8-K
RYAN SPECIALTY HOLDINGS, INC. (RYAN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 8-K
____________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 30, 2024
____________________
RYAN SPECIALTY HOLDINGS, INC.
(Exact name of Registrant as Specified in Its Charter)
____________________
| Delaware | 001-40645 | 86-2526344 |
|---|---|---|
| (State or Other Jurisdiction<br><br>of Incorporation) | (Commission File Number) | (IRS Employer<br><br>Identification No.) |
| 155 North Wacker Drive, Suite 4000 | ||
| Chicago, Illinois | 60606 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: 312 784-6001
(Former Name or Former Address, if Changed Since Last Report)
____________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br><br>Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Class A Common Stock, $0.001 par value | RYAN | The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act
of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act. o
Item 2.02 Results of Operations and Financial Condition.
On October 30, 2024, Ryan Specialty Holdings, Inc. (the “Company”) issued a press release announcing its results of
operations for the third quarter ended September 30, 2024. A copy of the press release is furnished as Exhibit 99.1 hereto
and is incorporated herein by reference.
The information furnished herewith pursuant to Item 2.02 of this Current Report, including Exhibit 99.1, shall not be
deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject
to the liabilities of that section. The information in this current report shall not be incorporated by reference into any
registration statement or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly
set forth by specific reference in such filing.
Item 8.01 Other Events.
On October 30, 2024, the Company's board of directors (the "Board") declared a regular quarterly dividend of $0.11 per
share on the outstanding Class A common stock. The regular quarterly dividend will be payable on November 26, 2024, to
stockholders of record as of the close of business on November 12, 2024.
Item 9.01 Financial Statements and Exhibits.
(d)Exhibits.
The following exhibits are furnished herewith:
| Exhibit No. | Description of Exhibit |
|---|---|
| 99.1 | Press Release dated October 30, 2024 |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL) |
Cautionary Note Regarding Forward-Looking Statements
This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of
1995 that involve substantial risks and uncertainties. All statements, other than statements of historical fact included in this
report, are forward-looking statements. Forward-looking statements give our current expectations relating to our financial
condition, results of operations, plans, objectives, future performance, and business. You can identify forward-looking
statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such
as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely,”
and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating
or financial performance or other events. For example, all statements we make relating to our estimated costs, expenditures,
financial results, any future dividends, our plans, and anticipated cost savings relating to the restructuring plan and the
amount and timing of delivery of annual cost savings are forward-looking statements. All forward-looking statements are
subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, These
forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties,
including, but not limited to, those relating to whether the Company will achieve the associated objectives with its
Program, whether the costs and charges associated with restructuring initiatives will exceed current estimates and forecasts,
its ability to realize expected savings and benefits in the amounts and at the times anticipated, changes in management’s
assumptions, its ability to achieve anticipated financial results, risks associated with acquisitions, divestitures, joint
ventures and strategic investments, outcomes of legal and regulatory matters, and changes in legislation or regulations.
These and other risks, assumptions and uncertainties are described in Item 1A (Risk Factors) of the Company’s most recent
Annual Report on Form 10-K and in other documents that the Company files or furnishes with the Securities and Exchange
Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements.
Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of
the date they are made. Except to the extent required by law, the Company does not undertake, and expressly disclaims,
any duty or obligation to update publicly any forward-looking statement after the date of this report, whether as a result of
new information, future events, changes in assumptions or otherwise.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
| RYAN SPECIALTY HOLDINGS, INC. (Registrant) | |||
|---|---|---|---|
| Date: | October 29, 2024 | By: | /s/ Janice M. Hamilton |
| Janice M. Hamilton<br><br>Executive Vice President and Chief Financial Officer |
RYAN-2024.09.30-EX 99.1
RYAN SPECIALTY REPORTS THIRD QUARTER 2024 RESULTS
Total Revenue grew 20.5% year-over-year to $604.7 million -
Organic Revenue Growth Rate* of 11.8% year-over-year -
Net Income of $28.6 million, or $0.09 per diluted share -
Adjusted EBITDAC* grew 29.4% year-over-year to $190.3 million -
Adjusted Net Income increased 31.2% year-over-year to $113.6 million, or $0.41 per diluted share -
October 30, 2024 | CHICAGO, IL — Ryan Specialty Holdings, Inc. (NYSE: RYAN) (“Ryan Specialty” or the
“Company”), a leading international specialty insurance firm, today announced results for the third quarter
ended September 30, 2024.
Third Quarter 2024 Highlights
•Revenue grew 20.5% year-over-year to $604.7 million, compared to $501.9 million in the prior-year period
•Organic Revenue Growth Rate* was 11.8% for the quarter, compared to 15.0% in the prior-year period
•Net Income increased 82.4% year-over-year to $28.6 million, compared to $15.7 million in the prior-year
period. Diluted Earnings per Share was $0.09.
•Adjusted EBITDAC* increased 29.4% to $190.3 million, compared to $147.0 million in the prior-year period
•Adjusted EBITDAC Margin* of 31.5%, compared to 29.3% in the prior-year period
•Adjusted Net Income* increased 31.2% to $113.6 million, compared to $86.6 million in the prior-year
period
•Adjusted Diluted Earnings per Share* increased 28.1% to $0.41, compared to $0.32 in the prior-year
period
•Capital return to shareholders and LLC unit holders was $19.0 million of regular dividends and distributions
“It was an excellent quarter for Ryan Specialty by all measures,” said Patrick G. Ryan, Founder and Executive
Chairman of Ryan Specialty. "We grew total revenue 20.5% led by 11.8% organic revenue growth. We
expanded Adjusted EBITDAC margin by 220 basis points year-over-year while growing Adjusted EPS by 28%.
Along with our strong results, we continued to execute our M&A strategy by closing five acquisitions through
the beginning of October. In addition, our leadership transition has been seamless, and we are thrilled to have
Tim Turner as our new CEO. I am confident that we have the right team in place to advance our winning
strategy today and over the long term.”
“We again had outstanding performance from all of our Specialties,” added Tim Turner, Chief Executive Officer
of Ryan Specialty. “Our team continues to tirelessly deliver value and develop innovative solutions for our
clients in this difficult insurance market. We are pleased to welcome new teammates from five delegated
authority businesses that have joined the Ryan Specialty family. These firms both enhance our current
offerings and expand our total addressable market. We also strengthened our balance sheet given we issued
new senior notes and upsized our credit facility, while reducing our borrowing margin. We continue to be well
positioned to deliver sustainable and differentiated growth over the long term, and to create additional value
for our shareholders.”
