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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-40645
RYAN SPECIALTY GROUP HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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86-2526344 |
(State or Other Jurisdiction of Incorporation or Organization) |
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(I.R.S. Employer Identification No.) |
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Two Prudential Plaza |
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180 N. Stetson Avenue, Suite 4600 |
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Chicago, IL |
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60601 |
(Address of principal executive offices) |
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(Zip Code) |
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(312) 784-6001 |
(Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading symbol |
Name of each exchange on which registered |
Class A Common Stock, $0.001 par value per share |
RYAN |
The New York Stock Exchange (NYSE) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
☐ |
Accelerated filer |
☐ |
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Non-accelerated filer |
☒ |
Smaller reporting company |
☐ |
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Emerging growth company |
☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
On November 11, 2021, the Registrant had 259,065,974 shares of common stock outstanding, consisting of 109,903,867 shares of Class A common stock, $0.001 par value, and 149,162,107 shares of Class B common stock, $0.001 par value.
Ryan Specialty Group Holdings, Inc.
INDEX
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q are forward-looking statements. Forward-looking statements give our current expectations relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated costs, expenditures, cash flows, growth rates and financial results, our plans, intended use of proceeds, anticipated cost savings relating to the Restructuring Plan and the amount and timing of delivery of annual cost savings, and objectives for future operations, growth or initiatives, strategies or the expected outcome or impact of pending or threatened litigation are forward-looking statements. All forward-looking statements are subject to risks and uncertainties (many of which may be amplified on account of the COVID-19 pandemic) that may cause actual results to differ materially from those that we expected, including:
our potential failure to develop a succession plan for the senior management team, including Patrick G. Ryan, and/or to recruit and retain revenue producers;
the cyclicality of, and the economic conditions in, the markets in which we operate;
conditions that result in reduced insurer capacity;
the potential loss of our relationships with insurance carriers or our clients, failure to maintain good relationships with insurance carriers or 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 our businesses;
decreases in the premiums or commission rates set by insurers, or actions by insurers seeking repayment of commissions;
decrease in the amount of supplemental or contingent commissions we receive;
our inability to collect our receivables;
the potential that our underwriting models contain errors or that are otherwise ineffective;
damage to our reputation;
failure to maintain, protect and enhance our brand;
decreases in current market share as a result of disintermediation within the insurance industry, including increased competition from insurance companies, technology companies and the financial services industry, as well as the shift away from traditional insurance markets;
changes in the mode of compensation in the insurance industry;
changes in our accounting estimates, assumptions or methodologies, or changes in accounting guidance generally;
changes in interest rates that affect our cost of capital and net investment income;
changes in interest rates and deterioration of credit quality that reduce the value of our cash balances;
any failure to maintain our corporate culture;
the inability to maintain rapid growth and generate sufficient revenue to maintain profitability;
the loss of clients or business as a result of consolidation within the retail insurance brokerage industry;
the impact if our 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;
any unsuccessful attempts to open new officers, enter new product lines, establish distribution channels, or hire new brokers and underwriters;
1
our inability to gain internal efficiencies through the application of technology or effectively apply technology in driving value for our clients through innovation and technology-based solutions;
the unavailability or inaccuracy of our clients’ and third parties’ data for pricing and underwriting our insurance policies;
a variety of risks in our third-party claims administration operations that are distinct from those we face in our insurance intermediary operations;
the competitiveness and cyclicality of the reinsurance industry;
the higher risk of delinquency or collection inherent in our premium finance business;
the occurrence of natural or man-made disasters;
our inability to successfully recover upon experiencing a disaster or other business continuity problem;
the economic and political conditions of the countries and regions in which we operate;
the failure or take-over by the FDIC of one of the financial institutions that we use;
our inability to respond quickly to operational or financial problems or promote the desired level of cooperation and interaction among our offices;
the impact of third parties that perform key functions of our business operations acting in ways that harm our business;
our global operations expose us to various international risks, including exchange rate fluctuations;
the impact of governmental regulations, legal proceedings and governmental inquiries related to our business;
being subject to E&O claims as well as other contingencies and legal proceedings;
our handling of client funds and surplus lines taxes that exposes us to complex fiduciary regulations;
changes in tax laws or regulations;
decreased commission revenues due to proposed tort reform legislation;
the impact of regulations affecting insurance carriers;
the impact on our operations and financial condition from the effects of the current COVID-19 pandemic and resulting governmental and societal responses;
the impact of breaches in security that cause significant system or network disruptions;
the impact of improper disclosure of confidential, personal or proprietary data, misuse of information by employees or counterparties or as a result of cyberattacks;
the impact of infringement, misappropriation or dilution of our intellectual property;
the impact of the failure to protect our intellectual property rights, or allegations that we have infringed on the intellectual property rights of others;
our outstanding debt potentially adversely affecting our financial flexibility and subjecting us to restrictions and limitations that could significantly affect our ability to operate;
not being able to generate sufficient cash flow to service all of our indebtedness and being forced to take other actions to satisfy our obligations under such indebtedness;
the impact of being unable to refinance our indebtedness;
being affected by further changes in the U.S.-based credit markets;
changes in our credit ratings;
the impact of failure to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies in the future; and
other factors disclosed in the section entitled “Risk Factors” and elsewhere in the IPO Prospectus and this Quarterly Report on Form 10-Q.
