BRP Group, Inc. (BRP) on Q2 2021 Results - Earnings Call Transcript
Operator: Greetings, and welcome to the BRP Group Inc. Second Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Bonnie Bishop, Executive Director of Investor Relations. Thank you. You may begin.
Bonnie Bishop: Welcome to the BRP Group's Second Quarter 2021 Earnings Call. Today's call is being recorded. Second quarter 2021 financial results, supplemental information and Form 10-Q were issued earlier this afternoon and are available on the company's website at ir.baldwinriskpartners.com. Please note that remarks made today may include forward-looking statements, which are based on the expectations, estimates and projections of management as of today, including certain expectations related to COVID-19 and other matters. Forward-looking statements are subject to various assumptions, risks and uncertainties, and a variety of factors that are difficult to predict, and which may cause actual results to differ materially from those contemplated by such statements. For a more detailed discussion of those factors, please refer to the company's earnings release for this quarter, and to our most recent SEC filings, including our most recent Form 10-K, all of which are available on the BRP website. During the call today, the company may also discuss certain non-GAAP financial measures. For a reconciliation of these measures to the most closely comparable GAAP measures, please refer to the company's earnings announcement and supplemental information, both of which have been posted on the company's website at ir.baldwinriskpartners.com, and can be found in the company's SEC filings. I will now hand the call over to Trevor Baldwin, Chief Executive Officer of BRP Group.
Trevor Baldwin: Thank you, Bonnie, and good afternoon, everyone and thank you for joining us for our second quarter earnings call. We're excited to announce another record quarter highlighted by organic growth of 32% and total revenue growth of 133%. All of our segments grew organically at a double-digit rate, including Middle Market, which grew 26%, its best organic quarterly performance in our history as a public company. The MGA of the Future demonstrated strong growth at 52% during the quarter continuing to execute multifamily, while also making continued progress on both flood and homeowners, which we believe will be important contributors to our growth into 2022 and beyond. As a result of the strong momentum across our entire business, we currently expect high-teens organic growth to the overall business in the third quarter above our target 10% to 15% range. On the partnership front, we've continued to execute on our strategy of partnering with only the industry's very best independent firms. Our partnership with RogersGray announced during the quarter marks our fourth top 100 partnership in a span of eight months significantly expands BRP Group's presence in New England and complements our homeowners' efforts within the MGA of the Future. Earlier this month, we also completed four additional partnerships, the two largest of which include Founder Shield and The Capital Group all bring unique incremental capabilities that we plan to leverage broadly across BRP. Specifically, Founder Shield is a rapidly growing tech-enabled and specialty-focused digital broker, joining our Specialty platform. It is rare when we find another firm profitably growing at the same rate as our Specialty business, which Founder Shield has done year-to-date. Founder Shield brings to BRP, a track record of growth and innovation that we anticipate will accelerate the deployment of tech-enabled, client interfaces, and integrated proprietary product across our platform, which we believe will be meaningful drivers of profitable growth for BRP well into the future. Including all 10 partnerships announced year-to-date, our total annual revenue from 2021 announced partnerships stands at $72.5 million. Looking across the balance of the year, our pipeline remains very strong and continues to build, as we continue to have multiple signed letters of intent for deals in a broad range of sizes. In closing, we're proud of the performance we have delivered through the first half of 2021, and the significant momentum we are carrying into the third quarter. Our collective focus on the convergence of building a great home for amazing talent with ongoing thoughtful investments in technology continues to enable our ability to innovate and execute for our clients and stakeholders at a high level. To all of our colleagues, who execute for our clients and stakeholders on a daily basis, a huge thank you. You are the reason our business continues to be in the strongest position it has been in our firm's history. With that, I will turn the call over to Brad to go into more detail on our Q2 results.