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Summary of Second Quarter 2024 Results
| Three Months Ended<br><br>September 30, | Nine Months Ended<br><br>September 30, | |||||
|---|---|---|---|---|---|---|
| (in thousands, except percentages<br><br>and per share data) | 2024 | 2023 | % | 2024 | 2023 | % |
| GAAP financial measures | ||||||
| Total revenue | $604,694 | 501,938 | 20.5% | $1,852,181 | 1,544,686 | 19.9% |
| Net commissions and fees | 588,129 | 487,345 | 20.7 | 1,806,264 | 1,507,878 | 19.8 |
| Compensation and benefits | 393,249 | 329,212 | 19.5 | 1,180,825 | 989,294 | 19.4 |
| General and administrative | 88,684 | 69,288 | 28.0 | 247,518 | 202,595 | 22.2 |
| Total operating expenses | 523,217 | 432,121 | 21.1 | 1,533,687 | 1,281,942 | 19.6 |
| Operating income | 81,477 | 69,817 | 16.7 | 318,494 | 262,744 | 21.2 |
| Net income | 28,643 | 15,703 | 82.4 | 187,358 | 135,977 | 37.8 |
| Net income (loss) attributable<br><br>to Ryan Specialty Holdings, Inc. | 17,589 | (5,047) | NM | 80,911 | 38,191 | 111.9 |
| Compensation and benefits<br><br>expense ratio (1) | 65.0% | 65.6% | 63.8% | 64.0% | ||
| General and administrative<br><br>expense ratio (2) | 14.7% | 13.8% | 13.4% | 13.1% | ||
| Net income margin (3) | 4.7% | 3.1% | 10.1% | 8.8% | ||
| Earnings (loss) per share (4) | $0.15 | (0.04) | $0.67 | 0.34 | ||
| Diluted earnings (loss) per<br><br>share (4) | $0.09 | (0.04) | $0.59 | 0.34 | ||
| Non-GAAP financial measures* | ||||||
| Organic revenue growth rate | 11.8% | 15.0% | 13.3% | 15.0% | ||
| Adjusted compensation and<br><br>benefits expense | $343,442 | 296,400 | 15.9% | $1,057,424 | 911,926 | 16.0% |
| Adjusted compensation and<br><br>benefits expense ratio | 56.8% | 59.1% | 57.1% | 59.0% | ||
| Adjusted general and<br><br>administrative expense | $70,991 | 58,560 | 21.2% | $199,583 | 166,606 | 19.8% |
| Adjusted general and<br><br>administrative expense ratio | 11.7% | 11.7% | 10.8% | 10.8% | ||
| Adjusted EBITDAC | $190,261 | 146,978 | 29.4% | $595,174 | 466,154 | 27.7% |
| Adjusted EBITDAC margin | 31.5% | 29.3% | 32.1% | 30.2% | ||
| Adjusted net income | $113,633 | 86,631 | 31.2% | $369,604 | 282,144 | 31.0% |
| Adjusted net income margin | 18.8% | 17.3% | 20.0% | 18.3% | ||
| Adjusted diluted earnings per<br><br>share | $0.41 | 0.32 | $1.34 | 1.04 |
All values are in US Dollars.
* For a definition and a reconciliation of Organic revenue growth rate, Adjusted compensation and benefits expense,
Adjusted compensation and benefits ratio, Adjusted general and administrative expense, Adjusted general and
administrative expense ratio, Adjusted EBITDAC, Adjusted EBITDAC margin, Adjusted net income, Adjusted net income
margin, and Adjusted diluted earnings per share to the most directly comparable GAAP measure, see “Non-GAAP
Financial Measures and Key Performance Indicators” below.
NM - Not Meaningful
(1)Compensation and benefits expense ratio is defined as Compensation and benefits divided by Total revenue.
(2)General and administrative expense ratio is defined as General and administrative expense divided by Total
revenue.
(3)Net income margin is defined as Net income divided by Total revenue.
(4)See “Note 10, Earnings Per Share” of the unaudited quarterly consolidated financial statements.
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Third Quarter 2024 Review*
Total revenue for the third quarter of 2024 was $604.7 million, an increase of 20.5% compared to $501.9
million in the prior-year period. This increase was primarily due to continued solid Organic revenue growth of
11.8%, driven by new client wins and expanded relationships with existing clients, coupled with continued
expansion of the E&S market, revenue from acquisitions completed within the trailing twelve months ended
September 30, 2024, changes in contingent commissions, the impact of foreign exchange rates, and increased
Fiduciary investment income. We experienced growth across the majority of our property and casualty lines.
Total operating expenses for the third quarter of 2024 were $523.2 million, a 21.1% increase compared to the
prior-year period. This increase was primarily due to an increase in Compensation and benefits expense
compared to the prior-year period resulting from higher compensation due to revenue growth and an increase
in Acquisition related long-term incentive compensation, partially offset by savings associated with
ACCELERATE 2025. General and administrative expense also increased compared to the prior-year period to
accommodate revenue growth and an increase in Acquisition related expense.
Net income for the third quarter of 2024 increased 82.4% to $28.6 million, compared to $15.7 million in the
prior-year period. The increase was due to strong revenue growth and lower Income tax expense compared to
the prior-year period, partially offset by higher Interest expense, net and higher Other non-operating loss.
Adjusted EBITDAC grew 29.4% to $190.3 million from $147.0 million in the prior-year period. Adjusted
EBITDAC margin for the quarter was 31.5%, compared to 29.3% in the prior-year period. The increase in
Adjusted EBITDAC was driven primarily by solid revenue growth, partially offset by higher Adjusted
compensation and benefits expense, as well as higher Adjusted general and administrative expense.
Adjusted net income for the third quarter of 2024 increased 31.2% to $113.6 million, compared $86.6 million
in the prior-year period. Adjusted net income margin was 18.8%, compared to 17.3% in the prior-year period.
Adjusted diluted earnings per share for the third quarter of 2024 increased 28.1% to $0.41, compared to $0.32
in the prior-year period.
*For the definition of each of the non-GAAP measures referred to above, as well as a reconciliation of such non-GAAP
measures to their most directly comparable GAAP measures, see “Non-GAAP Financial Measures and Key
Performance Indicators” below.
Third Quarter 2024 Net Commissions and Fees by Specialty and Revenue by Type
Growth in Net commissions and fees in all specialties was primarily driven by solid organic growth.
| Three Months Ended September 30, | ||||
|---|---|---|---|---|
| (in thousands, except percentages) | 2024 | 2023 | Change | |
| Wholesale Brokerage | 346,666 | 308,872 | $37,794 | 12.2% |
| Binding Authorities | 76,497 | 69,245 | 7,252 | 10.5 |
| Underwriting Management | 164,966 | 109,228 | 55,738 | 51.0 |
| Total net commissions and fees | 588,129 | 487,345 | $100,784 | 20.7% |
All values are in US Dollars.
