UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
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Securities registered pursuant to Section 12(b) of the Act:
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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.
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).
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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Accelerated filer |
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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
On October 31, 2023, the Registrant had
Ryan Specialty Holdings, Inc.
INDEX
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1 |
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Item 1. |
1 |
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1 |
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Consolidated Statements of Comprehensive Income (Loss) (Unaudited) |
2 |
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3 |
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4 |
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5 |
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7 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
25 |
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Item 3. |
45 |
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Item 4. |
46 |
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46 |
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Item 1. |
46 |
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Item 1A. |
46 |
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Item 2. |
46 |
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Item 3. |
47 |
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Item 4. |
47 |
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Item 5. |
47 |
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Item 6. |
48 |
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, anticipated amount and timing of cost savings relating to the ACCELERATE 2025 program, 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 that may cause actual results to differ materially from those that we expected, including:
i
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 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q and under the Section entitled “Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 and the Annual Report on Form 10-K for the year ended December 31, 2022. 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 filings with the SEC and other 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
ii
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:
iii
iv
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Ryan Specialty Holdings, Inc.
Consolidated Statements of Income (Loss) (Unaudited)
(In thousands, except share and per share data)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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REVENUE |
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Net commissions and fees |
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$ |
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$ |
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$ |
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$ |
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Fiduciary investment income |
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Total revenue |
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$ |
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$ |
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$ |
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$ |
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EXPENSES |
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Compensation and benefits |
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General and administrative |
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Amortization |
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Depreciation |
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Change in contingent consideration |
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( |
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Total operating expenses |
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$ |
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$ |
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$ |
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$ |
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OPERATING INCOME |
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$ |
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$ |
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$ |
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$ |
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Interest expense, net |
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Loss (income) from equity method investment in related party |
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( |
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Other non-operating loss (income) |
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( |
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INCOME BEFORE INCOME TAXES |
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$ |
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$ |
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$ |
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$ |
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Income tax expense |
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NET INCOME |
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$ |
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$ |
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$ |
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$ |
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Net income attributable to non-controlling interests, net of tax |
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NET INCOME (LOSS) ATTRIBUTABLE TO RYAN SPECIALTY HOLDINGS, INC. |
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$ |
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$ |
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$ |
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$ |
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NET INCOME (LOSS) PER SHARE OF CLASS A COMMON STOCK: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
( |
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$ |
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$ |
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$ |
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WEIGHTED-AVERAGE SHARES OF CLASS A COMMON STOCK OUTSTANDING: |
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Basic |
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Diluted |
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See accompanying Notes to the Consolidated Financial Statements (Unaudited)
1
Ryan Specialty Holdings, Inc.
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(In thousands)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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NET INCOME |
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$ |
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$ |
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$ |
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$ |
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Net income attributable to non-controlling interests, net of tax |
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NET INCOME (LOSS) ATTRIBUTABLE TO RYAN SPECIALTY HOLDINGS, INC. |
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$ |
( |
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$ |
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$ |
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$ |
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Other comprehensive income (loss), net of tax: |
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Gain on interest rate cap |
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(Gain) on interest rate cap reclassified to earnings |
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( |
) |
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( |
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Foreign currency translation adjustments |
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( |
) |
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( |
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( |
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( |
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Change in share of equity method investment in related party other comprehensive income (loss) |
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( |
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( |
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( |
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Total other comprehensive income (loss), net of tax |
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$ |
( |
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$ |
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$ |
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$ |
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COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO RYAN SPECIALTY HOLDINGS, INC. |
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$ |
( |
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$ |
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$ |
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$ |
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See accompanying Notes to the Consolidated Financial Statements (Unaudited)
2
Ryan Specialty Holdings, Inc.
Consolidated Balance Sheets (Unaudited)
(In thousands, except share and per share data)
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September 30, 2023 |
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December 31, 2022 |
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ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents |
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$ |
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$ |
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Commissions and fees receivable – net |
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Fiduciary cash and receivables |
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Prepaid incentives – net |
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Other current assets |
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Total current assets |
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$ |
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$ |
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NON-CURRENT ASSETS |
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Goodwill |
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Other intangible assets |
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Prepaid incentives – net |
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Equity method investment in related party |
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Property and equipment – net |
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Lease right-of-use assets |
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Deferred tax assets |
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Other non-current assets |
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Total non-current assets |
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$ |
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$ |
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TOTAL ASSETS |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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CURRENT LIABILITIES |
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Accounts payable and accrued liabilities |
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Accrued compensation |
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Operating lease liabilities |
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Tax Receivable Agreement liabilities |
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Short-term debt and current portion of long-term debt |
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Fiduciary liabilities |
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Total current liabilities |
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$ |
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$ |
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NON-CURRENT LIABILITIES |
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Accrued compensation |
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Operating lease liabilities |
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Long-term debt |
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Deferred tax liabilities |
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Tax Receivable Agreement liabilities |
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Other non-current liabilities |
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Total non-current liabilities |
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$ |
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$ |
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TOTAL LIABILITIES |
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$ |
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$ |
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STOCKHOLDERS' EQUITY |
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Class A common stock ($ |
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Class B common stock ($ |
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Class X common stock ($ |
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Preferred stock ($ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive income |
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Total stockholders' equity attributable to Ryan Specialty Holdings, Inc. |
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$ |
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$ |
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Non-controlling interests |
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Total stockholders' equity |
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$ |
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$ |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
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$ |
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$ |
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See accompanying Notes to the Consolidated Financial Statements (Unaudited)
3
Ryan Specialty Holdings, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
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Nine Months Ended September 30, |
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2023 |
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2022 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to cash flows provided by operating activities: |
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Loss (income) from equity method investment in related party |
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( |
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Amortization |
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Depreciation |
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Prepaid and deferred compensation expense |
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Non-cash equity-based compensation |
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Amortization of deferred debt issuance costs |
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Amortization of interest rate cap premium |
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Deferred income tax expense |
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Deferred income tax expense from reorganization |
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Loss on Tax Receivable Agreement |
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Change (net of acquisitions) in: |
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Commissions and fees receivable – net |
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Accrued interest liability |
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( |
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Other current assets and accrued liabilities |
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( |
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( |
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Other non-current assets and accrued liabilities |
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Total cash flows provided by operating activities |
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$ |
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$ |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Capital expenditures |
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( |
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( |
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Business combinations – net of cash acquired and cash held in a fiduciary capacity |
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( |
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Repayments of prepaid incentives |
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Total cash flows used for investing activities |
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$ |
( |
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$ |
( |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Proceeds from senior secured notes |
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Payment of interest rate cap premium |
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( |
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Repayment of term debt |
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( |
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( |
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Debt issuance costs paid |
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( |
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Finance lease and other costs paid |
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( |
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Payment of contingent consideration |
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( |
) |
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