Yep. We'll kick off the next session. Thanks for joining. We've got the Woodlands Group presenting. Sorry. In case you don't know me, Adam Klauber, I run our insurance practice here. For compliance disclosure, please see our website. Woodlands Group, which I've known for a good couple of years now, really great franchise. It is one of the ones leading the way on a new version of what I'll call personal lines or consumer insurance products. That business has been around for a long time, I won't say forever, but decades and decades. The way consumers buy and use insurance products is getting easier because of organizations like the Woodlands Group. I won't name names, but some of the old, what I'll call almost monolithic structures that have been around for decades and decades are actually, I think, beginning to cave a little quicker than I would have expected. It needs to be. It just has never been a very consumer-friendly business. Bad experiences, not always the greatest outcome. I will let Gordy, CEO and Founder, tell you about The Woodlands Group. Thank you, Adam, and thank you all for choosing to spend time with us this morning. I know you had other options. Insurance is usually the lowest man on the totem pole for interest. Definitely appreciate you being in the room. I'm going to try to be more conversational, less presentation. Give you a little background on me. I came directly out of the U.S. Coast Guard into insurance by accident. My resume went to the wrong PO box, and I was offered a job as an insurance sales agent at a company called Texas Farm Bureau. Anybody familiar with the Farm Bureau program? A highly agriculturally-focused, membership-driven, mutual-type operation. Insurance wasn't on my top list of things to do, but it offered me unlimited income, which was different than coming out of a government role where everybody got paid the same. I was attracted to the opportunity that insurance offered. I did very well with Farm Bureau, moved on to a company called American National, owned by the Moody family, and built out a territory and a region for them. Things started changing. This is the mid-1990s. Insurance had largely, to Adam's point, been distributed on personal lines through captive companies. Think State Farm, Allstate, Farmers, and then there were a few other captive distribution companies out there. Underwriting was really done in the field by agents. My first year in insurance, I was the home inspector, the insurance sales rep, the underwriter. We did basically everything. Over time, as technology came into the platforms, things started to shift. In the mid-1990s, credit underwriting was introduced, and that started to create a dislocation for these captive channels on who they can sell insurance to. Imagine you're a prospective customer of any of these captive companies that only offer one carrier, one product, and your sales agent tells you, "I can write your home, but I can't write your auto because your credit score is too high." Probably not a company you want to do business with. That started to become pervasive. As credit underwriting was being introduced, there was a dislocation in what we could actually sell to the broader consumers. I moved on, went over to Prudential, another large captive distribution company, and the introduction of probable maximum loss aggregate management for property started to hit the sales force. Now we had two issues with sales distribution. We had to get through credit underwriting, now we had to get through, did they already have too many insurance customers that had property in this zip code, this county, or this state? We would actually run out of product. If you've ever been in sales, how many times have you ever run out of product you could sell? That's not something that naturally occurs in most sales organizations, but it is exactly what was occurring in captive insurance distribution in the late 1990s. I saw this as an opportunity to jump out and create a different way to distribute insurance. Created TWFG, The Woodlands Financial Group, back in early late 2000. Launched our independent captive business model. In which case, we could actually develop a sales channel that accesses a broader insurance marketplace so that our customers, whether they had a credit score challenge or a carrier had a capacity challenge, we had a broader market to offer our customers. Instead of telling somebody, "No, I can't help you," we always had a yes. This, to me, seemed to make a lot of sense 25 years ago. We've spent all the last 2.5 decades helping captive agents exit what I think is a dying business model and enter into the independent agent distribution. There's a speed to market by joining our organization with the infrastructure that we bring to bear. We call that an agency in a box. I'll get into more depth on the structure of these business models. High level, just wanted to give you a background on why did I start this company. I saw a dysfunctional sales opportunity and said there's a better way to solve for that. Today, we are the eighth-largest personal lines insurance agency in the country. When you include all lines of business, we're number 26. Started everything from scratch. Initially capitalized with $10,000 of my own money that I had saved after four years of Coast Guard service. Fortunately, never had to spend the $10,000. We built this entire organization off of free cash flow. Very focused on operations and efficiency. We have 