Q1 2025 Ryan Specialty Holdings Inc Earnings Call

Unknown Executive: Earnings First Quarter 2025 Earnings Conference. In addition to this call, the company filed a press release with the SEC earlier this afternoon, which has also been posted to its website at ryanspecialty.com.

Earnings Conference call.

In addition to this cool the company filed a press release with the SEC earlier. This afternoon, which has also been posted to its website at Ryan specialty Dot com.

Unknown Executive: On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements. Investors should not place undue reliance on any forward looking statement. These statements are based on management's current expectations and beliefs, and are subject to risks and uncertainties that could cause actual results to differ materially from these discussed today.

On today's call management's prepared remarks and answers to your questions may contain forward looking statements.

Investors should not place undue reliance on any forward looking statements. These.

These statements are based on management's current expectations and beliefs.

Subject to risks and uncertainties that could cause actual results to differ materially from these discussed today.

Unknown Executive: Listeners are encouraged to review the more detailed discussion of these risk factors contained in the company's filings for the SEC.

Listeners are encouraged to review the more detailed discussion of these risk factors contained in the company's filings with the SEC.

Unknown Executive: The company assumes no duty to update such forward-looking statements in the future except as required by law.

The company assumes no duty to update such forward looking statements in the future except as required by law.

Unknown Executive: Additionally, certain non-GAAP financial measures will be discussed on this call and should not be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliations of these non GAAP financial measures to the most closely comparable measures prepared in accordance with GAAP are included in the earnings release, which is filed with the SEC and available on the company's website.

Additionally, certain non-GAAP financial measures will be discussed on this call and should not be considered in isolation or as a substitute for the financial information presented in accordance with GAAP.

Reconciliations of these non-GAAP financial measures to the most closely comparable measures prepared in accordance with GAAP are included in the earnings release, which is filed with the SEC and available on the company's website.

Patrick Ryan: With that, I'd now like to turn the call over to the Founder and Executive Chairman of Ryan Specialty, Pat Ryan. Good afternoon. And thank you for joining us to discuss our first quarter results.

With that I'd now like to turn the call over to the founder and executive Chairman of Ryan Specialty Pat Ryan.

Pat Ryan: Good afternoon.

Pat Ryan: Thank you for joining us to discuss our first quarter results.

Patrick Ryan: With me on today's call is our CEO, Tim Turner. Our president, Jeremiah Bickham, our CFO, Janice Hamilton. Our CEO of Underwriting Managers, Miles Wuller, and our Head of Investor Relations, Nick Messick.

Speaker Change: With me on today's call is our CEO Jim Turner.

Speaker Change: Our president Jerome I broke them.

Speaker Change: Our CFO China's Hamilton.

Speaker Change: Our CEO of underwriting managers.

Speaker Change: The ruler.

Speaker Change: Our head of Investor Relations like music.

Timothy Turner: The first quarter represented a strong start to the year. We grew total revenue 25%. driven by strong organic revenue growth of nearly 13%. 13 percentage points from M&A. This is our largest contribution from M&A in over three years. partially offset by a slight decline in fiduciary investment in adjusted EBITDA accrued 27.5%. 201 million. So it's a DIVA DAC margin, expanded 60 basis points to 29.1%. Adjusted earnings per share grew 11.4%. 39 sons.

Speaker Change: The first quarter represented a strong start to the year.

Speaker Change: We grew total revenue 25%.

Speaker Change: Driven by strong organic revenue growth.

Speaker Change: Nearly 13%.

Speaker Change: And 13 percentage points from M&A.

Speaker Change: This is our largest contribution from M&A and over three years.

Speaker Change: Partially offset by a slight decline in fiduciary investment income.

Speaker Change: Adjusted EBITDA grew 27, 5%.

Speaker Change: The $201 million.

Speaker Change: So I said EBITDA margin expanded 60 basis points to 29, 1%.

Speaker Change: Adjusted earnings per share grew 11, 4%.

Speaker Change: 39 cents.

Timothy Turner: very good quarter by any measure. Our growth was driven by strength and casualty across all three of our specialties. and Modest Growth and Property. This is a credit to our ability to deliver value for our clients in a challenging property market. We also have significant top line contributions. for recent acquisitions. including Velocity Risk Underwriters. which closed at the beginning of February. In April, we announced the acquisition of U.S. Q Risk. and are very excited to welcome these new teammates into the Ryan Specialty family.

Speaker Change: A very good quarter by any measure.

Speaker Change: Our growth was driven by strength in casually across all three of our specialties.

Speaker Change: And modest growth in property.

Speaker Change: Which is a credit to our ability to deliver value.

Speaker Change: For our clients in a challenging property market.

Speaker Change: We also had significant top line contributions from.

Speaker Change: Our recent acquisitions.

Speaker Change: Including velocity risk underwriters.

Speaker Change: Which closed at the beginning of February.

Speaker Change: In April.

Speaker Change: Obviously, the acquisition of U S <unk> risk.

Speaker Change: Very excited to welcome these new teammates into the Ryan specialty family.

Timothy Turner: Robust M&A activity over the past two years, and since our founding. has advanced various aspects of our strategy. Notably. Significantly expanded our total addressable We had an expertise. augmenting our capabilities to serve our clients across market segments. and Brodner International Football. We added many new programs and unique MGUs. provide us with greater advantages to extend our lead in delegated underwriting authority now. and over the long term.

Speaker Change: Our robust M&A activity over the past two years.

Speaker Change: And since our founding.

Speaker Change: As advanced various aspects of our strategy.

Speaker Change: Notably.

Speaker Change: Significantly expanded our total addressable market.

We added expertise.

Speaker Change: And our capabilities to serve our clients across market segments and.

Speaker Change: And broaden our international footprint.

Speaker Change: We added many new programs and unique to us.

Speaker Change: Provide us with greater advantages.

Speaker Change: To extend our lead in delegated underwriting authority now.

Speaker Change: And over the long term.

Unknown Executive: Nothing back.

Speaker Change: Stepping back.

Timothy Turner: I want to spend a minute on the current environment. There has been an increased level of uncertainty around global trade and the health of the broader economy. A Readthrough of this Uncertainty into the Real Economy. and Capital Markets. face elevated risks in the near and medium term. With our diversified set of businesses. Cycle-Tested Business Model, focused on specialized expertise and industry-leading talent. We believe we are well-positioned to navigate the challenging near-term environment and win over the long term. Just as we've done for the past 15 years.

Speaker Change: I wanted to spend a minute on the current environment.

Speaker Change: There's been an increased level of uncertainty around global trade and.

Speaker Change: The health of the broader economy.

Speaker Change: The read through of this uncertainty into the real economy.

Speaker Change: Inflation, aerie pressures and capital markets.

Speaker Change: Alright, so elevated risks in the near and medium term.

Speaker Change: With our diversified set of businesses.

Speaker Change: And cycle tested business model.

Speaker Change: Just on specialized expertise and industry leading talent.

Speaker Change: We believe we are well positioned to navigate the challenging near term environment.

Speaker Change: Over the long term.

Speaker Change: So as we've done for the past 15 years.

Timothy Turner: Moving ahead. We expect that we will continue to deliver innovative solutions. or a client. Generate Industry-Leading Organic Growth. Executor M&A Strategy. and increased profitability. on Investing in Our Plight. All of this will drive significant additional value for our shareholders. and ensure we remain a top specialty insurance services firm in our industry.

Speaker Change: Moving ahead.

Speaker Change: We expect that we will continue to deliver innovative solutions for our clients.

Speaker Change: <unk> industry, leading organic growth.

Speaker Change: Execute our M&A strategy.

Speaker Change: And increased profitability.

Speaker Change: While investing in our platform.

Speaker Change: All of this will drive significant additional value for our shareholders and.

Speaker Change: And ensure we remain a top specialty insurance services firm in our industry.

Patrick Ryan: I'm pleased to turn the call over to our Chief Executive Officer. Tim Turner, Tim. Thank you very much, Pat.

Speaker Change: I am pleased to turn the call over to our Chief Executive Officer, Jim Turner.

Speaker Change: <unk>.

Speaker Change: Thank you very much Pat before discussing the results I wanted to expand on Pat's comments and highlight the durability of Ryan specialties business model.

Timothy Turner: Before discussing the results, I wanted to expand on Pat's comments and highlight the durability of Ryan Specialty's business model with three particular points. We operate in the Resilient Specialty and E&S market. Many of our products are compulsory. And we have built a differentiated platform with top flight specialized talent. First, insurance premiums have a long track record of growth. It is important to remember that U.S. premium growth turned negative in aggregate only once over the past 60-plus years. As the world continues to become riskier and more complex, risks are moving into the specialty and E&S marketplace, which is equipped to offer solutions that would otherwise not be available.

