Ryan specialty reports third quarter 2022 results
Chicago--(business wire)--ryan specialty holdings, inc. (nyse: ryan) (“ryan specialty” or the “company”), a leading international specialty insurance firm, today announced results for the third quarter ended september 30, 2022. third quarter 2022 highlights revenue grew 16.8% year-over-year to $412.0 million, compared to $352.8 million in the prior-year period organic revenue growth rate* was 13.7% for the quarter, compared to 28.9% in the prior-year period net income increased to $29.3 million, compared to a net loss of $32.6 million in the prior-year period. diluted earnings per share was $0.09 adjusted ebitdac* increased 11.2% to $116.8 million, compared to $105.0 million in the prior-year period adjusted ebitdac margin* of 28.4%, compared to 29.8% in the prior-year period adjusted net income* increased 5.7% to $66.6 million, compared to $62.9 million in the prior-year period adjusted diluted earnings per share* for the third quarter of 2022 was $0.25, compared to $0.24 in the prior-year period “ryan specialty yet again validated our differentiated business model by delivering strong results in the face of an increasingly challenging economic environment,” said patrick g. ryan, founder, chairman and chief executive officer of ryan specialty. “another quarter of double-digit organic growth and healthy profitability is a testament to the unrelenting effort of our teammates to innovate and provide best-in-class solutions for existing and new clients. we also continued to add top talent to our team in the quarter, as we further enhanced our reputation as a destination of choice. with our strong balance sheet, our resilient business model and our focus on the growing e&s market, we are well positioned to skillfully navigate through this challenging economic environment and continue generating long-term value for our investors.” summary of third quarter 2022 results three months ended september 30, change nine months ended september 30, change (in thousands, except percentages and per share data) 2022 2021 $ % 2022 2021 $ % gaap financial measures total revenue $ 411,996 $ 352,766 $ 59,230 16.8 % $ 1,290,178 $ 1,054,236 $ 235,942 22.4 % compensation and benefits 274,108 286,538 (12,430 ) (4.3 ) 858,439 737,825 120,614 16.3 general and administrative 48,991 38,754 10,237 26.4 139,851 96,984 42,867 44.2 total operating expenses 350,652 353,496 (2,844 ) (0.8 ) 1,079,919 922,861 157,058 17.0 operating income (loss) 61,344 (730 ) 62,074 n/m 210,259 131,375 78,884 60.0 net income (loss) 29,279 (32,590 ) 61,869 n/m 117,475 27,016 90,459 n/m net income (loss) attributable to ryan specialty holdings, inc. 11,745 (1,334 ) 13,079 n/m 43,157 55,822 (12,665 ) (22.7 ) compensation and benefits expense ratio (1) 66.5 % 81.2 % 66.5 % 70.0 % general and administrative expense ratio (2) 11.9 % 11.0 % 10.8 % 9.2 % net income (loss) margin 7.1 % (9.2 )% 9.1 % 2.6 % earnings (loss) per share (3) $ 0.11 $ (0.16 ) $ 0.40 $ (0.16 ) diluted earnings (loss) per share (3) $ 0.09 $ (0.16 ) $ 0.37 $ (0.16 ) non-gaap financial measures* organic revenue growth rate 13.7 % 28.9 % 18.7 % 25.6 % adjusted compensation and benefits expense $ 247,095 $ 212,590 $ 34,505 16.2 % $ 769,253 $ 625,452 $ 143,801 23.0 % adjusted compensation and benefits expense ratio 60.0 % 60.3 % 59.6 % 59.3 % adjusted general and administrative expense $ 48,084 $ 35,153 $ 12,931 36.8 % $ 130,774 $ 88,870 $ 41,904 47.2 % adjusted general and administrative expense ratio 11.7 % 10.0 % 10.1 % 8.4 % adjusted ebitdac $ 116,817 $ 105,023 $ 11,794 11.2 % $ 390,151 $ 339,914 $ 50,237 14.8 % adjusted ebitdac margin 28.4 % 29.8 % 30.2 % 32.2 % adjusted net income $ 66,560 $ 62,949 $ 3,611 5.7 % $ 237,774 $ 209,739 $ 28,035 13.4 % adjusted net income margin 16.2 % 17.8 % 18.4 % 19.9 % adjusted diluted earnings per share $ 0.25 $ 0.24 $ 0.88 $ 0.78 * for a definition and a reconciliation of organic revenue growth rate, adjusted compensation and benefits expense, adjusted compensation and benefits ratio, adjusted general and administrative expense, adjusted general and administrative expense ratio, adjusted ebitdac, adjusted ebitdac margin, adjusted net income, adjusted net income margin, and adjusted diluted earnings per share to the most directly comparable gaap measure, see “non-gaap financial measures and key performance indicators” below. (1) compensation and benefits expense ratio is defined as compensation and benefits divided by total revenue. (2) general and administrative expense ratio is defined as general and administrative expense divided by total revenue. (3) see “note 12, earnings (loss) per share” of the unaudited quarterly consolidated financial statements. third quarter 2022 review* total revenue for the third quarter of 2022 was $412.0 million, an increase of 16.8% compared to $352.8 million in the prior-year period. this increase was primarily due to continued strong organic revenue growth of 13.7%, driven by new client wins and expanded relationships with existing clients, coupled with continued expansion of the e&s market, revenue from acquisitions completed in the fourth quarter of 2021 and increased fiduciary income. total operating expenses for the third quarter of 2022 were $350.7 million, a 0.8% decrease compared to the prior-year period. this was primarily due to significant reduction in ipo-related compensation expense, partially offset by an increase in compensation and benefits expense, which is heavily correlated to revenue growth. general and administrative expense also increased compared to the prior-year period to accommodate revenue growth, including continued normalization of business travel and client entertainment. net income for the third quarter of 2022 increased to $29.3 million, compared to a net loss of $32.6 million in the prior-year period. the increase was mainly due to strong year-over-year revenue growth, as well as ipo related expenses and other non-operating loss (income) in the prior-year quarter that did not recur in the third quarter of 2022, partially offset by higher interest and income tax expense. diluted earnings per share for the third quarter of 2022 was $0.09, compared to a loss of $0.16 in the prior-year period. adjusted ebitdac of $116.8 million grew 11.2% from $105.0 million in the prior-year period. adjusted ebitdac margin for the quarter was 28.4%, compared to 29.8% in the prior-year period. the increase in adjusted ebitdac was driven primarily by strong revenue growth and higher fiduciary investment income, partially offset by increased adjusted compensation and benefits expense, as well as higher adjusted general and administrative expense. adjusted net income for the third quarter of 2022 rose 5.7% to $66.6 million, compared to $62.9 million in the prior-year period. adjusted net income margin was 16.2%, compared to 17.8% in the prior-year period. adjusted diluted earnings per share for the third quarter of 2022 was $0.25, compared to $0.24 in the prior-year period. * for the definition of each of the non-gaap measures referred to above as well as a reconciliation of such non-gaap measures to their most directly comparable gaap measures, see “non-gaap financial measures and key performance indicators” below. third quarter 2022 revenue by specialty growth in net commissions and fees in all specialties was primarily driven by strong organic growth. three months ended september 30, (in thousands, except percentages) 2022 % of total 2021 % of total change wholesale brokerage $ 267,222 65.6 % $ 229,146 65.0 % $ 38,076 16.6 % binding authorities 55,607 13.6 52,795 15.0 2,812 5.3 underwriting management 84,722 20.8 70,669 20.0 14,053 19.9 total net commissions and fees $ 407,551 $ 352,610 $ 54,941 15.6 % liquidity and financial condition as of september 30, 2022, the company had cash and cash equivalents of $833.1 million and outstanding debt principal of $2.0 billion. full year 2022 