Good morning everyone, continue on with this morning's schedule. I'm Greg Peters, I'm the Insurance Analyst for Raymond James. And really pleased to welcome back the Baldwin Insurance Group who have been participating in our conference over since they went public. It has been a remarkable journey of growth for this company since they've been public. And then the last 12 months have been a different type of remarkable journey. And we're gonna hear more about it today. Before we begin with some opening remarks from Trevor, let me just introduce the management team. Bonnie Bishop is in the audience and she's the Executive Director of Investor Relations for the company. Feel free to reach out to her with questions. Brad Hale is the Chief Financial Officer for Baldwin. And of course, we have Trevor, who's the CEO. So before we, this is, the next 30 minutes is supposed to be interactive, Q&A, but before we begin with that, I thought this would be a good spot for you to provide us an update on the company. It's been a very challenging 12 months for you and talk about the outlook.
Yeah, good morning, it's great to be here. Thanks for having us, Greg. So Trevor Baldwin, CEO here at the Baldwin Group. And as Greg mentioned, we came public in October of 2019. That year, we were about $135 million of revenue, $35 million of EBITDA. And over the next six years, we grew the business to over $1.5 billion of revenue in 2025, $340 million of adjusted EBITDA, a CAGR on both top and bottom line of about 50% while growing earnings on a per-share basis by about 35% a year. We've intentionally built our business across Baldwin to create, you know, not just a brokerage, but a platform in the insurance space. And in today's day and age, particularly with all of the discussion around AI and the impacts and implications that's going to have, we think it's incredibly important to understand how that platform enables us to operate across the value chain in a manner that positions us incredibly well to accelerate our performance over the coming months and years. We operate a business across three core operating groups. The first is our insurance advisory solutions business, where we provide insurance brokerage services and advisory work to mid-sized and large clients. Importantly, in this business, our clients skew very much towards the continuum of scale and complexity. In fact, more than 80% of the revenue in that segment comes from clients that are spending on average in excess of half a million dollars a year in insurance premium, not the type of clients who we believe are going to be buying insurance from a chatbot anytime soon. So, kind of a real moat around how we go to market and who we're serving through deep specialty expertise. Second, for quite some time now, we've had a belief around the evolution of how personal insurance is both purchased and consumed. Meaning, we believe that embedded insurance solutions are the way of the future. We are the leading purveyor of home insurance solutions at point of new home sale. In fact, we're the partner for 20 of the top 25 home builders in the U.S. who collectively built and sold 57% of the new homes in the United States in 2024. We also have been investing deeply in building out a similar business in the mortgage channel. Last year, we launched our proprietary technology platform, Coverage Navigator, and onboarded 12 real estate mortgage partners, including New American Funding, a top 20 mortgage originator in the US. And just last week, we announced a 10-year exclusive partnership with Fairway Mortgage Lending Company, the sixth largest independent mortgage lender in the country. Real momentum on that platform, and a platform and a strategy that will be enhanced as AI enables us to transact more quickly, more effectively, and provide more seamless experiences. And then third is our strategy of vertically integrating into the insurance value chain via our UCTS segment where we build and manage proprietary insurance products and source, arrange, and manage third-party capital to stand behind those products. We don't take the balance sheet risk, but we source the capital, we arrange it, and we manage it. And building proprietary product creates that end-to-end ecosystem that has real kind of anti-fragility to disintermediation risks. And our embedded channels, we're distributing largely our own proprietary product, whether it's our builder products in the builder space, whether it's our own Brenner's solutions in the embedded Brenner space. We can't be disintermediated as a result of it's our product, you have to come to our platform to access it all that's to say we have a business that we believe was purpose-built for this era and we really are excited for how we're going to showcase that as growth continues to grow through the year quarter by quarter to Greg's remarks 2025 was a year that certainly had some uneven or financial bumpiness to it and and I I would say that that really puts a spotlight on the power of the diversified but integrated insurance platform we've built it's not going to be the last time that we go through periods of time where there's headwinds or challenges and the diversity of our platform enabled us to continue to deliver industry-leading organic growth for the year of 7% despite meaningful headwinds from the transition of our builder book from QBE, a procedural accounting change to achieve best practices and expedite cost synergy achievement in our IS business, and some real disruption in the Medicare marketplace that hit that small part of our business. You normalize for those three idiosyncratic headwinds we faced and we had a business that delivered 10% percent organic growth for the year and those three headwinds alone were a 30 million dollar adjusted EBITDA impact for the year in 2025 most importantly all of those headwinds are finite they have a specific end date and they turn into tailwinds as we go through the year and beyond great and I think that I think
it's worth highlighting the the organic revenue growth because it's been one of the standout features of your company since you've been public, your ability to generate better growth rates on an organic basis than your peers. Related to that is sales velocity. As we sit on the outside looking in, it's hard for us to visualize what's going on with sales velocity, but it's one of the leading indicators of success for your company. So maybe you can spend a minute and tell us about sales velocity, talk to us about how the industry performs in sales velocity, and then talk about your company's sales velocity. And there's always the history, but more current is like what's been happening in the last couple of quarters.