Speaker Change: With three particular points.

Speaker Change: We operate in a resilient specialty and E&S market.

Speaker Change: Many of our products are compulsory.

Speaker Change: And we have built a differentiated platform with top flight specialized talent.

Speaker Change: First insurance premiums have a long track record of growth it.

Speaker Change: It is important to remember that U S premium growth turned negative in aggregate only once over the past 60 plus years.

Speaker Change: As the World continues to become riskier and more complex risks are moving into the specialty and E&S marketplace.

Speaker Change: Which is equipped to offer solutions that would otherwise not be available.

Timothy Turner: This market is better suited to handle a more uncertain loss environment as it offers significantly more freedom of rate and form. and the ability for insurers and underwriters to adjust more quickly. This has also led to a secular shift in how capital is positioned in the broader insurance market. carriers that have historically participated only in the admitted market. are making significant commitments to ENS and new capital is also flowing in. Looking forward, we believe the E&S market will both continue to grow and important. and take share of the overall insurance landscape. Second, our wholesale brokerage and delegated underwriting authority businesses provide largely compulsory insurance products.

Speaker Change: This market is better suited to handle a more uncertain loss environment as it offer significantly more freedom of rate and form.

Speaker Change: And the ability for insurers and underwriters to adjust more quickly.

Speaker Change: This has also led to a secular shift in how capital is positioned in the broader insurance market.

Speaker Change: Carriers that have historically participated only in the admitted market.

Speaker Change: Are making significant commitments to E&S and new capital is also flowing in.

Speaker Change: Looking forward, we believe the E&S market will both continue to grow in importance and take share of the overall insurance landscape.

Speaker Change: Second our wholesale brokerage and delegated underwriting authority businesses provide largely compulsory insurance products.

Timothy Turner: Many, if not most businesses must have insurance. And as they grow, their needs become more and more complex. And third, we've built the best platform in the industry, driven by our world-class talent. Our specialized expertise and wholesale and delegated authority, as well as our alignment within it, provide our clients and trading partners with differentiated value and innovative solutions. As a result, we have created incredible trust and significantly deepened our relationships with these same clients and trading partners.

Speaker Change: Many if not most businesses must have insurance.

Speaker Change: And as they grow their needs become more and more complex.

Speaker Change: And third we built the best platform in the industry driven by our World class talent.

Speaker Change: Our specialized expertise in wholesale a delegated authority as well as our alignment within it provide our clients and trading partners with differentiated value and innovative solutions.

Speaker Change: As a result, we have created incredible trust and significantly deepened our relationships with the same clients and trading partners, which we believe provides us with a tremendous runway for continued growth for years to come.

Timothy Turner: which we believe provides us with a tremendous runway for continued growth for years to come.

Timothy Turner: Turning to results. We had an excellent first quarter driven by strong organic growth and significant contributions from our recent acquisitions. Now diving into our specialties, each of which grew their top line by double digit. our Wholesale Brokerage Specialty at another strong quarter. In property, we again executed well and still delivered modest growth. Despite a Very Challenging Environment. Property pricing declines continued along the same trend that we experienced in the fourth quarter. However, despite the softer pricing, we overcame these trends. We again took share of the strong flow into the channel, won head-to-head against our competitors, and had another quarter of high renewal retention.

Speaker Change: Turning to results.

Speaker Change: <unk> had an excellent first quarter driven by strong organic growth and significant contributions from our recent acquisitions.

Speaker Change: Now diving into our specialties, each of which grew their top line by double digits.

Speaker Change: Our wholesale brokerage specialty had another strong quarter and property.

Speaker Change: We again executed well and still delivered modest growth despite a very challenging environment.

Speaker Change: Property pricing declines continued along the same trend that we experienced in the fourth quarter. However, despite the softer pricing. We overcame these trends we again took share of the strong flow into the channel.

Speaker Change: One head to head against our competitors and had another quarter of high renewal retention.

Timothy Turner: This is a testament to our tenacious and ultra competitive RT brokerage team. We know how to navigate adversity in the marketplace, find new opportunities to grow and expand our market share, and importantly, find ways to win. It's in our DNA.

Speaker Change: This is a testament to our tenacious and ultra competitive RT brokerage team.

Speaker Change: We know how to navigate adversity in the marketplace by new opportunities to grow and expand our market share.

Speaker Change: And importantly find ways to win.

Speaker Change: In our DNA.

Timothy Turner: As a reminder, the second quarter is our largest property quarter, and the second quarter of 2024 was the last very strong quarter for property before rates began to decelerate. setting up a challenging comp for the second quarter of 2025. While we expect rates to remain competitive in the near term, we remain very bullish on property as an important contributor to our growth over the long term. are casually practiced at another excellent quarter with strong new business and high renewal retention. We saw strong growth for habitational. Transportation, Construction, and Healthcare. Our transportation practice saw another quarter of strong flow.

Speaker Change: As a reminder, the second quarter is our largest property quarter and the second quarter of 2024 was the last very strong quarter for property before rates began to decelerate.

Speaker Change: Setting up a challenging comp for the second quarter of 2025.

Speaker Change: We expect rates to remain competitive in the near term we remain very bullish on property as an important contributor to our growth over the long term.

Speaker Change: Our casualty practice had another excellent quarter with strong new business and high renewal retention.

Speaker Change: We saw strong growth for habitation risks transportation construction and healthcare.

Speaker Change: Our transportation practice.

Speaker Change: Another quarter of strong flow.

Timothy Turner: Difficult loss trends driven by both economic and severe social inflation are driving carriers to increase rates. pullback appetite, and in some cases, exit markets completely. Risks in each of these classes and many others are continuing to move into the specialty and E&S market. We see the E&S market responding in a disciplined manner, with carriers tightening distribution lines, re-underwriting, changing appetite, raising prices, and focusing on limit management. We believe the need for the specialized industry and product-level knowledge that Ryan Specialty offers has never been greater, and our value proposition has never been stronger. We remain confident that casualty will be a strong driver of our growth moving forward and that we will continue to be a leader in casualty solutions for years to come.

Speaker Change: Difficult loss trends driven by both economic and severe social inflation are driving carriers to increase rates pull.

Speaker Change: Pullback appetite and in some cases exit markets completely.

Speaker Change: Risks in each of these classes and many others are continuing to move into the specialty and E&S markets.

Speaker Change: We see the E&S market responding in a disciplined manner with carriers tightening distribution lines re underwriting changing appetite raising prices and focusing on limit management.

Speaker Change: We believe the need for the specialized industry and product level knowledge that Ryan specialty offers has never been greater and our value proposition has never been stronger.

Speaker Change: We remain confident that casualty will be a strong driver of our growth moving forward and that we will continue to be a leader in casualty solutions for years to come.

Timothy Turner: Now turning to our Delegated Authorities Special. which includes both binding and underwriting management. Our Binding Authority Specialty had a very good start in 2025, driven by our top-tier talent and expanding product set for small, tough-to-place commercial P&C risks.

Now turning to our delegated authority specialties.

Speaker Change: Which includes both binding and underwriting management.

Speaker Change: Our binding authority specialty had a very good start in 2025.

Speaker Change: Driven by our top tier talent.

Speaker Change: Expanding product set for small tough to place commercial P&C risks.

Timothy Turner: We continue to believe panel consolidation in binding authority remains a long-term growth opportunity, and we are well positioned to capitalize. Meanwhile, our underwriting management specialty at another excellent quarter. Results were driven by strong organic growth, particularly in casualty and transactional liability. We also had meaningful contributions from recent acquisitions, which added over 50 percentage points of growth to the top line of this specialty. Our strategic positioning allows us to capitalize on both organic and inorganic growth opportunities.

Speaker Change: We continue to believe panel consolidation and binding authority remains a long term growth opportunity and we are well positioned to capitalize.

Speaker Change: Meanwhile, our underwriting management specialty had another excellent quarter.

Speaker Change: Results were driven by strong organic growth, particularly in casualty and transactional liability.

Speaker Change: We also had meaningful contributions from recent acquisitions, which added over 50 percentage points of growth to the top line of this specialty.

Speaker Change: Our strategic positioning allows us to capitalize on both organic and inorganic growth opportunities.

