[Part I - Financial Information](index=6&type=section&id=Part%20I%20-%20Financial%20Information) This section presents the company's unaudited condensed consolidated financial statements, management's analysis of operations, market risk disclosures, and internal controls [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements present the company's financial performance for the three and six months ended June 30, 2025, and 2024. Key statements include the income statement, balance sheet, and cash flow statement, which show revenue growth, an increase in total assets driven by intangible assets from acquisitions, and significant cash usage in investing activities [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This statement details the company's revenue and net income performance for the three and six months ended June 30, 2025 and 2024 - For the six months ended June 30, 2025, **total revenues increased to $114.1 million** from $99.2 million year-over-year, driven by higher commission income, with **net income rising to $15.9 million** from $13.5 million in the prior year period[16](index=16&type=chunk) Condensed Consolidated Statements of Income (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total revenues** | **$60,308** | **$53,011** | **$114,131** | **$99,155** | | Commission income | $54,562 | $48,662 | $103,347 | $91,207 | | Operating income | $7,363 | $7,521 | $13,093 | $14,825 | | **Net income** | **$9,000** | **$6,918** | **$15,853** | **$13,547** | | Net income attributable to TWFG, Inc. | $1,957 | $— | $3,295 | $— | | **Basic EPS** | **$0.13** | **N/A** | **$0.22** | **N/A** | | **Diluted EPS** | **$0.13** | **N/A** | **$0.22** | **N/A** | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement outlines the company's financial position, including assets, liabilities, and equity, as of June 30, 2025, and December 31, 2024 - **Total assets increased to $342.8 million** as of June 30, 2025, from $323.4 million at December 31, 2024, primarily due to a significant increase in **intangible assets from $73.0 million to $125.9 million**, reflecting recent acquisition activity, while **cash and cash equivalents decreased from $195.8 million to $159.8 million**[20](index=20&type=chunk) Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $159,827 | $195,772 | | Intangible assets, net | $125,901 | $72,978 | | **Total assets** | **$342,849** | **$323,428** | | Total liabilities | $53,878 | $48,142 | | **Total stockholders' equity** | **$279,210** | **$275,286** | | **Total liabilities, redeemable noncontrolling interest and equity** | **$342,849** | **$323,428** | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 - For the six months ended June 30, 2025, **net cash provided by operating activities was $25.3 million**, while **net cash used in investing activities was significant at $46.7 million**, primarily for the purchase of intangible assets, and **net cash used in financing activities was $12.9 million**, largely due to distributions to members[26](index=26&type=chunk) Condensed Consolidated Cash Flows (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$25,260** | **$17,154** | | **Net cash used in investing activities** | **($46,706)** | **($21,223)** | | Purchase of intangible assets | ($47,226) | ($21,241) | | **Net cash used in financing activities** | **($12,876)** | **($5,886)** | | Distributions to members | ($13,263) | ($7,099) | | **Net change in cash, cash equivalents and restricted cash** | **($34,322)** | **($9,955)** | [Notes to the Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures regarding the condensed consolidated financial statements, including significant acquisitions and revenue breakdown - During the six months ended June 30, 2025, the company completed **asset acquisitions totaling $36.8 million for intangible assets**, and acquired a **50.1% equity interest in TWFG MGA FL, LLC for $9.7 million**, recognizing a customer relationship asset of $19.4 million[43](index=43&type=chunk)[44](index=44&type=chunk) - The Progressive Corporation was a major customer, accounting for **11% and 13% of total revenues** for the three and six months ended June 30, 2025, respectively[42](index=42&type=chunk) Disaggregation of Revenues by Offerings (in thousands) | Offering | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Insurance Services | | | | Agency-in-a-box | $39,316 | $75,312 | | Corporate Branches | $11,393 | $19,615 | | TWFG MGA | $9,233 | $18,428 | | Other | $366 | $776 | | **Total revenues** | **$60,308** | **$114,131** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial results, highlighting a 13.8% increase in total revenues for Q2 2025 and a 15.1% increase for H1 2025, primarily driven by higher commission income from increased premium rates and business growth. The discussion covers performance by business segment, key performance indicators like Total Written Premium (which grew 14.4% in Q2), an analysis of non-GAAP measures such as Organic Revenue Growth (10.6% in Q2), and the company's liquidity position, which remains strong following the IPO despite significant cash use for acquisitions [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section analyzes the company's revenue and expense trends, highlighting key factors influencing financial performance for the reported periods - For Q2 2025, **total revenues increased by 13.8% YoY to $60.3 million**, driven by a 12.1% increase in commission income and a 61.6% increase in contingent income, while for H1 2025, **total revenues grew 15.1% YoY to $114.1 million**, with commission income up 13.3%[119](index=119&type=chunk)[139](index=139&type=chunk) - **Salaries and employee benefits expense increased 39.3% in Q2 2025**, which included $1.5 million in stock-based compensation and costs from recent Corporate Branch acquisitions, and **other administrative expenses rose 44.2%** due to business growth and increased costs as a public company[131](index=131&type=chunk)[133](index=133&type=chunk) Total Revenues by Offering - Q2 Comparison (in thousands) | Offering | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Insurance Services | $50,709 | $43,773 | 15.8% | | TWFG MGA | $9,233 | $8,830 | 4.6% | | **Total