– Total Written Premium increased 20.3% over
the prior year period to $393.6
million –
– Total Revenue increased 17.4% over the
prior year period to $53.3 million
–
– Organic Revenue Growth Rate* of 13.8% –
–
Net Income of $6.9 million
–
– Adjusted Net Income* increased 18.1% over the prior
year period to $9.8 million
–
– Adjusted EBITDA* increased 25.8% over the prior year
period to $10.8 million –
–
Completed Initial Public Offering in July
2024 –
THE
WOODLANDS, Texas, Aug. 27,
2024 /PRNewswire/ -- TWFG, Inc. ("TWFG" or the
"Company") (NASDAQ: TWFG), a high-growth insurance distribution
company, today announced results for the second quarter ended
June 30, 2024.
Second Quarter 2024 Highlights
- Total Written Premium for the quarter increased 20.3% to
$393.6 million, compared to
$327.2 million in the same period in
the prior year
- Total revenues for the quarter increased 17.4% to $53.3 million, compared to $45.4 million in the same period in the prior
year
- Organic Revenue Growth Rate* for the quarter was 13.8%
- Net income for the quarter was $6.9
million, compared to $7.1
million in the same period in the prior year
- Adjusted Net Income* for the quarter increased 18.1% over the
prior year period to $9.8 million,
and Adjusted Net Income Margin* for the quarter was 18.4%
- Adjusted EBITDA* for the quarter increased 25.8% over the prior
year period to $10.8 million, and
Adjusted EBITDA Margin* for the quarter was 20.2%
- Cash flow from operating activities for the quarter was
$7.4 million, compared to
$6.9 million in the same period in
the prior year
- Adjusted Free Cash Flow* for the quarter was $3.7 million, compared to $1.9 million in the same period in the prior
year
|
*Organic Revenue Growth
Rate, Adjusted Net Income, Adjusted Net Income Margin, Adjusted
EBITDA, Adjusted EBITDA Margin, and Adjusted Free Cash Flow are
non-GAAP measures. Reconciliations of Organic Revenue Growth Rate
to total revenue growth rate, Adjusted Net income and Adjusted
EBITDA to net income, and Adjusted Free Cash Flow to cash flow from
operating activities, the most directly comparable financial
measures presented in accordance with GAAP, are outlined in the
reconciliation table accompanying this release.
|
"We delivered a strong second quarter and our value proposition
to independent and captive agents continues to resonate in the
marketplace" stated Gordy Bunch,
Founder, Chairman, and CEO. "In the second quarter, total revenues
increased 17.4% over the prior year period and we generated 13.8%
organic growth. Over the past couple of years, we have seen
unprecedented disruption in the personal lines market, impacting
thousands of our clients and highlighting the value our local
agents and their staff bring to policyholders as we navigate a
recalibration of carrier risk appetite and product
availability." "We are seeing signs of improved underwriting
margins at our carrier partners and an increase in underwriting
appetite, which bodes well for new business opportunities and more
orderly renewals for our agents and their customers."
Bunch added "It has been a busy and historic year for TWFG thus
far in 2024. We converted nine branches to corporate locations in
January. We completed our initial public offering in July, which
included significant participation by our employees, existing
stockholders, and agents. In the first half of the year, we
welcomed 44 experienced former captive agents to the TWFG family.
This opportunistic onboarding of seasoned, client-focused agents
demonstrates how TWFG is uniquely positioned to capture the ongoing
shift from captive distribution to independent distribution. I want
to remind our fellow stockholders that experienced agents typically
take between two to three years to become productive with us as
they transition from the captive model and relaunch their careers
as independent agents. We do not expect this influx of talent to
have a significant impact on revenues this year or next, but over
the long-term we expect the agents we are onboarding in 2024 to
contribute meaningfully to our organic growth."
Second Quarter 2024 Results
For the second quarter of 2024, Total Written Premium was
$393.6 million, a 20.3% increase
compared to the same period in the prior year. Revenues were
$53.3 million, an increase of 17.4%
compared to the same period in the prior year. Organic Revenues, a
non-GAAP measure that excludes contingent income, fee income, and
other income, for the second quarter of 2024 were $47.4 million, a 16.6% increase from $40.7 million in the same period in the prior
year. Organic Revenue Growth was driven by strong premium retention
of 93% and healthy new business premium.