Timothy Turner: We believe this combination, paired with our skill and discipline to manage the business through the insurance cycle, ensures our ability to deliver consistently profitable underwriting results, growth, and scale over the long We have repeatedly noted that in any cycle, as certain lines are perceived to reach pricing adequacy, admitted markets tend to step back in on certain places. However, this is still not playing out in any meaningful way, and the standard market has not meaningfully impacted the rate or flow in the aggregate. As we've said since our IPO, we continue to expect the flow of business into the specialty and E&S market to be a significant driver of Ryan Specialty's growth over the long term, more so than rate.

Speaker Change: We believe this combination paired with our skill and discipline to manage the business through the insurance cycle ensures our ability to deliver consistently profitable underwriting results growth and scale over the long term.

Speaker Change: We have repeatedly noted that in any cycle as certain lines are perceived to reach pricing adequacy admitted markets tend to step back in on certain placements.

Speaker Change: However, this is still not playing out in any meaningful way in the standard market is not meaningfully impacted the rate or flow in the aggregate.

Speaker Change: As we've said since our IPO.

Speaker Change: We continue to expect the flow of business into the specialty and E&S market to be a significant driver of Ryan specialties growth over the long term more so than rate.

Unknown Executive: Turning to M&A.

Speaker Change: Turning to M&A.

Timothy Turner: Today, we announce the closing of our acquisition of USQ Risk. USQ adds top talent and differentiated intellectual capital to our alternative risk offering. along with approximately $11 million of incremental annualized revenue to Ryan Specialty. Our new teammates will bolster the capabilities that we bring to our retail broker clients in this highly technical and valued segment of the market. With a focus on non-traditional insurance solutions for risks which the traditional insurance market cannot underwrite efficiently, USQ has carved out a niche. Each of the Property, Casualty, and Transportation Markets.

Speaker Change: Today, we announced the closing of our acquisition of U S SKU risk.

Speaker Change: U S SKU adds top talent and differentiated intellectual capital through our alternative risk offerings.

Speaker Change: Along with approximately $11 million of incremental annualized revenue to Ryan specialty.

Speaker Change: Our new teammates will bolster the capabilities that we bring to our retail broker clients in this highly technical and valued segment of the market.

Speaker Change: With a focus on non traditional insurance solutions for risks, which the traditional insurance market and that underwrite efficiently use SKU has carved out a niche in each of the property casualty and transportation markets.

Timothy Turner: Further on the MA front, our pipeline continues to be robust, including small, midsize, and large deals. That said, we will only move forward when all of our criteria for M&A are met. Strong cultural fit, strategic, and accretive.

Speaker Change: Further on the M&A front, our pipeline continues to be robust, including small midsize and large deals.

Speaker Change: That said, we will only move forward when all of our criteria for M&A are met a.

Speaker Change: A strong cultural fit strategic and accretive.

Timothy Turner: To sum up, it was another strong quarter for Ryan Specialty.

Speaker Change: To sum up it was another strong quarter for Ryan specialty I am proud of our entire team for continuing to deliver outstanding results and adding value for our clients trading partners and ultimately our shareholders.

Timothy Turner: I am proud of our entire team for continuing to deliver outstanding results and adding value for our clients, trading partners, and ultimately our shareholders.

Jeremiah Bickham: With that, I will now turn the call over to Jeremiah. Thank you. Thank you, Tim. We're pleased with our strong first quarter performance. On our last call, I noted our unique position to make even larger long-term investments in our platform this year to support our growing business, while also consistently delivering margin improvement. In the quarter, we made great progress on all these fronts. We continue to recruit, train and develop top flight talent, advance our operations and integrate numerous recent acquisitions, and lean into new technologies, all while expanding our margins. We continue to be a growth minded business and remain committed to balancing investments and margin expansion.

Jeremiah: With that I will now turn the call over to Jeremiah.

Speaker Change: Thank you.

Speaker Change: Thank you Tim we're pleased with our strong first quarter performance on our last call I noted our unique position to make even larger long term investments in our platform. This year to support our growing business, while also consistently delivering margin improvement.

Speaker Change: In the quarter, we made great progress on all these fronts, we continue to recruit.

Speaker Change: And develop top flight talent advance our operations and integrate numerous recent acquisitions and lean into new technologies, all while expanding our margin we continue to be a growth minded business and remain committed to balancing investments and margin expansion.

Jeremiah Bickham: We believe that these investments in our business today, in talent, in de novo's, acquisitions, operations, and technologies that leverage data and AI will deliver strong, sustainable growth well into the future.

Speaker Change: We believe that these investments in our business today, and talent and de Novo's acquisitions operations and technology that leverage data and AI will deliver strong sustainable growth well into the future.

Janice Hamilton: With that, I'll now turn the call over to our Chief Financial Officer, Janice Hamilton, who will give you more details on our financial results. Thanks, Jeremiah. In Q1, total revenue grew 25% period over period to $690 million. Growth was once again fueled by organic revenue growth of 12.9%, substantial contributions from M&A, which added 13 percentage points, and contingent commissions as we delivered strong underwriting profits for our carrier trading partners, and was partially offset by a decline in fiduciary investment income. Adjusted EBITDAC grew 27.5% to $201 million. Adjusted EBITDAC margin expanded 60 basis points to 29.1%, driven by another quarter of strong revenue growth and recent acquisitions, partially offset by headwinds from fiduciary investment income, as well as the timing of certain expenses.

Speaker Change: With that I'll now turn the call over to our Chief Financial Officer, Janice Hamilton, who will give you more details on our financial results.

Speaker Change: Yeah.

Speaker Change: Thanks, Jeremy and Q1 total revenue grew 25% period over period to 699.

Speaker Change: This was once again fueled by organic revenue growth of 12, 9%.

Speaker Change: Contributions from M&A, which added 13 percentage points and contingent commissions I think 11 strong underwriting profits for a carrier trading partners.

Speaker Change: Offset by a decline in fiduciary investment income.

Speaker Change: Adjusted EBITDA grew 27, 5% to $201 million.

Speaker Change: Adjusted EBITDA margin expanded 60 basis points to 29, 1% driven by another quarter of strong revenue growth and recent acquisitions, partially offset by headwinds from fiduciary investment income as well as the timing of certain expenses.

Janice Hamilton: Adjusted earnings per share grew 11.4% to 39 cents. We had a gap net loss of $4 million in the quarter.

Speaker Change: Adjusted earnings per share grew 11, 4% to 39.

Speaker Change: We had a GAAP net loss of $4 million in a quarter.

Janice Hamilton: Similar to our Associates transaction in the third quarter of 2023, because we reorganized Velocity from a C-Corp to an LLC upon closing, we incurred a non-recurring, non-cash deferred tax expense at the public holding company, creating a gap net loss of $0.22 per diluted share. Since we have no plan to sell Velocity, we do not expect the tax expense will ever be realized in cash. This reorganization was the right strategy and will result in an excellent outcome for shareholders, particularly with regard to go forward tax efficiency. As noted previously, we will continue to pursue a similar strategy with respect to any future acquisitions of C Corp.

Speaker Change: Similar to our associates transaction in the third quarter of 2023, because we reorganized velocity from a CCAR plan LLC upon closing, we incurred a nonrecurring noncash deferred tax expense at the public holding company, creating a GAAP net loss of 22 per diluted share.

Speaker Change: Since we have no plan to sell velocity, we cannot expect the tax expense will ever be realized in cash.

Speaker Change: This reorganization with the right strategy and will result in an excellent outcome for shareholders, particularly with regard to go foreign tax efficiency.

Speaker Change: As noted previously we will continue to pursue a similar strategy with respect to any future acquisitions of CCAR.

Janice Hamilton: Our adjusted effective tax rate was 26% for the quarter. For 2025, we expect our adjusted effective tax rate may move slightly based on geographic mix and tax budget.

Speaker Change: Our adjusted effective tax rate was 26% for the quarter.

Speaker Change: For 2025, we expect our adjusted effective tax rate, namely slightly based on geographic mix and tax law changes.

Janice Hamilton: Turning to capital allocation. M&A remains our top priority now and for the foreseeable future. We ended the quarter at 3.8 times total net leverage on a credit basis, which reflects the acquisition of velocity and seasonal working capital needs in Q1. While this is at the high end of our leveraged comfort corridor of three to four times, we do remain willing to temporarily go above our comfort corridor for M&A that meets our criteria. Our strong free cash flow and the strength of our balance sheet provides flexibility to continue executing on strategic M&A opportunities.

Speaker Change: Turning to capital allocation.

Speaker Change: M&A remains our top priority now and for the foreseeable future.

Speaker Change: We ended the quarter at three eight times total net leverage on a credit basis, which reflects the acquisition of velocity and seasonal working capital needs in Q1.