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| Nine Months Ended September 30, | ||||
|---|---|---|---|---|
| (in thousands, except percentages) | 2024 | 2023 | Change | |
| Wholesale Brokerage | 1,114,240 | 976,338 | $137,902 | 14.1% |
| Binding Authorities | 245,762 | 208,547 | 37,215 | 17.8 |
| Underwriting Management | 446,262 | 322,993 | 123,269 | 38.2 |
| Total Net commissions and fees | 1,806,264 | 1,507,878 | $298,386 | 19.8% |
All values are in US Dollars.
The following tables sets forth our revenue by type of commission and fees:
| Three Months Ended September 30, | ||||
|---|---|---|---|---|
| (in thousands, except percentages) | 2024 | 2023 | Change | |
| Net commissions and policy fees | 555,282 | 470,085 | $85,197 | 18.1% |
| Supplemental and contingent<br><br>commissions | 20,455 | 8,592 | 11,863 | 138.1 |
| Loss mitigation and other fees | 12,392 | 8,668 | 3,724 | 43.0 |
| Total net commissions and fees | 588,129 | 487,345 | $100,784 | 20.7% |
All values are in US Dollars.
| Nine Months Ended September 30, | ||||
|---|---|---|---|---|
| (in thousands, except percentages) | 2024 | 2023 | Change | |
| Net commissions and policy fees | 1,706,781 | 1,437,239 | $269,542 | 18.8% |
| Supplemental and contingent<br><br>commissions | 58,618 | 46,281 | 12,337 | 26.7 |
| Loss mitigation and other fees | 40,865 | 24,358 | 16,507 | 67.8 |
| Total net commissions and fees | 1,806,264 | 1,507,878 | $298,386 | 19.8% |
All values are in US Dollars.
Liquidity and Financial Condition
As of September 30, 2024, the Company had Cash and cash equivalents of $235.2 million and outstanding debt
principal of $2.7 billion.
Quarterly Dividend
On October 30, 2024, the Company's board of directors (the "Board") declared a regular quarterly dividend of
$0.11 per share on the outstanding Class A common stock. The regular quarterly dividend will be payable on
November 26, 2024 to stockholders of record as of the close of business on November 12, 2024. A portion of
the dividend, $0.04 per share, will be funded by free cash flow from Ryan Specialty, LLC and will be paid to all
holders of the Company's Class A common stock and the holders of the LLC Common Units (as defined below).
Full Year 2024 Outlook*
The Company is maintaining its full year 2024 outlook for Organic Revenue Growth Rate and Adjusted EBITDAC
Margin as follows:
•Organic Revenue Growth Rate guidance for full year 2024 is between 13.0% – 14.0%
•Adjusted EBITDAC Margin guidance for full year 2024 is between 32.0% – 32.5%
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The Company is unable to provide a comparable outlook for, or a reconciliation to, Total revenue growth rate
or Net income margin because it cannot provide a meaningful or accurate calculation or estimation of certain
reconciling items without unreasonable effort. Its inability to do so is due to the inherent difficulty in
forecasting the timing of items that have not yet occurred and quantifying certain amounts that are necessary
for such reconciliation, including variations in effective tax rate, expenses to be incurred for acquisition
activities, and other one-time or exceptional items.
*For a definition of Organic revenue growth rate and Adjusted EBITDAC margin, see “Non-GAAP Financial Measures and
Key Performance Indicators” below.
Conference Call Information
Ryan Specialty will host a conference call today at 5:00 PM ET to discuss these results. A live audio webcast of
the conference call will be available on the Company’s website at ryanspecialty.com in its Investors section.
The dial-in number for the conference call is (877) 451-6152 (toll-free) or (201) 389-0879 (international).
Please dial the number 10 minutes prior to the scheduled start time.
A webcast replay of the call will be available on the Company’s website at ryanspecialty.com in its Investors
section for one year following the call.
About Ryan Specialty
Founded in 2010, Ryan Specialty (NYSE: RYAN) is a service provider of specialty products and solutions for
insurance brokers, agents, and carriers. Ryan Specialty provides distribution, underwriting, product
development, administration, and risk management services by acting as a wholesale broker and a managing
underwriter with delegated authority from insurance carriers. Our mission is to provide industry-leading
innovative specialty insurance solutions for insurance brokers, agents, and carriers. Learn more at
ryanspecialty.com.
Forward-Looking Statements
All statements in this release and in the corresponding earnings call that are not historical are “forward-
looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and involve
substantial risks and uncertainties. For example, all statements the Company makes relating to its estimated
and projected costs, expenditures, cash flows, growth rates and financial results, its plans, anticipated amount
and timing of cost savings relating to the restructuring plan, or its plans and objectives for future operations,
growth initiatives, or strategies and the statements under the caption “Full Year 2024 Outlook” are forward-
looking statements. Words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,”
“may,” “will,” “should,” “can have,” “likely” and variations of such words and similar expressions are intended
to identify such forward-looking statements. All forward-looking statements are subject to risks and
uncertainties, known and unknown, that may cause actual results to differ materially from those that the
Company expected. Specific factors that could cause such a difference include, but are not limited to, those
disclosed previously in the Company’s filings with the Securities and Exchange Commission (“SEC”).
For more detail on the risk factors that may affect the Company’s results, see the section entitled ‘‘Risk
Factors’’ in our most recent annual report on Form 10-K filed with the SEC, and in other documents filed with,
or furnished to, the SEC. Should one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such
forward-looking statements. Given these factors, as well as other variables that may affect the Company’s
operating results, you are cautioned not to place undue reliance on these forward-looking statements, not to
assume that past financial performance will be a reliable indicator of future performance, and not to use
historical trends to anticipate results or trends in future periods. The forward-looking statements included in
this press release and on the related earnings call relate only to events as of the date hereof. The Company
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does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking
statement after the date of this release, whether as a result of new information, future events, changes in
assumptions, or otherwise.
Non-GAAP Financial Measures and Key Performance Indicators
In assessing the performance of the Company’s business, non-GAAP financial measures are used that are
derived from the Company’s consolidated financial information, but which are not presented in the Company’s
consolidated financial statements prepared in accordance with GAAP. The Company considers these non-
GAAP financial measures to be useful metrics for management and investors to facilitate operating
performance comparisons from period to period by excluding potential differences caused by variations in
capital structures, tax positions, depreciation, amortization, and certain other items that the Company
believes are not representative of its core business. The Company uses the following non-GAAP measures for
business planning purposes, in measuring performance relative to that of its competitors, to help investors to
understand the nature of the Company's growth, and to enable investors to evaluate the run-rate
performance of the Company. Non-GAAP financial measures should be viewed as supplementing, and not as
an alternative or substitute for, the consolidated financial statements prepared and presented in accordance
with GAAP. The footnotes to the reconciliation tables below should be read in conjunction with the unaudited
consolidated quarterly financial statements in the Company's Quarterly Report on form 10-Q filed with the
SEC. Industry peers may provide similar supplemental information but may not define similarly-named metrics
in the same way and may not make identical adjustments.
