Core Insights - BCP has agreed to sell its stake in Brown & Root Industrial Services, a provider of specialty industrial services, while KBR, Inc. will retain a significant stake in the company [1][2]. Company Overview - Brown & Root Industrial Services has nearly 100 years of experience in the industrial services sector, serving blue-chip customers across various segments including chemicals, energy, manufacturing, and government [2][6]. - The company has over 10,000 employees and operates 22 locations across the U.S., Mexico, and Canada [2]. Partnership and Growth - The partnership between BCP and Brown & Root Industrial Services has been pivotal in the company's growth over the past decade, enhancing its reputation and capabilities [3]. - BCP's investment strategy focuses on supporting world-class management teams and executing shared growth visions, which has positioned Brown & Root as a leading industrial services provider in North America [3]. Transaction Details - The transaction is expected to be completed in late Q3 or early Q4 of 2025, pending customary closing conditions and approvals [3]. Financial Advisory - Houlihan Lokey is acting as the financial advisor, while Kirkland & Ellis LLP serves as the legal advisor to BCP in this transaction [4]. BCP Overview - BCP is a private equity management firm established in 2013, with over $5 billion in assets under management, focusing on creating sustainable value in services and infrastructure businesses [5].

Group 1 - Root, Inc. reported quarterly earnings of $1.29 per share, exceeding the Zacks Consensus Estimate of $1.06 per share, compared to a loss of $0.52 per share a year ago, representing an earnings surprise of +21.70% [1] - The company posted revenues of $382.9 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 13.62%, and compared to year-ago revenues of $289.2 million [2] - Root shares have increased approximately 72.9% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.1% [3] Group 2 - The current consensus EPS estimate for the coming quarter is $0.19 on $340 million in revenues, and for the current fiscal year, it is $3.55 on $1.37 billion in revenues [7] - The Zacks Industry Rank for Insurance - Property and Casualty is currently in the top 37% of over 250 Zacks industries, indicating a favorable outlook for the industry [8] - HCI Group, another company in the same industry, is expected to report quarterly earnings of $4.47 per share, reflecting a year-over-year change of +6.2%, with revenues expected to be $218.5 million, up 5.9% from the year-ago quarter [9][10]

Financial Data and Key Metrics Changes - In Q2 2025, the company reported gross earned premiums of $371 million and net income of $22 million, marking a $30 million improvement year over year [6][13] - Operating income reached $27 million and adjusted EBITDA was $38 million, reflecting year-over-year improvements of $24 million and $26 million respectively [13] - The gross accident period loss ratio was 60%, and the net combined ratio improved by eight points year over year to 95% [14] Business Line Data and Key Metrics Changes - The partnership channel saw quarterly new writings nearly triple year over year, significantly contributing to the overall growth [8] - Policies in force and gross written premium both increased by 12% year over year [31] Market Data and Key Metrics Changes - The company is now available in more than 20 states and has made significant progress in expanding its geographic footprint [8] - The competitive landscape in the direct channel has intensified, prompting the company to reduce marketing spend when necessary [9] Company Strategy and Development Direction - The company aims to become the largest and most profitable personal lines insurance carrier in the U.S. and continues to invest in technology and growth [11][15] - The new pricing model enhances risk selection and increases customer lifetime values by an average of 20% [7] - The company is focused on long-term value creation rather than short-term profitability, with plans to invest in strategic areas and R&D [12][15] Management's Comments on Operating Environment and Future Outlook - Management noted that while competition has increased, they are not chasing a soft market and are focusing on growing the partnership channel [22] - The company has not yet seen a meaningful impact from tariffs and believes it can absorb potential impacts without raising rates [11][45] - Loss ratios are expected to increase slightly in the second half of the year due to typical seasonal pressures [45] Other Important Information - The company has $314 million in unencumbered capital, providing financial flexibility for future investments [15] - A cumulative warrant expense of approximately $16 million to $18 million is expected in Q3, which will result in a net loss for that quarter but positive adjusted EBITDA [16] Q&A Session Summary Question: Expectations for policies in force growth - Management noted modest growth in policies in force in Q3 and emphasized the significant long-term growth opportunity in the partnership channel [22][23] Question: Partnership channel's ability to offset direct channel pullback - Management confirmed that the partnership channel is expected to continue growing and can offset a pullback in the direct channel [26] Question: Budget for growth spending - The company plans to be opportunistic with direct marketing spend and expects overall spending to be slightly elevated compared to Q2 [27] Question: Pricing adequacy and segmentation - Management stated that pricing is adequate and they are not taking significant rate increases, with improvements in customer lifetime values due to new algorithms [32][34] Question: Impact of tariffs and loss ratios - Management indicated that they are monitoring the environment for tariff impacts but have not seen material signs yet [42][45] Question: Differences in loss ratios between channels - Management explained that there are no significant differences in unit economics across channels, and both are priced appropriately [46] Question: Future state approvals and filings - Management clarified that they received product filing approval in Washington and have other filings pending in various states [56]

