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Delaware
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001-39095
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61-1937225
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(State or other jurisdiction of
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(Commission
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(I.R.S. Employer
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incorporation or organization)
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File No.)
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Identification No.)
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4010 W. Boy Scout Blvd Suite 200
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Tampa, Florida
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33607
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(Address of principal executive offices)
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(Zip Code)
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(Registrant's telephone number, including area code): (866) 279-0698
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Not Applicable
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(Former Name, former address and former fiscal year, if changed since last report)
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Check the appropriate box below if the form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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¨
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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¨
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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¨
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Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2(b))
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¨
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Class A Common Stock, par value $0.01 per share
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BRP
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The Nasdaq Global Select Market
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Emerging Growth Company
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x
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Exhibit No.
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Description
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99.1
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99.2
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99.3
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BRP GROUP, INC.
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Date: March 17, 2020
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By:
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/s/ Kristopher A. Wiebeck
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Name:
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Kristopher A. Wiebeck
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Title:
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Chief Financial Officer
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Page
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Report of Independent Auditors
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Financial Statements
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Balance Sheets
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Statements of Income
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Statements of Stockholders' Equity
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Statements of Cash Flows
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Notes to Financial Statements
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1. Business and Basis of Presentation
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2. Significant Accounting Policies
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3. Revenue
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4. Property and Equipment, Net
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5. Long-Term Debt
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6. Stockholders' Equity
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7. Related Party Transactions
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8. Profit-Sharing Plan
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9. Employee Stock Option Plan
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10. Commitments and Contingencies
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11. Subsequent Events
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December 31,
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||||||
|
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2019
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2018
|
||||
Assets
|
|
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|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
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$
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3,155,534
|
|
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$
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3,807,574
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Premiums and commissions receivable
|
|
2,493,817
|
|
|
4,018,790
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|
||
Prepaid expenses and other current assets
|
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168,217
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|
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95,171
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|
||
Total current assets
|
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5,817,568
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|
|
7,921,535
|
|
||
Property and equipment, net
|
|
306,771
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159,496
|
|
||
Deferred commission expense
|
|
378,207
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|
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336,688
|
|
||
Deposits and other assets
|
|
45,953
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|
54,398
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|
||
Total assets
|
|
$
|
6,548,499
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|
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$
|
8,472,117
|
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity
|
|
|
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|
||||
Current liabilities:
|
|
|
|
|
||||
Premiums payable to insurance companies
|
|
$
|
2,953,522
|
|
|
$
|
4,272,848
|
|
Producer commissions payable, net
|
|
360,780
|
|
|
331,327
|
|
||
Contract liabilities
|
|
263,063
|
|
|
237,608
|
|
||
Accrued expenses
|
|
36,926
|
|
|
43,593
|
|
||
Current maturities of long-term debt
|
|
270,465
|
|
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373,784
|
|
||
Total current liabilities
|
|
3,884,756
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|
|
5,259,160
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|
||
Long-term debt, less current maturities
|
|
1,014,425
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1,284,290
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|
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Total liabilities
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4,899,181
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6,543,450
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||
|
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|
||||
Commitments and contingencies (Note 10)
|
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||||
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|
||||
Stockholders’ equity:
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|
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|
||||
Class A common stock, $0.01 par value, 10,000,000 shares authorized, 85,540 shares issued and outstanding at December 31, 2019 and 2018
|
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855
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855
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|
||
Class B common stock, $0.01 par value, 20,000,000 shares authorized, 108,240 shares issued, 16,092 and 16,120 shares outstanding at December 31, 2019 and 2018, respectively
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1,083
|
|
|
1,083
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|
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Additional paid-in capital
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1,366,399
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1,366,399
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|
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Retained earnings
|
|
8,437,843
|
|
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8,714,541
|
|
||
Treasury stock at cost, 92,148 and 92,120 shares at December 31, 2019 and 2018, respectively
|
|
(8,156,862
|
)
|
|
(8,154,211
|
)
|
||
Total stockholders’ equity
|
|
1,649,318
|
|
|
1,928,667
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
6,548,499
|
|
|
$
|
8,472,117
|
|
|
|
For the Years Ended December 31,
|
||||||
|
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2019
|
|
2018
|
||||
Revenues:
|
|
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|
||||
Commissions and fees
|
|
$
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8,324,161
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$
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8,303,888
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|
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|
||||
Operating expenses:
|
|
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|
||||
Commissions, employee compensation and benefits
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|
5,544,381
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5,273,626
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|
||
Other operating expenses
|
|
2,170,732
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|
|
2,222,891
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|
||
Depreciation expense
|
|
31,817
|
|
|
62,027
|
|
||
Total operating expenses
|
|
7,746,930
|
|
|
7,558,544
|
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||
|
|
|
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|
||||
Operating income
|
|
577,231
|
|
|
745,344
|
|
||
|
|
|
|
|
||||
Other income (expense):
|
|
|
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|
||||
Other income, net
|
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130,503
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180,389
|
|
||
Interest expense, net
|
|
(59,432
|
)
|
|
(86,718
|
)
|
||
Total other income
|
|
71,071
|
|
|
93,671
|
|
||
|
|
|
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|
||||
Net income
|
|
$
|
648,302
|
|
|
$
|
839,015
|
|
|
Class A Common Stock
|
|
Class B Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Treasury Stock
|
|
Total
|
|||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balance at January 1, 2018
|
85,540
|
|
|
$
|
855
|
|
|
108,240
|
|
|
$
|
1,083
|
|
|
$
|
1,366,399
|
|
|
$
|
8,800,526
|
|
|
(91,616
|
)
|
|
$
|
(8,117,340
|
)
|
|
$
|
2,051,523
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
839,015
|
|
|
—
|
|
|
—
|
|
|
839,015
|
|
||||||
Distributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(925,000
|
)
|
|
—
|
|
|
—
|
|
|
(925,000
|
)
|
||||||
Acquisition of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(504
|
)
|
|
(36,871
|
)
|
|
(36,871
|
)
|
||||||
Balance at December 31, 2018
|
85,540
|
|
|
855
|
|
|
108,240
|
|
|
1,083
|
|
|
1,366,399
|
|
|
8,714,541
|
|
|
(92,120
|
)
|
|
(8,154,211
|
)
|
|
1,928,667
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
648,302
|
|
|
—
|
|
|
—
|
|
|
648,302
|
|
||||||
Distributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(925,000
|
)
|
|
—
|
|
|
—
|
|
|
(925,000
|
)
|
||||||
Acquisition of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
|
(2,651
|
)
|
|
(2,651
|
)
|
||||||
Balance at December 31, 2019
|
85,540
|
|
|
$
|
855
|
|
|
108,240
|
|
|
$
|
1,083
|
|
|
$
|
1,366,399
|
|
|
$
|
8,437,843
|
|
|
(92,148
|
)
|
|
$
|
(8,156,862
|
)
|
|
$
|
1,649,318
|
|
|
|
For the Years Ended December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
648,302
|
|
|
$
|
839,015
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation expense
|
|
31,817
|
|
|
62,027
|
|
||
Gain on sale of assets
|
|
—
|
|
|
(77,600
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Premiums and commissions receivable
|
|
1,175,156
|
|
|
(79,258
|
)
|
||
Prepaid expenses and other current assets
|
|
(73,046
|
)
|
|
(36,825
|
)
|
||
Deferred commission expense
|
|
(41,519
|
)
|
|
(11,139
|
)
|
||
Deposits and other assets
|
|
(24,104
|
)
|
|
26,297
|
|
||
Premiums payable to insurance companies
|
|
(1,319,326
|
)
|
|
1,126,612
|
|
||
Producer commissions payable, net
|
|
29,453
|
|
|
(34,198
|
)
|
||
Contract liabilities
|
|
25,455
|
|
|
(122,420
|
)
|
||
Accrued expenses
|
|
(6,667
|
)
|
|
14,020
|
|
||
Reserve for policy cancellations
|
|
349,817
|
|
|
153,856
|
|
||
Net cash provided by operating activities
|
|
795,338
|
|
|
1,860,387
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
||||
Purchases of property and equipment
|
|
(179,092
|
)
|
|
(18,966
|
)
|
||
Proceeds from sale of assets
|
|
—
|
|
|
56,866
|
|
||
Payments received on notes receivable
|
|
32,549
|
|
|
23,574
|
|
||
Net cash provided by (used in) investing activities
|
|
(146,543
|
)
|
|
61,474
|
|
||
|
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
||||
Payments on long-term debt
|
|
(373,184
|
)
|
|
(360,490
|
)
|
||
Distributions
|
|
(925,000
|
)
|
|
(925,000
|
)
|
||
Purchase of treasury stock
|
|
(2,651
|
)
|
|
(36,871
|
)
|
||
Net cash used in financing activities
|
|
(1,300,835
|
)
|
|
(1,322,361
|
)
|
||
|
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents
|
|
(652,040
|
)
|
|
599,500
|
|
||
Cash and cash equivalents at beginning of year
|
|
3,807,574
|
|
|
3,208,074
|
|
||
Cash and cash equivalents at end of year
|
|
$
|
3,155,534
|
|
|
$
|
3,807,574
|
|
|
|
|
|
|
||||
Supplemental schedule of cash flow information:
|
|
|
|
|
||||
Cash paid during the year for interest
|
|
$
|
82,864
|
|
|
$
|
102,637
|
|
|
|
Years
|
Leasehold improvements
|
|
7 - 9
|
Computer equipment
|
|
3 - 5
|
Office furniture and fixtures
|
|
7
|
Office equipment
|
|
7
|
|
|
For the Years Ended December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Direct bill revenue (1)
|
|
$
|
5,073,633
|
|
|
$
|
4,821,840
|
|
Agency bill revenue (2)
|
|
3,018,027
|
|
|
3,048,582
|
|
||
Profit-sharing revenue (3)
|
|
173,306
|
|
|
309,604
|
|
||
Other income
|
|
59,195
|
|
|
123,862
|
|
||
Total commissions and fees
|
|
$
|
8,324,161
|
|
|
$
|
8,303,888
|
|
(1)
|
Direct bill revenue represents commission revenue earned by facilitating the arrangement between individuals/businesses and insurance carriers by providing insurance placement services to clients with insurance carriers, primarily for private risk management, commercial risk management and employee benefits.