revenues** | **$60,308** | **$53,011** | **13.8%** | [Key Performance Indicators](index=34&type=section&id=Key%20Performance%20Indicators) This section reviews key operational metrics such as Total Written Premium and retention rates, providing insights into business growth and performance - **Total Written Premium increased by 14.4% to $450.3 million in Q2 2025** and by **14.9% to $821.3 million in H1 2025** compared to the prior year periods, driven by increases in both new and renewal business[162](index=162&type=chunk)[165](index=165&type=chunk) - **Consolidated written premium retention decreased to 89% for Q2 2025** from 93% in Q2 2024, attributed to carriers moderating rate increases and opening up for new business after a period of restricted capacity[163](index=163&type=chunk)[164](index=164&type=chunk) Total Written Premium by Offering (in thousands) | Offering | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Total Insurance Services | $389,397 | $706,971 | | TWFG MGA | $60,891 | $114,280 | | **Total written premium** | **$450,288** | **$821,251** | [Non-GAAP Financial Measures](index=35&type=section&id=Non-GAAP%20Financial%20Measures) This section presents and reconciles non-GAAP financial measures, including Organic Revenue Growth, Adjusted Net Income, and Adjusted EBITDA, for performance assessment - The company uses several non-GAAP measures, including Organic Revenue, Adjusted Net Income, and Adjusted EBITDA, to evaluate performance, with **Organic Revenue Growth at 10.6% for Q2 2025 and 12.4% for H1 2025**, reflecting underlying business growth excluding recent large acquisitions[175](index=175&type=chunk)[178](index=178&type=chunk) Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $9,000 | $6,918 | $15,853 | $13,547 | | EBITDA | $11,838 | $10,503 | $20,926 | $20,818 | | **Adjusted EBITDA** | **$15,133** | **$10,758** | **$27,321** | **$19,765** | | **Adjusted EBITDA Margin** | **25.1%** | **20.3%** | **23.9%** | **19.9%** | Reconciliation of Net Income to Adjusted Net Income (Revised Methodology, in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $9,000 | $6,918 | $15,853 | $13,547 | | **Adjusted Net Income** | **$11,519** | **$9,822** | **$20,746** | **$17,921** | | **Adjusted Net Income Margin** | **19.1%** | **18.5%** | **18.2%** | **18.1%** | [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) This section evaluates the company's cash position, credit facilities, and capital structure, detailing the impact of IPO proceeds on liquidity - As of June 30, 2025, the company had **cash and cash equivalents of $159.8 million**, having received approximately **$192.9 million in net proceeds from its July 2024 IPO**, which was used to repay debt and for general corporate purposes[197](index=197&type=chunk) - The company has a **$50.0 million revolving credit facility** which was fully unutilized as of June 30, 2025, and the outstanding balance on its Term Loan C was $5.0 million[198](index=198&type=chunk) Comparative Cash Flows (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $25,260 | $17,154 | | Net cash used in investing activities | ($46,706) | ($21,223) | | Net cash used in financing activities | ($12,876) | ($5,886) | | **Net change in cash, cash equivalents and restricted cash** | **($34,322)** | **($9,955)** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risk from insurance premium pricing cycles and interest rate fluctuations. A soft insurance market could negatively affect commissions, while a hard market could be beneficial. Interest rate risk affects both investment income on cash balances and interest expense on variable-rate debt. The company uses derivative instruments to mitigate interest rate risk on its term loans - The company's primary market risks are related to the cyclical nature of P&C insurance premium pricing and interest rate risk on its cash holdings and variable-rate debt[215](index=215&type=chunk)[216](index=216&type=chunk) - As of June 30, 2025, the company had **$171.0 million in cash and cash equivalents**, where a hypothetical **100 basis point change in interest rates would impact interest income by approximately $0.4 million**[218](index=218&type=chunk) - The company had approximately **$5.0 million of variable-rate debt** outstanding under its Term Loan Credit Agreement as of June 30, 2025, with the impact of a hypothetical 10% change in interest rates on this debt not considered material[219](index=219&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of June 30, 2025. They concluded that these controls were effective at a reasonable assurance level. There were no material changes to the internal control over financial reporting during the quarter - Based on an evaluation as of June 30, 2025, the Principal Executive Officer and Principal Financial Officer concluded that the company's **disclosure controls and procedures were effective** at the reasonable assurance level[222](index=222&type=chunk) - No material changes in the company's internal control over financial reporting occurred during the six months ended June 30, 2025[223](index=223&type=chunk) [Part II - Other Information](index=46&type=section&id=Part%20II%20-%20Other%20Information) This section provides disclosures on legal proceedings, updated risk factors, equity sales, and other material information not covered in Part I [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings that are expected to have a material adverse effect on its business, financial condition, or results of operations - The company is not presently a party to any litigation that it believes would have a material adverse effect on its business, operating results, cash flows, or financial condition[224](index=224&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the company's Annual Report[225](index=225&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 reports no unregistered sales of equity securities. It details the use of the approximately $192.9 million in net proceeds from its IPO, which included acquiring LLC Units from its holding company, which in turn used the funds to pay IPO expenses and repay $41.0 million of outstanding debt under its Revolving Facility - The company received