Goosehead Insurance (GSHD) 26 Oct 222022 Q3 Earnings call transcript

Thank you for standing by. This is the conference operator. Welcome to the Goosehead Insurance Third Quarter 2022 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Dan Farrell, VP, Capital Markets. Please go ahead.

afternoon. good and you, Thank

and Before we everyone include need remind expectations, remarks, statements, today. as our part of formal estimates the that on may are I of our management which of to based begin projections discussion forward-looking today

future factors our could other them. We statements. cause the to Insurance. from update results recent differ are any statements, of operating statements SEC financial the obligations refer condition uncertainties should in various detailed those risks, predict are our placed not except forward-looking performance, statements intentions not to future uncertainties undue discussion materially implied or These forward-looking by to are law. the actual more of discussion Forward-looking required difficult in expressed all filings to to risks subject We assumptions, of for and the that be disclaim results that or which of you the and Goosehead upon any therefore, or and applicable a and extent revise to impact could guarantees and reliance

accordance to from are position, our measures I other are call, in we financial and metrics certain useful by variations representative evaluating financial depreciation, like we period comparisons be We for these potential to business. period during that not that believe and performance consider differences to this management items amortization investors non-GAAP tax core would discuss Management non-GAAP by of operating excluding and certain structure, measures prepared when capital various not caused facilitate to also will uses planning, monitoring point out with in these measures GAAP. that financial our performance.

non-GAAP For financial comparable more measures today's information the we to the of most these earnings measures, refer GAAP release. of to financial measures, you reconciliations use including regarding

Relations the over portion being I'd the is at website ends of An CEO, Investor www.gooseheadinsurance.com. call to our archived Mark after the shortly With webcast. call call will turn on to be this Jones. available the company's addition, that, In version like

bear human clients. client the to becoming to experience. to is margin and on businesses our the Basically, universe have a drive space, welcome, results and to call. provide and review model best financials. get underlying market, the extremely every everyone, with we the insurance to Jones at the distributor team recession-resistant fortunate to cash day. business unmatched the operating following a will in doing our and extraordinary Dan, and passed you serve set or Thanks, the the the and of our I upon, product. committed founded We started the company, third product. Then an and will planet accumulating market I personal of insurance company, which one continue to and Mark United We founding feel building personal of attractive anniversary that our is we it line we around capital something, XXX,XXX of remain the were what Mark takes the strategic to cover lifetime, our technology XX potential, lastly, $XXX incredibly XXth Jr. of which very create just after will our for to Miller my true business When the of billion years we principle during place bringing demand we them, somewhere line buy competitors refine you over very in live particularly overview, to our if center the goal flow #X quarter States remain weak resilient, the build to there.

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dynamics digital agent business. Our opportunity potentially core than those a our competitive growth with in represents extraordinary different

to pay have last competitive for the commit them insurance carriers constantly and millions that legally as soon to to to duplicate to but need to build possible built our protect entrust we position. This of operate them ultimately the over responsibility built. Remember high decades lead record and X trust we to crucial and of entrants track paying our case, to particularly insurance competitors relationships as investing competitive of business. new claims. be to of have carrier technology, many invest partners them time work earned the as over to substantial the and volumes privilege relates a being coverage take we years with what digital the convince will us our writing we profitable to our challenging A very and have the we've as are agent competitive with provide very over earn We claims. high-quality, quote-to-issue it It if to of transactions. sufficient moat, hand That our our hard is industry is carriers capability element a bind

President as Ricketts to Justin do Partnerships designed of that. of Technology addition announced Executive just help and is Vice recently Our

revenue is represents more widen team but the the our housing and people Only Great the to extend downturn business. headwind and Crisis is XXXX, Financial that from comes we're than lead actively some housing transactions nearly XXXX. of housing assume. tied is during our deepen our has to internal responding renewal from a The And closings. technology whose XX% competitive not an experience to the U.S. managing exposed a of mission referrals market XX% to XX and Goosehead, moat. The for Justin our based home headwind on of it remaining extent it through to market about

XX% about of of connected housing, revenue the only home per our represent X% year. closings Regarding currently to we