Speaker Change: While this is at the high end of our leverage comfort corridor of three to four times, we do remain willing to temporarily go above our comfort corridor for M&A that meets our criteria.

Speaker Change: Our strong free cash flow and the strength of our balance sheet provides flexibility to continue executing on strategic M&A opportunities.

Janice Hamilton: Based on the current interest rate environment, we expect to record GAAP interest expense, which is net of interest income on our operating funds, of approximately $217 million in 2025, with $59 million to be expensed in the second quarter. For the full year 2025, we are maintaining our guidance for organic revenue growth of between 11% and 13% and adjusted EBITDA margin of between 32.5% and 33.5%.

Speaker Change: Based on the current interest rate environment, we expect to record GAAP interest expense, which is net of interest income on our operating funds of approximately $217 million in 2025 50.

Speaker Change: <unk> $59 million can you expense in the second quarter.

Speaker Change: For the full year 2025, we are maintaining our guidance for organic revenue growth of between 11, and 13% and adjusted EBITDA margin of between $32 five and 33, 5%.

Janice Hamilton: Regarding the recent macro uncertainty, we continue to monitor the environment closely for any potential impact on our business. As Pat and Tim noted, we believe our business model is resilient, given we operate in a specialty in E&S market, the largely compulsory nature of our product set, and the differentiated platform and unparalleled expertise we offer our clients and trading partners.

Speaker Change: Regarding the recent macro uncertainty we continue to monitor the environment closely for any potential impact on our business.

Speaker Change: Of patents have noted we believe our business model is resilient given we operate in the specialty and E&S market largely compulsory nature of our product set and the differentiated platform and unparalleled expertise, we offer our clients and trading partners.

Unknown Executive: With that, we thank you for your time and would like to open up the call for Q&A. Operator. Thank you. At this time, if you'd like to ask a question, please click on the raised hand button, which can be found on the black bar at the bottom of your screen. You may remove yourself from the queue at any time by lowering your hand. When it is your turn, you'll hear your name called and receive a message on your screen asking you to unmute. Please unmute and ask your question. We'll wait for a moment to allow the queue to form.

Speaker Change: With that we thank you for your time I would like to open up the call for Q&A operator.

Speaker Change: Thank you.

Speaker Change: This time, if you'd like to ask a question. Please click on the raise hand button, which can be found on the black box at the bottom of your screen you may remove yourself from the queue at any time by lowering your hand.

Speaker Change: When it's as Youll term Youll hear your name code and receive a message on your screen asking you to Amit. Please on mute and ask your question.

Speaker Change: We will wait for a moment to allow the keys to form.

Elyse Greenspan: Our first question comes from Elyse Greenspan from Wells Fargo.

Speaker Change: Our first question comes from Elyse Greenspan from Wells Fargo. Please go ahead.

Elyse Greenspan: Please go ahead. Hi, everyone. Whoops, sorry. Oh, there it is.

Speaker Change: Okay.

Speaker Change: Thanks, Bob.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Perfect.

Speaker Change: Oh, yes.

Unknown Executive: Andrew, your line is now open, please go ahead and ask your question. Yes, can you hear me? Can you hear me? Yes. We can hear you. Okay. Great. Sorry about that. Um, so I'm, I'm looking at that amazing. revenue growth that you just put up and it's about You know, it's double digit higher than the organic growth. And historically, I was kind of thinking maybe upper single digits, upper mid single digits.

Speaker Change: Andrew Your line is now open. Please go ahead.

Speaker Change: Hi, Yes can you hear me.

Speaker Change: Can you hear me yes.

Speaker Change: We can hear you.

Speaker Change: Okay, great sorry about that.

Speaker Change: So I'm looking at that amazing.

Speaker Change: Revenue growth say, you just put up and it's about.

Speaker Change: You know, which double digit higher than me organic growth.

Speaker Change: And historically I was kind of thinking maybe.

Speaker Change: Upper single digits upper mid single digits could you talk a little bit about the pipeline right now and and weather.

Timothy Turner: Could you talk a little bit about the pipeline right now and whether, you know, at minimum upper single digit is sustainable in terms of inorganic revenue growth? Yeah. Be happy to. Our flow of business into the channel continues to be double digits, strong double digits, validated by the stamping offices. We're seeing heavy flow in most of the specialty channels, led by casualty. But property was surprising. While we saw continued rate deceleration like the fourth quarter, we were able to manage those headwinds and we had some modest growth.

Speaker Change: At minimum upper upper single digit is sustainable in terms of inorganic revenue growth.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Be happy too.

Speaker Change: Our flow of business into the channel continues to be double digits strong double digits validated by the stamping offices, we're seeing heavy flow in most of the specialty channels led by casualty.

Speaker Change: But property was surprising while we saw continued rate deceleration like the fourth order.

Speaker Change: We were able to manage those headwinds that we had some modest growth.

Timothy Turner: So, Our M&A pipeline, in particular. is very, very robust. We have tremendous opportunities in small, medium-sized acquisitions and some very large ones as well. So we remain very optimistic on our opportunities going forward. The market itself is very frothy and we're excited about the opportunities in 2025. to really scale that up.

Speaker Change: So.

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: Our M&A pipeline.

Speaker Change: Particular.

It's very very robust.

Speaker Change: We have tremendous opportunities in small medium sized acquisitions, and some very large ones as well. So we remain very optimistic on our opportunities going forward.

Speaker Change: The market itself is very frothy and we're excited about the opportunities in 'twenty five.

Speaker Change: And maybe.

Speaker Change: Following on to that you mentioned the U S Q risk acquisition.

Speaker Change: At $11 million in incremental revenue, which sounds very small to me and I think what impresses me is ryan's ability too.

Patrick Ryan: I mean, is that something that could turn into 50 or 100 million in revenue and not too long? And how might you do that?

Speaker Change: To really scale that up I mean is that something that could turn into.

Speaker Change: 50, or 100 million in revenue and not too long and how might you do that.

Patrick Ryan: Well, this is Pat. I'm not going to touch the growth rate you just articulated. But I would say that.

Speaker Change: Well this is Pat I'm, not a client of ours.

Speaker Change: That's the growth rate is just articulated.

Patrick Ryan: This is very specific. is very strategic at that. Since day one. Our investment strategy has been to build a suite of products and services. I can do an exceptional organic growth. for a cycle and over the lump. As you know, we've been constantly innovating. Launching new product.

Speaker Change: I would say to us.

Speaker Change: This is very strategic.

Speaker Change: It's very strategic in that.

Speaker Change: Uh huh.

Speaker Change: Since day one.

Speaker Change: Our investment strategy has been to build a suite of products deserves.

Kelly: Hi, Kelly of exception workout accruals.

Speaker Change: Cycle.

Speaker Change: And over the long term.

As you know we've been constantly innovating.

Speaker Change: Launching new products.

Patrick Ryan: I'm in Cape Verde. all the while expanding our total address one more.

Speaker Change: Having capabilities.

Speaker Change: All the while expanding our total addressable market.

Patrick Ryan: At teh. So this strategy really has positioned us well.

Speaker Change: Okay.

Speaker Change: So the strategy really has positioned us well.

Patrick Ryan: Weebly. to sustain our double-digit organic growth. and frankly overcome the challenges of scale. Harder to grow the larger you get.

Speaker Change: We believe so.

Speaker Change: Sustain double digit organic growth.

Speaker Change: And frankly overcome the challenges of scale.

Speaker Change: Harder to grow than the larger you get.

Patrick Ryan: Our market share. which was experienced in our own property. And we've done this over the last 15 years. So we do this through adding talent. both from within and outside of the industry. and very much to our acquisitions that we pay. and you put your finger on the key one.

Speaker Change: Our market shares.

Speaker Change: Which were experts in our own property.

Speaker Change: And we've done this over the last 15 years.

Speaker Change: So we do this through adding talent.

Speaker Change: Both from within and outside of the industry.

Speaker Change: And very much through acquisitions that we've made.

Speaker Change: And you put your finger on cable.

Patrick Ryan: The Acquisition of USQ Risk. Here, we are really deepening our strategic alliance.

Speaker Change: The acquisition of U S Q risk.

Speaker Change: Sure.

Speaker Change: We're really deepening our strategic alliance.

Patrick Ryan: The pleasure is all mine. I think you all understand. This is a very unique alliance and relationship we have with Nationwide Mutual.

Speaker Change: With nationwide mutual.

Speaker Change: I think you all understand.

Speaker Change: This is a very unique.

Speaker Change: Alliance relationship.

Patrick Ryan: The great thing about Who's the lion? is we both understand. What we bring to the equation. And what's the other one? And we're very proud, each of us, as to the expertise that we bring. So we've been doing. doing this now for on our sixth year. And we keep adding.

