Hagerty Reports Third Quarter 2024 Results; Updates 2024 Outlook for Revenue and Profit Growth
Third quarter 2024 Total Revenue increased 17% year-over-year to $323.4 million, and year-to-date 2024 Total Revenue increased 20% year-over-year to $908.3 million
Third quarter 2024 Written Premium increased 13% year-over-year to $287.6 million, and year-to-date 2024 Written Premium increased 16% year-over-year to $827.1 million
Third quarter 2024 Marketplace revenue increased 66% year-over-year to $21.6 million, and year-to-date 2024 Marketplace revenue increased 54% year-over-year to $38.3 million
Third quarter 2024 Loss Ratio of 60.0% (includes $24.7 million of pre-tax catastrophe losses related to Hurricane Helene) compared to 41.1% in the prior year period. Year-to-date 2024 Loss Ratio of 47.7% compared to 41.5% in the prior year period
Third quarter 2024 Net Income of $19.0 million, an increase of $0.4 million compared to the prior year period, and year-to-date 2024 Net Income of $69.9 million, an increase of $50.7 million compared to the prior year period
Third quarter 2024 Adjusted EBITDA of $24.2 million, a decrease of $13.2 million compared to the prior year period, and year-to-date 2024 Adjusted EBITDA of $104.6 million, an increase of $26.2 million compared to the prior year period
Increased 2024 growth outlook for Total Revenue to 18-19% and Written Premium to 15%. Hagerty's outlook for Net Income and Adjusted EBITDA has been updated to account for the $24.7 million of catastrophe losses from Hurricane Helene and an estimated $5.0 million of losses from Milton
TRAVERSE CITY, Mich., Nov. 7, 2024 /PRNewswire/, Hagerty, Inc. (NYSE:HGTY), an automotive enthusiast brand and leading specialty vehicle insurance provider, announced today financial results for the three and nine months ended September 30, 2024.
"Hagerty delivered yet another excellent quarter of strong revenue growth and operational efficiencies as we execute on our multi-year initiatives to drive sustained underlying profit growth. Year-to-date total revenue jumped 20% due to new business count gains and our growing Marketplace business. Our disciplined approach to expense management and optimization continued to drive margins higher. During the first nine months of 2024, we produced Net Income of $70 million and Adjusted EBITDA of $105 million," said McKeel Hagerty, Chief Executive Officer and Chairman of Hagerty.
"Given the strength of our results over the first nine months, we have increased our total revenue expectations for the year to 18-19% with written premiums on track to grow 15%. Our bottom line expectations were tracking consistently with our prior guidance before incorporating the losses from hurricanes Helene and Milton. After including catastrophe losses, we now expect net income growth of 131% to 163% and Adjusted EBITDA growth of 25% to 36%," continued Mr. Hagerty.
"Hurricane Helene was a devastating event for the United States, but we have a disciplined underwriting model and our teams were prepared for the storm. I want to thank One Team Hagerty as they have been working tirelessly over the last five weeks to help our members get back out on the roads in their special cars. Hagerty's customer-centric model and automotive expertise position us well for future growth through enhancing our net promoter scores and driving industry-leading member retention," added Mr. Hagerty.
THIRD QUARTER 2024 FINANCIAL HIGHLIGHTS
Third quarter 2024 Total Revenue increased 17% year-over-year to $323.4 million, and year-to-date 2024 Total Revenue increased 20% year-over-year to $908.3 million
Third quarter 2024 Written Premium increased 13% year-over-year to $287.6 million, and year-to-date 2024 Written Premium increased 16% year-over-year to $827.1 million
Third quarter 2024 Commission and fee revenue increased 13% year-over-year to $116.2 million, and year-to-date 2024 Commission and fee revenue increased 16% year-over-year to $333.8 million
Policies in Force Retention was 89% as of September 30, 2024 compared to 88% in the prior year period and total insured vehicles increased 8% year-over-year to 2.6 million
Third quarter 2024 Loss Ratio was 60.0% compared to 41.1% in the prior year period, and year-to-date 2024 Loss Ratio was 47.7% compared to 41.5% in the prior year period
Third quarter 2024 Earned Premium increased 19% year-over-year to $165.7 million, and year-to-date 2024 Earned Premium increased 24% year-over-year to $474.9 million
Third quarter 2024 Membership, marketplace and other revenue increased 27% year-over-year to $41.5 million, and year-to-date 2024 Membership, marketplace and other revenue increased 20% year-over-year to $99.6 million
Third quarter 2024 Marketplace revenue increased 66% year-over-year to $21.6 million, and year-to-date 2024 Marketplace revenue increased 54% year-over-year to $38.3 million
Third quarter 2024 Membership revenue increased 7% year-over-year to $14.8 million, and 2024 Membership revenue increased 7% year-over-year to $42.4 million
Hagerty Drivers Club (HDC) paid members increased 8% year-over-year to approximately 868,000 compared to 807,000
