TWFG, Inc.

Good morning. My name is DeeDee and I will be your conference operator today. At this time, I would like to welcome everyone to the TWFG second quarter 2025 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then 11 on your telephone keypad. If you would like to withdraw your question, please press star 11 again. This call is being recorded and will be available for replay on the company's website. Before we begin, let me remind you that today's discussion may contain forward-looking statements and actual results may differ materially from those discussed. For more information regarding forward-looking statements, please refer to the company's press releases and SEC filings. Also on today's call, our speakers will reference certain non-GAAP financial measures, which we believe will provide useful information for investors. The company has posted reconciliation of the non-GAAP financial measures discussed during this call in the tables accompanying the company's earnings press release, located on the Investors section of the company's website at www.investors.com. TWFG.com. It is now my pleasure to introduce Mr. Gordy Bunch, founder, chairman, and CEO of TWFG. Sir, the floor is yours.

Good morning, and thank you for joining us today. Joining me is Janice Zwingy, our chief financial officer. After our remarks, we'll open up the call for your questions. I'd like to start off by expressing my appreciation for our agents, employees, carrier partners, clients, and shareholders. The dedication of our team and trust are the foundation of our continued success. Our second quarter results reflect a strong execution and growing momentum. We delivered total revenue growth of 13.8% to $60.3 million and organic revenue growth of 10.6% Adjusted EBITDA rose 40.7% to $15.1 million, with margins expanding to 25.1%. Total written premiums increased 14.4% to $450.3 million. This performance highlights the scalability of our platform and our ability to drive profitable growth even as we invest in expansion. During the quarter, we added nine new branch locations expanded into Kentucky, and completed four acquisitions, including a new MGA property program in Florida. As always, it's important to note that newly onboarded agents typically take two to three years to reach full productivity. We are confident that today's investments will continue to fuel our future growth trajectory. We continue to see softening in the personalized market. Carrier capacity is expanding, rate increases are moderating, and certain regions have even seen rate reductions. As the market stabilizes, we're gaining more options for both new and renewal business. This contributed to a retention rate of 89% in Q2, consistent with our long-term averages. Looking ahead to the second half of 2025, we expect moderate rate increases and are monitoring how potential tariffs may impact lost costs. Our diversified network of agents is well positioned to capture share as conditions continue to improve. Our strategic focus is focused on four pillars, expanding our national footprint, investing in agent productivity, enhancing our technology infrastructure, and deepening our carrier relationships. We've begun piloting AI-driven tools within our services teams to reduce manual processes and improve responsiveness. We believe these tools will help us scale our platform efficiently while continuing to deliver exceptional service to clients and agents alike. I will now turn it over to our CFO, Janice Swingey.

Thank you, Gordy, and good morning, everyone. Before diving into the core results, as a reminder, interest income was moved from the revenue line down to other income, so we'll be comparable to prior and future periods. Starting with our top KPI written premiums, increased by $56.7 million or 14.4% over the prior year period to $450.3 million. Within our primary offerings, insurance services grew $55 million or 16.5% and TWFG MGA grew $1.6 million or 2.7%. This increase was a result of growth in both renewals and new business. During the second quarter of 2025, within both of our product offerings, we saw healthy renewal business growth of 45.4 million, or 14.9%, as well as new business growth of 11.3 million, or 12.6%, over the prior year period. Within our insurance services offering, renewal business grew 41.8 million, or 16.1%, and new business grew 13.2 million or 17.8% over the prior year period. This growth is reflective of our corporate store acquisitions and expansion into new geographical areas. Within our MGA offering, we saw a shift in renewal and new business growth as compared to the same period in the prior year. In the second quarter of 2024, we saw both property programs open up capacity in an increased rate environment, providing exceptional new business growth during that period. In the second quarter of 2025, these programs faced a slowing rate and more competitive market where we saw a decline in new business growth, resulting from an exceptional to a more normalized growth period. Growth shifted towards renewal business, which grew 3.5 million, or 8.1%, compared to minimal growth in the same period of the prior year. Our consolidated written premium retention was 89%, as compared to 93% in the prior year period, with current retention being in line with our long-term projected retention rate of 88%. The decrease quarter over quarter is correlated to the shift in renewal business growth, as previously discussed, and as a result of carriers moderating rate increases and opening up for new business. after a period of restricted capacity and aggressive rate increases. Our total revenues increased 7.3 million or 13.8% over the prior year period to 60.3 million. This increase, it was mainly due to commission income representing 11.1% of the total growth. The remaining 2.7% total growth included contingent income of 1.5% and fee and other income of 1.2%. Commission income increased $5.9 million or 12.1% over the prior year period to $54.6 million, driven by new business growth and solid retention levels. Insurance services was the main contributor at 14.2% growth or 12.1% of the total growth, while the MGA remained relatively flat over the prior year period. Contingent income increased 0.8 million or 61.6% over the prior year period to 2 million, tracking closely with our written premium growth. Fee income was up 0.6 million or 23.8% to 3.3 million, driven by increases in branch fees, PPA fees, policy fees, and licensing fees. Organic revenues increased $5.7 million, reaching $54.1 million compared to $48.4 million in the same period prior year, for an organic growth rate of 10.6%, driven by new business production, normalized retention levels, and moderating rate increases. Turning to expenses, commission expense increased $2.2 million or 6.8% over the prior year period to $34.2 million, tracking with commission income, taking into account the impact of corporate requisition additions and programs with no related commission expense. Our total salary and employee benefits increased by 2.7 million or 39.3% over the prior year period to 9.5 million, reflecting our scale and the IPO transition, driven by 1.5 million increase from the RSUs issued in connection with the IPO, $0.7 million due to corporate store acquisitions and $0.5 million due to growth of the business. Other admin expenses increased $1.7 million or 44.2% over the prior year period to $5.4 million with approximately $0.4 million in IT costs, $0.3 million related to professional consulting fees, and the remaining $1 million increase was tied to ongoing growth and acquisition integration. Depreciation and amortization increased $0.9 million for 31.4% to $3.9 million, primarily from our recent asset acquisition. Net income for the quarter was $9 million, up 30.1% over the prior year period. Adjusted net income increased 17.3% to $11.5 million, driven by earnings growth and partially offset by higher public company costs. and a $3.4 million increase in tax expense. EBITDA was $11.8 million, and adjusted EBITDA was $15.1 million, up 40.7% over the prior year period. Adjusted EBITDA margin expanded to 25.1% compared to 20.3% in Q2 2024, reflecting both top line growth and scale. With that, I will turn it back to Gordie.