approximately **$192.9 million in net proceeds from its IPO**, a portion of which was used by its subsidiary, TWFG Holding, to repay in full the outstanding debt of **$41.0 million under the Revolving Facility**[227](index=227&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) The company reported no other material information during the period. Additionally, no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement - No other significant information was reported for the period, and no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement[229](index=229&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the quarterly report, including the Certificate of Incorporation, By-Laws, and certifications from the CEO and CFO as required by the Sarbanes-Oxley Act - The exhibits filed with the report include the Amended and Restated Certificate of Incorporation, Amended and Restated By-Laws, CEO and CFO Certifications (Sections 302 and 906 of Sarbanes-Oxley Act), and XBRL Interactive Data Files[230](index=230&type=chunk)

Financial Data and Key Metrics Changes - Total revenue grew by 13.8% to $60.3 million, with organic revenue growth of 10.6% [5][11] - Adjusted EBITDA increased by 40.7% to $15.1 million, with margins expanding to 25.1% [5][14] - Total written premiums rose by 14.4% to $450.3 million [5][9] Business Line Data and Key Metrics Changes - Insurance services grew by 16.5% to $55 million, while TWFG MGA grew by 2.7% to $1.6 million [9] - Renewal business within insurance services increased by 16.1%, while new business grew by 17.8% [10] - MGA experienced a shift with renewal business growing by 8.1%, while new business growth declined [11] Market Data and Key Metrics Changes - The personal lines market is softening, with expanding carrier capacity and moderating rate increases [6][29] - Retention rate remained at 89%, consistent with long-term averages [7][11] - Certain regions, such as Florida and Louisiana, are experiencing price deceleration, while Texas remains stable [35][36] Company Strategy and Development Direction - The company focuses on four strategic pillars: expanding national footprint, investing in agent productivity, enhancing technology infrastructure, and deepening carrier relationships [7] - AI-driven tools are being piloted to improve efficiency and responsiveness [8] - The company is actively pursuing M&A opportunities to support growth [16][50] Management's Comments on Operating Environment and Future Outlook - Management expects moderate rate increases in 2025 and is monitoring potential tariff impacts on costs [7] - The company remains confident in its ability to deliver long-term value despite a moderating rate environment [46] - Guidance for 2025 includes organic revenue growth of 11% to 14% and adjusted EBITDA margins between 21% and 23% [16][42] Other Important Information - Net income for the quarter was $9 million, up 30.1% year-over-year [14] - The company has $160 million in cash and a fully available credit revolver, providing flexibility for investments [16] Q&A Session Summary Question: Profit margins this quarter - Management explained that lower commission expense is due to lower commission revenues, with corporate store acquisitions contributing to margin expansion [19][20] Question: Changes in organic growth expectations - Management noted that the market conditions have softened, leading to more options for customers and impacting organic growth [28][30] Question: M&A contribution to revenue - Management clarified that M&A contributions depend on the timing of asset onboarding, with expectations for increased contributions in the second half of the year [48][50] Question: Future EBITDA margin expansion - Management indicated that continued EBITDA margin expansion is feasible, depending on future acquisitions and operational efficiencies [53][54] Question: MGA business and competition - Management discussed the competitive landscape in the E&S home insurance market and its impact on MGA's trajectory, noting that their core program remains stable [66][68]

Core Insights - TWFG, Inc. reported revenue of $60.31 million for the quarter ended June 2025, marking a year-over-year increase of 13.2% [1] - The earnings per share (EPS) for the same period was $0.20, a significant decrease from $14.89 a year ago [1] - The reported revenue fell short of the Zacks Consensus Estimate of $63.94 million, resulting in a surprise of -5.68% [1] - The company achieved an EPS surprise of +11.11%, with the consensus EPS estimate being $0.18 [1] Revenue Breakdown - Contingent income was reported at $2.03 million, exceeding the average estimate of $1.8 million from four analysts [4] - Fee income was recorded at $3.33 million, slightly below the average estimate of $3.42 million from four analysts [4] - Commission income totaled $54.56 million, which was lower than the average estimate of $58.81 million based on four analysts [4] - Other income was reported at $0.38 million, also below the average estimate of $0.4 million from three analysts [4] Stock Performance - TWFG, Inc. shares have returned -17.6% over the past month, contrasting with the Zacks S&P 500 composite's +2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Viewpoint - TWFG, Inc. reported quarterly earnings of $0.20 per share, exceeding the Zacks Consensus Estimate of $0.18 per share, but significantly lower than $14.89 per share from the previous year, indicating a substantial decline in earnings year-over-year [1] Financial Performance - The company posted revenues of $60.31 million for the quarter ended June 2025, which fell short of the Zacks Consensus Estimate by 5.68%, compared to $53.27 million in revenues a year ago [2] - Over the last four quarters, TWFG has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times as well [2] Stock Performance - TWFG shares have declined approximately 11.9% since the beginning of the year, contrasting with the S&P 500's gain of 8.4% [3] - The current consensus EPS estimate for the upcoming quarter is $0.20 on revenues of $66.98 million, and for the current fiscal year, it is $0.70 on revenues of $247.13 million [7] Industry Outlook - The Zacks Industry Rank for Insurance - Multi line is