(Mark One) | |
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 82-3886022 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
1500 Solana Blvd, Building 4, Suite 4500 Westlake, TX | 76262 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | o | Accelerated filer | o | |
Non-accelerated filer | o | Smaller reporting company | þ | |
Emerging growth company | þ |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
Class A Common Stock, par value $.01 per share | GSHD | NASDAQ |
Page | ||
Part I | ||
Item 1. | Condensed Consolidated Financial Statements (Unaudited) | |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |
Item 4. | Controls and Procedures | |
Part II | ||
Item 1. | Legal Matters | |
Item 1A. | Risk Factors | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 3. | Defaults Upon Senior Securities | |
Item 4. | Mine Safety | |
Item 5. | Other Information | |
Item 6. | Exhibits | |
• | Agency Fees: Fees separate from commissions charged directly to clients for efforts performed in the issuance of new insurance policies. |
• | Carrier: An insurance company. |
• | Carrier Appointment: A contractual relationship with a Carrier. |
• | Client Retention: Calculated by comparing the number of all clients that had at least one policy in force twelve months prior to the date of measurement and still have at least one policy in force at the date of measurement. |
• | Contingent Commission: Revenue in the form of contractual payments from Carriers contingent upon several factors, including growth and profitability of the business placed with the Carrier. |
• | Corporate Channel: The Corporate Channel distributes insurance through a network of company-owned and financed operations with employees that are hired, trained and managed by Goosehead. |
• | Corporate Channel Adjusted EBITDA: Segment earnings before interest, income taxes, depreciation and amortization allocable to the Corporate Channel, adjusted to exclude equity-based compensation. |
• | Franchise Agreement: Agreements governing our relationships with Franchisees. |
• | Franchise Channel: The Franchise Channel network consists of Franchisee operations that are owned and managed by Franchisees. These business owners have a contractual relationship with Goosehead to use our processes, training, implementation, systems and back-office support team to place insurance. In exchange, Goosehead is entitled to an Initial Franchise Fee and Royalty Fees. |
• | Franchise Channel Adjusted EBITDA: Segment earnings before interest, income taxes, depreciation and amortization, adjusted to exclude other non-operating items allocable to the Franchise Channel and equity-based compensation. |
• | Franchisee: An individual or entity who has entered into a Franchise Agreement with us. |
• | Initial Franchise Fee: Contracted fees paid by Franchisees to compensate Goosehead for the training and onboarding of new franchise locations. |
• | GF: Goosehead Financial, LLC. |
• | GM: Goosehead Management, LLC. |
• | LLC Unit: a limited liability company unit of Goosehead Financial, LLC. |
• | New Business Revenue: Commissions received from Carriers, Agency Fees received from clients, and Royalty Fees received from Franchisees relating to policies in their first term. |
• | New Business Revenue (Corporate): Commissions received from Carriers and Agency Fees charged to clients relating to policies in their first term sold in the Corporate Channel. |
• | NPS: Net Promoter Score is calculated based on a single question: “How likely are you to refer Goosehead Insurance to a friend, family member or colleague?” Customers that respond with a 6 or below are Detractors, a score of 7 or 8 are called Passives, and a 9 or 10 are Promoters. NPS is calculated by subtracting the percentage of Detractors from the percentage of Promoters. |
• | Policies in Force: As of any reported date, the total count of current (non-cancelled) policies placed by us with our Carriers. |
• | Pre-IPO LLC Members: The members of Goosehead Financial, LLC prior to the closing of the initial public offering of Goosehead Insurance, Inc., which primarily consist of members of management. |
• | Renewal Revenue: Commissions received from Carriers and Royalty Fees received from Franchisees after the first term of policies. |
• | Renewal Revenue (Corporate): Commissions received from Carriers after the first term of policies originally sold in the Corporate Channel. |
• | Royalty Fees: Fees paid by Franchisees to the Company that are tied to the gross commissions paid by the Carriers related to policies sold or renewed in the Franchise Channel. |
• | Segment: One of the two Goosehead sales distribution channels, the Corporate Channel or the Franchise Channel. |
• | Segment Adjusted EBITDA: Either Corporate Channel Adjusted EBITDA or Franchise Channel Adjusted EBITDA. |
• | The Offering: The initial public offering completed by Goosehead Insurance, Inc. on May 1st, 2018. |
• | Total Written Premium: As of any reported date, the total amount of current (non-cancelled) gross premium that is placed with Goosehead’s portfolio of Carriers. |
• | TWIHG: Texas Wasatch Insurance Holdings Group, LLC. |
Page | ||
Condensed Consolidated Balance Sheets | ||
Condensed Consolidated Statements of Income | ||
Condensed Consolidated Statements of Stockholders' Equity | ||
Condensed Consolidated Statements of Cash Flows | ||
Notes to the Condensed Consolidated Financial Statements | ||
Note 1 | Organization | |
Note 2 | Summary of Significant Accounting Policies | |
Note 3 | Franchise Fees Receivable | |
Note 4 | Allowance for Uncollectible Agency Fees | |
Note 5 | Property and equipment | |
Note 6 | Note Payable | |
Note 7 | Commitments and Contingencies | |
Note 8 | Income Taxes | |
Note 9 | Stockholders' Equity | |
Note 10 | Equity-Based Compensation | |
Note 10 | Dividends | |
Note 12 | Segment Information | |
Note 13 | Litigation |
March 31 | December 31 | |||||||
2019 | 2018 | |||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 18,417 | $ | 18,635 | ||||
Restricted cash | 352 | 376 | ||||||
Dividends held by transfer agent | 5,962 | — | ||||||
Commissions and agency fees receivable, net | 2,328 | 2,016 | ||||||
Receivable from franchisees, net | 935 | 703 | ||||||
Prepaid expenses | 1,276 | 1,109 | ||||||
Total current assets | 29,270 | 22,839 | ||||||
Receivable from franchisees, net of current portion | 2,351 | 2,048 | ||||||
Property and equipment, net of accumulated depreciation | 8,435 | 7,575 | ||||||
Intangible assets, net of accumulated amortization | 266 | 248 | ||||||
Deferred income taxes, net | 7,950 | 1,958 | ||||||
Other assets | 130 | 130 | ||||||
Total assets | $ | 48,402 | $ | 34,798 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current Liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 3,753 | $ | 3,978 | ||||
Premiums payable | 352 | 376 | ||||||
Unearned revenue | 332 | 530 | ||||||
Dividends payable | 15,000 | — | ||||||
Deferred rent | 487 | 428 | ||||||
Note payable | 2,750 | 2,500 | ||||||
Total current liabilities | 22,674 | 7,812 | ||||||
Deferred rent, net of current portion | 5,474 | 4,548 | ||||||
Note payable, net of current portion | 45,251 | 45,947 | ||||||
Liabilities under tax receivable agreement, net of current portion | 6,854 | 1,694 | ||||||
Total liabilities | 80,253 | 60,001 | ||||||
Commitments and contingencies (see note 7) | ||||||||
Class A common stock, $.01 par value per share - 300,000 shares authorized, 14,522 shares issued and outstanding as of March 31, 2019, 13,800 shares issued and outstanding as of December 31, 2018 | 145 | 138 | ||||||
Class B common stock, $.01 par value per share - 50,000 shares authorized, 21,763 issued and outstanding as of March 31,2019, 22,486 shares issued and outstanding as of December 31, 2018 | 217 | 224 | ||||||
Additional paid in capital | 86,483 | 88,811 | ||||||
Accumulated deficit | (10,068 | ) | (6,578 | ) | ||||
Total stockholders' equity | 76,777 | 82,595 | ||||||
Non-controlling interests | (108,628 | ) | (107,798 | ) | ||||
Total equity | (31,851 | ) | (25,203 | ) | ||||
Total liabilities and stockholders' equity | $ | 48,402 | $ | 34,798 |
Three Months Ended March 31 | ||||||||
2019 | 2018 | |||||||
Revenues: | ||||||||
Commissions and agency fees | $ | 16,170 | $ | 9,596 | ||||
Franchise revenues | 6,828 | 4,910 | ||||||
Interest income | 135 | 83 | ||||||
Total revenues | 23,133 | 14,589 | ||||||
Operating Expenses: | ||||||||
Employee compensation and benefits | 9,191 | 6,835 | ||||||
General and administrative expenses | 4,430 | 2,374 | ||||||
Bad debts | 401 | 280 | ||||||
Depreciation and amortization | 423 | 337 | ||||||
Total operating expenses | 14,445 | 9,826 | ||||||
Income from operations | 8,688 | 4,763 | ||||||
Other Income (Expense): | ||||||||
Interest expense | (626 | ) | (995 | ) | ||||
Income before taxes | 8,062 | 3,768 | ||||||
Tax expense | 744 | — | ||||||
Net income | 7,318 | 3,768 | ||||||
Less: net income attributable to non-controlling interests | 4,846 | 3,768 | ||||||
Net income attributable to Goosehead Insurance, Inc. | $ | 2,472 | $ | — | ||||
Earnings per share: | ||||||||
Basic | $ | 0.17 | n/a | |||||
Diluted | $ | 0.16 | n/a | |||||
Weighted average shares of Class A common stock outstanding | ||||||||
Basic | 14,211 | n/a | ||||||
Diluted | 15,289 | n/a | ||||||
Dividends declared per share | $ | 0.41 | $ | — | ||||
Pro forma earnings per share: | ||||||||
Basic | n/a | $ | 0.08 | |||||
Diluted | n/a | $ | 0.08 |
Members' deficit | Issued shares of Class A common stock | Issued shares of Class B common stock | Class A Common stock | Class B Common Stock | Additional paid in capital | Accumulated deficit | Total stockholders' equity | Non-controlling interest | Total equity | ||||||||||||||||||||
Balance at January 1, 2018 | (41,133 | ) | — | — | — | — | — | — | — | — | (41,133 | ) | |||||||||||||||||
Net Income | 3,768 | — | — | — | — | — | — | — | — | 3,768 | |||||||||||||||||||