Total commission expenses for the second quarter of 2024 were
$32.0 million, a 3.5% increase from
$30.9 million in the same period in
the prior year. Commission expenses grew slower than the 16.5%
growth in commission income due to the conversion of nine branches
to corporate branches, which transitioned our non-employee
commission-based colleagues to employees. Upon conversion, these
corporate branches' employees received salaries, employee benefits,
and bonuses for services rendered instead of commissions. Salaries
and employee benefits for the second quarter of 2024 were
$6.8 million, up 102.3% from
$3.4 million in the same period in
the prior year. The increase was primarily due to the
aforementioned branch conversions along with the growth in the
business. Other administrative expenses for the second quarter of
2024 were $3.7 million, a 36.8%
increase compared to the same period in the prior year. The
increase was driven by branch conversions, growth in the business,
and public company costs.
For the second quarter of 2024, net income was $6.9 million, and net income margin was 13.0%,
compared to $7.1 million of net
income and net income margin of 15.6%, in the same period in the
prior year. Adjusted Net Income for the second quarter of 2024 was
$9.8 million, compared to
$8.3 million in the same period in
the prior year. Adjusted Net Income Margin for the second quarter
was 18.4%, compared to 18.3% in the same period in the prior
year.
Adjusted EBITDA for the second quarter was $10.8 million, an increase of 25.8% over the
prior year period. Our Adjusted EBITDA Margin was 20.2% in the
second quarter of 2024 compared to 18.8% in the same period in the
prior year.
Cash flow from operating activities for the second quarter was
$7.4 million, compared to
$6.9 million in the same period in
the prior year.
Adjusted Free Cash Flow for the second quarter of 2024 was
$3.7 million, compared to
$1.9 million in the same period in
the prior year.
Liquidity and Capital Resources
As of June 30, 2024, the Company
had cash and cash equivalents of $25.8
million. We had $9.0 million
unused capacity on our revolving credit facility of $50.0 million as of June
30, 2024, the outstanding balance of which was subsequently
repaid in connection with the IPO. The total outstanding term notes
payable balance was $7.0 million as
of June 30, 2024.
Adjusted Net Income Calculation Methodology
In the second quarter of 2024, we revised the calculation of
Adjusted Net Income to include amortization expenses among the
add-back adjustments to our net income when calculating our
Adjusted Net Income. Our legacy calculation methodology reflected
the impact of intangible asset amortization as a reduction to our
Adjusted Net Income. The revised calculation methodology excluded
the effect of the intangible asset amortization when calculating
our Adjusted Net Income by reflecting it among the add-back
adjustments to our net income. We believe that the revised
calculation of Adjusted Net Income is more consistent with the
method and presentation used by most of our peers and will allow
management to better evaluate our performance relative to our peer
companies. We believe that the revised calculation more effectively
represents what our stakeholders consider useful in assessing our
performance.
Conference Call Information
TWFG will host a conference call and webcast tomorrow at
9:00 AM ET to discuss these
results.
To access the call by phone, participants should register at
this link, where they will be provided with the dial in details. A
live webcast of the conference call will also be available on
TWFG's investor relations website at investors.twfg.com.
A webcast replay of the call will be available at
investors.twfg.com for one year following the call.
About TWFG
TWFG (NASDAQ: TWFG) is a high-growth, independent distribution
platform for personal and commercial insurance in the United States and represents hundreds of
insurance carriers that underwrite personal lines and commercial
lines risks. For more information, please visit twfg.com.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995
that involve substantial risks and uncertainties. All statements,
other than statements of historical fact included in this report,
are forward-looking statements. Forward-looking statements give our
current expectations relating to our financial condition, results
of operations, plans, objectives, future performance, and business.
You can identify forward-looking statements by the fact that they
do not relate strictly to historical or current facts. In some
cases, you can identify these statements by forward-looking words
such as "may," "might," "will," "should," "expects," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential" or
"continue," the negative of these terms and other comparable
terminology. These forward-looking statements, which are subject to
risks, uncertainties and assumptions about us, may include
projections of our future financial performance, our anticipated
growth strategies and anticipated trends in our business. These
statements are only predictions based on our current expectations
and projections about future events. There are important factors
that could cause our actual results, level of activity, performance
or achievements to differ materially from the results, level of
activity, performance or achievements expressed or implied by the
forward-looking statements, including those factors discussed under
the captions entitled "Risk factors" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in
our prospectus (the "IPO Prospectus") relating to our Registration
Statement on Form S-1, as amended (Registration No. 333-280439),
filed with the U.S. Securities and Exchange Commission pursuant to
Rule 424(b) under the Securities Act of 1933, as amended. You
should specifically consider the numerous risks outlined under
"Risk factors" in the IPO Prospectus.