outlook* considering current and developing market factors impacting the binding of project-based construction and m&a transactional liability policies, along with observed shifts in the market for public company d&o insurance, the company is adjusting its full year 2022 outlook for organic revenue growth rate: organic revenue growth rate guidance range for the full year 2022 is now 14.5 – 16.0%, compared to the company’s prior guidance range of 16.5% - 18.0%. the company is also updating its full year 2022 outlook for adjusted ebitdac margin: adjusted ebitdac margin guidance range for the full year 2022 is now 29.5% - 30.0%, compared to the company’s prior guidance range of 29.0% - 30.0%. * for a definition of organic revenue growth rate and adjusted ebitdac margin as well as an explanation of the company’s inability to provide reconciliations of these forward-looking non-gaap measures, see “non-gaap financial measures and key performance indicators” below. conference call information ryan specialty will host a conference call today at 5:00 pm et to discuss these results. a live audio webcast of the conference call will be available on the company’s website at ryanspecialty.com in its investors section. the dial-in number for the conference call is (877) 451-6152 (toll-free) or (201) 389-0879 (international). please dial the number 10 minutes prior to the scheduled start time. a webcast replay of the call will be available on the company’s website at ryanspecialty.com in its investors section for one year following the call. about ryan specialty founded in 2010, ryan specialty (nyse: ryan) is a service provider of specialty products and solutions for insurance brokers, agents and carriers. ryan specialty provides distribution, underwriting, product development, administration and risk management services by acting as a wholesale broker and a managing underwriter with delegated authority from insurance carriers. our mission is to provide industry-leading innovative specialty insurance solutions for insurance brokers, agents and carriers. learn more at ryanspecialty.com. forward-looking statements all statements in this release and in the corresponding earnings call that are not historical are “forward-looking statements” within the meaning of the private securities litigation reform act of 1995 and involve substantial risks and uncertainties. for example, all statements the company makes relating to its estimated and projected costs, expenditures, cash flows, growth rates and financial results or its plans and objectives for future operations, growth initiatives, or strategies and the statements under the caption “full year 2022 outlook” are forward-looking statements. words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely” and variations of such words and similar expressions are intended to identify such forward-looking statements. all forward-looking statements are subject to risks and uncertainties, known and unknown, that may cause actual results to differ materially from those that the company expected. specific factors that could cause such a difference include, but are not limited to, those disclosed previously in the company’s filings with the securities and exchange commission (“sec”) that include, but are not limited to: the company’s potential failure to develop a succession plan for the senior management team, including patrick g. ryan; the company’s failure to recruit and retain revenue producers; the cyclicality of, and the economic conditions in, the markets in which the company operates; conditions that result in reduced insurer capacity; the potential loss of the company’s relationships with insurance carriers or its clients, becoming dependent upon a limited number of insurance carriers or clients or the failure to develop new insurance carrier and client relationships; significant competitive pressures in each of the company’s businesses; decreases in the premiums or commission rates set by insurers, or actions by insurers seeking repayment of commissions; decreases in the amounts of supplemental or contingent commissions the company receives; the company’s inability to collect its receivables; the potential that the company’s underwriting models contain errors or are otherwise ineffective; any damage to the company’s reputation; decreases in current market share as a result of disintermediation within the insurance industry; impairment of goodwill; the inability to maintain rapid growth or to generate sufficient revenue to achieve and maintain profitability; the impact if the company’s mgu programs are terminated or changed; the risks associated with the evaluation of potential acquisitions and the integration of acquired businesses as well as introduction of new products, lines of business and markets; the occurrence of natural or man-made disasters; being subject to e&o claims as well as other contingencies and legal proceedings; the impact on the company’s operations and financial condition from the effects of the current covid-19 pandemic; the impact of breaches in security that cause significant system or network disruptions; not being able to generate sufficient cash flow to service all of the company’s indebtedness and being forced to take other actions to satisfy its obligations under such indebtedness; and the impact of being unable to refinance the company’s indebtedness. for more detail on the risk factors that may affect the company’s results, see the section entitled ‘‘risk factors’’ in its annual report on form 10-k filed with the securities and exchange commission on march 16, 2022, and in other documents filed with, or furnished to, the sec. should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. given these factors, as well as other variables that may affect the company’s operating results, you are cautioned not to place undue reliance on these forward-looking statements, not to assume that past financial performance will be a reliable indicator of future performance, and not to use historical trends to anticipate results or trends in future periods. the forward-looking statements included in this press release and on the related earnings call relate only to events as of the date hereof. the company does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise. non-gaap financial measures and key performance indicators in assessing the performance of the company’s business, non-gaap financial measures are used that are derived from the company’s consolidated financial information, but which are not presented in the company’s consolidated financial statements prepared in accordance with gaap. the company considers these non-gaap financial measures to be useful metrics for management and investors to facilitate operating performance comparisons from period to period by excluding potential differences caused by variations in capital structures, tax positions, depreciation, amortization and certain other items that the company believes are not representative of its core business. the company uses the following non-gaap measures for business planning purposes, in measuring performance relative to that of its competitors, to help investors to understand the nature of the company's growth, and to enable investors to evaluate the run-rate performance of the company. non-gaap financial measures should be viewed as supplementing, and not as an alternative or substitute for, the consolidated financial statements prepared and presented in accordance with gaap. the footnotes to the reconciliation tables below should be read in conjunction with the unaudited consolidated quarterly financial statements in the company’s quarterly report on form 10-q filed with the sec. industry peers may provide similar supplemental information but may not define similarly-named metrics in the same way and may not make identical adjustments. organic revenue growth rate: organic revenue growth rate is