currently in the top 41% of over 250 Zacks industries, suggesting a favorable outlook as the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Core Insights - The company reported a strong second quarter performance with total revenues increasing by 13.8% year-over-year to $60.3 million and total written premiums rising by 14.4% to $450.3 million [1][5][10] - Organic revenue growth rate for the quarter was 10.6%, driven by robust new business production and normalized retention levels [1][6][10] - Adjusted EBITDA increased by 40.7% to $15.1 million, with an adjusted EBITDA margin expanding to 25.1% [1][11][31] Financial Performance - Net income for the quarter was $9.0 million, compared to $6.9 million in the prior year, resulting in a net income margin of 14.9% [1][10][43] - Adjusted net income rose by 17.3% to $11.5 million, with an adjusted net income margin of 19.1% [1][10][43] - Total revenues for the six months ended June 30, 2025, were $114.1 million, representing a 15.1% increase compared to the same period in the prior year [5][10] Growth Strategy - The company completed four acquisitions during the quarter and onboarded nine new retail branches, expanding into Kentucky [4][10] - The acquisitions added five new corporate locations across Texas, Louisiana, and North Carolina, enhancing market presence in the eastern Gulf region [4][10] Operational Metrics - Commission income for the quarter increased by 12.1% to $54.6 million [6][10] - Salaries and employee benefits rose by 39.3% to $9.5 million, reflecting increased headcount and overall business growth [8][10] - Other administrative expenses increased by 44.2% to $5.4 million, indicating investments to support business growth [9][10] Cash Flow and Liquidity - Cash flow from operating activities for the quarter was $9.6 million, compared to $7.4 million in the same period last year [12][43] - As of June 30, 2025, the company had cash and cash equivalents of $159.8 million and full unused capacity on its revolving credit facility of $50.0 million [13][39]

[Company Overview](index=1&type=section&id=1.%20Company%20Overview) TWFG's Q2 2025 performance, strategic growth initiatives, and its core business as an independent insurance distribution platform are highlighted [Second Quarter 2025 Highlights](index=1&type=section&id=1.1.%20Second%20Quarter%202025%20Highlights) TWFG demonstrated strong performance in Q2 2025 with significant year-over-year growth in total revenue, total written premium, and adjusted EBITDA, alongside an improved adjusted EBITDA margin Key Financial Highlights (Q2 2025) | Metric | Amount ($ million) | Year-over-Year Growth | Notes | | :-------------------- | :----------------- | :--------- | :--- | | Total Revenue | $60.3 | +13.8% | | | Total Written Premium | $450.3 | +14.4% | | | Organic Revenue Growth Rate | 10.6% | - | | | Net Income | $9.0 | - | | | Adjusted EBITDA | $15.1 | +40.7% | | | Adjusted EBITDA Margin | 25.1% | - | Improved from 20.3% in prior year period | [CEO Commentary and Strategic Initiatives](index=1&type=section&id=1.2.%20CEO%20Commentary%20and%20Strategic%20Initiatives) CEO Gordy Bunch highlighted strong Q2 performance driven by strategic execution and business model strengths, with distribution platform expansion through acquisitions and new retail branches - CEO Gordy Bunch stated that the company's strong second-quarter results reflect continued strategic execution and the strength of its business model[4](index=4&type=chunk) - The company continued to grow its distribution platform through recruiting and M&A activities, completing **four acquisitions**, adding **nine new retail branches**, and expanding into Kentucky this quarter[5](index=5&type=chunk) - Acquisitions added **five new corporate locations** (one each in Texas, Louisiana, North Carolina) and a new MGA (Managing General Agent) property program in Florida, enhancing the company's market presence in the East Gulf region[5](index=5&type=chunk) [About TWFG](index=3&type=section&id=1.3.%20About%20TWFG) TWFG is a high-growth independent distribution platform providing personal and commercial insurance across the US, partnering with numerous carriers - TWFG is a high-growth independent insurance distribution platform providing personal and commercial insurance across the United States[20](index=20&type=chunk) - The company represents hundreds of insurance carriers to underwrite personal and commercial lines risks[20](index=20&type=chunk) [Second Quarter 2025 Financial Results](index=1&type=section&id=2.%20Second%20Quarter%202025%20Financial%20Results) This section details TWFG's Q2 2025 financial performance, covering revenue growth, expense analysis, profitability, and cash flow [Revenue Performance](index=1&type=section&id=2.1.%20Revenue%20Performance) TWFG achieved strong Q2 2025 revenue growth, with total revenue up 13.8% and organic revenue up 10.6%, driven by new business and stable client retention Revenue Performance (Q2 2025) | Metric | Q2 2025 ($ million) | Q2 2024 ($ million) | Year-over-Year Change | | :-------------------- | :------------------------- | :------------------------- | :--------- | | Total Revenue | $60.3 | $53.0 | +13.8% | | Commission Revenue | $54.6 | $48.7 | +12.1% | | Total Written Premium | $450.3 | $393.6 | +14.4% | | Organic Revenue | $54.1 | $48.4 | +11.8% | | Organic Revenue Growth Rate | 10.6% | - | - | - For the six months ended June 30, 2025, total revenue was **$114.1 million**, representing a **15.1% year-over-year increase**[7](index=7&type=chunk) - For the six months ended June 30, 2025, organic revenue was **$103.3 million**, representing a **14.9% year-over-year increase**, with an organic revenue growth rate of **12.4%**[8](index=8&type=chunk) [Expense Analysis](index=2&type=section&id=2.2.