Core Viewpoint - Root, Inc. announced its financial results for the second quarter of 2025, highlighting its ongoing operations and performance in the insurance sector [1]. Financial Results - The financial results and management commentary for the second quarter can be found in the shareholder letter posted on the company's investor relations website [1]. - An updated investor presentation will also be available for stakeholders [1]. Conference Call and Webcast - Root will host a conference call and earnings webcast on August 6, 2025, at 5:00 p.m. Eastern Time to discuss the results and provide updates on company operations [2]. - The live audio webcast can be accessed through the News & Events section of Root's Investor Relations website [2]. - Details for the conference call include a toll-free dial-in number (1-877-269-7751) and a toll dial-in number (1-201-389-0908) [3]. Company Overview - Root, Inc. was founded in 2015 and is based in Columbus, Ohio, serving as the parent company of Root Insurance Company [4]. - The company aims to revolutionize insurance through data science and technology, providing a personalized and fair experience for consumers [4]. - The Root app has achieved over 15 million downloads and has collected more than 32 billion miles of driving data to inform its insurance offerings [4].

Part I. Financial Information [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Root, Inc. achieved net income of **$22.0 million** in Q2 2025 and **$40.4 million** in H1 2025, driven by increased net premiums and improved loss ratios [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to **$1.59 billion** by June 30, 2025, primarily from increased cash and premiums receivable, while stockholders' equity rose to **$244.5 million** Balance Sheet Summary (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$1,587.7** | **$1,495.7** | | Total Investments | $327.1 | $311.2 | | Cash and cash equivalents | $641.4 | $599.3 | | **Total Liabilities** | **$1,231.2** | **$1,180.0** | | Loss and loss adjustment expense reserves | $444.5 | $413.2 | | Unearned premiums | $395.2 | $353.9 | | Long-term debt | $200.1 | $200.1 | | **Total Stockholders' Equity** | **$244.5** | **$203.7** | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) The company achieved profitability with **$22.0 million** net income in Q2 2025 and **$40.4 million** in H1 2025, fueled by a **34.9%** increase in net premiums earned Statement of Operations Highlights (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $382.9 | $289.2 | $732.3 | $544.1 | | Net Premiums Earned | $353.0 | $261.6 | $674.3 | $491.9 | | Operating Income | $27.3 | $3.8 | $51.0 | $9.2 | | Net Income (Loss) | $22.0 | $(7.8) | $40.4 | $(14.0) | | Diluted EPS | $1.29 | $(0.52) | $2.36 | $(0.95) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations was **$78.8 million** in H1 2025, with overall cash and equivalents increasing by **$42.2 million** due to reduced investing activities Cash Flow Summary - Six Months Ended June 30 (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $78.8 | $77.1 | | Net cash used in investing activities | $(17.6) | $(74.3) | | Net cash used in financing activities | $(19.0) | $(14.3) | | **Net increase (decrease) in cash** | **$42.2** | **$(11.5)** | | Cash at end of period | $642.5 | $668.2 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail the investment portfolio, favorable prior-year loss development, reduced reinsurance reliance, and share-based compensation - The company's investment portfolio of **$322.7 million** (fair value) is concentrated in high-quality securities, with **93.9%** rated A- or higher as of June 30, 2025[37](index=37&type=chunk)[42](index=42&type=chunk) - For the six months ended June 30, 2025, the company experienced favorable prior-year loss development, reducing incurred losses by **$14.0 million**, primarily from lower-than-expected reported losses from accident year 2024[46](index=46&type=chunk) - The company significantly reduced its reliance on reinsurance, with ceded premiums written decreasing by **72.6%** in Q2 2025 and **66.0%** in H1 2025 compared to the prior-year periods[47](index=47&type=chunk)[114](index=114&type=chunk)[124](index=124&type=chunk) - No warrant compensation expense was recognized in H1 2025 related to the Carvana agreement, compared to **$3.8 million** in H1 2024, as all short-term warrants have vested[55](index=55&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Improved performance and profitability resulted from policy growth, rate actions, and reduced reinsurance, leading to a **95.2%** net combined ratio in Q2 2025 [Key Performance Indicators](index=26&type=section&id=Key%20Performance%20Indicators) Policies in force grew to **455,493**, with the net combined ratio improving to **95.2%** and Adjusted EBITDA reaching **$37.6 million** in Q2 2025 Key Performance Indicators Summary | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Policies in force | 455,493 | 406,283 | 455,493 | 406,283 | | Gross premiums written | $346.2M | $308.2M | $757.0M | $638.9M | | Net income (loss) | $22.0M | $(7.8)M | $40.4M | $(14.0)M | | Direct contribution | $125.8M | $87.0M | $252.9M | $167.7M | | Adjusted EBITDA | $37.6M | $12.1M | $69.5M | $27.2M | | Net combined ratio | 95.2% | 102.7% | 95.4% | 102.4% | | Gross accident period loss ratio | 59.6% | 61.0% | 57.7% | 59.6% | [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Total revenues increased **32.4%** in Q2 2025, driven by net premiums earned, leading to operating income of **$27.3 million** and a lower net loss ratio - Q2 2025 net premiums earned increased by **34.9%** YoY, driven by growth in policies, higher premiums per policy, and a strategic reduction in ceded premiums to **4.9%** of gross premiums earned from **15.1%** in Q2 2024[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - The gross accident period loss ratio for Q2 2025 improved to **59.6%** from **61.0%** YoY, attributed to rate actions and favorable weather, which offset higher claims severity[117](index=117&type=chunk) - Q2 2025 Other Insurance Expense increased by **70.5%** YoY, primarily due to higher commission expenses from partnership channel growth and a **$6.0 million** decrease in contra-expense from ceding commissions due to reduced reinsurance[112](index=112&type=chunk)[119](index=119&type=chunk) - Interest expense for Q2 2025 decreased by **54.3%** YoY to **$5.3 million**, resulting from a more favorable interest rate on the Amended Term Loan[112](index=112&type=chunk)[121](index=121&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) The company holds **$641.4 million** in cash and equivalents, with **$314.2 million** unrestricted, ensuring sufficient liquidity for the next 12 months - The company maintains a strong liquidity position with **$641.4 million** in cash and cash equivalents, of which **$314.2 million** is held at the parent company level, free from regulatory restrictions[146](index=146&type=chunk) - Management believes existing cash and operational cash flow will be sufficient to support requirements for at least the next 12 months[147](index=147&type=chunk) - During H1 2025, insurance subsidiaries distributed dividends totaling **$35.0 million** to the parent company after receiving regulatory approval[142](index=142&type=chunk)[144](index=144&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes in the company's market risk disclosures from its 2024 Annual Report on Form 10-K - There have been no material changes in the quantitative and qualitative market risk disclosures from the 2024 10-K[159](index=159&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of June 30, 2025[160](index=160&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the quarter ended June 30, 2025[161](index=161&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is not party to any current or pending legal action reasonably expected to have a material adverse effect on its financial condition or operations - The company is not party to any legal proceedings expected to have a material adverse effect on its financials[164](index=164&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes have occurred in the company's risk factors since the filing of the 2024 10-K[166](index=166&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has never paid cash dividends and does not plan to, with payments restricted by regulations and debt covenants - The company has never paid cash dividends and does not plan to in the foreseeable future[168](index=168&type=chunk) - Dividend payments are restricted by both insurance regulations and covenants in the Amended Term Loan[169](index=169&type=chunk)[172](index=172&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025 - No directors or officers made changes to their Rule 10b5-1 or other trading arrangements during Q2 2025[175](index=175&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications and equity incentive plan documents

Q2 2025 Shareholder Letter Letter to Shareholders: Q2 2025 Key quarterly metrics Dear Shareholders Dear Root Shareholders, The second quarter was another strong quarter for Root. We set a new record on revenue, growing gross earned premium 21% to $371 million, while also improving net income by $30 million year-over-year to $22 million. Other highlights of the quarter include: 2 • Gross combined ratio improved 6 points to 94% year-over-year, demonstrating the power of our pricing and underwriting technology ...

