TWFG, Inc.(TWFG) - 2024 Q4 - Annual Report

Financial Performance - For the year ended December 31, 2024, the company generated revenue of $203.8 million, representing year-over-year growth of 18.4%[27] - Adjusted EBITDA for the year ended December 31, 2024, was$ 45.3 million, with an Adjusted Net Income of $33.0 million[27] - The compound annual growth rate (CAGR) in Total Written Premium and total revenue from January 1, 2019, through December 31, 2024, was 19.2%[27] - Organic Revenue Growth was 14.5% year-over-year, driven by the success in attracting productive agents and retaining renewal business[27] - The company has successfully exceeded$ 1 billion in Total Written Premium for each of the last three years[30] Market Position and Operations - The company's Total Written Premium in the United States was approximately $968.7 billion as of 2023, making it the eighth largest personal lines agency and the 27th largest agency across all lines of business[26] - The company operates over 500 Branches and more than 2,100 MGA Agencies across 42 states, enhancing its distribution capabilities[30] - The company has a significant geographic presence, with 52.5% of Total Written Premiums concentrated in Texas, 16.2% in California, and 13.9% in Louisiana[55] - The company operates through two primary offerings: Insurance Services (82% of 2024 Revenue) and TWFG MGA (17% of 2024 Revenue)[43][53] M&A Strategy - The company aims to be a preferred partner for M&A targets in a fragmented industry with approximately 39,000 independent agencies and brokerages as of 2024[76] - The company’s M&A strategy focuses on acquiring high-quality targets that enhance capabilities and can be integrated into its ecosystem[76] - The company offers upfront payment structures in its M&A deals, providing sellers with certainty while limiting contingent liabilities[77] - The company enables its branches to expand their books of business through M&A support, allowing them to acquire smaller agencies and enhance service offerings[75] Growth and Development - The company supports organic growth for its branches by providing training, centralized resources, and automated marketing tools to maintain and grow client relationships[74] - The distribution platform is designed to support TWFG Agencies with resources, technology, and training, enhancing their ability to grow and serve clients[31] - The company aims to attract experienced agents to its platform, enhancing growth and expertise while facilitating succession planning[71] - The company is strategically expanding its product portfolio through specialty distribution channels, enhancing its offerings beyond personal lines products[73] Financial Position and Cash Management - As of December 31, 2024, the company had$ 195.8 million in cash and cash equivalents, earning interest income of $4.8 million for the year[475] - The company had approximately$ 5.9 million under its Term Loan Credit Agreement as of December 31, 2024, with previous borrowings of $8.4 million and$ 41.0 million under the Term Loan Credit Agreement and Revolving Facility, respectively, as of December 31, 2023[476] - The company repaid the outstanding balances of its Term Loan B and Revolving Facility in full as of December 31, 2024[476] - The fair values of cash and cash equivalents as of December 31, 2024 and 2023 approximated their respective carrying values due to their short-term duration, indicating minimal market risk[474] Regulatory and Compliance - The company qualifies as an "emerging growth company" under the JOBS Act, allowing it to take advantage of specified exemptions from certain regulatory requirements[102] - The company is classified as an emerging growth company and has elected to use the extended transition period for complying with new or revised accounting standards[104] - The company may cease to be an emerging growth company upon reaching $1.235 billion in annual revenue or issuing more than$ 1.0 billion of non-convertible debt over a three-year period[103] Employee and Management - As of December 31, 2024, the company employed approximately 293 people in the U.S. and 68 in the Philippines, with no union representation[95] - The company’s management team has an average of over 25 years of insurance industry experience, supporting its growth strategy[70] Industry Insights - Insurance premium pricing within the P&C insurance industry is cyclical, influenced by underwriting capacity and economic conditions, with terms "soft market" and "hard market" used to describe these cycles[473] - The company has experienced industry premium growth of 14.3% in personal lines and 7.2% in commercial lines in 2023[41] IPO and Market Activity - The company 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[98] - The SEC maintains an internet site that contains reports and information regarding issuers that file electronically, which can be accessed for further details[106]