Capital withdrawn | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Balance March 31, 2018 | (37,365 | ) | — | — | — | — | — | — | — | — | (37,365 | ) | |||||||||||||||||
Members' deficit | Issued shares of Class A common stock | Issued shares of Class B common stock | Class A Common stock | Class B Common Stock | Additional paid in capital | Accumulated deficit | Total stockholders' equity | Non-controlling interest | Total equity | ||||||||||||||||||||
Balance, December 31, 2018 | — | 13,799 | 22,486 | 138 | 224 | 88,811 | (6,578 | ) | 82,595 | (107,798 | ) | (25,203 | ) | ||||||||||||||||
Distributions | — | — | — | — | — | — | — | — | (245 | ) | (245 | ) | |||||||||||||||||
Dividends declared | — | — | — | — | — | — | (5,962 | ) | (5,962 | ) | (9,038 | ) | (15,000 | ) | |||||||||||||||
Net income | — | — | — | — | — | — | 2,472 | 2,472 | 4,846 | 7,318 | |||||||||||||||||||
Equity-based compensation | — | — | — | — | — | 368 | — | 368 | — | 368 | |||||||||||||||||||
Redemption of LLC Units | — | 723 | (723 | ) | 7 | (7 | ) | (3,607 | ) | — | (3,607 | ) | 3,607 | — | |||||||||||||||
Deferred tax adjustments related to Tax Receivable Agreement | — | — | — | — | — | 911 | — | 911 | — | 911 | |||||||||||||||||||
Balance March 31, 2019 | — | 14,522 | 21,763 | 145 | 217 | 86,483 | (10,068 | ) | 76,777 | (108,628 | ) | (31,851 | ) |
Three Months Ended March 31 | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 7,318 | $ | 3,768 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 476 | 337 | ||||||
Bad debt expense | 401 | 280 | ||||||
Equity-based compensation | 368 | — | ||||||
Adjustments to tax receivable agreement liability | 5,161 | — | ||||||
Deferred income taxes | (5,081 | ) | — | |||||
Changes in operating assets and liabilities: | ||||||||
Dividends held by transfer agent | (5,962 | ) | — | |||||
Commissions and agency fees receivable | (553 | ) | (705 | ) | ||||
Receivable from franchisees | (565 | ) | (414 | ) | ||||
Prepaid expenses | (167 | ) | (219 | ) | ||||
Other assets | — | (2,827 | ) | |||||
Accounts payable and accrued expenses | (356 | ) | 2,167 | |||||
Deferred rent | 985 | 284 | ||||||
Premiums payable | (24 | ) | 191 | |||||
Unearned revenue | (199 | ) | (287 | ) | ||||
Net cash provided by operating activities | 1,802 | 2,575 | ||||||
Cash flows from investing activities: | ||||||||
Proceeds from notes receivable | 5 | 5 | ||||||
Purchase of software | (55 | ) | (44 | ) | ||||
Purchase of property and equipment | (1,249 | ) | (334 | ) | ||||
Net cash used for investing activities | (1,299 | ) | (373 | ) | ||||
Cash flows from financing activities: | ||||||||
Loan origination fees | — | 49 | ||||||
Repayment of note payable | (500 | ) | (125 | ) | ||||
Member distributions and dividends | (245 | ) | (550 | ) | ||||
Net cash provided by (used for) financing activities | (745 | ) | (626 | ) | ||||
Net increase in cash and restricted cash | (242 | ) | 1,576 | |||||
Cash and cash equivalents, and restricted cash, beginning of period | 19,011 | 5,366 | ||||||
Cash and cash equivalents, and restricted cash, end of period | $ | 18,769 | $ | 6,942 | ||||
Supplemental disclosures of cash flow data: | ||||||||
Cash paid during the year for interest | 626 | 897 | ||||||
Cash paid for income taxes | — | — |
Goosehead Insurance, Inc. |
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
Goosehead Insurance, Inc. | |
Notes to the consolidated financial statements | Page |
Note 1. Organization | |
Note 2. Summary of significant accounting policies | |
Note 3. Franchise fees receivable | |
Note 4. Allowance for uncollectible agency fees | |
Note 5. Property and equipment | |
Note 6. Note payable | |
Note 7. Commitments and contingencies | |
Note 8. Income taxes | |
Note 9. Stockholder's equity | |
Note 10. Equity-based compensation | |
Note 11. Dividends | |
Note 12. Segment information | |
Note 13. Litigation |
Goosehead Insurance, Inc. |
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
Goosehead Insurance, Inc. |
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
March 31 | ||||||||
2019 | 2018 | |||||||
Cash and cash equivalents | $ | 18,417 | $ | 6,332 | ||||
Restricted cash | 352 | 610 | ||||||
Cash and cash equivalents, and restricted cash | $ | 18,769 | $ | 6,942 |
Goosehead Insurance, Inc. |
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
March 31 | December 31 | |||||||
2019 | 2018 | |||||||
Franchise fees receivable | $ | 4,277 | $ | 3,906 | ||||
Less: Unamortized discount | (1,533 | ) | (1,381 | ) | ||||
Less: Allowance for uncollectible franchise fees | (494 | ) | (455 | ) | ||||
Total franchise fees receivable | $ | 2,250 | $ | 2,070 |
Balance at December 31, 2017 | $ | 336 | |
Charges to bad debts | 74 | ||
Write offs | — | ||
Balance at March 31, 2018 | $ | 410 | |
Balance at December 31, 2018 | $ | 455 | |
Charges to bad debts | 160 | ||
Write offs | (121 | ) | |
Balance at March 31, 2019 | $ | 494 |
Goosehead Insurance, Inc. |
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
Balance at December 31, 2017 | $ | 183 | |
Charges to bad debts | 206 | ||
Write offs | (182 | ) | |
Balance at March 31, 2018 | $ | 207 | |
Balance at December 31, 2018 | $ | 242 | |
Charges to bad debts | 241 | ||
Write offs | (245 | ) | |
Balance at March 31, 2019 | $ | 238 |
March 31 | December 31 | ||||
2019 | 2018 | ||||
Furniture & fixtures | 2,517 | 2,233 | |||
Computer equipment | 1,056 | 1,023 | |||
Network equipment | 252 | 252 | |||
Phone system | 831 | 824 | |||
Leasehold improvements | 7,615 | 6,692 | |||
Total | 12,271 | 11,024 | |||
Less accumulated depreciation | (3,836 | ) | (3,449 | ) | |
Property and equipment, net | 8,435 | 7,575 |
Goosehead Insurance, Inc. |
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
Leverage Ratio | Interest Rate |
< 1.50x | LIBOR + 175.0 bps |
> 1.50x | LIBOR + 200.0 bps |
> 2.50x | LIBOR + 225.0 bps |
> 3.50x | LIBOR + 250.0 bps |
Amount | |||
2019 | $ | 2,000 | |
2020 | 4,000 | ||
2021 | 32,500 | ||
$ | 38,500 |
• | Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets. |
• | Level 2—Significant other observable inputs other than Level 1 prices such as quoted prices in markets that are not active, quoted prices for similar assets or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset. |
• | Level 3—Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. |
Goosehead Insurance, Inc. |
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
Amount | |||
2019 | $ | 1,307 | |
2020 | 2,575 | ||
2021 | 2,793 | ||
2022 | 2,762 | ||
2023 | 2,578 | ||
2023-2029 | 11,626 | ||
$ | 23,641 |
Three months ended | ||||||
March 31, 2019 | March 31, 2018 | |||||
Income before taxes | $ | 8,062 | $ | 3,768 | ||
Less: (income) prior to the Reorganization Transactions | — | (3,768 | ) | |||
Income before taxes | $ | 8,062 | $ | — | ||
Income taxes at U.S. federal statutory rate | $ | 1,693 | $ | — | ||
Tax on income not subject to entity level federal income tax | (1,058 | ) | — | |||
Permanent Differences: | ||||||
Meals & Entertainment | 8 | |||||
State income tax, net of federal benefit | 103 | — | ||||
Other Reconciling items: | ||||||
Other | (2 | ) | — | |||
Income tax expense | $ | 744 | $ | — |
Goosehead Insurance, Inc. |
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
March 31, 2019 | December 31, 2018 | |||||
Investment in flow-through entity | 7,950 | 1,958 | ||||
Net deferred tax asset (liability) | $ | 7,950 | $ | 1,958 |
Goosehead Insurance, Inc. |
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
March 31, 2019 | ||
LLC Units | Ownership % | |
Number of LLC Units held by GSHD | 14,522 | 40.0% |
Number of LLC Units held by non-controlling interest holders | 21,763 | 60.0% |
Number of LLC Units outstanding | 36,285 | 100.0% |
Goosehead Insurance, Inc. |
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
Three Months Ended March 31, 2019 | ||||
Numerator: | ||||
Income before taxes | $ | 8,062 | ||
Less: income before taxes attributable to non-controlling interests | 4,909 | |||
Income before taxes attributable to GSHD | 3,153 | |||
Less: income tax expense attributable to GSHD | 681 | |||
Net income attributable to GSHD | $ | 2,472 | ||
Denominator: | ||||
Weighted average shares of Class A common stock outstanding - basic | 14,211 | |||
Effect of dilutive securities: | ||||
Stock options | 1,078 | |||
Weighted average shares of Class A common stock outstanding - diluted | $ | 15,289 | ||
Earnings per share of Class A common stock - basic | $ | 0.17 | ||
Earnings per share of Class A common stock - diluted | $ | 0.16 |
Three Months Ended March 31, 2018 | ||||
Numerator: | ||||
Net income | $ | 3,768 | ||
Less: pro forma net income attributable to non-controlling interests | 2,362 | |||
Pro forma income before taxes attributable to GSHD | 1,406 | |||
Less: pro forma income tax expense | 336 | |||
Pro forma net income attributable to GSHD | $ | 1,070 | ||
Denominator: | ||||
Pro forma weighted average shares of Class A common stock outstanding - basic | 13,533 | |||
Pro forma effect of dilutive securities: | ||||
Pro forma stock options | — | |||
Pro forma weighted average shares of Class A common stock outstanding - diluted | 13,533 | |||
Pro forma earnings per share of Class A common stock - basic | $ | 0.08 | ||
Pro forma earnings per share of Class A common stock - diluted | $ | 0.08 |
Goosehead Insurance, Inc. |
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
Three Months Ended March 31 | ||||||
2019 | 2018 | |||||
Stock options | 368 | — | ||||
Equity-based compensation expense | $ | 368 | $ | — |
LLC Units held as of March 18, 2019 | Dividends declared | |||||
Class A common stockholders | 14,421 | $ | 5,962 | |||
Class B common stockholders via LLC Units held | 21,864 | 9,038 | ||||
Total | 36,285 | $ | 15,000 |
Goosehead Insurance, Inc. |
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
Corporate Channel | Franchise Channel | Other | Total | |||||||||||||
Three months ended March 31, 2019: | ||||||||||||||||
Revenues: | ||||||||||||||||
Commissions and fees | $ | 11,955 | $ | 4,215 | $ | — | $ | 16,170 | ||||||||
Franchise revenues | — | 6,828 | — | 6,828 | ||||||||||||