defined as the percentage change in revenue, as compared to the prior-year period, adjusted for revenue attributable to acquisitions during their first 12 months of the company’s ownership, and other adjustments such as contingent commissions, fiduciary investment income, and the impact of changes in foreign exchange rates. the most directly comparable gaap financial metric is total revenue growth rate. adjusted compensation and benefits expense: adjusted compensation and benefits expense is defined as compensation and benefits expense adjusted to reflect items such as (i) equity-based compensation, (ii) acquisition and restructuring related compensation expenses, and (iii) other exceptional or non-recurring compensation expenses, as applicable. the most directly comparable gaap financial metric is compensation and benefits expense. adjusted general and administrative expense: adjusted general and administrative expense is defined as general and administrative expense adjusted to reflect items such as (i) acquisition and restructuring related general and administrative expenses, and (ii) other exceptional or non-recurring general and administrative expenses, as applicable. the most directly comparable gaap financial metric is general and administrative expense. adjusted compensation and benefits expense ratio: adjusted compensation and benefits expense ratio is defined as the adjusted compensation and benefits expense as a percentage of total revenue. the most directly comparable gaap financial metric is compensation and benefits expense ratio. adjusted general and administrative expense ratio: adjusted general and administrative expense ratio is defined as the adjusted general and administrative expense as a percentage of total revenue. the most directly comparable gaap financial metric is general and administrative expense ratio. adjusted ebitdac: adjusted ebitdac is defined as net income (loss) before interest expense, net, income tax expense (benefit), depreciation, amortization, and change in contingent consideration, adjusted to reflect items such as (i) equity-based compensation, (ii) acquisition-related expenses, and (iii) other exceptional or non-recurring items, as applicable. the most directly comparable gaap financial metric is net income (loss). adjusted ebitdac margin: adjusted ebitdac margin is defined as adjusted ebitdac as a percentage of total revenue. the most directly comparable gaap financial metric is net income (loss) margin. adjusted net income: adjusted net income is defined as tax-effected earnings before amortization and certain items of income and expense, gains and losses, equity-based compensation, acquisition related long-term incentive compensation, acquisition-related expenses, costs associated with the ipo and certain exceptional or non-recurring items. the company will be subject to united states federal income taxes, in addition to state, local, and foreign taxes, with respect to its allocable share of any net taxable income of ryan specialty, llc. for comparability purposes, this calculation incorporates the impact of federal and state statutory tax rates on 100% of the company's adjusted pre-tax income as if the company owned 100% of ryan specialty, llc. the most directly comparable gaap financial metric is net income (loss). adjusted net income margin: adjusted net income margin is defined as adjusted net income as a percentage of total revenue. the most directly comparable gaap financial metric is net income (loss) margin. adjusted diluted earnings per share: adjusted diluted earnings per share is defined as adjusted net income divided by diluted shares outstanding after adjusting for the effect of the exchange of 100% of the outstanding common units of new rs holdings, llc (together with the shares of class b common stock) into shares of class a common stock and the effect of unvested equity awards. the most directly comparable gaap financial metric is diluted earnings (loss) per share. the reconciliation of the above non-gaap measures to their most directly comparable gaap financial measure is set forth in the reconciliation table accompanying this release. with respect to the organic revenue growth rate and adjusted ebitdac margin outlook presented in the “full year 2022 outlook” section of this press release, the company is unable to provide a comparable outlook for, or a reconciliation to, total revenue growth rate or net income (loss) margin because it cannot provide a meaningful or accurate calculation or estimation of certain reconciling items without unreasonable effort. its inability to do so is due to the inherent difficulty in forecasting the timing of items that have not yet occurred and quantifying certain amounts that are necessary for such reconciliation, including variations in effective tax rate, expenses to be incurred for acquisition activities and other one-time or exceptional items. consolidated statements of income (unaudited) three months ended september 30, nine months ended september 30, (in thousands, except percentages and per share data) 2022 2021 2022 2021 revenue net commissions and fees $ 407,551 $ 352,610 $ 1,284,459 $ 1,053,800 fiduciary investment income 4,445 156 5,719 436 total revenue $ 411,996 $ 352,766 $ 1,290,178 $ 1,054,236 expenses compensation and benefits 274,108 286,538 858,439 737,825 general and administrative 48,991 38,754 139,851 96,984 amortization 25,667 26,982 78,563 82,095 depreciation 1,463 1,179 3,903 3,601 change in contingent consideration 423 43 (837 ) 2,356 total operating expenses $ 350,652 $ 353,496 $ 1,079,919 $ 922,861 operating income (loss) $ 61,344 $ (730 ) $ 210,259 $ 131,375 interest expense, net 28,864 21,193 75,462 60,224 loss (income) from equity method investment in related party (144 ) (176 ) 414 (610 ) other non-operating loss (income) (66 ) 16,211 6,832 45,547 income (loss) before income taxes $ 32,690 $ (37,958 ) $ 127,551 $ 26,214 income tax expense (benefit) 3,411 (5,368 ) 10,076 (802 ) net income (loss) $ 29,279 $ (32,590 ) $ 117,475 $ 27,016 gaap financial measures revenue $ 411,996 $ 352,766 $ 1,290,178 $ 1,054,236 compensation and benefits 274,108 286,538 858,439 737,825 general and administrative 48,991 38,754 139,851 96,984 net income (loss) $ 29,279 $ (32,590 ) $ 117,475 $ 27,016 compensation and benefits expense ratio 66.5 % 81.2 % 66.5 % 70.0 % general and administrative expense ratio 11.9 % 11.0 % 10.8 % 9.2 % net income (loss) margin 7.1 % (9.2 )% 9.1 % 2.6 % earnings (loss) per share $ 0.11 $ (0.16 ) $ 0.40 $ (0.16 ) diluted earnings (loss) per share $ 0.09 $ (0.16 ) $ 0.37 $ (0.16 ) non-gaap financial measures (unaudited) three months ended september 30, nine months ended september 30, (in thousands, except percentages and per share data) 2022 2021 2022 2021 non-gaap financial measures organic revenue growth rate 13.7 % 28.9 % 18.7 % 25.6 % adjusted compensation and benefits expense $ 247,095 $ 212,590 $ 769,253 $ 625,452 adjusted compensation and benefits expense ratio 60.0 % 60.3 % 59.6 % 59.3 % adjusted general and administrative expense $ 48,084 $ 35,153 $ 130,774 $ 88,870 adjusted general and administrative expense ratio 11.7 % 10.0 % 10.1 % 8.4 % adjusted ebitdac $ 116,817 $ 105,023 $ 390,151 $ 339,914 adjusted ebitdac margin 28.4 % 29.8 % 30.2 % 32.2 % adjusted net income $ 66,560 $ 62,949 $ 237,774 $ 209,739 adjusted net income margin 16.2 % 17.8 % 18.4 % 19.9 % adjusted diluted earnings per share $ 0.25 $ 0.24 $ 0.88 $ 0.78 consolidated statements of financial position (unaudited) (in thousands, except share and per share data) september 30, 2022 december 31, 2021 assets current assets cash and cash equivalents $ 833,135 $ 386,962 commissions and fees receivable – net 187,223 210,252 fiduciary cash and receivables 2,146,894 2,390,185 prepaid incentives – net 7,782 7,726 other current assets 24,559 15,882 total current assets $ 3,199,593 $ 3,011,007 non-current assets goodwill 1,314,301 