So, have huge and share we on growth. dependent overall market still to transaction gain market housing are not

leads play Our existing to to soften referral into day are ramping referrals this partner pivot marketing our that allows every generate We're our clients when via agents. We're partners generates out current seeing and former team search ones. up us and turning client to digital new volumes tool technology activity revenue. add phenomenon business with with new referral from meaningful consistently

normal XXXX premiums. this While higher we of underwriting Whenever been than have at pay is many looking we increasing pricing us our those losses a get carrier contingent tailwind raise and commission more beyond, most industry in and happens, as we percentage this successful a that a premiums. hope further higher out. because policy levels normalized creating earn have This commission partners for of plagued and a drive year, better profitability

year benefit of our XX% business. XXXX impact premium has a for housing transition revenue us. tailwinds pricing While the headwinds of book XXX% base, of our about been market

received in were Over onboarded the virtual many corporate and environment. years, a our agents last training X of

of went Some in-person through those our impacted of ramp up profitability channel. not training, these as the which corporate agents did quickly who negatively as

environment, in largely training and in out more that aggressively. a is Now we're less conducted our we managing productive post-pandemic person agents are

growth placed be roles at cost of a out extensive at seen take Our franchise we for backlog best have made it the good business agencies strategy. our X,XXX end weak play new faster of corporate to more earlier valuable a profitable. XXX Management is We've This pace of that structure consume to launch XXXX, to agencies strengthened and that year can revenue. moving the relative only resources negligible with to our and recalibration use corporate resources declining this sustainable. optimal become date investment priority progress drive to includes returns. In also is to a from on will profitable simple and is and QX. management the the time where our channels by our performers pencils drive producers attractive but sharpened contribute terms, In it in

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have with almost productivity. new out among year, agencies XX our So this far for top That's of become X XXX corporate far. launched of so franchisees, agencies agents X being them

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revenues expansion efforts pay as margin, of far, at of Even are margin off XX% adjusted XX% $XX delivered So and beginning year-over-year, points XXX QX climbed an representing XXXX. more than we discuss to Miller basis economic I'll a our from million our EBITDA our in to ever one the and confident that turn remains stories. With business success results. to great American business very uncertainty, we're Mark of that, of business building over we're strong, environment in it

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healthy to efforts build to the business. Turning a franchise

underlying We launch. the seeing. signing and been launches I'm time encouraged on improving between with the have franchise compressing extremely we're and trends focused

record. we During XX% XXX the quarter, company and up franchises, year-over-year launched new a

onboarding we strong, our recruiting processes model remain is and signings is rates. implemented substantial. our signed of changes pipeline the we're our and in seeing addition, team. direct our continues to In and quality pipeline improve, to a faster compensation of our and recruiting the The result of launch This adjustments

we franchises. During underperforming of culling delayed COVID,

put returned seeing This production now to of trends on some the net franchises process a franchise low in of is eliminating launches. strong and We sales that drag our offsetting our historic culling system. overall have we're

be to account they but clear, of Just production, business than disproportionate franchise less X% for amount new valuable operating these terminated bandwidth. absorb our of a

increasing agents converted we on very franchise Additionally, are to have converting Historically, ownership. focus corporate our agents to corporate owners. franchise strong few

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corporate of productivity optimizing we're how to on agents. Moving

to overall line than increasing company corporate the corporate in eliminating agency top initiative will has strengthen agents. franchise model to our performance deliver efficient per business. Over industry has a particularly minimal gold of new our of improvement in opportunity become rapidly way deliberately corporate we growth. this already footprint business agency to and in less the productivity our rapidly to the driver production in substantially the XX% growth. caused corporate the establish premium become practice as network our less best revenue franchise tuned impact further focus and started quarter, P&L This with the for of the that with time, standard less the corporate by our growing and U.S. near-term the we with drag and We one-year on by underperforming expand best skilled highly cohort. improvement agent and see is This more efficiently headcount productivity finely During to and agent, headcount, With across slowdown team reduced believe feeds the innovation agency overall technology the a our talent. an

we the the agency their to phase are next supports business. slow business overall does for received piloted that business corporate scaling franchises business, corporate producer franchise our identified the this to will mean add to of significant the their believe that to the our optimize team overwhelmingly number roughly headcount growth count our only We producer count result franchises as and less we And development. franchises service year. year, program program in to the and head franchises. the this the than over franchise Moderating our XXX we the As network expansion the extent expanding XXX not years top in in continue are are will We our where scaling recruiting over combined. Earlier total it in high-growth have additions will that grow are X intend old. a of producer currently franchise operations franchise of we talent matures. we This in corporate pilot, was business

organization is years leverage come. a to will this So, for service our franchise

