The Baldwin Insurance Group, Inc. earnings

Management highlights

- Began the year with solid start after closing partnerships with CAC, OV, and Capstone in Jan. - Delivered total revenue of $532 million, adjusted EBITDA of $137 million, adjusted EBITDA margin of 26%, and adjusted diluted earnings per share of 63 cents. - Commission and fee organic revenue growth was 3%, total organic revenue growth was 2%, and with adjustments, overall organic revenue growth would have been 5% including the impact of partnerships. - CAC and Capstone delivered strong early contributions, with CAC generating new business and revenue growth, and integration work ahead of schedule with cost synergies actioned. - Leaning into AI with conviction, building proprietary AI orchestration layer with early productivity gains, and using AI to enhance operations. - Thesis on disintermediation unchanged with structural advantages strengthened by complex risk management needs, embedded distribution, and proprietary product and risk capital formation.

Guidance

- Second quarter expected revenue of $485 million to $495 million, organic revenue growth in the mid single digits. - Anticipate adjusted EBITDA between $113 million and $118 million and adjusted diluted EPS of $0.44 to $0.48 per share. - Full-year consolidated guidance remains unchanged, and full-year cash flow trajectory remains on track for double-digit growth in 2026.

Segment performance

Insurance Advisory Solutions: Overall organic revenue growth was 4%, driven by sales velocity of 13% before layering in CAC and Capstone results. Including CAC and Capstone, organic growth would have been 10%. CAC generated new business of $38 million in Q1, up 39% y-o-y, and total revenue was $92 million, up 27% y-o-y. Underwriting Capacity and Technology Solution: Organic revenue growth was 3% in the quarter, core commissions and fees grew by approx. 6%. Excluding a large one-time contingent payment, UCTF's organic growth would have been 9%. Multifamily business grew revenue 10% in the quarter, Juniper Re grew over 90%, while ENS homeowners book revenue was down roughly 30%. Main Street Insurance Solution: Organic revenue growth was down 5% in quarter, driven by headwinds from QBE commission rate reduction at Westwood and softness in Medicare business. Normalizing for those, overall organic revenue growth was 7%. Embedded mortgage businesses showed growing momentum.

Risks & headwinds

- Market volatility and economic uncertainties may impact financial performance. - Integration risks associated with acquisitions, such as achieving expected synergies. - Risks related to the successful implementation and adoption of AI technologies. - Changes in insurance market conditions, including soft property market affecting certain segments.

Analyst Q&A

• Q: Focus on organic revenue results and UCTS line, and growth at CAC.

  A: Trevor addressed UCTS with normalizing one-time item and strong underlying momentum, and detailed strong early contributions and momentum at CAC including revenue and expense synergies.

• Q: Follow-up on Catalyst Program slide.

  A: Trevor and Brad discussed Catalyst program with early positive results, example of product team leveraging AI to compress timeline for new product, and combination with other investments driving margin expansion.

• Q: Optimistic about early success around cross-sell with DAC Group.

  A: Tommy was given examples of cross-sell successes in construction and private equity areas.

• Q: Headwinds on Medicare side.

  A: Expect headwind to largely resolve beginning next quarter.

• Q: UCTS headwind and earned premium.

  A: Charlie was told about UCTS headwind from one-time item and ENS business, and expectation of momentum pickup.

• Q: Buybacks motivation.

  A: Brad stated capital allocation priorities remain intact, thoughtful about price when deploying capital.

• Q: EPS guide and buybacks.

  A: Trevor said EPS guide not raised as it doesn't assume additional buyback, and three partnership businesses running ahead of plan but early to extrapolate.

• Q: Market impact on property pricing.

  A: Elise was told property market is deeply soft with rate decreases, and expectation of rate and exposure headwinds in Q2 and for the year.

• Q: IAS organic growth and 2027 outlook.

  A: Andrew was told IAS is double-digit organic growth business inclusive of CAC and Capstone, and early to opine on 2027 but positive underlying trends.

• Q: Capital management and leverage.

  A: Andrew was told leverage expected to hover in 4 - 4.5 times range, and difficult to find financially prudent M&A due to equity trade.

• Q: E&S homeowners business.

  A: Trevor unpacked E&S homeowners business with rate cuts, rolling out new variants, and expectation of improvement.

• Q: Pushback on buying growth thesis.

  A: Trevor stated pushback in numbers and expectations with organic growth expected to accelerate despite market impacts.

• Q: Disintermediation thesis.

  A: Trevor reaffirmed thesis with structural advantages and unique positioning against peers.