Hagerty Reports Third Quarter 2024 Results; Updates 2024 Outlook for Revenue and Profit Growth

PR Newswire

TRAVERSE CITY, Mich., Nov. 7, 2024

   -- Third quarter 2024 Total Revenue increased 17% year-over-year to $323.4 
      million, and year-to-date 2024 Total Revenue increased 20% year-over-year 
      to $908.3 million 
 
   -- Third quarter 2024 Written Premium increased 13% year-over-year to $287.6 
      million, and year-to-date 2024 Written Premium increased 16% 
      year-over-year to $827.1 million 
 
   -- Third quarter 2024 Marketplace revenue increased 66% year-over-year to 
      $21.6 million, and year-to-date 2024 Marketplace revenue increased 54% 
      year-over-year to $38.3 million 
 
   -- Third quarter 2024 Loss Ratio of 60.0% (includes $24.7 million of pre-tax 
      catastrophe losses related to Hurricane Helene) compared to 41.1% in the 
      prior year period. Year-to-date 2024 Loss Ratio of 47.7% compared to 
      41.5% in the prior year period 
 
   -- Third quarter 2024 Net Income of $19.0 million, an increase of $0.4 
      million compared to the prior year period, and year-to-date 2024 Net 
      Income of $69.9 million, an increase of $50.7 million compared to the 
      prior year period 
 
   -- Third quarter 2024 Adjusted EBITDA of $24.2 million, a decrease of $13.2 
      million compared to the prior year period, and year-to-date 2024 Adjusted 
      EBITDA of $104.6 million, an increase of $26.2 million compared to the 
      prior year period 
 
   -- Increased 2024 growth outlook for Total Revenue to 18-19% and Written 
      Premium to 15%. Hagerty's outlook for Net Income and Adjusted EBITDA has 
      been updated to account for the $24.7 million of catastrophe losses from 
      Hurricane Helene and an estimated $5.0 million of losses from Milton 

TRAVERSE CITY, Mich., Nov. 7, 2024 /PRNewswire/ -- Hagerty, Inc. $(HGTY)$, an automotive enthusiast brand and leading specialty vehicle insurance provider, announced today financial results for the three and nine months ended September 30, 2024.

"Hagerty delivered yet another excellent quarter of strong revenue growth and operational efficiencies as we execute on our multi-year initiatives to drive sustained underlying profit growth. Year-to-date total revenue jumped 20% due to new business count gains and our growing Marketplace business. Our disciplined approach to expense management and optimization continued to drive margins higher. During the first nine months of 2024, we produced Net Income of $70 million and Adjusted EBITDA of $105 million," said McKeel Hagerty, Chief Executive Officer and Chairman of Hagerty.

"Given the strength of our results over the first nine months, we have increased our total revenue expectations for the year to 18-19% with written premiums on track to grow 15%. Our bottom line expectations were tracking consistently with our prior guidance before incorporating the losses from hurricanes Helene and Milton. After including catastrophe losses, we now expect net income growth of 131% to 163% and Adjusted EBITDA growth of 25% to 36%," continued Mr. Hagerty.

"Hurricane Helene was a devastating event for the United States, but we have a disciplined underwriting model and our teams were prepared for the storm. I want to thank One Team Hagerty as they have been working tirelessly over the last five weeks to help our members get back out on the roads in their special cars. Hagerty's customer-centric model and automotive expertise position us well for future growth through enhancing our net promoter scores and driving industry-leading member retention," added Mr. Hagerty.

THIRD QUARTER 2024 FINANCIAL HIGHLIGHTS

   -- Third quarter 2024 Total Revenue increased 17% year-over-year to $323.4 
      million, and year-to-date 2024 Total Revenue increased 20% year-over-year 
      to $908.3 million 
 
   -- Third quarter 2024 Written Premium increased 13% year-over-year to $287.6 
      million, and year-to-date 2024 Written Premium increased 16% 
      year-over-year to $827.1 million 
 
   -- Third quarter 2024 Commission and fee revenue increased 13% 
      year-over-year to $116.2 million, and year-to-date 2024 Commission and 
      fee revenue increased 16% year-over-year to $333.8 million 
 
          -- Policies in Force Retention was 89% as of September 30, 2024 
             compared to 88% in the prior year period and total insured 
             vehicles increased 8% year-over-year to 2.6 million 
 