We and franchises. grow client will across licensed agents leadership. total corporate long-term continue and in of needs franchise agents over of us our industry goal our service X,XXX X,XXX number have drive operations to X,XXX-plus toward our professionally This agents sales meaningfully and our serve trained to and approximately

determine partnerships. We it platform leveraging across to agent-facing Our allows more recently package we quote to innovation Aviator. products unmatched of we and new of through on carriers best coverage. rater, development and advantage further seamlessly are is focused This in technology the and this industry, proprietary agents and our the efficiently call launched

one of currently with are development to in our carriers. new carrier also other our digital several on and on issue quote national, regional stages to capabilities. [QTI] continuing are various We of have and make We progress

growth. position a expect base we portion meaningful substantial be position excited QTI-enabled current with of and to the premium of We our the its company more be time. I couldn't priorities focusing on are will for phase over the next company's

annually these priorities We while believe us remain opportunity processes to our hardening operating focused revenue core these efficiently market allow premiums is at to several the driving meet executing and enormous will We market scale opportunities. high with against XXs through business grow CFO, me our on potential XX% Our XX% the strategic this drive same mid- to enormous. that the to Jones that, over to next it partnerships continuously let years hyper Jr. growth into EBITDA margin turn to to time well upside over over our to period. With Mark

call. to and everybody Thank the on hello you, Mark,

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downside consistent risk we earnings us drive These earnings producer expansion of and talent. come. will allows while balance levels potential allow the high sheet many reduces characteristics cost growth to risk cash significant significantly This as distribution to franchise significantly less the for the years minimizing expanding us conversion optimize to flow revenue bear with of to on ramp emphasis and Our limited risk. fast

For This $XXX performance being retention of continued increased premium and profitability. million XX% increasing to premiums, renewal driven pricing leading to improve our of from core the third future $XXX high $XXX written XXXX, book indicator and of quarter the growth to and This to key growth, levels growth of P&C premium of ancillary by XX% growth revenue strong million. corporate underwriting franchise XX% million. total needed is included

to and the our benefits account. of maximize producer continue offset we headcount quality improve deliberate long-term dollars. productivity by profit our add partially corporate reduction drive Additionally, franchise agent efficiency These to and improvements, increased were in near-term

benefits $XX.X seeing core emerge. Total $XX.X million and respectively. at revenues for from million, already and these the are We revenues quarter up XX% efforts were XX% and

term Our remaining as of the in results accounting the initial agreement. defer over fees million cost of recognition up was revenue XX% rules us of recovery agency franchise acceleration deferred revenue. Terminating underperforming fee an the franchise require $X.X of to the franchise the

flow as includes which million of the the quarter unchanged franchise Ancillary is collect initial commissions, revenue, revenues these franchise. Importantly, contingent ago. we a fees in $X.X compared the these the to at of launch $X.X year cash million was

million, profitability. commissions and between full continue for expect $X to underwriter year to $XX We range contingent the given current million

level a further seeing overdue industry improve long more we time and However, in out. underwriting lead that to actions looking contingent profitability over rate are normalized the should

from XXX of the quarter, is year Increased in quarter, was preceding year-ago was begin underlying X,XXX, XX% quarter distribution. In existing core retention the the we year-over-year we by XX% end franchises up of strength second third the an third quarter us the the and underperforming during revenue XX% or business count to the growing generated growth culling levels. growth see launch the count terminate. X of a of increase the franchise KPIs saw production and backlog period. At from of the million a launches a in in Franchise to quarters. the flat franchise as franchises over is launch roughly revenue record the for Our growth driven a operating masking The ago. core XX% premium new increasing $XX.X from launch franchise quarter, compared

Our within return expect same-store in production data agents trend to sales early they the contribution as the ramp growth fourth remain ran compared balance at a up launch increased we positive to by sales. which term franchisees in historical their respective the annualized their from of continue quarter hire driving strong being offset new second This continues XX% in through franchises, We revenue of near as at our quarter year. quarter well XX% encouraged average. and the roughly XX% the in higher franchise tenured franchises, the is a to by KPI

We up that near allowed make we expect higher as pandemic. of most churn churn through high term in the the we for single-digit

to properly investments resulting most lowest view critical drive We Our most and ensuring successful It accounts consistent as franchises growth. it valuation near-term of X% requires churn we increase new business premium of focus that high-performing management to substantial sales organization. of continue these resources. our a less previous And but for that percentages necessary churn, a higher consumed than remains towards generation, of the healthy our run performing with in successful franchises. focus part franchises,

our launch. quality strong franchises activity no remains improve longer identify pipeline yet continues also we pool recruiting and but intend engage our actively overall and signed to launch of overall drive franchises robust, faster launched to as the that and to signed Our not signed

franchise the efforts in not down second by our not quarter but to launched strong QX launch. signed Our at end quarter with cull in X,XXX pipeline franchises activity was signing XXX, XXX that count of the we'll from and offset

quarter. the XXX, labor year period. head comprised COVID of the the an environment count quarter the signed was the which XX% Corporate to a $XX.X at recruiting more compared third of recent is a in place quarters, increase took as core to We in compared normal were and year of more the ago third to decrease sales of Corporate quarter, expect end to pool ago million higher rates XX% continue launch emerge years. increasingly revenues operating from

headcount expect balance the with to focus maintaining forward, productivity also franchise corporate resources and the overall to on and efficiency. for adequate Looking improving optimize profitability effort corporate we while management manage between growth

we count distribution. the we expect to grow term, down corporate corporate quarter efforts, these slightly expect head to Given the year-end. Longer from be third by

