Hagerty(HGTY)2024-03-12 16:51Financial Data and Key Metrics Changes - Total revenue for Q4 2023 grew by 24% to 1 billion for the first time [6][17] - Adjusted EBITDA improved from a loss of 10 million in Q4 2023, marking a 10 million, with a margin expansion of 960 basis points [18][51] - Net income for Q4 2023 was 32 million in the previous year [25] Business Line Data and Key Metrics Changes - Commission revenue grew by 22% to 20 million due to the absence of a live auction in Q4 2023 [48] - Written premium growth was 19%, supported by robust new business count and improved retention [48] Market Data and Key Metrics Changes - Earned premium grew by 31% to 14 billion, representing a double-digit increase from the prior year [21] Company Strategy and Development Direction - The company aims to improve customer loyalty to drive renewals and referrals, expecting to add over 250,000 new members in 2024 [9] - The acquisition of CNIC is intended to enhance underwriting profits and allow for new product launches targeting the classic and enthusiast market [10][53] - The company is focused on building Hagerty Marketplace into a trusted platform for buying and selling collectible vehicles, with a goal of increasing transaction volume and value [21][63] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving another year of growth and margin expansion in 2024, with an initial revenue growth outlook of 15% to 17% [27] - The company anticipates net income to more than double in 2024, reaching between 70 million, and adjusted EBITDA growth of 41% to 53% [52] - Management noted that the operating environment remains favorable, with expectations for continued price increases in the insurance market [58] Other Important Information - The company reported a significant improvement in operating cash flow, which jumped 142% to 134 million in 2023 [51] - The company is strategically investing in technology and personnel to support long-term growth and profitability [46][53] Q&A Session Summary Question: Differences in loss profile for post-1980s collectible vehicles - Management indicated that while there may be slightly different loss ratios for post-1980s vehicles, they are developing sophisticated pricing models to manage this segment effectively [30] Question: Quota share stability for 2024 - Management confirmed that the quota share has stepped up to 80% and will remain stable moving forward [31] Question: Gross sales value of live auctions for 2023 - The company disclosed a total of 29 million for live auctions, including online sales and financing [35] Question: Ability to continue price increases amid cooling inflation - Management noted that they are observing industry peers' rate actions and will continue to implement single-digit rate increases in 2024 [58] Question: Top of the funnel alignment with total addressable market (TAM) - Management confirmed that the types of vehicles they are interested in are increasing significantly, particularly from the 1980s and beyond, aligning with their TAM [39][61] Question: Growth expectations for written premium in 2024 - Management expects written premium growth of 13% to 14%, driven by new customer growth and rate increases [70]