1,309,267 other intangible assets 501,254 573,930 prepaid incentives – net 20,234 25,382 equity method investment in related party 38,514 45,417 property and equipment – net 22,669 15,290 lease right-of-use assets 135,283 84,874 deferred tax assets 398,990 382,753 other non-current assets 57,124 10,788 total non-current assets $ 2,488,369 $ 2,447,701 total assets $ 5,687,962 $ 5,458,708 liabilities and stockholders' equity current liabilities accounts payable and accrued liabilities 81,975 99,403 accrued compensation 232,728 386,301 operating lease liabilities 19,114 18,783 tax receivable agreement liabilities 7,977 — short-term debt and current portion of long-term debt 29,157 23,469 fiduciary liabilities 2,146,894 2,390,185 total current liabilities $ 2,517,845 $ 2,918,141 non-current liabilities accrued compensation 9,067 4,371 operating lease liabilities 135,040 74,386 long-term debt 1,953,461 1,566,627 deferred tax liabilities 624 631 tax receivable agreement liabilities 294,385 272,100 other non-current liabilities 20,016 27,675 total non-current liabilities $ 2,412,593 $ 1,945,790 total liabilities $ 4,930,438 $ 4,863,931 stockholders' equity class a common stock ($0.001 par value; 1,000,000,000 shares authorized, 112,212,653 and 109,894,548 shares issued and outstanding at september 30, 2022 and december 31, 2021, respectively) 112 110 class b common stock ($0.001 par value; 1,000,000,000 shares authorized, 147,390,500 and 149,162,107 shares issued and outstanding at september 30, 2022 and december 31, 2021, respectively) 147 149 class x common stock ($0.001 par value; 10,000,000 shares authorized, 640,784 shares issued and 0 outstanding at september 30, 2022 and december 31, 2021) — — preferred stock ($0.001 par value; 500,000,000 shares authorized, 0 shares issued and outstanding at september 30, 2022 and december 31, 2021) — — additional paid-in capital 402,026 348,865 retained earnings (accumulated deficit) 36,093 (7,064 ) accumulated other comprehensive income 4,367 1,714 total stockholders' equity attributable to ryan specialty holdings, inc. $ 442,745 $ 343,774 non-controlling interests 314,779 251,003 total stockholders' equity 757,524 594,777 total liabilities and stockholders' equity $ 5,687,962 $ 5,458,708 consolidated statements of cash flows (unaudited) nine months ended september 30, (in thousands) 2022 2021 cash flows from operating activities net income $ 117,475 $ 27,016 adjustments to reconcile net income to cash flows provided by operating activities: loss (gain) from equity method investment 414 (610 ) amortization 78,563 82,095 depreciation 3,903 3,601 prepaid and deferred compensation expense 27,256 34,960 non-cash equity-based compensation 61,084 46,877 amortization of deferred debt issuance costs 9,017 8,546 amortization of interest rate cap premium 2,898 — deferred income tax expense (benefit) 4,597 (5,860 ) loss on extinguishment of existing debt — 8,634 loss on tax receivable agreement 7,173 — change (net of acquisitions) in: commissions and fees receivable – net 24,341 6,004 accrued interest liability 3,016 602 other current assets and accrued liabilities (192,752 ) 27,751 other non-current assets and accrued liabilities 3,999 (85,241 ) total cash flows provided by operating activities $ 150,984 $ 154,375 cash flows from investing activities asset acquisitions — (343,158 ) prepaid incentives issued – repayments 337 4,136 capital expenditures (12,026 ) (6,429 ) total cash flows used for investing activities $ (11,689 ) $ (345,451 ) cash flows from financing activities proceeds from senior secured notes 394,000 — payment of interest rate cap premium (25,500 ) — repayment of term debt (12,375 ) (12,375 ) debt issuance costs paid (2,369 ) (1,893 ) finance lease and other costs paid (27 ) (108 ) payment of contingent consideration (6,241 ) (4,495 ) purchase of remaining interest in ryanre — (48,368 ) repurchase of preferred equity — (78,256 ) equity repurchases from pre-ipo unitholders — (3,880 ) cash distribution to llc unitholders (32,678 ) (47,039 ) repurchase of class a common stock in the ipo — (183,616 ) repurchase of pre-ipo llc units and payment of alternative tra payments — (780,352 ) issuance of class a common stock in the ipo, net of offering costs paid — 1,455,184 repayment of unsecured promissory notes — (1,108 ) receipt of taxes related to net share settlement of equity awards 7,132 — taxes paid related to net share settlement of equity awards (6,832 ) — net change in fiduciary liabilities (54,775 ) 52,422 total cash flows provided by financing activities $ 260,335 $ 346,116 effect of changes in foreign exchange rates on cash, cash equivalents, and cash held in a fiduciary capacity (1,274 ) (1,486 ) net change in cash, cash equivalents, and cash held in a fiduciary capacity $ 398,356 $ 153,554 cash, cash equivalents, and cash held in a fiduciary capacity—beginning balance $ 1,139,661 $ 895,704 cash, cash equivalents, and cash held in a fiduciary capacity—ending balance $ 1,538,017 $ 1,049,258 reconciliation of cash, cash equivalents, and cash held in a fiduciary capacity cash and cash equivalents $ 833,135 $ 413,695 cash held in a fiduciary capacity $ 704,882 $ 635,563 total cash, cash equivalents, and cash held in a fiduciary capacity $ 1,538,017 $ 1,049,258 net commissions and fees three months ended september 30, (in thousands, except percentages) 2022 % of total 2021 % of total change wholesale brokerage $ 267,222 65.6 % $ 229,146 65.0 % $ 38,076 16.6 % binding authorities 55,607 13.6 52,795 15.0 2,812 5.3 underwriting management 84,722 20.8 70,669 20.0 14,053 19.9 total net commissions and fees $ 407,551 $ 352,610 $ 54,941 15.6 % nine months ended september 30, (in thousands, except percentages) 2022 % of total 2021 % of total change wholesale brokerage $ 841,273 65.5 % $ 676,229 64.2 % $ 165,044 24.4 % binding authorities 178,351 13.9 161,436 15.3 16,915 10.5 underwriting management 264,835 20.6 216,135 20.5 48,700 22.5 total net commissions and fees $ 1,284,459 $ 1,053,800 $ 230,659 21.9 % reconciliation of organic revenue growth rate to total revenue growth rate three months ended september 30, 2022 2021 total revenue growth rate (gaap) (1) 16.8 % 49.0 % less: mergers and acquisitions (2) (2.8 ) (18.8 ) change in other (3) (0.3 ) (1.3 ) organic revenue growth rate (non-gaap) 13.7 % 28.9 % (1) september 30, 2022 revenue of $412.0 million less september 30, 2021 revenue of $352.8 million is a $59.2 million period-over-period change. the change, $59.2 million, divided by the september 30, 2021 revenue of $352.8 million is a total revenue change of 16.8%. september 30, 2021 revenue of $352.8 million less september 30, 2020 revenue of $236.8 million is a $116.0 million period-over-period change. the change, $116.0 million, divided by the september 30, 2020 revenue of $236.8 million is a total revenue change of 49.0%. see “comparison of the three months ended september 30, 2022 and 2021” for further details. (2) the acquisitions adjustment excludes net commission and fees revenue generated during the first 12 months following an acquisition. the total adjustment for the three months ended september 30, 2022 and three months ended september 30, 2021 was $9.9 million and $44.4 million, respectively. (3) the other adjustments exclude the period-over-period change in contingent commissions, fiduciary investment income, and foreign exchange rates. the total adjustment for the three months ended september 30, 2022 and three months ended september 30, 2021 was $0.9 million and $2.9 million, respectively. nine months ended september 30, 2022 2021 total revenue growth rate (gaap) (1) 22.4 % 52.5 % less: mergers and acquisitions (2) (3.0 ) (26.7 ) change in other (3) (0.7 ) (0.2 ) organic revenue growth rate (non-gaap) 18.7 % 25.6 % (1) september 30, 2022 revenue of $1,290.2 million less september 30, 2021 revenue of $1,054.2 million is a $235.9 million period-over-period change. the