Although we believe the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, level of activity, performance or achievements.
Moreover, neither we nor any other person assumes responsibility
for the accuracy and completeness of any of these forward-looking
statements. We undertake no obligation to publicly update or revise
any forward-looking statement, whether as a result of new
information, future developments or otherwise, except as may be
required by law.
Non-GAAP Financial Measures and Key Performance
Indicators
Non-GAAP Financial Measures
Organic Revenue, Organic Revenue Growth, Adjusted Net Income,
Adjusted Net Income Margin, Adjusted EBITDA, Adjusted EBITDA Margin
and Adjusted Free Cash Flow included in this release are not
measures of financial performance in accordance with generally
accepted accounting principles in the
United States of America ("GAAP") and should not be
considered substitutes for GAAP measures, including revenues (for
Organic Revenue and Organic Revenue Growth), net income (for
Adjusted Net Income, Adjusted Net Income Margin, Adjusted EBITDA
and Adjusted EBITDA Margin), and cash flow from operating
activities (for Adjusted Free Cash Flow) which we consider to be
the most directly comparable GAAP measures. These non-GAAP
financial measures have limitations as analytical tools, and when
assessing our operating performance, you should not consider these
non-GAAP financial measures in isolation or as substitutes for
revenues, net income, operating cash flow or other consolidated
financial statement data prepared in accordance with GAAP. Other
companies may calculate any or all of these non-GAAP financial
measures differently than we do, limiting their usefulness as
comparative measures.
Organic Revenue. Organic Revenue is total revenue
(the most directly comparable GAAP measure) for the relevant
period, excluding contingent income, fee income, other income and
those revenues generated from acquired businesses with over
$0.5 million in annualized revenue
that have not reached the twelve-month owned mark.
Organic Revenue Growth. Organic Revenue Growth is
the change in Organic Revenue period-to-period, with prior period
results adjusted to include revenues that were excluded in the
prior period because the relevant acquired businesses had not
reached the twelve-month-owned mark but have reached the
twelve-month owned mark in the current period. We believe Organic
Revenue Growth is an appropriate measure of operating performance
because it eliminates the impact of acquisitions, which affects the
comparability of results from period to period.
Adjusted Net Income. Adjusted Net Income is a
supplemental measure of our performance and is defined as net
income (the most directly comparable GAAP measure) before
amortization, non-recurring or non-operating income and expenses,
including equity-based compensation, adjusted to assume a single
class of stock (Class A) and assuming noncontrolling interests do
not exist. We believe Adjusted Net Income is a useful measure
because it adjusts for the after-tax impact of significant
one-time, non-recurring items and eliminates the impact of any
transactions that do not directly affect what management considers
to be our ongoing operating performance in the period. These
adjustments generally eliminate the effects of certain items that
may vary from company to company for reasons unrelated to overall
operating performance.
We are subject to U.S. federal income taxes, in addition to
state, and local taxes, with respect to our allocable share of any
net taxable income of TWFG Holding Company, LLC. Adjusted Net
Income pre-IPO did not reflect adjustments for income taxes since
TWFG Holding Company, LLC is a limited liability company and is
classified as a partnership for U.S. federal income tax purposes.
Post-IPO, the calculation will incorporate the impact of federal
and state statutory tax rates on 100% of our adjusted pre-tax
income as if the Company owned 100% of TWFG Holding Company,
LLC.
Adjusted Net Income Margin. Adjusted Net Income
Margin is Adjusted Net Income divided by total revenues. We believe
that Adjusted Net Income Margin is a useful measurement of
operating profitability for the same reasons we find Adjusted Net
Income useful and also because it provides a period-to-period
comparison of our after-tax operating performance.
Adjusted EBITDA. Adjusted EBITDA is a supplemental
measure of our performance and is defined as EBITDA adjusted to
exclude equity-based compensation and other non-operating items,
including, certain nonrecurring or non-operating gains or losses.
EBITDA is defined as net income (the most directly comparable GAAP
measure) before interest, income taxes, depreciation and
amortization. We believe that Adjusted EBITDA is an appropriate
measure of operating performance because it adjusts for significant
one-time, non-recurring items and eliminates the ongoing accounting
effects of certain capital spending and acquisitions, such as
depreciation and amortization, that do not directly affect what
management considers to be our ongoing operating performance in the
period. These adjustments generally eliminate the effects of
certain items that may vary from company to company for reasons
unrelated to overall operating performance.