Speaker Change: Sure.

Speaker Change: The great thing about.

Speaker Change: This alliance is.

Speaker Change: We both understand.

Speaker Change: What we bring to the equation.

Speaker Change: And what's the other Brooks.

Speaker Change: And we're very proud of each of us us.

Speaker Change: As to the expertise that we bring.

Speaker Change: So we've been doing.

Speaker Change: Doing this now for.

Speaker Change: On our sixth year.

Speaker Change: And we keep adding.

Patrick Ryan: Top New Town. both from within and outside of the industry.

Speaker Change: Top new talent.

Speaker Change: Walter will then.

Speaker Change: Side of the industry.

Patrick Ryan: This is Nationwide Mutual.

Speaker Change: And.

Speaker Change: <unk> neutral.

Patrick Ryan: Alana Goodbye. that we invest in new products at all of us. and I keep telling. So we'll... You know, it was a cure-all risk. We brought in 17. Highly skilled. Thank you all for the wise, sophisticated experts. and our underwriters and actuaries. It's a key talent addition. through this acquisition. to fulfill the opportunities that Nationwide Mutual and we have together. agreed that gives us a long runway. of Organic Growth and Marginal Expense.

Speaker Change: Alliance.

Speaker Change: To match.

We invest in new product development.

Speaker Change: And add key talent.

Speaker Change: So.

Speaker Change: It was too risky.

Speaker Change: We brought in 17.

Speaker Change: ILEC skill sets.

Speaker Change: Sophisticated.

Speaker Change: Experts.

At our underwriters and actuaries.

Speaker Change: It's a key talent additions.

Speaker Change: Through this acquisition.

Speaker Change: To fulfill the opportunities that nationwide mutual we have together.

Speaker Change: Great.

Speaker Change: It gives us a lot of runway.

Speaker Change: Organic growth and margin expansion.

Patrick Ryan: Additionally, Prior to closing this acquisition today. We had eight other really highly skilled professionals. different walks of life that fit this strategy and bring tremendous intellectual capital differentiation. But by adding this differentiated talent capabilities.

Speaker Change: Additionally.

Speaker Change: Prior to closing this acquisition today.

Speaker Change: We haven't as other really highly skilled professional.

Speaker Change: Different walks of life.

Speaker Change: The strategy to bring tremendous.

Speaker Change: Excellent capital differentiation.

Speaker Change: So by adding this.

Patrick Ryan: And I want to expand our time. We had a new cylinder of Powerful group. who are a group of and we very much advance our core mission.

Speaker Change: This differentiated talent capabilities.

Speaker Change: But not only expands our Tam.

Speaker Change: We had a who cylinder.

Speaker Change: Although it will grow.

Speaker Change: So our growth engine.

Speaker Change: And we very much advance our core mission.

Patrick Ryan: I just want to remind everybody, we've stuck to this vision from founding. and others to provide innovative services. to Promise. Agents, and very importantly, insurance carriers. And that's what we're doing here with our. Strategic Alliance Partner, Nationwide Mutual. So you can tell from all of this. Needless to say, we're pretty very excited. about this acquisition and the overall opportunity that it brings. And you'll forgive me if I won't answer the compounding growth rates that you threw out, but we're very enthusiastic. Now, that was very helpful.

Speaker Change: I just want to remind everybody.

Speaker Change: We've stuck to the submission from founded.

Speaker Change: That is to provide innovative services.

Speaker Change: Brokers.

Speaker Change: Agents.

Speaker Change: And very importantly insurance carriers.

Speaker Change: And that's what we're doing here with our strategic alliance partner nationwide mutual.

Speaker Change: So you can tell from all of this.

Speaker Change: Needless to say pretty very excited.

About this acquisition and the overall opportunity that it brings.

Speaker Change: You'll forgive me if I will answer the compounded growth rates that you throw out.

Speaker Change: Alright.

Speaker Change: Yes.

Speaker Change: Now that was that was very helpful.

Unknown Executive: Thank you.

Alex Scott: And our next question comes from Alex Scott from Barclays. Please unmute your line and go ahead. Hey, thanks for taking the question.

Speaker Change: Thank you and our next question comes from Alex Scott from Barclays. Please on mute your line and go ahead.

Unknown Executive: The first one I had is on the technology spend, and if you could kind of give us a little more color on some of the things you're doing and, you know, how that will contribute to growth and operational efficiency in the future. And just an idea, too, around, you know, whether these will continue or if they were more loaded into the first quarter. Yeah, so we are trying to streamline and digitize as much of our workflow processes as possible. We still have system consolidation work to do. There's a lot of efficiencies through investments in our workbenches that we can do.

Speaker Change: Okay.

Speaker Change: For taking the question.

Speaker Change: First one I had is on the technology spend and if you could kind of give us a little more color on some of the things you're doing.

Speaker Change: How that will contribute to growth and operational efficiency in the future.

Speaker Change: Just an idea to around whether these will continue where they were more loaded into the first quarter.

Speaker Change: Yes, so we are trying to.

Speaker Change: Streamline and digitize as much of our workflow processes as possible.

Speaker Change: We still have system consolidation work to do.

Speaker Change: There's a lot of efficiencies through.

Speaker Change: Investments in our work benches that we can do and we are starting to experiment with AI solutions across various business units. So there is nothing individually that moves the needle this year, but what it does in aggregate is continue the trend of.

Unknown Executive: And we are starting to experiment with AI solutions across various business units. So there's nothing individually that moves the needle this year, but what it does in aggregate is continue the trend of Reducing cycle time, speeding up answers and insights to clients, and processing everything, especially the non-strategic, client-facing activities in the swiftest, most cost-efficient fashion. So what that does is equip our producers to be as good and as fast as they can, and helps us spend money on talent rather than process. And most importantly, we're able to balance those investments with exceptional growth and margin improvement along the way.

Speaker Change: Reducing cycle times, speeding up answers and insights to clients and processing everything, especially the non strategic client facing activities in the swiftness most cost efficient fashion.

Speaker Change: So what that what that does is equipped our producers to be as good and as fast as they can.

Speaker Change: And it helps us spend money on on talent rather than processed.

Speaker Change: And most importantly, we're able to balance that those investments.

Speaker Change: With exceptional growth.

Speaker Change: And margin improvement along the way.

Unknown Executive: Oh, that's really helpful. Thank you.

Unknown Executive: Next I have is on 2Q and just having a more property heavy quarter potentially, you know, ahead of cat season.

That's really helpful. Thank you.

Speaker Change: Next one I had is on <unk> and just Kevin more property heavy quarter potentially.

Unknown Executive: Could you frame for us, you know, maybe, you know, what a normal portion of premiums, you know, kind of property versus, you know, a heavier 2Q and I hate to be short term about it.

Speaker Change: Cat season could you frame for us maybe.

Speaker Change: What a normal portion of premiums.

Speaker Change: Our property versus a heavier to Q and I hate to be short term about it I just want to make sure we have the right expectation there potentially.

Unknown Executive: I just want to make sure we have the right expectations and then the potentially, you know, more difficult comp just given properties hit the center of the storm here.

Speaker Change: More difficult comp just given properties sort of center of the storm here.

Jeremiah Bickham: I'll take that, Alex. So, as you noted, Q2 is our largest quarter for property. Tim mentioned in his remarks that it will be a tough cop. That was the last quarter before rates started to accelerate. We've acknowledged from a number of quarters that property for us is continuing or continuing to expect modest growth. We've had that the first quarter and we will expect that for the remainder of the year. So, while we expect property to be a large component of our Q2, Q2 is our largest quarter overall. And so, from that, hopefully we can gain the seasonality elements of property, but we are expecting modest growth for the remainder of the year.

Speaker Change: Sure I'll take that Alex So as you note in Q2 is our largest quarter or property.

Speaker Change: Tim mentioned in his remarks that where it will be a tough comp that was the last quarter before rates started to accelerate.

Speaker Change: We'll be acknowledged from.

Speaker Change: A number of quarters that.

Speaker Change: Property for us.

Speaker Change: <unk> or can you expect modest growth we've had that in the first.

Speaker Change: First quarter, and we will continue to expect that for the remainder of the year. So while we expect the property to be a large component of our Q2, that's our largest quarter overall.

Speaker Change: So from that.

Speaker Change: <unk> mobile seasonality elements of property that we are expecting modest growth.

Timothy Turner: Tim, is there anything you'd want to add to that? No, I think that's very accurate. We do have headwinds, great deceleration in property, but we're winning new business. We're retaining our renewals. The new business coming into the channel is strong and we're winning frequently in head-to-head competition. So, we're confident that we can maintain our growth, modest in property, and much heavier in cash yields.

