and solutions that deliver the insurance protection and risk mitigation vital to their businesses and livelihoods. We continue to work tirelessly on your behalf, simplifying complexity and protecting what's possible. With that, I will turn it over to Brad, who will detail our financial results.

Brad: We are grateful for our clients, who place their trust in us for advice and solutions, which deliver the insurance protection and risk mitigation vital to their businesses and livelihoods.

Brad: We continue to work tirelessly on your behalf simplifying complexity to protect what's possible.

Trevor L. Baldwin: With that I will turn it over to Brad who will detail our financial results.

Bradford Lenzie Hale: Thanks, Trevor. Good afternoon, everyone.

Brad: Thanks, Trevor and good afternoon, everyone.

Bradford Lenzie Hale: For the first quarter, we generated organic revenue growth of 16% and total revenue of $380 million. We generated double-digit organic revenue growth in all three segments, with IAS coming in at 11%, UCTS at 21%, and MIS at 24%. We recorded GAAP net income for the first quarter of $39.1 million, or GAAP diluted earnings per share of $0.33. Adjust the net income for the first quarter, which excludes share-based compensation, amortization, and other one-time expenses, to $65.3 million, or $0.56 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 SBA.

Brad: For the first quarter, we generated organic revenue growth of 16% and total revenue of $380 million.

Bradford Lenzie Hale: We generated double digit organic revenue growth in all three segments with I S coming in at 11% you see T S at 21% and M. I asked that 24%.

Bradford Lenzie Hale: We recorded GAAP net income for the first quarter of $39 1 million or GAAP diluted earnings per share of 33.

Bradford Lenzie Hale: Adjusted net income for the first quarter, which exclude share based compensation amortization and other one time expenses was $65 3 million or <unk> 56 per fully diluted share.

Bradford Lenzie Hale: 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.

Bradford Lenzie Hale: Adjusted EBITDA for the first quarter rose 29% to $102 million, compared to $79 million in the prior year period. Adjusted the even a margin expanded 280 basis points year over year to 26.7% for the quarter, compared to 23.9% in the prior year period. Adjusted EBITDA growth at nearly double the rate of strong organic growth is evidence of the meaningful operating leverage we have in the business across our expenses. Free cash flow from operations for the first quarter was $53.3 million, a 51% increase year-over-year, a direct reflection of the expense rationalization work we highlighted last quarter, coupled with the continued outsized growth of the business. In the first quarter, we paid $54 million in earnouts in cash, inclusive of amounts reclassified to colleague earnout incentives.

Bradford Lenzie Hale: Adjusted EBITDA for the first quarter rose, 29% to $102 million compared to $79 million in the prior year period.

Bradford Lenzie Hale: Adjusted EBITDA margin expanded 280 basis points year over year to 26, 7% for the quarter compared to 23, 9% in the prior year period.

Bradford Lenzie Hale: Adjusted EBITDA growth at nearly double the rate of strong organic growth is evidence of the meaningful operating leverage we have in the business across our expense base.

Bradford Lenzie Hale: Free cash flow from operations for the first quarter was $53 3, million% to 51% increase year over year, a direct reflection of the expense rationalization work, we highlighted last quarter, coupled with the continued outsized growth of the business.

Bradford Lenzie Hale: In the first quarter, we paid $54 million of earn outs and cash inclusive of amounts reclassified to colleague earn out incentive does.

Bradford Lenzie Hale: Thus far in the second quarter, we've paid an additional $35 million of earnouts in cash, bringing our remaining estimated undiscounted earnout obligations to approximately $222 million. Of note, despite having paid approximately $89 million of cash earnouts and $21 million of cash bonuses through April 2024, the business has de-levered over a quarter turn from where we ended 2024. As discussed on the fourth quarter earnings call, several of our partnership agreements contain provisions that permit former selling shareholders to allocate portions of the earnout proceeds to colleagues who meaningfully contributed to the partnered firm's achievement of earnings. When this determination is made, we record compensation expense that is an offset to the change in contingent consideration and net neutral to net income.

Bradford Lenzie Hale: Thus far in the second quarter, we paid an additional $35 million of earn out some cash, bringing our remaining estimated on discounted earn out obligations to approximately $222 million.

Bradford Lenzie Hale: Of note, despite having paid approximately $89 million of cash earn out and $21 million of cash bonuses through April 2020 for the business has de levered over a quarter turn from where we ended 2023.

Bradford Lenzie Hale: As discussed on our fourth quarter earnings call. Several of our partnership agreement contained provisions that permit farmer selling shareholders to allocate portions of the earn out proceeds to colleagues who meaningfully contributed to the partner firm achievement of the earn out.

Bradford Lenzie Hale: When this determination is made we record compensation expense it as an offset to the change in contingent consideration and net neutral to net income.

Bradford Lenzie Hale: As a result of this practice, we added back $3.6 million of compensation expense in the first quarter associated with colleague earn-out pools, and based on current estimates, expect to add back approximately $6 million in the second quarter for earn-outs we've paid or are coming due. On March 1st, we closed on the sale of our Connected Risk Solutions wholesale business to AmWin, generating gross cash proceeds of approximately $59 million. As discussed on our last call, this transaction is expected to be neutral to 2024 adjusted EPS and accretive to both 2024 organic growth and adjusted even margin.