Brad Hale: Thanks, Trevor and good afternoon to everyone on the call. For the second quarter, we generated revenue growth of 133% to $119.7 million, demonstrating again that our hybrid growth model, namely outsized organic growth combined with contributions from new partnerships is delivering strong results, as the economic backdrop continues to improve. We generated record-setting organic growth of 32% on a year-over-year basis, thanks primarily to not only strong performance from our Specialty segment, but also across all of our sectors and in particular Middle Market. We recorded a GAAP loss for the second quarter of $20.1 million or a loss of $0.22 per fully diluted share. Adjusted net income for the second quarter of 2021, which excludes share-based compensation, amortization and other onetime expenses, was $13.3 million or $0.14 per fully diluted share. A table reconciling GAAP net income to adjusted net income can be found in our earnings release and our 10-Q filed with the SEC. Adjusted EBITDA for the second quarter of 2021 rose 143% to $20.4 million compared to $8.4 million in the prior year period. Adjusted EBITDA margin was 17% for the second quarter of 2021, compared to 16% in the prior year period. For the third quarter, we anticipate an adjusted EBITDA margin of 14% to 15%. This margin movement versus the prior year is timing related as a result of seasonality of the business changing, given our M&A success. For the full year, we expect to achieve the high end of our previously communicated 150 to 200 basis point increase in adjusted EBITDA margin, relative to last year's 18%. With respect to a few KPIs for the MGA, our renters policies in force increased by over 39000 from March 31 2021 to 605,295 as of June 30. And as of August 6, policies in force have increased further to over 625,000. Additionally, on July 30, we set another new record for new policies sold in a day of 3,472 policies eclipsing our previous daily high from last year by roughly 250 policies. Since our last earnings call on May 10, we've also turned on an additional 500,000 units, bringing the total unit count in which our renter solution is available to over nine million. Finally, we took advantage of our larger size and set fantastic performance since October 2020 to upsize and improved pricing on a new $500 million Term Loan B in May and late last week, executed a $75 million upside to our revolving credit facility, providing us incremental capacity to better position us for our strong and growing partnership pipeline, while reducing our cost of capital. With that, I will now turn the call over to Kris.
Kris Wiebeck: Thanks, Brad and good afternoon to everyone on the call. A few closing remarks before we hit Q&A. To reflect for a moment on the trajectory and momentum our hybrid growth strategy has facilitated in a relatively short amount of time, Business Insurance recently published their annual list of top 100 brokers, on which BRP currently ranks number 19. When we launched our goal of Top 10 in 10 in early 2018, we were ranked 81 in that same list based on 2017 results. This highlights just how powerful the combination of our consistent outsized organic growth supported with a partnership strategy of attracting only the very best independent firms has been. As we look ahead, we remain confident and uniquely well positioned to achieve our Top 10 in 10 goal. Lastly and importantly, I want to welcome all of the new colleagues that have joined us over the last quarter and echo Trevor in thanking all of our colleagues for such an amazing job in executing for each other and our stakeholders. With that, I thank you for your time, and we'll now open up the call for Q&A. Operator?
Operator: Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. Our first question comes from the line of Greg Peters with Raymond James. Please proceed with your question.
Greg Peters: Hey, good afternoon. And thank you for the relatively short comments. Most of the companies we listen to conference calls will talk for 20-plus minutes, so it's appreciated. As far as…
Trevor Baldwin: Thanks, Greg and good evening.
Greg Peters: Yeah, good evening. So I think one of the challenges the market's having is the substantial growth in organic. And I think you've laid out obviously that the third quarter is going to be another great quarter for you. Can you give us -- when you look at the second quarter results, can you give us -- when we look at Middle Market -- and can you give us a sense of what's going on? Is it rate? Is it exposure or is it new clients or probably all three of them? But give us some perspective of where you're driving this -- the organic results from?
