• Total Revenue Growth: 20.5% increase to $605 million.
• Organic Revenue Growth: 11.8% for the quarter.
• Adjusted EBITDA Growth: 29.4% increase to $190 million.
• Adjusted EBITDA Margin: Expanded by 220 basis points to 31.5%.
• Adjusted Diluted EPS: Grew 28% to $0.41 per share.
• Effective Tax Rate: 26.1% for the quarter.
• Dividend: Regular quarterly dividend of $0.11 declared.
• Credit Facility and Term Loan: Refinanced with an upsized revolver and $1.7 billion term loan.
• Senior Secured Notes: Issued $600 million at a fixed rate of 5.875%.
• Guidance for Organic Revenue Growth: Full year 2024 guidance maintained at 13.0% to 14.8%.
• Guidance for Adjusted EBITDA Margin: Full year 2024 guidance maintained at 32.0% to 32.5%.

• Warning! GuruFocus has detected 3 Warning Signs with RELY.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ryan Specialty Holdings Inc (NYSE:RYAN) reported a strong third quarter with total revenue growth of 20.5%, including 11.8% organic growth.
• The company achieved a 29.4% increase in adjusted EBITDA to $190 million, with an expanded adjusted EBITDA margin of 31.5%.
• Ryan Specialty Holdings Inc (NYSE:RYAN) executed several acquisitions, aligning with its long-term M&A strategy, which is expected to contribute to future growth.
• The company successfully implemented a leadership succession plan, ensuring continuity in executing its strategic vision.
• Ryan Specialty Holdings Inc (NYSE:RYAN) maintained a strong balance sheet, with ample capacity for future M&A opportunities, supported by a recent refinancing of its credit facility.

Negative Points

• The company faced short-term headwinds due to property rate deterioration, which accelerated in September.
• There is heightened uncertainty in the loss environment, particularly in casualty classes, driven by social inflation and litigation finance.
• The property market experienced a decline in pricing, which could impact future revenue if the trend continues.
• Ryan Specialty Holdings Inc (NYSE:RYAN) is exposed to risks from severe weather events, such as hurricanes, which could affect contingent commissions.
• The company is navigating a competitive landscape, particularly in the E&S market, which requires continuous adaptation and strategic positioning.

Q & A Highlights

Q: Can you provide insights on the organic growth rate for Q4, considering the impact of the property market and recent storms? A: Janice M Hamilton, CFO, explained that despite challenging property rates in Q3, Ryan Specialty managed healthy growth due to new risks entering the channel and market share gains. The company is optimistic about Q4, noting better results so far compared to September, with December being a crucial month due to its seasonal significance.

Q: How are contingent commissions being affected by recent storms, and what is the outlook for Q4? A: Unidentified respondent noted that profit commissions have exceeded expectations due to investments in top-tier staff and a high standard of care in underwriting. The company expects this trend to continue, with no significant impact from recent storms.

Q: What are the current trends in the casualty market, and how is Ryan Specialty positioned? A: Unidentified respondent highlighted that the casualty market is firming, especially in high-hazard areas like transportation and consumer product liability. Ryan Specialty sees double-digit growth in casualty, driven by loss cost adjustments and increased business flow into the channel.

Q: How is the decline in property pricing affecting customer purchase behavior? A: Unidentified respondent mentioned high retention rates and strong new business flow despite pricing declines. Customers are using enhanced purchasing power to buy lower deductibles or increase coverage to total insured value, indicating a strategic redeployment of savings.

Q: Can you discuss the impact of panel consolidation on growth and how it contributes to Ryan Specialty's performance? A: Unidentified respondent explained that panel consolidation is part of winning new business and taking market share. The company benefits from strategic relationships with wholesalers, helping clients optimize portfolios and win more business, contributing to growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.