Interest income | — | 135 | — | 135 | ||||||||||||
Total | 11,955 | 11,178 | — | 23,133 | ||||||||||||
Operating expenses: | ||||||||||||||||
Employee compensation and benefits, excluding equity-based compensation | 5,068 | 3,755 | — | 8,823 | ||||||||||||
General and administrative expenses | 1,902 | 1,632 | 896 | 4,430 | ||||||||||||
Bad debts | 241 | 160 | — | 401 | ||||||||||||
Total | 7,211 | 5,547 | 896 | 13,654 | ||||||||||||
Adjusted EBITDA | 4,744 | 5,631 | (896 | ) | 9,479 | |||||||||||
Equity-based compensation | — | — | (368 | ) | (368 | ) | ||||||||||
Interest expense | — | — | (626 | ) | (626 | ) | ||||||||||
Depreciation and amortization | (239 | ) | (184 | ) | — | (423 | ) | |||||||||
Taxes | — | — | (744 | ) | (744 | ) | ||||||||||
Net income (loss) | $ | 4,505 | $ | 5,447 | $ | (2,634 | ) | $ | 7,318 | |||||||
At March 31, 2019: | ||||||||||||||||
Total Assets | $ | 7,083 | $ | 16,054 | $ | 25,265 | $ | 48,402 |
Corporate Channel | Franchise Channel | Other | Total | |||||||||||||
Three months ended March 31, 2018: | ||||||||||||||||
Revenues: | ||||||||||||||||
Commissions and fees | $ | 7,856 | $ | 1,740 | $ | — | $ | 9,596 | ||||||||
Franchise revenues | — | 4,910 | — | 4,910 | ||||||||||||
Interest income | — | 83 | — | 83 | ||||||||||||
Total | 7,856 | 6,733 | — | 14,589 | ||||||||||||
Operating expenses: | ||||||||||||||||
Employee compensation and benefits, excluding equity-based compensation | 4,045 | 2,790 | — | 6,835 | ||||||||||||
General and administrative expenses | 1,628 | 745 | 1 | 2,374 | ||||||||||||
Bad debts | 206 | 74 | — | 280 | ||||||||||||
Total | 5,879 | 3,609 | 1 | 9,489 | ||||||||||||
Adjusted EBITDA | 1,977 | 3,124 | (1 | ) | 5,100 | |||||||||||
Interest expense | — | — | (995 | ) | (995 | ) | ||||||||||
Depreciation and amortization | (236 | ) | (101 | ) | — | (337 | ) | |||||||||
Net income (loss) | $ | 1,741 | $ | 3,023 | $ | (996 | ) | $ | 3,768 | |||||||
At March 31, 2018: | ||||||||||||||||
Total Assets | $ | 10,408 | $ | 5,993 | $ | 18,397 | $ | 34,798 |
Goosehead Insurance, Inc. |
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
• | Total revenue increased 59% from the first quarter of 2018 to $23.1 million |
• | Commissions and Agency fee revenues increased 69% from the first quarter of 2018 to $16.2 million |
• | Franchise revenues increased 39% from the first quarter of 2018 to $6.8 million |
• | Net income increased by 94% from the first quarter of 2018 to $7.3 million |
• | Adjusted EBITDA*, a non-GAAP measure, increased 86% from the first quarter of 2018 to $9.5 million, or 41% of total revenues |
• | Corporate Channel Adjusted EBITDA increased 140% from the first quarter of 2018 to $4.7 million, or 40% of Corporate Channel revenues |
• | Franchise Channel Adjusted EBITDA increased 80% from the first quarter of 2018 to $5.6 million, or 50% of Franchise channel revenues |
• | Basic earnings per share was $0.17 and Adjusted EPS*, a non-GAAP measure, was $0.18 for the three months ended March 31, 2019 |
• | Total Written Premiums placed increased 45% from the prior-year period to $147 million. |
• | Policies in Force increased 45% from March 31, 2018 to 365 thousand at March 31, 2019 |
• | Corporate sales headcount increased 52% from March 31, 2018 to 184 at March 31, 2019 |
◦ | As of March 31, 2019, 103 of these Corporate sales agents had less than one year of tenure and 81 had greater than one year of tenure |
• | Operating franchises increased 47% from March 31, 2018 to 501 at March 31, 2019 |
◦ | In Texas as of March 31, 2019, 29 operating franchisees had less than one year of tenure and 175 operating franchisees had greater than one year of tenure. |
◦ | Outside of Texas as of March 31, 2019, 178 operating franchisees had less than one year of tenure and 119 had greater than one year of tenure. |
Three Months Ended March 31 | ||||||||||||
2019 | 2018 | |||||||||||
Revenues: | ||||||||||||
Commissions and agency fees | $ | 16,170 | 70 | % | $ | 9,596 | 66 | % | ||||
Franchise revenues | 6,828 | 30 | % | 4,910 | 34 | % | ||||||
Interest income | 135 | 1 | % | 83 | 1 | % | ||||||
Total revenues | 23,133 | 100 | % | 14,589 | 100 | % | ||||||
Operating Expenses: | ||||||||||||
Employee compensation and benefits | 9,191 | 64 | % | 6,835 | 70 | % | ||||||
General and administrative expenses | 4,430 | 31 | % | 2,374 | 24 | % | ||||||
Bad debts | 401 | 3 | % | 280 | 3 | % | ||||||
Depreciation and amortization | 423 | 3 | % | 337 | 3 | % | ||||||
Total operating expenses | 14,445 | 100 | % | 9,826 | 100 | % | ||||||
Income from operations | 8,688 | 4,763 | ||||||||||
Other Income (Expense): | ||||||||||||
Interest expense | (626 | ) | (995 | ) | ||||||||
Income before taxes | 8,062 | 3,768 | ||||||||||
Tax expense | 744 | — | ||||||||||
Net Income | 7,318 | 3,768 | ||||||||||
Less: net income attributable to non-controlling interests | 4,846 | 3,768 | ||||||||||
Net Income attributable to Goosehead Insurance Inc. | $ | 2,472 | $ | — |
Three Months Ended March 31 | |||||||||||
2019 | 2018 | % Change | |||||||||
New Business Revenue (Corporate) | $ | 2,459 | $ | 1,800 | 37 | % | |||||
Agency Fees | 1,437 | 1,099 | 31 | % | |||||||
Renewal Revenue (Corporate) | 4,789 | 3,903 | 23 | % | |||||||
Contingent Commissions (Corporate) | 3,270 | 1,054 | 210 | % | |||||||
Contingent Commissions (Franchise) | 4,215 | 1,740 | 142 | % | |||||||
Commissions and agency fees | $ | 16,170 | $ | 9,596 | 69 | % |
Three Months Ended March 31 | |||||||||||
2019 | 2018 | % Change | |||||||||
New Business Royalty Fees | $ | 1,355 | $ | 953 | 42 | % | |||||
Renewal Royalty Fees | 3,763 | 2,287 | 65 | % | |||||||
Initial Franchise Fees | 1,710 | 1,670 | 2 | % | |||||||
Franchise revenues | $ | 6,828 | $ | 4,910 | 39 | % |
Three Months Ended March 31 | % Change | |||||||||
2019 | 2018 | |||||||||
Corporate Channel Total Written Premium | $ | 50,675 | $ | 39,701 | 28 | % | ||||
Franchise Channel Total Written Premium | 96,199 | 61,247 | 57 | % | ||||||
Total Written Premium | $ | 146,874 | $ | 100,948 | 45 | % |
Three months ended March 31, | ||||||||
2019 | 2018 | |||||||
Net income | $ | 7,318 | $ | 3,768 | ||||
Interest expense | 626 | 995 | ||||||
Depreciation and amortization | 423 | 337 | ||||||
Tax expense | 744 | — | ||||||
Equity-based compensation | 368 | — | ||||||
Adjusted EBITDA | $ | 9,479 | $ | 5,100 | ||||
Adjusted EBITDA Margin(1) | 41 | % | 35 | % |
Three months ended March 31, 2019 | ||||
Earnings per share - basic (GAAP) | $ | 0.17 | ||
Add: equity-based compensation(1) | 0.01 | |||
Adjusted EPS (non-GAAP) | $ | 0.18 |
Leverage Ratio | Interest Rate |
< 1.50x | LIBOR + 175.0 bps |
> 1.50x | LIBOR + 200.0 bps |
> 2.50x | LIBOR + 225.0 bps |
> 3.50x | LIBOR + 250.0 bps |
Amount | |||
2019 | 2,000 | ||
2020 | 4,000 | ||
2021 | 32,500 | ||
$ | 38,500 |
Three months ended March 31, | |||||||||||
2019 | 2018 | Change | |||||||||
Net cash provided by operating activities | $ | 1,802 | $ | 2,575 | $ | (773 | ) | ||||
Net cash used for investing activities | (1,299 | ) | (373 | ) | (926 | ) | |||||
Net cash provided by (used for) financing activities | (745 | ) | (626 | ) | (119 | ) | |||||
Net increase in cash and cash equivalents | (242 | ) | 1,576 | (1,818 | ) | ||||||
Cash and cash equivalents, and restricted cash, beginning of period | 19,011 | 5,366 | 13,645 | ||||||||
Cash and cash equivalents, and restricted cash, end of period | $ | 18,769 | $ | 6,942 | $ | 11,827 |
• | we will record an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the redemption or exchange; |
• | to the extent we estimate that we will not realize the full benefit represented by the deferred tax asset, based on an analysis that will consider, among other things, our expectation of future earnings, we will reduce the deferred tax asset with a valuation allowance; and |
• | we will record 85% of the estimated realizable tax benefit (which is the recorded deferred tax asset less any recorded valuation allowance) as an increase to the liability due under the tax receivable agreement and the remaining 15% of the estimated realizable tax benefit as an increase to additional paid-in capital. |
Contractual obligations, commitments and contingencies | ||||||||||||||||||||
(in thousands) | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
Operating leases(1) | $ | 23,641 | $ | 1,768 | $ | 5,592 | $ | 5,266 | $ | 11,015 | ||||||||||
Debt obligations payable(2) | 48,500 | 2,750 | 45,750 | — | — | |||||||||||||||
Interest expense(3) | 5,908 | 2,289 | 3,619 | — | — | |||||||||||||||
Liabilities under the tax receivable agreement(4) | 6,863 | 9 | 732 | 771 | 5,351 | |||||||||||||||
Total | $ | 84,912 | $ | 6,816 | $ | 55,693 | $ | 6,037 | $ | 16,366 |
(1) | The Company leases its facilities under non-cancelable operating leases. In addition to monthly lease payments, the lease agreements require the Company to reimburse the lessors for its portion of operating costs each year. Rent expense was $447 thousand and $405 thousand for the three months ended March 31, 2019 and 2018. |
(2) | The Company refinanced its credit facilities on August 3, 2018 in the form of a $40 million term loan and $13 million revolving credit facility, of which $10 million was drawn as of March 31, 2019. The refinancing decreased the Company's borrowing costs by 300 bps and shortened the term loan maturity to 3 years. |
(3) | Interest payments on our outstanding debt obligations under our credit agreement. Our debt obligations have variable interest rates. We have calculated future interest obligations based on the interest rate for our debt obligations as of March 31, 2019. |
(4) | See "Item 2. Management's discussion and analysis of financial condition and results of operation - Tax receivable agreement." |
101.INS | XBRL Instance Document |
101.SCH | XBRL Schema Document |
101.CAL | XBRL Calculation Linkbase Document |
101.DEF | XBRL Definition Linkbase Document |
101.LAB | XBRL Label Linkbase Document |
101.PRE | XBRL Presentation Linkbase |
GOOSEHEAD INSURANCE, INC. | ||||
Date: | May 2, 2019 | By: | /s/ Mark E. Jones | |