|
(2)
|
Agency bill revenue represents commission revenue earned through the distribution of insurance products to consumers using a network of agents and brokers on behalf of various insurance carriers. The Company acts as an agent on behalf of the insured for the term of the insurance policy.
|
(3)
|
Profit-sharing revenue represents bonus-type revenue that is earned by the Company as a sales incentive provided by certain insurance carriers.
|
•
|
The Company considers the policyholders as representative of its customers.
|
•
|
The Company recognizes separately contracted commissions revenue at the effective date of insurance placement and considers any ongoing interaction with the customer to be immaterial in the context of the contract.
|
•
|
Variable consideration includes estimates of direct bill commissions, a reserve for policy cancellations and an estimate of profit-sharing income.
|
•
|
Due to the relatively short time period between the information gathering phase and binding insurance coverage, the Company has determined that costs to fulfill contracts are not significant. Therefore, costs to fulfill a contract are expensed as incurred.
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Contract assets
|
|
$
|
2,354,085
|
|
|
$
|
2,119,192
|
|
Contract liabilities
|
|
263,063
|
|
|
237,608
|
|
|
|
For the Years Ended December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Balance at beginning of year
|
|
$
|
336,688
|
|
|
$
|
325,549
|
|
Costs capitalized
|
|
183,866
|
|
|
159,346
|
|
||
Amortization
|
|
(142,347
|
)
|
|
(148,207
|
)
|
||
Balance at end of year
|
|
$
|
378,207
|
|
|
$
|
336,688
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Building improvements
|
|
$
|
610,661
|
|
|
$
|
438,696
|
|
Computer equipment
|
|
377,335
|
|
|
370,208
|
|
||
Office furniture and fixtures
|
|
332,345
|
|
|
332,345
|
|
||
Office equipment
|
|
150,972
|
|
|
150,972
|
|
||
Total property and equipment
|
|
1,471,313
|
|
|
1,292,221
|
|
||
Less: accumulated depreciation
|
|
(1,164,542
|
)
|
|
(1,132,725
|
)
|
||
Property and equipment, net
|
|
$
|
306,771
|
|
|
$
|
159,496
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
6% unsecured note payable to former stockholder, payable in monthly installments of principal and interest of $8,406 through November 2025
|
|
$
|
501,364
|
|
|
$
|
569,910
|
|
6% unsecured note payable to former stockholder, payable in monthly installments of principal and interest of $7,339 through November 2025
|
|
437,722
|
|
|
497,567
|
|
||
6% unsecured note payable to former stockholder, payable in monthly installments of principal and interest of $16,534 through June 2020
|
|
97,489
|
|
|
283,929
|
|
||
Unsecured note payable to former stockholder, payable in monthly installments of $2,622, including interest based on January's Applicable Federal Rate each year, 2.85% and 2.16% at December 31, 2019 and 2018, respectively, through May 2026
|
|
185,532
|
|
|
211,515
|
|
||
6% unsecured note payable to former stockholder, payable in monthly installments of principal and interest of $1,119 through June 2025
|
|
62,783
|
|
|
72,140
|
|
||
6% unsecured note payable to former stockholder, payable in monthly installments of principal and interest of $2,621 through September 2019
|
|
—
|
|
|
23,013
|
|
||
Total long-term debt
|
|
1,284,890
|
|
|
1,658,074
|
|
||
Less current maturities
|
|
270,465
|
|
|
373,784
|
|
||
Long-term debt, less current maturities
|
|
$
|
1,014,425
|
|
|
$
|
1,284,290
|
|
Year Ending December 31,
|
|
Amount
|
||
2020
|
|
$
|
270,465
|
|
2021
|
|
182,768
|
|
|
2022
|
|
193,139
|
|
|
2023
|
|
204,123
|
|
|
2024
|
|
215,756
|
|
|
Thereafter
|
|
218,639
|
|
|
Total
|
|
$
|
1,284,890
|
|
Year Ending December 31,
|
|
Amount (1)
|
||
2020
|
|
$
|
321,044
|
|
2021
|
|
298,750
|
|
|
2022
|
|
305,000
|
|
|
2023
|
|
305,000
|
|
|
2024
|
|
305,000
|
|
|
Thereafter
|
|
432,083
|
|
|
Total
|
|
$
|
1,966,877
|
|
(1)
|
Future minimum rental payments have not been reduced by the amount of sublease rentals due in the future under the noncancelable sublease described below.