%20Expense%20Analysis) Q2 2025 operating expenses significantly increased due to higher compensation and benefits, including equity compensation and acquisition-related costs, and other G&A expenses supporting growth and public company operations Expense Analysis (Q2 2025) | Expense Category | Q2 2025 ($ million) | Q2 2024 ($ million) | Year-over-Year Change | | :-------------------------- | :------------------------- | :------------------------- | :--------- | | Commission Expense | $34.2 | $32.0 | +6.8% | | Compensation and Employee Benefits | $9.5 | $6.8 | +39.3% | | Other General and Administrative Expenses | $5.4 | $3.7 | +44.2% | - The increase in compensation and employee benefits includes **$1.5 million** in equity-based compensation expense and **$1.2 million** in compensation and employee benefits related to corporate branch acquisitions in 2025[10](index=10&type=chunk) - The increase in other general and administrative expenses reflects investments to support business growth and costs incurred as a public company[11](index=11&type=chunk) [Profitability and Earnings](index=1&type=section&id=2.3.%20Profitability%20and%20Earnings) Q2 2025 saw improved net income and adjusted net income with expanding margins, alongside substantial adjusted EBITDA growth and margin enhancement reflecting operational efficiency Profitability and Earnings (Q2 2025) | Metric | Q2 2025 ($ million) | Q2 2024 ($ million) | Year-over-Year Change | | :-------------------- | :------------------------- | :------------------------- | :--------- | | Net Income | $9.0 | $6.9 | +30.4% | | Net Income Margin | 14.9% | 13.1% | +1.8 pp | | Adjusted Net Income | $11.5 | $9.8 | +17.3% | | Adjusted Net Income Margin | 19.1% | 18.5% | +0.6 pp | | Adjusted EBITDA | $15.1 | $10.8 | +40.7% | | Adjusted EBITDA Margin | 25.1% | 20.3% | +4.8 pp | - Diluted earnings per share for Q2 2025 was **$0.13**, and adjusted diluted earnings per share was **$0.20**[6](index=6&type=chunk) [Cash Flow from Operations](index=2&type=section&id=2.4.%20Cash%20Flow%20from%20Operations) Q2 2025 operating cash flow increased, while adjusted free cash flow decreased primarily due to distributions made to pre-IPO members Cash Flow from Operations (Q2 2025) | Metric | Q2 2025 ($ million) | Q2 2024 ($ million) | Year-over-Year Change | | :-------------------------- | :------------------------- | :------------------------- | :--------- | | Cash Flow from Operations | $9.6 | $7.4 | +29.7% | | Adjusted Free Cash Flow | $2.9 | $3.7 | -21.6% | - The decrease in adjusted free cash flow was primarily due to distributions made to pre-IPO members[14](index=14&type=chunk) [Liquidity and Capital Resources](index=2&type=section&id=3.%20Liquidity%20and%20Capital%20Resources) This section outlines TWFG's liquidity position and capital resources, including cash reserves, credit facilities, and outstanding debt [Liquidity and Capital Resources Overview](index=2&type=section&id=3.1.%20Liquidity%20and%20Capital%20Resources%20Overview) As of June 30, 2025, TWFG maintained a strong liquidity position with ample cash reserves, a $50 million undrawn revolving credit facility, and a relatively low term note balance - As of June 30, 2025, the company had **$159.8 million** in cash and cash equivalents[15](index=15&type=chunk) - The company had the full **$50.0 million** available under its revolving credit facility as of June 30, 2025[15](index=15&type=chunk) - The outstanding term note balance was **$5.0 million** as of June 30, 2025[15](index=15&type=chunk) [2025 Updated Outlook](index=2&type=section&id=4.%202025%20Updated%20Outlook) This section provides TWFG's updated financial guidance for the full fiscal year 2025, including revenue and profitability expectations [Full-Year 2025 Guidance](index=2&type=section&id=4.1.%20Full-Year%202025%20Guidance) TWFG updated its full-year 2025 guidance, projecting continued growth in total revenue and organic revenue growth rate, alongside a healthy adjusted EBITDA margin Full-Year 2025 Guidance | Metric | FY 2025 Guidance | | :---------------------- | :---------------------- | | Total Revenue | $240 million to $255 million | | Organic Revenue Growth Rate | 11% to 14% | | Adjusted EBITDA Margin | 21% to 23% | - The company is unable to provide a reconciliation to the most directly comparable GAAP measures without unreasonable effort due to the inherent difficulty in forecasting the timing and quantifying certain amounts necessary for such reconciliations of items that have not yet occurred[17](index=17&type=chunk) [Non-GAAP Financial Measures and Key Performance Indicators](index=1&type=section&id=5.%20Non-GAAP%20Financial%20Measures%20and%20Key%20Performance%20Indicators) This section defines TWFG's non-GAAP financial measures and key performance indicators, along with their reconciliations to GAAP equivalents [Non-GAAP Financial Measures Definitions](index=1&type=section&id=5.1.%20Non-GAAP%20Financial%20Measures%20Definitions) This section defines TWFG's key non-GAAP financial measures, including organic revenue, adjusted net income, adjusted EBITDA, and adjusted free cash flow, explaining their calculation and relevance for performance evaluation - Organic Revenue is total revenue (the most directly comparable GAAP measure) excluding or adjusting for contingent revenue, non-policy fee revenue, other revenue, and revenue from acquired businesses with annualized revenue greater than **$0.5 million** that have not met the 12-month hold period; as of Q1 2025, the calculation of organic revenue has been revised to include policy fee revenue[24](index=24&type=chunk) - Adjusted Net Income is net income (the most directly comparable GAAP measure) before amortization, non-recurring or non-operating income and expenses (including equity-based compensation), and assuming a single class of stock (Class A) with no non-controlling interest[26](index=26&type=chunk) - Adjusted EBITDA is EBITDA adjusted for equity-based compensation, interest income, other non-operating, and certain non-recurring items; EBITDA is defined as net income (the most directly comparable GAAP measure) before interest, income taxes, depreciation, and amortization[30](index=30&type=chunk) - Adjusted Free Cash Flow is defined as cash flow from operating activities (the most directly comparable GAAP measure) less cash payments for tax distributions, purchases of property and equipment, and acquisition-related costs[33](index=33&type=chunk) [Key Performance Indicators Definitions](index=5&type=section&id=5.2.