Organic revenue growth rate: Organic revenue growth rate represents the percentage change in Net
commissions and fees, as compared to the same period for the year prior, adjusted to eliminate revenue
attributable to acquisitions for the first twelve months of ownership, and other items such as contingent
commissions and the impact of changes in foreign exchange rates.
Adjusted compensation and benefits expense: Adjusted compensation and benefits expense is defined as
Compensation and benefits expense adjusted to reflect items such as (i) equity-based compensation, (ii)
acquisition and restructuring related compensation expenses, and (iii) other exceptional or non-recurring
compensation expenses, as applicable. The most directly comparable GAAP financial metric is Compensation
and benefits expense.
Adjusted general and administrative expense: Adjusted general and administrative expense is defined as
General and administrative expense adjusted to reflect items such as (i) acquisition and restructuring related
general and administrative expenses, and (ii) other exceptional or non-recurring general and administrative
expenses, as applicable. The most directly comparable GAAP financial metric is General and administrative
expense.
Adjusted compensation and benefits expense ratio: Adjusted compensation and benefits expense ratio is
defined as the Adjusted compensation and benefits expense as a percentage of Total revenue. The most
directly comparable GAAP financial metric is Compensation and benefits expense ratio.
Adjusted general and administrative expense ratio: Adjusted general and administrative expense ratio is
defined as the Adjusted general and administrative expense as a percentage of Total revenue. The most
directly comparable GAAP financial metric is General and administrative expense ratio.
Adjusted EBITDAC: Adjusted EBITDAC is defined as Net income before Interest expense, net, Income tax
expense (benefit), Depreciation, Amortization, and Change in contingent consideration, adjusted to reflect
items such as (i) equity-based compensation, (ii) acquisition-related expenses, and (iii) other exceptional or
non-recurring items, as applicable. Acquisition-related expense includes one-time diligence, transaction-
related, and integration costs. In 2024, Acquisition-related expense includes a $4.5 million charge for the nine
months ended September 30, 2024 related to a deal-contingent foreign exchange forward contract associated
with the Castel acquisition. The remaining charges in both years represent typical one-time diligence,
7
transaction-related, and integration costs. Acquisition-related long-term incentive compensation arises from
changes to long-term incentive plans associated with acquisitions. Restructuring and related expense consists
of compensation and benefits, occupancy, contractors, professional services, and license fees related to the
ACCELERATE 2025 program. The compensation and benefits expense included severance as well as
employment costs related to services rendered between the notification and termination dates and other
termination payments. See “Note 4, Restructuring” of the unaudited quarterly consolidated financial
statements for further discussion of ACCELERATE 2025. The remaining costs that preceded the restructuring
plan were associated with professional services costs related to program design and licensing costs.
Amortization and expense is composed of charges related to discontinued prepaid incentive programs. For the
three months ended September 30, 2024, Other non-operating loss was composed of $16.2 million of expense
related to a term loan modification and $0.5 million of TRA contractual interest and related expense offset by
$0.1 million of sublease income. For the three months ended September 30, 2023, Other non-operating loss
included $0.3 million of TRA contractual interest and related expense offset by $0.2 million of sublease
income. For the nine months ended September 30, 2024, Other non-operating loss consisted of $18.1 million
of expense related to term loan modifications and $0.8 million of TRA contractual interest and related expense
offset by $0.4 million of sublease income. For the nine months ended September 30, 2023, Other non-
operating loss included $0.5 million of TRA contractual interest and related charges offset by $0.4 million of
sublease income. Equity-based compensation reflects non-cash equity-based expense. For the three and nine
months ended September 30, 2024, Equity-based compensation included $4.6 million of expense associated
with the removal of equity transfer restrictions for an executive officer of the Company. Initial Public Offering
(the "IPO") related expenses include compensation-related expense primarily related to the expense for new
awards issued at IPO as well as expense related to the revaluation of existing equity awards at IPO. Total
revenue less Adjusted compensation and benefits expense and Adjusted general and administrative expense is
equivalent to Adjusted EBITDAC. For a breakout of compensation and general and administrative costs for
each addback refer to the Adjusted compensation and benefits expense and Adjusted general and
administrative expense tables below. The most directly comparable GAAP financial metric to Adjusted
EBITDAC is Net income.
Adjusted EBITDAC margin: Adjusted EBITDAC margin is defined as Adjusted EBITDAC as a percentage of Total
revenue. The most directly comparable GAAP financial metric is Net income margin.
Adjusted net income: Adjusted net income is defined as tax-effected earnings before amortization and certain
items of income and expense, gains and losses, equity-based compensation, acquisition related long-term
incentive compensation, acquisition-related expenses, costs associated with our IPO, and certain exceptional
or non-recurring items. The Company will be subject to United States federal income taxes, in addition to
state, local, and foreign taxes, with respect to its allocable share of any net taxable income of Ryan Specialty,
LLC (together with its parent New Ryan Specialty, LLC and their subsidiaries, the “LLC”). For comparability
purposes, this calculation incorporates the impact of federal and state statutory tax rates on 100% of the
Company's adjusted pre-tax income as if the Company owned 100% of Ryan Specialty, LLC. The most directly
comparable GAAP financial metric is Net income.
Adjusted net income margin: Adjusted net income margin is defined as Adjusted net income as a percentage
of Total revenue. The most directly comparable GAAP financial metric is Net income margin.
Adjusted diluted earnings per share: Adjusted diluted earnings per share is defined as Adjusted net income
divided by diluted shares outstanding after adjusting for the effect if 100% of the outstanding LLC Common
Units (“LLC Common Units”), together with the shares of Class B common stock, vested Class C Incentive Units,
and unvested equity awards were exchanged into shares of Class A common stock as if 100% of unvested
equity awards were vested. The most directly comparable GAAP financial metric is Diluted earnings per share.
The reconciliation of the above non-GAAP measures to each of their most directly comparable GAAP financial
measure is set forth in the reconciliation table accompanying this release.
8
With respect to the Organic revenue growth rate and Adjusted EBITDAC margin outlook presented in the “Full
Year 2024 Outlook” section of this press release, the Company is unable to provide a comparable outlook for,
or a reconciliation to, Total revenue growth rate or Net income margin because it cannot provide a meaningful
or accurate calculation or estimation of certain reconciling items without unreasonable effort. Its inability to
do so is due to the inherent difficulty in forecasting the timing of items that have not yet occurred and
quantifying certain amounts that are necessary for such reconciliation, including variations in effective tax
rate, expenses to be incurred for acquisition activities, and other one-time or exceptional items.