|
|
|
For the Years Ended December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Rental expense
|
|
$
|
418,035
|
|
|
$
|
410,535
|
|
Less: sublease rental income
|
|
(130,434
|
)
|
|
(123,457
|
)
|
||
Net rental expense
|
|
$
|
287,601
|
|
|
$
|
287,078
|
|
|
|
Page
|
Report of Independent Auditors
|
|
|
Financial Statements
|
|
|
Balance Sheets
|
|
|
Statements of Income
|
|
|
Statements of Members' Equity
|
|
|
Statements of Cash Flows
|
|
|
Notes to Financial Statements
|
|
|
1. Business and Basis of Presentation
|
|
|
2. Significant Accounting Policies
|
|
|
3. Revenue
|
|
|
4. Property and Equipment, Net
|
|
|
5. Stock Appreciation Rights
|
|
|
6. Commitments and Contingencies
|
|
|
7. Subsequent Events
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
1,961,639
|
|
|
$
|
1,521,775
|
|
Premiums and commissions receivable
|
|
5,956,927
|
|
|
3,996,297
|
|
||
Prepaid expenses and other current assets
|
|
22,919
|
|
|
80,345
|
|
||
Total current assets
|
|
7,941,485
|
|
|
5,598,417
|
|
||
Property and equipment, net
|
|
49,210
|
|
|
—
|
|
||
Total assets
|
|
$
|
7,990,695
|
|
|
$
|
5,598,417
|
|
|
|
|
|
|
||||
Liabilities and Members’ Equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Premiums payable to insurance companies
|
|
$
|
6,374,008
|
|
|
$
|
4,280,958
|
|
Producer commissions payable
|
|
40,905
|
|
|
45,301
|
|
||
Accrued expenses
|
|
17,352
|
|
|
94,457
|
|
||
Other current liabilities
|
|
875,588
|
|
|
478,921
|
|
||
Total current liabilities
|
|
7,307,853
|
|
|
4,899,637
|
|
||
|
|
|
|
|
||||
Commitments and contingencies (Note 6)
|
|
|
|
|
||||
|
|
|
|
|
||||
Members’ equity:
|
|
|
|
|
||||
Members’ capital
|
|
1,000
|
|
|
1,000
|
|
||
Retained earnings
|
|
681,842
|
|
|
697,780
|
|
||
Total members’ equity
|
|
682,842
|
|
|
698,780
|
|
||
Total liabilities and members’ equity
|
|
$
|
7,990,695
|
|
|
$
|
5,598,417
|
|
|
|
For the Years Ended December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Revenues:
|
|
|
|
|
||||
Commissions and fees
|
|
$
|
13,172,952
|
|
|
$
|
10,466,616
|
|
|
|
|
|
|
||||
Operating expenses:
|
|
|
|
|
||||
Commissions, employee compensation and benefits
|
|
12,315,218
|
|
|
9,553,568
|
|
||
Other operating expenses
|
|
538,987
|
|
|
603,320
|
|
||
Total operating expenses
|
|
12,854,205
|
|
|
10,156,888
|
|
||
|
|
|
|
|
||||
Operating income
|
|
318,747
|
|
|
309,728
|
|
||
|
|
|
|
|
||||
Other income:
|
|
|
|
|
||||
Other income, net
|
|
1,808
|
|
|
390
|
|
||
Interest income, net
|
|
1,853
|
|
|
3,998
|
|
||
Total other income
|
|
3,661
|
|
|
4,388
|
|
||
|
|
|
|
|
||||
Net income
|
|
$
|
322,408
|
|
|
$
|
314,116
|
|
|
|
Members' Capital
|
|
Retained Earnings
|
|
Total
|
||||||
|
|
|
|
|||||||||
Balance at January 1, 2018
|
|
$
|
1,000
|
|
|
$
|
673,386
|
|
|
$
|
674,386
|
|
Net income
|
|
—
|
|
|
314,116
|
|
|
314,116
|
|
|||
Distributions
|
|
—
|
|
|
(289,722
|
)
|
|
(289,722
|
)
|
|||
Balance at December 31, 2018
|
|
1,000
|
|
|
697,780
|
|
|
698,780
|
|
|||
Net income
|
|
—
|
|
|
322,408
|
|
|
322,408
|
|
|||
Distributions
|
|
—
|
|
|
(338,346
|
)
|
|
(338,346
|
)
|
|||
Balance at December 31, 2019
|
|
$
|
1,000
|
|
|
$
|
681,842
|
|
|
$
|
682,842
|
|
|
|
For the Years Ended December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
322,408
|
|
|
$
|
314,116
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Premiums and commissions receivable
|
|
(1,960,630
|
)
|
|
(1,848,401
|
)
|
||
Prepaid expenses and other current assets
|
|
57,426
|
|
|
(74,057
|
)
|
||
Premiums payable to insurance companies
|
|
2,093,050
|
|
|
2,380,429
|
|
||
Producer commissions payable
|
|
(4,396
|
)
|
|
(19,146
|
)
|
||
Accrued expenses
|
|
(77,105
|
)
|
|
70,580
|
|
||
Other current liabilities
|
|
396,667
|
|
|
191,951
|
|
||
Net cash provided by operating activities
|
|
827,420
|
|
|
1,015,472
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
||||
Purchases of property and equipment
|
|
(49,210
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
|
(49,210
|
)
|
|
—
|
|
||
|
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
||||
Distributions
|
|
(338,346
|
)
|
|
(289,722
|
)
|
||
Net cash used in financing activities
|
|
(338,346
|
)
|
|
(289,722
|
)
|
||
|
|
|
|
|
||||
Net increase in cash and cash equivalents
|
|
439,864
|
|
|
725,750
|
|
||
Cash and cash equivalents at beginning of year
|
|
1,521,775
|
|
|
796,025
|
|
||
Cash and cash equivalents at end of year
|
|
$
|
1,961,639
|
|
|
$
|
1,521,775
|
|
|
|
Years
|
Office furniture and fixtures
|
|
7
|
Office equipment
|
|
7
|
Automobile
|
|
5
|
|
|
For the Years Ended December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Agency bill revenue (1)
|
|
$
|
13,166,982
|
|
|
$
|
10,449,716
|
|
Direct bill revenue (2)
|
|
5,970
|
|
|
16,900
|
|
||
Total commissions and fees
|
|
$
|
13,172,952
|
|
|
$
|
10,466,616
|
|
(1)
|
Agency bill revenue represents commission revenue earned through the distribution of insurance products to consumers using a network of agents and brokers on behalf of various insurance carriers. The Company acts as an agent on behalf of the insured for the term of the insurance policy.
|
(2)
|
Direct bill revenue represents commission revenue earned by facilitating the arrangement between individuals/businesses and insurance carriers by providing insurance placement services to clients with insurance carriers, primarily for private risk management, commercial risk management and employee benefits.
|
•
|
The Company considers the policyholders as representative of its customers.
|
•
|
The Company recognizes separately contracted commissions revenue at the effective date of insurance placement and considers any ongoing interaction with the customer to be immaterial in the context of the contract.
|
•
|
Variable consideration includes estimates of direct bill commissions and a reserve for policy cancellations.
|
•
|
Due to the relatively short time period between the information gathering phase and binding insurance coverage, the Company has determined that costs to fulfill contracts are not significant. Therefore, costs to fulfill a contract are expensed as incurred.
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Office furniture and fixtures
|
|
$
|
64,741
|
|
|
$
|
64,741
|
|
Office equipment
|
|
54,147
|
|
|
54,147
|
|
||
Automobile
|
|
49,210
|
|
|
—
|
|
||
Total property and equipment
|
|
168,098
|
|
|
118,888
|
|
||
Less: accumulated depreciation
|
|
(118,888
|
)
|
|
(118,888
|
)
|
||
Property and equipment, net
|
|
$
|
49,210
|
|
|
$
|
—
|
|
|
|
Stock
Appreciation
Rights
|
|
Outstanding at December 31, 2017
|
|
—
|
|
Granted
|
|
60
|
|
Outstanding at December 31, 2018
|
|
60
|
|
Granted
|
|
30
|
|
Outstanding at December 31, 2019
|
|
90
|
|
•
|
audited historical consolidated financial statements of BRP Group for the year ended December 31, 2018, and the related notes included in the Company's Prospectus;
|
•
|
unaudited historical interim condensed consolidated financial statements of BRP Group as of, and for the nine months ended, September 30, 2019 and the related notes included in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2019;
|
•
|
audited historical financial statements of Lanier for the years ended December 31, 2019 and 2018, and the related notes included as exhibit 99.1 to this Current Report on Form 8-K; and
|
•
|
audited historical financial statements of Highland for the years ended December 31, 2019 and 2018, and the related notes included as exhibit 99.2 to this Current Report on Form 8-K.
