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Item 2. Management’s Discussion and Analysis

2025-07-28 compared with 2025-04-28 · 289 added, 123 removed, 313 unchanged (57% of the section changed)

1 unchanged sentence

The following discussion updates the Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and the two discussions should be read together.

Company Overview — First Quarter of 2025

Company Overview — Second Quarter of 2025

The following discussion should be read in conjunction with our Condensed Consolidated Financial Statements and the related Notes to those Financial Statements included elsewhere in this Quarterly Report on Form 10-Q, which are prepared in accordance with accounting principles generally accepted in the United States ("GAAP").

In addition, please see “Information Regarding Non-GAAP Financial Measures” below concerning important information on non-GAAP financial measures contained in our discussion and analysis.

We are a diversified insurance agency, wholesale brokerage, insurance programs and services organization headquartered in Daytona Beach, Florida.

We are a diversified insurance agency, wholesale brokerage, insurance programs and service organization headquartered in Daytona Beach, Florida.

As an insurance intermediary, our principal sources of revenue are commissions paid by insurance companies and, to a lesser extent, fees paid directly by customers.

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(iii) net changes in insurance premium rates or the commission rate paid to us by our carrier partners;

(iv) the net change in fees paid to us by our customers;

and (v) any businesses acquired or disposed of.

(iv) the net change in fees paid to us by our customers and (v) any businesses acquired or disposed of.

We also earn profit-sharing contingent commissions, which are commissions based primarily on underwriting results, but in select situations may reflect additional considerations for volume, growth and/or retention.

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Payments are primarily received in the first and second quarters of each subsequent year, based upon the aforementioned considerations for the prior year(s), but may differ from the amount estimated and accrued due to the lack of complete visibility regarding loss information until they are received.

Over the last three years, profit-sharing contingent commissions have averaged approximately 3.6% of commissions and fees revenue.

Over the last three years, profit-sharing contingent commissions have averaged approximately 3.6% of commissions and fee revenues.

Fee revenues primarily relate to services other than securing coverage for our customers, and for fees negotiated in lieu of commissions.

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Fee revenues as a percentage of our total commissions and fees, represented 21.1% in 2024 and 23.9% in 2023.

For the three months ended March 31, 2025, our total commissions and fees growth rate was 12.0%, and our consolidated Organic Revenue growth rate was 6.5%.

For the three months ended June 30, 2025, our total commissions and fees growth rate was 8.2%, and our consolidated Organic Revenue growth rate was 3.6%.

Historically, investment and other income has consisted primarily of interest earnings on operating cash and where permitted, on premiums collected and held in a fiduciary capacity before being remitted to insurance companies.

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Other income primarily reflects other miscellaneous revenues.

Income before income taxes for the three months ended March 31, 2025 increased from the first quarter of 2024 by $63 million or 17.3%, driven by Organic Revenue growth, leveraging our expense base, net new business, lower interest expense and acquisitions completed in the past twelve months.

Income before income taxes for the three months ended June 30, 2025 decreased from the second quarter of 2024 by $35 million or 10.1%, due to the gain on disposal recorded in the second quarter of 2024 related to the sale of certain third-party claims administration and

adjusting services businesses and Acquisition/Integration Costs associated with the pending acquisition of Accession, partially offset by Organic Revenue growth, leveraging our expense base, net new business and acquisitions completed in the past twelve months.

Information Regarding Non-GAAP Financial Measures

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(ii) divested business (core commissions and fees generated from offices, books of business or niches sold or terminated during the comparable period) and (iii) Foreign Currency Translation (as defined below).

The term “core commissions and fees” excludes profit-sharing contingent commissions and therefore represents the revenues earned directly from specific insurance policies sold and specific fee-based services rendered.

The term “core commissions and fees” excludes profit-sharing contingent commissions;

and therefore, represents the revenues earned directly from specific insurance policies sold and specific fee-based services rendered.

Organic Revenue can be expressed as a dollar amount or a percentage rate when describing Organic Revenue growth.

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• EBITDAC Margin is defined as EBITDAC divided by total revenues.

• EBITDAC - Adjusted is defined as EBITDAC, excluding (gain)/loss on disposal.

• EBITDAC - Adjusted is defined as EBITDAC, excluding (i) (gain)/loss on disposal (as defined below), and (ii) Acquisition/Integration Costs (as defined below)

• EBITDAC Margin - Adjusted is defined as EBITDAC - Adjusted divided by total revenues.

Definitions Related to Certain Components of Non-GAAP Measures

• “Acquisition/Integration Costs” means the acquisition and integration costs (e.g., costs associated with regulatory filings;

costs for third-party professional services, including legal, accounting, consulting, financial advisory and due diligence;

costs and fees associated with entry into the bridge financing commitment;

costs of integrating or streamlining processes and information technology systems, including data migration and system integration;

costs associated with optimizing vendor agreements and leased office space, including exit costs related to location combinations;

and employment-related costs, including severance payments, costs associated with the transition of certain legacy compensation programs and retention-related compensation expenses) arising out of our pending acquisition of Accession, which are not considered to be normal, recurring or part of ongoing operations.

