Ryan Specialty Reports Fourth Quarter 2024 Results

- Total Revenue grew 24.5% year-over-year to $663.5 million -

- Organic Revenue Growth Rate* of 11.0% year-over-year -

- Net Income of $42.6 million, or $0.10 per diluted share -

- Adjusted EBITDAC* grew 36.2% year-over-year to $216.0 million -

- Adjusted Net Income increased 28.9% year-over-year to $123.3 million, or $0.45 per diluted share -

Ryan Specialty Holdings, Inc. (NYSE:RYAN) ("Ryan Specialty" or the "Company"), a leading international specialty insurance firm, today announced results for the fourth quarter ended December 31, 2024.

Fourth Quarter 2024 Highlights

• Revenue grew 24.5% year-over-year to $663.5 million, compared to $532.9 million in the prior-year period
• Organic Revenue Growth Rate* was 11.0% for the quarter, compared to 16.5% in the prior-year period
• Net Income decreased 27.3% year-over-year to $42.6 million, compared to $58.5 million in the prior-year period. Diluted Earnings per Share was $0.10.
• Adjusted EBITDAC* increased 36.2% to $216.0 million, compared to $158.6 million in the prior-year period
• Adjusted EBITDAC Margin* of 32.6%, compared to 29.8% in the prior-year period
• Adjusted Net Income* increased 28.9% to $123.3 million, compared to $95.7 million in the prior-year period
• Adjusted Diluted Earnings per Share* increased 28.6% to $0.45, compared to $0.35 in the prior-year period
• Capital return to shareholders and LLC unit holders was $19.2 million of regular dividends and distributions

Full Year 2024 Highlights

• Revenue grew 21.1% year-over-year to $2,515.7 million compared to $2,077.5 million in the prior-year
• Organic Revenue Growth Rate* was 12.8% for the year, compared to 15.4% in the prior-year
• Net Income increased 18.2% year-over-year to $229.9 million, compared to $194.5 million in the prior-year. Diluted Earnings per Share was $0.71.
• Adjusted EBITDAC* increased 29.8% to $811.2 million, compared to $624.7 million in the prior-year
• Adjusted EBITDAC Margin* of 32.2%, compared to 30.1% in the prior-year
• Adjusted Net Income* increased 31.4% to $493.5 million, compared to $375.6 million in the prior-year
• Adjusted Diluted Earnings per Share* increased 29.7% to $1.79, compared to $1.38 in the prior-year
• Capital return to shareholders and LLC unit holders was $102.4 million, consisting of $27.1 million of special dividends and $75.3 million of regular dividends and distributions

"It was another outstanding year for Ryan Specialty," said Patrick G. Ryan, Founder and Executive Chairman of Ryan Specialty. "For the year, we grew total revenue 21%, supported by organic growth of 12.8% and strong contributions from M&A, which added 7% to our top line. This marked our sixth consecutive year growing total revenue 20% or more. We expanded Adjusted EBITDAC margin 210 basis points year-over-year and grew Adjusted EPS by 30%. Along with our strong results, we executed our M&A strategy by closing 7 high quality acquisitions, which will add over $265 million in annualized revenue and further distinguish Ryan Specialty as an industry-leading international insurance services firm."

"We produced excellent results in 2024, driven by significant new business growth while maintaining strong renewal retention," added Tim Turner, Chief Executive Officer of Ryan Specialty. "Coupling these results with significant M&A not only increased our market share but greatly expanded our total addressable market. We could not be more proud of the outstanding success we had in executing our M&A strategy, as we had our largest year yet in terms of acquired revenue. We've carried that momentum into 2025 with the completion of the highly strategic acquisition of Velocity Risk Underwriters earlier this month. These acquisitions support our thesis of aligning specialized underwriting products with our distribution expertise across industries, expanding our capabilities, and offering clients diverse innovative solutions. These efforts reflect the resolve of our 5,200 talented teammates to execute with distinction and to provide best-in-class service to our clients and trading partners. We believe we remain well positioned to deliver sustainable and differentiated growth in 2025 and over the long term, and to create additional value for our shareholders."

Summary of Fourth Quarter and Full Year 2024 Results

Fourth Quarter 2024 Review*

Total revenue for the fourth quarter of 2024 was $663.5 million, an increase of 24.5% compared to $532.9 million in the prior-year period. This increase was primarily due to continued solid Organic revenue growth of 11.0%, 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 December 31, 2024, higher contingent commissions, and the impact of foreign exchange rates. We experienced growth across the majority of our property and casualty lines.