Core Insights - Root, Inc. (ROOT) is anticipated to show improvements in both revenue and earnings for Q2 2025, with revenue expected to reach $337 million, reflecting a 16.5% increase year-over-year [1][9] - The earnings per share (EPS) estimate stands at $1.06, indicating a significant year-over-year growth of 303.9% [2][9] Revenue and Earnings Estimates - The Zacks Consensus Estimate for ROOT's second-quarter revenues is $337 million, which represents a 16.5% growth compared to the same quarter last year [1][9] - The consensus estimate for earnings is $1.06 per share, which has increased by 141% in the last 30 days, suggesting a year-over-year increase of 303.9% [2][9] Earnings Prediction Model - The earnings prediction model indicates a likely earnings beat for ROOT, supported by a positive Earnings ESP of +58.29% and a Zacks Rank of 1 (Strong Buy) [3][4] Factors Influencing Q2 Results - Key factors expected to positively impact ROOT's Q2 results include higher net premiums earned, improved net investment income, and increased fee income [5] - An increase in policies in force, driven by enhanced marketing efforts and a favorable customer mix, is likely to contribute to net premiums earned [6] Investment Income and Underwriting Profitability - The Zacks Consensus Estimate for second-quarter net investment income is $311 million, with expectations of growth due to a higher average cash balance and a larger investment portfolio [6] - Improved underwriting profitability is anticipated from better pricing and prudent underwriting practices, although operating expenses are expected to rise due to various costs [7]

Core Viewpoint - The article emphasizes the importance of logical analysis over emotional responses in market commentary, aiming to provide clear insights into business, economics, and investing [1]. Group 1 - The focus is on cutting through market noise to highlight what truly matters in investment decisions [1]. - The approach taken is characterized by a commitment to curiosity and critical thinking, rather than succumbing to distractions [1].

Company Overview - Root, Inc. is the parent company of Root Insurance Company, founded in 2015 and based in Columbus, Ohio [3] - The company aims to revolutionize insurance through data science and technology, providing a personalized and fair experience for consumers [3] - The Root app has over 15 million downloads and has collected more than 32 billion miles of driving data to inform its insurance offerings [3] Upcoming Financial Results - Root, Inc. plans to host a conference call on August 6, 2025, at 5:00 p.m. Eastern Time to discuss its financial results for the second quarter of 2025 [1] - The second quarter results will be released on the Investor Relations section of the company's website following the close of financial markets on the same day [1] Conference Call Details - The participant toll-free dial-in number for the conference call is 1 (877) 269-7751, and the toll dial-in number is 1 (201) 389-0908 [2] - A webcast of the conference call will be available at https://ir.joinroot.com/news-events/events, with a replay available for on-demand viewing shortly after the call [2]

Group 1 - Artisan Partners Asset Management (APAM) is outperforming the Finance sector with a year-to-date return of 10%, compared to the sector average of 8.7% [4] - The Zacks Consensus Estimate for APAM's full-year earnings has increased by 16.6% in the past quarter, indicating improved analyst sentiment [4] - APAM holds a Zacks Rank of 1 (Strong Buy), suggesting a positive earnings outlook and potential for market outperformance [3] Group 2 - Artisan Partners Asset Management is part of the Financial - Investment Management industry, which has an average year-to-date loss of 2.4%, further highlighting APAM's strong performance [6] - The Finance sector consists of 870 individual stocks and is currently ranked 7 in the Zacks Sector Rank [2] - Investors should monitor both Artisan Partners Asset Management and Root, Inc. for continued solid performance in the Finance sector [7]