Adjusted EBITDA Margin. Adjusted EBITDA Margin is
Adjusted EBITDA divided by total revenue. We believe that Adjusted
EBITDA Margin is a useful measurement of operating profitability
for the same reasons we find Adjusted EBITDA useful and also
because it provides a period-to-period comparison of our operating
performance.
Adjusted Free Cash Flow. Adjusted Free Cash
Flow is a supplemental measure of our performance. We define
Adjusted Free Cash Flow as cash flow from operating activities (the
most directly comparable GAAP measure) less cash payments for tax
distributions, purchases of property, plant, and equipment and
acquisition-related costs. We believe Adjusted Free Cash Flow is a
useful measure of operating performance because it represents the
cash flow from the business that is within our discretion to direct
to activities including investments, debt repayment, and returning
capital to stockholders.
The reconciliation of the above non-GAAP measures to their most
comparable GAAP financial measure is outlined in the reconciliation
table accompanying this release.
Key Performance Indicators
Total Written Premium. Total Written Premium
represents, for any reported period, the total amount of current
premium (net of cancellation) placed with insurance carriers. We
utilize Total Written Premium as a key performance indicator when
planning, monitoring and evaluating our performance. We believe
Total Written Premium is a useful metric because it is the
underlying driver of the majority of our revenue.
Contacts
Investor Contact:
Jeff Arricale for TWFG
Email: jeff.arricale@twfg.com
PR Contact:
Alex Bunch for TWFG
Email: alex@twfg.com
|
Condensed
Consolidated Statements of Operations (Unaudited)
(Amounts in
thousands, except unit and per unit data)
|
|
|
Three Months
Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Revenues
|
|
|
|
|
|
|
|
|
Commission
income
|
$
48,662
|
|
$
41,771
|
|
$
91,207
|
|
$
78,458
|
|
Contingent
income
|
1,258
|
|
1,003
|
|
2,334
|
|
1,988
|
|
Fee income
|
2,689
|
|
2,208
|
|
4,921
|
|
4,236
|
|
Other
income
|
657
|
|
394
|
|
1,117
|
|
550
|
|
Total
revenues
|
53,266
|
|
45,376
|
|
99,579
|
|
85,232
|
|
Expenses
|
|
|
|
|
|
|
|
|
Commission
expense
|
31,962
|
|
30,896
|
|
58,405
|
|
58,392
|
|
Salaries and employee
benefits
|
6,816
|
|
3,370
|
|
13,070
|
|
6,706
|
|
Other administrative
expenses
|
3,744
|
|
2,736
|
|
6,874
|
|
5,231
|
|
Depreciation and
amortization
|
2,968
|
|
1,134
|
|
5,981
|
|
2,195
|
|
Total operating
expenses
|
45,490
|
|
38,136
|
|
84,330
|
|
72,524
|
|
Operating
income
|
7,776
|
|
7,240
|
|
15,249
|
|
12,708
|
|
Interest
expense
|
(872)
|
|
(173)
|
|
(1,714)
|
|
(258)
|
|
Other non-operating
income (expense), net
|
14
|
|
—
|
|
12
|
|
(11)
|
|
Net income from
continuing operations
|
6,918
|
|
7,067
|
|
13,547
|
|
12,439
|
|
Net income from
discontinued operation, net of tax
|
—
|
|
—
|
|
—
|
|
834
|
|
Net
income
|
$
6,918
|
|
$
7,067
|
|
$
13,547
|
|
$
13,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
units used in the computation of net income per
unit:
|
|
|
|
|
|
|
|
|
Basic
|
659,439
|
|
631,750
|
|
659,439
|
|
631,750
|
|
Diluted
|
659,439
|
|
631,750
|
|
659,439
|
|
631,750
|
|
Net income per
unit:
|
|
|
|
|
|
|
|
|
Net income from
continuing operations per unit - basic
|
$
10.49
|
|
$
11.19
|
|
$
20.54
|
|
$
19.69
|
|