Bradford Lenzie Hale: As a result of this practice, we added back $3 6 million of compensation expense in the first quarter associated with colleague earn out pool and based on current estimates expect to add back approximately $6 million in second quarter for earn outs, we've paid or are coming due.

Bradford Lenzie Hale: On March 1st we closed on the sale of our connected risk solutions wholesale business to amarin generating gross cash proceeds of approximately $59 million.

Bradford Lenzie Hale: As discussed on our last call. This transaction is expected to be neutral to 2024, adjusted EPS and accretive to both 2020 for organic growth and adjusted EBITDA margin.

Bradford Lenzie Hale: As I mentioned earlier, we ended the first quarter at less than 4.5 times net leverage, down more than a quarter turn from where we ended 2023. By year-end, we anticipate having satisfied $130 million of aggregate earn-out obligations while simultaneously bringing net leverage below four times, the high end of our stated long-term operating range. Looking ahead, our full year 2024 guidance remains unchanged. We continue to expect revenue of $1.35 billion to $1.4 billion, and organic growth towards the upper end of our long-term range of 10% to 15%.

Bradford Lenzie Hale: As I mentioned earlier, we ended the first quarter at less than four five times net leverage down more than a quarter turn from where we ended 2023.

Bradford Lenzie Hale: By year end, we anticipate having satisfied $130 million of aggregate earn out obligations, while simultaneously, bringing net leverage below four times. The high end of our stated long term operating range.

Bradford Lenzie Hale: Looking ahead, our full year 'twenty 'twenty four guidance remains unchanged. We continue to expect revenue of 1.35 billion to $1 4 billion organic growth towards the upper end of our long term range of 10% to 15%.

Bradford Lenzie Hale: Adjusted EBITDA of 315 million to $330 million and free cash flow from operations of 165 million to $195 million.

Bradford Lenzie Hale: Adjusted EBITDA of $315 million to $330 million, and free cash flow from operations of $165 million to $195 million. For the second quarter of 2024, we expect revenue of $325 million to $335 million and organic revenue growth towards the high end of our 10 to 15% long-term range. We anticipate adjusted EBITDA between $69 million and $74 million, and adjusted EPS of $0.30 to $0.34 per share. Of note, based on the expected timing of certain contingent commission revenues and prior year quarterly comparables, we expect the margin accretion implied in our full year guidance to be more heavily weighted towards the first and fourth quarters.

Bradford Lenzie Hale: For the second quarter of 2024, we expect revenue of 325 million to $335 million and organic revenue growth towards the high end of our 10% to 15% long term range.

Bradford Lenzie Hale: We anticipate adjusted EBITDA between $69 million and $74 million and adjusted EPS of <unk> 30 to 34 cents per share.

Bradford Lenzie Hale: Of note based on the expected timing of certain contingent commission revenues and prior year quarterly comparable we expect the margin accretion implied in our full year guidance to be more heavily weighted towards the first and fourth quarters.

Bradford Lenzie Hale: To sum it up, we are thrilled about the strong start to the year and the broad-based momentum we are seeing across all of our operating segments. We are immensely proud of our colleagues as they continue to persevere through a challenging insurance environment. Moreover, thank you to our clients for their trust and confidence in our ability to deliver differentiated advice and solutions. Operator?

Bradford Lenzie Hale: To sum it up we are thrilled about the strong start to the year and the broad based momentum we are seeing across all of our operating segments. We are immensely proud of our colleagues as they continue to persevere it was challenging in certain insurance environment.

Bradford Lenzie Hale: Moreover, thank you to our clients for their trust and confidence in our ability to deliver differentiated advice and solutions, we will now take questions operator.

Speaker Change: Thank you Lady.

Operator: Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key. Ladies and gentlemen, we will wait for a moment while we poll you for questions. Our first question is from the line of Maya Sales with KBW. Please go ahead.

Speaker Change: Ladies and gentlemen, we will now be conducting a question and answer session.

Maya Sales: If you'd like to ask a question. Please press star and one on your telephone keypad.

Maya Sales: Confirmation tone will indicate your line is in the question queue you.

Operator: You May press star two if you'd like to remove your question from the queue.

Maya Sales: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the stock east.

Operator: Ladies and gentlemen, we will wait for a moment, while we poll for questions.

Maya Sales: Our first question is from the line of my own sales with K B W. Please go ahead.

Meyer Shields: Thanks. First off, Trevor, just because I get this question a lot, is there any way of quantifying the impact of rate and exposure on first-quarter organics?

Maya Sales: Thanks first off Trevor just because I get the question a lot is there any are quantifying the impact of rate and exposure on first quarter again.