change, $235.9 million, divided by the september 30, 2021 revenue of $1,054.2 million is a total revenue change of 22.4%. september 30, 2021 revenue of $1,054.2 million less september 30, 2020 revenue of $691.3 million is a $362.9 million period-over-period change. the change, $362.9 million, divided by the september 30, 2020 revenue of $691.3 million is a total revenue change of 52.5%. see “comparison of the nine months ended september 30, 2022 and 2021” for further details. (2) the acquisitions adjustment excludes net commission and fees revenue generated during the first 12 months following an acquisition. the total adjustment for the nine months ended september 30, 2022 and nine months ended september 30, 2021 was $31.5 million and $184.4 million, respectively. (3) the other adjustments exclude the period-over-period change in contingent commissions, fiduciary investment income, and foreign exchange rates. the total adjustment for the nine months ended september 30, 2022 and nine months ended september 30, 2021 was $7.0 million and $1.2 million, respectively. reconciliation of adjusted compensation and benefits expense to compensation and benefits expense three months ended september 30, (in thousands, except percentages) 2022 2021 total revenue $ 411,996 $ 352,766 compensation and benefits expense $ 274,108 $ 286,538 acquisition-related expense (21 ) — acquisition related long-term incentive compensation (7,383 ) (10,333 ) restructuring and related expense (19 ) (895 ) amortization and expense related to discontinued prepaid incentives (1,533 ) (1,759 ) equity-based compensation (5,530 ) (3,371 ) initial public offering related expense (12,527 ) (57,590 ) adjusted compensation and benefits expense (1) $ 247,095 $ 212,590 compensation and benefits expense ratio 66.5 % 81.2 % adjusted compensation and benefits expense ratio 60.0 % 60.3 % (1) adjustments made to compensation and benefits expense are described in the footnotes of the reconciliation of adjusted ebitdac to net income (loss) in “reconciliation of adjusted ebitdac to net income.” nine months ended september 30, (in thousands, except percentages) 2022 2021 total revenue $ 1,290,178 $ 1,054,236 compensation and benefits expense $ 858,439 $ 737,825 acquisition-related expense (122 ) — acquisition related long-term incentive compensation (22,181 ) (28,837 ) restructuring and related expense (724 ) (9,246 ) amortization and expense related to discontinued prepaid incentives (5,075 ) (5,441 ) equity-based compensation (18,009 ) (11,259 ) initial public offering related expense (43,075 ) (57,590 ) adjusted compensation and benefits expense (1) $ 769,253 $ 625,452 compensation and benefits expense ratio 66.5 % 70.0 % adjusted compensation and benefits expense ratio 59.6 % 59.3 % (1) adjustments made to compensation and benefits expense are described in the footnotes of the reconciliation of adjusted ebitdac to net income (loss) in “reconciliation of adjusted ebitdac to net income.” reconciliation of adjusted general and administrative expense to general and administrative expense three months ended september 30, (in thousands, except percentages) 2022 2021 total revenue $ 411,996 $ 352,766 general and administrative expense $ 48,991 $ 38,754 acquisition-related expense (716 ) (106 ) restructuring and related expense — (2,465 ) initial public offering related expense (191 ) (1,030 ) adjusted general and administrative expense (1) $ 48,084 $ 35,153 general and administrative expense ratio 11.9 % 11.0 % adjusted general and administrative expense ratio 11.7 % 10.0 % (1) adjustments made to general and administrative expense are described in the footnotes of the reconciliation of adjusted ebitdac to net income (loss) in “reconciliation of adjusted ebitdac to net income.” nine months ended september 30, (in thousands, except percentages) 2022 2021 total revenue $ 1,290,178 $ 1,054,236 general and administrative expense $ 139,851 $ 96,984 acquisition-related expense (2,767 ) (2,128 ) restructuring and related expense (4,993 ) (4,286 ) other non-recurring expense — (354 ) initial public offering related expense (1,317 ) (1,346 ) adjusted general and administrative expense (1) $ 130,774 $ 88,870 general and administrative expense ratio 10.8 % 9.2 % adjusted general and administrative expense ratio 10.1 % 8.4 % (1) adjustments made to general and administrative expense are described in the footnotes of the reconciliation of adjusted ebitdac to net income (loss) in “reconciliation of adjusted ebitdac to net income.” reconciliation of adjusted ebitdac to net income three months ended september 30, (in thousands, except percentages) 2022 2021 total revenue $ 411,996 $ 352,766 net income (loss) $ 29,279 $ (32,590 ) interest expense, net 28,864 21,193 income tax expense (benefit) 3,411 (5,368 ) depreciation 1,463 1,179 amortization 25,667 26,982 change in contingent consideration 423 43 ebitdac $ 89,107 $ 11,439 acquisition-related expense (1) 737 106 acquisition related long-term incentive compensation (2) 7,383 10,333 restructuring and related expense (3) 19 3,360 amortization and expense related to discontinued prepaid incentives (4) 1,533 1,759 other non-operating loss (income) (5) (66 ) 16,211 equity-based compensation (6) 5,530 3,371 ipo related expenses (7) 12,718 58,620 (income) from equity method investments in related party (144 ) (176 ) adjusted ebitdac $ 116,817 $ 105,023 net income (loss) margin (8) 7.1 % (9.2 )% adjusted ebitdac margin 28.4 % 29.8 % (1) acquisition-related expense includes diligence, transaction-related, and integration costs. compensation and benefits expenses were de minimis for the three months ended september 30, 2022, while general and administrative expenses contributed to $0.7 million and $0.1 million of the acquisition-related expense for the three months ended september 30, 2022 and 2021, respectively. (2) acquisition related long-term incentive compensation arises from long-term incentive plans associated with acquisitions. (3) restructuring and related expense consists of compensation and benefits were de minimis for the three months ended september 30, 2022 and $0.9 million for the three months ended september 30, 2021, and general and administrative costs including occupancy and professional services fees of $2.5 million for the three months ended september 30, 2021, related to the restructuring plan. the compensation and benefits expense includes severance as well as employment costs related to services rendered between the notification and termination dates. see “note 5, restructuring” of the unaudited quarterly consolidated financial statements for further discussion. the remaining costs that preceded the restructuring plan were associated with organizational design, other severance, and non-recurring lease costs. (4) amortization and expense related to discontinued prepaid incentive programs – see “note 14, employee benefit plans, prepaid and long-term incentives” of the unaudited quarterly consolidated financial statements for further discussion. (5) for the three months ended september 30, 2022, other non-operating loss (income) includes a $0.1 million of sublease income. for the three months ended september 30, 2021, other non-operating loss (income) includes the change in fair value of the embedded derivatives on the redeemable preferred units. this change in fair value of $16.3 million was due to the occurrence of a realization event in the third quarter of 2021, which is defined in the onex purchase agreement as a qualified public offering or a sale transaction. (6) equity-based compensation reflects non-cash equity-based expense. (7) ipo related expenses include $0.2 million and $1.0 million of general and administrative expense associated with the preparations for sarbanes-oxley compliance, tax, and accounting advisory services on ipo-related structure changes for the three months ended september 30, 2022 and 