Mark E. Jones | ||||
Chairman and Chief Executive Officer | ||||
(Principal Executive Officer) | ||||
Date: | May 2, 2019 | By: | /s/ Mark S. Colby | |
Mark S. Colby | ||||
Chief Financial Officer | ||||
(Principal Financial Officer and Principal Accounting Officer) |
1. | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and |
Document and Entity Information - shares |
3 Months Ended | |
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Mar. 31, 2019 |
May 02, 2019 |
|
Entity Information [Line Items] | ||
Entity Registrant Name | Goosehead Insurance, Inc. | |
Entity Central Index Key | 0001726978 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Class A Common Stock | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 14,522,206 | |
Class B Common Stock | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 21,763,171 |
Condensed Consolidated Balance Sheets (Unaudited) Parenthetical - $ / shares |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Class A Common Stock | ||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock shares issued (in shares) | 14,522,000 | 13,800,000 |
Common stock shares outstanding (in shares) | 14,522,000 | 13,800,000 |
Class B Common Stock | ||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock shares issued (in shares) | 21,763,000 | 22,486,000 |
Common stock shares outstanding (in shares) | 21,763,000 | 22,486,000 |
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
Total |
Class B Common Stock |
Members' deficit |
Common stock
Class A Common Stock
|
Common stock
Class B Common Stock
|
Additional paid in capital |
Accumulated deficit |
Total stockholders' equity |
Non-controlling interest |
---|---|---|---|---|---|---|---|---|---|
Members' deficit, beginning balance at Dec. 31, 2017 | $ (41,133) | $ (41,133) | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Distributions | 0 | 0 | |||||||
Net income | 3,768 | 3,768 | |||||||
Members' deficit, ending balance at Mar. 31, 2018 | (37,365) | (37,365) | |||||||
Beginning balance (in shares) at Dec. 31, 2018 | 13,799 | 22,486 | |||||||
Beginning balance at Dec. 31, 2018 | (25,203) | 0 | $ 138 | $ 224 | $ 88,811 | $ (6,578) | $ 82,595 | $ (107,798) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Distributions | (245) | (245) | |||||||
Dividends declared | (15,000) | (5,962) | (5,962) | (9,038) | |||||
Net income | 7,318 | 2,472 | 2,472 | 4,846 | |||||
Equity-based compensation | 368 | 368 | 368 | ||||||
Redemption of LLC Units (in shares) | (723) | 723 | (723) | ||||||
Redemption of LLC Units | 0 | $ 7 | $ (7) | (3,607) | (3,607) | 3,607 | |||
Deferred tax adjustments related to Tax Receivable Agreement | 911 | 911 | 911 | ||||||
Ending balance (in shares) at Mar. 31, 2019 | 14,522 | 21,763 | |||||||
Ending balance at Mar. 31, 2019 | $ (31,851) | $ 0 | $ 145 | $ 217 | $ 86,483 | $ (10,068) | $ 76,777 | $ (108,628) |
Organization |
3 Months Ended |
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Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization On May 1, 2018 Goosehead Insurance, Inc. ("GSHD") completed an initial public offering (the “Offering”) of 9,810 thousand shares of Class A common stock at a price of $10.00 per share, which included 1,280 thousand shares issued pursuant to the underwriter's over-allotment option. Following completion of the Offering, GSHD owned 37.3% of Goosehead Financial, LLC (“GF”) and the Pre-IPO LLC Members owned the remaining 62.7%. GSHD is the sole managing member of GF and, although GSHD holds a minority economic interest in GF, GSHD has the sole voting power and control of management of GF. Accordingly, GSHD consolidates the financial results of GF and reports non-controlling interest in GSHD's consolidated financial statements. GF was organized on January 1, 2016 as a Delaware Limited Liability Company and is headquartered in Westlake, TX. The operations of GF represent the predecessor to GSHD prior to the Offering. Operations for any periods prior to May 1, 2018 are the condensed, consolidated and combined operations of GF and its subsidiaries and affiliates. GSHD (collectively with its consolidated subsidiaries, the “Company”) provides personal and commercial property and casualty insurance brokerage services for its clients through a network of corporate-owned agencies and franchise units across the nation. The Company had seven corporate-owned locations in operation at March 31, 2019 and 2018. Franchisees are provided access to insurance Carrier Appointments, product training, technology infrastructure, client service centers and back office services. During the three months ended March 31, 2019 and 2018, the Company sold 63 and 58 franchise locations, respectively and had 501 and 341 operating franchise locations as of March 31, 2019 and 2018, respectively. No franchises were purchased by the Company during the three months ended March 31, 2019 or 2018. All intercompany accounts and transactions have been eliminated in consolidation. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all of the annual disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). However, in the opinion of management, these statements include all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the condensed consolidated financial position at March 31, 2019, and the condensed consolidated results of operations, and cash flows for the three months ended March 31, 2019 and 2018. The interim period condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements that are included in the Annual Report on Form 10-K. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Accordingly, actual results could differ from those estimates as more information becomes known. Income Taxes Prior to the Offering, GF was treated as a partnership for U.S. federal and applicable state and local income tax purposes. As a partnership, GF's taxable income or loss was included in the taxable income of its members. Accordingly, no income tax expense was recorded for federal and state and local jurisdictions for periods prior to the Offering. In connection with the Offering completed on May 1, 2018, the Company became a taxable entity. The Company accounts for income taxes pursuant to the asset and liability method which requires the recognition of deferred income tax assets and liabilities related to the expected future tax consequences arising from temporary differences between the carrying amounts and tax bases of assets and liabilities based on enacted statutory tax rates applicable to the periods in which the temporary differences are expected to reverse. Any effects of changes in income tax rates or laws are included in income tax expense in the period of enactment. Restricted Cash The Company holds premiums received from the insured, but not yet remitted to the insurance carrier in a fiduciary capacity. Premiums received but not yet remitted included in restricted cash were $352 thousand and $610 thousand as of March 31, 2019 and 2018, respectively. The following is a reconciliation of our cash and restricted cash balances as presented in the condensed consolidated statement of cash flows for the three months ended March 31, 2019 and 2018 (in thousands):
Recently Issued Accounting Pronouncements Statement of Cash Flows (ASU 2016-18): This standard requires that the Statement of Cash Flows explain the changes during the period of cash and cash equivalents inclusive of amounts categorized as Restricted Cash. As such, the Company’s condensed consolidated statement of cash flows shows the sources and uses of cash that explain the movement in the balance of cash and cash equivalents, inclusive of restricted cash, over the period presented. As an emerging growth company (“EGC”), the standard became effective for the Company January 1, 2019. The standard did not have a material impact on the Statement of Cash Flows. As shown in the reconciliation above, restricted cash of $610 thousand, which was previously shown as an investing activity has been reclassified and is now included together with cash and cash equivalents to conform to the current period presentation in the condensed consolidated statement of cash flows as a result of the adoption of ASU 2016-18. Statement of Cash Flows (ASU 2016-15): This standard addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified and applies to all entities, including both business entities and not-for-profit entities that are required to present a statement of cash flows under Topic 230. The standard became effective for the Company on January 1, 2019. The Company has evaluated the impact of ASU 2016-15 and has determined the impact to be immaterial. The Company does not, at this time, engage in the activities being addressed by the standard. Revenue from Contracts with Customers (ASU 2014-09): This standard supersedes the existing revenue recognition guidance and provides a new framework for recognizing revenue. The core principle of the standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new standard also requires significantly more comprehensive disclosures than the existing standard. Guidance subsequent to ASU 2014-09 has been issued to clarify various provisions in the standard, including principal versus agent considerations, identifying performance obligations, licensing transactions, as well as various technical corrections and improvements. This standard may be adopted using either a retrospective or modified retrospective method. According to the superseding standard ASU 2015-14 that deferred the effective dates of the preceding, and because the Company is filing as an emerging growth company, the standard will become effective for the Company January 1, 2019, but the Company is not required to present the impacts of the standard until it files its annual report on Form 10-K for the fiscal year ended December 31, 2019. The Company is continuing to evaluate the impact this standard is expected to have on the consolidated financial statements and expects to adopt the modified retrospective method. The