Trevor L. Baldwin: Yeah, hey, Mayor, good afternoon. So in the retail businesses, rate and exposure was roughly a four and a half percent tailwind to organic revenue growth in the revenue or in the quarter. I think notably, while that's up from the roughly 2% headwind that we saw in the fourth quarter of last year, it's down meaningfully from roughly a 10% tailwind in the first quarter of 2023. And I think that speaks to the underlying quality of the organic growth print that you saw from the business this quarter, with record new business in the IS and Main Street businesses. New business was up roughly 90% in our IS business. And, you know, overall, new business, you know, with sales velocity was up 700 basis points across our retail business.

Maya Sales: Yeah, Hey, good afternoon.

Trevor L. Baldwin: So.

Trevor L. Baldwin: And the retail business is rate and exposure was roughly a four 5% tailwind.

Trevor L. Baldwin: So organic revenue in the quarter, I think notably well that's up from the roughly 2% headwind that we saw in the fourth quarter.

Trevor L. Baldwin: Last year, it's down meaningfully from roughly a 10% tailwind in the first quarter of 2023.

Trevor L. Baldwin: That speaks to the underlying quality of the organic growth trends that you saw.

Trevor L. Baldwin: From the business this quarter with record new business in the Ias and mainstream businesses, new business was up roughly 90%.

Trevor L. Baldwin: His business and overall new business.

Trevor L. Baldwin: Sales velocity was up 700 basis points across our retail businesses.

Meyer Shields: Okay, perfect. That is very helpful. Also, question for Brad, and I may just be misunderstanding this, but you talked about contingent commissions being particularly margin helpful in one queue. But when I look, especially, I'm sorry, at UCTS, it looks like profit commissions were down significantly by enough so that they were down overall on a year-over-year basis. Am I missing something there?

Speaker Change: Okay perfect that's very helpful.

Meyer Shields: Also a question for Brad.

Meyer Shields: <unk> be misunderstanding, but you talked about contingent commission being particularly margin helpful. In one Q.

Meyer Shields: But when I look.

Meyer Shields: Especially I'm sorry at <unk>.

Meyer Shields: It looks like part of the commissions were down significantly by enough. So that they were down overall on a year over year basis.

Speaker Change: I'm missing something there.

Bradford Lenzie Hale: Yeah, hey, Mayor. So I think what Brad was mentioning was specific to just the margin accretion we're expecting for the year, which is going to be more heavily weighted to the first quarter. In the fourth quarter, specific to UCTS, you know, profit commissions were down in the quarter year over year. That's driven really by three kinds of primary dynamics. One, in our umbrella product portfolio, you know, we did not receive a contingent commission this year.

Meyer Shields: Yeah, Hey, there. So I think what you know Brad was mentioning was specific to just the margin accretion we're expecting.

Bradford Lenzie Hale: For the year, which is going to be more heavily weighted to the first quarter and the fourth quarter specific to use Etfs.

Bradford Lenzie Hale: Profit commissions were down in the quarter year over year.

Bradford Lenzie Hale: That's driven really by three kind of primary dynamics, one and our umbrella product portfolio.

Bradford Lenzie Hale: And we did last year; that's about a third of the impact you're seeing on a year over year basis. And, you know, the contingent commissions in that product line tend to be more episodic in nature. It's a long-tail product; we have a trading partner there that's been supporting that product line for us and our partner for over 20 years. And, you know, I don't need to tell you about, you know, what's been happening with reserve development and certain casualty lines.

Bradford Lenzie Hale: We did not receive a contingent commission this year and we did last year, that's about a third of the impact you're seeing on a year over year basis.

Speaker Change: And you know that.

Bradford Lenzie Hale: The contingent commissions in that product line tend to be more episodic in nature. It's a long tail products, we have a trading partner there that's been supporting that product line for us and our our partner for over 20 years.

Bradford Lenzie Hale: And I don't need to tell you about you know what what's been happening with reserve development in certain casualty lines. So we're certainly not immune to that ourselves, although we continue to see leading underwriting results overall.

Bradford Lenzie Hale: So we're certainly not immune to that ourselves, although, you know, we continue to see leading underwriting results overall. The other two dynamics, one, you know, last year, we'd finished up calculations on profit share commissions in the renters portfolio during the first quarter. As that book's grown, you know, there's more complexity to that calculation. So that's more of a timing issue. And then, then lastly, you know, last year, in particular, with one of our fronting partners related to the, a certain product line, we, we received an override for 18 months worth of, of premium as it was a new, new booking. And that this year is going to be 12 months. So again, just a timing dynamic. So two thirds timing, one third tied to, you know, specific idiosyncratic dynamic in that umbrella portfolio. Yeah.

Bradford Lenzie Hale: The other two dynamics one last year, we finished up calculations on profit share commissions and the renters portfolio. During the first quarter is that books grown there's more complexity to that calculation. So that's more of a timing issue and then and then lastly, you know last year in.

Bradford Lenzie Hale: With one of our fronting partners related to.

Bradford Lenzie Hale: Certain product line, we we received an override for 18 months worth of premium as it was a new new booking in that.

Bradford Lenzie Hale: This year is going to be 12 months. So again, just a timing dynamic so two thirds timing one third are tied to it.

Bradford Lenzie Hale: Specific idiosyncratic dynamic in that umbrella portfolio, yes, I think importantly mayor.