|
•
|
adjustments for a series of transactions entered into by BRP Group and BRP LLC to implement an internal reorganization (the “Reorganization Transactions”) and the entry into the Tax Receivable Agreement;
|
•
|
the issuance of 18,859,300 shares of our Class A common stock, including 2,459,300 shares pursuant to the underwriters’ over-allotment option that subsequently settled on November 26, 2019, to the purchasers in the Offering in exchange for net proceeds of approximately $246.2 million, after deducting underwriting discounts and commissions but before deducting offering expenses;
|
•
|
the application by BRP Group of the net proceeds from the Offering to acquire 14,000,000 newly-issued LLC Units from BRP LLC, 1,800,000 LLC Units from Lowry Baldwin, our Chairman, and 600,000 LLC Units from The Villages Invesco, LLC (“Villages Invesco”) at a purchase price per LLC Unit equal to the initial public offering price of Class A common stock after underwriting discounts and commissions, and the cancellation of the corresponding number of shares of Class B common stock;
|
•
|
the recognition of a noncontrolling interest in BRP LLC held by the owners of BRP LLC Units prior to the Offering (the “Pre-IPO LLC Members”);
|
•
|
the application by BRP LLC of a portion of the proceeds of the sale of LLC Units to BRP Group to pay fees and expenses of $4.8 million in connection with the Offering;
|
•
|
the application by BRP LLC of a portion of the proceeds of the sale of LLC Units to BRP Group to repay in full $88.4 million of related party debt; and
|
•
|
the grant of restricted shares of Class A common stock under our Omnibus Incentive Plan (“Incentive Plan”) in connection with the Offering.
|
|
Historical
|
Pro Forma Partnership Related Adjustments
|
|
Pro Forma Offering Adjustments
|
|
Pro Forma BRP Group, Inc.
|
||||||||||||||
(in thousands)
|
Baldwin Risk Partners, LLC
|
Lanier
|
Highland
|
|
|
|||||||||||||||
|
A
|
A
|
A
|
|
|
|
|
(1)
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$
|
11,106
|
|
$
|
4,619
|
|
$
|
2,140
|
|
$
|
(30,975
|
)
|
B
|
$
|
124,762
|
|
H
|
$
|
111,652
|
|
Restricted cash
|
6,404
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
6,404
|
|
||||||
Premiums, commissions and fees receivable, net
|
45,235
|
|
3,497
|
|
12,258
|
|
—
|
|
|
—
|
|
|
60,990
|
|
||||||
Prepaid expenses and other current assets
|
5,664
|
|
55
|
|
51
|
|
—
|
|
|
(3,151
|
)
|
I
|
2,619
|
|
||||||
Due from related parties
|
44
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
44
|
|
||||||
Total current assets
|
68,453
|
|
8,171
|
|
14,449
|
|
(30,975
|
)
|
|
121,611
|
|
|
181,709
|
|
||||||
Property and equipment, net
|
2,794
|
|
142
|
|
—
|
|
—
|
|
|
—
|
|
|
2,936
|
|
||||||
Deposits and other assets
|
11,744
|
|
380
|
|
—
|
|
—
|
|
|
(6,324
|
)
|
N
|
5,800
|
|
||||||
Deferred tax assets
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
M
|
—
|
|
||||||
Intangible assets, net
|
92,393
|
|
—
|
|
—
|
|
13,681
|
|
C
|
—
|
|
|
106,074
|
|
||||||
Goodwill
|
170,816
|
|
—
|
|
—
|
|
24,883
|
|
C
|
—
|
|
|
195,699
|
|
||||||
Total assets
|
$
|
346,200
|
|
$
|
8,693
|
|
$
|
14,449
|
|
$
|
7,589
|
|
|
$
|
115,287
|
|
|
$
|
492,218
|
|
Liabilities, Mezzanine Equity and Stockholders’/Members’ Equity (Deficit)
|
|
|
|
|
|
|
|
|
||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
||||||||||||
Premiums payable to insurance companies
|
$
|
42,889
|
|
$
|
3,524
|
|
$
|
11,955
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
58,368
|
|
Producer commissions payable
|
7,127
|
|
461
|
|
45
|
|
—
|
|
|
—
|
|
|
7,633
|
|
||||||
Accrued expenses and other current liabilities
|
13,216
|
|
179
|
|
1,250
|
|
—
|
|
|
—
|
|
M
|
14,645
|
|
||||||
Current portion of long-term debt
|
2,647
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
2,647
|
|
||||||
Current portion of contingent earnout liabilities
|
—
|
|
316
|
|
—
|
|
—
|
|
|
—
|
|
|
316
|
|
||||||
Total current liabilities
|
65,879
|
|
4,480
|
|
13,250
|
|
—
|
|
|
—
|
|
|
83,609
|
|
||||||
Tax Receivable Agreement liability
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
M
|
—
|
|
||||||
Revolving lines of credit
|
105,000
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
105,000
|
|
||||||
Related party debt
|
88,425
|
|
—
|
|
—
|
|
—
|
|
|
(88,425
|
)
|
N
|
—
|
|
||||||
Long-term debt, less current portion
|
—
|
|
1,059
|
|
—
|
|
—
|
|
|
—
|
|
|
1,059
|
|
||||||
Contingent earnout liabilities, less current portion
|
32,497
|
|
—
|
|
—
|
|
2,387
|
|
D
|
—
|
|
|
34,884
|
|
||||||
Other liabilities
|
3,447
|
|
—
|
|
—
|
|
—
|
|
|
(1,729
|
)
|
G
|
1,718
|
|
||||||
Total liabilities
|
295,248
|
|
5,539
|
|
13,250
|
|
2,387
|
|
|
(90,154
|
)
|
|
226,270
|
|
||||||
Mezzanine equity:
|
|
|
|
|
|
|
|
|
||||||||||||
Redeemable noncontrolling interest
|
82,608
|
|
—
|
|
—
|
|
—
|
|
|
(82,608
|
)
|
G
|
—
|
|
||||||
Redeemable members’ capital
|
172,238
|
|
—
|
|
—
|
|
—
|
|
|
(172,238
|
)
|
L
|
—
|
|
||||||
Stockholders’/members’ equity (deficit):
|
|
|
|
|
|
|
|
|
||||||||||||
Members’ deficit
|
—
|
|
—
|
|
1
|
|
(1
|
)
|
E
|
—
|
|
|
—
|
|
||||||
Class A common stock
|
—
|
|
1
|
|
—
|
|
3
|
|
E
|
190
|
|
K
|
194
|
|
||||||
Class B common stock
|
—
|
|
1
|
|
—
|
|
(1
|
)
|
E
|
4
|
|
K
|
4
|
|
||||||
Notes receivable from stockholders/members
|
(240
|
)
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
(240
|
)
|
||||||
Additional paid-in capital
|
—
|
|
1,366
|
|
—
|
|
4,748
|
|
E
|
79,899
|
|
O
|
86,013
|
|
||||||
Retained earnings
|
(206,042
|
)
|
9,940
|
|
1,198
|
|
(11,138
|
)
|
F
|
204,120
|
|
P
|
(1,922
|
)
|
||||||
Treasury stock
|
—
|
|
(8,154
|
)
|
—
|
|
8,154
|
|
E
|
—
|
|
|
—
|
|
||||||
Noncontrolling interest
|
2,388
|
|
—
|
|
—
|
|
3,437
|
|
E
|
176,074
|
|
J
|
181,899
|
|
||||||
Total stockholders’/members’ equity (deficit)
|
(203,894
|
)
|
3,154
|
|
1,199
|
|
5,202
|
|
|
460,287
|
|
|
265,948
|
|
||||||
Total liabilities, mezzanine equity and stockholders’/members’ equity (deficit)
|
$
|
346,200
|
|
$
|
8,693
|
|
$
|
14,449
|
|
$
|
7,589
|
|
|
$
|
115,287
|
|
|
$
|
492,218
|
|
(1)
|
In accordance with Article 11 of Regulation S-X, these pro forma financial statements give effect to (i) the Lanier and Highland Partnerships and (iii) the Offering Adjustments as if each had occurred on September 30, 2019.