• “Foreign Currency Translation” means the period-over period impact of foreign currency translation, which is calculated by applying current-year foreign exchange rates to the various functional currencies in our business to our reporting currency of U.S.

dollars for the same period in the prior year.

• “(Gain)/loss on disposal” is a caption on our consolidated statements of income which reflects net proceeds received as compared to net book value related to sales of books of business and other divestiture transactions, such as the disposal of a business through sale or closure.

Our industry peers may provide similar supplemental non-GAAP information with respect to one or more of these measures, although they may not use the same or comparable terminology and may not make identical adjustments and, therefore comparability may be limited.

• “(Gain)/loss on disposal” a caption on our consolidated statements of income which reflects net proceeds received as compared to net book value related to sales of books of business and other divestiture transactions, such as the disposal of a business through sale or closure.

therefore, comparability may be limited.

This supplemental non-GAAP financial information should be considered in addition to, and not in lieu of, the Company ' s Condensed Consolidated Financial Statements.

Part of our business strategy is to attract high-quality insurance intermediaries and service organizations to join our operations.

From 1993 through the first quarter of 2025, we acquired 687 insurance intermediary operations.

From 1993 through the second quarter of 2025, we acquired 702 insurance intermediary operations.

Critical Accounting Policies

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Refer to Note 1 in the “Notes to Consolidated Financial Statements” in our Annual Report on Form 10-K for the year ended December 31, 2024 for details regarding our critical and significant accounting policies.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024

The following discussion and analysis regarding results of operations and liquidity and capital resources should be considered in conjunction with the accompanying Condensed Consolidated Financial Statements and related Notes.

Financial information relating to our condensed consolidated financial results is as follows:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in millions, except percentages)

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Other operating expenses

Gain on disposal

(Gain)/loss on disposal

Change in estimated acquisition

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(2) A non-GAAP financial measure.

NMF = Not a meaningful figure

Commissions and Fees

Commissions and fees, including profit-sharing contingent commissions and earned premiums, for the three months ended March 31, 2025 increased $148 million to $1,385 million, or 12.0%, over the same period in 2024.

Core commissions and fees revenue for the first quarter of 2025 increased $151 million or 12.7%, composed of:

Commissions and fees, including profit-sharing contingent commissions and earned premiums, for the three months ended June 30, 2025 increased $95 million to $1,249 million, or 8.2%, over the same period in 2024.

Core commissions and fees revenue for the second quarter of 2025 increased $86 million or 7.7%, composed of:

(i) approximately $40 million of net new and renewal business, which reflects an Organic Revenue growth rate of 3.6%;

(ii) $79 million from acquisitions that had no comparable revenues in the same period of 2024 and offsetting decreases from;

(iii) the impact of Foreign Currency Translation of $2 million and (iv) $3 million related to commissions and fees revenue from businesses or books of business divested in the preceding twelve months.

Profit-sharing contingent commissions for the first quarter of 2025 decreased by $3 million, or 6.5%, compared to the same period in 2024.

(ii) $42 million from acquisitions that had no comparable revenues in the same period of 2024;

(iii) an increase from the impact of Foreign Currency Translation of $8 million and an offsetting decrease from (iv) $4 million related to commissions and fees revenue from businesses or books of business divested in the preceding twelve months.

Profit-sharing contingent commissions for the second quarter of 2025 increased by $9 million, or 25%, compared to the same period in 2024.

This increase was driven primarily by (i) improved underwriting results and qualifying for certain profit-sharing contingent commissions that we did not qualify for in the prior year and (ii) recent acquisitions.

Commissions and fees, including profit-sharing contingent commissions and earned premiums, for the six months ended June 30, 2025, increased $244 million to $2,634 million, or 10.2%, over the same period in 2024.

Core commissions and fees revenue for the six months ended June 30, 2025 increased $238 million or 10.3%, composed of:

(i) approximately $118 million of net new and renewal business, which reflects an Organic Revenue growth rate of 5.1%;

(ii) $121 million from acquisitions that had no comparable revenues in the same period of 2024;

(iii) an increase from the impact of Foreign Currency Translation of $6 million and (iv) an offsetting decrease of $7 million related to commissions and fees revenue from businesses or books of business divested in the preceding twelve months.

Profit-sharing contingent commissions for the six months ended June 30, 2025 increased by $6 million, or 7.3%, compared to the same period in 2024.

Investment and Other Income

Investment and other income for the three months ended March 31, 2025 decreased $2 million from the same period in 2024.

The decrease was primarily driven by lower average interest rates as compared to the prior year.

Investment and other income for the three months ended June 30, 2025 increased $12 million from the same period in 2024.

Investment income for the six months ended June 30, 2025 increased $10 million, from the same period in 2024.

The increase was primarily driven by approximately $13 million of interest income generated by the proceeds received in June 2025 from our follow-on common stock offering and senior notes issuance in connection with the pending acquisition of Accession, which was partially offset by lower average interest rates as compared to the prior year.