550 retail locations across 34 states. When we talk about retail, that means they are branded TWFG Insurance. They only sell products through our contracts and through our organization, and they're essentially a captive independent agent. We also serve a broader marketplace through our MGA. Our MGA wholesale and brokers to other independent agencies, products that they don't have access to on a direct basis or programs that we created in order to serve a marketplace that had capacity constraints. All in, approaching $2 billion in annual sales. High-growth organization, double-digit organic since inception. We did turn in our first quarter earnings a few weeks ago. That was a double-digit quarter for us as well, and looking to sustain that on a forward trajectory. A breakdown of the model shift. This is a chart highlighting the last decade of where customers have been procuring insurance. If you look back and you look at market share. Next slide. Yeah. Oh, I'm Yeah. Oh, I'm Yeah. Oh, I'm sorry. I'm way behind. There you go. There we go. Wow. Really cool slide I just covered. All right. This is the market shift. This is tracking 2015 to 2025 market share shift. You can see going back to 2015, 37% of homeowners were insured through captive agents, and today that's 31%. The captive agent share has shrunk. You can see that the independent agency's market share has grown. If you look at auto, private passenger auto, same story. Market share has shifted from captive agencies into direct-to-consumer and/or to independent agencies. We've heard a lot about disruption to the different sales channels. What you're seeing is the independent channel is a net beneficiary. What I wish I had is a slide to go back to when I founded this company. If I had a slide going back to 2000, captive agents would have been well over 50% market share of personal lines insurance, and independents would have been a much smaller portion. I've been leading this company to where the market is shifting for 25 years. We are probably one of the first organizations to see this opportunity, and we do think that if I look at a five, 10-year outlook, I see the industry shifting to dual channel. You will have direct writing carriers, and they will also have an independent distribution channel, and we want to be an outsized winner in the independent distribution space. Why do we need to exist to help captive agents and other smaller independent agents scale? If you go out and you become your own independent agent, you have to source carrier contracts. Just because you have an insurance license doesn't grant you binding authority with every carrier that has a product in your state. You have to have an actual agreement with that market, and most of those agreements require some volume commitment for you to sustain that relationship. We bridge that gap. Our total collective volume really makes it easy for carriers, for us to add additional agencies too. Since we already produce a lot of volume for them, they're able to access more markets than they otherwise would. Commissions are scaled based on volume and performance. Given our size, we tend to be at the highest end of the commission spectrum. Even though we're in a revenue share business model, our agents are able to yield more commission dollars working through us than they can directly on their own. All the things that it takes to operate an insurance agency are time-consuming and not necessarily revenue-generating. One of our core functions in our business is to take the non-revenue-generating work out of the field offices and centralize that. We create efficiencies for them by processing carrier contracts, commissions, agency bill accounting, things that would take their eye off of adding additional customers and serving their existing customers. Our industry has a perpetuation problem. There's 39,000 independent agencies today, and I would say less than 1,000 of them have a perpetuation plan. We built in perpetuation into our agreements so that we have rights of first refusal on all the portfolios that are being developed. The addressable market is nearing $1 trillion between personal lines and commercial lines. We do write all lines of business, so personal, commercial, life, health, and annuities. We think the addressable market is there for us to get more market share over the forward periods. At $2 billion, we're really just scratching the surface of what's available to us. This dives in a little bit deeper into our agency-in-a-box model. The things that you need to be efficient. Think about trying to quote multiple carriers. You need to have comparative rating engines that allow you to quote in a single sign-on entry format. We've bridged that technology gap, tying in the independent agency markets and the independent agency carriers into a singular platform. This allows our agents to enter the information one time and get back quotes from multiple markets, making it easier to prove to our customers that we have the ability to shop their insurance for them. There's no need for them to go anywhere else. We also have integrations with the carriers to get the documents and servicing abilities within our agency management software. That agency management software company is proprietary. We own that. We started that company over 20+ years ago to make sure that we had the tools internally to pivot as technology changes over time. It's also a huge efficiency and economy of scale play for us. We're