|
|
Historical
|
|
Transaction Adjustments
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
(in thousands, except per share data)
|
Baldwin Risk Partners, LLC
|
Lykes Ptnrshp (two months unowned)
|
MSI Ptnrshp (three months unowned)
|
Lanier Ptnrshp
|
Highland Ptnrshp
|
|
Lykes Ptnrshp
|
|
MSI Ptnrshp
|
|
Lanier Ptnrshp
|
|
Highland Ptnrshp
|
|
Offering
Adjstmts |
|
Pro Forma BRP Group, Inc.
|
|
||||||||||||||||||||||
|
Q
|
Q
|
Q
|
Q
|
Q
|
|
Q
|
|
Q
|
|
Q
|
|
Q
|
|
|
|
(1)
|
|
||||||||||||||||||||||
Commissions and fees
|
$
|
101,281
|
|
$
|
2,825
|
|
$
|
7,828
|
|
$
|
6,756
|
|
$
|
9,478
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
128,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Commissions, employee compensation and benefits
|
67,067
|
|
1,054
|
|
5,207
|
|
4,047
|
|
8,269
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
484
|
|
R
|
86,128
|
|
|
|||||||||||
Operating expenses
|
16,711
|
|
262
|
|
470
|
|
1,512
|
|
399
|
|
|
(84
|
)
|
V
|
(240
|
)
|
V
|
—
|
|
|
—
|
|
|
—
|
|
|
19,030
|
|
|
|||||||||||
Depreciation expense
|
460
|
|
—
|
|
9
|
|
25
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
494
|
|
|
|||||||||||
Amortization expense
|
6,793
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
183
|
|
W
|
1,743
|
|
W
|
284
|
|
W
|
305
|
|
W
|
—
|
|
|
9,308
|
|
|
|||||||||||
Change in fair value of contingent consideration
|
(3,222
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,222
|
)
|
|
|||||||||||
Total operating expenses
|
87,809
|
|
1,316
|
|
5,686
|
|
5,584
|
|
8,668
|
|
|
99
|
|
|
1,503
|
|
|
284
|
|
|
305
|
|
|
484
|
|
|
111,738
|
|
|
|||||||||||
Operating income
|
13,472
|
|
1,509
|
|
2,142
|
|
1,172
|
|
810
|
|
|
(99
|
)
|
|
(1,503
|
)
|
|
(284
|
)
|
|
(305
|
)
|
|
(484
|
)
|
|
16,430
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Interest income (expense), net
|
(8,998
|
)
|
—
|
|
—
|
|
(44
|
)
|
1
|
|
|
(558
|
)
|
X
|
(1,010
|
)
|
X
|
—
|
|
|
—
|
|
|
3,911
|
|
S
|
(6,698
|
)
|
|
|||||||||||
Other income, net
|
5
|
|
—
|
|
—
|
|
97
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
116
|
|
|
|||||||||||
Total other income (expense)
|
(8,993
|
)
|
—
|
|
—
|
|
53
|
|
15
|
|
|
(558
|
)
|
|
(1,010
|
)
|
|
—
|
|
|
—
|
|
|
3,911
|
|
|
(6,582
|
)
|
|
|||||||||||
Income (loss) before income taxes
|
4,479
|
|
1,509
|
|
2,142
|
|
1,225
|
|
825
|
|
|
(657
|
)
|
|
(2,513
|
)
|
|
(284
|
)
|
|
(305
|
)
|
|
3,427
|
|
|
9,848
|
|
|
|||||||||||
Income tax provision (benefit)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
T
|
—
|
|
|
|||||||||||
Net income (loss)
|
4,479
|
|
1,509
|
|
2,142
|
|
1,225
|
|
825
|
|
|
(657
|
)
|
|
(2,513
|
)
|
|
(284
|
)
|
|
(305
|
)
|
|
3,427
|
|
|
9,848
|
|
|
|||||||||||
Net income (loss) attributable to non-controlling interest
|
3,873
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
(523
|
)
|
|
(57
|
)
|
|
(125
|
)
|
|
3,686
|
|
|
6,854
|
|
U
|
|||||||||||
Net income (loss) attributable to controlling interest
|
$
|
606
|
|
$
|
1,509
|
|
$
|
2,142
|
|
$
|
1,225
|
|
$
|
825
|
|
|
$
|
(657
|
)
|
|
$
|
(1,990
|
)
|
|
$
|
(227
|
)
|
|
$
|
(180
|
)
|
|
$
|
(259
|
)
|
|
$
|
2,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Pro forma net income per share data: Y
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Pro forma weighted-average shares of Class A common stock outstanding - basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,402
|
|
|
|||||||||||||||||||||
Pro forma net income available to Class A common stockholders per share - basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.15
|
|
|
(1)
|
In accordance with Article 11 of Regulation S-X, these pro forma financial statements give effect to (i) the Lanier and Highland Partnerships, (ii) the Significant Historical Businesses Acquired and (iii) the Offering Adjustments as if each had occurred on January 1, 2018.
|
|
Historical
|
|
Transaction Adjustments
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
(in thousands, except per share data)
|
Baldwin Risk Partners, LLC
|
T&C Insurance Ptnrshp (four months unowned)
|
Lykes Ptnrshp
|
MSI Ptnrshp
|
Lanier Ptnrshp
|
Highland Ptnrshp
|
|
T&C Insurance Ptnrshp
|
|
Lykes Ptnrshp
|
|
MSI Ptnrshp
|
|
Lanier Ptnrshp
|
|
Highland Ptnrshp
|
|
Pro Forma Offering
Adjstmts |
|
Pro Forma BRP Group, Inc.
|
|
||||||||||||||||||||||||||
|
Q
|
Q
|
Q
|
Q
|
Q
|
Q
|
|
Q
|
|
Q
|
|
Q
|
|
Q
|
|
Q
|
|
|
|
(1)
|
|
||||||||||||||||||||||||||
Commissions and fees
|
$
|
79,880
|
|
$
|
2,145
|
|
$
|
11,590
|
|
$
|
28,163
|
|
$
|
8,304
|
|
$
|
10,467
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
140,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||
Commissions, employee compensation and benefits
|
51,654
|
|
1,925
|
|
7,500
|
|
20,181
|
|
5,274
|
|
9,554
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
968
|
|
R
|
97,056
|
|
|
|||||||||||||
Operating expenses
|
14,379
|
|
437
|
|
2,660
|
|
2,127
|
|
2,223
|
|
603
|
|
|
(14
|
)
|
V
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,415
|
|
|
|||||||||||||
Depreciation expense
|
508
|
|
24
|
|
88
|
|
34
|
|
62
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
716
|
|
|
|||||||||||||
Amortization expense
|
2,582
|
|
50
|
|
147
|
|
—
|
|
—
|
|
—
|
|
|
63
|
|
W
|
549
|
|
W
|
6,974
|
|
W
|
371
|
|
W
|
1,053
|
|
W
|
—
|
|
|
11,789
|
|
|
|||||||||||||
Change in fair value of contingent consideration
|
1,228
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,228
|
|
|
|||||||||||||
Total operating expenses
|
70,351
|
|
2,436
|
|
10,395
|
|
22,342
|
|
7,559
|
|
10,157
|
|
|
49
|
|
|
549
|
|
|
6,974
|
|
|
371
|
|
|
1,053
|
|
|
968
|
|
|
133,204
|
|
|
|||||||||||||
Operating income
|
9,529
|
|
(291
|
)
|
1,195
|
|
5,821
|
|
745
|
|
310
|
|
|
(49
|
)
|
|
(549
|
)
|
|
(6,974
|
)
|
|
(371
|
)
|
|
(1,053
|
)
|
|
(968
|
)
|
|
7,345
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||
Interest income (expense), net
|
(6,625
|
)
|
8
|
|
(1
|
)
|
1
|
|
(87
|
)
|
4
|
|
|
(781
|
)
|
X
|
(3,157
|
)
|
X
|
(4,134
|
)
|
X
|
—
|
|
|
—
|
|
|
6,551
|
|
S
|
(8,221
|
)
|
|
|||||||||||||
Other income (expense), net
|
(215
|
)
|
—
|
|
118
|
|
—
|
|
181
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
84
|
|
|
|||||||||||||
Total other income (expense)
|
(6,840
|
)
|
8
|
|
117
|
|
1
|
|
94
|
|
4
|
|
|
(781
|
)
|
|
(3,157
|
)
|
|
(4,134
|
)
|
|
—
|
|
|
—
|
|
|
6,551
|
|
|
(8,137
|
)
|
|
|||||||||||||
Income (loss) before income taxes
|
2,689
|
|
(283
|
)
|
1,312
|
|
5,822
|
|
839
|
|
314
|
|
|
(830
|
)
|
|
(3,706
|
)
|
|
(11,108
|
)
|
|
(371
|
)
|
|
(1,053
|
)
|
|
5,583
|
|
|
(792
|
)
|
|
|||||||||||||
Income tax provision (benefit)
|
—
|
|
12
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
T
|
—
|
|
|
|||||||||||||
Net income (loss)
|
2,689
|
|
(295
|
)
|
1,312
|
|
5,822
|
|
839
|
|
314
|
|
|
(818
|
)
|
|
(3,706
|
)
|
|
(11,108
|
)
|
|
(371
|
)
|
|
(1,053
|
)
|
|
5,583
|
|
|
(792
|
)
|
|
|||||||||||||
Net income (loss) attributable to non-controlling interest
|
3,313
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,092