Bradford Lenzie Hale: Yeah, I think important, Mayor, you know, the performance in Q1 was even better than print because of the headwinds we saw in contingent. So, you know, you could have seen an over 400 basis point margin expansion had contingents been a little more in line with the prior year. And in peeling back the guidance a little bit, I was specifically talking about Q2 and Q3. So while we continue to see real momentum in core commissions and fees and real operating leverage in our expense line items, you know, I'll point out two comparables to last year for Q2 and Q3 that I think are worth mentioning.

Bradford Lenzie Hale: The performance in Q1 was even better than Brent because of the headwinds we saw in contingent so you could have seen.

Bradford Lenzie Hale: And over 400 basis point margin expansion had contingent spend a little more in line with the prior year and then scaling back the guidance a little bit I was specifically talking about Q2 and Q3.

Bradford Lenzie Hale: While we continue to see real momentum in core commission and fees and in real operating leverage in our expense line items.

Bradford Lenzie Hale: I'll point out two comparable to last year for Q2, and Q3 that I think are worth mentioning Q.

Bradford Lenzie Hale: Q2 is largely when we receive cash on our prior year accrued contingents. In the last couple of years, that's been a favorable tailwind for us, but it's just hard to budget for. So, you know, we take a conservative approach in Q2 and don't plan for, you know, upside to prior year accruals. In Q3, we actually had about $7 million hit in Q3 last year that we largely expect to get moved into Q4 this year. And it was related to two items. One, in MIS, we locked in a contingent that eliminated any downside risk for us for the balance of the year. We did that on September 23 last year.

Bradford Lenzie Hale: Q2 is largely when we received cash on our prior year accrued contingent.

Bradford Lenzie Hale: In the last couple of years, that's been a favorable tailwind for us, but it's just hard to budget. So we take a conservative approach in Q2, and and don't plan for upside to prior year accruals in.

Bradford Lenzie Hale: In Q3, we actually had about $7 million hit Q3 last year that we largely expect to get moved into Q4. This year and it was it was related to two items one in Ms. We locked in a contingent that eliminated any downside risk for us.

Bradford Lenzie Hale: For the balance of the year, we did that in September 23 last year.

Bradford Lenzie Hale: And in UCTS, we received sufficient information about our home book in September of last year in order to book an estimate. We would expect a more normal trend to be getting that information in Q4, so that's the shift you're seeing year over year. Given those dynamics, if you read between the lines, we're forecasting about 50 to 150 basis points of margin expansion in Q2 and Q3, and about 450 to 600 basis points in Q4.

Bradford Lenzie Hale: And in use Etfs, we received sufficient information about our home book in September 23 last year in order to book an estimate.

Bradford Lenzie Hale: We would expect.

Bradford Lenzie Hale: More normal trend to be getting that information and in Q4.

Bradford Lenzie Hale: So that's the shift youre seeing year over year.

Bradford Lenzie Hale: Given those dynamics.

Bradford Lenzie Hale: If you read between the lines were forecasting about 50 to 150 basis points of margin expansion in Q2, and Q3 and about 450 to 600 basis points in Q4.

Bradford Lenzie Hale: You know, as contingents develop, right, that can shift throughout the year, but based on the line of sight we have now, we think that's the best view of the cadence of the margin expansion we can get. Okay, that was enough.

Bradford Lenzie Hale: As contingent develop great that that can shift.

Bradford Lenzie Hale: Throughout the year, but based on our line of sight. We have now we think that's the best view.

Bradford Lenzie Hale: View of the cadence of the margin expansion, we get into the year.

Meyer Shields: Okay, that was phenomenal. Thank you very much, guys.

Speaker Change: Okay that was phenomenal. Thank you very much guys.

Speaker Change: Thanks Mark.

Operator: Thank you. Our next question is from the line of Elyse Greenspan with Wealth Fargo. Please go ahead.

Speaker Change: Thank you <unk>.

Meyer Shields: Question is from the line of Elyse Greenspan with Wells Fargo. Please go ahead.

Elyse Beth Greenspan: Hi, thanks, good morning. I think you guys called out, I think, Brad, you addressed in your prior remarks, right, but this new colleague earn out incentive line, is that just a geography, meaning a shift, you know, from your other earnouts? I'm just trying to understand if that's like a new metric this quarter, or if it just sounded like maybe it's just geography.

Elyse Beth Greenspan: Hi, Thanks, good morning.

Elyse Beth Greenspan: I think you guys called.

Elyse Beth Greenspan: Called out I think Tom Brad you addressed in your prepared remarks, but this new colleague earn out incentive line is that just a geography, meaning a shift.

Elyse Beth Greenspan: Your other earn outs I'm just trying to understand.

Elyse Beth Greenspan: That's like a new a new metric this quarter or if it's just it sounded like maybe it's just geography.

Bradford Lenzie Hale: It is just geography, Elyse. I think we had it in Q4 as well. The nature of it is, look, we fully accrue the earn out. And certain of our partners establish a colleague incentive pool where they can allocate a portion of the earnout to non-selling shareholders. That is not a sort of Trevor and Brad decision, right? That is our selling former partners making that decision. It does result from a gap perspective and a shift from the change in earnout to comp expense because they are Baldwin Group colleagues. So it's just a geological thing.