Yeah, happy to. Sales velocity is one of the key KPIs we track internally, and it's a measure or a metric of new business revenue one as a percentage of prior year commission and fee revenue. So excluding contingents and overrides. It's a measure of kind of pure client revenue momentum, so to speak. And since going public, we have been a high teens or higher sales velocity business. That compares to the industry average sales velocity or median of 11 and a half percent and a top quartile sales velocity of 15 and a half percent. In 2025, our sales velocity was 19%, what we believe to be top decile performance for the industry and certainly at scale. That compares to our scale peers who are generally on average in and around 10 to 12% from a sales velocity perspective. What does that mean? That's one of the retention and sales velocity are two of the most controllable internal variables to organic growth. How much new revenue are we outwitting, are we taking share, are we growing our pie, and how much of the prior year revenue are we holding on to? We have historically been in and around average from a retention standpoint, but notably we've made some significant enhancements to our overall stewardship processes and methodologies, and are seeing that pay meaningful dividends with client retention improving nearly 300 basis points year-over-year in the fourth quarter with visibility of that trend continuing into the year. With continued high teens to low 20s sales velocity, retention in and above 90 percent, and a normalized market impact or renewal premium change back for a flat to plus 100 to 200 basis points, this is a double-digit growth platform. That's the math. So I think the way in which we go to market, the value of the tools and resources that we have, the quality of the talent we've been able to assemble and organize enables us to consistently generate those type of new business results and speaks to the health and the value
of our franchise in the market. So the talent comment is a great segue into something that's going on in the industry, which is there are some entities out there that are trying to poach talent away from other brokers and and then there's the ownership of the stock and the stock performance it also can affect sentiment among producers so maybe you can talk about the retention of your employee base set us up you know how many of your producers own stock give us you know sort of the and and and give us the background on that and then and i know i know part of your answer you'll focus on the vanguard producers which are very important to your organization
yeah so another key metric we track or key kpi that i stare at on a monthly basis is vanguard colleague retention our vanguard colleagues today is roughly about a third of of our overall colleague population, and is a metric and a measure of our highest performers. And we track the retention of those highest performers very closely last year, it was 94%. It is, since inception, always been over 90%, a metric we're incredibly proud of, and I believe speaks to the power of our culture, the power of our platform, and the way in which we have built a business that enables those really high achievers to come build the most impactful and rewarding career that they can here at Baldwin. Greg alluded to some of the competitive dynamics in the marketplace. 2025 proved to be the most competitive talent environment our industry has seen since I've been in the business. And that, I believe, is driven by a number of factors. There's, and Greg alluded to this, been some new entrants to the space who are bidding up talent in a meaningful way. And I also believe just the general softening rate environment and quest for continued growth has caused competitors to lean into talent more heavily as a result. You certainly saw us do that last year. we increased our investment in frontline client generating talent by 44% in our IS business, taking our net unvalidated producer pay or NUP, a metric we track closely, up by 70 basis points from, I believe, 1.6% of commission fee revenue to 2.3% of commission fee revenue, really at the high end of where industry incumbents or investing from a new talent perspective. So our talent franchise continues to be incredibly healthy. We had no regrettable producer losses in 2025. With that being said, it's a risk and it's one we're very clear eyed to. We're, you know, I am certain we'll have talent losses from time to time that we would have preferred to avoid. But we're being thoughtful about investing in our professionals, creating kind of clear and expedited career tracks for our high performers, and continuing to invest in the tools, the resources, and the technology to ensure that we are the platform where the industry's very best and brightest can come to build those most meaningful, impactful careers and maximize their earnings opportunities over time. Stock ownership has been a hallmark of our culture since the very early days, frankly, since before even coming public. But since then, it's given us the ability to make 100% of our colleagues shareholders in the business. So everyone at Baldwin both enjoys the value creation and success when our stock performs and feels the pain when it doesn't. 2025 was a pretty bruising year from a stock price performance perspective but I would also frame that as an opportunity for our colleagues while there's definitely ways in which they earn stock through performance and bonuses particularly on the production side you know and entrepreneurs and investors they they invest and pay for their buy their stock and we have that opportunity for our colleagues and spades and so I think many of our high performers took advantage of the dislocation in our stock price to really invest in and the platform that they're contributing to and helping to drive our success so while it can create some unnerving feelings when you see a stock price that in many ways is disconnected from the underlying fundamentals of the business they see and hear what's happening they're feeling the client wins they see that 19% sales velocity because they're in the midst of it every day they're feeling those retention improvements they're seeing the new product rollouts that we're having they're seeing the momentum that we're driving across our embedded platforms and so I would say by and large you know our colleague base they're true believers and they're putting their money where their mouth is more than 50% of our companies owned by colleagues our alignment runs deep and that means we share in both our successes and our failures with our shareholders in a super meaningful way okay so with no