Trevor Baldwin: Yeah, Greg, happy to. So a couple of things to maybe just kind of lay the foundation to the question before kind of diving in more specifically. One I think the momentum we have across our platform at BRP has never been better. The strength of our franchise the collective capabilities of our people and the breadth of resources and client sector expertise is as strong as it's ever been. So we're executing at the highest levels we've seen and we're winning consistently in front of our clients, which is ultimately what's leading to the results that you're seeing here. Specifically, for the quarter organic growth was double-digits across all four of our segments again highlighting the strength of the franchise and the collective momentum we have across our business. When we look at the relative contributors to organic growth as we've talked about in the past, we really view there to be kind of four building blocks to that. And so you would start with the combined impact of insurance rate and underlying client exposure unit growth or contraction. And for the quarter, the combined impact of rate and exposure for our organic growth was 7.5% which is certainly helpful, but in the context of the 32% organic growth that we ultimately reported normalizes down to 25%, which is still an exceptional result compared to the industry's historical trends. And so when you think about the other two drivers of organic growth, well it's retention of client revenues and I would say again as a relative kind of symptom of the strength of our platform, I'd say we've seen retention tick up slightly in most of our businesses. But that's not going to be a meaningful driver. Maybe that impacts growth by 100 basis points plus or minus. And so really what's driving it is our ability to continue to write new business, win market share and ultimately bring new clients onto the BRP platform at a rate that meaningfully exceeds generally what our peers are doing. And that is the single largest driver of organic growth for our business.
Greg Peters: That's great color. I'm curious with the 7.5 points rate in exposure versus the 32% total overall in. Is it -- would you think about this going forward that 23%, 24% of your organic would be continually defined by rating exposure with the balance being retention in new business? Is that sort of to think about going forward?
Trevor Baldwin: I don't know that I'd think about it like that Greg because it's so -- and tied to kind of external environmental factors, right? So if you're in a relatively steady state economic environment where GDP is growing 150 to 300 basis points, generally speaking I wouldn't expect underlying exposure units to be a meaningful kind of driver or headwind to organic growth. Maybe it's plus 150 or minus 150 basis points. Rate, again that's environmental. And so in the current environment, we're certainly seeing meaningful positive rate trends. Now I'll caveat that the rate is kind of deescalating and we've seen that trend this quarter. With that being said, we certainly expect continued positive rate action through 2022 at this point, and potentially longer. The world's just becoming a riskier place. You've got natural catastrophes that are generally impacting geographies that are more built out from a value-at-risk perspective. You've got things like cyber who -- where the exposure set's growing exponentially. And then, you've got the impact in the near-term of inflation. You have the longer-term impact of social inflation and the relative uncertainty that comes with that. And so there's a lot of factors out there that we believe are going to continue to drive, relatively healthy positive rate momentum for the next couple of years.
Greg Peters: That makes sense. The second question I have would be around M&A, and recruiting. Can you talk about, how the pipeline looks today, as we think out the next six to 12 months? And then, related to that, given, where we are with the economy and the state of employment, can you talk about how your organic recruiting efforts are going?
Trevor Baldwin: Absolutely. So from an M&A perspective Greg, our partnership pipeline continues to be very strong, continues to be made up of firms that are of the utmost highest quality and with really incredibly unique capabilities and resources. I mean, Founder Shield is a great example of that. They're a specialty digital broker of approximately $10 million of revenue that on a year-to-date basis is growing greater than 50% and doing so profitably. They've built out on their technology stack, the tools to automate or bring a much more seamless approach to transacting property and casualty insurance for small to medium-sized businesses. And we believe, we're going to be able to leverage their know-how, their capabilities and their technology stack broadly across our business, in a manner similar to which we've leveraged the proprietary tech that we have at the MGA of the Future, to drive really meaningful growth. And so, I think that's a long-winded way of saying we're excited about the quality of our pipeline. And we continue to feel good about the activity there. From a recruiting standpoint, we're leaning in a really, really heavy manner. So, as I've mentioned earlier, the strength of our franchise is at an all-time high. And that goes beyond just client execution and wins, but importantly goes to colleagues as well. And so the ability for us to attract really talented professionals, across a range of areas of expertise and ultimate product lines has never been better. We've five times the size of our recruiting team since last December. And through the midpoint of July this year we've added on an organic basis over 370 new hires into our team which is more than by a meaningful margin the total new hires we made in all of 2020. So we're investing deeply in talent across our platform, across all four segments. And we're really excited about the momentum and the success that we're seeing there.
Greg Peters: Great. The final little detailed question for, Brad or Kris, I was just looking at your statement of cash flows. And the net cash provided by operating activities didn't grow as fast as the revenue or your operating results. So I'm wondering, what's going on embedded in that, that's if you will making the growth rate -- still grew, but a little bit lower than some of the other indicators that you're reporting.