primary anticipated impacts of the new standard to the Company's revenues and expenses are as follows: Under the new guidance, the Company expects commission revenues will be recognized at the effective date of the policy, which will accelerate some revenues. Currently, commissions from insurance carriers, net of estimated cancellations, are recognized as revenue when the data necessary to reasonably determine such amounts is made available to the Company. For contingent commissions, the Company anticipates revenues will be estimated and recorded throughout the year as the underlying business is placed with the insurance carriers as opposed to the Company's historical recognition when the Company received cash, the related policy detail, or other carrier specific information from the insurance carrier, typically in the first quarter of the following year. The effect of this change will result in revenue being recognized more evenly throughout the year. Franchise revenues, including franchise fees, are also likely to change under the new guidance. Currently, initial franchise fees are recognized as revenue in the month the agency owner or initial agency representative attends training. Under the new guidance, the Company anticipates these revenues will likely be recognized over the contract term, typically 10 years. The Company also expects to recognize an asset for the costs to obtain and/or fulfill a contract and to amortize on a systematic basis that is consistent with the transfer of services to which asset relates. Leases (ASU 2016-02): This standard establishes a new lease accounting model, which introduces the recognition of lease assets and liabilities for those leases classified as operating leases under previous GAAP. It should be applied using a modified retrospective approach, with the option to elect various practical expedients. Early adoption is permitted. The standard will become effective for the Company January 1, 2020. The Company is currently evaluating the impact this standard will have on the Company's consolidated financial statements. However, the Company expects the impact of this guidance on its consolidated financial statements could be significant, as its future minimum operating lease commitments totaled $23.6 million as of March 31, 2019. |
Franchise Fees Receivable |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Franchise Fees Receivable | Franchise Fees Receivable The balance of Franchise fees receivable included in Receivable from franchisees consisted of the following at March 31, 2019 and December 31, 2018 (in thousands):
Activity in the allowance for uncollectible franchise fees was as follows (in thousands):
Allowance for Uncollectible Agency Fees Activity in the allowance for uncollectible agency fees was as follows (in thousands):
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Allowance for Uncollectible Agency Fees |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Uncollectible Agency Fees | Franchise Fees Receivable The balance of Franchise fees receivable included in Receivable from franchisees consisted of the following at March 31, 2019 and December 31, 2018 (in thousands):
Activity in the allowance for uncollectible franchise fees was as follows (in thousands):
Allowance for Uncollectible Agency Fees Activity in the allowance for uncollectible agency fees was as follows (in thousands):
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Property and equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment | Property and equipment Property and equipment consisted of the following at:
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Note Payable |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note Payable | Note Payable On August 3, 2018, the Company refinanced its $3.0 million revolving credit facility and $50.0 million term note payable to a $13.0 million revolving credit facility and $40.0 million term note payable in order to obtain a more favorable interest rate on the outstanding debt. The Company has the right, subject to approval by the administrative agent and each issuing bank, to increase the commitments under the credit facilities an additional $50.0 million. The $13.0 million revolving credit facility accrues interest on amounts drawn at an initial interest rate of LIBOR plus 2.50%, then at an interest rate determined by the Company's leverage ratio for the preceding period. As of March 31, 2019, the Company was in the greater than 2.50x leverage ratio tranche, accruing interest of LIBOR plus 2.25%. At March 31, 2019, the Company had $10.0 million drawn against the revolver. At March 31, 2019, the Company had a letter of credit of $417 thousand applied against the maximum borrowing availability, thus amounts available to draw totaled $2.6 million. The revolving credit facility is collateralized by substantially all the Company’s assets, which includes rights to future commissions. Interest paid on the revolving credit facility totaled $122 thousand for the three months ended March 31, 2019. The $40.0 million term note accrues interest at an initial interest rate of LIBOR plus 2.5%, then at an interest rate determined by the Company's leverage ratio for the preceding period. As of March 31, 2019, the Company was in the greater than 2.50x leverage ratio tranche, accruing interest of LIBOR plus 2.25%. The aggregate principal amount of the term note as of March 31, 2019 is $38.5 million, payable in quarterly installments of (x) $500,000 through the fiscal quarter ending June 30, 2019, (y) $750,000 from the fiscal quarter ending September 30, 2019 through the fiscal quarter ending June 30, 2020, and (z) $1,250,000 from the fiscal quarter ending September 30, 2020 through the fiscal quarter ending June 30, 2021, with a balloon payment of the entire unpaid principal amount of the term note on August 3, 2021. The term note is collateralized by substantially all the Company’s assets, which includes rights to future commissions. The interest rate for each leverage ratio tier are as follows:
Maturities of the term note payable for the next three calendar years as of March 31, 2019 are as follows (in thousands):
The $10.0 million drawn against the revolver is coterminous with the term loan and is due in full on August 3, 2021. Loan origination fees of $499 thousand at March 31, 2019 are reflected as a reduction to the note balance and will be amortized through interest expense over three years (the term of the note payable). The Company’s note payable agreement contains certain restrictions and covenants. Under these restrictions, the Company is limited in the amount of debt incurred and distributions payable. In addition, the credit agreement contains certain change of control provisions that, if broken, would trigger a default. Finally, the Company must maintain certain financial ratios. As of March 31, 2019, the Company was in compliance with these covenants. Because of both instruments’ origination date and variable interest rate, the note payable balance at March 31, 2019 and December 31, 2018, approximates fair value using Level 2 inputs, described below. The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described as follows:
The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. |
Commitments and Contingencies |
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies The Company leases its facilities under non-cancelable operating leases, expiring in various years through 2029. In addition to monthly lease payments, the lease agreements require the Company to reimburse the lessors for its portion of operating costs each year. Rent expense was $447 thousand and $405 thousand for the three months ended March 31, 2019 and 2018. The following is a schedule of future minimum lease payments as of March 31, 2019 (in thousands):
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Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes As a result of the Reorganization Transactions and the Offering, GSHD became the sole managing member of GF, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, GF is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by GF is passed through to and included in the taxable income or loss of its members, including GSHD, on a pro rata basis. GSHD is subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to GSHD's allocable share of income of GF. Income tax expense A reconciliation of income tax expense computed at the U.S. federal statutory income tax rate to the income tax expense recognized is as follows (in thousands):
Deferred tax assets and liabilities The components of deferred tax assets and liabilities are as follows:
Uncertain tax positions GSHD has determined there are no material uncertain tax positions as of March 31, 2019. Tax Receivable Agreement GF intends to make an election under Section 754 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “Code”) effective for each taxable year in which a redemption or exchange of LLC Units and corresponding Class B common stock for shares of Class A common stock occurs. Future taxable redemptions or exchanges are expected to result in tax basis adjustments to the assets of GF that will be allocated to the Company and thus produce favorable tax attributes. These tax attributes would not be available to GSHD in the absence of those transactions. The anticipated tax basis adjustments are expected to reduce the amount of tax that GSHD would otherwise be required to pay in the future. GSHD entered into a tax receivable agreement with the Pre-IPO LLC Members on May 1, 2018 that provides for the payment by GSHD to the Pre-IPO LLC Members of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that GSHD actually realizes as a result of (i) any increase in tax basis in GSHD's assets and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the tax receivable agreement. During the three months ended March 31, 2019, an aggregate of 723 thousand LLC Units were redeemed by the Pre-IPO LLC Members for newly issued shares of Class A common stock. In connection with these redemptions, GSHD received 723 thousand LLC Units, which resulted in an increase in the tax basis of its investment in GF subject to the provisions of the Tax Receivable Agreement. The Company recognized a liability for the TRA Payments due to the Pre-IPO LLC Members, representing 85% of the aggregate tax benefits the Company expects to realize from the tax basis increases related to the redemptions of LLC Units, after concluding it was probable that such TRA Payments would be paid based on its estimates of future taxable income. As of March 31, 2019, the total amount of TRA Payments due to the Pre-IPO LLC Members under the Tax Receivable Agreement was $6.9 million, of which $9 thousand was current and included in Accounts payables and accrued expenses on the Consolidated Balance Sheet. |