   -- Third quarter 2024 Loss Ratio was 60.0% compared to 41.1% in the prior 
      year period, and year-to-date 2024 Loss Ratio was 47.7% compared to 41.5% 
      in the prior year period 
 
   -- Third quarter 2024 Earned Premium increased 19% year-over-year to $165.7 
      million, and year-to-date 2024 Earned Premium increased 24% 
      year-over-year to $474.9 million 
 
   -- Third quarter 2024 Membership, marketplace and other revenue increased 
      27% year-over-year to $41.5 million, and year-to-date 2024 Membership, 
      marketplace and other revenue increased 20% year-over-year to $99.6 
      million 
 
          -- Third quarter 2024 Marketplace revenue increased 66% 
             year-over-year to $21.6 million, and year-to-date 2024 Marketplace 
             revenue increased 54% year-over-year to $38.3 million 
 
          -- Third quarter 2024 Membership revenue increased 7% year-over-year 
             to $14.8 million, and 2024 Membership revenue increased 7% 
             year-over-year to $42.4 million 
 
                 -- Hagerty Drivers Club (HDC) paid members increased 8% 
                    year-over-year to approximately 868,000 compared to 807,000 
 
   -- Third quarter 2024 Operating Income of $10.1 million, a decrease of $6.0 
      million compared to the prior year period, and year-to-date 2024 
      Operating Income of $60.4 million, an increase of $43.5 million compared 
      to the prior year period 
 
          -- Third quarter 2024 Operating Income margin decreased by 270 bps 
             compared to the prior year period, and year-to-date 2024 Operating 
             Income margin expanded by 440 bps compared to the prior year 
             period. Hurricane Helene negatively impacted year-to-date 
             operating margins by 280 bps 
 
          -- Cost containment and resource prioritization initiatives decreased 
             general and administrative expenses by 6.0% in the third quarter 
             2024 and 4.3% year-to-date. Cost discipline, combined with reduced 
             accrued incentive compensation, resulted in a decline in salary 
             and benefits of 8.0% in the third quarter 2024 and an increase of 
             0.5% year-to-date 
 
          -- Third quarter 2024 depreciation and amortization was $9.2 million 
             compared to $10.8 million in the prior year period, and 
             year-to-date 2024 depreciation and amortization was $29.8 million 
             compared to $34.9 million in the prior year period 
 
   -- Third quarter 2024 Net Income of $19.0 million, an increase of $0.4 
      million compared to the prior year period, and year-to-date 2024 Net 
      Income of $69.9 million, an increase of $50.7 million compared to the 
      prior year period. Third quarter and year-to-date 2024 results both 
      include an estimated $19.5 million post-tax impact from Hurricane Helene 
 
          -- Third quarter 2024 Net Income includes a $2.1 million increase in 
             interest and other income, and year-to-date 2024 Net Income 
             includes a $12.3 million increase in interest and other income, 
             primarily due to the diversification of Hagerty Re's investment 
             portfolio which resulted in investing in higher yielding fixed 
             maturity securities. In addition, third quarter 2024 Net Income 
             includes a $0.5 million loss and year-to-date 2024 Net Income 
             includes a $8.5 million loss due to the change in fair value and 
             settlement of warrant liabilities 
 
          -- Completed warrant exchange offer and mandatory exchange in July 
             2024, whereby Hagerty issued 3.9 million shares of Class A Common 
             Stock in exchange for 19.5 million warrants 
 
   -- Third quarter 2024 Adjusted EBITDA (a non-GAAP measure) of $24.2 million, 
      a decrease of $13.2 million compared to the prior year period, and 
      year-to-date 2024 Adjusted EBITDA of $104.6 million, an increase of $26.2 
      million compared to the prior year period 
 
   -- Third quarter 2024 Basic and Diluted Earnings per Share was $0.03, and 
      year-to-date 2024 Basic and Diluted Earnings per Share was $0.09 
 
          -- Third quarter 2024 Adjusted EPS (a non-GAAP measure) was $0.05, 
             and year-to-date 2024 Adjusted EPS was $0.22 

The definitions and reconciliations of non-GAAP financial measures are provided under the heading Key Performance Indicators and Certain Non-GAAP Financial Measures at the end of this press release.

UPDATED 2024 OUTLOOK FOR GROWTH AND PROFITABILITY

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November 07, 2024 07:00 ET (12:00 GMT)