2021, respectively, and compensation-related expense of $12.5 million and $57.6 million for the three months ended september 30, 2022 and 2021, respectively, primarily related to the revaluation of existing equity awards at ipo as well as expense for new awards issued at ipo. (8) net income (loss) margin is net income (loss) as a percentage of total revenue. nine months ended september 30, (in thousands, except percentages) 2022 2021 total revenue $ 1,290,178 $ 1,054,236 net income (loss) $ 117,475 $ 27,016 interest expense, net 75,462 60,224 income tax expense (benefit) 10,076 (802 ) depreciation 3,903 3,601 amortization 78,563 82,095 change in contingent consideration (837 ) 2,356 ebitdac $ 284,642 $ 174,490 acquisition-related expense (1) 2,889 2,128 acquisition related long-term incentive compensation (2) 22,181 28,837 restructuring and related expense (3) 5,717 13,532 amortization and expense related to discontinued prepaid incentives (4) 5,075 5,441 other non-operating loss (income) (5) 6,832 45,547 equity-based compensation (6) 18,009 11,259 other non-recurring expense (7) — 354 ipo related expenses (8) 44,392 58,936 (income) from equity method investments in related party 414 (610 ) adjusted ebitdac (9) $ 390,151 $ 339,914 net income (loss) margin (10) 9.1 % 2.6 % adjusted ebitdac margin 30.2 % 32.2 % (1) acquisition-related expense includes diligence, transaction-related, and integration costs. compensation and benefits expenses were $0.1 million for the nine months ended september 30, 2022, while general and administrative expenses contributed to $2.8 million and $2.1 million of the acquisition-related expense for the nine months ended september 30, 2022 and 2021, respectively. (2) acquisition related long-term incentive compensation arises from long-term incentive plans associated with acquisitions. (3) restructuring and related expense consists of compensation and benefits of $0.7 million and $9.2 million for the nine months ended september 30, 2022 and 2021, respectively, and general and administrative costs including occupancy and professional services fees of $5.0 million and $4.3 million for the nine months ended september 30, 2022 and 2021, respectively, related to the restructuring plan. the compensation and benefits expense includes severance as well as employment costs related to services rendered between the notification and termination dates. see “note 5, restructuring” of the unaudited quarterly consolidated financial statements for further discussion. the remaining costs that preceded the restructuring plan were associated with organizational design, other severance, and non-recurring lease costs. (4) amortization and expense related to discontinued prepaid incentive programs – see “note 14, employee benefit plans, prepaid and long-term incentives” of the unaudited quarterly consolidated financial statements for further discussion. (5) for the nine months ended september 30, 2022, other non-operating loss (income) includes a $7.2 million charge related to the change in the tra liability caused by a change in our blended state tax rates. for the nine months ended september 30, 2021, other non-operating loss (income) includes the change in fair value of the embedded derivatives on the redeemable preferred units. this change in fair value of $36.9 million was due to the occurrence of a realization event in the third quarter of 2021, which is defined in the onex purchase agreement as a qualified public offering or a sale transaction. for the nine months ended september 30, 2021, other non-operating loss (income) also includes expense of $8.6 million associated with the extinguishment of a portion of our deferred debt issuance costs on the term debt. (6) equity-based compensation reflects non-cash equity-based expense. (7) other non-recurring expense includes one-time impacts that do not reflect the core performance of the business, including general and administrative expenses of $0.4 million for the nine months ended september 30, 2021. other non-recurring items include one-time professional services costs associated with term debt repricing, one-time non-income tax charges, and tax and accounting consultancy costs associated with potential structure changes. (8) ipo related expenses include $1.3 million and $1.3 million of general and administrative expense associated with the preparations for sarbanes-oxley compliance, tax, and accounting advisory services on ipo-related structure changes for the nine months ended september 30, 2022 and 2021, respectively, and compensation-related expense of $43.1 million and $57.6 million for nine months ended september 30, 2022 and 2021, respectively, primarily related to the revaluation of existing equity awards at ipo as well as expense for new awards issued at ipo. (9) consolidated adjusted ebitdac does not reflect a deduction for the adjusted ebitdac associated with the non-controlling interest in ryan re for the period of time prior to march 31, 2021 when we did not own 100% of ryan re. (10) net income (loss) margin is net income (loss) as a percentage of total revenue. reconciliation of adjusted net income to net income three months ended september 30, (in thousands, except percentages) 2022 2021 total revenue $ 411,996 $ 352,766 net income (loss) $ 29,279 $ (32,590 ) income tax expense (benefit) 3,411 (5,368 ) amortization 25,667 26,982 amortization of deferred debt issuance costs (1) 3,033 2,777 change in contingent consideration 423 43 acquisition-related expense (2) 737 106 acquisition related long-term incentive compensation (3) 7,383 10,333 restructuring and related expense (4) 19 3,360 amortization and expense related to discontinued prepaid incentives (5) 1,533 1,759 other non-operating loss (income) (6) (66 ) 16,211 equity-based compensation (7) 5,530 3,371 ipo related expenses (8) 12,718 58,620 (income) / loss from equity method investments in related party (144 ) (176 ) adjusted income before income taxes $ 89,523 $ 85,428 adjusted tax expense (9) (22,963 ) (22,479 ) adjusted net income $ 66,560 $ 62,949 net income (loss) margin (10) 7.1 % (9.2 )% adjusted net income margin 16.2 % 17.8 % (1) interest expense, net includes amortization of deferred debt issuance costs. (2) acquisition-related expense includes diligence, transaction-related, and integration costs. compensation and benefits expenses were de minimis for the three months ended september 30, 2022, while general and administrative expenses contributed to $0.7 million and $0.1 million of the acquisition-related expense for the three months ended september 30, 2022 and 2021, respectively. (3) acquisition related long-term incentive compensation arises from long-term incentive plans associated with acquisitions. (4) restructuring and related expense consists of compensation and benefits were de minimis for the three months ended september 30, 2022 and $0.9 million for the three months ended september 30, 2021, and general and administrative costs including occupancy and professional services fees of $2.5 million for the three months ended september 30, 2021, related to the restructuring plan. the compensation and benefits expense includes severance as well as employment costs related to services rendered between the notification and termination dates. see “note 5, restructuring” of the unaudited quarterly consolidated financial statements for further discussion. the remaining costs that preceded the restructuring plan were associated with organizational design, other severance, and non-recurring lease costs. (5) amortization and expense related to discontinued prepaid incentive programs – see “note 14, employee benefit plans, prepaid and long-term incentives” of the unaudited quarterly consolidated financial statements for further discussion. (6) for the three months ended september 30, 2022, other non-operating loss (income) includes a $0.1 million of sublease income. for the three months ended