First quarter 2024 Total Revenue increased 24% year-over-year to $271.7 million First quarter 2024 Written Premium increased 19% year-over-year to $218.3 million First quarter 2024 Operating Income margin expanded by 1,210 bps compared to the prior year period First quarter 2024 Net Income of $8.2 million, an increase of $23.2 million compared to the prior year period First quarter 2024 Adjusted EBITDA (a non-GAAP measure) of $27.3 million, an increase of $20.6 million compared to the prior year period Delivered Policies in Force Retention of 88.7% and achieved insurance Net Promoter Score of 82 Reaffirmed 2024 Outlook for 15-17% Total Revenue growth, 116-148% Net Income growth and 41-53% Adjusted EBITDA growth TRAVERSE CITY, Mich., May 7, 2024 /PRNewswire/ -- Hagerty, Inc. (NYSE:HGTY), an automotive enthusiast brand and leading specialty vehicle insurance provider, announced today financial results for the three months ended March 31, 2024. "We are off to a great start in 2024 as the initiatives undertaken in 2023 powered strong top-line momentum and significant margin expansion," said McKeel Hagerty, Chief Executive Officer and Chairman of Hagerty. "Total revenue gains of 24% were fueled by written premium growth of 19% as our brand strength and performance marketing efforts drove high rates of compounding growth in new members. Importantly, we are acquiring new customers and serving existing ones more efficiently than ever, resulting in operating margin expansion of 1,210 basis points." "This laser focus on profitability resulted in a year-over-year improvement in Net Income of $23 million and Adjusted EBITDA of $21 million in what had historically been a seasonally weak quarter for the Company.  Operating leverage and optimized business processes have shifted that paradigm," continued Mr. Hagerty. "We are reaffirming our 2024 growth outlook given the great start to the year as we execute on our long range plan," added Mr. Hagerty. "Operating margins should continue to expand, powered by operational efficiencies, cost discipline, and sustained mid-teens revenue growth as we help car enthusiasts protect, buy and sell, and enjoy their special vehicles." FIRST QUARTER 2024 FINANCIAL HIGHLIGHTS First quarter 2024 Total Revenue increased 24% year-over-year to $271.7 million First quarter 2024 Written Premium increased 19% year-over-year to $218.3 million First quarter 2024 Commission and fee revenue increased 19% year-over-year to $88.8 million Policies in Force Retention was 88.7% as of March 31, 2024 compared to 87.9% as of March 31, 2023 and total insured vehicles increased 6% year-over-year to 2.4 million First quarter 2024 Loss Ratio was 41.1% compared to 41.3% in the prior year period First quarter 2024 Earned Premium increased 29% year-over-year to $151.6 million Earned Premium growth was driven by the strong Written Premium growth as well as the prior year's increased quota share to approximately 80%. First quarter 2024 Membership, Marketplace and other revenue increased 18% year-over-year to $31.2 million First quarter 2024 Marketplace revenue increased 58% year-over-year to $10.5 million First quarter 2024 Membership revenue increased 7% year-over-year to $13.5 million Hagerty Drivers Club (HDC) paid members increased 8% year-over-year to approximately 831,000 compared to 768,000 Cost containment and resource prioritization initiatives drove a 7.1% decline in General and administrative services and held salary and benefits growth to only 1.6% compared to the prior year period First quarter 2024 Operating Income of $12.2 million compared to an Operating Loss of $16.5 million in the prior year period. First quarter 2024 operating margin expanded by 1,210 bps compared to the prior year period First quarter 2024 depreciation and amortization was $10.6 million compared to $13.7 million in the prior year period. The decrease was primarily driven by a $3.6 million impairment of digital media content assets recorded in the prior year period, partially offset by a $0.4 million increase in amortization attributable to a higher base of information technology assets in the current period. First quarter 2023 results included restructuring charges of $5.5 million. The prior year period's charges were primarily associated with a reduction in force, reduced hiring plans and cost containment initiatives First quarter 2024 Net Income of $8.2 million compared to a Net Loss of $15.0 million in the prior year period First quarter 2024 Net Income includes a $1.6 million increase in interest income due to higher rates and better investments, as well as the impacts from the change in fair value of warrant liabilities First quarter 2024 Adjusted EBITDA (a non-GAAP measure) of $27.3 million compared to $6.7 million in the prior year period First quarter 2024 Basic and Diluted Earnings per Share was $(0.04) First quarter 2024 Adjusted EPS (a non-GAAP measure) was $0.04 The definitions and reconciliations of non-GAAP financial measures are provided under the heading Key Performance Indicators and Certain Non-GAAP Financial Measures at the end of this press release. 2024 OUTLOOK — GROWTH AND PROFITABILITY Despite the uncertain macro environment and challenging dynamics for the insurance industry with heightened inflationary pressures, 2024 is on track to be another year of strong top-line growth and margin expansion for Hagerty as our performance-based culture powers great results for stakeholders. We remain focused on growing our Insurance, Membership and Marketplace businesses, positioning us to deliver compounding profit growth over the coming years and fund our purpose to save driving and fuel car culture for future generations. Key 2024 business priorities include: Further improve loyalty to drive renewals and referrals Enhance member experience in a cost effective and efficient way Build Hagerty Marketplace into the most trusted and preferred place to buy, sell, and finance collector cars Expand insurance offerings, particularly in the post-1980s collectible space For full year 2024, the company reaffirmed its outlook to deliver: Written Premium growth of 13-14% Total Revenue growth of 15-17% Net Income growth of 116-148% Adjusted EBITDA growth of 41-53% 2024 Outlook 2024 Growth in thousands 2023 Results Low End High End Low End High End Total Written Premium $907,175 $1,025,000 $1,034,000 13 % 14 % Total Revenue $1,000,213 $1,150,000 $1,170,000 15 % 17 % Net Income (1) $28,179 $61,000 $70,000 116 % 148 % Adjusted EBITDA $88,162 $124,000 $135,000 41 % 53 % (1) Net income range assumes no impact from warrants.  