|
)
|
|
(74
|
)
|
|
(432
|
)
|
|
(1,266
|
)
|
|
(551
|
)
|
U
|
|||||||||||||
Net income (loss) attributable to controlling interest
|
$
|
(624
|
)
|
$
|
(295
|
)
|
$
|
1,312
|
|
$
|
5,822
|
|
$
|
839
|
|
$
|
314
|
|
|
$
|
(818
|
)
|
|
$
|
(3,706
|
)
|
|
$
|
(9,016
|
)
|
|
$
|
(297
|
)
|
|
$
|
(621
|
)
|
|
$
|
6,849
|
|
|
$
|
(241
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||
Pro forma net loss per share data: Y
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||
Pro forma weighted-average shares of Class A common stock outstanding - basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,402
|
|
|
|||||||||||||||||||||||||
Pro forma net loss available to Class A common stockholders per share - basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.01
|
)
|
|
(1)
|
In accordance with Article 11 of Regulation S-X, these pro forma financial statements give effect to (i) the Lanier and Highland Partnerships, (ii) the Significant Historical Businesses Acquired and (iii) the Offering Adjustments as if each had occurred on January 1, 2018.
|
Consideration Transferred (in thousands)
|
|
Lanier
|
|
Highland
|
||||
Cash paid to owners
|
|
$
|
24,475
|
|
|
$
|
6,500
|
|
Class A common stock (389,727 shares)
|
|
6,119
|
|
|
—
|
|
||
Class B common stock (286,624 shares)
|
|
—
|
|
|
3,437
|
|
||
Fair value of contingent earnout consideration
|
|
1,599
|
|
|
788
|
|
||
Total consideration transferred
|
|
$
|
32,193
|
|
|
$
|
10,725
|
|
A
|
BRP Group was incorporated as a Delaware corporation on July 1, 2019 and had no material assets or results of operations until the completion of the Offering and therefore its historical financial position is not shown in a separate column in this unaudited pro forma condensed consolidated balance sheet. This column represents the consolidated historical financial statements of BRP LLC, the predecessor for accounting purposes.
|
B
|
Reflects the funding of the Lanier and Highland Partnerships, which consisted of cash of $24.5 million and $6.5 million paid to Lanier and Highland, respectively.
|
C
|
Reflects allocation of purchase price to record intangible assets and goodwill at their estimated fair value assuming the Lanier and Highland Partnerships occurred on September 30, 2019. Reflects the pro forma allocations to intangible assets, which include $6.3 million of purchased customer accounts for Lanier and $7.4 million of purchased customer account, carrier relationships and trade names for Highland. Reflects the pro forma allocations to goodwill, which include $22.7 million and $2.2 million related to the Lanier Partnership and the Highland Partnership, respectively. Management has performed a preliminary allocation of the purchase price to major assets and liabilities in the accompanying unaudited pro forma condensed consolidated financial statements based on estimates. The final allocation of purchase price may differ significantly from the pro forma amounts included herein.
|
D
|
Represents the pro forma adjustments to reflect the estimated contingent earnout consideration exchanged in the Lanier and Highland Partnerships.
|
E
|
Reflects the elimination of Lanier's historical stockholders' common stock, treasury stock and additional paid-in capital and Highland's historical members' capital, offset by the issuance of Class A common stock to Lanier and Class B common stock to Highland as a form of rollover equity consideration:
|
(in thousands)
|
|
Lanier
|
|
Highland
|
||||
Eliminate Lanier's historical common stock, treasury stock and additional paid-in capital and Highland's historical members' capital
|
|
$
|
6,786
|
|
|
$
|
(1
|
)
|
Record adjustment to Class A common stock for commons stock issuance
|
|
4
|
|
|
—
|
|
||
Record adjustment to Class B common stock for commons stock issuance
|
|
—
|
|
|
—
|
|
||
Record adjustment to additional paid-in capital for Class A common stock issuance
|
|
6,115
|
|
|
—
|
|
||
Record adjustment to noncontrolling interest for Class B common stock issuance
|
|
—
|
|
|
3,437
|
|
||
Total adjustments to common stock, treasury stock, additional paid-in capital, members' capital and noncontrolling interest
|
|
$
|
12,905
|
|
|
$
|
3,436
|
|
F
|
Reflects the elimination of Lanier and Highland's historical retained earnings at September 30, 2019.
|
G
|
Prior to the Offering, BRP LLC held an indirect controlling interest in a number of subsidiaries in which a noncontrolling interest was held by pre-acquisition owners or joint venture partners. Many of the noncontrolling interests represent redeemable equity and are classified in mezzanine equity in BRP LLC’s historical financial statements. BRP LLC consummated the Reorganization Transactions, pursuant to which BRP LLC issued LLC Units to equity holders of its subsidiaries in exchange for all of the equity interests in its subsidiaries not held by BRP LLC prior to such exchange. In addition, the BRP LLC agreement was amended and restated to, among other things, modify the BRP LLC capital structure by reclassifying the interests previously held by the Pre-IPO LLC Members into LLC Units. The LLC Units do not meet the definition of redeemable equity and were reclassified to permanent equity.
|
(in thousands, except share and per share data)
|
|
Amount
|
||
Value of advisor incentive liability
|
|
$
|
1,418
|
|
Value of participation unit ownership plan
|
|
311
|
|
|
Value of obligations settled in Class A common stock
|
|
1,729
|
|
|
Price per share
|
|
$
|
14.00
|
|
Number of shares of Class A common stock
|
|
123,537
|
|
H
|
For purposes of the unaudited pro forma financial information, the Company has reflected the issuance of 18,859,300 shares of Class A common stock, which includes the underwriters' option to purchase 2,459,300 shares of Class A common stock at the initial offering price per share of $14.00.
|
(in thousands, except share and per share data)
|
|
Amount
|
||
Initial public offering price per share
|
|
$
|
14.00
|
|
Shares of Class A common stock issued in the Offering
|
|
18,859,300
|
|
|
Gross proceeds
|
|
$
|
264,030
|
|
Less: acquisition of LLC units from Lowry Baldwin and Villages Invesco
|
|
31,332
|
|
|
Less: underwriting discounts and commissions
|
|
17,822
|
|
|
Less: offering expenses (including amounts previously deferred)
|
|
4,840
|
|
|
Plus: offering expenses previously deferred (included above)
|
|
3,151
|
|
|
Net cash proceeds
|
|
213,187
|
|
|
Less: payment of long-term debt
|
|
88,425
|
|
|
Cash proceeds after paydown of debt
|
|
$
|
124,762
|
|
I
|
The Company is deferring certain costs associated with the Offering, including certain legal, accounting and other related expenses, which have been recorded in prepaid expenses and other current assets on this unaudited pro forma condensed consolidated balance sheet. Upon completion of the Offering, these deferred costs will be charged against the proceeds from the Offering with a corresponding reduction to additional paid-in capital.