Stockholders' Equity |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders' Equity Class A Common Stock GSHD has a total of 14,522 thousand shares of its Class A common stock outstanding at March 31, 2019. Each share of Class A common stock holds economic rights and entitles its holder to one vote per share on all matters submitted to a vote of the stockholders of GSHD. Class B Common Stock GSHD has a total of 21,763 thousand shares of its Class B common stock outstanding at March 31, 2019. Each share of Class B common stock has no economic rights but entitles its holder to one vote per share on all matters submitted to a vote of the stockholders of GSHD. Holders of Class A common stock and Class B common stock vote together as a single class on all matters presented to GSHD's shareholders for their vote or approval, except as otherwise required by applicable law, by agreement, or by GSHD's certificate of incorporation. Non-Controlling Interests Following the Offering, GSHD became the sole managing member of GF and, as a result, it consolidates the financial results of GF. GSHD reports a non-controlling interest representing the economic interest in GF held by the other members of GF. On a quarterly basis, GF makes distributions to the LLC Unit holders on a pro rata basis to facilitate the LLC Unit holder's quarterly tax payments. For the three months ended March 31, 2019, GF made distributions of $400 thousand, of which $245 thousand where made to Pre-IPO LLC Members. The remaining $155 thousand were made to GSHD and were eliminated in consolidation. There were no distributions made during the three months ended March 31, 2018. Under the amended and restated Goosehead Financial, LLC Agreement, the Pre-IPO LLC Members have the right, from and after the completion of the Offering (subject to the terms of the amended and restated Goosehead Financial, LLC Agreement), to require GSHD to redeem all or a portion of their LLC Units for, at GSHD's election, newly-issued shares of Class A common stock on a one-for-one basis or a cash payment equal to the volume weighted average market price of one share of GSHD's Class A common stock for each LLC Unit redeemed (subject to customary adjustments, including for stock splits, stock dividends and reclassifications) in accordance with the terms of the amended and restated Goosehead Financial, LLC Agreement. Additionally, in the event of a redemption request by a Pre-IPO LLC Member, GSHD may, at its option, effect a direct exchange of cash or Class A common stock for LLC Units in lieu of such a redemption. Shares of Class B common stock will be cancelled on a one-for-one basis if GSHD, at the election of a Pre-IPO LLC Member, redeems or exchanges LLC Units of such Pre-IPO LLC Member pursuant to the terms of the amended and restated Goosehead Financial, LLC Agreement. Except for transfers to GSHD pursuant to the amended and restated Goosehead Financial, LLC Agreement or to certain permitted transferees, the Pre-IPO LLC Members are not permitted to sell, transfer or otherwise dispose of any LLC Units or shares of Class B common stock. During the three months ended March 31, 2019, an aggregate of 723 thousand LLC Units were redeemed by the non-controlling interest holders. Pursuant to the GF LLC Agreement, GSHD issued 723 thousand shares of Class A common stock in connection with these redemptions and received 723 thousand LLC Interests, increasing GSHD's ownership interest in GF. Simultaneously, and in connection with these redemptions, 723 thousand shares of Class B common stock were surrendered and cancelled. The following table summarizes the ownership interest in GF as of March 31, 2019 (in thousands).
The weighted average ownership percentages for the applicable reporting periods are used to attribute net income to GSHD and the non-controlling interest holders. The non-controlling interest holders' weighted average ownership percentage for the three months ended March 31, 2019 was 60.8%. All net income prior to the Offering is attributed to non-controlling interest holders. Earnings Per Share The following table sets forth the calculation of basic earnings per share ("EPS") based on net income attributable to GSHD for the three months ended March 31, 2019, divided by the basic weighted average number of Class A common stock as of March 31, 2019 (in thousands, except per share amounts). Diluted earnings per share of Class A common stock is computed by dividing net income attributable to GSHD by the weighted average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities (in thousands, except per share amounts). The Company has not included the effects of conversion of Class B shares to Class A shares in the diluted EPS calculation using the "if-converted" method, because doing so has no impact on diluted EPS.
The following table sets forth the calculation of pro forma basic EPS based on pro forma net income attributable to GSHD for the three months ended March 31, 2018, divided by the pro forma basic weighted average number of Class A common stock as of March 31, 2018 (in thousands, except per share amounts). Pro forma diluted earnings per share of Class A common stock is computed by dividing pro forma net income attributable to GSHD by the pro forma weighted average number of shares of Class A common stock outstanding adjusted to give effect to pro forma potentially dilutive securities (in thousands, except per share amounts).
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Equity-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Equity-Based Compensation | Equity-Based Compensation A summary of equity-based compensation expense during the three months ended March 31, 2019 and March 31, 2018 is as follows (in thousands):
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Dividends | Dividends On March 7, 2019, GF approved a $15.0 million extraordinary dividend to all holders of LLC Units, including GSHD. The board of directors of the Company then declared an extraordinary dividend of $0.41 (rounded) to all holders of Class A common stock of GSHD with a record date of March 18, 2019, paid on or before April 1, 2019. A summary of the total amounts declared by GF is as follows (in thousands):
In order to facilitate the payment of dividends to Class A shareholders, the Company engages a transfer agent to maintain and distribute the funds. Amounts due to Class A shareholders are typically paid to the transfer agent one business day prior to distribution. In connection with the dividend described above, the Company paid $6.0 million to the transfer agent, but the dividend had not yet been distributed to Class A shareholders. These funds are included on the consolidated and condensed balance as Dividends held by transfer agent. Any future extraordinary dividends will be declared at the sole discretion of GF's managing members with respect to GF and the Company's board of directors with respect to GSHD. In determining whether a future extraordinary dividend will be declared by the Company, the board of directors may, at its sole discretion, consider the following: the Company's financial condition and operating results, the Company's available cash and current and anticipated cash needs, the Company's capital requirements, any contractual, legal, tax and regulatory restrictions, general economic and business conditions, and such other factors or conditions as the board of directors deems relevant. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The Company has two reportable segments: Corporate Channel and Franchise Channel. The Corporate Channel consists of company-owned and financed operations with employees who are hired, trained, and managed by Goosehead. The Franchise Channel network consists of franchisee operations that are owned and managed by individual business owners. These business owners have a contractual relationship with Goosehead to use the Company's processes, systems, and back-office support team to sell insurance and manage their business. In exchange, Goosehead is entitled to an initial franchise fee and ongoing royalty fees. Allocations of contingent commissions and certain operating expenses are based on reasonable assumptions and estimates primarily using revenue, headcount and other information. The Company’s chief operating decision maker uses net income before interest, income taxes, depreciation and amortization, adjusted to exclude equity-based compensation and other non-operating items, including, among other things, certain non-cash charges and certain non-recurring or non-operating gains or losses (“Adjusted EBITDA”) as a performance measure to manage resources and make decisions about the business. Summarized financial information concerning the Company’s reportable segments is shown in the following tables (in thousands). There are no intersegment sales, only interest income and interest expense related to an intersegment line of credit, all of which eliminate in consolidation. The “Other” column includes any income and expenses not allocated to reportable segments and corporate-related items, including equity-based compensation, certain legal expenses and interest related to the note payable.