Contacts:
| Investor Relations<br><br>Nicholas Mezick<br><br>Director, Investor Relations<br><br>Ryan Specialty<br><br>IR@ryanspecialty.com<br><br>Phone: (312) 784-6152 | Media Relations<br><br>Alice Phillips Topping<br><br>SVP, Chief Marketing & Communications Officer<br><br>Ryan Specialty<br><br>Alice.Topping@ryanspecialty.com<br><br>Phone: (312) 635-5976 |
|---|
9
Consolidated Statements of Income (Unaudited)
| Three Months Ended<br><br>September 30, | Nine Months Ended September<br><br>30, | |||
|---|---|---|---|---|
| (in thousands, except percentages and per share data) | 2024 | 2023 | 2024 | 2023 |
| Revenue | ||||
| Net commissions and fees | $588,129 | $487,345 | $1,806,264 | $1,507,878 |
| Fiduciary investment income | 16,565 | 14,593 | 45,917 | 36,808 |
| Total revenue | $604,694 | $501,938 | $1,852,181 | $1,544,686 |
| Expenses | ||||
| Compensation and benefits | 393,249 | 329,212 | 1,180,825 | 989,294 |
| General and administrative | 88,684 | 69,288 | 247,518 | 202,595 |
| Amortization | 39,182 | 29,572 | 97,711 | 79,125 |
| Depreciation | 2,467 | 2,201 | 6,820 | 6,570 |
| Change in contingent consideration | (365) | 1,848 | 813 | 4,358 |
| Total operating expenses | $523,217 | $432,121 | $1,533,687 | $1,281,942 |
| Operating income | $81,477 | $69,817 | $318,494 | $262,744 |
| Interest expense, net | 49,388 | 31,491 | 109,916 | 89,840 |
| (Income) from equity method investment in related party | (4,182) | (2,271) | (13,510) | (5,882) |
| Other non-operating loss | 16,590 | 67 | 18,575 | 37 |
| Income before income taxes | $19,681 | $40,530 | $203,513 | $178,749 |
| Income tax expense (benefit) | (8,962) | 24,827 | 16,155 | 42,772 |
| Net income | $28,643 | $15,703 | $187,358 | $135,977 |
| GAAP financial measures | ||||
| Total revenue | $604,694 | $501,938 | $1,852,181 | $1,544,686 |
| Net commissions and fees | 588,129 | 487,345 | 1,806,264 | 1,507,878 |
| Compensation and benefits | 393,249 | 329,212 | 1,180,825 | 989,294 |
| General and administrative | 88,684 | 69,288 | 247,518 | 202,595 |
| Net income | 28,643 | 15,703 | 187,358 | 135,977 |
| Compensation and benefits expense ratio (1) | 65.0% | 65.6% | 63.8% | 64.0% |
| General and administrative expense ratio (2) | 14.7% | 13.8% | 13.4% | 13.1% |
| Net income margin (3) | 4.7% | 3.1% | 10.1% | 8.8% |
| Earnings (loss) per share (4) | $0.15 | $(0.04) | $0.67 | $0.34 |
| Diluted earnings (loss) per share (4) | $0.09 | $(0.04) | $0.59 | $0.34 |
Non-GAAP Financial Measures (Unaudited)
| Three Months Ended<br><br>September 30, | Nine Months Ended September<br><br>30, | |||
|---|---|---|---|---|
| (in thousands, except percentages and per share data) | 2024 | 2023 | 2024 | 2023 |
| Non-GAAP financial measures* | ||||
| Organic revenue growth rate | 11.8% | 15.0% | 13.3% | 15.0% |
| Adjusted compensation and benefits expense | $343,442 | $296,400 | $1,057,424 | $911,926 |
| Adjusted compensation and benefits expense ratio | 56.8% | 59.1% | 57.1% | 59.0% |
| Adjusted general and administrative expense | $70,991 | $58,560 | $199,583 | $166,606 |
| Adjusted general and administrative expense ratio | 11.7% | 11.7% | 10.8% | 10.8% |
| Adjusted EBITDAC | $190,261 | $146,978 | $595,174 | $466,154 |
| Adjusted EBITDAC margin | 31.5% | 29.3% | 32.1% | 30.2% |
| Adjusted net income | $113,633 | $86,631 | $369,604 | $282,144 |
| Adjusted net income margin | 18.8% | 17.3% | 20.0% | 18.3% |
| Adjusted diluted earnings per share | $0.41 | $0.32 | $1.34 | $1.04 |
10
Consolidated Balance Sheets (Unaudited)
| (in thousands, except share and per share data) | September 30,<br><br>2024 | December 31,<br><br>2023 |
|---|---|---|
| ASSETS | ||
| CURRENT ASSETS | ||
| Cash and cash equivalents | $235,199 | $838,790 |
| Commissions and fees receivable – net | 334,637 | 294,195 |
| Fiduciary cash and receivables | 3,357,047 | 3,131,660 |
| Prepaid incentives – net | 8,309 | 8,718 |
| Other current assets | 84,165 | 62,229 |
| Total current assets | $4,019,357 | $4,335,592 |
| NON-CURRENT ASSETS | ||
| Goodwill | 2,341,340 | 1,646,482 |
| Customer relationships | 1,283,489 | 572,416 |
| Other intangible assets | 69,167 | 38,254 |
| Prepaid incentives – net | 15,449 | 15,103 |
| Equity method investment in related party | 62,444 | 46,099 |
| Property and equipment – net | 45,703 | 42,427 |
| Lease right-of-use assets | 122,617 | 127,708 |
| Deferred tax assets | 486,432 | 383,816 |
| Other non-current assets | 32,505 | 39,312 |
| Total non-current assets | $4,459,146 | $2,911,617 |
| TOTAL ASSETS | $8,478,503 | $7,247,209 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
| CURRENT LIABILITIES | ||
| Accounts payable and accrued liabilities | $206,185 | $136,340 |
| Accrued compensation | 325,120 | 419,560 |
| Operating lease liabilities | 21,489 | 21,369 |
| Tax Receivable Agreement liabilities | 22,721 | — |
| Short-term debt and current portion of long-term debt | 33,316 | 35,375 |
| Fiduciary liabilities | 3,357,047 | 3,131,660 |
| Total current liabilities | $3,965,878 | $3,744,304 |
| NON-CURRENT LIABILITIES | ||
| Accrued compensation | 52,261 | 24,917 |
| Operating lease liabilities | 148,487 | 154,457 |
| Long-term debt | 2,646,550 | 1,943,837 |
| Tax Receivable Agreement liabilities | 432,406 | 358,898 |
| Deferred tax liabilities | 21,162 | 55 |
| Other non-current liabilities | 110,227 | 41,097 |
| Total non-current liabilities | $3,411,093 | $2,523,261 |
| TOTAL LIABILITIES | $7,376,971 | $6,267,565 |
| STOCKHOLDERS’ EQUITY | ||
| Class A common stock ($0.001 par value; 1,000,000,000 shares authorized, 125,096,524 and<br><br>118,593,062 shares issued and outstanding at September 30, 2024 and December 31, 2023,<br><br>respectively) | 125 | 119 |
| Class B common stock ($0.001 par value; 1,000,000,000 shares authorized, 136,724,772 and<br><br>141,621,188 shares issued and outstanding at September 30, 2024 and December 31, 2023,<br><br>respectively) | 137 | 142 |
| Class X common stock ($0.001 par value; 10,000,000 shares authorized, 640,784 shares issued and 0<br><br>outstanding at September 30, 2024 and December 31, 2023) | — | — |