able to control the per-user cost of technology versus having to rely on third-party technologies. Marketing, CRM, all fully integrated. We bring to the table trainers, account executives, sales training professionals to help our agencies grow and develop. We offer training to our principals as well as their staff. We have incentives. There were some things positive of the captive distribution models. It created a peer group, everybody flying the same flag. They had contests and conventions. We have replicated those positive aspects within our organization. Next week, I'll be hosting 600 of my closest friends and family from TWFG to our annual convention. They'll come in, they build on their relationships with each other, but we also have 89 of our carriers in attendance, where our agents and our carriers can collaborate on how they work together going forward. We do that on an annual basis to keep everything fresh and to actually build that peer group performance. We do have client websites. Think about GEICO, and they have the app on that. Anybody remember the GEICO commercial with the little piggy? All right. I watch too much TV. It really irritated me. There was a commercial, and a pig's driving a car, and he gets pulled over, and he pulls out his phone and shows his ID card to the cop on his phone. That was one of GEICO's pushes is, "Look how easy we make insurance." From that commercial, I went out and we built our own customer application. Our TWFG clients have the same technology access to their insurance as they would with a direct-to-consumer writer like Progressive and GEICO. In our case, it doesn't matter who the carrier is because we're carrying that information forward for them. Small thing, but we are one of the first companies to actually introduce DTC-like services to independent agent customers. Breaking into how our MGA works. Our MGA brings markets to agencies where either they don't have the scale to access that market, or it's an MGA-only type carrier. For high-value homes, Chubb, AIG, Private Client Group, they typically don't work with small independent agencies, but they do want to get some of that flow of business. They will contract an MGA like us to access that broader distribution channel, and then we act as their third-party underwriting team to flow business up to them. We also create our own programs. I mentioned a while ago that property became a little more fragmented once probable maximum loss aggregate exposure management tools came out. We create our own proprietary homeowners programs in Texas and Florida, and then we also support the creation of ancillary property programs for third-party carriers in 10 states, where if it's not going to hit their underwriting box and they need to have some place to flow that, we've built alternative capacity for that distribution channel. Our MGA, we pay commissions to our agents, and they access us on an admitted and non-admitted basis. How does our product break down? Can I stop you? Sure. What's the different economics to you for the MGA business versus the core agency business? Economically, we pass through 80% of our commissions, new and renewal, to our retail exclusive partners. That seems like a lot, but they actually bear all the brick-and-mortar expense of their locations, their service staff, and their team. They retain the profitability off their 80% of the revenue. We retain the profitability off our retained 20%. Our incentives and bonuses for the retail side is retained by the company. Our ability to drive profitability to these carriers enrich our economics by those bonus plans. We make a little bit less money on our captive exclusive model, but we get 100% of their effort. Everything they do flows through our contracts. Roughly, what's your margin on that business? On a net of the 80%, it is over 50%. Right. That's pretty healthy margins for us on the revenue we retain. On the MGA side, we have higher economics on a gross basis. We get paid a higher commission for acting as an underwriter claims TPA. We pass through a smaller percentage of the commission to the independent agents in that environment. The MGA also benefits from policy fee income. Since we are doing third-party underwriting, there are additional revenue streams available to an MGA that are not available to a retailer. The margins there are going to be healthier and less dependent on contingent and bonus revenues. The slide I have up is mix of business. This is through the first quarter. Very balanced on personal lines. If you look at the insurance services in the middle, we have an equal amount of home and auto, which gets to the bundling question. We are able to bundle our customers to auto and home regardless of it being the same carrier. We have the flexibility of choosing what's best for our insured. Commercial Lines is now 22% of the volume in that division, other specialty lines makes up the balance. If you look at the MGA on the far right, homeowners is an outsized line. That's where we're doing our programs. We launched a program in Florida last year. We have a program in Texas that's been live since 2004, we have the programs in 10 states for that other carrier that we're distributing for. That's a cat-exposed property program concentration. The mix shift for the MGA will change over time. We recently acquired a commercial MGA in the second quarter that we announced, APIA, that will bring a real estate investment commercial platform to