Company Overview - TWFG, Inc. is a high-growth, independent distribution platform for personal and commercial insurance, licensed in all 50 states [2] - The company represents hundreds of insurance carriers that underwrite personal lines and commercial lines risks [2] Leadership Change - Eugene "Gene" Padgett has joined TWFG's Leadership Team as Chief Accounting Officer [1] - Padgett has over 30 years of experience in accounting and financial management across diverse industries [1] - He has a strong track record of enhancing organizational performance through strategic financial planning, SEC reporting, and compliance [1] - Padgett will report to Janice Zwinggi, Chief Financial Officer [1]

Financial Performance - Net income for the three months ended September 30, 2024, was $6.893 million, a decrease of 9.4% compared to $7.608 million in the same period of 2023[10]. - Comprehensive income attributable to TWFG, Inc. for the three months ended September 30, 2024, was $1.121 million, down from $7.573 million in the same period of 2023[10]. - Net income from continuing operations for the nine months ended September 30, 2024, was $20,440,000, compared to $20,047,000 for the same period in 2023, reflecting an increase of approximately 2%[21]. - Adjusted Net Income for the three months ended September 30, 2024, was $8,343 million, compared to $8,686 million in the same period of 2023[178]. - Adjusted Net Income Margin for the three months ended September 30, 2024, was 15.3%, down from 18.2% in the same period of 2023[178]. - Net income for the three months ended September 30, 2024, was $6.89 million, a decrease from $7.61 million in the same period of 2023, representing a decline of 9.4%[184]. Revenue Growth - Total revenues for the three months ended September 30, 2024, were $54.64 million, an increase of 14.1% from $47.71 million for the same period in 2023[68]. - Total revenues for the nine months ended September 30, 2024, were $154.22 million, up from $132.94 million in the same period of 2023[126]. - Commission income for the nine months ended September 30, 2024, was $139.45 million, up 13.9% from $122.45 million in the prior year[68]. - Total revenues for the three months ended September 30, 2024, increased by $6.9 million, or 14.5%, compared to the same period in the prior year, primarily driven by a $4.2 million, or 9.7%, increase in commission income[130]. - Fee income for Q3 2024 was $2.89 million, representing 5% of total revenues, consistent with the 5% in Q3 2023[126]. Assets and Liabilities - Total current assets increased significantly to $234.127 million as of September 30, 2024, compared to $75.108 million at December 31, 2023[13]. - Total liabilities decreased to $44.959 million as of September 30, 2024, from $84.386 million at December 31, 2023[13]. - Total assets increased to $313.093 million as of September 30, 2024, from $115.437 million at December 31, 2023[13]. - The balance at September 30, 2024, included total stockholders' equity of $268,134,000, reflecting a strong financial position[18]. Cash Flow and Financing - Cash provided by operating activities from continuing operations increased to $28,879,000 for the nine months ended September 30, 2024, up from $23,264,000 in the prior year, representing a growth of about 24%[21]. - The company reported a net cash provided by financing activities from continuing operations of $147,147,000 for the nine months ended September 30, 2024, compared to a net cash used of $6,086,000 in the prior year[21]. - The company repaid the outstanding balance of the Revolving Facility amounting to $41.0 million on August 5, 2024, using a portion of the net proceeds from the IPO[189]. - As of September 30, 2024, cash and cash equivalents were $191.2 million, significantly up from $39.3 million as of December 31, 2023[188]. IPO and Capital Structure - TWFG, Inc. completed an IPO on July 19, 2024, issuing 11,000,000 shares of Class A common stock at an initial price of $17.00 per share, raising significant capital for the company[25]. - The company used approximately $41.0 million of the IPO proceeds to repay outstanding debt under the Revolving Credit Agreement, enhancing its financial stability[30]. - The company issued 11,000,000 shares of Class A Common Stock at $17.00 per share during its IPO, resulting in net proceeds of approximately $192.9 million after deducting underwriting discounts and commissions[88][90]. Expenses and Cost Management - Total operating expenses for the three months ended September 30, 2024, were $46,895,000, compared to $39,808,000 in the same period in the prior year[130]. - Salaries and employee benefits increased by $4.9 million, or 145.8%, to $8.3 million for the three months ended September 30, 2024, driven by branch conversions and asset acquisitions[142]. - Other administrative expenses rose by $2.0 million, or 71.2%, to $4.8 million for the three months ended September 30, 2024, mainly due to increased consultant fees and IT costs[143]. Strategic Acquisitions - The company completed five asset acquisitions in 2023 with an annual revenue exceeding $0.5 million for a total purchase price of $19.4 million[118]. - In January 2024, the company acquired assets of nine independent branches for $40.8 million and remaining interests in partially owned branches for $5.2 million[119]. - The company purchased the assets of Wade for a total consideration of $4.3 million, with $3.0 million paid in cash and $1.3 million settled through an interest-bearing note[102]. Tax and Regulatory Matters - The estimated effective tax rate for the three months ended September 30, 2024, was 5.96%, significantly lower than the statutory rate of 21%[64]. - The company anticipates tax benefits from LLC Unit exchanges could aggregate to approximately $182.4 million over the next 15 years, with $155.1 million payable to Continuing Pre-IPO LLC Members[205]. Market Position and Future Outlook - TWFG Holding is positioned as an independent distribution platform for personal and commercial insurance in the U.S., with a focus on expanding its market presence[25]. - The company has plans for future market expansion and product development, leveraging its strong financial position post-IPO[25]. - The company expects to have sufficient financial resources to meet its business requirements in the next 12 months, including servicing debt and financing capital expenditures[204].

Core Insights - TWFG, Inc. completed its IPO in July 2024, raising $192.9 million through the issuance of 12,650,000 shares at $17.00 per share [1] - The company reported a total written premium of $400.1 million for Q3 2024, reflecting a 13.0% increase year-over-year [2][7] - Total revenue for the quarter was $54.6 million, up 14.5% from the previous year [2][7] - The organic revenue growth rate was 7.6% for the quarter [2][7] - Net income for Q3 2024 was $6.9 million, with diluted earnings per share of $0.08 [2][9] - Adjusted EBITDA increased by 29.7% year-over-year to $11.7 million, with an adjusted EBITDA margin of 21.5% [2][10] Financial Performance - Total written premium for Q3 2024 was $400.1 million, compared to $354.1 million in Q3 2023 [2] - Total revenues increased to $54.6 million from $47.7 million in the same period last year [2] - Organic revenue for Q3 2024 was $47.3 million, up from $42.8 million in Q3 2023 [7] - Adjusted net income for the quarter was $8.3 million, down 4.0% from the prior year [2][9] - Adjusted net income margin for Q3 2024 was 15.3%, compared to 18.2% in the same period last year [9] Operational Highlights - The company opened 86 new TWFG locations in Q3 2024, expanding into 13 new states [5] - The recruiting efforts have outpaced historical growth trends, indicating potential for future growth [5][6] - The company experienced a 5.2% decrease in total commission expense despite a 9.7% growth in commission income due to branch conversions [8] Cash Flow and Liquidity - Cash flow from operating activities for Q3 2024 was $11.7 million, compared to $7.4 million in the same period last year [10] - Adjusted free cash flow for the quarter was $11.5 million, significantly up from $4.6 million in Q3 2023 [10] - As of September 30, 2024, the company had cash and cash equivalents of $191.2 million and $50.0 million unused capacity on its revolving credit facility [11] Market Context - The company operates as a high-growth insurance distribution platform in the U.S., representing hundreds of insurance carriers [15] - The results reflect the resilience of the company's business model amid challenges such as multiple hurricanes [4][3]