We derive many of our forward-looking statements from our operating budgets and forecasts that are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under the sections entitled “Risk Factors” and
2
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this Quarterly Report on Form 10-Q in the context of these risks and uncertainties.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
Commonly Used Defined Terms
As used in this Quarterly Report on Form 10-Q, unless the context indicates or otherwise requires, the following terms have the following meanings:
“we”, “us”, “our”, the “Company”, “Ryan Specialty”, and similar references refer: (i) following the consummation of the Organizational Transactions, including our IPO, to Ryan Specialty Group Holdings, Inc., and, unless otherwise stated, all of its subsidiaries, including RSG LLC, and (ii) prior to the completion of the Organizational Transactions, including our IPO, to RSG LLC and, unless otherwise stated, all of its subsidiaries.
Admitted: The insurance market comprising insurance carriers licensed to write business on an “admitted” basis by the insurance commissioner of the state in which the risk is located. Insurance rates and forms in this market are highly regulated by each state and coverages are largely uniform.
Affiliate (and, with a correlative meaning, “Affiliated”): With respect to a specified Person, each other Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. As used in this definition, “control” (including with correlative meanings, “controlled by” and “under common control with”) means possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of voting securities or by contract or other agreement).
All Risks or ARL: All Risks Specialty, LLC (f/k/a All Risk, Ltd.), an insurance specialist providing services in wholesale brokerage and delegated underwriting authority.
All Risks Acquisition: In September 2020, Ryan Specialty acquired All Risks.
Binding Authority: Our Binding Authority receives submissions for insurance directly from retail brokers, evaluates price and makes underwriting decisions regarding these submissions based on narrowly prescribed guidelines provided by carriers, and binds and issues policies on behalf of insurance carriers who retain the insurance underwriting risk.
Class C Incentive Units: Class C common incentive units, initially of RSG LLC on and prior to September 30, 2021 and then subsequently of New RSG Holdings, that are subject to vesting and will be exchangeable into LLC Common Units. These awards were referred to as “Management Incentive Units” in our IPO Prospectus.
E&O: Errors and omissions.
E&S: Excess and surplus lines. In this insurance market, carriers are licensed on a “non-admitted” basis. The excess and surplus lines market often offers carriers more flexibility in terms, conditions, and rates than does the Admitted market.
Family Group: (i) In the case of a member of RSG LLC or a RSG LLC Employee who is an individual, such individual’s spouse, parents and descendants (whether natural or adopted) and any trust or estate planning vehicle or entity solely for the benefit of such individual and/or the individual’s spouse, parents, descendants and/or other relatives, and (ii) in the case of a member of RSG LLC or a RSG LLC Employee that is a trust, the beneficiary of such trust.
3
Founder: Patrick G. Ryan.
Founder Group: Founder, members of the Founder’s Family Group and Founder’s Affiliates.
IPO: Initial public offering.