Third quarter 2024 Operating Income of $10.1 million, a decrease of $6.0 million compared to the prior year period, and year-to-date 2024 Operating Income of $60.4 million, an increase of $43.5 million compared to the prior year period
Third quarter 2024 Operating Income margin decreased by 270 bps compared to the prior year period, and year-to-date 2024 Operating Income margin expanded by 440 bps compared to the prior year period. Hurricane Helene negatively impacted year-to-date operating margins by 280 bps
Cost containment and resource prioritization initiatives decreased general and administrative expenses by 6.0% in the third quarter 2024 and 4.3% year-to-date. Cost discipline, combined with reduced accrued incentive compensation, resulted in a decline in salary and benefits of 8.0% in the third quarter 2024 and an increase of 0.5% year-to-date
Third quarter 2024 depreciation and amortization was $9.2 million compared to $10.8 million in the prior year period, and year-to-date 2024 depreciation and amortization was $29.8 million compared to $34.9 million in the prior year period
Third quarter 2024 Net Income of $19.0 million, an increase of $0.4 million compared to the prior year period, and year-to-date 2024 Net Income of $69.9 million, an increase of $50.7 million compared to the prior year period. Third quarter and year-to-date 2024 results both include an estimated $19.5 million post-tax impact from Hurricane Helene
Third quarter 2024 Net Income includes a $2.1 million increase in interest and other income, and year-to-date 2024 Net Income includes a $12.3 million increase in interest and other income, primarily due to the diversification of Hagerty Re's investment portfolio which resulted in investing in higher yielding fixed maturity securities. In addition, third quarter 2024 Net Income includes a $0.5 million loss and year-to-date 2024 Net Income includes a $8.5 million loss due to the change in fair value and settlement of warrant liabilities
Completed warrant exchange offer and mandatory exchange in July 2024, whereby Hagerty issued 3.9 million shares of Class A Common Stock in exchange for 19.5 million warrants
Third quarter 2024 Adjusted EBITDA (a non-GAAP measure) of $24.2 million, a decrease of $13.2 million compared to the prior year period, and year-to-date 2024 Adjusted EBITDA of $104.6 million, an increase of $26.2 million compared to the prior year period
Third quarter 2024 Basic and Diluted Earnings per Share was $0.03, and year-to-date 2024 Basic and Diluted Earnings per Share was $0.09
Third quarter 2024 Adjusted EPS (a non-GAAP measure) was $0.05, and year-to-date 2024 Adjusted EPS was $0.22
The definitions and reconciliations of non-GAAP financial measures are provided under the heading Key Performance Indicators and Certain Non-GAAP Financial Measures at the end of this press release.
UPDATED 2024 OUTLOOK FOR GROWTH AND PROFITABILITY
2024 is on track to be another year of strong top-line growth and margin expansion for Hagerty as our performance-based culture powers great results for stakeholders. We remain focused on growing our Insurance, Membership and Marketplace businesses, positioning us to deliver sustained, compounding profit growth over the coming years, fund our purpose to save driving and fuel car culture for future generations.
Key 2024 business priorities include:
Further improve loyalty to drive renewals and referrals
Enhance member experience in a cost effective and efficient way
Build Hagerty Marketplace into the most trusted and preferred place to buy, sell, and finance collector cars
Expand insurance offerings, particularly in the post-1980s collectible space
For full year 2024, Hagerty updated its outlook:
Written Premium growth of approximately 15%
Total Revenue growth of 18-19%
Net Income growth of 131-163%
Adjusted EBITDA growth of 25-36%
Adjusted EBITDA and Net Income incorporate combined losses from Hurricane Helene and Hurricane Milton of $29.7 million pre-tax and $23.5 million post-tax
Prior 2024 Outlook 1
Revised 2024 Outlook
in thousands
2023 Results
Low End
High End
Low End
High End
Total Written Premium
$907,175
$1,034,000
$1,043,000
$1,043,000
$1,043,000
Total Revenue
$1,000,213
$1,160,000
$1,180,000
$1,180,000
$1,190,000
Net Income 2
$28,179
$76,000
$84,000
$65,000
$74,000
Adjusted EBITDA 3
$88,162
$130,000
$140,000
$110,000
$120,000
1
Prior 2024 Outlook shared on the Hagerty's second quarter earnings call on August 6th, 2024.
2
Net income range assumes no impact from warrants. Fully diluted share count post warrant exchange of ~360 million including Class A Common Stock, Class V Common Stock, Series A Convertible Preferred Stock, and share-based compensation awards.
3
See Non-GAAP Financial Measures below for additional information regarding this non-GAAP financial measure.
Conference Call Details
Hagerty will hold a conference call to discuss the financial results today at 10:00 am Eastern Time. A webcast of the conference call, including its Investor Presentation highlighting third quarter 2024 financial results, will be available on Hagerty's investor relations website at investor.hagerty.com. The dial-in for the conference call is (877) 423-9813 (toll-free) or (201) 689-8573 (international). Please dial the number 10 minutes prior to the scheduled start time.
