v3.22.2

Business and Basis of Presentation (Notes) | 6 Months Ended
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Jun. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Business and Basis of Presentation | Business and Basis of Presentation BRP Group, Inc. (“BRP Group” or the “Company”) was incorporated in the state of Delaware on July 1, 2019. BRP Group is a diversified insurance agency and services organization that markets and sells insurance products and services to its customers throughout the U.S. A significant portion of the Company’s business is concentrated in the Southeastern U.S. with several other regional concentrations. BRP Group and its subsidiaries operate through four Operating Groups, including Middle Market, Specialty, MainStreet, and Medicare, which are discussed in more detail in Note 15. Principles of Consolidation The consolidated financial statements include the accounts of BRP Group and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. As the sole manager of Baldwin Risk Partners, LLC (“BRP”), BRP Group operates and controls all the business and affairs of BRP, and has the sole voting interest in, and controls the management of, BRP. Accordingly, BRP Group consolidates BRP in its consolidated financial statements, resulting in a noncontrolling interest related to the membership interests of BRP (the “LLC Units”) held by BRP’s LLC members in its consolidated financial statements. The Company has prepared these condensed consolidated financial statements in accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“Topic 810”). Topic 810 requires that if an enterprise is the primary beneficiary of a variable interest entity, the assets, liabilities, and results of operations of the variable interest entity should be included in the consolidated financial statements of the enterprise. The Company has recognized certain entities as variable interest entities of which the Company is the primary beneficiary and has included the accounts of these entities in the consolidated financial statements. Refer to Note 3 for additional information regarding the Company’s variable interest entities. Topic 810 also requires that the equity of a noncontrolling interest shall be reported on the condensed consolidated balance sheets within total equity of the Company. Certain redeemable noncontrolling interests are reported on the condensed consolidated balance sheets as mezzanine equity. Topic 810 also requires revenues, expenses, gains, losses, net income or loss, and other comprehensive income or loss to be reported in the consolidated financial statements at consolidated amounts, which include amounts attributable to the owners of the parent and the noncontrolling interests. Unaudited Interim Financial Reporting The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all the information and related notes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments, consisting of recurring accruals, considered necessary for fair statement have been included. The accompanying balance sheet for the year ended December 31, 2021 was derived from audited financial statements, but does not include all disclosures required by GAAP. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2022. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. Significant estimates underlying the accompanying consolidated financial statements include the application of guidance for revenue recognition, including determination of allowances for estimated policy cancellations; the determination of fair value in relation to business combinations, purchase price allocation and valuation of intangible assets and contingent consideration; impairment of long-lived assets including goodwill; valuation of the Tax Receivable Agreement liability and income taxes; and share-based compensation. Changes in Presentation Certain prior year amounts have been reclassified to conform to current year presentation. The Company reclassified its wealth business revenue from other income to consulting and service fee revenue in the disaggregated revenue table in Note 4. The Company identified an error in the March 31, 2022 financial statements related to commissions expense. We have corrected this error in the second quarter of 2022 as an out-of-period adjustment, which resulted in $5.5 million of commissions expense in the condensed consolidated statement of comprehensive income (loss) for the three months ended June 30, 2022. There was no impact to commissions expense in the condensed consolidated statement of comprehensive income (loss) for the six months ended June 30, 2022. Recent Accounting Pronouncements In October 2021, the FASB issued Accounting Standards Update (“ASU”) No. 2021-08, Business Combinations (Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”) to improve the accounting for acquired revenue contracts with customers in business combination by addressing diversity in practice and inconsistency related to (i) the recognition of an acquired contract liability and (ii) payment terms and their effect on subsequent revenue recognized by the acquirer. ASU 2021-08 requires that, at acquisition date, an entity recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”) as if it had originated the contracts, while also taking into account how the acquiree applied Topic 606. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the full effect that the adoption of this standard will have on its consolidated financial statements. Adoption of the Lease Accounting Standard Under Topic 842 On December 31, 2021, the Company adopted ASU No. 2016-02, Leases (“Topic 842”) in connection with the loss of its emerging growth company status. Topic 842 was adopted effective January 1, 2021 (the “adoption date”) on a modified retrospective basis, under which the Company applied the new guidance to leases existing at, or entered into after, the adoption date. The Company revised its previously reported consolidated financial statements effective January 1, 2021 in its Form 10-K for the year ended December 31, 2021 without filing amendments to its previously filed quarterly reports on Form 10-Q for the same year. Accordingly, our prior period condensed consolidated financial statements and information, as presented herein, have been revised to conform to the standard. The following table summarizes the effects of adopting ASC 842 on our condensed consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2021:
| For the Three Months Ended June 30, 2021 |  | For the Six Months Ended June 30, 2021
(in thousands, except per share data) | As Previously Reported |  | Effect of Adoption of Topic 842 |  | As Adjusted |  | As Previously Reported |  | Effect of Adoption of Topic 842 |  | As Adjusted
Operating expenses: |  |  |  |  |  |  |  |  |  |  |
Other operating expenses | $ | 19,200 |  |  | $ | 337 |  |  | $ | 19,537 |  |  | $ | 36,768 |  |  | $ | (356) |  |  | $ | 36,412 |
Total operating expenses | 132,905 |  |  | 337 |  |  | 133,242 |  |  | 249,476 |  |  | (356) |  |  | 249,120 |
Operating income (loss) | (13,199) |  |  | (337) |  |  | (13,536) |  |  | 23,058 |  |  | 356 |  |  | 23,414 |
Net income (loss) | (20,104) |  |  | (337) |  |  | (20,441) |  |  | 10,510 |  |  | 356 |  |  | 10,866 |
Net income (loss) attributable to BRP Group, Inc. | (9,756) |  |  | (337) |  |  | (10,093) |  |  | 4,857 |  |  | 356 |  |  | 5,213 |
Basic earnings (loss) per share | $ | (0.22) |  |  | $ | (0.01) |  |  | $ | (0.23) |  |  | $ | 0.11 |  |  | $ | 0.01 |  |  | $ | 0.12 |
Diluted earnings (loss) per share | $ | (0.22) |  |  | $ | (0.01) |  |  | $ | (0.23) |  |  | $ | 0.11 |  |  | $ | — |  |  | $ | 0.11 |
The following table summarizes the effects of adopting ASC 842 on our condensed consolidated statement of cash flows for the six months ended June 30, 2021:
|  | For the Six Months Ended June 30, 2021
(in thousands) |  | As Previously Reported |  | Effect of Adoption of Topic 842 |  | As Adjusted
Cash flows from operating activities: |  |  |  |  |  |
Net income |  | $ | 10,510 |  |  | $ | 356 |  |  | $ | 10,866 |
Changes in operating assets and liabilities, net of effect of acquisitions: |  |  |  |  |  |
Prepaid expenses and other current assets |  | (2,254) |  |  | 169 |  |  | (2,085) |
Right-of-use assets |  | — |  |  | (57,816) |  |  | (57,816) |
Accounts payable, accrued expenses and other current liabilities |  | 49,321 |  |  | (1,885) |  |  | 47,436 |
Operating lease liabilities |  | — |  |  | 59,176 |  |  | 59,176 |

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