Brad Hale: Hi Greg, so as we've discussed previously we evaluate free cash flow net of the change in AR and AP, because of the fact that we hold fiduciary cash. So if you back out AR and AP, you actually get $13 million of free cash flow generation in the prior year. So at $52 million this year we have four times that number on a year-over-year basis.
Greg Peters: Got it. Thanks for your answers.
Brad Hale: Thanks, Greg.
Operator: Our next question comes from the line of Josh Shanker with Bank of America. Please proceed with your question.
Josh Shanker: Yes. Thank you very much for taking my question. Congratulations on the quarter. I'm trying to do some math and I'm not -- maybe I'm doing it wrong. But can you run through what organic growth was ex MGA of the Future? I'm thinking maybe 25%. Am I doing that correctly?
Trevor Baldwin: So Josh, we haven't specifically disclosed ex-MGA of the Future. What I would share is as an example Middle Market organic growth was 26% for the quarter and all four of our segments were double-digit, which I think just highlights the relative strength we're seeing across our business.
Josh Shanker: So, I guess, I'm doing some schlock math maybe because I'm trying it. It seems to me that you guys have had very good growth on the non-MGA of the Future business this quarter and I'm trying to make a comparison to what that was in 1Q. Just trying to figure out what was going on with the reopening of the economy this quarter. Certainly in the Medicare businesses, you've been able to probably reach out to some clients who you weren't able to see for a while. Can we sort of talk about like the difference between the organic growth this quarter, last quarter the qualitative differences I guess about what's going on and how we should think that should inform third quarter?
Trevor Baldwin: Yes. Happy to do that, Josh. So as we think about the relative environmental differences from Q1 to Q2, I'd say it's kind of broadly reopening economies certainly a resurgent and recovering business activity and people and our clients in general being much more kind of willing and open to meeting and frankly making changes and changes to BRP in a good way. So I think all of that is a positive. And when you think about the relative impact of the economic activity as I'd mentioned earlier to Greg the combined impact of rate and exposure on our organic growth was plus 7.5%. So while that was a tailwind the real story is the underlying performance of our business and the ability to take share from our competitors driving the new business that's ultimately driving the organic growth results. As we think about organic growth looking forward as I had mentioned earlier in my remarks we expect high-teens organic growth for the third quarter as a result of the momentum and the strength across our platform and feel really good about continuing to execute as we look forward to the balance of this year and into 2022 and beyond.
Josh Shanker: Is the difference between the third quarter organic projection in 2Q actual the easy comps from 2Q 2020?
Trevor Baldwin: Well, our organic growth in 2Q of 2020, I think was 19% so I'm not sure I'd necessarily think of that as an easy comp. 3Q 2020 was 20% so slightly harder. I'd say look there's just a little bit more uncertainty as the Delta variant resurges and that could undoubtedly create some choppiness and recovery and openness and the ability for our folks to get in front of prospects and clients. And so I think you're continuing to see an appropriate amount of conservatism as a result of some of the uncertainty that remains, while leaning into the relative momentum that we're seeing in our business and the strength that we're projecting that will carry forward to the balance of the year.
Josh Shanker: And on MGA of the Future are there any -- you guys always tout the net new customer or I guess net customer growth. I don't know if it matters any one quarter to the next but maybe new channel partners can be a big step-up. How is recruitment for new channel partners going? And do we expect the growth rate for that business accelerates or it's so huge now it can only decelerate from here?
Trevor Baldwin: Yes. So the MGA of the Future continues to perform at a really high level. Specific to our HO4 business we've got a pipeline that's as strong as it's ever been relative to new technology channel partners and recently took one live as recent as earlier this month in August. When we look at the new policy transaction trends in that business Q2 was a record quarter relative to new policies sold in the history of the firm with June being a record month in the history of the MGA for new policies issued that was then subsequently broken by a new record that was approximately 15% higher in the month of July. So momentum continues to be very strong there. In addition to that we've invested deeply in technology and talent to expand our capabilities across a new breadth of product lines including homeowners and flood. Specifically, we recently brought on a gentleman Naimish Patel, who's spearheading our national homeowners ambitions as we look to quickly build out a team capable of building and launching a 50-state homeowner solution to tackle the $100 billion-plus market that that represents across the US. So we're excited about the momentum. I think we continue to feel good about the relative growth trajectory that we have and would not look to update that from what we've discussed in prior quarters
Josh Shanker: Thank you very much.
