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DEBT | 9 Months Ended
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Sep. 30, 2024
Debt Disclosure [Abstract] |
DEBT | DEBT The following is a summary of the Company’s outstanding debt (in thousands):
| September 30, 2024 |  | December 31, 2023
Term Loans |  |  |
5-year term loan, periodic interest and monthly principal payments, Daily Simple SOFR + 0.11448% SOFR adjustment, matures July 30, 2024 | $ | — |  |  | $ | 584 |
7-year term loan, periodic interest and monthly principal payments, Daily Simple SOFR + 0.11448% SOFR adjustment, matures December 6, 2027 | 6,387 |  |  | 7,772 |
Total term loans | 6,387 |  |  | 8,356 |
Revolving Facility |  |  |
5-year revolving credit facility, periodic interest payments, Term SOFR + 0.10% SOFR adjustment + 2% up to 2.75% applicable margin based on the consolidated leverage ratio, plus commitment fees of 0.20% up to 0.35% based on the consolidated leverage ratio, matures May 23, 2028 | — |  |  | 41,000 |
Deferred acquisition payable | 1,430 |  |  | 1,381 |
Total debt | 7,817 |  |  | 50,737 |
Current maturities | (2,403) |  |  | (2,781) |
Long-term debt | $ | 5,414 |  |  | $ | 47,956 |
Future maturities of the Company’s outstanding debt as of September 30, 2024, were as follows (in thousands):
Remainder of 2024 | $ | 596 |
2025 | 2,417 |
2026 | 2,474 |
2027 | 2,207 |
2028 | 63 |
Thereafter | 60 |
Total | $ | 7,817 |
For the three and nine months ended September 30, 2024, the Company incurred interest expense of $0.4 million and $2.1 million, respectively. For the three and nine months ended September 30, 2023, the Company incurred interest expense of $0.3 million and $0.6 million, respectively. Term Loans The 5-year term loan was entered into on July 30, 2019, with the original principal of $4.0 million, which was fully repaid by its maturity on July 30, 2024, while the 7-year term loan was entered into on December 4, 2020, with the original principal of $13.0 million. The Company entered into interest rate swap agreements to manage its exposure to interest rate fluctuations related to its term loans. See Note 6 for more information relating to the interest rate swaps associated with these loans. Revolving Credit Agreement On May 23, 2023, the Company entered into a Revolving Credit Agreement (the “Revolving Credit Agreement”) with PNC Bank National Association (“Lender”) which provides a revolving credit facility to the Company, with commitments in an aggregate principal amount not to exceed $50.0 million (as amended on June 20, 2024, the “Revolving Facility”). The borrowings under the Revolving Facility will be used by the Company for permitted acquisitions, working capital and general corporate purposes. The Company pays a commitment fee on undrawn amounts under the Revolving Facility of 0.20% to up to 0.35% based on the consolidated leverage ratio. On August 5, 2024, the Company repaid the outstanding balance of its Revolving Facility amounting to $41.0 million using a portion of the net proceeds from the IPO (see Note 1). As of September 30, 2024 and December 31, 2023, the unused capacity under the Revolving Facility was $50.0 million and $9.0 million, respectively. Borrowings under the term loans and the Revolving Facility are secured by substantially all assets constituting personal property of TWFG, Inc. and its subsidiaries, including receivables, inventory, equipment, and intellectual property, subject to certain exceptions. In addition, the term loan agreement contains covenants that restrict the Company’s ability to make certain distributions or dividend payments, incur additional debt, engage in certain asset sales, mergers, acquisitions or similar transactions, create liens on assets, engage in certain transactions with affiliates, change the Company’s business or make investments. In addition, the term loan agreement requires the Company to maintain certain financial ratios. As of September 30, 2024 and December 31, 2023, the Company was in compliance with these covenants. Because the Company’s term loans and borrowings under the Revolving Facility have variable interest rates, the outstanding debt as of September 30, 2024 and December 31, 2023 approximates fair value. Acquisition-Related Notes In April 2023, the Company acquired customer list intangible assets for a total consideration of $4.3 million, of which $3.0 million was paid in cash at closing. The remaining balance was settled through the issuance of a note payable monthly over three years beginning in April 2024 and bears an annual interest of 3.75%. In March 2024, the Company acquired customer list intangible assets, of which approximately $0.4 million of the purchase price was settled through the issuance of a non-interest bearing note and was recorded as deferred acquisition payable. The note is payable monthly over a period of 70 months. The deferred acquisition payable was recorded at fair value with an imputed interest rate of 5.00%. The portion of the Company’s acquisition-related notes due within 12 months or less from the financial statement date is reported in the Condensed Consolidated Statements of Financial Position as Deferred acquisition payable, current, while the amount due after 12 months from the financial statement date is included in Deferred acquisition payable, non-current. See Notes 4 and 12 for more information regarding the purchase of the customer list intangible assets.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481544/470-10-50-6 Reference 2: 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