A webcast replay of the call will be available at investor.hagerty.com following the call.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts. These forward-looking statements reflect Hagerty's current expectations and projections with respect to its expected future business and financial performance, including, among other things: (i) expected operating results, such as revenue growth and increases in profit and earned premium; (ii) changes in the market for Hagerty's products and services, (iii) anticipated business objectives; and (iv) the strength of Hagerty's business model. These statements may be preceded by, followed by or include the words "aim," "anticipate," "believe," "estimate," "expect," "forecast," "future," "goal," "intend," "likely," "outlook," "plan," "potential," "project," "seek," "target," "can," "could," "may," "should," "would," "will," the negatives thereof and other words and terms of similar meaning.
A number of factors could cause actual results or outcomes to differ materially from those indicated by these forward-looking statements. These factors include, among other things, Hagerty's ability to: (i) compete effectively within its industry and attract and retain insurance policy holders and paid HDC subscribers; (ii) maintain key strategic relationships with its insurance distribution and underwriting carrier partners; (iii) prevent, monitor and detect fraudulent activity; (iv) manage risks associated with disruptions, interruptions, outages with its technology platforms or third-party services; (v) accelerate the adoption of Hagerty's membership products as well as any new insurance programs and products; (vi) manage the cyclical nature of the insurance business including through any periods of recession, economic downturn or inflation; (vii) address unexpected increases in the frequency or severity of claims; (viii) comply with the numerous laws and regulations applicable to Hagerty's business, including state, federal and foreign laws relating to insurance and rate increases, privacy, the internet and accounting matters; (ix) manage risks associated with being a controlled company; (x) successfully defend any litigation, government inquiries and investigations, and (xi) other risks and uncertainties indicated from time to time in documents filed or to be filed with the Securities and Exchange Commission (the "SEC") by Hagerty.
The forward-looking statements herein represent the judgment of Hagerty as of the date of this release and Hagerty disclaims any intent or obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise. This press release should be read in conjunction with the information included in the Hagerty's other press releases, reports and other filings with the SEC. Understanding the information contained in these filings is important in order to fully understand Hagerty's reported financial results and its business outlook for future periods.
About Hagerty, Inc. (NYSE:HGTY)
Hagerty is an automotive enthusiast brand committed to saving driving and to fueling car culture for future generations. The company is a leading provider of specialty vehicle insurance, expert car valuation data and insights, live and digital car auction services, immersive events and automotive entertainment custom made for the 67 million Americans who self-describe as car enthusiasts. Hagerty also operates in Canada and the U.K. and is home to Hagerty Drivers Club, a community of over 865,000 who can't get enough of cars. For more information, please visit www.hagerty.com or connect with us on Facebook, Instagram, Twitter and LinkedIn..
More information can be found at newsroom.hagerty.comContact: Jay Koval, Media Contact: Andrew Heller,
Category: FinancialSource: Hagerty
Hagerty, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
Three months ended September 30,
2024
2023
$ Change
% Change
REVENUE:
in thousands (except percentages and per share amounts)
Commission and fee revenue
$ 116,161
$ 103,173
$ 12,988
12.6 %
Earned premium
165,686
139,785
25,901
18.5 %
Membership, marketplace and other revenue
41,527
32,616
8,911
27.3 %
Total revenue
323,374
275,574
47,800
17.3 %
OPERATING EXPENSES:
Salaries and benefits
47,192
51,318
(4,126)
(8.0) %
Ceding commissions, net
77,501
65,413
12,088
18.5 %
Losses and loss adjustment expenses
99,430
57,485
41,945
73.0 %
Sales expense
59,141
47,737
11,404
23.9 %
General and administrative
20,837
22,166
(1,329)
(6.0) %
Depreciation and amortization
9,184
10,753
(1,569)
(14.6) %
Restructuring, impairment and related charges, net
—
473
(473)
(100.0) %
Gains, losses, and impairments related to divestitures
—
4,112
(4,112)
(100.0) %
Total operating expenses
313,285
259,457
53,828
20.7 %
OPERATING INCOME
10,089
16,117
(6,028)
(37.4) %
Gain (loss) related to warrant liabilities, net
(463)
850
(1,313)
(154.5) %
Interest and other income (expense), net
8,359
6,260
2,099
33.5 %
INCOME BEFORE INCOME TAX EXPENSE
17,985
23,227
(5,242)
(22.6) %
Income tax benefit (expense)
1,022
(4,604)
5,626
(122.2) %
NET INCOME
19,007
18,623
384
2.1 %
Net income attributable to non-controlling interest
(14,122)
(13,269)
(853)
6.4 %
Accretion of Series A Convertible Preferred Stock
(1,875)
(1,838)
(37)
2.0 %
NET INCOME ATTRIBUTABLE TO CLASS A COMMON STOCKHOLDERS
$ 3,010
$ 3,516
$ (506)
(14.4) %
Earnings per share of Class A Common Stock:
Basic
$ 0.03
$ 0.04
Diluted
$ 0.03
$ 0.04
Weighted average shares of Class A Common Stock outstanding:
Basic
89,691
84,479
Diluted
89,691