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Litigation |
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Commitments and Contingencies Disclosure [Abstract] | |
Litigation | Litigation From time to time, GSHD may be involved in various legal proceedings, lawsuits and claims incidental to the conduct of the Company's business. The amount of any loss from the ultimate outcomes is not probable or reasonably estimable. It is the opinion of management that the resolution of outstanding claims will not have a material adverse effect on the financial position or results of operations of the Company. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||
Basis of Combination | All intercompany accounts and transactions have been eliminated in consolidation. |
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Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all of the annual disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). However, in the opinion of management, these statements include all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the condensed consolidated financial position at March 31, 2019, and the condensed consolidated results of operations, and cash flows for the three months ended March 31, 2019 and 2018. The interim period condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements that are included in the Annual Report on Form 10-K. |
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Accordingly, actual results could differ from those estimates as more information becomes known. |
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Income Taxes | Income Taxes Prior to the Offering, GF was treated as a partnership for U.S. federal and applicable state and local income tax purposes. As a partnership, GF's taxable income or loss was included in the taxable income of its members. Accordingly, no income tax expense was recorded for federal and state and local jurisdictions for periods prior to the Offering. In connection with the Offering completed on May 1, 2018, the Company became a taxable entity. The Company accounts for income taxes pursuant to the asset and liability method which requires the recognition of deferred income tax assets and liabilities related to the expected future tax consequences arising from temporary differences between the carrying amounts and tax bases of assets and liabilities based on enacted statutory tax rates applicable to the periods in which the temporary differences are expected to reverse. Any effects of changes in income tax rates or laws are included in income tax expense in the period of enactment. |
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Restricted Cash | Restricted Cash The Company holds premiums received from the insured, but not yet remitted to the insurance carrier in a fiduciary capacity. Premiums received but not yet remitted |
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Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Statement of Cash Flows (ASU 2016-18): This standard requires that the Statement of Cash Flows explain the changes during the period of cash and cash equivalents inclusive of amounts categorized as Restricted Cash. As such, the Company’s condensed consolidated statement of cash flows shows the sources and uses of cash that explain the movement in the balance of cash and cash equivalents, inclusive of restricted cash, over the period presented. As an emerging growth company (“EGC”), the standard became effective for the Company January 1, 2019. The standard did not have a material impact on the Statement of Cash Flows. As shown in the reconciliation above, restricted cash of $610 thousand, which was previously shown as an investing activity has been reclassified and is now included together with cash and cash equivalents to conform to the current period presentation in the condensed consolidated statement of cash flows as a result of the adoption of ASU 2016-18. Statement of Cash Flows (ASU 2016-15): This standard addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified and applies to all entities, including both business entities and not-for-profit entities that are required to present a statement of cash flows under Topic 230. The standard became effective for the Company on January 1, 2019. The Company has evaluated the impact of ASU 2016-15 and has determined the impact to be immaterial. The Company does not, at this time, engage in the activities being addressed by the standard. Revenue from Contracts with Customers (ASU 2014-09): This standard supersedes the existing revenue recognition guidance and provides a new framework for recognizing revenue. The core principle of the standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new standard also requires significantly more comprehensive disclosures than the existing standard. Guidance subsequent to ASU 2014-09 has been issued to clarify various provisions in the standard, including principal versus agent considerations, identifying performance obligations, licensing transactions, as well as various technical corrections and improvements. This standard may be adopted using either a retrospective or modified retrospective method. According to the superseding standard ASU 2015-14 that deferred the effective dates of the preceding, and because the Company is filing as an emerging growth company, the standard will become effective for the Company January 1, 2019, but the Company is not required to present the impacts of the standard until it files its annual report on Form 10-K for the fiscal year ended December 31, 2019. The Company is continuing to evaluate the impact this standard is expected to have on the consolidated financial statements and expects to adopt the modified retrospective method. The primary anticipated impacts of the new standard to the Company's revenues and expenses are as follows: Under the new guidance, the Company expects commission revenues will be recognized at the effective date of the policy, which will accelerate some revenues. Currently, commissions from insurance carriers, net of estimated cancellations, are recognized as revenue when the data necessary to reasonably determine such amounts is made available to the Company. For contingent commissions, the Company anticipates revenues will be estimated and recorded throughout the year as the underlying business is placed with the insurance carriers as opposed to the Company's historical recognition when the Company received cash, the related policy detail, or other carrier specific information from the insurance carrier, typically in the first quarter of the following year. The effect of this change will result in revenue being recognized more evenly throughout the year. Franchise revenues, including franchise fees, are also likely to change under the new guidance. Currently, initial franchise fees are recognized as revenue in the month the agency owner or initial agency representative attends training. Under the new guidance, the Company anticipates these revenues will likely be recognized over the contract term, typically 10 years. The Company also expects to recognize an asset for the costs to obtain and/or fulfill a contract and to amortize on a systematic basis that is consistent with the transfer of services to which asset relates. Leases (ASU 2016-02): This standard establishes a new lease accounting model, which introduces the recognition of lease assets and liabilities for those leases classified as operating leases under previous GAAP. It should be applied using a modified retrospective approach, with the option to elect various practical expedients. Early adoption is permitted. The standard will become effective for the Company January 1, 2020. The Company is currently evaluating the impact this standard will have on the Company's consolidated financial statements. However, the Company expects the impact of this guidance on its consolidated financial statements could be significant, as its future minimum operating lease commitments totaled $23.6 million as of March 31, 2019. |
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Framework for Measuring Fair Value | The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described as follows:
The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. |
Summary of Significant Accounting Policies (Tables) |
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Schedule of Reconciliation of Cash and Restricted Cash | The following is a reconciliation of our cash and restricted cash balances as presented in the condensed consolidated statement of cash flows for the three months ended March 31, 2019 and 2018 (in thousands):
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Schedule of Reconciliation of Cash and Restricted Cash | The following is a reconciliation of our cash and restricted cash balances as presented in the condensed consolidated statement of cash flows for the three months ended March 31, 2019 and 2018 (in thousands):
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Franchise Fees Receivable (Tables) |
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Franchise Fees Receivable | The balance of Franchise fees receivable included in Receivable from franchisees consisted of the following at March 31, 2019 and December 31, 2018 (in thousands):
Activity in the allowance for uncollectible agency fees was as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Allowance For Uncollectible Franchise Fees | Activity in the allowance for uncollectible franchise fees was as follows (in thousands):
|
Allowance for Uncollectible Agency Fees (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Allowance for Uncollectible Agency Fees | The balance of Franchise fees receivable included in Receivable from franchisees consisted of the following at March 31, 2019 and December 31, 2018 (in thousands):
Activity in the allowance for uncollectible agency fees was as follows (in thousands):
|
Property and equipment (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment | Property and equipment consisted of the following at:
|
Note Payable (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||
Schedule of Interest Rate Dependent of Leverage Ratio | The interest rate for each leverage ratio tier are as follows:
|
||||||||||||||||||||||||||||
Schedule of Maturities of Note Payable | Maturities of the term note payable for the next three calendar years as of March 31, 2019 are as follows (in thousands):
|
Commitments and Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Lease Payments | The following is a schedule of future minimum lease payments as of March 31, 2019 (in thousands):
|
Income Taxes (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation of Income Tax Expense | A reconciliation of income tax expense computed at the U.S. federal statutory income tax rate to the income tax expense recognized is as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income before Income Taxes | A reconciliation of income tax expense computed at the U.S. federal statutory income tax rate to the income tax expense recognized is as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax Expense | A reconciliation of income tax expense computed at the U.S. federal statutory income tax rate to the income tax expense recognized is as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferred Tax Assets and Liabilities | The components of deferred tax assets and liabilities are as follows:
|
Stockholders' Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Pro Forma Ownership Interest | The following table summarizes the ownership interest in GF as of March 31, 2019 (in thousands).
|
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Schedule of Calculation of EPS and Pro Forma EPS | The following table sets forth the calculation of basic earnings per share ("EPS") based on net income attributable to GSHD for the three months ended March 31, 2019, divided by the basic weighted average number of Class A common stock as of March 31, 2019 (in thousands, except per share amounts). Diluted earnings per share of Class A common stock is computed by dividing net income attributable to GSHD by the weighted average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities (in thousands, except per share amounts). The Company has not included the effects of conversion of Class B shares to Class A shares in the diluted EPS calculation using the "if-converted" method, because doing so has no impact on diluted EPS.