However, as it support not network, the needed grow to the as growth. will fast will franchise at but franchise level

continue were quarter growth expenses of XX%. Given that agents stream third network term, and our trajectory. revenues but through revenue the and recruiting clients marketing our hiring ensure and million, on from the produced the XXXX, organization, largest Growth our operating and real is up expanding was revenue manage up profile moderately compensation higher to headcount equity-based of an Total the increased franchise expenses ago. travel quarter, G&A various to near excluding were expense for net for other internal year $XX.X benefits due XX% users. G&A driven is in year edge expense, changes period. service an entertainment year of for and basis, $XX.X equity-based benefits, of functions footprint, and million, a across resulting headcount technology and compensation, estate from for on excluding expenses compensation, and accounted million the our may to the growth The the our margin $XX.X XX% growth ago. was renewals, a are impact in trajectory from to being these cutting ago a Compensation our the increase expenses they XX% particularly quarter will for onboarding significantly improve earnings from by increased developers system increase

largely a expense ago, XX% $X.X million to the culling a adjusted our period. to debt to million was franchises $XX yet the grew compared to for XX% by EBITDA signed million year bad the ago launch. Total of margin compared increase year Our have versus $X.X ago. $X.X in increased XX% year million was with quarter that EBITDA driven

$X.XX $X.XX Adjusted points EBITDA the versus quarter. was Excluding contingent ago X expanded commissions, in in margin year the EPS period.

ago. expect margins be a continue full compared up to our We year year to will

drive beyond Looking several excluding growth XXXX, annual to higher expect as revenue expansion, an than core for manage next on expense we moderately years basis. we the annual contingents growth margin

As September $XX.X $XX.X the company payable Total million outstanding of had had an XXXX, unused at quarter the XX, was of cash and million. million quarter. cash end. of equivalents end term at note of $XX.X line credit We balance the of

the the October revolving paid drawn the During we cash down facility balance on with million existing $XX credit sheet. on

of expected on addressing. high For full the the commissions as low a growth revenues follows. growth, growth between are on are high XX% the guidance range historical Total than end weaker for challenges billion XX% end core year expected they of billion, XXXX, by $X.XXX $X.XXX are XXXX and of placed as of representing continued our on million premiums levels result for the the the range, offset average $XXX and be to is written carriers of the XXXX range profitability be end $XXX by XX% to driven the end range. between and recently Total low million, representing organic high of XX% contingent in revenue to of of the just

plans does contingency year not calendar the to reminder, equate restart in a a below-average each As contingency and the weaker year future bonuses years.

We margin expect in continue EBITDA to growth year. full for the and EBITDA

do significant effects contingent EBITDA contingent We and commissions. commissions more in of lower-than-expected growth planned. excluding the EBITDA margin margin result expect and However, when more than moderate could in EBITDA

let's want to look deliver up for to that, the business for challenging open I Operator? Our to everybody the their business the remainder in revenue strong thank with earnings on growth time. the forward through years We demonstrating And environment. and year continuing beyond. of the is questions. line and many

Instructions] Matt Carletti [Operator comes first question JMP. from of Our

go to opening I your of Mark, to want some back comments.

but and the a bit maybe a your how was hoping between can could that, it but is of pricing numbers, environment exposed market? about the for talked see kind is XX% more kind make it you is direct I how of to just enough too and revenues also from to I'm exposed comparison housing environment of Or not that. about kind the You you market difficult right impacts the the your of obviously strong entire qualitatively it that to book offsetting the pricing looking the housing see now, as you X. impact call?

completely point, existing know going it's there's if X the I to much don't We to it's difficult home of you. how over I'm in compression months. X -- At with or be going sales call really be this to too of think sort next honest sort

to cautious. trying we're be so, And

think the your remember estate a market referral important given in partners. turbulence win of turbulence focused the we're you market where when keep a about the market clients, that space And and is sort externally real pick I of add people closings, X% maniacal way closings, got the lots country, you of there's that only we this white your and the up. on is we've referral is and partners focus or you the and there's we lots thing have home to in on time that our on

