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RYAN SPECIALTY HOLDINGS, INC. (RYAN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered strong top-line growth: revenue rose 24.5% to $663.5M; organic revenue growth was 11.0%; Adjusted EBITDAC up 36.2% to $216.0M; Adjusted EBITDAC margin expanded to 32.6% .
  • GAAP net income declined 27.3% year-over-year to $42.6M due to higher income tax and interest expense, despite robust revenue growth and margin expansion; diluted EPS was $0.10 while adjusted diluted EPS rose 28.6% to $0.45 .
  • FY25 guidance introduced: organic revenue growth 11–13% and adjusted EBITDAC margin 32.5–33.5; regular quarterly dividend increased 9.1% to $0.12 per share, signaling confidence in outlook .
  • Strategic catalysts: mix shift toward delegated underwriting authority (MGU/MGA) and recent acquisitions (US Assure, Innovisk, Velocity) expanding capabilities and TAM; management reiterated a path to ~35% adjusted EBITDAC margin by 2027, underpinned by ACCELERATE 2025 efficiencies and investment in AI/digital tools .

What Went Well and What Went Wrong

What Went Well

  • Revenue and margin outperformance: revenue +24.5% YoY to $663.5M; Adjusted EBITDAC +36.2% to $216.0M; Adjusted EBITDAC margin up to 32.6% from 29.8%, driven by organic growth, acquisitions, and ACCELERATE 2025 savings .
  • Underwriting Management momentum: segment net commissions and fees +84.1% YoY in Q4, reflecting strong organic growth and M&A contributions (US Assure, Velocity) .
  • Management conviction and strategic clarity: “This quarter is a telling example of how our specialized diverse portfolio can balance out and even overcome difficult market conditions to produce exceptional organic growth at scale.” — Patrick Ryan .

What Went Wrong

  • GAAP net income down 27.3% YoY to $42.6M, as higher tax and interest expense offset growth; GAAP net income margin compressed to 6.4% from 11.0% .
  • Property pricing headwinds intensified in December, pressuring near-term growth outlook; management expects “more modest growth in property” in 2025 despite long-term bullishness .
  • Operating cost mix: G&A expense ratio rose to 15.8% in Q4 (from 13.8% YoY) amid integration and growth investments, though adjusted ratios improved (Adjusted C&B 55.6% vs 58.3% YoY; Adjusted G&A 11.8% vs 12.0% YoY) .

Financial Results

Income Statement and EPS vs prior periods

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Total Revenue ($USD Millions)$532.9 $695.4 $604.7 $663.5
Net Income ($USD Millions)$58.5 $118.0 $28.6 $42.6
Net Income Margin (%)11.0% 17.0% 4.7% 6.4%
Diluted EPS ($USD)$0.18 $0.37 $0.09 $0.10
Adjusted EBITDAC ($USD Millions)$158.6 $247.7 $190.3 $216.0
Adjusted EBITDAC Margin (%)29.8% 35.6% 31.5% 32.6%
Adjusted Diluted EPS ($USD)$0.35 $0.58 $0.41 $0.45
Organic Revenue Growth Rate (%)16.5% 14.2% 11.8% 11.0%

Notes: Wall Street consensus estimates from S&P Global could not be retrieved due to an SPGI request limit error; as a result, beat/miss vs estimates is unavailable for this quarter.

Segment Net Commissions and Fees (trend)

Segment ($USD Millions)Q4 2023Q2 2024Q3 2024Q4 2024
Wholesale Brokerage$342.7 $444.1 $346.7 $374.8
Binding Authority$67.4 $80.6 $76.5 $74.6
Underwriting Management$108.6 $155.5 $165.0 $200.0
Total Net Commissions & Fees$518.7 $680.2 $588.1 $649.4

Revenue by Type (Q4)

Revenue Type ($USD Millions)Q4 2023Q4 2024
Net Commissions & Policy Fees$498.6 $603.6
Supplemental & Contingent Commissions$10.1 $30.2
Loss Mitigation & Other Fees$10.0 $15.6
Total Net Commissions & Fees$518.7 $649.4