september 30, 2021, other non-operating loss (income) includes the change in fair value of the embedded derivatives on the redeemable preferred units. this change in fair value of $16.3 million was due to the occurrence of a realization event in the third quarter of 2021, which is defined in the onex purchase agreement as a qualified public offering or a sale transaction. (7) equity-based compensation reflects non-cash equity-based expense. (8) ipo related expenses include $0.2 million and $1.0 million of general and administrative expense associated with the preparations for sarbanes-oxley compliance, tax, and accounting advisory services on ipo-related structure changes for the three months ended september 30, 2022 and 2021, respectively, and compensation-related expense of $12.5 million and $57.6 million for the three months ended september 30, 2022 and 2021, respectively, primarily related to the revaluation of existing equity awards at ipo as well as expense for new awards issued at ipo. (9) the company is subject to united states federal income taxes, in addition to state, local, and foreign taxes, with respect to our allocable share of any net taxable income of the llc. for the three months ended september 30, 2022, this calculation of adjusted tax expense is based on a federal statutory rate of 21% and a combined state income tax rate net of federal benefits of 4.65% on 100% of our adjusted income before income taxes as if the company owned 100% of the llc. for the three months ended september 30, 2021, this calculation of adjusted tax expense is based on a federal statutory rate of 21% and a combined state income tax rate net of federal benefits of 5.31% on 100% of our adjusted income before income taxes as if the company owned 100% of the llc. (10) net income (loss) margin is net income (loss) as a percentage of total revenue. nine months ended september 30, (in thousands, except percentages) 2022 2021 total revenue $ 1,290,178 $ 1,054,236 net income (loss) $ 117,475 $ 27,016 income tax expense (benefit) 10,076 (802 ) amortization 78,563 82,095 amortization of deferred debt issuance costs (1) 9,017 8,546 change in contingent consideration (837 ) 2,356 acquisition-related expense (2) 2,889 2,128 acquisition related long-term incentive compensation (3) 22,181 28,837 restructuring and related expense (4) 5,717 13,532 amortization and expense related to discontinued prepaid incentives (5) 5,075 5,441 other non-operating loss (income) (6) 6,832 45,547 equity-based compensation (7) 18,009 11,259 other non-recurring items (8) — 354 ipo related expenses (9) 44,392 58,936 (income) / loss from equity method investments in related party 414 (610 ) adjusted income before income taxes $ 319,803 $ 284,635 adjusted tax expense (10) (82,029 ) (74,896 ) adjusted net income (11) $ 237,774 $ 209,739 net income (loss) margin (12) 9.1 % 2.6 % adjusted net income margin 18.4 % 19.9 % (1) interest expense, net includes amortization of deferred debt issuance costs. (2) acquisition-related expense includes diligence, transaction-related, and integration costs. compensation and benefits expenses were $0.1 million for the nine months ended september 30, 2022, while general and administrative expenses contributed to $2.8 million and $2.1 million of the acquisition-related expense for the nine months ended september 30, 2022 and 2021, respectively. (3) acquisition related long-term incentive compensation arises from long-term incentive plans associated with acquisitions. (4) restructuring and related expense consists of compensation and benefits of $0.7 million and $9.2 million for the nine months ended september 30, 2022 and 2021, respectively, and general and administrative costs including occupancy and professional services fees of $5.0 million and $4.3 million for the nine months ended september 30, 2022 and 2021, respectively, related to the restructuring plan. the compensation and benefits expense includes severance as well as employment costs related to services rendered between the notification and termination dates. see “note 5, restructuring” of the unaudited quarterly consolidated financial statements for further discussion. the remaining costs that preceded the restructuring plan were associated with organizational design, other severance, and non-recurring lease costs. (5) amortization and expense related to discontinued prepaid incentive programs – see “note 14, employee benefit plans, prepaid and long-term incentives” of the unaudited quarterly consolidated financial statements for further discussion. (6) for the nine months ended september 30, 2022, other non-operating loss (income) includes a $7.2 million charge related to the change in the tra liability caused by a change in our blended state tax rates. for the nine months ended september 30, 2021, other non-operating loss (income) includes the change in fair value of the embedded derivatives on the redeemable preferred units. this change in fair value of $36.9 million was due to the occurrence of a realization event in the third quarter of 2021, which is defined in the onex purchase agreement as a qualified public offering or a sale transaction. for the nine months ended september 30, 2021, other non-operating loss (income) also includes expense of $8.6 million associated with the extinguishment of a portion of our deferred debt issuance costs on the term debt (7) equity-based compensation reflects non-cash equity-based expense. (8) other non-recurring expense includes one-time impacts that do not reflect the core performance of the business, including general and administrative expenses of $0.4 million for the nine months ended september 30, 2021. other non-recurring items include one-time professional services costs associated with term debt repricing, one-time non-income tax charges, and tax and accounting consultancy costs associated with potential structure changes. (9) ipo related expenses include $1.3 million and $1.3 million of general and administrative expense associated with the preparations for sarbanes-oxley compliance, tax, and accounting advisory services on ipo-related structure changes for the nine months ended september 30, 2022 and 2021, respectively, and compensation-related expense of $43.1 million and $57.6 million for nine months ended september 30, 2022 and 2021, respectively, primarily related to the revaluation of existing equity awards at ipo as well as expense for new awards issued at ipo. (10) the company is subject to united states federal income taxes, in addition to state, local, and foreign taxes, with respect to our allocable share of any net taxable income of the llc. for the nine months ended september 30, 2022, this calculation of adjusted tax expense is based on a federal statutory rate of 21% and a combined state income tax rate net of federal benefits of 4.65% on 100% of our adjusted income before income taxes as if the company owned 100% of the llc. for the nine months ended september 30, 2021, this calculation of adjusted tax expense is based on a federal statutory rate of 21% and a combined state income tax rate net of federal benefits of 5.31% on 100% of our adjusted income before income taxes as if the company owned 100% of the llc. (11) consolidated adjusted net income does not reflect a deduction for the adjusted net income associated with the non-controlling interest in ryan re for the period of time prior to march 31, 2021 when the company did not own 100% of ryan re or the non-controlling interest attributed to the retained ownership of the llc. (12) net income (loss) margin is net income (loss) as a percentage of total revenue. reconciliation of adjusted diluted earnings per share to diluted earnings per share three months ended september 30, 2022 adjustments (in thousands, except per share data) u.s. gaap less: net income attributed to dilutive awards and substantively vested shares (1) plus: net income (loss) attributed to non-controlling interests (2) plus: adjustments to adjusted net income (3) plus: dilutive impact of unvested equity awards (4) adjusted diluted earnings per share numerator: net income (loss) attributable to class a common shareholders- diluted $ 24,824 $ (13,079 ) $ 17,534 $ 37,281 $ — $ 66,560 denominator: weighted-average shares of class a common stock outstanding- diluted 266,352 — — — 4,153 270,505 net income (loss) per share of class a common stock- diluted $ 0.09 $ (0.05 ) $ 0.07 $ 0.14 $ — $ 0.25 (1) adjustment removes the impact of net income (loss) attributed to dilutive awards and substantively vested rsus to arrive at net income (loss) attributable to ryan specialty holdings, inc. see “note 12, earnings (loss) per share” of the unaudited quarterly consolidated financial statements. (2) for comparability purposes, this calculation incorporates the net income (loss) that would be outstanding if all llc common units (together with shares of class b common stock) were exchanged for shares of class a common stock. 