Net income from
continuing operations per unit - diluted
|
$
10.49
|
|
$
11.19
|
|
$
20.54
|
|
$
19.69
|
|
|
|
|
|
|
|
|
|
Net income from
discontinued operation per unit - basic
|
$
—
|
|
$
—
|
|
$
—
|
|
$
1.32
|
|
Net income from
discontinued operation per unit - diluted
|
$
—
|
|
$
—
|
|
$
—
|
|
$
1.32
|
|
|
|
|
|
|
|
|
|
Net income per unit -
basic
|
$
10.49
|
|
$
11.19
|
|
$
20.54
|
|
$
21.01
|
|
Net income per unit -
diluted
|
$
10.49
|
|
$
11.19
|
|
$
20.54
|
|
$
21.01
|
|
|
|
|
|
|
|
|
|
The following table
presents the disaggregation of our revenues by offerings(in
thousands):
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Insurance
Services
|
|
|
|
|
|
|
|
|
Agency-in-a-Box
|
$
34,589
|
|
$
35,145
|
|
$
66,418
|
|
$
66,644
|
|
Corporate
Branches
|
9,351
|
|
1,568
|
|
16,627
|
|
2,504
|
|
Total Insurance
Services
|
43,940
|
|
36,713
|
|
83,045
|
|
69,148
|
|
TWFGMGA
|
8,884
|
|
7,953
|
|
15,723
|
|
14,879
|
|
Other
|
442
|
|
710
|
|
811
|
|
1,205
|
|
Total
revenues
|
$
53,266
|
|
$
45,376
|
|
$
99,579
|
|
$
85,232
|
|
|
|
|
|
|
|
|
|
|
The following table
presents the disaggregation of our commission income by
offerings(in thousands):
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Insurance
Services
|
|
|
|
|
|
|
|
|
Agency-in-a-Box
|
$
32,259
|
|
$
33,787
|
|
$
62,159
|
|
$
63,990
|
|
Corporate
Branches
|
9,412
|
|
1,566
|
|
16,662
|
|
2,485
|
|
Total Insurance
Services
|
41,671
|
|
35,353
|
|
78,821
|
|
66,475
|
|
TWFGMGA
|
6,991
|
|
6,418
|
|
12,386
|
|
11,983
|
|
Total commission
income
|
$
48,662
|
|
$
41,771
|
|
$
91,207
|
|
$
78,458
|
|
|
|
|
|
|
|
|
|
|
The following table
presents the disaggregation of our fee income by major
sources(in thousands):
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Policy fees
|
$
933
|
|
$
521
|
|
$
1,446
|
|
$
1,076
|
|
Branch fees
|
1,220
|
|
843
|
|
2,351
|
|
1,310
|
|
License fees
|
444
|
|
660
|
|
959
|
|
1,535
|
|
TPA fees
|
92
|
|
184
|
|
165
|
|
315
|
|
Total fee
income
|
$
2,689
|
|
$
2,208
|
|
$
4,921
|
|
$
4,236
|
|
|
|
|
|
|
|
|
|
|
The following table
presents the disaggregation of our commission expense by
offerings(in thousands):
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Insurance
Services
|
|
|
|
|
|
|
|
|
Agency-in-a-Box
|
$
25,529
|
|
$
26,744
|
|
$
47,557
|
|
$
50,576
|
|
Corporate
Branches
|
1,256
|
|
189
|
|
2,118
|
|
360
|
|
Total Insurance
Services
|
26,785
|
|
26,933
|
|
49,675
|
|
50,936
|
|
TWFGMGA
|
5,158
|
|
3,951
|
|
8,693
|
|
7,426
|
|
Other
|
19
|
|
12
|
|
37
|
|
30
|
|
Total commission
expense
|
$
31,962
|
|
$
30,896
|
|
$
58,405
|
|
$
58,392
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Financial Position
(Unaudited)
(Amounts in
thousands, except unit data)
|
|
|
June 30,
2024
|
|
December 31,
2023
|
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
$
25,755
|
|
$
39,297
|
|
Restricted
cash
|
10,758
|
|
7,171
|
|
Commissions
receivable, net
|
22,401
|
|
19,082
|
|
Accounts
receivable
|
9,608
|
|
5,982
|
|
Deferred offering
costs
|
5,917
|
|
2,025
|
|
Other current assets,
net
|
911
|
|
1,551
|
|
Total current
assets
|
75,350
|
|
75,108
|
|
Non-current
assets
|
|
|
|
|
Intangible assets -
net
|
77,794
|
|
36,436
|
|
Property and equipment
- net
|
514
|
|
597
|
|
Lease right-of-use
assets - net
|
2,760
|
|
2,459
|
|
Other non-current
assets
|
801
|
|
837
|
|
Total
assets