He's does and activities. damn also, working of fast. And can increase with franchise referral lots agents to both on marketing just maybe agents, happen been their overnight, our Mark That our our road out franchisees. doesn't talk. to happen Miller partner corporate but it we're So, agents and the talked pretty

big but out you add, and regional talked and them the got questions XXX And doing I to headwinds road down I they for know with conferences of owners, just what their bring out were Macro X think on I they they and leaning concerns. ask were them of just all are our I the was Yes. to to over there, this sat And concerns I sure. we just franchise they've heavier. in additional know much it's at were do mean business. in know one point. what major think not to going

more really generating referral And on so, partners they're and extra focused leads. getting

Piper Newsome Our of from next comes Sandler. question Paul

of Maybe business one just this key more off run new on issue.

could the ultimately, like focused the not new on maybe the focus little where productivity seems the markedly not know of most idea the to that you but about of just a business this renewal shrinking if questions. it piece already, a I'm agencies talked getting folks it are very and it slow. effects, I little be the you piece bit negative will on piece, just on other the maybe even With just that kind seems And stock again. side piece and corporate

Yes. to singularly headcount agent that say I we're this Jr. is focused on corporate exactly. Paul, not is Mark driving would What

to the producer focus specifically, we've count fact, is want on franchise. we with agents. we're to In between corporate But to and productivity both add total what those said going do do

on producers So, we that go-forward add about We're the out headwind this do responded market is talked And is housing continue to have franchise basis. we going talked producers into those And the program seen we've XX a to successful. like very network, to about been to year. this what there. we Matt,

their referral their additional with policy taking really agents partners cross-selling job doing good canceled are existing share combating working Our book, from their list. that well as as a

our the being insurance a macro whether are and transaction good that's to doing agile has in or generating opportunity additional not. is, right We've marketplace. what additional of environment challenging environment. But shopping the fact got us take of behavior, housing to now middle job the the So, it's share in you're where a have of is some an inflationary is agents very and a for regardless everybody

that about production the and learned in new talked they X-thirds hires a So, agency total in of might the growing a the think being channel, be franchise. we producer franchise producer, Paul, average one we as produce and on I you as today when existing headcount this an interested about focus

next think that, XXX franchise if you the add out in field producers of that's about about we equivalent XXX year, new franchises. So, the adding

real So, we've -- there's bang and get for leverage, buck. that the applying we're to going learned biggest some where where we're

guidance a may small was lower nitpicky, sense. down curious just little noting. bit. if Makes it's range is there? This there worth in anything little I but of be anything bit the but a behind number, the a there I apologize, that there's noticed the that contingents Is

next profitability P&C the I'm having closer normalize week. now. I'm expect to of macro we're would start of seen we the in end that's the range, at to that in carriers real the that some going point, right the see top you given term, bottom just the probably this it's some or the There's profitability come be bottom that notes saw this longer Ideally, sure now taking we'll you've some out end with whether the to at have challenges. it's are of over that sure they're that of environment, that year, carriers. and Yes. uncertainty range, with environment the end where but through right rate

somebody then I'll question, where snap does to normalized ask with elevated an And back bad well? I coming about as level? ask that, kind producer understand at franchise elevated it's more can let given but think, remains you're we the wanted should anticipate doing my I debt. Or that a of corporate what from, level and else last that to

near in that to The we that Yes, of backlog as rest come you'll elevated term, work I the continue the year. this age through think see down of backlog. that has be

with So, be done. still to some progress we're work pleased that the There's making. we're

elevated term, historical to near then remain in So, see back longer you'll that over intermediate would the term that and levels. the to normalize

of Our Ryan next Autonomous from question comes Tunis Research.

indicative this quarter. expense might been extent fourth seeing I'm into to Q? right action In -- reducing that trying the all be quarter to the the headed through that the was what and we're thinking expense about I'm expenses just we've base baseline out corporate, figure taken what is of

Yes.

would in faster I base. growing about think the So, quarter. core probably it about That's revenue we've we're than talked fourth the how expense growing

think will third If be fourth in number you the corporate our average headcount quarter, the it about the agent in was quarter. than higher

plan the quarter. expense in the So growth would that's fourth how for I

McJoynt next comes from Our Tommy KBW. of question

on So, the expense topic. I continuing guess

employee sequentially. compensation So, $X expense about the increased million line

hirings you few there that be ratable? in there a and a other is Was -- called think more could one-timer? Or initiatives. anything considered run I out this was number quarter that

Yes.

of to the be. I prepared that Miller service service levels back during think to to a headcount wanted talked the quarter the those them levels bunch up we about Mark added We in our get remarks.

here the basis. makes probably think I on a that go-forward level it sense you at see

management big onboarding as that see to successfully well as service, environment franchises You continue those to agent possible. productive going from overhead that. in the a increases management many won't as add from associated our our the and we is help back teams headcount as corporate can producers as ramp to office team agency But scaling we're up

wouldn't necessarily in I anything onetime So, say that from compensation the there's the quarter.