144,085 weighted average outstanding llc common units were considered dilutive for the three months ended september 30, 2022 and included in the 266,352 weighted-average shares outstanding within diluted eps. see “note 12, earnings (loss) per share” of the unaudited quarterly consolidated financial statements. (3) adjustments to adjusted net income are described in the footnotes of the reconciliation of adjusted net income to net income (loss) in “adjusted net income and adjusted net income margin.” (4) for comparability purposes and to be consistent with the treatment of the adjustments to arrive at adjusted net income, the dilutive effect of unvested equity awards is calculated using the treasury stock method as if the weighted average unrecognized cost associated with the awards was $0 over the period, less any unvested equity awards determined to be dilutive within the diluted earnings per share calculation disclosed in “note 12, earnings (loss) per share” of the unaudited quarterly consolidated financial statements. three months ended september 30, 2021 adjustments (in thousands, except per share data) u.s. gaap plus: net income attributable to the llc before the organizational transactions plus: impact of all llc common units exchanged for class a shares (1) plus: adjustments to adjusted net income (2) plus: dilutive impact of unvested equity awards (3) adjusted diluted earnings per share numerator: net income (loss) attributable to class a common shareholders- diluted $ (17,115 ) $ 15,781 $ (31,256 ) $ 95,539 $ — $ 62,949 denominator: weighted-average shares of class a common stock outstanding- diluted 105,309 — 142,727 — 19,684 267,721 net income (loss) per share of class a common stock- diluted $ (0.16 ) $ 0.15 $ (0.12 ) $ 0.39 $ (0.02 ) $ 0.24 (1) for comparability purposes, this calculation incorporates the net income (loss) and weighted average shares of class a common stock that would be outstanding if all llc common units (together with shares of class b common stock) were exchanged for shares of class a common stock. see “note 12, earnings (loss) per share” of the unaudited quarterly consolidated financial statements. (2) adjustments to adjusted net income are described in the footnotes of the reconciliation of adjusted net income to net income (loss) in “adjusted net income and adjusted net income margin.” (3) for comparability purposes and to be consistent with the treatment of the adjustments to arrive at adjusted net income, the dilutive effect of unvested equity awards is calculated using the treasury stock method as if the weighted average unrecognized cost associated with the awards was $0 over the period, less any unvested equity awards determined to be dilutive within the diluted earnings per share calculation disclosed in “note 12, earnings (loss) per share” of the unaudited quarterly consolidated financial statements. nine months ended september 30, 2022 adjustments (in thousands, except per share data) u.s. gaap less: net income attributed to dilutive awards and substantively vested shares (1) plus: net income (loss) attributed to non-controlling interests (2) plus: adjustments to adjusted net income (3) plus: dilutive impact of unvested equity awards (4) adjusted diluted earnings per share numerator: net income (loss) attributable to class a common shareholders- diluted $ 98,565 $ (55,408 ) $ 74,318 $ 120,299 $ — $ 237,774 denominator: weighted-average shares of class a common stock outstanding- diluted 265,071 — — — 5,011 270,082 net income (loss) per share of class a common stock- diluted $ 0.37 $ (0.21 ) $ 0.28 $ 0.46 $ (0.02 ) $ 0.88 (1) net income (loss) attributable to ryan specialty holdings, inc. see “note 12, earnings (loss) per share” of the unaudited quarterly consolidated financial statements. (2) for comparability purposes, this calculation incorporates the net income (loss) that would be outstanding if all llc common units (together with shares of class b common stock) were exchanged for shares of class a common stock. 144,004 weighted average outstanding llc common units were considered dilutive for the three months ended september 30, 2022 and included in the 265,071 weighted-average shares outstanding within diluted eps. see “note 12, earnings (loss) per share” of the unaudited quarterly consolidated financial statements. (3) adjustments to adjusted net income are described in the footnotes of the reconciliation of adjusted net income to net income (loss) in “adjusted net income and adjusted net income margin.” (4) for comparability purposes and to be consistent with the treatment of the adjustments to arrive at adjusted net income, the dilutive effect of unvested equity awards is calculated using the treasury stock method as if the weighted average unrecognized cost associated with the awards was $0 over the period, less any unvested equity awards determined to be dilutive within the diluted earnings per share calculation disclosed in “note 12, earnings (loss) per share” of the unaudited quarterly consolidated financial statements. nine months ended september 30, 2021 adjustments (in thousands, except per share data) u.s. gaap plus: net income attributable to the llc before the organizational transactions plus: impact of all llc common units exchanged for class a shares (1) plus: adjustments to adjusted net income (2) plus: dilutive impact of unvested equity awards (3) adjusted diluted earnings per share numerator: net income (loss) attributable to class a common shareholders- diluted $ (17,115 ) $ 75,387 $ (31,256 ) $ 182,723 $ — $ 209,739 denominator: weighted-average shares of class a common stock outstanding- diluted 105,309 — 142,727 — 19,684 267,721 net income (loss) per share of class a common stock- diluted $ (0.16 ) $ 0.72 $ (0.44 ) $ 0.74 $ (0.06 ) $ 0.78 (1) for comparability purposes, this calculation incorporates the net income (loss) and weighted average shares of class a common stock that would be outstanding if all llc common units (together with shares of class b common stock) were exchanged for shares of class a common stock. see “note 12, earnings (loss) per share” of the unaudited quarterly consolidated financial statements. (2) adjustments to adjusted net income are described in the footnotes of the reconciliation of adjusted net income to net income (loss) in “adjusted net income and adjusted net income margin.” (3) for comparability purposes and to be consistent with the treatment of the adjustments to arrive at adjusted net income, the dilutive effect of unvested equity awards is calculated using the treasury stock method as if the weighted average unrecognized cost associated with the awards was $0 over the period, less any unvested equity awards determined to be dilutive within the diluted earnings per share calculation disclosed in “note 12, earnings (loss) per share” of the unaudited quarterly consolidated financial statements.
