0001849253-26-000026
SEC filingUnderwriting Management specialty drove 38.3% revenue growth, offset by property rate headwinds; adjusted EBITDAC margin expanded modestly to 29.2%.
Total revenue for Q1 2026 rose 15.2% to $795.2 million from $690.2 million in Q1 2025, driven by organic growth of 11.8% and acquisitions (2.1% contribution). Net commissions and fees grew 15.8% to $782.9 million, with Underwriting Management leading at 38.3% growth, while Wholesale Brokerage and Binding Authority grew 4.7% and 7.9% respectively. Fiduciary investment income declined 12.2% due to lower interest rates. Operating income decreased 5.6% to $94.6 million, as a $27.3 million unfavorable change in contingent consideration and increased restructuring costs offset revenue gains. Net income swung to $40.6 million from a loss of $4.4 million, primarily because the prior year included a $48.1 million non-cash deferred tax expense from the common control reorganization. Adjusted diluted EPS rose 20.5% to $0.47, reflecting higher adjusted net income and a stable share count.
Underwriting Management posted the strongest performance with 38.3% revenue growth, fueled by strong organic new business, acquisitions, and higher contingent commissions. Wholesale Brokerage grew 4.7%, driven by organic expansion and the JM Wilson acquisition, partially offset by property rate declines and retail direct placements. Binding Authority increased 7.9%, benefiting from organic growth and contingent commissions. The revenue mix shifted: Underwriting Management’s share rose to 37.7% from 31.5%, while Wholesale Brokerage’s share fell to 48.3% from 53.4%. Net commission rates remained stable across specialties.
Management initiated the Empower Program, a three-year restructuring expected to generate $80 million in annual savings by 2029, with cumulative one-time charges of ~$160 million. In Q1, $5.9 million of costs were recognized. The company expects to continue investing in growth, including talent, de novo formations, and technology. The property market experienced rate declines and increased retail direct placements, a trend that may persist through 2026. A $300 million share repurchase program was authorized, with $40 million executed in Q1. No specific quantitative guidance was provided, but management remains focused on organic growth, strategic M&A, and margin expansion through efficiencies.
As of March 31, 2026, Ryan Specialty held $154.7 million in cash and cash equivalents, while total debt stood at $3.57 billion, including $1.66 billion in term loan, $1.19 billion in 2032 senior secured notes, and $398.6 million in 2030 notes. The revolving credit facility had $319.4 million drawn, leaving $1.08 billion available. Stockholders' equity was $1.22 billion, with $582.9 million attributable to non-controlling interests. The deferred revenue (contract liability) was $10.5 million, and contract assets were $83.1 million.
The Company has no significant purchase commitments for inventory or capacity. However, contingent consideration liabilities totaled $177.8 million (fair value) as of March 31, 2026, with an aggregate maximum of $597.3 million. The company is also obligated under a Tax Receivable Agreement of $460.8 million. The newly announced Empower restructuring program commits $160.0 million through 2028, of which $4.6 million was incurred in Q1 2026.
The Board authorized a $300 million share repurchase program on February 10, 2026. During Q1, the company repurchased 982,073 shares for $40.0 million, leaving $260 million available. Dividends of $0.13 per share were paid, totaling $16.8 million, consistent with the prior quarter. Debt increased by $217.6 million, primarily from net borrowings of $245.6 million on the revolver. Capital expenditures were $13.3 million (1.7% of revenue).
Ryan Specialty operates as a single segment, but the Notes disaggregate revenue by specialty. Wholesale Brokerage contributed $377.8 million (48.3% of net commissions), Underwriting Management $295.1 million (37.7%), and Binding Authority $110.0 million (14.0%). Year-over-year growth was strongest in Underwriting Management (+38.3%), attributable to the Velocity acquisition. Geographically, 93.4% of revenue came from the United States ($742.6 million) and 6.6% from foreign operations ($52.6 million).
Net income was $40.6M but operating cash flow was -$167.4M, a significant divergence due to heavy working capital headwinds: commissions and fees receivable increased $77.8M, accrued interest liability dropped $21.5M, and other liabilities decreased $227.7M. These outflows overshadowed positive adjustments like amortization ($65.3M) and non-cash compensation ($17.4M).
Capex of $13.3M (0.3% of revenue) indicates low capital intensity. Free cash flow (not explicitly stated) would be deeply negative, but the company financed operations via $524.9M revolver borrowings and $279.4M repayments, netting $245.5M in borrowings, along with $86.3M total financing cash inflow.
Share repurchases of $40.0M and dividends of $16.8M were funded through debt, not operating cash flow. The prior year included a large acquisition outflow ($555.6M) which distorted investing cash flows. Anomalies include the absence of business combinations in 2026 and a $48.1M deferred tax expense from common control reorganization in 2025.