Conference Call DetailsHagerty will hold a conference call to discuss the financial results today at 10:00 am Eastern Time. A webcast of the conference call, including the Company's Investor Presentation highlighting first quarter 2024 financial results, will be available on Hagerty's investor relations website at investor.hagerty.com. The dial-in for the conference call is (877) 423-9813 (toll-free) or (201) 689-8573 (international). Please dial the number 10 minutes prior to the scheduled start time. A webcast replay of the call will be available at investor.hagerty.com following the call. Forward-Looking StatementsThis press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts. These forward-looking statements reflect Hagerty's current expectations and projections with respect to its expected future business and financial performance, including, among other things: (i) expected operating results, such as revenue growth and increases in profit and earned premium; (ii) changes in the market for Hagerty's products and services, (iii) anticipated business objectives; and (iv) the strength of Hagerty's business model. These statements may be preceded by, followed by or include the words "aim," "anticipate," "believe," "estimate," "expect," "forecast," "future," "goal," "intend," "likely," "outlook," "plan," "potential," "project," "seek," "target," "can," "could," "may," "should," "would," "will," the negatives thereof and other words and terms of similar meaning. A number of factors could cause actual results or outcomes to differ materially from those indicated by these forward-looking statements. These factors include, among other things, Hagerty's ability to: (i) compete effectively within its industry and attract and retain insurance policy holders and paid HDC subscribers; (ii) maintain key strategic relationships with its insurance distribution and underwriting carrier partners; (iii) prevent, monitor and detect fraudulent activity; (iv) manage risks associated with disruptions, interruptions, outages with its technology platforms or third-party services; (v) accelerate the adoption of Hagerty's membership products as well as any new insurance programs and products; (vi) manage the cyclical nature of the insurance business including through any periods of recession, economic downturn or inflation; (vii) address unexpected increases in the frequency or severity of claims; (viii) comply with the numerous laws and regulations applicable to Hagerty's business, including state, federal and foreign laws relating to insurance and rate increases, privacy, the internet and accounting matters; (ix) manage risks associated with being a controlled company; (x) successfully defend any litigation, government inquiries and investigations, and (xi) other risks and uncertainties indicated from time to time in documents filed or to be filed with the Securities and Exchange Commission (the "SEC") by Hagerty. The forward-looking statements herein represent the judgment of Hagerty as of the date of this release and Hagerty disclaims any intent or obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise. This press release should be read in conjunction with the information included in the Company's other press releases, reports and other filings with the SEC. Understanding the information contained in these filings is important in order to fully understand Hagerty's reported financial results and our business outlook for future periods. About Hagerty, Inc. (NYSE:HGTY) Hagerty is an automotive enthusiast brand committed to saving driving and fueling car culture for future generations. The company is a leading provider of specialty vehicle insurance, expert car valuation data and insights, live and digital car auction services, immersive events and automotive entertainment custom made for the 67 million Americans who self-describe as car enthusiasts. Hagerty also operates in Canada and the U.K. and is home to Hagerty Drivers Club, a community of over 800,000 who can't get enough of cars. As a purpose-driven organization, Hagerty Impact aims to be a catalyst for positive change across the issues that matter most to our teams, our members, the broader automotive community, our shareholders and the planet at large. For more information, please visit www.hagerty.com or connect with us on Facebook, Instagram, Twitter and LinkedIn. More information can be found at newsroom.hagerty.com. Category: Financial Source: Hagerty   Hagerty, Inc. Condensed Consolidated Statements of Operations (Unaudited) Three months ended March 31, 2024 2023 $ Change % Change REVENUE: in thousands (except percentages and per share amounts) Commission and fee revenue $       88,840 $       74,612 $       14,228 19.1 % Earned premium 151,619 117,231 34,388 29.3 % Membership, marketplace and other revenue 31,249 26,509 4,740 17.9 % Total revenue 271,708 218,352 53,356 24.4 % OPERATING EXPENSES: Salaries and benefits 56,116 55,232 884 1.6 % Ceding commissions, net 70,930 55,425 15,505 28.0 % Losses and loss adjustment expenses 62,356 48,412 13,944 28.8 % Sales expense 39,660 35,113 4,547 12.9 % General and administrative services 19,862 21,381 (1,519) (7.1) % Depreciation and amortization 10,560 13,743 (3,183) (23.2) % Restructuring, impairment and related charges, net — 5,535 (5,535) N/M Total operating expenses 259,484 234,841 24,643 10.5 % OPERATING INCOME (LOSS) 12,224 (16,489) 28,713 174.1 % Change in fair value of warrant liabilities (6,140) (515) (5,625) N/M Interest and other income (expense) 7,244