The following table sets forth the calculation of pro forma basic EPS based on pro forma net income attributable to GSHD for the three months ended March 31, 2018, divided by the pro forma basic weighted average number of Class A common stock as of March 31, 2018 (in thousands, except per share amounts). Pro forma diluted earnings per share of Class A common stock is computed by dividing pro forma net income attributable to GSHD by the pro forma weighted average number of shares of Class A common stock outstanding adjusted to give effect to pro forma potentially dilutive securities (in thousands, except per share amounts).
|
Equity-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Summary of Equity-Based Compensation Expense | A summary of equity-based compensation expense during the three months ended March 31, 2019 and March 31, 2018 is as follows (in thousands):
|
Dividends (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Summary of total estimated dividends to be paid | A summary of the total amounts declared by GF is as follows (in thousands):
|
Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Information |
|
Organization - Narrative (Details) shares in Thousands |
3 Months Ended | |||
---|---|---|---|---|
May 02, 2018 |
May 01, 2018
$ / shares
shares
|
Mar. 31, 2019
location
franchise
|
Mar. 31, 2018
location
franchise
|
|
Subsidiary, Sale of Stock [Line Items] | ||||
Corporate-owned locations | location | 7 | 7 | ||
Franchise locations sold | 63 | 58 | ||
Operating franchise locations | 501 | 341 | ||
Franchises purchased | 0 | 0 | ||
Initial Public Offering | Class A Common Stock | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Shares issued (in shares) | shares | 9,810 | |||
Share price (in dollars per share) | $ / shares | $ 10 | |||
Over-Allotment Option | Class A Common Stock | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Shares issued (in shares) | shares | 1,280 | |||
Goosehead Insurance, Inc. | Goosehead Financial, LLC | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Ownership interest | 37.30% | |||
Pre-IPO LLC Members | Goosehead Financial, LLC | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Ownership interest | 62.70% |
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Mar. 31, 2018 |
---|---|---|
Accounting Policies [Abstract] | ||
Restricted cash | $ 352 | $ 610 |
Future minimum operating lease commitments | $ 23,641 |
Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 18,417 | $ 18,635 | $ 6,332 | |
Restricted cash | 352 | 610 | ||
Cash and cash equivalents, and restricted cash | $ 18,769 | $ 19,011 | $ 6,942 | $ 5,366 |
Franchise Fees Receivable - Balance of Franchise Fees Receivable (Details) - Franchise Fees Receivable - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Franchise fees receivable | $ 4,277 | $ 3,906 | ||
Less: Unamortized discount | (1,533) | (1,381) | ||
Less: Allowance for uncollectible franchise fees | (494) | (455) | $ (410) | $ (336) |
Total franchise fees receivable | $ 2,250 | $ 2,070 |
Franchise Fees Receivable - Roll-Forward of Allowance (Details) - Franchise Fees Receivable - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Financing Receivable, Allowance for Credit Losses [Roll Forward] | ||
Beginning balance | $ 455 | $ 336 |
Charges to bad debts | 160 | 74 |
Write offs | (121) | 0 |
Ending balance | $ 494 | $ 410 |
Allowance for Uncollectible Agency Fees - Roll-Forward of Allowance (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||
Bad debt expense | $ 401 | $ 280 |
Agency Fees | ||
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||
Beginning balance | 242 | 183 |
Bad debt expense | 241 | 206 |
Write offs | (245) | (182) |
Ending balance | $ 238 | $ 207 |
Property and equipment (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 12,271 | $ 11,024 |
Less accumulated depreciation | (3,836) | (3,449) |
Property and equipment, net | 8,435 | 7,575 |
Furniture & fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 2,517 | 2,233 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,056 | 1,023 |
Network equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 252 | 252 |
Phone system | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 831 | 824 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 7,615 | $ 6,692 |
Note Payable - Schedule of Maturities of Note Payable (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2019 | $ 2,000 |
2020 | 4,000 |
2021 | 32,500 |
Note payable outstanding | $ 38,500 |
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 447 | $ 405 |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||
2019 | 1,307 | |
2020 | 2,575 | |
2021 | 2,793 | |
2022 | 2,762 | |
2023 | 2,578 | |
2023-2029 | 11,626 | |
Future minimum payments | $ 23,641 |
Income Taxes (Details) shares in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
shares
| |
Income Tax Contingency [Line Items] | |
Uncertain tax positions | $ 0 |
Tax Receivable Agreement | |
Income Tax Contingency [Line Items] | |
Percentage due to related parties | 85.00% |
Tax Receivable Agreement | Pre-IPO LLC Members | |
Income Tax Contingency [Line Items] | |
Percentage due to related parties | 85.00% |
Due to related parties | $ 6,900,000 |
Due to related parties, current | $ 9,000 |
LLC Units | |
Income Tax Contingency [Line Items] | |
Redemption of LLC Units (in shares) | shares | (723) |
Income Taxes Schedule of Reconciliation of Income Tax Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Income Tax Disclosure [Abstract] | ||
Income before taxes | $ 8,062 | $ 3,768 |
Less: (income) prior to the Reorganization Transactions | 0 | (3,768) |
Income before taxes | 8,062 | 0 |
Income taxes at U.S. federal statutory rate | 1,693 | 0 |
Tax on income not subject to entity level federal income tax | (1,058) | 0 |
Meals & Entertainment | 8 | |
State income tax, net of federal benefit | 103 | 0 |
Other | (2) | 0 |
Income tax expense | $ 744 | $ 0 |
Income Taxes Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Investment in flow-through entity | $ 7,950 | $ 1,958 |
Net deferred tax asset (liability) | $ 7,950 | $ 1,958 |
Stockholders' Equity - Narrative (Details) |
3 Months Ended | |||
---|---|---|---|---|
May 01, 2018 |
Mar. 31, 2019
USD ($)
vote
shares
|
Mar. 31, 2018
USD ($)
|
Dec. 31, 2018
shares
|
|
Class of Stock [Line Items] | ||||
Ownership interest held by non-controlling interest holders | 60.00% | |||
Class A Common Stock | ||||
Class of Stock [Line Items] | ||||
Common stock shares outstanding (in shares) | 14,522,000 | 13,800,000 | ||
Vote per share | vote | 1 | |||
Class B Common Stock | ||||
Class of Stock [Line Items] | ||||
Common stock shares outstanding (in shares) | 21,763,000 | 22,486,000 | ||
Vote per share | vote | 1 | |||
Redemption of LLC Units (in shares) | 723,000 | |||
LLC Units | ||||
Class of Stock [Line Items] | ||||
Distributions | $ | $ 400,000 | $ 0 | ||
Conversion ratio | 1 | |||
Redemption of LLC Units (in shares) | 723,000 | |||
Pre-IPO LLC Members | LLC Units | ||||
Class of Stock [Line Items] | ||||
Distributions | $ | $ 245,000 | |||
Goosehead Insurance, Inc. | LLC Units | ||||
Class of Stock [Line Items] | ||||
Distributions | $ | $ 155,000 | |||
Weighted Average | ||||
Class of Stock [Line Items] | ||||
Ownership interest held by non-controlling interest holders | 60.80% |
Stockholders' Equity - Pro Forma Ownership Interest (Details) - shares shares in Thousands |
Mar. 31, 2019 |
Mar. 18, 2019 |
---|---|---|
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||
Pro forma number of LLC Units outstanding (in shares) | 36,285 | 36,285 |
Ownership interest held by non-controlling interest holders | 60.00% | |
Ownership interest | 100.00% | |
Parent | ||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||
Pro forma number of LLC Units outstanding (in shares) | 14,522 | |
Non-controlling interest | ||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||
Pro forma number of LLC Units outstanding (in shares) | 21,763 | |
Goosehead Financial, LLC | ||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||
Ownership interest held by Goosehead Insurance, Inc. | 40.00% |
Equity-Based Compensation - Schedule of Equity-Based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | $ 368 | $ 0 |
Employee Stock Option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | $ 368 | $ 0 |
Dividends (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2019 |
Mar. 18, 2019 |
Mar. 07, 2019 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Dividends Payable [Line Items] | |||||
Dividends | $ 15,000 | ||||
Dividends declared per share (in dollars per share) | $ 0.41 | $ 0.00 | |||
LLC Units held (in shares) | 36,285 | 36,285 | |||
Payment of dividends | $ 6,000 | ||||
LLC Units | |||||
Dividends Payable [Line Items] | |||||
Dividends | $ 15,000 | ||||
Class A Common Stock | |||||
Dividends Payable [Line Items] | |||||
Dividends | $ 5,962 | ||||
Dividends declared per share (in dollars per share) | $ 0.41 | ||||
LLC Units held (in shares) | 14,421 | ||||
Class B Common Stock | |||||
Dividends Payable [Line Items] | |||||
Dividends | $ 9,038 | ||||
LLC Units held (in shares) | 21,864 |
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