Jr.'s just Yes. levels. I during would We comments up about ramp we Last achieved that service on needed say Mark the the is Mark we service. This quarter to talked quarter. about Miller.

so, service And we agents. with ended close XXX to

volume what through. but we we things that's to at come to up also you're need seeing with at slightly the be right grows, automation. that to So dial start it need now, we will We're take level can but as back

the probably that find but step-up of cost that's in to trying balance, what perfect some headcount we're is. So,

just actually well. going back then housing And as question to the Okay.

to weigh on compounds in since renewal kind transaction a So, XX% But it volumes. growth does into housing new fair of about sharper only of time? I to is slowdown understand that exposed business revenue housing think that over that is

I mean seen the because the we of and market time, in And mean said that like in our arithmetic. very history we what -- saw we that's haven't we housing a business. we that anything I Yes. just What XXXX, at are XXXX. rough doing,

failed can the So, looked happened that well, and are during circumstances analogous we successful time, said, what we the were we dot-com that that bubble ones what successful and were burst. from, there that that companies very be at on their We're of sort their during were learn the And companies inwardly strategy focused were that focused exact same tend we works. markets, circling strategy the outwardly failed pursued ones XXXX. ones and on XXXX, that wagons, clients, It now. to the pursuing were in that that

a of say adjustment proud That's that that we'll a certainly weren't we of, come in going in out there's way renewal market to And powerful blowing a this forward. with I'm very see, records, if but away I'm we're very to it that impact not sales still book no going through confident and renewal powering the it's very very it's going we're to -- that strong our be book. all even

piece Yes, just add, are a I such share. we still would market small of the

really really, had we plenty do downturn. our that. of X%. have market There's we on concern we if execute still less a a to significant space just and be big would XX% housing with need share, even can that than white that strategies, We confidence So

on haven't And I there that, have yet, which digital volume generate we've top that of marketing other been our that would on I just we're very are which pretty efforts, nicely. to think ways off add we -- aggressive discussed paid

to with the from one them And picking up incremental going base. and time going only customers policies, cross-selling us, existing are ways additional people volume existing that base, we're to that the back over canceled have policy so generating have to line that

Truist. Our of Hughes question Mark next from comes

could the up the talk in XX% quarter. trend wonder total you if about I franchise

mentioned to you goes ones then adding sense go I coming those think new growth. But just that that anticipate about operating how you sales, that it's will that don't or in where you're status. of those some quarters? the if up some culling that, talk could eventually maybe terminations to you I more of culling wonder actively And versus XX%

Yes.

we secure launches recent about think So, all pool of the to from trying our of most signing.

agency now We're are opposed the policies. where total operating the growth. count on the culling as sell insurance is of driving So that agencies seeing you're that to The focused going out to at on drag XXX. and count operating total franchise backlog that that's there growth go

culling during the got we've make quarter. XX% in increase strong XX% in QX we can. relatively up system to aggressive healthiest that quarter So net of the sure trends. launched agencies with That's the total some some that

really seeing in agency good the standpoint. an we're So, there operating things data from

And sorry, you XX% the mentioned? what was number

count is ] XX% franchise total the growth the [ the include growth, backlog. is operating if agency's XX% you total

the about the we trend? when about of Anything sold think quarters couple franchises last prior new versus Yes.

Yes.

they've trends. been encouraging think really I

year record direction in QX a So, over the prior That's launch. trends. got all franchises quarter, going this initial a strong right increase there. XX% QX. It's XXX We've the

attrition starts operating slow the think within that the hump franchises, to down when do of then And normalize? and kind you you get the over or Understood. that

Yes.

So, than to it we're now. historical below being during hotter average churn really be. that a needed our XXXX running XXXX, talked we about little where and We've

hotter than would for a term to average I historical still the running be the that little So, expect near XX%. of

Over to the to historical longer to intermediate that expect the down back trend would average. term, I

down you you The Jones where Jr., final a then did make would might here? did properly? And you comment slightly -- that be question. corporate I from say Mark by about headcount, Did hear that a year-end

said the remarks. quarter, down of That's at the prepared we'll the be what at in year. the of end we We're slightly is at the end Yes. expectation the from XXX that

RBC Capital Markets. Our comes next from of question Dwelle Mark

the expense -- the on just kind on Back to remain of topic.