IPO Prospectus: our final prospectus for our IPO dated as of July 21, 2021 and filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act.
LLC Operating Agreement: Except where noted, the Seventh Amended and Restated Limited Liability Company Agreement of RSG LLC
LLC Units: Class A common units and Class B common units of RSG LLC prior to the Organizational Transactions.
LLC Unitholders: holders of the LLC Units or the LLC Common Units, as the context requires.
LLC Common Units: non-voting common interest units initially of RSG LLC on and prior to September 30, 2021 and then subsequently of New RSG Holdings.
MGA: Managing general agent.
MGU: Managing general underwriter.
New RSG Holdings: New RSG Holdings LLC is a Delaware limited liability company and a direct subsidiary of Ryan Specialty Group Holdings, Inc.
New RSG Holdings LLC Operating Agreement: The Amended and Restated Limited Liability Company Agreement of New RSG Holdings LLC.
Onex: Onex Corporation and its affiliates, a holder of LLC Units and Redeemable Preferred Units prior to the Organizational Transactions, and one of our shareholders following the Organizational Transactions.
Organizational Transactions: The series of organizational transactions completed by the Company in connection with the IPO, as described in the IPO Prospectus.
Participation: Collectively, the Mandatory Participation and the Optional Participation.
Person: An individual or any corporation, partnership, limited liability company, trust, unincorporated organization, association, joint venture or any other organization or entity, whether or not a legal entity.
Redeemable Preferred Units: Class B preferred units of RSG LLC held by Onex prior to the Organizational Transactions.
Restructuring Plan: Plan to reduce costs and increase efficiencies, streamline management reporting structures, and centralize functions across the Company to improve operating margins, which is expected to be fully actioned by June 30, 2022.
RSG LLC: Ryan Specialty Group, LLC, together with its parent New RSG Holdings, and their subsidiaries. RSG LLC was referred to as “Holdings LLC” in our IPO Prospectus.
SEC: The Securities and Exchange Commission.
Securities Act: Securities Act of 1933, as amended.
Specialty: One of the three Ryan Specialty primary distribution channels, which includes Wholesale Brokerage, Binding Authority, and Underwriting Management.
Stock Option: A non-qualified stock option award that gives the grantee the option to buy a specified number of Class A common stock at the grant date price.
Tax Receivable Agreement or TRA: The tax receivable agreement entered into in connection with the IPO.
U.S. GAAP: Accounting principles generally accepted in the United States of America.
4
Underwriting Management: Underwriting Management administers a number of MGUs, MGAs and programs that offer commercial and personal insurance for specific product lines or industry classes. Underwriters act with delegated underwriting authority based on varying degrees of prescribed guidelines as provided by carriers, quoting, binding and issuing policies on behalf of Ryan Specialty’s carrier trading partners which retain the insurance underwriting risk.
Wholesale Brokerage: Wholesale Brokerage distributes a wide range and diversified mix of specialty property, casualty, professional lines, personal lines and workers’ compensation insurance products, as a broker between the carriers and retail brokerage firms.
5
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Ryan Specialty Group Holdings, Inc.