Employee Compensation and Benefits

Employee compensation and benefits expense as a percentage of total revenues was 48.6% for the three months ended March 31, 2025 as compared to 50.2% for the three months ended March 31, 2024, an increase of 8.2%, or $52 million.

This increase included $30 million of compensation costs related to stand-alone acquisitions that had no comparable costs in the same period of 2024.

Therefore, employee compensation and benefits expense attributable to those offices that existed in the same time periods of 2025 and 2024 increased by $22 million, or 3.4%.

Employee compensation and benefits expense as a percentage of total revenues was 49.8% for the three months ended June 30, 2025 as compared to 49.7% for the three months ended June 30, 2024, an increase of 9.4%, or $55 million.

This increase included $21 million of compensation costs related to acquisitions that had no comparable costs in the same period of 2024.

Therefore, employee compensation and benefits expense attributable to those offices that existed in the same time periods of 2025 and 2024 increased by $34 million.

This underlying employee compensation and benefits expense increase was primarily related to:

(i) an increase in staff costs attributable to new hires;

(ii) an increase in producer compensation associated with revenue growth;

(iii) an increase in non-cash stock-based compensation driven by the strong financial performance of the Company and partially offset by (iv) the year-over-year decrease of approximately $13 million in the value of deferred compensation liabilities driven by changes in the market prices of our deferred compensation plan, with such amount substantially offset within other operating expenses as we hold assets to fund these liabilities.

(ii) the increased cost of health insurance;

(iii) an increase in producer compensation associated with revenue growth;

and (iv) the year-over-year increase of approximately $14 million in the value of deferred compensation liabilities driven by changes in the market prices of our deferred compensation plan, with such amount substantially offset within other operating expenses as we hold assets to fund these liabilities.

Employee compensation and benefits expense as a percentage of total revenues was 49.2% for the six months ended June 30, 2025 as compared to 49.9% for the six months ended June 30, 2024, and increased 8.8%, or $107 million.

This increase included $54 million of compensation costs related to acquisitions that had no comparable costs in the same period of 2024.

Therefore, employee compensation and benefits expense attributable to those offices that existed in the same time periods of 2025 and 2024 increased by $53 million.

This underlying employee compensation and benefits expense increase was primarily related to:

(i) an increase in staff costs attributable to new hires;

(ii) the increased cost of health insurance;

and (iii) an increase in producer compensation associated with revenue growth.

Other Operating Expenses

Other operating expenses represented 13.2% of total revenues for the first quarter of 2025, as compared to 12.8% for the first quarter of 2024.

Other operating expenses for the first quarter of 2025 increased $25 million, or 15.5%, from the same period of 2024.

Other operating expenses represented 16.4% of total revenues for the second quarter of 2025, as compared to 14.7% for the second quarter of 2024.

Other operating expenses for the second quarter of 2025 increased $38 million, or 22.0%, from the same period of 2024.

This change includes:

(i) $9 million of other operating expenses related to stand-alone acquisitions that had no comparable costs in the same period of 2024;

(ii) increased information technology related costs;

and (iii) the year-over-year increase of approximately $13 million in the value of assets held to fund the associated liabilities within our deferred compensation plan, which was substantially offset within employee compensation and benefits, as noted above.

(i) $9 million of other operating expenses related to acquisitions that had no comparable costs in the same period of 2024;

(ii) $37 million of Acquisition/Integration Costs associated with the pending acquisition of Accession;

(iii) increased information technology-related costs;

and partially offset by (iv) the year-over-year decrease of approximately $14 million in the value of assets held to fund the associated liabilities within our deferred compensation plan, which was substantially offset within employee compensation and benefits, as noted above.

Other operating expenses represented 14.8% of total revenues for the six months ended June 30, 2025, as compared to 13.7% for the six months ended June 30, 2024.

Other operating expenses for the first six months of 2025 increased $64 million, or 19.2%, from the same period of 2024.

This change includes:

(i) $17 million of other operating expenses related to acquisitions that had no comparable costs in the same period of 2024;

(ii) $37 million of Acquisition/Integration Costs associated with the pending acquisition of Accession;

and (iii) increased information technology-related costs.

(Gain)/Loss on Disposal

(Gain)/Loss on disposal for the first quarter of 2025 was unchanged from the first quarter of 2024 at $2 million.

Gain on disposal for the second quarter of 2025 decreased $31 million from the second quarter of 2024.

Gain on disposal for the six months ended June 30, 2025 decreased $30 million from the six months ended June 30, 2024.

These decreases were primarily attributable to the prior year finalization of the gain associated with selling certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023.

Although we do not routinely sell businesses or customer accounts, we periodically sell an office or a book of business (one or more customer accounts) that we believe does not produce reasonable margins or demonstrate a potential for adequate growth, or because doing so is in the Company’s best interest.

Amortization expense for the first quarter of 2025 increased $10 million, or 23.3%, compared to the first quarter of 2024.