|
$
157,219
|
|
$
115,437
|
|
|
|
|
|
Liabilities and
Members' Equity
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Commissions
payable
|
$
15,301
|
|
$
12,487
|
|
Carrier
liabilities
|
15,190
|
|
8,731
|
|
Operating lease
liabilities, current
|
1,031
|
|
882
|
|
Short-term bank
debt
|
2,030
|
|
2,437
|
|
Deferred acquisition
payable, current
|
583
|
|
5,369
|
|
Other current
liabilities
|
6,913
|
|
5,006
|
|
Total current
liabilities
|
41,048
|
|
34,912
|
|
Non-current
liabilities
|
|
|
|
|
Operating lease
liabilities, net of current portion
|
1,639
|
|
1,518
|
|
Long-term bank
debt
|
45,970
|
|
46,919
|
|
Deferred acquisition
payable, non-current
|
1,050
|
|
1,037
|
|
Total
liabilities
|
89,707
|
|
84,386
|
|
Commitment and
contingencies (see Note 12)
|
|
|
|
|
Members'
equity
|
|
|
|
|
Class A common units
(27,689 units and 0 units issued and outstanding at June 30,
2024 and
December 31, 2023, respectively)
|
28
|
|
—
|
|
Class B common units
(110,750 units issued and outstanding at both June 30, 2024
and
December 31, 2023)
|
111
|
|
111
|
|
Class C common units
(521,000 units issued and outstanding at both June 30, 2024
and
December 31, 2023)
|
521
|
|
521
|
|
Additional paid-in
capital
|
55,132
|
|
25,114
|
|
Retained
earnings
|
11,253
|
|
4,805
|
|
Accumulated other
comprehensive income
|
467
|
|
500
|
|
Total members'
equity
|
67,512
|
|
31,051
|
|
Total liabilities and
members' equity
|
$
157,219
|
|
$
115,437
|
|
|
|
|
|
Non-GAAP Financial
Measures
A reconciliation of
Organic Revenue and Organic Revenue Growth Rate to Total Revenue
and Total Revenue Growth Rate, the most directly comparable GAAP
measures, is as follows:
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Total
revenues
|
$
53,266
|
|
$
45,376
|
|
$
99,579
|
|
$
85,232
|
|
Acquisition
adjustments(1)
|
(1,217)
|
|
(1,064)
|
|
(2,684)
|
|
(1,495)
|
|
Contingent
income
|
(1,258)
|
|
(1,003)
|
|
(2,334)
|
|
(1,988)
|
|
Fee income
|
(2,689)
|
|
(2,208)
|
|
(4,921)
|
|
(4,236)
|
|
Other
income
|
(657)
|
|
(394)
|
|
(1,117)
|
|
(550)
|
|
Organic
Revenue
|
$
47,445
|
|
$
40,707
|
|
$
88,523
|
|
$
76,963
|
|
Organic Revenue
Growth(2)
|
$
5,746
|
|
$
3,233
|
|
$
10,386
|
|
$
7,938
|
|
Total Revenue Growth
Rate(3)
|
17.4 %
|
|
8.7 %
|
|
16.8 %
|
|
12.0 %
|
|
Organic Revenue Growth
Rate(2)
|
13.8 %
|
|
8.6 %
|
|
13.3 %
|
|
11.5 %
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents revenues
generated from the acquired businesses during the first 12 months
following an acquisition.
|
|
(2)
|
Organic Revenue for the
three months ended June 30, 2023 and 2022, and for the six months
ended June 30, 2023 and 2022, used to calculate Organic Revenue
Growth for the three months ended June 30, 2024 and 2023, and for
the for the six months ended June 30, 2024 and 2023, was $41.7
million, $37.5 million, $78.1 million and $69.0 million,
respectively, which is adjusted to reflect revenues from acquired
businesses with over $0.5 million in annualized revenue that
reached the twelve-month owned mark during the year ended December
31, 2023 and 2022, respectively. Organic Revenue Growth represents
the period-to-period change in Organic Revenue divided by the total
adjusted Organic Revenue in the prior period.
|
|
(3)
|
Represents the
period-to-period change in total revenues divided by the total
revenues in the prior period.