Consolidated Statements of Income (Unaudited)
All balances presented in thousands, except share and per share amounts
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Three months ended September 30, |
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Nine months ended September 30, |
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2021 |
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2020 |
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2021 |
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2020 |
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REVENUE |
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Net commissions and fees |
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$ |
352,610 |
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$ |
236,683 |
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$ |
1,053,800 |
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$ |
689,833 |
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Fiduciary investment income |
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156 |
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128 |
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436 |
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1,494 |
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Total revenue |
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$ |
352,766 |
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$ |
236,811 |
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$ |
1,054,236 |
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$ |
691,327 |
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EXPENSES |
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Compensation and benefits |
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286,538 |
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162,981 |
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737,825 |
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461,094 |
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General and administrative |
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38,754 |
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31,370 |
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96,984 |
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81,755 |
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Amortization |
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26,982 |
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15,640 |
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82,095 |
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34,789 |
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Depreciation |
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1,179 |
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|
1,029 |
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3,601 |
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2,658 |
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Change in contingent consideration |
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43 |
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(35 |
) |
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2,356 |
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|
|
997 |
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Total operating expenses |
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$ |
353,496 |
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$ |
210,985 |
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$ |
922,861 |
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$ |
581,293 |
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OPERATING INCOME (LOSS) |
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$ |
(730 |
) |
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$ |
25,826 |
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$ |
131,375 |
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$ |
110,034 |
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Interest expense |
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21,193 |
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|
|
10,859 |
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|
|
60,224 |
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|
|
26,295 |
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Income from equity method investment in related party |
|
|
176 |
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|
|
326 |
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|
610 |
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|
|
413 |
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Other non-operating loss |
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(16,211 |
) |
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|
(1,574 |
) |
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|
(45,547 |
) |
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|
(4,066 |
) |
INCOME (LOSS) BEFORE INCOME TAXES |
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$ |
(37,958 |
) |
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$ |
13,719 |
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$ |
26,214 |
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$ |
80,086 |
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Income tax expense (benefit) |
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(5,368 |
) |
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|
2,923 |
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(802 |
) |
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|
6,085 |
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NET INCOME (LOSS) |
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$ |
(32,590 |
) |
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$ |
10,796 |
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$ |
27,016 |
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$ |
74,001 |
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Net income (loss) attributable to non-controlling interests, net of tax |
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(31,256 |
) |
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|
585 |
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(28,806 |
) |
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|
1,531 |
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NET INCOME (LOSS) ATTRIBUTABLE TO RYAN SPECIALTY GROUP HOLDINGS, INC. |
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$ |
(1,334 |
) |
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$ |
10,211 |
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$ |
55,822 |
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$ |
72,470 |
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NET (LOSS) PER SHARE OF CLASS A COMMON STOCK: |
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Basic and diluted |
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$ |
(0.16 |
) |
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$ |
(0.16 |
) |
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WEIGHTED-AVERAGE SHARES OF CLASS A COMMON STOCK OUTSTANDING: |
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Basic and diluted |
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105,309,406 |
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105,309,406 |
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See accompanying Notes to the Consolidated Financial Statements (Unaudited)
6
Ryan Specialty Group Holdings, Inc.
Consolidated Statements of Comprehensive Income (Unaudited)
All balances presented in thousands
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Three months ended September 30, |
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Nine months ended September 30, |
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2021 |
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2020 |
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2021 |
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2020 |
|
NET INCOME (LOSS) |
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$ |
(32,590 |
) |
|
$ |
10,796 |
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|
$ |
27,016 |
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$ |
74,001 |
|
Net income (loss) attributable to non-controlling interests, net of tax |
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(31,256 |
) |
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|
585 |
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(28,806 |
) |
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|
1,531 |
|
NET INCOME (LOSS) ATTRIBUTABLE TO RYAN SPECIALTY GROUP HOLDINGS, INC. |
|
$ |
(1,334 |
) |
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$ |
10,211 |
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$ |
55,822 |
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$ |
72,470 |
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Other comprehensive loss, net of tax: |
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Foreign currency translation adjustments |
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(648 |
) |
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(1,747 |
) |
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(204 |
) |
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(1,045 |
) |
Change in share of equity method investment in related party other comprehensive loss |
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— |
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— |
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(738 |
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— |
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Total other comprehensive loss, net of tax |
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$ |
(648 |
) |
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$ |
(1,747 |
) |
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$ |
(942 |
) |
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$ |
(1,045 |
) |
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO RYAN SPECIALTY GROUP HOLDINGS, INC. |
|
$ |
(1,982 |
) |
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$ |
8,464 |
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$ |
54,880 |
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$ |
71,425 |
|
See accompanying Notes to the Consolidated Financial Statements (Unaudited)
7
Ryan Specialty Group Holdings, Inc.