| Preferred stock ($0.001 par value; 500,000,000 shares authorized, 0 shares issued and outstanding at<br><br>September 30, 2024 and December 31, 2023) | — | — |
| Additional paid-in capital | 500,518 | 441,997 |
| Retained earnings | 124,973 | 114,420 |
| Accumulated other comprehensive income | 7,080 | 3,076 |
| Total stockholders’ equity attributable to Ryan Specialty Holdings, Inc. | $632,833 | $559,754 |
| Non-controlling interests | 468,699 | 419,890 |
| Total stockholders’ equity | $1,101,532 | $979,644 |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $8,478,503 | $7,247,209 |
11
Consolidated Statements of Cash Flows (Unaudited)
| Nine Months Ended September<br><br>30, | ||
|---|---|---|
| (in thousands) | 2024 | 2023 |
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Net income | $187,358 | $135,977 |
| Adjustments to reconcile net income to cash flows provided by operating activities: | ||
| (Income) from equity method investment in related party | (13,510) | (5,882) |
| Amortization | 97,711 | 79,125 |
| Depreciation | 6,820 | 6,570 |
| Prepaid and deferred compensation expense | 25,220 | 8,882 |
| Non-cash equity-based compensation | 61,664 | 54,136 |
| Amortization of deferred debt issuance costs | 21,838 | 9,125 |
| Amortization of interest rate cap premium | 5,216 | 5,216 |
| Deferred income tax expense (benefit) | (1,959) | 11,745 |
| Deferred income tax expense from reorganization | — | 20,679 |
| Loss on Tax Receivable Agreement | 646 | 478 |
| Changes in operating assets and liabilities, net of acquisitions: | ||
| Commissions and fees receivable – net | 21,514 | 3,875 |
| Accrued interest liability | 2,260 | (4,293) |
| Other current and non-current assets | (12,826) | 10,935 |
| Other current and non-current accrued liabilities | (146,724) | (86,233) |
| Total cash flows provided by operating activities | $255,228 | $250,335 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Business combinations – net of cash acquired and cash held in a fiduciary capacity | (1,256,732) | (366,149) |
| Capital expenditures | (29,705) | (16,013) |
| Repayments of prepaid incentives | — | 228 |
| Total cash flows used in investing activities | $(1,286,437) | $(381,934) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Proceeds from Senior Secured Notes | 595,200 | — |
| Borrowings on Revolving Credit Facility | 850,000 | — |
| Repayments on Revolving Credit Facility | (850,000) | — |
| Debt issuance costs paid | (16,771) | — |
| Proceeds from term debt | 107,625 | — |
| Repayment of term debt | (8,250) | (12,375) |
| Payment of contingent consideration | — | (4,477) |
| Tax distributions to non-controlling LLC Unitholders | (65,833) | (52,633) |
| Receipt of taxes related to net share settlement of equity awards | 26,502 | 7,786 |
| Taxes paid related to net share settlement of equity awards | (18,516) | (7,091) |
| Dividends paid to Class A common shareholders | (66,507) | — |
| Distributions to non-controlling LLC Unitholders | (16,754) | — |
| Payment of accrued return on Ryan Re preferred units | (2,047) | — |
| Net change in fiduciary liabilities | 90,700 | 36,832 |
| Total cash flows provided by (used in) financing activities | $625,349 | $(31,958) |
| Effect of changes in foreign exchange rates on cash, cash equivalents, and cash and cash<br><br>equivalents held in a fiduciary capacity | 5,641 | (828) |
| NET CHANGE IN CASH, CASH EQUIVALENTS, AND CASH AND CASH EQUIVALENTS HELD IN A<br><br>FIDUCIARY CAPACITY | $(400,219) | $(164,385) |
| CASH, CASH EQUIVALENTS, AND CASH AND CASH EQUIVALENTS HELD IN A FIDUCIARY CAPACITY<br><br>—Beginning balance | 1,756,332 | 1,767,385 |
| CASH, CASH EQUIVALENTS, AND CASH AND CASH EQUIVALENTS HELD IN A FIDUCIARY CAPACITY<br><br>—Ending balance | $1,356,113 | $1,603,000 |
| Reconciliation of cash, cash equivalents, and cash and cash equivalents held in a fiduciary<br><br>capacity | ||
| Cash and cash equivalents | 235,199 | 754,370 |
| Cash and cash equivalents held in a fiduciary capacity | 1,120,914 | 848,630 |
| Total cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity | $1,356,113 | $1,603,000 |
12
Reconciliation of Organic Revenue Growth Rate
| Three Months Ended<br><br>September 30, | Nine Months Ended<br><br>September 30, | |||
|---|---|---|---|---|
| (in thousands, except percentages) | 2024 | 2023 | 2024 | 2023 |
| Current period Net commissions and fees revenue | $588,129 | $487,345 | $1,806,264 | $1,507,878 |
| Less: Current period contingent commissions | (14,842) | (4,487) | (44,741) | (30,624) |
| Net Commissions and fees revenue<br><br>excluding contingent commissions | $573,287 | $482,858 | $1,761,523 | $1,477,254 |
| Prior period Net commissions and fees revenue | $487,345 | $407,551 | $1,507,878 | $1,284,459 |
| Less: Prior year contingent commissions | (4,487) | (3,039) | (30,624) | (24,978) |
| Prior period Net commissions and fees revenue<br><br>excluding contingent commissions | $482,858 | $404,512 | $1,477,254 | $1,259,481 |
| Change in Net commissions and fees revenue excluding<br><br>contingent commissions | $90,429 | $78,346 | $284,269 | $217,773 |
| Less: Mergers and acquisitions Net commissions and fees<br><br>revenue excluding contingent commissions | (33,416) | (16,980) | (87,690) | (28,563) |
| Impact of change in foreign exchange rates | (196) | (739) | (521) | 350 |
| Organic revenue growth (Non-GAAP) | $56,817 | $60,628 | $196,058 | $189,560 |
| Net commissions and fees revenue growth rate (GAAP) | 20.7% | 19.6% | 19.8% | 17.4% |
| Less: Impact of contingent commissions (1) | (2.0) | (0.2) | (0.6) | (0.1) |
| Net commissions and fees revenue<br><br>excluding contingent commissions growth rate (2) | 18.7% | 19.4% | 19.2% | 17.3% |
| Less: Mergers and acquisitions Net commissions and fees<br><br>revenue excluding contingent commissions (3) | (6.9) | (4.2) | (5.9) | (2.3) |
| Impact of change in foreign exchange rates (4) | 0.0 | (0.2) | 0.0 | 0.0 |
| Organic Revenue Growth Rate (Non-GAAP) | 11.8% | 15.0% | 13.3% | 15.0% |
(1)Calculated by subtracting Net commissions and fees revenue growth rate from net commissions and fees revenue
excluding contingent commissions growth rate.