questions in the audience I'm going to continue on you talk about investing in colleagues you've also invested in businesses and there's been some recent acquisition activity talk to us about the recent transactions you've closed and what the opportunity set is there for the company going forward yeah we
we closed on three partnerships our nomenclature for acquisitions on January 1st capstone group which is a high-performing middle market platform in the Philadelphia area, about $10 million in revenue, multi-year track record of double-digit organic growth and industry-leading sales velocity. Incredibly excited about their addition to the team and the momentum they're driving. We also partnered with a firm, Obi, who had been a long time trading partner of ours with our MGA, the largest distributor of our real estate investor product built for single-family home for rent investors that operate at the kind of small to medium scale. That business is a track record of phenomenal growth, and we believe we're going to be able to really elevate that through a combination of our technology and their technology, but they're the leading embedded purveyor to insurance solutions to that real estate investor marketplace and incredibly excited about the momentum we're driving there. And then importantly, CAC, the largest transaction in the history of Baldwin since our Westwood partnership back in April of 2022. I'd say be remiss if I didn't point out Westwood's been one of the most successful partnerships in the history of our track record of M&A. We recently published the success of the financial metrics around that transaction with our year-end financial supplement, buying down our multiple to roughly six times over three years, that has been a complete home run. That doesn't even contemplate the value of the earnings stream we have in the MGA from all the proprietary home products we distribute through Westwood, which is a whole separate earnings stream that's not a part of that calculation. So it truly understates the performance of that combination. But back to CAC, CAC is a one-of-one asset. I spoke earlier to the value and moat we have around our IS business and the way in which we've leaned into clients of scale and complexity and really fielding teams of deep experts to be able to wrap around those relationships. The VEC enhances that in a way that no other partnership possibly could have. I think it's important to provide some context around how that transaction came about. This isn't a deal that we got a sim for, we dug in, we got excited, and we made a move for. This is a management team that I've known incredibly well for over a decade and spent years cultivating relationships with. We've had a front row seat to how they've built that business really going back to 2019 when CAC was formed through the combination of Cobbs Allen, Mike Rice, Paul Sparks, Grant Lynn Rice, and Bruce Denson coming together to form this incredible business. And then getting to know Erin Lynch, their CEO over the past couple of years and her track record what CAC built there is no other example of it in the industry at scale with independence and the depth and breadth of expertise into these incline industry sectors and upmarket risk product areas of expertise they had a three five-year organic growth CAGR of nearly 30 percent they have revenue per colleague metrics that are off the charts all over 600 colleagues for over 300 million of revenue and they come and it's as if our businesses were purpose-built to come together so when they were running a process and exploring what was the right next step for them from a capital standpoint we became the only strategic partner that they even entertain the conversation with we were able to put together a deal that made sense for both parties but that on its face is a fantastic financial construct for our shareholders and and create significant financial upside if you assume we can execute reasonably well importantly that partnership is off to a really fantastic start I think when we announced the deal I characterized CAC as a Ferrari and we're gonna put it on the track and we're gonna let it run and I can tell you it's running as of the middle of last week the CAC team had over 32 million dollars of closed one new business that compares to 19.6 million at the same point in time in the prior year period we have over 11 $7 million of active cross-sell opportunities that are being jointly worked between Legacy Baldwin and CAC colleagues. And as of two weeks ago, we've already actioned over $25 million of the identified $43 million of expected cost synergies to be achieved by three years, 60 days in. We're ahead of schedule. The teams are working together incredibly well. the industrial logic, the wisdom that we saw in bringing these businesses together is proving itself out faster in a more meaningful way than we could have predicted even months ago. We're incredibly excited here.
I think that's a good point. There's some questions. Yeah, please. Can we just give you a view? For the webcast, the question is around free cash flow and where it is currently and projected.