Consolidated Balance Sheets (Unaudited)
All balances presented in thousands, except share and per share data
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September 30, 2021 |
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December 31, 2020 |
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ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents |
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$ |
413,695 |
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$ |
312,651 |
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Commissions and fees receivable – net |
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171,862 |
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177,699 |
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Fiduciary assets |
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1,916,585 |
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1,978,152 |
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Prepaid incentives – net |
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7,738 |
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|
8,842 |
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Other current assets |
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21,039 |
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|
16,006 |
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Total current assets |
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$ |
2,530,919 |
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$ |
2,493,350 |
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NON-CURRENT ASSETS |
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Goodwill |
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1,223,957 |
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1,224,196 |
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Other intangible assets |
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|
527,804 |
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|
604,764 |
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Prepaid incentives – net |
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|
27,044 |
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|
36,199 |
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Equity method investment in related party |
|
|
47,087 |
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|
47,216 |
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Property and equipment – net |
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|
15,034 |
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|
17,423 |
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Lease right-of-use assets |
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|
80,295 |
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|
|
93,941 |
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Deferred tax assets |
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|
395,805 |
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|
- |
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Other non-current assets |
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|
10,511 |
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|
|
12,293 |
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Total non-current assets |
|
$ |
2,327,537 |
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|
$ |
2,036,032 |
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TOTAL ASSETS |
|
$ |
4,858,456 |
|
|
$ |
4,529,382 |
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LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS'/MEMBERS’ EQUITY |
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CURRENT LIABILITIES |
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Accounts payable and accrued liabilities |
|
|
78,777 |
|
|
|
115,573 |
|
Accrued compensation |
|
|
335,923 |
|
|
|
349,558 |
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Operating lease liabilities |
|
|
18,811 |
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|
|
19,880 |
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Short-term debt and current portion of long-term debt |
|
|
26,769 |
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|
|
19,158 |
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Fiduciary liabilities |
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|
1,916,585 |
|
|
|
1,978,152 |
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Total current liabilities |
|
$ |
2,376,865 |
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|
$ |
2,482,321 |
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NON-CURRENT LIABILITIES |
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Accrued compensation |
|
|
— |
|
|
|
69,121 |
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Operating lease liabilities |
|
|
69,928 |
|
|
|
83,737 |
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Long-term debt |
|
|
1,568,410 |
|
|
|
1,566,192 |
|
Deferred tax liabilities |
|
|
379 |
|
|
|
577 |
|
Tax receivable agreement liabilities |
|
|
282,470 |
|
|
- |
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Other non-current liabilities |
|
|
5,306 |
|
|
|
16,709 |
|
Total non-current liabilities |
|
$ |
1,926,493 |
|
|
$ |
1,736,336 |
|
TOTAL LIABILITIES |
|
$ |
4,303,358 |
|
|
$ |
4,218,657 |
|
MEZZANINE EQUITY |
|
|
|
|
|
|
Preferred units ($1.00 par value; 0 issued and outstanding at September 30, 2021 and 260,000,000 issued and outstanding at December 31, 2020) |
|
$ |
— |
|
|
$ |
239,635 |
|
STOCKHOLDERS'/MEMBERS’ EQUITY |
|
|
|
|
|
|
Members' interest |
|
|
— |
|
|
|
67,088 |
|
Class A common stock ($0.001 par value; 1,000,000,000 shares authorized, 109,903,867 shares issued and outstanding at September 30, 2021) |
|
|
110 |
|
|
|
— |
|
Class B common stock ($0.001 par value; 1,000,000,000 shares authorized, 149,162,107 shares issued and outstanding at September 30, 2021) |
|
|
149 |
|
|
|
— |
|
Class X common stock ($0.001 par value; 10,000,000 shares authorized, 640,784 shares issued and 0 outstanding at September 30, 2021) |
|
|
— |
|
|
|
— |
|
Preferred stock ($0.001 par value; 500,000,000 shares authorized, 0 shares issued and outstanding at September 30, 2021) |
|
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
|
327,805 |
|
|
|
— |
|
Accumulated deficit |
|
|
(17,115 |
) |
|
|
— |
|
Accumulated other comprehensive income |
|
|
1,760 |
|
|
|
2,702 |
|
Total stockholders' equity attributable to Ryan Specialty Group Holdings, Inc. /members’ equity |
|
$ |
312,709 |
|
|
$ |
69,790 |
|
Non-controlling interests |
|
|
242,389 |
|
|
|
1,300 |
|
Total stockholders'/members’ equity |
|
|
555,098 |
|
|
|
71,090 |
|
TOTAL LIABILITIES, MEZZANINE AND STOCKHOLDERS'/MEMBERS’ EQUITY |
|
$ |
4,858,456 |
|
|
$ |
4,529,382 |
|
See accompanying Notes to the Consolidated Financial Statements (Unaudited)
8
Ryan Specialty Group Holdings, Inc.