Trevor Baldwin: Thanks, Josh
Operator: Our next question comes from the line of Elyse Greenspan with Wells Fargo. Please proceed with your question.
Elyse Greenspan: Hi, thanks. Good evening. My first question on the acquisition side. So you guys are around just under $73 million announced so far this year. The goal was $120 million to $150 million. I know there's talk of a lot of momentum towards the end of this year when there's more certainty on tax reform and you guys also sound bullish about what's in the pipeline. So if you could just give us a sense, how you think the year will stack up relative to that guidance.
Trevor Baldwin: Yes thanks. Good evening, Elyse. We continue to feel really good about that $120 million to $150 million target for the year.
Elyse Greenspan: Okay. Do you think it will be more -- we're in August right now right? Do you think it will be more Q4 or Q3-heavy relative to when deals start to come in or maybe even between the two?
Trevor Baldwin: Yes. Look M&A timing has some lumpiness to it Elyse. And so, what I would tell you is that deals like announcements will likely be late Q3 but probably most of the effective dates for the transaction is occurring in Q4.
Elyse Greenspan: Okay that's helpful. And then in terms of just thinking about organic growth I just want to follow up on one of the prior questions. So you guys are looking for high teens in the third quarter, which was also the guidance for this quarter that came in well above that. So is there a sense of -- it sounds like there's just some conservatism with the Delta variant and uncertainty of the economy. Or have you seen, anything in your business in July that would cause you to think things are slowing or it's more just an embedded level of conservatism and recognizing that that's higher than where you normally guide on organic growth?
Trevor Baldwin: Yes. I think Elyse, one, I would highlight that high teens is certainly above our long-term range of 10% to 15%. I think Q2, there was certainly a little bit of a kind of rebound the fact that the world reopens and so there's a little bit of a catch-up there. And then there's certainly, I think an appropriate amount of conservatism as a result of some of the potential choppiness and uncertainty relative to the Delta variant. But in no way, should that signal that we feel like there's a deceleration in the business. We feel really good about the momentum and carrying that forward to the balance of the year and beyond.
Elyse Greenspan: Okay. And then on the margin side, you came in better than would have expected in the second quarter just given the full-year guide. And it sounds like you're still keeping the full-year guide. Is it just a sense of more investment in the second half given that growth has been so strong? More -- I know you said some seasonality with M&A. Can you just help us think through what's kind of driving the margins in the second half of the year?
Brad Hale: Yes. Elyse, so the business outperformance in the first half of the year namely the organic and the total revenue has allowed us to guide to the high end of our previously communicated range. But we're also able to lean heavier into multiple reinvestments in the business, ahead of our plan to drive growth well into the future, which is why we're not expanding that range.
Trevor Baldwin: Yes. And Elyse to put a little bit of a finer point on that for you -- you shouldn't think about the investments we're leaning into being a result of keeping up with the growth like the business is doing that normal course. You should think about the, investments we're leaning into being really kind of new areas of capabilities and product lines but innovative solutions that we believe we'll be able to launch and drive future growth with in a meaningful manner. And so Naimish Patel and his team leading up our homeowners initiatives and ambitions across a 50-state solution being a great example of that. We're going to scale up a nearly 50-person homeowners team inside the MGA by the end of the year as an example.
Elyse Greenspan: Okay. That’s helpful. Thanks for the color.
Trevor Baldwin: Thanks, Elyse.
Operator: Our next question comes from the line of Pablo Singzon with JPMorgan. Please proceed with your question.
Pablo Singzon: Hi. Thanks. The first question I had is, can you just give the latest cash balance adjusted for recent movements in debt, and then, your thoughts on whether that's enough to fund partnerships in 2022. And if not, how are you then thinking about the mix between equity and debt to fund incremental cash you might need?