Speaker Change: It is just geography lease I think we had in Q4 as well the nature of it is look we fully accrue the earn outs.

Bradford Lenzie Hale: And certain of our partners establish a colleague incentive pool, where they can allocate a portion of the earn out to non selling shareholders that is not a sort of Trevor and Brad decision right that is our selling former.

Bradford Lenzie Hale: Partners make that decision. It does result from a GAAP perspective, and a shift.

Bradford Lenzie Hale: From the change in earn out to comp expense because they are bolden group colleagues.

Bradford Lenzie Hale: So it's just a geography thing in terms of how we treat that.

Bradford Lenzie Hale: thing in terms of how we treat that in the ad back schedule because it's net neutral to the P&L. The change in earn out directly offsets the comp expense hit we take. But if we don't add it back, you know, it mischaracterizes what the accrued earnout payment was that we had accrued over time with respect to performance of that.

Bradford Lenzie Hale: In the add backs scheduled because it is net neutral to the P&L of the change in earn out directly offset the comp expense hit we take but if we don't add it back.

Bradford Lenzie Hale: It mischaracterizes, what what the accrued earn out payment was that we had accrued over time with respect to performance of that business.

Bradford Lenzie Hale: And that was the $6 million, I guess, for Q2. So would you expect that line to call out something in that line item until you get through the majority there announced later this year?

Bradford Lenzie Hale: And that was the 6 million I guess for the Q2. So would you expect that line I guess to you know to call out something in that line item until you get through that the majority of their in house later this year.

Bradford Lenzie Hale: Yes, we would, and again, these aren't necessarily massive pools, and we don't have line-of-sight because it's not our decision to make, so yes, we will be explicit about calling out what we're seeing so that you all can model it.

Speaker Change: Yes, we would and again these arent necessarily.

Bradford Lenzie Hale: Massive pools.

Bradford Lenzie Hale: And we don't have line of sight, because it's not our decision to make so yes, we will be explicit about calling out what we're what we're seeing so that you all can model it appropriately.

Elyse Beth Greenspan: Okay, and then on to the last question: I think you said 600 and change right of margin improvement in the fourth quarter. What's like, what's driving that? I think there was some contingent discussion, but what's like, what's the you know, driver big driver that's 600? Because that's a pretty big level of margin improvement in the fourth quarter.

Speaker Change: Okay and then on to the last question I think Tom you said 600 and change rate of margin improvement in the fourth quarter.

Elyse Beth Greenspan: Like what's driving that I think there were some contingent discussion, but what's like what's the you know drive the big driver of that 600, because that's a pretty big level of margin improvement in the fourth quarter.

Bradford Lenzie Hale: Yeah, I would characterize it as two things, Elyse. One is, you know, I mentioned $7 million in contingents that we would expect to largely show up in Q4 this year that did not show up in Q4 last year. And as you know, that's super margin accretive. In addition, you know, we've mentioned the headwinds we saw in rate and exposure in the IAS business last Q4. And, you know, based on the trends we're seeing now and that rate and exposure normalizing, we would expect an uplift in that business, which bridges the full 450 to 600 basis points of margin expansion I mentioned.

Speaker Change: Yeah, I would characterize it as two things one is I mentioned $7 million of of contingent debt.

Bradford Lenzie Hale: We would expect to largely show up in Q4. This year that did not show up in Q4 of last year.

Bradford Lenzie Hale: And as you know that's that's super margin accretive in.

Bradford Lenzie Hale: In addition, we've mentioned the headwinds we saw in rain exposure in the Ais business last Q4 and based on the trends, we're seeing now and that rain exposure normalizing, we would expect an uplift in that business.

Bradford Lenzie Hale: Which bridges the fall.

Bradford Lenzie Hale: $450 to 600 basis points of margin expansion I mentioned, yes.

Trevor L. Baldwin: Yeah, Elyse, this is Trevor. I think it's worth really underscoring the momentum we're seeing in underlying net new client wins. And as Brad mentioned earlier, it was a fantastic quarter for the business, hitting on all cylinders, with broad-based double-digit organic growth across all segments. But despite all of that, the strength of the quarter is not even fully highlighted in the financial results as a result of the contingent commission timing we mentioned in UCTS and elsewhere.

Bradford Lenzie Hale: Yeah. This is Trevor I think I think it's worth really.

Trevor L. Baldwin: Underscoring the the momentum we're seeing in underlying net new client wins.

Trevor L. Baldwin: And as Brad mentioned earlier, it was a fantastic quarter for the business hitting on all cylinders broad based double digit organic growth across all segments, but despite all of that.

Trevor L. Baldwin: The strength of the quarter is not even fully highlighted and the financial results. As a result of the contingent Commission timing, we mentioned and use Etfs and elsewhere, where we're credibly excited and bullish about what we're seeing in the business. The work we've done.