Consolidated Statements of Cash Flows (Unaudited)
All balances presented in thousands
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
|
|
2021 |
|
|
2020 |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
Net income |
|
$ |
27,016 |
|
|
$ |
74,001 |
|
Adjustments to reconcile net income to cash flows from (used for) operating activities: |
|
|
|
|
|
|
Loss (gain) from equity method investment |
|
|
(610 |
) |
|
|
(413 |
) |
Amortization |
|
|
82,095 |
|
|
|
34,789 |
|
Depreciation |
|
|
3,601 |
|
|
|
2,658 |
|
Prepaid and deferred compensation expense |
|
|
34,960 |
|
|
|
12,559 |
|
Non-cash equity based compensation |
|
|
46,877 |
|
|
|
6,355 |
|
Amortization of deferred debt issuance costs |
|
|
8,546 |
|
|
|
1,758 |
|
Deferred income taxes |
|
|
(5,860 |
) |
|
|
(56 |
) |
Loss on extinguishment of existing debt |
|
|
8,634 |
|
|
|
1,708 |
|
Change (net of acquisitions and divestitures) in: |
|
|
|
|
|
|
Commissions and fees receivable - net |
|
|
6,004 |
|
|
|
17,669 |
|
Accrued interest |
|
|
602 |
|
|
|
19 |
|
Other current assets and accrued liabilities |
|
|
27,751 |
|
|
|
(121,565 |
) |
Other non-current assets and accrued liabilities |
|
|
(85,241 |
) |
|
|
(27,218 |
) |
Total cash flows provided by operating activities |
|
$ |
154,375 |
|
|
$ |
2,264 |
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
Cash paid for acquisitions - net of cash acquired |
|
|
— |
|
|
|
(808,546 |
) |
Asset acquisitions |
|
|
(343,158 |
) |
|
|
(5,236 |
) |
Prepaid incentives issued – net of repayments |
|
|
4,136 |
|
|
|
(6,213 |
) |
Equity method investment in related party |
|
|
— |
|
|
|
(23,500 |
) |
Capital expenditures |
|
|
(6,429 |
) |
|
|
(10,596 |
) |
Total cash flows used for investing activities |
|
$ |
(345,451 |
) |
|
$ |
(854,091 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
Contributions of members' equity and preferred equity |
|
|
— |
|
|
|
118,936 |
|
Purchase of remaining interest in Ryan Re |
|
|
(48,368 |
) |
|
|
— |
|
Payment of contingent consideration |
|
|
(4,495 |
) |
|
|
— |
|
Equity repurchases from pre-IPO unitholders |
|
|
(3,880 |
) |
|
|
(44,957 |
) |
Repurchase of preferred equity |
|
|
(78,256 |
) |
|
|
— |
|
Cash distribution to pre-IPO unitholders |
|
|
(47,039 |
) |
|
|
(45,705 |
) |
Repayment of term debt |
|
|
(12,375 |
) |
|
|
(140,625 |
) |
Repayment of unsecured promissory notes |
|
|
(1,108 |
) |
|
|
— |
|
Borrowing of term debt |
|
|
— |
|
|
|
1,650,000 |
|
Repayment of subordinated notes |
|
|
— |
|
|
|
(25,000 |
) |
Repayments on revolving credit facilities |
|
|
— |
|
|
|
(428,697 |
) |
Finance lease and other costs paid |
|
|
(108 |
) |
|
|
230 |
|
Debt issuance costs paid |
|
|
(1,893 |
) |
|
|
(70,484 |
) |
Repurchase of Class A common stock in the IPO |
|
|
(183,616 |
) |
|
|
— |
|
Repurchase of pre-IPO LLC Units and payment of Alternative TRA Payments |
|
|
|