%20Key%20Performance%20Indicators%20Definitions) TWFG's primary KPI is total written premium, representing the aggregate current premium bound with carriers, considered a fundamental driver of most company revenue - Total Written Premium represents the aggregate current premium bound with carriers (net of cancellations) during any reporting period[35](index=35&type=chunk) - The company uses total written premium as a key performance indicator for planning, monitoring, and evaluating performance because it is considered a fundamental driver of most of the company's revenue[35](index=35&type=chunk) [Reconciliation of Non-GAAP Financial Measures](index=10&type=section&id=5.3.%20Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section provides detailed reconciliations of TWFG's non-GAAP financial measures to their most directly comparable GAAP metrics for the three and six months ended June 30, 2025 and 2024, using revised and historical methodologies as applicable [Organic Revenue and Organic Revenue Growth Rate Reconciliation](index=10&type=section&id=5.3.1.%20Organic%20Revenue%20and%20Organic%20Revenue%20Growth%20Rate%20Reconciliation) This reconciliation details adjustments made to total revenue to derive organic revenue, highlighting the impact of acquisitions, contingent revenue, and other revenue components Organic Revenue and Organic Revenue Growth Rate Reconciliation ($ thousand) | Metric | Q2 2025 (Revised) | Q2 2024 (Revised) | H1 2025 (Revised) | H1 2024 (Revised) | | :-------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Total Revenue | $60,308 | $53,011 | $114,131 | $99,155 | | Acquisition Adjustment | $(1,524) | $(1,217) | $(2,133) | $(2,684) | | Contingent Revenue | $(2,033) | $(1,258) | $(3,696) | $(2,334) | | Fee Revenue | $(3,329) | $(2,689) | $(6,340) | $(4,921) | | Policy Fee Revenue | $1,082 | $933 | $2,134 | $1,446 | | Other Revenue | $(384) | $(402) | $(748) | $(693) | | **Organic Revenue** | **$54,120** | **$48,378** | **$103,348** | **$89,969** | | Organic Revenue Growth Rate | 10.6% | 14.6% | 12.4% | 13.6% | [Adjusted Net Income and Adjusted Net Income Margin Reconciliation](index=11&type=section&id=5.3.2.%20Adjusted%20Net%20Income%20and%20Adjusted%20Net%20Income%20Margin%20Reconciliation) This reconciliation details adjustments to net income, including income tax expense, acquisition-related costs, equity-based compensation, and amortization, to derive adjusted net income and its corresponding margin Adjusted Net Income and Adjusted Net Income Margin Reconciliation ($ thousand) | Metric | Q2 2025 (Revised) | Q2 2024 (Revised) | H1 2025 (Revised) | H1 2024 (Revised) | | :-------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net Income | $9,000 | $6,918 | $15,853 | $13,547 | | Income Tax Expense | $620 | — | $1,276 | — | | Acquisition-Related Costs | $19 | — | $52 | — | | Equity-Based Compensation | $1,515 | — | $2,719 | — | | Other Non-Recurring Items | $10 | — | $10 | $(1,477) | | Amortization Expense | $3,762 | $2,904 | $6,971 | $5,851 | | Adjusted Pre-Tax Income | $14,926 | $9,822 | $26,881 | $17,921 | | Adjusted Income Tax Expense | $(3,407) | — | $(6,135) | — | | **Adjusted Net Income** | **$11,519** | **$9,822** | **$20,746** | **$17,921** | | Net Income Margin | 14.9% | 13.1% | 13.9% | 13.7% | | Adjusted Net Income Margin | 19.1% | 18.5% | 18.2% | 18.1% | [Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation](index=12&type=section&id=5.3.3.%20Adjusted%20EBITDA%20and%20Adjusted%20EBITDA%20Margin%20Reconciliation) This reconciliation shows adjustments to net income to calculate EBITDA and Adjusted EBITDA, including interest, taxes, depreciation, amortization, and other non-recurring items Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation ($ thousand) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------- | :---------------- | :---------------- | :---------------- | :---------------- | | Net Income | $9,000 | $6,918 | $15,853 | $13,547 | | Interest Expense | $68 | $872 | $151 | $1,714 | | Interest Income | $(1,751) | $(255) | $(3,614) | $(424) | | Depreciation and Amortization | $3,901 | $2,968 | $7,260 | $5,981 | | Income Tax Expense | $620 | — | $1,276 | — | | **EBITDA** | **$11,838** | **$10,503** | **$20,926** | **$20,818** | | Acquisition-Related Costs | $19 | — | $52 | — | | Equity-Based Compensation | $1,515 | — | $2,719 | — | | Interest Income (Adjustment) | $1,751 | $255 | $3,614 | $424 | | Other Non-Recurring Items | $10 | — | $10 | $(1,477) | | **Adjusted EBITDA** | **$15,133** | **$10,758** | **$27,321** | **$19,765** | | Adjusted EBITDA Margin | 25.1% | 20.3% | 23.9% | 19.9% | [Adjusted Free Cash Flow Reconciliation](index=12&type=section&id=5.3.4.%20Adjusted%20Free%20Cash%20Flow%20Reconciliation) This reconciliation adjusts cash flow from operations by deducting capital expenditures, tax distributions, and acquisition-related costs to derive adjusted free cash flow Adjusted Free Cash Flow Reconciliation ($ thousand) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------- | :---------------- | :---------------- | :---------------- | :---------------- | | Cash Flow from Operations | $9,615 | $7,400 | $25,260 | $17,154 | | Purchases of Property and Equipment | $(44) | $(39) | $(59) | $(47) | | Tax Distributions to Members | $(6,728) | $(3,685) | $(8,752) | $(6,104) | | Acquisition-Related Costs | $19 | — | $52 | — | | **Adjusted Free Cash Flow** | **$2,862** | **$3,676** | **$16,501** | **$11,003** | [Adjusted Diluted Earnings Per Share Reconciliation](index=13&type=section&id=5.3.5.%20Adjusted%20Diluted%20Earnings%20Per%20Share%20Reconciliation) This reconciliation adjusts diluted EPS for the impact of LLC unit conversion to Class A common stock and other adjusted net income adjustments, providing a comparable operating performance measure Adjusted Diluted Earnings Per Share Reconciliation | Metric | Q2 2025 | H1 2025 | | :------------------------------------------------ | :-------- | :-------- | | Diluted Earnings Per Share of Common Stock | $0.13 | $0.22 | | Add: Impact of all LLC Units converted to Class A Common Stock | $0.03 | $0.06 | | Add: Adjustments to Adjusted Net Income | $0.04 | $0.09 | | **Adjusted Diluted Earnings Per Share** | **$0.20** | **$0.37** | [Disaggregation of Revenues and Expenses by Offering](index=8&type=section&id=5.4.