Trevor L. Baldwin: We're incredibly excited and bullish about what we're seeing in the business, the work we've done to really stitch the business together through all the hard work around integration, development, and deployment of technology, how it's enabling us to go to market effectively and efficiently, and how we're seeing our colleagues work together across the platform to drive really fantastic results and outcomes for our clients. And all of that is resulting in really, really strong momentum on core client commissions and fees, and we expect that to continue.

Trevor L. Baldwin: It really stitch the business together through all the hard work around integration and development and deployment of technology.

Trevor L. Baldwin: How it is enabling us to go to market effectively and efficiently how we're seeing our colleagues work together across our platform to drive really fantastic results and outcomes for our clients and all of that resulting in really really strong momentum on core client Commission.

Trevor L. Baldwin: <unk> and <unk> and we expect that to continue.

Trevor L. Baldwin: And then, Trevor, last quarter on M&A, right, you said even though you guys will be within your leverage target at the end of this year, it sounds like you might go back into, you know, deal mode next year, but it'll be a little bit of a different strategy than in the past. Is that still kind of the same, I guess, M&A blueprint that you guys have today? Yeah, that's the right way to think about it, Elyse.

Speaker Change: And then Trevor last quarter on M&A right, you said, even though you're right you guys will be within your leverage target at the end of this year. It sounds like you might go back into it you know deal mode next year, but it'll be a.

Trevor L. Baldwin: A little bit of a different strategy than in the past is that still kind.

Trevor L. Baldwin: Kind of the same I guess M&A blueprint that that you guys have today.

Trevor L. Baldwin: Yeah, that's the right way to think about it, Elyse. Our priority continues to be de-levering the business. As we sit here today, we're a short few quarters away from having a very different free cash flow profile for the overall business. And as a result, we're going to have a lot more flexibility from a capital allocation standpoint, and that's something we're very much planning for and looking forward to. M&A has been an important lever for us in the business over time and one that we've been able to successfully pull to create a lot of value for shareholders, and it's one that we expect to continue to do so.

Speaker Change: Yes, that's the right way to think about it at least our priority continues to be delevering the business.

Trevor L. Baldwin: As we sit here today, we're a short a few quarters away from having a very different free cash flow profile for the overall business.

Trevor L. Baldwin: And as a result, we're going to have a lot more flexibility from a capital allocation standpoint that that's something we're very much planning for and looking forward to.

Trevor L. Baldwin: M&A has been an important lever for us in the business over time, and one that we've been able to successfully pull to create a lot of value for shareholders and it's one that we expect to continue to do so with all that being said M&A is going to look differently for us going forward. When we came public in October.

Trevor L. Baldwin: All that being said, M&A is going to look differently for us going forward. When we went public in October of 2019 at roughly $135 million in revenue, getting scale was existential. We were at a period in time when there was a gold rush of sorts for the industry broadly around really large-scale, high-quality firms that were coming to market. And I'd say, better than anyone else, we took advantage of that time and were able to partner with what we believe to be among the highest quality, most differentiated platforms out there.

Trevor L. Baldwin: 2019 at roughly $135 million of revenue getting the scale was existential we were at a period in time, where there was a gold rush of sorts for the industry broadly around really kind of large scale high quality firms that were coming to market and I'd say better than anyone else.

Trevor L. Baldwin: We took advantage of that time, and we were able to partner with what we believe to be among the highest quality most differentiated platforms out there and you see that represented in the continued durability of our outsized organic growth in and beginning to see that flow through in the underlying margin accretion as well.

Trevor L. Baldwin: And you see that represented in the continued durability of our outsized organic growth and beginning to see that flow through in the underlying margin accretion as we've brought those businesses together, with lots more to come there. Going forward, we would expect M&A to be a bit more episodic in nature. We find ourselves today at a time when M&A volumes are down, call it 35-40% year over year, largely a function, I think, of where the cost of capital is and the impact that's had on some of the more highly levered acquirers in the space.

Trevor L. Baldwin: What those businesses together.

Trevor L. Baldwin: And lots more to come there going forward, we would expect M&A to be a bit more episodic in nature.

Trevor L. Baldwin: Find ourselves today at a time, where M&A volumes are down you know call it $35 40%.

Trevor L. Baldwin: Year over year.

Trevor L. Baldwin: Largely a function I think of where our cost of capital is and the impact that's had on some of the more highly levered acquirers in this space.

Trevor L. Baldwin: So we're going to sit back, we're going to pick our spots, and we are focused, as always, first and foremost on culture and alignment, you know, and then, you know, equally so on strategic fit, and, and, and, and what makes financial sense, and we need to check all three of those boxes. So I would not anticipate us doing any meaningful amounts of M&A through the balance of this year. And, and, you know, from there, it's going to be episodic in nature, to a degree where I'm not sure I'd suggest you put anything in your models, but we're going to be opportunistic.

Trevor L. Baldwin: So we're going to we're going to sit back we're going to pick our spots.

Trevor L. Baldwin: Were focus has always.

Trevor L. Baldwin: First and foremost on culture and alignment.