Speaker Change: The remainder of the year.

Speaker Change: And is there anything you want to add that.

Speaker Change: Thats very accurate, we do have headwinds right deceleration in property, but we're winning new business, we're retaining our renewals and new business coming into the channel is strong.

Speaker Change: And we're.

Speaker Change: We're winning.

Speaker Change: Frequently and head to head competition. So we're we're confident that we can.

Contain our growth status and property and <unk>.

Speaker Change: Much heavier in casually.

Meyer Shields: Thank you. Our next question comes from Meyer Shields from KBW.

Speaker Change: Thank you.

Speaker Change: Our next question comes from EMEA Shields from K VW diesel mute yourself and go ahead.

Meyer Shields: Please unmute yourself and go ahead. Okay, hopefully I'm coming through here.

Janice Hamilton: Um, you mentioned, I think, maybe this is best for Jeremiah or Janice, some timing related issues on investments. And I think that probably goes to explain why the DNA ratio went up. Is there anything unusual in the compensation ratio declining on a year-over-year basis? Or is that just the typical organic leverage? I'm sorry, the operating leverage that we should expect?

Speaker Change: Okay, hopefully I'm coming through here.

You had mentioned I think maybe this is best for Jeremiah Janice.

Speaker Change: Some timing related issues on investments and I think that probably goes to explain why the TNA ratio wind up is there anything unusual in the compensation ratio declining on a year over year basis or is that just the typical organic leverage I'm sorry, the operating leverage that we should expect.

Janice Hamilton: So Mayor, I'll take that one. So you are correct. First of all, I'll just note that we had our 60 basic points of margin improvement in the quarter, which we were very pleased about. We highlighted within our remarks that there were some timing, timing differences there from an overall, you know, full year margin perspective. Those timing differences actually relate to the timing of certain benefits and other related expenses coming through in the first quarter, as well as some other community and professional services. Jeremiah touched on some of the beginnings of the initiatives that we have, but also professional services that are driven by revenue generating activities.

Speaker Change: Yes, sure maybe I'll take that one Joe you are correct first of all I'll. Just note we had our 60 basis points of margin improvement in the quarter, which we were very pleased about.

Speaker Change: Highlighted within our remarks that there were some timing timing differences there from an overall full year margin perspective.

Speaker Change: Those timing differences actually relate to the <unk>.

Speaker Change: <unk>, a certain benefits and other related expenses coming through in the first quarter as well as some other tool and professional services Jeremiah touched on Saturday.

Speaker Change: Beginning with the initiatives that you have.

Speaker Change: But also professional services that are driven by revenue generating activities.

Janice Hamilton: I think what you're thinking about or what you're seeing is the G&A ratio worsening effectively relative to last year, but comp benefits expanding significantly. And that is really coming from where we have U.S. Assure earning in and think about the timing of U.S. Assure continuing to earn in over the next two quarters, first quarter, second quarter, and a little bit of a third quarter. That margin expansion is really all dropping top. So there's a little bit of accelerate 2025 in there from last year continuing to earn through, but really think about that as U.S. Assure.

Speaker Change: What you're what you're thinking about or what you're seeing is G&A ratio worsening secondly, relative to last year, but constant benefits expanding significantly and.

Speaker Change: That is really.

Speaker Change: Where we have the rest assure earning in and think about timing of congrats assure continuing to earn it over the next two quarters first quarter second quarter, and a little bit of a third quarter that margin expansion is really all dropping comp so theres, a little bit of accelerate 2025, and there from last year.

Janice Hamilton: And then on the G&A side, that would continue as we have investments that are liable to our ops and technology. So we would expect G&A to continue on a similar trajectory and comp benefits, you know, the margin expansion that I highlighted.

Speaker Change: But really think about that as you know for sure and then on the G&A side that will continue and we have one vessel in sugar land.

Speaker Change: So we would expect G&A to continue on a similar trajectory.

Speaker Change: The benefits.

Speaker Change: Yes.

Unknown Executive: Okay, perfect. That's very helpful.

Speaker Change: Karen.

Speaker Change: But I highlighted.

Timothy Turner: Taking a step back, we are hearing sort of generalized grumbling from a lot of carriers about MGAs. And I'm wondering whether the fact that you've got the underwriting management business, does that pose any challenges to the relationship you have with carriers in the wholesale specialty? No, actually, it's been well received by majority, vast majority of our partners. They understand the parallel to the brokerage side of it, the importance of the delegated underwriting authority space, not just in MGUs, but in the program space, the binding authority space. So it's very, very much aligned with these carriers.

Okay, perfect Thats very helpful.

Speaker Change: Taking a step back we are hearing.

Speaker Change: Sort of generalized grumbling from auto carriers about M D A's and I'm wondering whether the fact that you've got the underwriting management business does that pose any challenges to the relationship you have with carriers in the wholesale specialty.

Speaker Change: Oh, no actually it's been well received by majority vast majority of our partners.

Speaker Change: They understand the parallel to the brokerage side of it the importance of the delegated underwriting authority space not just in <unk>, but in the program space the binding authority space.

Timothy Turner: Sure, we hear an occasional question or grumbling about it, but I would say that's the minority by far. Most of the E&S carriers, 110 of them now that are dedicated to the wholesale distribution channel have a delegated, a specific delegated underwriting authority department. So we're engaging with them, we're strengthening our trading relationships with them, and they have a lot to gain and a lot to win from the partnership. So it's very much positive and well received today.

Speaker Change: So it's very very much aligned with these carriers sure. We hear an occasional question are grumbling about it but I would say that's the minority by far most of the E&S carriers. All under 10 of them now that are dedicated to the wholesale distribution channel Abbott delegated.

Speaker Change: Specific delegated underwriting authority department, so we're engaging with them, we're strengthening our trading relationships with them.

Speaker Change: They have a lot to gain and a lots of wind from the partnership so it's very much positive and well received today.

Unknown Executive: All right, fantastic.

Unknown Executive: Thank you.

Speaker Change: Alright, thanks, guys. Thank you.

Unknown Executive: As a reminder, if you would like to ask a question, you can use the raised hand icon at the bottom of your Zoom screen. And if you're dialed in by phone, you can press star six when called upon to unmute.

Speaker Change: As a reminder, if you would like to ask a question you can use the raised hand icon at the bottom the molecules in screen.

Speaker Change: And if you're dialing in by phone you can press star six when called upon Plum mute yourself.

Robert Cox: So our next question will come from Robert Cox from Goldman Sachs. Please unmute yourself and go ahead. Hey, thanks for taking my question. Yeah, I was hoping you could just give us a sense of what you've seen through April. And maybe in April, from an economic perspective, I know some other brokers have called out construction as an area of some economic pressure. So I was hoping, you know, wondering if you saw that and if if you did, if you could remind us of your exposure there and just broadly what you're seeing. We're continuing to experience very strong construction results.

Speaker Change: So our next question will come from Robert Cox from Goldman Sachs is a mute yourself and go ahead.

Robert Cox: Hey, Thanks for taking my question I was hoping you could just give us a sense of what you've seen through April.

Robert Cox: And then maybe in April from an economic perspective, I know some other brokers have called out construction as an area of some economic pressure says, hoping wondering if you saw that in this if you did if you could remind us of your exposure there and just broadly what you're seeing.

Robert Cox: We are continuing to experience very strong construction results, we're not seeing any real change noticeable change in the market. Thus far this year.

Timothy Turner: We're not seeing any real change, noticeable change in the market thus far this year. The infrastructure roll-up space is strong, obviously subs, GCs and artisans very strong across the country, and even residential construction remains strong.

Robert Cox: The.

Robert Cox: The infrastructure roll ups space is strong, obviously subs gcs and artisan very strong across the country and even residential construction remains strong so.

Timothy Turner: So we really haven't seen any indication of a slowdown. Awesome. Thanks, Tim.

Robert Cox: We really haven't seen any indication of a slowdown.

Timothy Turner: And Tim, I wanted to go back to your comments on the submission flow. Sounds like you guys are taking share of the submission flow. I think you called out property in particular in light of the pricing pressure there. Do you have a sense generally like where you're taking share of the flow? I assume it's not primarily from your large wholesale peers, but I was just wondering if you could provide some color. Sure. Well, there's this double-digit increase in flow that's coming into the channel. So that's one of them. But another phenomenon that is nowhere near coming to the end of the line would be the consolidation of the use of brokerage intermediaries.

Robert Cox: Okay.