%20Disaggregation%20of%20Revenues%20and%20Expenses%20by%20Offering) This section details the disaggregation of TWFG's total revenue, commission revenue, fee revenue, and commission expense by business type, including Agency-in-a-Box, Corporate Branches, and TWFG MGA Q2 2025 Total Revenue by Offering ($ thousand) | Offering Type | Amount | | :---------------- | :----- | | Insurance Services | $50,709 | | - Agency-in-a-Box | $39,316 | | - Corporate Branches | $11,393 | | TWFG MGA | $9,233 | Q2 2025 Commission Revenue by Offering ($ thousand) | Offering Type | Amount | | :---------------- | :----- | | Insurance Services | $47,569 | | - Agency-in-a-Box | $36,275 | | - Corporate Branches | $11,294 | | TWFG MGA | $6,993 | Q2 2025 Fee Revenue by Primary Source ($ thousand) | Fee Source | Amount | | :--------- | :----- | | Policy Fees | $1,082 | | Branch Fees | $1,416 | | Licensing Fees | $559 | | TPA Fees | $272 | Q2 2025 Commission Expense by Offering ($ thousand) | Offering Type | Amount | | :---------------- | :----- | | Insurance Services | $29,581 | | - Agency-in-a-Box | $28,013 | | - Corporate Branches | $1,568 | | TWFG MGA | $4,544 | [Disaggregation of Total Written Premium](index=14&type=section&id=5.5.%20Disaggregation%20of%20Total%20Written%20Premium) This section disaggregates total written premium by business type (Insurance Services, TWFG MGA), business mix (renewal, new business), and line of business (personal, commercial), offering insights into premium composition and retention rates Q2 2025 Total Written Premium by Offering Type ($ thousand) | Offering Type | Amount | Percentage of Total | | :---------------- | :----- | :----------- | | Insurance Services | $389,397 | 86% | | TWFG MGA | $60,891 | 14% | Q2 2025 Total Written Premium by Business Mix ($ thousand) | Business Mix | Amount | Percentage of Total | | :-------------------------- | :----- | :----------- | | Insurance Services Renewal Business | $301,930 | 67% | | Insurance Services New Business | $87,467 | 19% | | TWFG MGA Renewal Business | $47,366 | 11% | | TWFG MGA New Business | $13,525 | 3% | Q2 2025 Written Premium Retention Rate | Offering Type | Retention Rate | | :---------------- | :----- | | Insurance Services | 90% | | TWFG MGA | 80% | | Consolidated | 89% | Q2 2025 Total Written Premium by Line of Business ($ thousand) | Line of Business | Amount | Percentage of Total | | :----------- | :----- | :----------- | | Personal Lines | $365,409 | 81% | | Commercial Lines | $84,879 | 19% | [Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=6.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents TWFG's unaudited condensed consolidated financial statements, including statements of income and balance sheets [Condensed Consolidated Statements of Income](index=7&type=section&id=6.1.%20Condensed%20Consolidated%20Statements%20of%20Income) The unaudited condensed consolidated statements of income present TWFG's revenues, expenses, and net income for the three and six months ended June 30, 2025 and 2024, with detailed breakdowns of income and expense categories Condensed Consolidated Statements of Income ($ thousand) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------------------------- | :---------------- | :---------------- | :---------------- | :---------------- | | Total Revenue | $60,308 | $53,011 | $114,131 | $99,155 | | Total Operating Expenses | $52,945 | $45,490 | $101,038 | $84,330 | | Operating Income | $7,363 | $7,521 | $13,093 | $14,825 | | Income Before Income Taxes | $9,620 | $6,918 | $17,129 | $13,547 | | Net Income | $9,000 | $6,918 | $15,853 | $13,547 | | Net Income Attributable to TWFG, Inc. | $1,957 | $— | $3,295 | $— | | Diluted Earnings Per Share | $0.13 | $— | $0.22 | $— | [Condensed Consolidated Balance Sheets](index=9&type=section&id=6.2.%20Condensed%20Consolidated%20Balance%20Sheets) The unaudited condensed consolidated balance sheets provide a snapshot of TWFG's financial position as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheets ($ thousand) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :---------------- | | Total Current Assets | $208,525 | $241,848 | | Total Assets | $342,849 | $323,428 | | Total Current Liabilities | $45,394 | $39,617 | | Total Liabilities | $53,878 | $48,142 | | Total Stockholders' Equity | $279,210 | $275,286 | - Cash and cash equivalents decreased from **$195.772 million** as of December 31, 2024, to **$159.827 million** as of June 30, 2025[39](index=39&type=chunk) - Net intangible assets significantly increased from **$72.978 million** to **$125.901 million**, reflecting recent acquisitions[39](index=39&type=chunk) [Additional Information](index=3&type=section&id=7.%20Additional%20Information) This section provides supplementary information including conference call details, forward-looking statements, and contact information [Conference Call Information](index=3&type=section&id=7.1.%20Conference%20Call%20Information) TWFG will host a conference call and webcast to discuss Q2 2025 results, with details provided for registration and accessing live and replay versions - The conference call and webcast are scheduled for **10:00 AM ET on August 13, 2025**[19](index=19&type=chunk) - Participants can register for the conference call via the provided link, and the webcast will be available on the TWFG Investor Relations website at investors.twfg.com[19](index=19&type=chunk) [Forward-Looking Statements](index=3&type=section&id=7.2.%20Forward-Looking%20Statements) This section contains a standard disclaimer regarding forward-looking statements, emphasizing inherent risks and uncertainties, and advises readers to consult SEC filings for risk factors - This press release contains "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995, which involve significant risks and uncertainties[21](index=21&type=chunk) - Forward-looking statements are based on current expectations and projections about future events and are not guarantees of future results, activity levels, performance, or achievements[21](index=21&type=chunk)[22](index=22&type=chunk) - Readers are cautioned to consider the numerous risks outlined under the "Risk Factors" item in the company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the U.S. Securities and Exchange Commission[21](index=21&type=chunk) [Contacts](index=6&type=section&id=7.3.%20Contacts) Contact information for investor relations and public relations is provided - Investor Contact: Gene Padgett, Chief Accounting Officer, TWFG (gene.padgett@twfg.com)[36](index=36&type=chunk) - Public Relations Contact: Alex Bunch, Chief Marketing Officer, TWFG (alex@twfg.com)[36](index=36&type=chunk)