Amortization expense for the second quarter of 2025 increased $6 million, or 13.6%, compared to the second quarter of 2024.

Amortization expense for the six months ended June 30, 2025 increased $17 million, or 19.8%, compared to the six months ended June 30,

This change reflects the amortization of new intangibles from businesses acquired within the past twelve months, net of certain intangible assets becoming fully amortized or written off in the (Gain)/Loss on disposal.

Depreciation expense for the first quarter of 2025 remained flat at $11 million as compared to the first quarter of 2024.

Depreciation expense for the second quarter of 2025 remained flat, compared to the second quarter of 2024.

Depreciation expense for the six months ended June 30, 2025 increased $2 million, or 9.5%, compared to the six months ended June 30, 2024.

Changes in depreciation expense reflect net additions of fixed assets resulting from businesses acquired in the past twelve months and the addition of fixed assets resulting from business initiatives, partially offset by the impact of fixed assets that became fully depreciated or written off in the gain or loss on disposal.

Interest Expense

Interest expense for the first quarter of 2025 decreased $2 million, or 4.2%, compared to the first quarter of 2024.

The decrease was primarily driven by lower total debt outstanding as compared to the prior year.

Interest expense for the second quarter of 2025 increased $2 million, or 4.1%, compared to the second quarter of 2024.

Interest expense for the six months ended June 30, 2025 decreased $1 million, or 1.0%, compared to the first six months of 2024.

Underlying interest expense for both the second quarter and the six-month period ended June 30, 2025 would have decreased by excluding approximately $5 million related to the issuance and sale of notes in June 2025 in connection with the pending acquisition of Accession.

Change in Estimated Acquisition Earn-Out Payables

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Additionally, the fair value of contingent consideration arrangements (such as earn-out purchase price arrangements) at the acquisition date must be included in the purchase price consideration.

The recorded purchase price for acquisitions

includes an estimation of the fair value of liabilities associated with any potential earn-out provisions.

The recorded purchase price for acquisitions includes an estimation of the fair value of liabilities associated with any potential earn-out provisions.

Subsequent changes in these earn-out obligations are required to be recorded in the Condensed Consolidated Statements of Income when incurred or reasonably estimated.

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The net charge or credit to the Consolidated Statements of Income for the period is the combination of the net change in the estimated acquisition earn-out payables liability, and the accretion of the present value discount on those liabilities.

As of March 31, 2025 and 2024, the fair values of the estimated acquisition earn-out payables were re-evaluated based upon projected operating results and measured at fair value on a recurring basis using unobservable inputs (Level 3) as defined in ASC 820- Fair Value Measurement .

As of June 30, 2025 and 2024, the fair values of the estimated acquisition earn-out payables were re-evaluated based upon projected operating results and measured at fair value on a recurring basis using unobservable inputs (Level 3) as defined in ASC 820- Fair Value Measurement .

The resulting net changes, as well as the interest expense accretion on the estimated acquisition earn-out payables were as follows:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in millions)

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Net change in earnings from estimated acquisition earn-out payables

For the three months ending March 31, 2025 and 2024, the fair value of estimated earn-out payables was re-evaluated and resulted in decreases of $6 million and $4 million, respectively, which were credits to the Condensed Consolidated Statements of Income.

As of March 31, 2025, estimated acquisition earn-out payables totaled $143 million, of which $51 million was recorded as accounts payable and $92 million was recorded as other non-current liabilities.

The effective tax rate on income from operations for the three months ended March 31, 2025 and 2024 was 21.8% and 19.5%, respectively.

The increase was driven primarily by the lower tax benefit associated with vesting of restricted stock awards in the first quarter of 2025 as compared to the first quarter of 2024.

For the three months and six months ended June 30, 2025, the fair value of estimated earn-out payables was re-evaluated and resulted in increases of $9 million and $4 million, respectively, which resulted in charges to the Condensed Consolidated Statements of Income.

As of June 30, 2025, estimated acquisition earn-out payables totaled $151 million, of which $63 million was recorded as accounts payable and $88 million was recorded as other non-current liabilities.

The effective tax rate on income from operations for the three months ended June 30, 2025 and 2024 was 24.8% and 25.1%, respectively.

The effective tax rate on income from operations for the six months ended June 30, 2025 and 2024 was 22.9% and 22.3%, respectively.

The increase for the six months ended June 30, 2025 was driven primarily by the lower tax benefit associated with vesting of restricted stock awards and restricted stock units in 2025 as compared to 2024.

RESULTS OF OPERATIONS — SEGMENT INFORMATION

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As such, management primarily focuses on the Organic Revenue growth rate and EBITDAC Margin when evaluating the operational efficiency of a segment.

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the three months ended March 31, 2025 and 2024, and the growth rates for Organic Revenue for the three months ended March 31, 2025, including by segment, are as follows:

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the three months ended June 30, 2025 and 2024, and the growth rates for Organic Revenue for the three months ended June 30, 2025, including by segment, are as follows:

Wholesale Brokerage

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(2) A non-GAAP financial measure.