Speaker Change: Awesome, Thanks, Tim and.

Speaker Change: Tim I wanted to go back to your comments on.

Speaker Change: The submission flow it sounds like you guys are taking share of the submission flow I think you called out property in particular in light of the pricing pressure. There do you have a sense generally like where you're taking share of the flow I assume it's not primarily from your large wholesale peers, but I was just wondering if.

Speaker Change: If you could provide some color.

Speaker Change: Sure well, there's this double digit increase.

Speaker Change: Increase in flow that's coming into the channels. So that's one of them, but another phenomenon that is nowhere near.

Speaker Change: Coming to the end of the line would be the consolidation of the use of brokerage intermediaries.

Timothy Turner: Jeremiah talks about it a lot. We're really in the, probably the middle stages on the brokerage side of it in the top 100 retail community. Lots more opportunities in tier two and tier three. Tens of thousands of retail brokers yet to consolidate brokerage. And in the delegated underwriting authority space, this is the exciting part. That's the MGU, again, programs and binding authorities. We're in the early stages of the consolidation. So tremendous opportunity to really grow exponentially there over just the consolidation of that business. So we're out RFPing, we're out presenting, we're out using all of our tools, our digital trading platform, our strong, deep bench and binding authorities.

Speaker Change: <unk> talked about it a lot we're really in the probably the middle stages on the brokerage side of it in the top 100 retail broker community loss or opportunities in tier two and tier three tens of thousands of retail brokers yet to consolidate brokerage and then the delegated underwriting authority space.

Speaker Change: This is the exciting part.

Speaker Change: <unk> BMG, you again programs as binding authorities.

Speaker Change: We're in the early stages of the consolidation so tremendous opportunity to really grow exponentially there over just the consolidation of that business. So we're all RFP.

Speaker Change: <unk> were out using all of our tools, our digital trading platform are strong deep bench and binding authorities and we're very optimistic about growing that with panel consolidation.

Timothy Turner: And we're very optimistic about growing that with panel consolidation.

Unknown Executive: Great, thank you.

Mike Zaremski: Our next question comes from Mike Zaremski from BMO.

Speaker Change: Great. Thank you.

Speaker Change: Our next question comes from Mike Zaremski from BMI, Please limit yourself and ask your question.

Mike Zaremski: Please unmute yourself and ask your question. Mike, your line is unmuted. Please go ahead.

Speaker Change: Mike Your line is muted. Please go ahead.

Elyse Greenspan: Okay, it seems that we don't have any audio coming from your side, Mike. So we'll move back to Elyse Greenspan. Please unmute yourself by pressing star six and go ahead. Hi, can you guys hear me? can. Okay, sorry about that earlier. Thanks.

Elyse Greenspan: Okay. It seems that we don't have any audio coming from your slide Mike's It will move back to Elyse Greenspan. Please on mute yourself by pressing star six and go ahead.

Elyse Greenspan: Hi can you guys hear me.

Speaker Change: Yes, yes.

Janice Hamilton: So, um, I guess what I was going to ask upon, I think, I mean, Alex did touch on, but I want to come back just to the seasonality. Is it fair to assume within the guidance, I guess, just from a quarterly perspective, that Q2, and then I guess also Q4, right, would be lower growth quarters because of the higher property concentration? And then I guess I'll throw in a second part to that question. It sounds like you guys are, in the guidance, you're assuming like some continued growth in property this year. So are you assuming that weights don't continue to decelerate from where they are today, as we go through the rest of the year?

Elyse Greenspan: Okay, sorry about that earlier.

Elyse Greenspan: So.

Speaker Change: I guess, what I was going to ask upon I think I mean, Alex did touch on but I want to come back just to the seasonality.

Speaker Change: Is it fair to assume within the guidance I guess just from a quarterly perspective that Q2, and then I guess also Q4 right would be lower growth quarter is because of the higher property concentration and then I guess I'll throw in a second part to that question it.

Speaker Change: It sounds like you guys are in.

Speaker Change: In the guidance you are assuming like some continued growth in property. This year or so are you assuming that waits till it to continue to decelerate from where they are today as we go through the rest of the year.

Janice Hamilton: Okay, Elyse, I'll take that one. And then if there's anything, Tim, you want to add to it, please go ahead. So I, you know, I mentioned, and I think we've said before, we don't guide by quarter. So the seasonality point that I made earlier, just around property being the largest in Q2 and Q4, those are also our largest quarters. Q2 is a tough comp against last year, just because we did have one more quarter of, you know, freight freight being harder in the second quarter last year, that deceleration started in the third. And fourth quarter.

Speaker Change: Hey, Elyse I'll take that one and then if there's anything can you want to answer it.

Speaker Change: Ahead so.

Speaker Change: Mentioned and I think we've said before we don't guide by quarter. So the seasonality point that I made earlier just around the property being the largest in <unk> or.

Speaker Change: Or those are also our largest quarter and Q2 is a tough comp against last year.

Speaker Change: One more quarter of great great thing harder in the second quarter last year that deceleration started in the third and fourth quarter. So I think from a comp perspective, you will certainly be the toughest.

Janice Hamilton: So, you know, I think from a from a comp perspective, Q2 will certainly be the toughest. I also mentioned that in the first quarter, we continue to see modest growth, and we have that expectation in our guidance for the whole year. And that's really a continuation of the trends that we've seen from Q4 through the first quarter. So yeah, at least from a from a comp perspective related to property, things do get better as the year goes on just as a function of math. But our underpinning assumptions for guidance don't assume, like materially improved conditions in property.

Speaker Change: I also mentioned that in the first quarter.

Speaker Change: He bought X growth.

Speaker Change: That expectation in our guidance for the full year and that's really a continuation of the trends that we've seen report.

Speaker Change: Okay.

Speaker Change: So yes.

Speaker Change: A.

Speaker Change: From a comp perspective related to properties things do get better as the year goes on just as a function of math, but are underpinning assumptions for guidance don't assume like materially improved conditions in property, we're just expecting to modestly grow through that just to clarify.

Janice Hamilton: We're just expecting to modestly grow through that just to clarify. Thanks.

Timothy Turner: And then on the M&A side, right? I mean, you guys had previously told us, right, you're coming up towards, you know, the top of your leverage corridor, right? And you've obviously said that you would go above, depending upon deals out there. I think you guys said like the pipeline has like small, mid and, and large size deals.

Speaker Change: Thanks, and then on the M&A side right. I mean, you guys had previously told US why youre coming up towards the top of your leverage corridor right Andy.

Speaker Change: And you've obviously said that you would go above depending upon deals out there I think you guys said like the pipeline has like small mid and large sized deals can you just give us a sense of like the pipeline today relative to transactions, where you guys are are focusing on.

Janice Hamilton: Can you just give us a sense of like the pipeline today relative to transactions where you guys are, are focusing on, you know, and what we could see, I guess, in the near to intermediate term? On the M&A side? Well, we have As Tim outlined, robust opportunity. We're clearly evaluating those opportunities as to the greatest strategic greatest ability to multiply that. that acquisition into strong organic growth hereafter. We are going to maintain our a ratio of debt, which was, I think, probably, Janice, you ought to pick up on that part of it. But it is a Four of a buyer's market.

Speaker Change: And what we could see I guess in the near to intermediate term on the M&A side.

Speaker Change: Well we have.

Speaker Change: As Tim outlined robust opportunity.

Speaker Change: We're clearly evaluating those opportunities.

Speaker Change: As to our greatest strategic.

Speaker Change: Great.

Speaker Change: Alright.

Speaker Change: Good idea too.

Speaker Change: Multiply that.

Speaker Change: At acquisition that to stronger organic growth thereafter.

Speaker Change: We are going to maintain.

Speaker Change: Our.

Speaker Change: Our ratio of debt.

Speaker Change: Perfect.

Speaker Change: Ill pick up on that part of it.

Speaker Change: But it is a.

Patrick Ryan: That's not way bad. Certainly, PE's. You're all aware of whatever powers they have. Oh, we got it. aggressive new competitor, M&A. at some point, I think Bill Blair was CRC. But it's much more of a fire. market today, but it is bad. I just mean that multiples will come down. from out of play at all. We buy quality firm. quality firms have come out of a higher multiple, but we've been quite successful in cost synergies. particularly revenue synergies, where we have to pay a multiple that's a bit higher than we would like, we've been able to buy those down pretty quickly.

More of a buyer's market.

Speaker Change: But we've had.

Speaker Change: Certainly.

Speaker Change: As you're all aware of whatever.

Speaker Change: Yeah.

Got it.

Speaker Change: Aggressive though.