Trevor L. Baldwin: And then equally so on strategic fit and and you know what makes financial sense and we need to check all three of those boxes.

Trevor L. Baldwin: So I would not anticipate us doing any meaningful amount of M&A through the balance of this year and from there it's gonna be episodic in nature to a degree where I'm not sure I'd suggest you put anything in your models, but we're gonna be opportunistic and when something strategic comes comes up that makes sense, where there's strong fit.

Trevor L. Baldwin: And when something strategic comes up that makes sense, whether a strong fit, you know, we're going to be all over it. And, you know, we've proven we have the playbook, we can identify those high-quality businesses. We believe, and history would suggest we have an offering that is attractive to those high-quality firms and those principals that aren't looking to sell out, but sell in and become part of, you know, a larger-scale enterprise where the very best and brightest of our industry can come together.

Trevor L. Baldwin: We're going to be all over it and we've proven we've got the playbook, we can identify those high quality businesses, we believe and history would suggest we have an offering that is attractive to those high quality firms and those principles that arent looking to sell out but sell in and become part of a larger scale enterprise.

Trevor L. Baldwin: We're the very best and brightest of our industry can come together.

Trevor L. Baldwin: And ultimately, through our shared experiences and collective expertise, generate and create outcomes that otherwise would be, you know, we would be unable to do on our own. So we're, we're super excited. We feel like we're really well positioned. And importantly, the business is performing exceptionally well on an underlying basis, both from a top line and bottom line margin accretion, and so we're not in a position where we have to do anything. We can pick our spots.

Trevor L. Baldwin: And ultimately through our shared experiences and.

Trevor L. Baldwin: Collective expertise gen.

Trevor L. Baldwin: Generation create outcomes that otherwise would be.

Trevor L. Baldwin: Good.

Trevor L. Baldwin: Unable to do on our own. So we're super excited we feel like we're really well positioned and importantly.

Trevor L. Baldwin: The business is performing exceptionally well on an underlying basis, both from a topline and bottomline margin accretion and so we're not in a position where we have to do anything and we can pick our spots.

Speaker Change: Thank you.

Speaker Change: Thank you Les.

Operator: Thank you. Ladies and gentlemen, a reminder, if you wish to ask a question, please press star and one. Our next question comes from the line of Pablo Singzon with J.P. Morgan. Please go ahead.

Speaker Change: Ladies and gentlemen, a reminder, if you wish to ask a question. Please press star and one.

Pablo Augusto Serrano Singzon: Our next question comes from the line of Pablo thing Zone with J P. Morgan. Please go ahead.

Pablo Augusto Serrano Singzon: Hi, thank you. There was a note in the 10Q about Founders Shield being moved from UCDS Insurance Advisors. How much did that change the growth profile in each of those segments? Or was it not meaningful enough either way?

Pablo Augusto Serrano Singzon: Hi, Thank you.

Pablo Augusto Serrano Singzon: There is a note in the turnkey about founder Shields being moved from you said, yes.

Pablo Augusto Serrano Singzon: Interest advisory.

Pablo Augusto Serrano Singzon: How much did that.

Pablo Augusto Serrano Singzon: Change the growth profile in each of those segments or was it not meaningful enough either way.

Bradford Lenzie Hale: It was not meaningful enough either way, Pablo. It didn't change the material.

Pablo Augusto Serrano Singzon: It was not meaningful enough either way Pablo it didn't change materially.

Bradford Lenzie Hale: Okay.

Speaker Change: And then Trevor.

Pablo Augusto Serrano Singzon: And then Trevor, I was hoping that you could impact your commentary on, you know, new business growth. A tremendous number, right? I was curious to hear if you're seeing it, broadly speaking, or is it concentrated in certain geographies or practice areas and sort of any color commentary you can provide.

Pablo Augusto Serrano Singzon: I was hoping that you could didn't factor your commentary on a you know and you Mr. Scott with a tremendous number I was curious to hear if you're seeing it broadly speaking or is it concentrated sort of geographies or practice areas is there any.

Pablo Augusto Serrano Singzon: Any color or commentary you can provide there would be helpful.

Trevor L. Baldwin: Yeah, the new business was broad-based across our footprint. So I wouldn't say it was concentrated in any one area, Pablo, which is fantastic to see.

Trevor: Yes, the new business was broad based across our footprint. So I wouldn't say it was concentrated in any one area of Pablo which is fantastic to see.

Trevor L. Baldwin: We brought together businesses with deep expertise across a number of areas, including real estate oil and gas construction private equity and M&A technology and life Sciences, and we're seeing big wins in all of those areas and importantly, we're seeing parts of our business that didn't have that expertise before they joined the Baldwin grew.

Trevor L. Baldwin: You know, we've brought together businesses with deep expertise across a number of areas, including real estate, oil and gas, construction, private equity, and M&A, technology, and life sciences. And we're seeing big wins in all of those areas. And importantly, we're seeing parts of our business that didn't have that expertise before they joined the Baldwin Group leverage those resources and those capabilities as a result of how accessible we've made them through the work we've done to integrate this business and how we've aligned and assimilated around a common go-to-market model.