Trevor Baldwin: Yes. Pablo, this is Trevor. Let me tackle the partnership funding and then, I'll ask Brad to point to some of the specific metrics you were talking about. So relative to our pipeline and M&A, we feel good about our ability to fund our targeted M&A for the year based on cash and available debt on the balance sheet. And to the extent that we exceed those numbers, we'll certainly have to evaluate our capital options. And as the business continues to grow in scale so does our free cash flow and EBITDA and ability to leverage that. So, we continue to feel good about executing on our partnership strategy into the future, and we'll continue to evaluate capital options as they make sense.
Brad Hale: Yes, Pablo. So cash balance as of the end of the quarter was roughly $225 million. As you saw us disclose look, we're constantly vigilant about our capital structure and that led us to the upsize of the TLB in May as well as the revolver last week, which continues to assist in our partnership strategy.
Pablo Singzon: Got it. And then, just on organic growth, your results in the Middle Market business was surprising at least just, because if you look at last year -- second quarter last year was actually your business comp for that business right? And it seems like from what you're suggesting you expect growth in Middle Market and other segments to slow sequentially even when comps get a bit easier right? So if I could just I guess ask the same question another way right? Like why would it be reasonable to assume that right given that actually the second quarter was the strongest quarter last year and I guess logically if the momentum continues as it is and obviously putting -- recognizing caveats for the Delta variant amid the economy slowing down a bit. But it just seems like the momentum versus last year should sustain and even I guess grow stronger from here right just given how the comps developed. And remember, the fourth quarter last year I think you had a negative comp in Middle Market, right? So if you can just sort of speak to that Trevor, I'd be interested to see -- hear how you're thinking about how growth for the second half of the year might evolve.
Trevor Baldwin: Yes. So Pablo, we feel really good about high-teens organic growth for the third quarter. At this point, we're not providing any specificity to our thoughts for Q4. But there is a healthy and appropriate conservatism relative to some of the choppiness and uncertainty from the Delta variant. With all that being said, the momentum in our business is real and we feel really good about our ability to execute. And with the outsized organic growth in Q2, as I mentioned earlier, there's a little bit of kind of a rebound effect as the world had reopened and a lot was able to get done with clients and prospects that have been in dialogue and been in conversation with our professionals.
Pablo Singzon: Got it. And then, the last one for me. Just a question about I guess two new ventures of yours right? So the first one is, Founder Shield, if I -- I just want to confirm, I understood you correctly Trevor. So it seems like Founder Shield, their main market today are start-ups and VC-backed firms. But from what you're saying it seems like there are plans for you to expand it to just the broader small commercial market?
Trevor Baldwin: Yes. That's exactly right, Pablo.
Pablo Singzon: Okay, all right. And then, second question under the same topic of new ventures. If I do my math correctly, I think Millennial probably hit close to $90 million of revenues this year. Any sense on how big homeowners or flood could be? Like -- and obviously like I'm not asking for an exact number but...
Trevor Baldwin: This year or into the future?
Pablo Singzon: In the future? And recognizing the homeowners is a much bigger market you're doing a 50-state rollout, right? Like would it be reasonable to sort of take that relationship and apply it to what you're doing with Millennial, right? Just recognizing that homeowners is a much bigger market?
Trevor Baldwin: Yes. I think that's exactly the way to think about it, Pablo. As we think about our goals and ambitions here, it's about leveraging the tech and our go-to-market strategies that we've developed across the MGA for renters and deploying that into the homeowners marketplace. We think it's a massive opportunity. The market TAM is multiples of what renters is, and our tech is already built to support that product set. We're building out a bench of experts and we feel like we're going to be able to make meaningful progress in the coming years around building a really big business in that particular line.
Pablo Singzon : All right. Thanks for answers and good luck for the rest of the year.
Trevor Baldwin: Thanks, Pablo.
Operator: Our next question comes from the line of Meyer Shields with KBW. Please proceed with your question.
Meyer Shields: Great. Thanks. A couple of really small ones. First, I think, Brad mentioned, I didn't catch the details an element of timing when providing the outlook for the third quarter adjusted EBITDA margin. I was hoping I can get him to review that.
