Bearish stock to watch: BRP Group Inc (NASDAQ: BRP)

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BRP Group Inc (NASDAQ: BRP) stock fell over 0.5% on 3rd December, 2019 (as of 9:39 am GMT-5; Source: Google finance) as margin expansion was flat.

The company in the third quarter of FY 19 has reported 100% increase in the revenues to $38.4 million compared to the third quarter of 2018, mainly due to the Company’s 2019 Partnerships and organic growth.  Organic Revenue increased by 12% over the prior-year period to $20.9 million. Adjusted EBITDA for the third quarter of 2019 grew 125%, to $7.4 million, compared to the third quarter of 2018.  Adjusted EBITDA Margin had expanded to 19% for the third quarter of 2019, compared to 18% for the third quarter of 2018. As of September 30, 2019, the company had generated the cash and cash equivalents of $11.1 million, and there was $193.4 million of long-term debt outstanding.

Moreover, Middle Market Operating Group Revenues for the third quarter of 2019 rose 61% over the prior-year period to $12.8 million, mainly due to an increase of $3.5 million attributable to Lykes and Fiduciary Partners acquired in 2019 and a rise of $0.6 million attributable to the Middle Market Partners acquired in 2018. Specialty Operating Group Revenues for the third quarter of 2019 rose by whopping 368% over the prior-year period to $16.7 million, on the back of organic growth and the MSI Partnership completed in April 2019, which accounted for $12.2 million of third quarter 2019 revenues. MainStreet Operating Group Revenues for the third quarter of 2019 increased by 32% over the prior-year period, to $6.6 million. The Foundation Insurance Partnership was completed in August 2019, which accounted for $0.9 million of the increase, with the remainder mainly attributable to organic growth.

Meanwhile, in October 2019, the Company had sold the total of 18,859,300 shares of its Class A common stock to the underwriters’ over-allotment, which got settled on November 26, 2019.  The shares were sold at an initial public offering price of $14 per share and the Company received net proceeds of about $241.9 million after deducting underwriting discounts, commissions and offering expenses.  The Company used a part of this proceeds for the repayment of outstanding related party indebtedness and accrued interest under the Villages Credit Agreement of $89 million and concurrently closed the Villages Credit Agreement. The Company has also repaid a portion of its revolving lines of credit of amount of $65 million.

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