Total operating expenses for the fourth quarter of 2024 were $554.2 million, a 27.0% increase compared to the prior-year period. This increase was primarily due to higher Compensation and benefits expense resulting from higher compensation attributable to revenue growth, an increase in Acquisition related long-term incentive compensation, higher Acquisition-related expenses, and higher Amortization from recent M&A activity partially offset by savings associated with ACCELERATE 2025, as well as lower Change in contingent consideration due to a downward adjustment on the US Assure earn-out. 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 fourth quarter of 2024 decreased 27.3% to $42.6 million, compared to $58.5 million in the prior-year period. The decrease was due to higher Income tax expense and higher Interest expense, net partially offset by strong revenue growth.

Adjusted EBITDAC grew 36.2% to $216.0 million from $158.6 million in the prior-year period. Adjusted EBITDAC margin for the quarter was 32.6%, compared to 29.8% 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 fourth quarter of 2024 increased 28.9% to $123.3 million, compared $95.7 million in the prior-year period. Adjusted net income margin was 18.6%, compared to 18.0% in the prior-year period. Adjusted diluted earnings per share for the fourth quarter of 2024 increased 28.6% to $0.45, compared to $0.35 in the prior-year period.

Liquidity and Financial Condition

As of December 31, 2024, the Company had Cash and cash equivalents of $540.2 million and outstanding debt principal of $3.3 billion.

Quarterly Dividend

On February 20, 2025, the Company's board of directors (the "Board") declared and increased the Company's regular quarterly dividend by 9.1% to $0.12 per share on the outstanding Class A common stock. The regular quarterly dividend will be payable on March 18, 2025 to stockholders of record as of the close of business on March 4, 2025. A portion of the dividend, $0.05 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 2025 Outlook*

The Company is initiating its full year 2025 outlook for Organic Revenue Growth Rate and Adjusted EBITDAC Margin as follows:

• Organic Revenue Growth Rate guidance for full year 2025 to be between 11.0% – 13.0%
• Adjusted EBITDAC Margin guidance for full year 2025 to be between 32.5% – 33.5%

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.

Fourth Quarter 2024 and Full Year 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.

The following tables sets forth our revenue by type of commission and fees:

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 2025 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 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 audited consolidated financial statements in our Annual Report on form 10-K 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 Ryan Specialty's 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, 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. For the year ended December 31, 2024, Acquisition-related expense included a $4.5 million charge 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, 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 5, Restructuring" of the annual 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 December 31, 2024, Other non-operating loss (income) was composed of $3.2 million of income related to a decrease in our blended state tax rates and foreign tax credit impact on the TRA remeasurement, and $0.1 million of sublease income offset by $0.2 million of TRA contractual interest and related expense. For the three months ended December 31, 2023, Other non-operating loss (income) included a $10.4 million charge related to the change in the TRA liability caused by a change in our blended state tax rates. For the twelve months ended December 31, 2024, Other non-operating loss (income) consisted of $18.1 million of expense related to term loan modifications and $1.3 million of TRA contractual interest and related expense offset by $3.4 million of income related to a decrease in our blended state tax rates and foreign tax credit impact on the TRA remeasurement and $0.5 million of sublease income. For the twelve months ended December 31, 2023, Other non-operating loss (income) included $10.4 million charge related to the change in the TRA liability caused by a change in our blended state tax rates. Equity-based compensation reflects non-cash equity-based expense. For the twelve months ended December 31, 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.

Credit Adjusted EBITDAC: Credit Adjusted EBITDAC is defined as Adjusted EBITDAC as further adjusted without duplication for: acquired EBITDAC from the beginning of the applicable twelve month reference period through the acquisition close date, certain annualized run rate expected cost savings and initiatives, and certain other adjustments as permitted in calculating leverage ratios under our debt agreements. The Company presents Credit Adjusted EBITDAC as an additional measure of liquidity and leverage. The calculation of Credit Adjusted EBITDAC pursuant to our debt agreements permits certain estimates and assumptions that may differ from actual results.

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.

With respect to the Organic revenue growth rate and Adjusted EBITDAC margin outlook presented in the "Full Year 2025 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.