KPIs

KPIQ4 2023Q2 2024Q3 2024Q4 2024
Compensation & Benefits Expense Ratio (%)62.3% 59.5% 65.0% 61.8%
G&A Expense Ratio (%)13.8% 11.9% 14.7% 15.8%
Adjusted C&B Expense Ratio (%)58.3% 55.2% 56.8% 55.6%
Adjusted G&A Expense Ratio (%)12.0% 9.2% 11.7% 11.8%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Revenue Growth Rate (%)FY 2025N/A11.0–13.0 New
Adjusted EBITDAC Margin (%)FY 2025N/A32.5–33.5 New
Regular Quarterly Dividend ($/share)Q1 2025$0.11 (declared 10/30/24) $0.12 (declared 2/20/25) Raised
Adjusted Effective Tax Rate (%)FY 2025~26% (FY24 actual) ~26%, may move slightly Maintained/qualifier
Interest Expense ($USD Millions)FY 2025N/A~$225 for FY25; ~$57 in Q1 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2/Q3 2024)Current Period (Q4 2024)Trend
Property pricing and outlookQ2: strong; Q3: deterioration became pronounced late in Q3 Pricing down in Q4; decline accelerated in December; expect modest growth in 2025; long-term bullish Near-term softer; long-term positive
Casualty momentumStrong driver across specialties in Q2/Q3 Accelerating loss costs drive E&S flow; casualty expected to lead growth Strengthening
Delegated authority (MGU/MGA)Strategy expanded via acquisitions (US Assure, Innovisk) “Including Velocity, delegated authority now makes up nearly 45% of revenue”; AM Best validates trend Increasing mix/validation
ACCELERATE 2025 savingsNoted savings benefits in Q2/Q3 Program completed; ~$60M gross savings in 2025, funding larger investment year Transition to reinvestment
AI/technology and digitalLimited detail priorInvesting in AI solutions and digital insights to enhance underwriting and client experience Scaling investments
Fiduciary investment incomeTailwind earlier in 2024 Headwind in 2025 due to lower rates; using forward curve assumptions Turning to headwind
M&A pipeline and leverageMultiple deals, upsized notes Robust pipeline; ample borrowing capacity; willing to flex leverage within corridor (3–4x) Ongoing consolidation

Management Commentary

  • Strategic positioning: “This quarter is a telling example of how our specialized diverse portfolio can balance out and even overcome difficult market conditions to produce exceptional organic growth at scale.” — Patrick Ryan .
  • Delegated authority thesis: “Including Velocity, delegated authority now makes up nearly 45% of our revenue... carriers’ use of delegated authority is accelerating” — Patrick Ryan referencing AM Best study .
  • 2025 investment and margin path: “We will generate approximately $60 million of savings, gross of reinvestment in 2025... on track to hit a 35% adjusted EBITDAC margin by the end of 2027” — Janice Hamilton .
  • Property market: “Property pricing is still soft near term... flow remains strong and our ability to win market share... more than offsetting the pricing” — Tim Turner .

Q&A Highlights

  • Organic growth composition: Management expects double-digit organic growth across specialties, with delegated authority benefiting as acquisitions lap 12 months; property contribution “modest” near term, casualty strong .
  • Margin framework: 2025 adjusted EBITDAC margin guided to 32.5–33.5%, with M&A and underlying expansion offset by fiduciary income headwinds; reinvestment prioritized while progressing toward 35% by 2027 .
  • Capital allocation and M&A capacity: Leverage at 3.1x credit basis at Q4-end; ample borrowing capacity; M&A pace governed by asset quality, not leverage constraints .
  • Interest and tax cadence: FY25 GAAP interest expense ~$225M (Q1 ~$57M); adjusted effective tax rate ~26% subject to geographic mix and tax law changes .
  • Personal lines expansion: Building high net worth capabilities through London MGU and AIG/PCS JV; strong demand amid nonrenewals across states .

Estimates Context

  • S&P Global/Capital IQ consensus estimates for EPS and revenue were attempted but unavailable due to an SPGI daily request limit error; therefore, formal beat/miss analysis versus Wall Street consensus cannot be provided for Q4 2024 (values retrieved from S&P Global unavailable).

Key Takeaways for Investors

  • Mix shift toward delegated authority is accelerating and now represents a substantial portion of revenue post-Velocity, enhancing margin durability and underwriting profit-sharing (contingent commissions) .
  • Despite property rate softness, management expects continued share gains and long-term growth in property supported by Velocity and capital partnerships (FM Global), while casualty remains a core growth engine .
  • Margin trajectory remains favorable: adjusted EBITDAC margin expanded to 32.6% in Q4; FY25 guided to 32.5–33.5%; management targets ~35% by 2027, supported by ACCELERATE 2025 savings and disciplined reinvestment in AI and platform tools .
  • Balance sheet flexibility: recent $600M add-on 2032 notes at 5.875% and strong free cash flow underpin ongoing M&A; leverage within 3–4x corridor with willingness to flex for strategic deals .
  • Dividend increase to $0.12 reflects confidence in earnings power and capital allocation discipline amid continued consolidation opportunities .
  • Watch near-term headwinds: fiduciary investment income expected to be a 2025 headwind given lower rates; property pricing remains soft in the near term .
  • Absent consensus data, focus on internal drivers (organic growth, acquisitions, margin management) and segment trends (UM strong, casualty broadening) for positioning into FY25 .

Appendix: Additional Q4-Period Press Releases (context)

  • Upsized/priced $600M of 5.875% senior secured notes due 2032 to support M&A and general corporate purposes .
  • Completion of strategic acquisitions (Innovisk in Nov-2024; Velocity in Feb-2025) bolstering underwriting management and property capabilities .

Sources: Q4 2024 8-K and Exhibit 99.1 press release ; Q4 2024 earnings call transcript ; Q3 2024 press release ; Q2 2024 press release ; December 2, 2024 senior notes offering press release .