our ownership group. You will see commercial start to slide upward as total mix. This is more of the economic model of how cash flows through the different businesses. I think this goes to Adam's question, how do we make money? We collect all the commissions at the top. We pay our agents. That way, we have the ability to offset any owed monies or liabilities they create. We have the rights of first refusal on our retail portfolios. That give us another opportunity to tuck in existing operating stores and do corporate locations. We do have a higher margin on our corporate-owned business. That's where we're operating the agency with employees, because we retain 100% of the economics. That margin profile is going to be in the 30%-40% range on that business. On the MGA side, it's going to shift slightly depending on how much business is going through programs versus wholesale brokerage. If it's a program, we have the best economics. We get a much higher commission, and we have many more revenue streams. Consistent. We've been growing since inception. We've been growing through hard markets and soft markets alike. From a revenue and written premium standpoint, our business is solid. This is a recap of really the first quarter. We had total revenue of 35% growth. We had an EBITDA margin of 29%. Really fantastic results for the first quarter. We are achieving some better than average EBITDA margins in our MGA right now due to some takeout business that we received from the Florida Citizens Program. That gives us commission income without some commission expenses. We can hit up more on that in Q&A. EBITDA growth, margin expansion, kind of been the story. We really look to grow the business 15%-20% year-over-year as a long-term sustainable growth. I know this is a growth conference. Hopefully, that's right in the sweet spot for most of you looking to invest in growth-oriented companies. We have a 25-year track record of achieving those results. Organic has dipped, our dip is still to the double digits. We are 2x-3x the industry average on organic, depending on whether it's a hard or soft market. We do see opportunities here to add exposures in the softening market. As prices come down, as carriers open up for more underwriting and additional customers, we're able to add more exposure that offsets usually the rate headwind. We're in a transitioning period right now where we're going from a hard market to a soft market, and currently both personal and commercial are softening. Our offset to that is new business and new distribution add, plus program expansion of our own. All right. This is more of an M&A slide. There's a lot of opportunity for us to do consolidations and roll-ups. It's not our core driver for growth. Our core driver for growth has been organic, although we will look to supplement our growth with inorganic acquisitions. When we look at acquisitions, we're looking for things that are culturally aligned, create a organic or EBITDA expansion, and has to be accretive to our shareholders. It's a very disciplined strategy on our acquisition. This chart is just showing that there's an accelerated volume of opportunities over the next five years. Principals looking to exit as they are at or above retirement age. This is a recap of what I just said, I won't restate it. I'm long. I believe in our business model. I believe in our industry. I think the opportunities we have in front of us are greater than those we had behind us. I saw a pattern 20+ years ago that distribution was going to consolidate down into two channels. I believe I picked the winning channel. It is the one that has demonstrated the most growth in market share by all lines of business, and I do believe it's got the tailwinds of the market coming our direction. For those of you that don't know, GEICO used to have direct-to-consumer only. They came to us a few years ago and asked us to help them create an independent agency channel, which we have done, and they have launched into the independent channel space. Berkshire Hathaway, ultimate owner of GEICO, has more money than most countries. If they're leaning in on independent distribution, that tells you that that's a long-term opportunity and a direction where customers are going. When you look at the differentiation between direct-to-consumer and independent agent distribution, independent agent distribution is dealing with clientele that have much more complex insurance needs. They tend to be business owners, homeowners, people that have a need for umbrella and consultation and advice. Direct-to-consumer does very well with less complex insurance sales. Think lower limits of liability, auto only, maybe only rent an apartment. What each of the direct-to-consumer dominant carriers have learned, Progressive and GEICO being the two dominant. If you're not familiar, Progressive is now the largest auto carrier in the country. They are all leaning into the independent channel because they see their own customers wanting to exit the direct channel when they have a claim issue, when they have a underwriting concern, or their life gets more complex, and they need more advice than a call center can handle. I do think that we're long in the industry as far as a viable distribution. We have a great business built over 25 years, intentionally built to do what we're doing. We have been through 25 years of what I would say, I wouldn't say hell, but this is just a snapshot of all the different crises and