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the three months ended March 31, 2024 and 2023, including by segment, and the growth rates for Organic Revenue for the three months ended March 31, 2024, including by segment, are as follows:

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the three months ended June 30, 2024 and 2023, including by segment, and the growth rates for Organic Revenue for the three months ended June 30, 2024, including by segment, are as follows:

Wholesale Brokerage

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Core commissions and fees

Acquisition revenues

Foreign Currency Translation

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(2) A non-GAAP financial measure.

The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the three months ended March 31, 2025, including by segment, is as follows:

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the six months ended June 30, 2025 and 2024, including by segment, and the growth rates for Organic Revenue for the six months ended June 30, 2025, including by segment, are as follows:

Wholesale Brokerage

(in millions)

Commissions and fees

Total growth %

Profit-sharing contingent

Core commissions and fees

Foreign Currency Translation

Organic Revenue (2)

Organic Revenue growth (2)

Organic Revenue growth % (2)

(1) The Retail segment includes commissions and fees reported as “Other” in the Segment Information table in Note 12 of this Quarterly Report on Form 10-Q of the Notes to the Condensed Consolidated Financial Statements, which includes corporate and consolidation items.

(2) A non-GAAP financial measure.

The reconciliation of commissions and fees included in the Condensed Consolidated Statements of Income to Organic Revenue, a non-GAAP financial measure, for the six months ended June 30, 2024 and 2023, including by segment, and the growth rates for Organic Revenue for the six months ended June 30, 2024, including by segment, are as follows:

Wholesale Brokerage

(in millions)

Commissions and fees

Total growth %

Profit-sharing contingent

Core commissions and fees

Foreign Currency Translation

Organic Revenue (2)

Organic Revenue growth (2)

Organic Revenue growth % (2)

(2) A non-GAAP financial measure.

The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the three months ended June 30, 2025, including by segment, is as follows:

(in millions)

Total Revenues

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(Gain)/loss on disposal

Acquisition/Integration Costs

EBITDAC - Adjusted (2)

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(2) A non-GAAP financial measure.

(3) Amount reflects the positive impact of approximately $13 million of interest income earned from the proceeds of the Company’s follow-on common stock offering and senior notes issuance in June 2025, held in preparation for the closing of the Company’s pending acquisition of Accession.

NMF = Not a meaningful figure

The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the three months ended June 30, 2024, including by segment, is as follows:

(in millions)

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(Gain)/loss on disposal

Acquisition/Integration Costs

EBITDAC - Adjusted (2)

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NMF = Not a meaningful figure

non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the six months ended June 30, 2025, including by segment, is as follows:

(in millions)

Wholesale Brokerage

Total Revenues

Income before income taxes

Income Before Income Taxes Margin (1)

Change in estimated acquisition

earn-out payables

EBITDAC Margin (2)

(Gain)/loss on disposal

Acquisition/Integration Costs

EBITDAC - Adjusted (2)

EBITDAC Margin - Adjusted (2)

(1) “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues.

(2) A non-GAAP financial measure.

NMF = Not a meaningful figure

The reconciliation of income before income taxes, included in the Condensed Consolidated Statements of Income, to EBITDAC, a non-GAAP measure, and EBITDAC - Adjusted, a non-GAAP measure, and Income Before Income Taxes Margin to EBITDAC Margin, a non-GAAP measure, and EBITDAC Margin - Adjusted, a non-GAAP measure, for the six months ended June 30, 2024, including by segment, is as follows:

(in millions)

Wholesale Brokerage

Total Revenues

Income before income taxes

Income Before Income Taxes Margin (1)

Change in estimated acquisition

earn-out payables

EBITDAC Margin (2)

(Gain)/loss on disposal

Acquisition/Integration Costs

EBITDAC - Adjusted (2)

EBITDAC Margin - Adjusted (2)

(1) “Income Before Income Taxes Margin” is defined as income before income taxes divided by total revenues.

(2) A non-GAAP financial measure.

NMF = Not a meaningful figure

Retail Segment

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Financial information relating to our Retail segment is as follows:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in millions, except percentages)

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NMF = Not a meaningful figure

The Retail segment’s total revenues for the three months ended March 31, 2025 increased 12.5%, or $101 million, as compared to the same period in 2024, to $907 million.

The $102 million increase in core commissions and fees revenue was driven primarily by:

The Retail segment’s total revenues for the three months ended June 30, 2025 increased 7.9%, or $51 million, as compared to the same period in 2024, to $697 million.

The $50 million increase in core commissions and fees revenue was driven by:

(i) approximately $29 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2024;

(ii) an increase of $19 million related to net new and renewal business;

and (iii) an offsetting decrease of $3 million related to commissions and fees recorded in 2024 from businesses since divested.

Profit-sharing contingent commissions for the first quarter of 2025 remained flat at $14 million as compared to the same period in 2024.

The Retail segment’s total commissions and fees increased by 12.7%, and the Organic Revenue growth rate was 4.1% for the first quarter of 2025.