(2)Calculated by dividing the change in Total net commissions & fees revenue excluding contingent commissions by
prior year net commissions and fees excluding contingent commissions.
(3)Calculated by taking the mergers and acquisitions net commissions and fees revenue excluding contingent
commissions, representing the first 12 months of net commissions and fees revenue generated from acquisitions,
divided by prior period net commissions and fees revenue excluding contingent commissions.
(4)Calculated by taking the change in foreign exchange rates divided by prior period net commissions and fees
revenue excluding contingent commissions.
13
Reconciliation of Adjusted Compensation and Benefits Expense to Compensation and Benefits Expense
| Three Months Ended<br><br>September 30, | Nine Months Ended<br><br>September 30, | |||
|---|---|---|---|---|
| (in thousands, except percentages) | 2024 | 2023 | 2024 | 2023 |
| Total revenue | $604,694 | $501,938 | $1,852,181 | $1,544,686 |
| Compensation and benefits expense | $393,249 | $329,212 | $1,180,825 | $989,294 |
| Acquisition-related expense | (3,785) | (1,546) | (5,171) | (3,331) |
| Acquisition related long-term incentive compensation | (15,775) | (550) | (17,039) | (1,702) |
| Restructuring and related expense | (5,693) | (11,538) | (35,676) | (13,407) |
| Amortization and expense related to discontinued prepaid<br><br>incentives | (1,095) | (1,571) | (3,851) | (4,793) |
| Equity-based compensation | (17,385) | (8,280) | (39,656) | (23,106) |
| Initial public offering related expense | (6,074) | (9,327) | (22,008) | (31,029) |
| Adjusted compensation and benefits expense (1) | $343,442 | $296,400 | $1,057,424 | $911,926 |
| Compensation and benefits expense ratio | 65.0% | 65.6% | 63.8% | 64.0% |
| Adjusted compensation and benefits expense ratio | 56.8% | 59.1% | 57.1% | 59.0% |
(1)Adjustments made to Compensation and benefits expense are described in the definition of Adjusted EBITDAC in
“Non-GAAP Financial Measures and Key Performance Indicators.”
Reconciliation of Adjusted General and Administrative Expense to General and Administrative Expense
| Three Months Ended<br><br>September 30, | Nine Months Ended<br><br>September 30, | |||
|---|---|---|---|---|
| (in thousands, except percentages) | 2024 | 2023 | 2024 | 2023 |
| Total revenue | $604,694 | $501,938 | $1,852,181 | $1,544,686 |
| General and administrative expense | $88,684 | $69,288 | $247,518 | $202,595 |
| Acquisition-related expense | (12,560) | (5,790) | (35,779) | (12,196) |
| Restructuring and related expense | (5,133) | (4,938) | (12,156) | (23,793) |
| Adjusted general and administrative expense (1) | $70,991 | $58,560 | $199,583 | $166,606 |
| General and administrative expense ratio | 14.7% | 13.8% | 13.4% | 13.1% |
| Adjusted general and administrative expense ratio | 11.7% | 11.7% | 10.8% | 10.8% |
(1)Adjustments made to General and administrative expense are described in the definition of Adjusted EBITDAC in
“Non-GAAP Financial Measures and Key Performance Indicators.”
14
Reconciliation of Adjusted EBITDAC to Net Income
| Three Months Ended<br><br>September 30, | Nine Months Ended<br><br>September 30, | |||
|---|---|---|---|---|
| (in thousands, except percentages) | 2024 | 2023 | 2024 | 2023 |
| Total revenue | $604,694 | $501,938 | $1,852,181 | $1,544,686 |
| Net income | $28,643 | $15,703 | $187,358 | $135,977 |
| Interest expense, net | 49,388 | 31,491 | 109,916 | 89,840 |
| Income tax expense (benefit) | (8,962) | 24,827 | 16,155 | 42,772 |
| Depreciation | 2,467 | 2,201 | 6,820 | 6,570 |
| Amortization | 39,182 | 29,572 | 97,711 | 79,125 |
| Change in contingent consideration | (365) | 1,848 | 813 | 4,358 |
| EBITDAC | $110,353 | $105,642 | $418,773 | $358,642 |
| Acquisition-related expense | 16,345 | 7,336 | 40,950 | 15,527 |
| Acquisition related long-term incentive compensation | 15,775 | 550 | 17,039 | 1,702 |
| Restructuring and related expense | 10,826 | 16,476 | 47,832 | 37,200 |
| Amortization and expense related to discontinued<br><br>prepaid incentives | 1,095 | 1,571 | 3,851 | 4,793 |
| Other non-operating loss | 16,590 | 67 | 18,575 | 37 |
| Equity-based compensation | 17,385 | 8,280 | 39,656 | 23,106 |
| IPO related expenses | 6,074 | 9,327 | 22,008 | 31,029 |
| (Income) from equity method investments in related<br><br>party | (4,182) | (2,271) | (13,510) | (5,882) |
| Adjusted EBITDAC | $190,261 | $146,978 | $595,174 | $466,154 |
| Net income margin | 4.7% | 3.1% | 10.1% | 8.8% |
| Adjusted EBITDAC margin | 31.5% | 29.3% | 32.1% | 30.2% |
(1)Adjustments made to Net income are described in the definition of Adjusted EBITDAC in “Non-GAAP Financial
Measures and Key Performance Indicators.”