calamities that we've grown through. That growth curve is actual. Think of the financial crises, the wildfires, the hurricanes, the floods, the derechos, the tornadoes. We've grown through it all. At each inflection point of change, we've adapted and innovated our way into fostering a continuation of our growth trajectory. This is my favorite slide because it reminds me of all the things we've been through, and all the things to come are less challenging than all the things we've already overcome. With that, I believe we can open up for some questions. Great. Any questions from the audience? I'll kick off with one or two. State Farm, I'll call it a bit of an about-face, has always been very paternal with their captive agents, and more recently, it seems like they're making some changes that look a little less paternal. Is that creating more opportunities for you? Are State Farm agents the right fit for TWFG? Not just today, but this is going to be a multi-year trend, obviously. Yeah. I don't know if the audience is familiar with what Adam's commenting on, but there's some contractual changes that are occurring. It's not just State Farm. Farmers. Right. Allstate have done similar activities. What's occurring is you're seeing the captive channel reduce economics to their agents. Again, it's not isolated to one captive carrier, it's basically all of them. That actually does increase the value of our proposition. Somebody who's currently working in one of these other organizations, their commission rate might be 8% or 6% of the premium derived. Our agents average 10%-12%. The economics of our business opportunity, that's after our revenue share. They can make more money with us than perhaps where they're at. We don't obviously spend the billions of dollars on advertising that you see every Saturday and Sunday at every sporting event that some of the large captives can do. They do get brand leverage, right? Our agents have to build their books because everybody coming from a captive environment has a non-compete clause. Yep. When we show you the growth charts and we show you what we've accomplished, that's largely from zero. Every agent that starts with us comes over and starts with no book, has to build client by client, retain that customer, add a new customer. It's a little bit different. With State Farm, most of those agents came from an aspirational program where they started off in claims or underwriting and then were assigned to an existing book of business. It's a little bit too early for me to tell, is that the same type of agent as one who grinded out and built something from zero? They were good at managing a portfolio that already existed and growing a portfolio that existed, but I don't know how many of them want to start all the way over and say, "Okay, now I got to go build it from scratch. Right. We do have a couple prior State Farm agents that have done well with us. It's never really been a targeted company. because they've been the gold standard. The changes that they're implementing don't take effect until January of 2027, and then more impactfully, January 2028. I'd say too early to tell. Right. If there's a mass exodus from any of the captive operations that are out there, we are a natural landing spot where we built a business intentionally there to capture that transition, that migration of talent. That's what we were built for. Okay. Thank you. If there are no more questions, two. Go ahead. Just looking at at least one of your notes saying that AI could be sort of a potential disintermediation of the model that you along with a lot of companies out there today, by the way. Could you give any comments on that? I think that's been the biggest topic in the first quarter was AI and disintermediation. AI itself isn't going to disintermediate any of us. AI is going to be introduced into the direct-to-consumer channel and how they currently sell direct to customers. In the independent channel, AI will be adopted to create efficiencies and help us scale and replace the talent that inevitably is going to retire. We could also introduce that into a sales channel. If you look at it, AI in itself, back to why does an agent need to join a company like ours? AI doesn't have appointments to 800 insurance carriers in 50 jurisdictions. There's licensing requirements. The ability to actually distribute insurance is much more complex than just standing up a tool. You will see carriers utilize AI in their direct sales channels faster than you'll see a new distribution organization stand up. The economics actually don't really work well for direct sales for agencies. When you look at the amount of money GEICO spends, $1 billion in advertising, there's not enough revenue at the retail level to justify that kind of spend. The acquisition cost for a direct consumer is higher than the commission cost or the commission we receive. That's why you really only see DTC in a carrier-type model. We, as a program manager, have DTC technology already. I can already go there. As we've tested it out, the customers don't retain as long, the quality of the customer is less, and again, it's a less complex sell. We don't see that as an issue. We see it as something we're going to adopt, we're going to lean into, refresh all of our APIs into agentic tools, and then capture those efficiencies within our business, and provide those tools to our sales force so they can be more efficient and do more with less. Well, thank you. Yep.