(iii) an increase from the impact of Foreign Currency Translation of $6 million and (iv) an offsetting decrease of $3 million related to commissions and fees recorded in 2024 from businesses since divested.

Profit-sharing contingent commissions for the second quarter of 2025 remained flat at $7 million, as compared to the same period in 2024.

The Retail segment’s total commissions and fees increased by 7.8%, and the Organic Revenue growth rate was 3.0% for the second quarter of 2025.

The Organic Revenue growth rate was driven by net new business written during the preceding twelve months and growth on renewals of existing customers.

Renewal business was impacted by timing of certain nonrecurring revenue and rate and exposure unit growth.

Income before income taxes for the three months ended March 31, 2025 increased 19.3%, or $46 million, as compared to the same period in 2024, to $284 million.

Growth for renewal business was moderated by slowing rate increases, rate decreases for certain lines and the timing of certain non-recurring revenue.

Income before income taxes for the three months ended June 30, 2025 decreased 1.6%, or $2 million, as compared to the same period in 2024, to $127 million.

The primary factors driving this decrease were:

(i) an increase in estimated acquisition earn-out payables, and (ii) amortization and depreciation expense growing faster than total revenues, partially offset by (iii) a decrease in intercompany interest expense and (iv) the profit associated with the net increase in revenue as described above.

EBITDAC - Adjusted for the three months ended June 30, 2025 increased 6.1%, or $11 million, as compared to the same period in 2024, to $192 million.

EBITDAC Margin - Adjusted for the three months ended June 30, 2025 decreased to 27.5% from 28.0% in the same period in 2024.

The change in EBITDAC Margin - Adjusted was primarily driven by:

(i) the timing of revenues and profit associated with certain recent acquisitions;

and (ii) the impact of Foreign Currency Translation, which was partially offset by;

(iii) leveraging our expense base.

The Retail segment’s total revenues for the six months ended June 30, 2025 increased 10.5%, or $152 million, as compared to the same period in 2024, to $1,604 million.

The $150 million increase in core commissions and fees revenue was driven by:

(i) approximately $102 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2024;

increase of $51 million related to net new and renewal business;

(iii) an increase from the impact of Foreign Currency Translation of $5 million;

and (iv) an offsetting decrease of $7 million related to commissions and fees recorded in 2024 from businesses since divested.

Profit-sharing contingent commissions for the six months of 2025 increased 4.8%, or $1 million, as compared to the same period in 2024, to $22 million.

The Retail segment’s total commissions and fees increased by 10.4%, and the Organic Revenue growth rate was 3.6% for the first six months of 2025.

The Organic Revenue growth rate was driven by net new business written during the preceding twelve months and growth on renewals of existing customers.

Renewal business was impacted by timing of certain nonrecurring revenue as well as rate and exposure unit growth.

Income before income taxes for the six months ended June 30, 2025 increased 12.0%, or $44 million, as compared to the same period in 2024, to $411 million.

The primary factors driving this increase were:

(i) a decrease in intercompany interest expense;

(ii) a decrease in estimated acquisition earn-out payables, and (iii) the profit associated with the net increase in revenue as described above.

EBITDAC - Adjusted for the three months ended March 31, 2025 increased 16.2%, or $47 million, as compared to the same period in 2024, to $338 million.

EBITDAC Margin - Adjusted for the three months ended March 31, 2025 increased to 37.3% from 36.1% in the same period in 2024.

The change in EBITDAC Margin - Adjusted was primarily driven by:

and (ii) the profit associated with the net increase in revenue as described above, partially offset by (iii) an increase in estimated acquisition earn-out payables, and (iv) amortization and depreciation expense growing faster than total revenues.

EBITDAC - Adjusted for the six months ended June 30, 2025 increased 12.3%, or $58 million, as compared to the same period in 2024, to $530 million.

EBITDAC Margin - Adjusted for the six months ended June 30, 2025 increased to 33.0% from 32.5% in the same period in 2024.

The increase in EBITDAC Margin - Adjusted was primarily driven by:

(i) the net increase in revenue as described above;

(ii) the timing of revenues associated with recent acquisitions;

(iii) leveraging our expense base, which was partially offset by;

(iv) higher non-cash stock-based compensation.

and (iii) leveraging our expense base.

Programs Segment

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Financial information relating to our Programs segment is as follows:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in millions, except percentages)

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NMF = Not a meaningful figure

The Programs segment’s total revenues for the three months ended March 31, 2025 increased 10.1%, or $30 million, as compared to the same period in 2024, to $328 million.

The $37 million increased in core commissions and fees revenue was driven primarily by:

The Programs segment’s total revenues for the three months ended June 30, 2025 increased 6.1%, or $22 million, as compared to the same period in 2024, to $381 million.

The $16 million increased in core commissions and fees revenue was driven by:

(i) approximately $1 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2024;

and (ii) approximately $15 million of net new business, renewal business, and fee revenues.

Profit-sharing contingent commissions for the first quarter of 2025 decreased approximately $6 million as compared to the first quarter of 2024.