Core Insights - TWFG Insurance has expanded its national presence through the acquisition of Angers & Litz Associates, marking a significant step in its Northeast growth strategy [1][3] - Angers & Litz, established in 1963, is recognized for its strong reputation in providing commercial and personal insurance solutions, which will enhance TWFG's market penetration and growth potential in the Northeast [2][3] - The acquisition aligns with TWFG's strategy to partner with culturally compatible, high-performing agencies, thereby strengthening its distribution capabilities and supporting independent agents [3] Company Overview - TWFG Insurance is a leading independent distribution platform for personal and commercial insurance in the United States, leveraging a network of independent agents and access to numerous carriers [4] - The company focuses on delivering tailored coverage solutions that enhance growth, efficiency, and customer satisfaction [4]

Core Viewpoint - TWFG, Inc. is set to release its financial results for the second quarter of 2025 on August 12, 2025, with a conference call scheduled for the following morning to discuss these results [1]. Company Overview - TWFG, Inc. is a leading independent insurance distribution platform that offers innovative and personalized insurance solutions to individuals and businesses across the United States [3]. - The company emphasizes service, professionalism, and an entrepreneurial spirit, empowering its extensive network of agents to provide client-focused insurance options across various personal and commercial lines [3]. Investor Relations - Participants can register for the conference call via a provided link to receive dial-in details, and a live webcast will be available on TWFG's Investor Relations website [2]. - Interested parties are encouraged to access the webcast at least 10 minutes before the scheduled start time, and a replay will be available for a limited time after the call [2].

Summary of TWFG Conference Call - June 11, 2025 Company Overview - **Company**: TWFG (The Woodlands Financial Group) - **Industry**: Insurance, specifically focusing on personal lines and independent agency distribution Key Points and Arguments Market Conditions and Growth Opportunities - Post-IPO, the market has reacted positively to TWFG, with favorable conditions observed except for a challenging week in April [3][4] - The personal lines insurance market is seen as a consolidation opportunity, with a potential market size of half a trillion dollars [5][6] - The company anticipates organic revenue growth of 12-16% and an adjusted EBITDA margin of 20-22% for 2025, driven by improved market conditions and new business incentives [7][8] Competitive Landscape - The competitive environment for private passenger auto insurance is rated at 7.5 out of 10, indicating a competitive market, while homeowners insurance is rated at 2.5 to 3, suggesting room for improvement [19][22] - Direct-to-consumer (DTC) channels like GEICO and Progressive are not seen as threats to independent agents; instead, collaboration is expected to continue [15][16] Distribution Model - The shift from captive agency models to independent agency models is noted, with independent agents now capturing a significant share of the market [16][28] - TWFG's "agency in a box" model is highlighted as a strategic advantage, providing comprehensive support to agents [31][34] Retention and Profitability - Agents retain 100% of the profits generated from their local operations, incentivizing them to grow their businesses within the TWFG framework [38][41] - The company emphasizes the importance of retention and productivity, which are expected to drive future growth [40][41] Expansion Strategy - TWFG is expanding into new states, focusing on recruiting talent and acquiring portfolios to strengthen its market position [42][43] - The company has successfully entered markets like Ohio and North Carolina through acquisitions and organic growth [43][44] M&A Strategy - M&A is viewed as an enhancement rather than a necessity for TWFG's operations, allowing for additional growth opportunities [60][61] - The company aims to be selective in M&A activities, focusing on acquiring businesses that can provide synergistic benefits [62][63] Technology Investments - Significant investments in technology are being made to improve operational efficiency and support agency growth [70][78] - The company is exploring AI applications to enhance workflows and improve productivity across its network [71][72] MGA Programs - TWFG has been successful in its MGA programs, particularly in challenging markets, and plans to expand these offerings [55][56] Additional Important Insights - The company has a unique position in the market due to its ability to bundle insurance products, which is a competitive advantage over DTC platforms [23][26] - The fragmented nature of the homeowners insurance market makes it less likely for independent agents to be displaced by DTC offerings [17][18] - TWFG's focus on scalable technology investments is expected to yield compounding benefits across its operations [78][81]

Core Insights - TWFG, Inc. is a high-growth insurance distribution company that will have its Founder and CEO, Gordy Bunch, participate in a fireside chat at the Morgan Stanley US Financials Conference on June 11, 2025 [1] - A live webcast of the conference will be available, along with a replay on the company's website [1] Company Overview - TWFG is a leading independent distribution platform for personal and commercial insurance in the United States, representing hundreds of insurance carriers [2] - The company provides innovative insurance solutions through a network of agents, carriers, and technology-driven distribution models [2]