Brad Hale: Yes. So given the change in our business mix as a result of M&A and the phasing of revenue recognition what we are communicating is that the timing of margins can change year-to-year in relation to prior years. So we were trying to set a base as to what we expect for this third quarter versus last third quarter and communicated the 14% to 15% expectation of EBITDA margin for this third quarter.
Trevor Baldwin: And Meyer, it has nothing to do with anything internally at the business. It's purely as a result of the kind of phasing of revenue changing as a result of the M&A that occurred in the prior year period.
Meyer Shields: Yes. That's what I wanted to make sure that I understood that there was no revenue timing that impacted issues. I know you don't include acquisitions revenues in the organic growth number. Is it reasonable for us to assume that the growth in recent partnerships accelerated to the same extent that legacy BRP organic did in the quarter?
Trevor Baldwin: Yes, Meyer, great question. So, the first thing I would tell you is that the performance of our new partner firms that are not yet included in the organic growth calculation continues to meet and exceed our expectations, and I would point you to the earnings supplement that should be up on our IR website. And on Page 3 of that deck, which is a new slide of key performance metrics at the very bottom of that chart, you'll see total revenue of businesses owned as of 12/31/2020. And we put this in there to really highlight for investors the overall performance of our business, including new partners on a like-for-like basis. And so what you'll see for the quarter is that the total business revenue accelerated on a year-over-year basis at a rate of approximately 32%. And the other thing I would point out is if you look to the year-to-date, it's at 16%. But I would point you to sub Note 7. And if you'll recall from the Q1 earnings call, there was a revenue timing as a result of acquisition accounting that caused $11 million to basically get booked into opening balance sheets and things of that nature. And so if you normalize for that that year-to-date growth number is in excess of 20%, which I think really highlights the fact that the overall performance of the business, including new partner firms is frankly performing at similar levels and outsized levels.
Meyer Shields: Okay. Yes. That bottom line is actually tremendously helpful. Thank you for pointing it out. With regard to Cover Shield , should we think of that as just a new way or a new go-to-market platform, or are there elements of Cover Shield that all of the other commercial brokerage businesses within BRP can adopt and whether that promotes faster growth or higher margins?
Trevor Baldwin: The answer to that is yes, Meyer. Founder Shield has not only developed a highly successful and profitable growth strategy, and they're using their unique go-to-market methodology that's enabled them to win a significant share of VC and high-growth start-up clientele. But in addition to that as a result of their focus on small and rapidly growing clients, they've built out a technology stack that enables them to build innovation and delightful experiences into the overall insurance procurement process. And so what we're going to be focused on is not only pouring more capital into that business to accelerate what they're doing really well already, but then leveraging their tech and their innovation across our platform, to drive profitability and better client experience for all of our small business clients. In addition to that, they've already built in proprietary product that is connected kind of directly through their tech. And so we've layered that in with the MGA, to continue to be able to build out proprietary products delivering more effective and bespoke solutions to our clients that truly meet their needs. So we're very excited about it.
Meyer Shields: Okay. And then last question, I promise. Is there any way of ballparking, how long it takes the year-to-date recruits to be productive at least those of them that are client-facing?
Trevor Baldwin: It's different answers for different parts of our business, Meyer. I'd say, the longer side of that is in our Middle Market business, where it's a more technical sale and generally a longer sales cycle, and we tend to have those folks kind of up and running in six months, but kind of doing so with mentors that are kind of riding along with them, and there's examples of folks, we're recruiting in that are highly experienced. They're coming from competitive organizations that are plugging in day one and becoming highly productive or folks that we're recruiting into kind of new de novo parts of our business we're building out all of the homeowner strategy as an example. We're bringing in a team that's highly experienced with a lot of expertise that can hit the ground running pretty quickly. So it's a range depending on the role and the part of our business. But in general, it's measured in months not years.
Meyer Shields: Okay. Perfect. Thank you so much.
Trevor Baldwin: Thanks, Meyer.
Operator: There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.
Trevor Baldwin: Thank you. We appreciate everybody joining us this evening for our second quarter earnings call. And I just want to reiterate and provide a huge thank you to all of our colleagues. They have put us in this incredible position and the strength and momentum of our platform, and our franchise has never been better. So thank you, and we look forward to seeing everyone soon. Take care.
Operator: Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.