This decrease is a result of the prior year including approximately $7 million resulting from the finalization of the calculation of profit-sharing contingent commissions that were estimated and accrued in 2023.

The Programs segment’s total commissions and fees increased by 10.6%, and the Organic Revenue growth rate was 13.6% for the three months ended March 31, 2025.

The Organic Revenue growth was driven by hurricane claims revenue, good retention, and exposure unit expansion, but was partially offset by declining rates on catastrophe ("CAT") property.

Income before income taxes for the three months ended March 31, 2025 increased 20.8%, or $21 million, as compared to the same period in 2024, to $122 million.

Income before income taxes increased due to the drivers of EBITDAC - Adjusted described below as well as lower year over year interest expense and depreciation.

EBITDAC - Adjusted for the three months ended March 31, 2025 increased 15.9%, or $20 million, from the same period in 2024, to $146 million.

EBITDAC Margin - Adjusted for the three months ended March 31, 2025 increased to 44.5% from 42.3% in the same period in 2024.

Profit-sharing contingent commissions for the second quarter of 2025 increased approximately $5 million as compared to the second quarter of 2024.

This increase is a result of increased premiums and favorable loss ratios.

The Programs segment’s total commissions and fees increased by 5.9%, and the Organic Revenue growth rate was 4.6% for the three months ended June 30, 2025.

The Organic Revenue growth was driven by good retention, net new business, and exposure unit expansion, but was partially offset by declining rates on catastrophe CAT property and a growth incentive received in 2024.

Income before income taxes for the three months ended June 30, 2025 decreased 1.6%, or $3 million, as compared to the same period in 2024, to $180 million.

Income before income taxes decreased due to a gain on disposal recorded in the prior year and partially offset by the drivers of EBITDAC - Adjusted described below.

EBITDAC - Adjusted for the three months ended June 30, 2025 increased 12.9%, or $23 million, from the same period in 2024, to $201 million.

EBITDAC Margin - Adjusted for the three months ended June 30, 2025 increased to 52.8% from 49.6% in the same period in 2024.

EBITDAC Margin - Adjusted increased due to Organic Revenue growth, increase in profit-sharing contingent commissions and leveraging our expense base.

The Programs segment’s total revenues for the six months ended June 30, 2025 increased 7.9%, or $52 million, as compared to the same period in 2024, to $709 million.

The $54 million increase in core commissions and fees revenue was driven by:

(i) approximately $2 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2024;

approximately $52 million of net new business, renewal business and fee revenues.

Profit-sharing contingent commissions for the six months ended June 30, 2024 decreased approximately $2 million, or by 3.9%, as compared to the same period in 2024.

The Programs segment’s total commissions and fees increased by 8.1%, and the Organic Revenue growth rate was 8.8%, for the six months ended June 30, 2025.

The Organic Revenue growth was driven by hurricane claims revenue, good retention, net new business and exposure unit expansion, but was partially offset by declining rates on catastrophe ("CAT") property.

Income before income taxes for the six months ended June 30, 2025 increased 6.0%, or $17 million to $302 million, from the same period in 2024.

Income before income taxes increased due to the drivers of EBITDAC - Adjusted described below partially offset by gain on disposal recorded in the prior year.

EBITDAC - Adjusted for the six months ended June 30, 2025 increased 13.8%, or $42 million to $347 million, as compared to the same period in 2024.

EBITDAC Margin - Adjusted for the six months ended June 30, 2025 increased to 48.9% from 46.4% in the same period in 2024.

EBITDAC Margin - Adjusted increased due to strong Organic Revenue growth and leveraging our expense base.

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Financial information relating to our Wholesale Brokerage segment is as follows:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in millions, except percentages)

21 unchanged sentences

NMF = Not a meaningful figure

The Wholesale Brokerage segment’s total revenues for the three months ended March 31, 2025 increased 12.0%, or $17 million, as compared to the same period in 2024, to $159 million.

The Wholesale Brokerage segment’s total revenues for the three months ended June 30, 2025 increased 14.5%, or $23 million, as compared to the same period in 2024, to $182 million.

The $19 million net increase in core commissions and fees revenue was driven primarily

(i) $6 million related to net new and renewal business (ii) $12 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2024;

and (iii) an increase from the impact of Foreign Currency Translation of $1 million.

Profit-sharing contingent commissions for the second quarter of 2025 increased $4 million compared to the second quarter of 2024, driven by improved underwriting results, increased written premium and finalization of prior year estimates of profit-sharing contingent commissions.

The Wholesale Brokerage segment’s growth rate for total commissions and fees was 14.6%, and the Organic Revenue growth rate was 3.9% for the second quarter of 2025.

The Organic Revenue growth rate was driven by net new business and exposure unit increases, while being partially offset by rate decreases for CAT property.

Income before income taxes for the three months ended June 30, 2025 increased 12.8%, or $6 million, as compared to the same period in 2024, to $53 million due to:

(i) the growth of EBITDAC - Adjusted described below, partially offset by (ii) an increase in the change in estimated acquisition earn-out payables.