seems a of it different year just reiterate was lot there. a You've to build the out corporate money a ago, add I number spent of I gone and franchise little over corporate to a want infrastructure channel through of kind heard people mean I and like things. what I've sure make there.

that? is Or Are of we're associated actually refinement planning are down exit a process? of Or there is locations, executed? what today hearing close charges that just to attrition? with of all some kind branches? is this how these So, it kind of you Or just allowing being

one back environment it's ago operating truth sales was is we we on with different sort of normal what it. expand. of to operating whatnot. a kind the a I And overestimated seeing that's we environment, sort of with me, were had got and on that ability calls, found overestimated, capacity absorptive that was. Once or our Sr. Jones real so our management's Probably capacity Yes. It we manage and exceeded absorptive ourselves capacity to our a Mark, the Mark of indicated COVID I year

sort take us order of the to we've So, corporate profitability. what to that's in that had And that, is money. do back agency capacity out we've a to do got to we get losing got to attractive of level

any a bit. of management kind in we consolidations But like a where we're or are closings. of anticipate We location don't don't we other bench sort -- little our rebuilding situation anticipate

We've because and of matter We a done now, committed combined very the put in consolidation a of one little of locations Austin. organization don't corporate all anticipate the sort together like not number It's we going had cleansing X -- my helpful. in those finish to our people to I continue any -- stomach. committed or proving were that to kind locations, that's other That's the got office there. We of all just that bit offices and in small be attractive bigger eyes We But Las of anything see particularly of there. of we've a actually and of producers through. Vegas. charges the a them We business had than we that big so market, to we're out. we to so my took coming sort just

helpful. That's Okay.

up then the questions. one prior of in So, to bit conjunction that maybe sum with

the that producer As the ranks not But the we employee compensation the on with that you've of support Is staff. of of guess presumably and the And other year-over-year interpreting look way traffic at of and right net sequential you've on compensation basis. or both hand, hand, the line, expense some in that? overall the growth added I to expense one quarter expense was, line associated a reduced staff the the the flesh service out is the a in that them. the some people on

that's fair. Yes,

anticipated recently. the associated in any any in that? changes there had -- of rank to you've the with Was any some senior or management be quarter expenses there Were

little Well, itself. of and bit not but is there's of that severance, in material a

bit, but little lot. a So, a not

any you weren't quarter? as the and lastly, the the associated appropriate with just on G&A answered There And already side. up down staff either this or maybe then is staff the already in Okay. expenses unique G&A-related

No.

continue our headcount to service Antonio fantastic we is the a basis, most will, Right us. We San makes think the on areas for in a sense. it location now, add Center go-forward where Service

space fantastic fantastic taking a grow additional demographic for there. It's we're service agents. our So, there job. do a They to

to from real we'll the perspective, real nothing in estate a there So, continue term. see expected sales, corporate estate from else service footprint expansion a expansion near

negative it, something losses with know the But relative respect then this the to total say, next -- And were large -- the that they refinement effect year's contingents? anticipate for quarter, contingent previously. the on commissions, necessarily about rather you to for to thinking were on a greater Ian calculation lastly, year Okay. year. having to carry cumulative any the were we I there you don't the how have in

get hurt related for for specifically if Ian. already caps personal those you to Most have the help ratio also losses, so really percentage, year doesn't you're it. not if Probably of already these but the throughout loss the there, it lines carriers you're include plans doesn't but over earning been not you catastrophic contingency the that tough the losses also hurricane

contingencies. year of impact the or we of have can kind XXXX, So, see back it get into should carryover and to hopefully we average like so, not level take doesn't you pricing it's next any over the mentioned, and historical -- hold

Our from of comes next question Pablo JPMorgan. Singzon

over return do quarters. of past I has Or pricing further of gap and and I between And the exposure? the year-on-year perspective? the [indiscernible] there you question had several guess, fair widens been and gap So, perhaps from benefit we exposure are a the past think premiums of that first representation peak in XXXX? was pricing sort that of growth increasing Is gap and sort

question, Yes. Good Pablo.

total holding premium You see steady XX%. at that that risk can

gap I that enforced of policy think the we're fair market. pricing seeing that the growth is and inflation premium between growth indication a total written in

rate we credit need when for chain increase And that their to important on and it's take the right the to value think take carriers spot being distribution I in when and them, profitability, in we the good insurance to typically market take don't for high soft profitability have a contingencies. raise rate, they that our book. entire it's get need where we

would gap back probably to that shrink. to growth to see expect and continue normalize [PIF] off written but as into do that we growth pricing total starts premium So, and again, level XXXX, start you between