Speaker Change: Competitor.

Speaker Change: Hi, there.

Speaker Change: So I'm going to go.

Speaker Change: Blair with CRC.

Speaker Change: But as far as much more of a buyers.

Speaker Change: Uh huh.

Speaker Change: Market today.

Speaker Change: And it is Pat.

Speaker Change: That doesn't mean that bulk of all the above.

Speaker Change: Probiotics play at all.

Speaker Change: Whereby quality firms.

Speaker Change: All of these firms.

Speaker Change: Got the Kabbalah.

Speaker Change: Our political but.

Speaker Change: But quite successful.

Speaker Change: Cost synergies.

Speaker Change: Particularly the revenue synergies.

Speaker Change: We have to pay a multiple of that.

Speaker Change: But higher than we would like.

Janice Hamilton: I do want to pick up on the ratios at the top. Yeah, happy to. So, Elyse, in my prepared remarks, I noted that we ended the quarter at 3.8 times our net leverage on a credit basis, and that was consistent with what we had expected. We said that we would end the first quarter at the higher end as a result of velocity in our seasonal working capital trend, which we did see. Absent, you know, a significant amount of further M&A, we would expect to significantly lever by the end of the year, a full turn. Q1, as a reminder, is, you know, still a heavy working capital quarter for us, so we would expect that to sit back down in Q1 of next year.

Speaker Change: We have been able to buy those off pretty quickly.

Speaker Change: If you want to pick up on the ratios.

Speaker Change: So at least in my prepared remarks, I noted that we ended the quarter.

Speaker Change: Our net leverage on a credit basis and that was consistent with what we had expected.

Speaker Change: Alright, and the first quarter at the higher end as a result of velocity and oxygen on working capital drag.

Speaker Change: Hum.

Speaker Change: Absent.

Speaker Change: With that amount of further M&A, we would expect a significant will delever by the end of <unk>.

Speaker Change: Q1, as a reminder.

Speaker Change: Still heavy working capital quarter for us.

Janice Hamilton: But overall, we have ample capacity to execute on significant M&A opportunities, and we said that we would be willing to go above four times temporarily for the right deal. But in light of the fact that we're expecting significant leverage based on our strong growth and free cash flow, we have significant amounts of financial flexibility in order to meet the pipeline needs.

Speaker Change: Check that box.

Speaker Change: One of next year.

Speaker Change: But overall have ample capacity to execute on.

M&A opportunity and we've got it.

Speaker Change: Oh above four times temporarily for the right deal, but in light of the fact that.

Speaker Change: Significant leverage.

Speaker Change: Based on our.

Speaker Change: Strong growth and free cash flow.

Speaker Change: We have significant amount of financial flexibility.

Patrick Ryan: I think the other point that we'd like to make on that. is Peter Ellis Statements I've very much. This here is M&A. next year and the following year, organic growth. So we've just done the last. Velocity. Underwriters is performing very well and has really significant potential to expand our property book. We all believe that. that the property decline will reverse itself just because of all the external forces. We don't know when or how fast it will reverse, but it will, we believe. And so adding that M&A that we added last year in the first part of this year, and now adding...

Speaker Change: Bye bye.

Speaker Change: I think the other point that we'd like to thank God.

Rick: This is Rick.

Speaker Change: Okay.

Speaker Change: But very much.

Speaker Change: This year's M&A.

Speaker Change: Next year the following year.

Speaker Change: That accrual.

Speaker Change: Absolutely just on velocity.

Speaker Change: I'll answer the.

Speaker Change: Underwriters.

Speaker Change: It's performing very well.

Speaker Change: There is significant potential.

Speaker Change: Yeah.

Our property book.

Speaker Change: We all believe that.

Speaker Change: Property <unk>.

Speaker Change: Time will reverse itself.

Speaker Change: Those are all the external forces, we don't know when or how fast it will reverse but it will be I believe.

Speaker Change: And so adding that.

Speaker Change: M&A that we added last year or first part of this year.

Unknown Executive: It was cute. We believe running. sets us up for strong organic growth. Unknown Speaker, MikeURL Thanks. And then I'll throw one last one in there. You know, we saw, you know, you know, a few of the big states, right, provide staffing capacity. And that data did come out today, which showed, I mean, it's for April, right, a bit of a slowdown. I know, right, it's only three states.

Speaker Change: Now adding.

Speaker Change: Our SKU.

Speaker Change: We believe really.

Speaker Change: So it's a sub from strong organic growth.

Speaker Change: Six to 12 months.

Speaker Change: Okay.

Speaker Change: Thanks, Tom and then I'll I'll throw one last one in there we saw.

Speaker Change: Two of the big statewide provide staffing capacity and that data did come out today, which showed that for April right a bit of a slowdown I know right. It's only three states.

Timothy Turner: But have you guys, like, I guess, any color on that or, you know, anything that you want to say relative to, you know, you might be willing to say relative to April growth, you know, just just for the company, or just in relation to just E&S and just, you know, continued flow, which you seem pretty positive about. Yeah, we've been very, very enthusiastic about the stamping results that we see just some really sizable increases in state of California, and a few others. We believe that's a trend. We believe there's going to be continued dumping and shutting from the admitted markets.

Speaker Change: But have you guys like I guess any any color on that or anything that you want to say relative to when you might be willing to say relative to April growth just for the company or just in relation to just E&S and just.

Speaker Change: Continued flow, which you seem pretty positive about.

Speaker Change: Yes, we've been.

Speaker Change: Very very enthusiastic about the stamping results that we see.

Speaker Change: Just some really.

Speaker Change: Sizable increases in state of California, and a few others.

Speaker Change: We believe that's a trend we believe theres going to be continued dumping and shedding from the admitted markets.

Timothy Turner: boss leaders and trends like transportation, areas that we've focused on and have built strong broking teams around the country and built MGUs and made acquisitions to strengthen that practice group vertical is an illustration of how we do it. We knew transportation would continue to drive more dumping and shedding and we're prepared for it. High net worth, same thing, capturing a lot of that new business today and we expect that to grow exponentially, but lots of others, lots of other boss leaders that caused the admitted standard markets to non-renew and we try to be right up in those spaces and again have the broking talent, leading broking talent and underwriting platforms to strengthen our value proposition.

Speaker Change: <unk> leaders and trends like transportation areas that we've focused on and have built strong broking teams around the country and bill Mg use and made acquisitions to strengthen that practice group vertical as an illustration of how we do it we knew transportation would continue to drop.

Speaker Change: <unk> or dumping and chatting and we're prepared for it high net worth same thing capturing a lot of that new business today, and we expect that to grow exponentially.

Speaker Change: Lots of others lots of other loss leaders that caused the admitted standard markets to non renew.

Speaker Change: And we try to be right up in those spaces.

Speaker Change: Again have the broking talent, leading broking talent and underwriting platforms to strengthen our value proposition that strategy is working very well for us.

Unknown Executive: That strategy is working very well for us. Thank you.

Unknown Executive: There are no further questions at this time.

Speaker Change: Thank you.

Patrick Ryan: I will now hand the call back to management for closing remarks. OK, well, thanks for your. Great question.

Speaker Change: Thank you there are no further questions at this time I will now hand, the call back to management for closing remarks.

Patrick Ryan: as the coach of this team of outstanding professionals. I'd like to reiterate how proud I am, extremely proud. of our industry leading nearly 13% organic revenue growth. and 25% total revenue growth Q1. We really are proud of that. I'm proud as the coach of this outstanding team.

Speaker Change: Okay, well thanks for your.

Speaker Change: Great questions.

Speaker Change: As the cause of the same.

Speaker Change: Staffing professionals.

Speaker Change: I'd like to reiterate our pro.

Speaker Change: I am extremely proud.

Speaker Change: Of our industry leading.

Speaker Change: So the 13% organic revenue growth.

Speaker Change: 25% total.

Speaker Change: Revenue growth Q1.

Speaker Change: We really are proud of that.

Unknown Executive: So we appreciate you taking the time to join us today. and for your continued support of our firm. And we look forward to updating you on our progress next quarter. Thank you all for your interest. Thanks for joining us today. Have a nice evening.

Speaker Change: I'm proud of the coach results fairly soon.

Speaker Change: So we appreciate your taking the time to join us today.

Speaker Change: And for your continued support of our firm.

Speaker Change: And we look forward to updating you on our progress next quarter.

Speaker Change: You all for your interest.

Unknown Executive: This concludes the call. Thank you.

Speaker Change: Joining us today.

Speaker Change: This evening.

Speaker Change: This concludes the call. Thank you.

Speaker Change: Yeah.