|
J
|
Upon completion of the Reorganization Transactions, BRP Group became the sole managing member of BRP LLC. Although BRP Group has a minority economic interest in BRP LLC, BRP Group has the sole voting interest in, and controls the management of, BRP LLC. As a result, BRP Group consolidates the financial results of BRP LLC and reports a noncontrolling interest related to the LLC Units held by the Pre-IPO LLC Members on its consolidated balance sheet. The computation of the noncontrolling interest following the consummation of the Offering, based on the initial public offering price of $14.00, is as follows:
|
|
|
Units
|
|
%
|
||
Interest in BRP LLC held by BRP Group
|
|
18,859,300
|
|
|
30.4
|
%
|
Noncontrolling interest in BRP LLC held by Pre-IPO LLC Members
|
|
43,188,235
|
|
|
69.6
|
%
|
Total
|
|
62,047,535
|
|
|
100
|
%
|
(in thousands, except percentages)
|
|
Amount
|
||
Beginning members' deficit
|
|
$
|
(206,042
|
)
|
Member note receivable
|
|
(240
|
)
|
|
Noncontrolling interest previously in subsidiaries of BRP LLC
|
|
2,388
|
|
|
Proceeds from the Offering, net of underwriting discounts
|
|
246,208
|
|
|
Purchase of units in BRP LLC from Lowry Baldwin and Villages Invesco
|
|
(31,332
|
)
|
|
Offering expenses
|
|
(4,840
|
)
|
|
Conversion of certain incentive plans to Class A common stock
|
|
1,729
|
|
|
Reclassification of mezzanine equity
|
|
254,846
|
|
|
Total members' equity
|
|
$
|
262,717
|
|
|
|
|
||
Continuing members' economic interest in BRP LLC
|
|
69.6
|
%
|
|
|
|
|
||
Noncontrolling interest upon completion of the Offering
|
|
$
|
182,864
|
|
Write-off of deferred financing fees relating to noncontrolling interest post-Offering
|
|
(4,402
|
)
|
|
Noncontrolling interest prior to effect of noncontrolling interest previously in subsidiaries
|
|
178,462
|
|
|
Less: noncontrolling interest previously in subsidiaries of BRP LLC
|
|
(2,388
|
)
|
|
Noncontrolling interest pro forma Offering Adjustment
|
|
$
|
176,074
|
|
K
|
In connection with the Offering, the Company issued 43,188,235 shares of Class B common stock with a par value of $0.0001 to the Pre-IPO LLC Members, on a one-to-one basis with the number of LLC Units they own, for nominal consideration. In addition, the Company issued 18,859,300 shares of Class A common stock with a par value of $.01 in connection with the Offering, inclusive of the underwriter's option to purchase 2,459,300 shares of Class A common stock and and 123,537 shares of Class A common stock to settle a portion of the obligation of BRP LLC under the advisor incentive and participation unit ownership plans, all of which were outstanding following the Offering.
|
L
|
Prior to the Offering two minority founders of BRP LLC held voting common units that required redemption upon death; however, the controlling founder had the unilateral right to effect a change in control with drag-along rights that terminate the redemption provision. The Company concluded that the controlling founder’s rights represent a conditional future event that scopes the two minority founders’ voting common units out of the guidance pertaining to mandatorily redeemable instruments. The voting common units of two minority holders also contained certain put and call rights in conjunction with termination at the greater of fair value or a floor; thus, the voting common units were presented in redeemable members’ capital in the consolidated balance sheet of BRP LLC. The Company consummated the Reorganization Transactions pursuant to which BRP LLC issued LLC Units to the two minority founding members to replace the previous voting common units. The LLC Units do not meet the definition of redeemable equity and were reclassified to permanent equity.
|
M
|
As part of the Reorganization Transactions, BRP Group entered into the Tax Receivable Agreement, pursuant to which BRP Group will pay to the Pre-IPO LLC Members 85% of the amount of cash savings, if any, in U.S. federal, state, and local income tax or franchise tax that it actually realizes (or is deemed to realize in certain circumstances) in periods after the Offering as (i) any increase in tax basis in BRP LLC’s assets resulting from (a) acquisitions by BRP Group of LLC Units from Lowry Baldwin, our Chairman, and Villages Invesco in connection with the Offering, (b) the acquisition of LLC Units using the net proceeds from any future offering, (c) redemptions or exchanges by the Pre-IPO LLC Members of LLC Units and the corresponding number of shares of Class B common stock for shares of our Class A common stock or cash or (d) payments under the Tax Receivable Agreement, and (ii) tax benefits related to imputed interest resulting from payments made under the Tax Receivable Agreement.
|
N
|
Reflects adjustments to related party debt and deferred financing costs from repayment in full of $88.4 million of related party debt and the write-off of $6.3 million of deferred financing costs relating to this debt, 69.6% of which, or $4.4 million, relates to noncontrolling interests and the remaining $1.9 million relates to controlling interest.
|
(in thousands)
|
|
Amount
|
||
Proceeds from offering net of underwriting discounts
|
|
$
|
246,208
|
|
Purchase of units in BRP LLC from Lowry Baldwin and Villages Invesco
|
|
(31,332
|
)
|
|
Offering expenses
|
|
(4,840
|
)
|
|
Reclassification of members' deficit
|
|
(206,042
|
)
|
|
Conversion of certain incentive plans to Class A common stock
|
|
1,729
|
|
|
Reclassification of mezzanine equity to Class B common stock
|
|
254,846
|
|
|
Reclassification of noncontrolling interest of BRP LLC to Class B common stock
|
|
2,388
|
|
|
Par value of Class A common stock
|
|
(190
|
)
|
|
Par value of Class B common stock
|
|
(4
|
)
|
|
Noncontrolling interest
|
|
(182,864
|
)
|
|
Additional paid-in-capital pro forma Offering Adjustment
|
|
$
|
79,899
|
|
P
|
The computation for pro forma accumulated deficit takes into account the portion related to the controlling interest of the write-off of deferred financing fees associated with the paydown of the related party debt, which occurred post-offering. The rollforward of the pro forma accumulated deficit is below:
|
(in thousands)
|
|
Amount
|
||
Beginning members' deficit
|
|
$
|
(206,042
|
)
|
Reclassification of members' deficit to additional paid-in capital in connection with the Offering
|
|
206,042
|
|
|
Write-off of deferred financing fees relating to controlling interest post-Offering
|
|
(1,922
|
)
|
|
Accumulated deficit
|
|
$
|
(1,922
|
)
|
Q
|
BRP Group was incorporated as a Delaware corporation on July 1, 2019 and had no material assets or results of operations until the completion of the Offering and therefore its historical financial position is not shown in a separate column in this unaudited pro forma condensed consolidated statements of income (loss). This column represents the consolidated financial statements of BRP LLC, the predecessor for accounting purposes.
|
R
|
This adjustment represents the total increase in compensation expense the Company expects to incur in conjunction with the completion of the Offering as a result of the grant of restricted stock units of Class A common stock that cliff-vest after four years under our Incentive Plan. This adjustment reflects compensation expense associated with this grant had it occurred on January 1, 2018.
|
S
|
Reflects an adjustment to interest expense from repayment in full of $88.4 million of related party debt using a portion of the proceeds from the Offering, which includes removing the pro forma interest related to related party debt as a result of the Significant Historical Businesses Acquired by BRP LLC.
|
T
|
BRP LLC has been, and will continue to be, treated as a partnership for U.S. federal and state income tax purposes. As such, income generated by BRP LLC will flow through to its partners, including BRP Group, and is generally not subject to tax at the BRP LLC level. Following the Reorganization Transactions, the Company will be subject to U.S. federal income taxes, in addition to state and local income taxes with respect to our allocable share of any taxable income of BRP LLC. A valuation allowance has been recorded against all deferred income taxes as management has concluded it is more likely than not the deferred tax assets arising from the Reorganization Transactions and the Offering will not be realized. As a result, the unaudited pro forma condensed consolidated statements of income (loss) reflect no adjustment to our income tax expense.