Got it. contingent. a just That makes And follow-up sense. on

underwriters, the all margins where taken assume over like to improve pass, be my a actions be should by be If in what longer your assessment least pricing otherwise given comes it XXXX would be seems lower fair So the is to that probably term. that XXXX they but would XXXX, personal at being right, want might year? scenario in be than to it normal contingent that not

contingency that's as expect fair Yes, a assessment. to great in a would probably think I year averages XXXX. not super compared I historical

big willing be do before to to bonuses carriers in think pay I to their still where work on a probably the profitability brokers. get more spot have going pricing some they they're to

wouldn't I blowout contingencies So, XXXX. a expect year in in

And reasons for upfront right franchising. last the basis. time me, I Mark of think Okay. a expenses then mentioned from as away It's it's the question. corporative the Jones sort And and broader about from one had a you ramp-up for corporate pivot on moving Sr., relative

the that, moving And point, what segment given part and is the you've on is is, ago, maybe reason you assume So, from that EBITDA, done spending context is to just it that the a all significantly several good. at about right? had think a corporate you're the But margins, of date [indiscernible] away XX% about corporate which discussion in was XX% fair to the years And basis? worse I relative today? why question disclosed pretty

Yes.

being And just like of reason the Okay. overcapacity... sort

come by of of the not if you taking are return. Pablo, $X actions But revenue carry business franchise stand and we're it, to returns But the that an people we're business, our lot to carry get allocate resources, we best and think it want back allocating infrastructure improving to infrastructure have for us hour corporate in then that to we're us. sort revenue. doing us our a to basically, finite business to the and generate in in about that going if channel, right? we And in to maintain in we revenue of cost our we're of So, for cost the of again, we service. There's there's work pay allocate generate money, now. where going time the franchise

and -- a you it's So, consume kind faster the a doesn't not And capital we it hell in of deal. move can it's than our corporate same can agency. of

into the the that -- office always that channel, wasn't And producers. all stuff expenses know costs we're the Now franchise roughly move we're a we're cost economics that -- producers. my someone we case. We It production. was they out took, last the as of out remarks, in super that the But we us agencies that going we new subscale, agencies. bit, that example, now, franchise. business couple an very franchise of expenses entire if know as put take of the were XX in They're it are like When productive and franchises that we when that and corporate productive carrying for months, X.Xx of we to X the add doesn't I not us little top over channel different. but said people payroll for know help X.X, X for those we a

hour for looking our can doing that $X return pull longest money. we're get we're to what of levers our an we are at and time best of the what So, is the

question Josh of comes next Shanker Our from America. of Bank

of curious, become are them more. left and who finding start-up, guess, be Or are just corporate the, the those with of franchisees? the X platform, initial the and are you'll are agents best to going brightest, who those of I longer many I'm no

Mark Yes, Jr. Josh, this is

get of don't corporate a fail you job a to franchise. out So, buy and

through to go got approval process. You our

need a the resources, can't where plenty you've successful you agents If that we access most not corporate to the very be coming corporate to that But in you're you've of specific to do position targets like We and proven buy really franchise. the that they And successful sell going them we a good year. would buy pipeline a franchise. control have of timing franchise. of what give then got the see to a in to on that

can it's you a on pretty campus refining own decade. paid come be worth net your have X-year our partnership. a get we on go you a business terms sort a owner value to basically spectacular can program And X-figure our work or proposition. when value income an and dynamite And entrepreneurial next of over and you It's say just for proposition, us in path on-campus with like company, of a the

corporate agents didn't assume who we and all franchises, XXX-or-so gone And open they're for so, the should basically purposes? intents

that corporate people agent franchises. for group just those are except bought That And that have talked the people Yes. that declined franchises. we headcount; system, started of those to that about in from QX literally out X number are moving into QX we

results So, this new, the good. are but is early super

you've term? is, that of signatures, about you where Very of guess you get lot any good. the and you about culled I tell asked, signatures quarter? that was signatures. XXX I franchisees that Is color. magnitude it gets in lot If can anything us launches number more and about newly the but can a the we there Is then there added maybe new little us take but And guess, the a to subtract I you've assume in even outstanding the from signed talk a

can I strong. talk there, about not We're agencies very for but new the specifics remains you to going tell pipeline

lines at a the one don't write of in in, big working the job. want look and that personal of the for effectively you're out you market, live to you're captives If they if insurance you area

So, our value in proposition insurance for plays market really, this really professionals. well

think of So, strong through will we we that continue both have are signing a and very XXXX. now pipeline sign that to franchises new

session. over remarks. back for Jones turn any to I concludes closing to would This conference question-and-answer Mark the the like

time. you. everybody's Thank appreciate We

conference This concludes call. today's

your disconnect participating, may pleasant lines. day. Thank for have a You you and