15
Reconciliation of Adjusted Net Income to Net Income
| Three Months Ended<br><br>September 30, | Nine Months Ended<br><br>September 30, | |||
|---|---|---|---|---|
| (in thousands, except percentages) | 2024 | 2023 | 2024 | 2023 |
| Total revenue | $604,694 | $501,938 | $1,852,181 | $1,544,686 |
| Net income | $28,643 | $15,703 | $187,358 | $135,977 |
| Income tax expense (benefit) | (8,962) | 24,827 | 16,155 | 42,772 |
| Amortization | 39,182 | 29,572 | 97,711 | 79,125 |
| Amortization of deferred debt issuance costs (1) | 15,402 | 3,045 | 21,838 | 9,125 |
| Change in contingent consideration | (365) | 1,848 | 813 | 4,358 |
| Acquisition-related expense | 16,345 | 7,336 | 40,950 | 15,527 |
| Acquisition related long-term incentive compensation | 15,775 | 550 | 17,039 | 1,702 |
| Restructuring and related expense | 10,826 | 16,476 | 47,832 | 37,200 |
| Amortization and expense related to discontinued<br><br>prepaid incentives | 1,095 | 1,571 | 3,851 | 4,793 |
| Other non-operating loss | 16,590 | 67 | 18,575 | 37 |
| Equity-based compensation | 17,385 | 8,280 | 39,656 | 23,106 |
| IPO related expenses | 6,074 | 9,327 | 22,008 | 31,029 |
| (Income) from equity method investments in related<br><br>party | (4,182) | (2,271) | (13,510) | (5,882) |
| Adjusted income before income taxes (2) | $153,808 | $116,331 | $500,276 | $378,869 |
| Adjusted income tax expense (3) | (40,175) | (29,700) | (130,672) | (96,725) |
| Adjusted net income | $113,633 | $86,631 | $369,604 | $282,144 |
| Net income margin | 4.7% | 3.1% | 10.1% | 8.8% |
| Adjusted net income margin | 18.8% | 17.3% | 20.0% | 18.3% |
(1)Interest expense, net includes amortization of deferred debt issuance costs.
(2)Adjustments made to Net income are described in the definition of Adjusted EBITDAC in “Non-GAAP Financial
Measures and Key Performance Indicators.”
(3)The Company is subject to United States federal income taxes, in addition to state, local, and foreign taxes, with
respect to our allocable share of any net taxable income of the LLC. For the three and nine months ended
September 30, 2024, this calculation of adjusted income tax expense is based on a federal statutory rate of 21%
and a combined state income tax rate net of federal benefits of 5.12% on 100% of our adjusted income before
income taxes as if the Company owned 100% of the LLC. For the three and nine months ended September 30,
2023, this calculation of adjusted income tax expense is based on a federal statutory rate of 21% and a combined
state income tax rate net of federal benefits of 4.53% on 100% of our adjusted income before income taxes as if
the Company owned 100% of the LLC.
16
Reconciliation of Adjusted Diluted Earnings per Share to Diluted Earnings per Share
| Three Months Ended<br><br>September 30, | Nine Months Ended<br><br>September 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Earnings (loss) per share of Class A common stock – diluted | $0.09 | $(0.04) | $0.59 | $0.34 |
| Less: Net income attributed to dilutive shares and substantively<br><br>vested RSUs (1) | (0.03) | — | (0.29) | (0.03) |
| Plus: Impact of all LLC Common Units exchanged for Class A shares (2) | 0.05 | 0.10 | 0.39 | 0.20 |
| Plus: Adjustments to Adjusted net income (3) | 0.31 | 0.28 | 0.67 | 0.54 |
| Plus: Dilutive impact of unvested equity awards (4) | (0.01) | (0.02) | (0.02) | (0.01) |
| Adjusted diluted earnings per share | $0.41 | $0.32 | $1.34 | $1.04 |
| (Share count in '000) | ||||
| Weighted-average shares of Class A common stock outstanding –<br><br>diluted | 272,686 | 115,872 | 271,283 | 124,884 |
| Plus: Impact of all LLC Common Units exchanged for Class A shares (2) | — | 141,690 | — | 142,974 |
| Plus: Dilutive impact of unvested equity awards (4) | 3,467 | 15,115 | 4,445 | 4,390 |
| Adjusted diluted earnings per share diluted share count | 276,153 | 272,677 | 275,728 | 272,248 |
(1)Adjustment removes the impact of Net income attributed to dilutive awards and substantively vested RSUs to
arrive at Net income attributable to Ryan Specialty Holdings, Inc. For the three months ended September 30, 2024
and 2023, this removes $8.3 million and $(0.1) million of Net income (loss), respectively, on 272.7 million and 115.9
million Weighted-average shares of Class A common stock outstanding - diluted, respectively. For the nine months
ended September 30, 2024 and 2023, this removes $78.3 million and $3.8 million of Net income, respectively, on
271.3 million and 124.9 million Weighted-average shares of Class A common stock outstanding - diluted,
respectively. See “Note 10, Earnings Per Share” of the unaudited quarterly consolidated financial statements.
(2)For comparability purposes, this calculation incorporates the Net income that would be distributable if all LLC
Common Units (together with shares of Class B common stock) and vested Class C Incentive units were exchanged
for shares of Class A common stock. For the three months ended September 30, 2024 and 2023, this includes $11.1
million and $20.8 million of Net income, respectively, on 272.7 million and 257.6 million Weighted-average shares
of Class A common stock outstanding - diluted, respectively. For the nine months ended September 30, 2024 and
2023, this includes $106.4 million and $97.8 million of Net income, respectively, on 271.3 million and 267.9 million
Weighted-average shares of Class A common stock outstanding - diluted, respectively. For the three months ended
September 30, 2023, 141.7 million weighted average outstanding LLC Common Units were considered dilutive and
included in the 257.6 million Weighted-average shares of Class A common stock outstanding - diluted within
Diluted EPS. For the nine months ended September 30, 2023, 143.0 million weighted average outstanding LLC
Common Units were considered dilutive and included in the 267.9 million Weighted-average shares of Class A
common stock outstanding - diluted within Diluted EPS. See “Note 10, Earnings Per Share” of the unaudited
quarterly consolidated financial statements.
(3)Adjustments to Adjusted net income are described in the footnotes of the reconciliation of Adjusted net income to
Net income in “Adjusted Net Income and Adjusted Net Income Margin” on 272.7 million and 257.6 million
Weighted-average shares of Class A common stock outstanding - diluted for the three months ended
September 30, 2024 and 2023, respectively, and on 271.3 million and 267.9 million Weighted-average shares of
Class A common stock outstanding- diluted for the nine months ended September 30, 2024 and 2023, respectively.
(4)For comparability purposes and to be consistent with the treatment of the adjustments to arrive at Adjusted net
income, the dilutive effect of unvested equity awards is calculated using the treasury stock method as if the
weighted-average unrecognized cost associated with the awards was $0 over the period, less any unvested equity
awards determined to be dilutive within the Diluted EPS calculation disclosed in “Note 10, Earnings Per Share” of
the unaudited quarterly consolidated financial statements. For the three months ended September 30, 2024 and
2023, 3.5 million and 15.1 million shares were added to the calculation, respectively. For the nine months ended
September 30, 2024 and 2023, 4.4 million shares were added to the calculation.