Total written awards: $1 billion, an increase of 28% from the same period last year.
Franchise Premium Growth: 33% to $825 million.
Growth in corporate bonuses: 12% to $204 million.
Total sales: $78 million, representing 10% growth over the same period last year.
Core sales: $73.5 million, up 16% in the quarter.
Adjusted EBITDA: $26.1 million, up 17% from $22.4 million last year.
Adjusted EBITDA margin: Expansion by 193 basis points to 34%.
Operating cash flow: Increased from $37.4 million to $59 million, an increase of 58%.
Applicable guidelines: 1.6 million, an increase of 12% compared to 11% in the previous quarter.
Customer retention rate: Stable at 84% from the second to the third quarter.
Franchise producers: 2,093, up from 1,995 in the second quarter of 2024.
Company producers: 458, 45% more than last year (316).
Same store sales growth: 26% compared to the previous year.
Average gross wage per franchise: Increase of 56% in the quarter compared to the previous year.
Cash and cash equivalents: $50.1 million at the end of the third quarter.
Debt to EBITDA for the last four quarters: 1.2 times.
Net debt to EBITDA for the last four quarters: 0.6 times.
Full-Year 2024 Written Premium Guidelines: Expected to be between $3.7 and $3.82 billion.
Forecast for total sales for the full year 2024: Expected to be between $295 and $310 million.
Q: Can you elaborate on market stabilization and product availability, particularly in key regions such as Texas and California? A: Mark Miller, President and CEO, stated that the automotive product is on the rise again and carriers are changing their home products, which is promising for markets like Texas. Although product availability is lower, there is optimism that it will improve soon.
Q: Are your products competitive with captive products in areas like Texas and California? A: Mark Miller noted that while the market is no longer as competitive as it once was, captives are starting to raise prices. Goosehead carriers stabilize their prices and ensure adequate lead flow and good product availability.
Q: Has customer retention bottomed out at 84% or could it drop further? A: Mark Jones, CFO, explained that customer loyalty is largely influenced by pricing measures. With lower price increases, retention is expected to remain stable and possibly improve through 2025.
Q: How is new referral partner activation and business class evolving amid challenging home sales volumes? A: Mark Miller emphasized that the primary strategy remains focused on home closing transactions. Despite the challenges, the new class of companies is performing well and early signs point to high quality and productivity.
Q: Have the recent hurricanes impacted sales and what impact is expected in the fourth quarter? A: Mark Jones explained that hurricanes typically cause a temporary slowdown in production due to airline moratoriums. The impact is typically short-term in nature as production resumes after the event and some business may be shifted to the next quarter.
Q: Why is there a wide range in sales forecasts despite the late year? A: Mark Jones highlighted the volatile environment, with product availability and contingent revenue being important variables. Franchise performance is strong and impacts premium more than immediate revenue.
Q: What is the reason for the improvement in the revenue-to-premium ratio in the fourth quarter guidance? A: The improvement is largely due to franchise performance accelerating new business production and impacting premium growth more than immediate revenue growth.
Q: How does the new class of corporate recruits impact margins compared to previous classes? A: Mark Jones noted that improved productivity should lead to better margins. The focus is on retaining agents in the first year so they can take full advantage of the Goosehead systems.
For the full transcript of the conference call, please see the full conference call minutes.
This article first appeared on GuruFocus.