|
|
A reconciliation of
Adjusted Net Income and Adjusted Net Income Margin to Net income
and Net income margin, the most directly comparable GAAP measures,
is as follows:
|
|
|
Revised
Calculation Methodology Applied to Current
Period
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Total
revenues
|
$
53,266
|
|
$
45,376
|
|
$
99,579
|
|
$
85,232
|
|
Net income
|
$
6,918
|
|
$
7,067
|
|
$
13,547
|
|
$
13,273
|
|
Acquisition-related
expenses
|
—
|
|
168
|
|
—
|
|
168
|
|
Restructuring and
related expenses
|
—
|
|
10
|
|
—
|
|
17
|
|
Discontinued operation
income
|
—
|
|
—
|
|
—
|
|
(834)
|
|
Other non-recurring
items(1)
|
—
|
|
—
|
|
(1,477)
|
|
—
|
|
Amortization
expense
|
2,904
|
|
1,070
|
|
5,851
|
|
2,065
|
|
Adjusted Net
Income
|
$
9,822
|
|
$
8,315
|
|
$
17,921
|
|
$
14,689
|
|
Net Income
Margin
|
13.0 %
|
|
15.6 %
|
|
13.6 %
|
|
15.6 %
|
|
Adjusted Net Income
Margin
|
18.4 %
|
|
18.3 %
|
|
18.0 %
|
|
17.2 %
|
|
|
|
|
|
|
|
|
|
Legacy
Calculation Methodology Applied to Current
Period
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Total
revenues
|
$
53,266
|
|
$
45,376
|
|
$
99,579
|
|
$
85,232
|
|
Net income
|
$
6,918
|
|
$
7,067
|
|
$
13,547
|
|
$
13,273
|
|
Acquisition-related
expenses
|
—
|
|
168
|
|
—
|
|
168
|
|
Restructuring and
related expenses
|
—
|
|
10
|
|
—
|
|
17
|
|
Discontinued operation
income
|
—
|
|
—
|
|
—
|
|
(834)
|
|
Other non-recurring
items(1)
|
—
|
|
—
|
|
(1,477)
|
|
—
|
|
Adjusted Net
Income
|
$
6,918
|
|
$
7,245
|
|
$
12,070
|
|
$
12,624
|
|
Net Income
Margin
|
13.0 %
|
|
15.6 %
|
|
13.6 %
|
|
15.6 %
|
|
Adjusted Net Income
Margin
|
13.0 %
|
|
16.0 %
|
|
12.1 %
|
|
14.8 %
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents a one-time
adjustment reducing commission expense, which resulted from the
branch conversions. In January 2024, nine of our Branches converted
to Corporate Branches. Upon conversion, agents of the newly
converted Corporate Branches became employees and received
salaries, employee benefits, and bonuses for services rendered
instead of commissions. As a result, we released a portion of the
unpaid commissions related to the converted branches that we no
longer are required to settle.
|
|
A reconciliation of
Adjusted EBITDA and Adjusted EBITDA Margin to Net income and Net
income margin, the most directly comparable GAAP measures, is as
follows:
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Total
revenues
|
$
53,266
|
|
$
45,376
|
|
$
99,579
|
|
$
85,232
|
|
Net income
|
$
6,918
|
|
$
7,067
|
|
$
13,547
|
|
$
13,273
|
|
Interest
expense
|
872
|
|
173
|
|
1,714
|
|
258
|
|
Depreciation and
amortization
|
2,968
|
|
1,134
|
|
5,981
|
|
2,195
|
|
EBITDA
|
10,758
|
|
8,374
|
|
21,242
|
|
15,726
|
|
Acquisition-related
expenses
|
—
|
|
168
|
|
—
|
|
168
|
|
Restructuring and
related expenses
|
—
|
|
10
|
|
—
|
|
17
|
|
Discontinued operation
income
|
—
|
|
—
|
|
—
|
|
(834)
|
|
Other non-recurring
items(1)
|
—
|
|
—
|
|
(1,477)
|
|
—
|
|
Adjusted
EBITDA
|
$
10,758
|
|
$
8,552
|
|
$
19,765
|
|
$
15,077
|
|
Net Income
Margin
|
13.0 %
|
|
15.6 %
|
|
13.6 %
|
|
15.6 %
|
|
Adjusted EBITDA
Margin
|
20.2 %
|
|
18.8 %
|
|
19.8 %
|
|
17.7 %
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents a one-time
adjustment reducing commission expense, which resulted from the
branch conversions. In January 2024, nine of our Branches converted
to Corporate Branches. Upon conversion, agents of the newly
converted Corporate Branches became employees and received
salaries, employee benefits, and bonuses for services rendered
instead of commissions. As a result, we released a portion of the
unpaid commissions related to the converted branches that we no
longer are required to settle.