Yeah, so our free cash flow currently is running about 25% to 30% conversion rate from adjusted EBITDA, which is well below peers who are running, call it in the 65% to 70% range. The single largest differentiator there is the leverage that we've carried and the relative cash interest. That almost bridges you entirely to where the peers operate. so clearly we've got to grow into that and continue to deliver the business the second differentiator I'd say is the amount of investment we've made in the business the amount we've spent on integration certainly from a growth perspective and even an expansion of margin and EPS perspective we're benefiting from those investments but we have out indexed our peers in terms of the integration costs and some of the one-time costs over the last several years we have another year of I think integration costs now associated with CAC that will continue to you know have us operate I think somewhere below peer levels but over the next several years there's nothing fundamentally different about our business I think that would prevent us from achieving where the
peers operate I think it's worth also just accentuating a point Brad talks about the you know the the capex effectively the internal use software development work that we've invested in our platform you know probably well close to 100 million dollars over the past three or four years but i think it's important to talk about where that leaves us now we've built out our own orchestration layer on top of our data layer we call it internally gator we're plugging in LLMs and creating both synchronous and asynchronous capabilities for those LLMs to drive coordination of workflow and operating sequences, which is going to unlock massive margin opportunity. That's what 3B30 Catalyst is all about. It's about redesigning the way in which work gets done in our business. And we're in this unique position where we've done the hard work to integrate our platform, organize our data assets, and now having built that orchestration layer so that AI is kind of infrastructure across our entire platform that positions us to move with speed to leverage the advantages that that brings to knowledge work, drive significant gains in productivity, and enhance the way in which our colleagues go to market. and provide advisory work and solutions to our clients. The next couple of years, undoubtedly, are gonna be the most consequential in the history of our firm because of the rate of change that is occurring. And I couldn't be more excited about how we're positioned to be a leader in that change across our industry. And that means we'll continue to bolster our status as the platform for the industry's best professionals where they can come to gain access those tools and resources and to deliver the most impactful outcomes for our clients it's going to be it's going to be a really incredible couple of years in a go ahead sir yeah so the question was what's our deal sourcing methodology beyond just kind of proprietary relationships we have in the business um one i wouldn't characterize while we have been somewhat prolific from an m a standpoint we've done about 35 transactions since going public relative to our more acquisitive peers I'd say those are relatively benign numbers you know many of our peers are doing upwards of 30 40 50 transactions a year that's not our business model we're investing in high quality highly differentiated businesses where one plus one equals something far more than two as we integrated into our broader business from a deal sourcing perspective we have a reputation across the industry is being that preferred home for those top professionals and so when those businesses decide it's time for them to explore alternatives we're generally getting a phone call we have a network of investment bankers the traffic and these type of opportunities whether we're hearing about it proactively or we're we're getting the inbounds there's generally not a transaction of significance that's occurring that that we don't have line
site too. I think it's worth just closing out because it's a very topical, the property casualty pricing cycle, and you talk about the organization being purpose-built. Talk to us about your expectation of how you're going to perform as this cycle continues to evolve and the pricing pressure continues to develop. Yeah, so the first thing I would say is our guidance
for 2026 does not contemplate any miraculous recovery in the pricing environment for insurance we believe property rates will continue to be deeply competitive we believe that combined rate and exposure impacts will be headwinds before normalizing the more of a neutral impact towards the back half of the year as we look across various lines of business capital is somewhat abundant property will remain deeply competitive we're beginning to see signs of the admitted market come in and take some share the fourth quarter for the first time in over four years we actually saw a slight uptick and admitted is a percentage of our overall book of business and force that's the first time that's occurred in quite some time it It was a very small uptick, but that is a, I think, notable change that we saw. Casualty pricing pressure, while rates remain positive, they are ebbing, and competition across many casualty lines continues to increase, as I believe many in the property space are struggling to fully hit their premium budgets and goals because of how competitive the market is. It's a great environment for an intermediary such as ourselves to deliver great outcomes for our clients. Last year we did not see meaningful changes in buying patterns, meaning historically when the market begins to turn like this, you see clients transfer more risk via lower deductibles, higher limits. I expect we'll see more of that, we will see that begin to flow through this year although again that's not fully contemplated and the expectations that we've set and and I don't see any catalyst for a shift in that market dynamic over the coming year or two I think I think we're in for a definitely a few years of competitive pricing and you know the ebbs and flows of that will be somewhat dictated by lost trends and lost events, but I don't think will change
the overall direction of travel. Excellent. So we're at the 30-minute mark. Management will be downstairs in Cordova 6 for a breakout session. And Trevor, Brad, and Bonnie, thank you very much
for your presentation today. Thanks, Greg. Pleasure to be here.