|
U
|
Upon completion of the Reorganization Transactions, BRP Group became the sole managing member of BRP LLC through the Amended LLC Agreement. The BRP LLC capital structure was modified by reclassifying the interests currently held by the Pre-IPO LLC Members into a single new class of non-voting common interest units. In addition, the Amended LLC Agreement provides for BRP Group to manage and operate the business and control the strategic decisions and day-to-day operations of BRP LLC. Although BRP Group has a minority economic interest in BRP LLC, BRP Group has the sole voting interest in, and controls the management of, BRP LLC. As a result, BRP Group consolidates the financial results of BRP LLC in accordance with the variable interest model under ASC 810-10 and reports a noncontrolling interest related to the LLC Units held by the Pre-IPO LLC Members on the consolidated statements of income (loss). The Company believes the variable interest model is appropriate because: (a) the governing provisions of BRP LLC are the functional equivalent of a limited partnership, which requires application of authoritative literature for limited partnerships; (b) BRP Group has a variable interest in BRP LLC via equity interest; and (c) BRP LLC meets the definition of a variable interest entity as Pre-IPO LLC Members do not hold substantive kick-out or participation rights. In addition, BRP Group is the primary beneficiary of BRP LLC because it holds a controlling financial interest in BRP LLC via the power to direct the activities that most significantly impact BRP LLC’s economic performance and the obligation to absorb losses and receive benefits from BRP LLC that could potentially be significant to BRP LLC. As a result, the Company consolidates the financial results of BRP LLC and reports a noncontrolling interest related to the LLC Units held by the Pre-IPO LLC Members on the consolidated statements of income (loss). Following the Offering (including the underwriters’ exercise of their over-allotment option), BRP Group owned 30.4% of the economic interest of BRP LLC and the Pre-IPO LLC Members owned the remaining 69.6% of the economic interest of BRP LLC. Net income (loss) attributable to noncontrolling interests represented 69.6% of the income (loss) before income taxes of BRP LLC upon completion of the Offering.
|
(in thousands, except percentages)
|
|
For the Nine Months Ended September 30, 2019
|
|
For the Year Ended December 31, 2018
|
||||
Income before income taxes
|
|
$
|
9,848
|
|
|
$
|
(792
|
)
|
Pre-IPO LLC Members economic interest in BRP LLC
|
|
69.6
|
%
|
|
69.6
|
%
|
||
Income (loss) attributable to noncontrolling interest
|
|
$
|
6,854
|
|
|
$
|
(551
|
)
|
V
|
For the nine months ended September 30, 2019, reflects the pro forma adjustment to remove transaction expenses including due diligence and attorneys’ fees incurred in connection with the acquisitions of Lykes in March 2019 and MSI in April 2019.
|
W
|
For the nine months ended September 30, 2019, reflects the pro forma adjustment to amortization expense related to purchased customer accounts recorded in connection with the acquisitions of Lykes in March 2019 and Lanier in January 2020; software, purchased carrier relationships, purchased distributor relationships, trade name, and purchased customer accounts of MSI in April 2019; and purchased carrier relationships, trade names, and purchased customer accounts of Highland in January 2020.
|
Intangible Assets
|
|
Useful Life (in years)
|
|
Purchased customer accounts (T&C Insurance, Lykes and Lanier)
|
|
15
|
|
Purchased customer accounts (MSI)
|
|
5
|
|
Purchased customer accounts (Highland)
|
|
20
|
|
Software
|
|
5
|
|
Purchased carrier relationships (MSI)
|
|
20
|
|
Purchased carrier relationships (Highland)
|
|
0.75
|
|
Purchased distributor relationships (MSI)
|
|
20
|
|
Trade names (MSI and Highland)
|
|
5
|
|
|
|
Amortization Expense Over the Next Five Years
|
|||||||||||||
(in thousands)
|
|
Year 1
|
|
Year 2
|
|
Year 3
|
|
Year 4
|
|
Year 5
|
|||||
Lykes
|
|
469
|
|
|
400
|
|
|
340
|
|
|
289
|
|
|
244
|
|
MSI
|
|
6,973
|
|
|
6,671
|
|
|
6,947
|
|
|
7,270
|
|
|
7,364
|
|
Lanier
|
|
384
|
|
|
392
|
|
|
400
|
|
|
408
|
|
|
417
|
|
Highland
|
|
417
|
|
|
423
|
|
|
419
|
|
|
374
|
|
|
354
|
|
X
|
For the nine months ended September 30, 2019, reflects the pro forma adjustment to interest expense related to the incremental debt borrowed in connection with the acquisitions of Lykes in March 2019 and MSI in April 2019. An adjustment was not made for the Lanier and Highland Partnerships, which were funded with cash on the balance sheet.
|
(in thousands)
|
|
For the Nine Months Ended September 30, 2019
|
|
For the Year Ended December 31, 2018
|
||||
Interest on revolving lines of credit
|
|
$
|
594
|
|
|
$
|
2,923
|
|
Interest on related party debt
|
|
636
|
|
|
3,271
|
|
||
Pro forma cash interest expense
|
|
1,230
|
|
|
6,194
|
|
||
Amortization of capitalized debt issuance costs
|
|
338
|
|
|
1,878
|
|
||
Total pro forma interest expense
|
|
$
|
1,568
|
|
|
$
|
8,072
|
|
Y
|
Pro forma basic net income (loss) per share is computed by dividing the net income (loss) available to Class A common stockholders by the weighted-average shares of Class A common stock outstanding during the period. Pro forma diluted net income (loss) per share is computed by adjusting the net loss available to Class A common stockholders and the weighted-average shares of Class A common stock outstanding to give effect to potentially dilutive securities. The calculation of diluted net loss per share excludes 43,188,235 shares of Class B common stock that are convertible into Class A common stock under the “if-converted” method as the inclusion of such shares would be antidilutive to the periods presented. Shares of Class B common stock are not entitled to receive any distributions or dividends and are therefore not included in the computation of pro forma basic or diluted net loss per share. In addition, the Company granted 273,880 restricted stock units of Class A common stock under our Incentive Plan with an aggregate value of $3.8 million in connection with the Offering, each at an exercise price equal to the initial public offering price. Under the treasury stock method, assuming the restricted stock units were granted at the beginning of the period at an exercise price equal to $14.00 per share (the initial public offering price in the Offering), the effect of these restricted stock units is anti-dilutive and has therefore been excluded from the computations of pro forma diluted net income (loss) per share. The following table sets forth a reconciliation of the numerators and denominators used to compute pro forma basic and diluted net income (loss) per share.
|
(in thousands, except per share data)
|
|
For the Nine Months Ended September 30, 2019
|
|
For the Year Ended December 31, 2018
|
||||
Pro forma basic and diluted net income (loss) per share
|
|
|
|
|
||||
Numerator
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
9,848
|
|
|
$
|
(792
|
)
|
Less: net income (loss) attributable to noncontrolling interest
|
|
6,854
|
|
|
(551
|
)
|
||
Pro forma net income (loss) attributable to Class A common stockholders - basic and diluted
|
|
$
|
2,994
|
|
|
$
|
(241
|
)
|
|
|
|
|
|
||||
Denominator
|
|
|
|
|
||||
Shares of Class A common stock held by Pre IPO LLC Members
|
|
153
|
|
|
153
|
|
||
Shares of Class A common stock sold in the Offering
|
|
18,859
|
|
|
18,859
|
|
||
Shares of Class A common stock issued to Lanier
|
|
390
|
|
|
390
|
|
||
Weighted-average shares of Class A common stock outstanding - basic and diluted
|
|
19,402
|
|
|
19,402
|
|
||
|
|
|
|
|
||||
Pro forma basic and diluted net income (loss) per share
|
|
$
|
0.15
|
|
|
$
|
(0.01
|
)
|