TWFG, Inc. Common Stock (TWFG) Earnings

Management highlights

### Overall Financial Performance - Q2 2026 delivered stronger-than-expected results, with 45.1% total revenue growth, 37% organic revenue growth, and 75.8% adjusted EBITDA growth. Consolidated written premium retention reached 93% (up from 89% YoY), the highest retention rate in company history. - The MGA Florida Citizens takeout program provided a near-term margin benefit, as assumed policies generate commission income without corresponding sub-producer commission expense during runoff; this margin benefit will normalize as policies renew with standard commission structures. ### Strategic Execution - Completed the acquisition of Fortress Insurance Services (a well-established Iowa-based agency) on May 1, 2026, which complements prior Midwest expansion. This acquisition meets the company's 2026 M&A target, so near-term focus is now on integrating first-half 2026 acquisitions. - The $50 million authorized share repurchase program is nearly complete, with ~$42.9 million repurchased at an average price of $19 per share, retiring ~15% of pre-program Class A shares. The Board will evaluate future reauthorization based on M&A pipeline, cash generation, valuation, and alternative capital uses. - The company continues to invest in AI-enabled technology capabilities to improve agent productivity, leveraging its proprietary in-house technology stack and 25 years of proprietary underwriting data. - Investor Day is scheduled for November 12, 2026, where the company will share its medium-term financial framework, MGA platform strategy, geographic expansion plans, and technology roadmap. ### Market Environment - Personal auto insurance rates have moderated, with mid-single-digit declines in some subsegments; homeowners rates are broadly flat, with regional pressure in catastrophe-exposed areas. - Carrier appetite for high-quality independent agent business remains strong, and growth-focused carriers continue to offer competitive new business incentives, supporting share gains for diversified platforms across both soft and hard market cycles. ### Balance Sheet & Capital Position - The balance sheet remains strong, with $142.7 million in total liquidity as of June 30, 2026, including $73.7 million in unrestricted cash, full unused capacity on the $50 million revolving credit facility, and only $3 million in outstanding term debt. First-half 2026 operating cash flow grew 29% YoY to $32.5 million.

Guidance

Management raised 2026 full-year guidance based on strong first-half 2026 performance, with all key metrics revised upward: - Total revenue guidance raised to $300 million - $320 million, from the prior $285 million - $300 million - Organic revenue growth guidance raised to 13% - 17%, from the prior 10% - 15% - Adjusted EBITDA margin guidance raised to 23% - 27%, from the prior 22% - 25% - Base guidance does not include potential additional M&A transactions in the second half of 2026, so any completed transactions would represent upside to the current guidance - There is potential upside to revenue and margins from contingent income, which management will update after the third quarter once carrier profit-sharing agreements are finalized

Segment performance

Total company revenue grew 45.1% YoY to $87.5 million, with adjusted EBITDA growing 75.8% to $26.6 million (adjusted EBITDA margin expanded 530 basis points to 30.4%). Total written premium grew 26.6% YoY to $569.9 million. 1. Insurance Services: Written premium grew 12.8% YoY to $436.9 million, driven by 15.9% renewal premium growth. This segment represents approximately 65% of total revenue, down from 85% YoY. 2. MGA Channel: Written premium grew 114.8% YoY to $133 million, driven by the ramp of Florida voluntary homeowners programs, the acquired APIA business, and ongoing Citizens takeout portfolio renewals. Commission income for the MGA channel grew 290% YoY to $27.3 million, now representing 35% of total company revenue, up from 15% YoY. The MGA channel has a structurally higher margin profile than Insurance Services.

Risks & headwinds

- The MGA Florida Citizens takeout program will create quarterly organic growth volatility due to mismatched timing of earned premium runoff and policy renewal, with a particularly large expected headwind in Q4 2026 leading to flattish organic growth that quarter - In the current softening rate environment, there is uncertainty around carrier loss ratios, which could negatively impact future contingent income - Soft market conditions have led to underwriting guideline loosening and increased price competition, which could pressure profitability over time - Future share repurchase activity depends on multiple variable factors, including M&A opportunities and valuation, so there is no guarantee of additional buyback authorization

Analyst Q&A

• Q: Is it reasonable to model no additional acquisitions or continued share buybacks in H2 2026, given the company's strong cash position and unused liquidity?

  A: TWFG has an active M&A pipeline, but base guidance only includes pre-agreed acquisition activity, and any additional H2 2026 transactions are not included in current guidance. This means additional M&A would be upside to the current outlook, not a base expectation. The $50 million share repurchase program is nearly complete, and the Board will evaluate future reauthorization alongside other capital priorities like M&A.

• Q: How large are the Florida MGA organic growth tailwinds in H1 2026, and will they create significant tough comparable headwinds that push organic growth near zero in H1 2027?

  A: The primary timing impact of Florida takeout policy runoff creates a headwind in Q4 2026, not H1 2027, because the mismatched earned premium and renewal timing impacts 2025 and 2026 periods. Excluding Florida takeout noise, core organic growth remains in the high teens in Q2 2026, and only minimal takeout-related skew is expected for 2027 full-year results, as the bulk of the timing adjustment has already occurred. The growth of the separate voluntary Florida MGA program also offsets any residual renewal headwinds.

• Q: Are transformative large acquisitions back on the table after TWFG's share price recovery, following prior market volatility that paused these discussions?

  A: TWFG maintains an active M&A pipeline, and with the recent share price recovery, previously discussed transformative opportunities are now being revisited. None of these potential transactions are included in current 2026 guidance, so any completion would represent upside to the current outlook, and TWFG now has the balance sheet capacity to entertain these transactions again.

• Q: Have carriers started renegotiating commission rates more favorably to win share in the current soft market, as competitors have reported, and how does this impact TWFG's growth trajectory?

  A: Carriers are offering more short-term new business incentives, quarterly bonuses, and favorable profit-sharing terms to compete for growth in the soft market. These are mostly near-term incentives that will disappear in the next hard market. TWFG prioritizes long-term relationships with core carriers that supported it through hard markets, and does not generally participate in one-time book roll incentives; it will share feedback with carriers if their compensation becomes uncompetitive relative to the market.