Trevor L. Baldwin: <unk> leverage those resources and those capabilities as a result of how accessible we've made them do the work we've done to integrate this business and how we've aligned and assimilate it around a common go to market model and that's unlocked real opportunity that's being leveraged in the field to deliver that expertise.

Trevor L. Baldwin: And that's unlocked real opportunity that's being leveraged in the field to deliver that expertise and ultimately convert that into new client relationships. So it's broad-based. And, you know, I'd say we saw a recovery in our construction practice in the quarter as we, you know, signaled that we had expected last call. It wasn't anything outlier in nature. It was more just a kind of regular way, the type of growth and new business results we would expect to see.

Trevor L. Baldwin: And ultimately convert that into new client relationships.

Trevor L. Baldwin: It's broad base and you know I'd say, we saw a recovery in our construction practice in the quarter as we signaled that we had expected last last call.

Trevor L. Baldwin: It wasn't anything outlier in nature. It was more just kind of regular way the type of growth and new business results, we would expect to see.

Trevor L. Baldwin: Okay.

Pablo Augusto Serrano Singzon: And then last but not least for me, I was curious to hear if you're seeing any change in, I guess, the compensation you're receiving from your insurance workers on an overall basis, and I guess, typically, you know, in the main three channels, right, where, you know, the past several years, like, a lot of drivers have been under pressure, and I think some of them have adjusted compensation for their for their partner brokers, but any significant Right? And perhaps even such a Medicare or commercial side, and then specifically, the retail, you know, main Yeah, so at a high level, no.

Speaker Change: Got it that makes sense and then lastly for me.

Pablo Augusto Serrano Singzon: I was curious to hear if you're seeing.

Pablo Augusto Serrano Singzon: And I guess the compensation, you're receiving from your insurance person and overall beef and I guess typically you know and the.

Pablo Augusto Serrano Singzon: Mitri channels, right, where you know I guess the best.

Pablo Augusto Serrano Singzon: Like all other carriers have been under pressure and I think some of that I have just said.

Pablo Augusto Serrano Singzon: Compensation for the further Parker for Christmas.

Pablo Augusto Serrano Singzon: Any significant changes youre seeing I guess for the overall company right.

Pablo Augusto Serrano Singzon: Perhaps you could touch a Medicare or commercial side, and then specifically the <unk>.

Pablo Augusto Serrano Singzon: Retail you know main street.

Trevor L. Baldwin: Yeah, so at a high level, no, Pablo, we're not seeing any, you know, abnormal changes there. When we look at, you know, both our IS and our Main Street business, client retention continues to, you know, operate in line with where we have historically overall premium retention, you know, if anything is, you know, above, you know, the intermediate to longer term historical standards based on, you know, where we are right now. You know where we are in the rate cycle.

Speaker Change: Yeah, so it at a high.

Trevor L. Baldwin: High level no Pablo we're not seeing any abnormal changes there.

Trevor L. Baldwin: When we look at both our RIS in our Mainstreet business client retention continues to.

Trevor L. Baldwin: Operated in line with where we have historically.

Trevor L. Baldwin: Overall premium retention, if anything is above the intermediate to longer term historical standards based on where we are in the rate cycle.

Trevor L. Baldwin: And look, I'd say from time to time, do you see insurance companies, you know, pull on the commission lever if they're experiencing pretty significant financial challenges? Yeah, you do. And, you know, do we see that from time to time? Absolutely. Do we ever see that in a manner that's kind of noticeable or impactful to our overall results? No, we haven't. And, you know, we're not seeing that today, and we wouldn't anticipate that going forward.

Trevor L. Baldwin: And look I'd say from time to time do you see insurance companies pull on the commission a lever if they're experiencing pretty significant financial challenges. Yeah, you do and do we see that from time to time, absolutely do we ever see that in a manner that's noticeable.

Trevor L. Baldwin: Or or impactful to our overall results no we haven't and we're not seeing that today and we wouldnt anticipate that going forward.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you Pablo.

Speaker Change: Thank you ladies.

Operator: Ladies and gentlemen, as there are no further questions, I now hand the conference over to Trevor Baldwin for his closing comments. Trevor? Thank you.

Trevor L. Baldwin: Ladies and gentlemen, as there are no further questions I now hand, the conference over to Trevor Baldwin for his closing comments treble.

Trevor L. Baldwin: Thank you, Ryan. I want to thank everyone for joining us on the call this afternoon. In closing, I want to thank our colleagues for their hard work and dedication. I also want to thank our clients for their continued trust and confidence. Thank you all very much, and I look forward to speaking with you again next quarter.

Trevor L. Baldwin: Thank you Brian I wanted to thank everyone for joining us on the call. This afternoon in closing I want to thank our colleagues for their hard work and dedication I also want to thank our clients for their continued trust and confidence. Thank you all very much and I look forward to speaking with you again next quarter.

Speaker Change: Thank you the conference of the Baldwin Group has now concluded. Thank you for your participation you may now disconnect your lines.

Operator: Thank you. The conference of the Baldwin Group has now concluded. Thank you for your participation. You may now disconnect your lines.

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