|
|
A reconciliation of
Adjusted Free Cash Flow to Cash Flow from Operating Activities, the
most directly comparable GAAP measure, is as follows:
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Cash Flow from
Operating Activities
|
$
7,400
|
|
$
6,918
|
|
$
17,154
|
|
$
16,709
|
|
Purchase of property
and equipment
|
(39)
|
|
(30)
|
|
(47)
|
|
(54)
|
|
Tax distribution to
members(1)
|
(3,685)
|
|
(5,186)
|
|
(6,104)
|
|
(6,927)
|
|
Acquisition-related
expenses
|
—
|
|
168
|
|
—
|
|
168
|
|
Net cash flow provided
by operating activities from
discontinued operation
|
—
|
|
—
|
|
—
|
|
(839)
|
|
Adjusted Free Cash
Flow
|
$
3,676
|
|
$
1,870
|
|
$
11,003
|
|
$
9,057
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Tax distributions to
members represents the amount distributed to the members of TWFG
Holding Company, LLC in respect of their income tax liability
related to the net income of TWFG Holding Company, LLC allocated to
its members.
|
|
Key Performance
Indicators
The following presents
the disaggregation of Total Written Premium by offerings, business
mix and line of business (in thousands):
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Amount
|
|
% of
Total
|
|
Amount
|
|
% of
Total
|
|
Amount
|
|
% of
Total
|
|
Amount
|
|
% of
Total
|
|
Offerings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency-in-a-Box
|
$
256,203
|
|
65 %
|
|
$
263,436
|
|
80 %
|
|
$
475,139
|
|
66 %
|
|
$
476,818
|
|
80 %
|
|
Corporate
Branches
|
78,169
|
|
20
|
|
12,482
|
|
4
|
|
136,053
|
|
19
|
|
20,870
|
|
4
|
|
Total Insurance
Services
|
334,372
|
|
85
|
|
275,918
|
|
84
|
|
611,192
|
|
85
|
|
497,688
|
|
84
|
|
TWFGMGA
|
59,263
|
|
15
|
|
51,258
|
|
16
|
|
103,709
|
|
15
|
|
94,872
|
|
16
|
|
Total written
premium
|
$
393,635
|
|
100 %
|
|
$
327,176
|
|
100 %
|
|
$
714,901
|
|
100 %
|
|
$
592,560
|
|
100 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business
Mix:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renewal
business
|
$
260,121
|
|
66 %
|
|
$
214,964
|
|
66 %
|
|
$
474,598
|
|
66 %
|
|
$
381,515
|
|
64 %
|
|
New
business
|
74,251
|
|
19
|
|
60,954
|
|
19
|
|
136,594
|
|
19
|
|
116,173
|
|
20
|
|
Total Insurance
Services
|
334,372
|
|
85
|
|
275,918
|
|
85
|
|
611,192
|
|
85
|
|
497,688
|
|
84
|
|
TWFGMGA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renewal
business
|
43,825
|
|
11
|
|
43,672
|
|
13
|
|
79,289
|
|
11
|
|
79,734
|
|
13
|
|
New
business
|
15,438
|
|
4
|
|
7,586
|
|
2
|
|
24,420
|
|
4
|
|
15,138
|
|
3
|
|
Total TWFG
MGA
|
59,263
|
|
15
|
|
51,258
|
|
15
|
|
103,709
|
|
15
|
|
94,872
|
|
16
|
|
Total written
premium
|
$
393,635
|
|
100 %
|
|
$
327,176
|
|
100 %
|
|
$
714,901
|
|
100 %
|
|
$
592,560
|
|
100 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Written Premium
Retention:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
Services
|
|
|
94 %
|
|
|
|
96 %
|
|
|
|
95 %
|
|
|
|
95 %
|
|
TWFG MGA
|
|
|
85
|
|
|
|
87
|
|
|
|
84
|
|
|
|
90
|
|
Consolidated
|
|
|
93
|
|
|
|
94
|
|
|
|
93
|
|
|
|
94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Line of
Business:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal
lines
|
$
322,349
|
|
82 %
|
|
$
262,695
|
|
80 %
|
|
$
577,213
|
|
81 %
|
|
$
469,265
|
|
79 %
|
|
Commercial
lines
|
71,286
|
|
18
|
|
64,481
|
|
20
|
|
137,688
|
|
19
|
|
123,295
|
|
21
|
|
Total written
premium
|
$
393,635
|
|
100 %
|
|
$
327,176
|
|
100 %
|
|
$
714,901
|
|
100 %
|
|
$
592,560
|
|
100 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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SOURCE TWFG, Inc.