EBITDAC - Adjusted for the three months ended June 30, 2025 increased 17.0%, or $9 million, as compared to the same period in 2024, to $62 million.

EBITDAC Margin - Adjusted for the three months ended June 30, 2025 increased to 34.1% from 33.3%, as compared to the same period in 2024.

EBITDAC Margin - Adjusted increased due to:

(i) increased profit-sharing contingent commissions;

and (ii) leveraging our expense base with total revenue growth, both of which were partially offset by a business acquired within the last twelve months that has lower margins than our average segment margins and higher non-cash stock based compensation.

The Wholesale Brokerage segment’s total revenues for the six months ended June 30, 2025 increased 13.3%, or $40 million, as compared to the same period in 2024, to $341 million.

The $33 million net increase in core commissions and fees revenue was driven primarily by:

(i) $15 million related to net new and renewal business and (ii) $17 million related to the core commissions and fees revenue from acquisitions that had no comparable revenues in the same period of 2024.

Profit-sharing contingent commissions for the first quarter of 2025 increased $3 million compared to the first quarter of 2024, driven by improved underwriting results, increased written premium and finalization

of prior year estimates of profit-sharing contingent commissions.

The Wholesale Brokerage segment’s growth rate for total commissions and fees was 12.1%, and the Organic Revenue growth rate was 6.7% for the first quarter of 2025.

The Organic Revenue growth rate was driven by net new business and exposure unit increases, which was partially offset by rate decreases for CAT property.

Income before income taxes for the three months ended March 31, 2025 increased 7.3%, or $3 million, as compared to the same period in 2024, to $44 million due primarily to the growth of EBITDAC - Adjusted described below.

EBITDAC - Adjusted for the three months ended March 31, 2025 increased 10.9%, or $5 million, as compared to the same period in 2024, to $51 million.

EBITDAC Margin - Adjusted for the three months ended March 31, 2025 decreased to 32.1% from 32.4%, as compared to the same period in 2024.

EBITDAC Margin - Adjusted decreased due to:

(i) a higher impact of foreign exchange rate changes;

and (ii) higher non-cash stock-based compensation, which were partially offset by leveraging our expense base.

As discussed in Note 12 of the Notes to Condensed Consolidated Financial Statements, the “Other” column in the Segment Information table includes any revenue and expenses not allocated to reportable segments, and corporate-related items, including the intercompany interest expense charges to reporting segments.

Profit-sharing contingent commissions for the first six months of 2025 increased approximately $7 million compared to the same period of 2024 driven by improved underwriting results, increased written premium and finalization of prior year estimates of profit-sharing contingent commissions.

The Wholesale Brokerage segment’s growth rate for total commissions and fees was 13.4%, and the Organic Revenue growth rate was 5.2% for the first six months of 2025.

The Organic Revenue growth rate was driven by net new business and exposure unit increases, which were partially offset by rate decreases for CAT property.

Income before income taxes for the six months ended June 30, 2025 increased 10.2%, or $9 million, as compared to the same period in 2024, to $97 million due to:

(i) the growth of EBITDAC - Adjusted described below and partially offset by (ii) an increase in the change in estimated acquisition earn-out payables.

EBITDAC - Adjusted for the six months ended June 30, 2025 increased 14.1%, or $14 million, as compared to the same period in 2024, to $113 million.

EBITDAC Margin - Adjusted for the six months ended June 30, 2025 increased to 33.1% from 32.9% in the same period in 2024 due to leveraging our expense base which were partially offset by:

(i) business acquired within the last twelve months;

and (ii) higher non-cash stock-based compensation.

As discussed in Note 12 of the Notes to Condensed Consolidated Financial Statements, the “Other” line items in the Segment Information table includes any revenue and expenses not allocated to reportable segments, and corporate-related items, including the intercompany interest expense charges to reporting segments.

LIQUIDITY AND CAPITAL RESOURCES

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Our capital requirements to operate as an insurance intermediary are low, and we have been able to grow and invest in our business through a combination of cash that has been generated from operations, the disciplined use of debt and the issuance of equity as part of the purchase price consideration to acquire certain businesses.

We have the ability to utilize our Revolving Credit Facility under the Second Amended and Restated Credit Agreement (the “Second Amended and Restated Credit Agreement”), which as of March 31, 2025 provided up to $400 million in available cash.

We have the ability to utilize our Revolving Credit Facility under the Second Amended and Restated Credit Agreement (the “Second Amended and Restated Credit Agreement”), which as of June 30, 2025 provided up to $800 million in available cash.

We believe that we have access to additional funds, if needed, through the capital markets or private placements to obtain further debt financing under the current market conditions.

The Company believes that its existing cash, cash equivalents, short-term investment portfolio and funds generated from operations, together with the funds available under the Revolving Credit Facility and the Loan Agreement, dated March 31, 2022, which provided term loan capacity of $800 million (the “Loan Agreement”), will be sufficient to satisfy its normal liquidity needs, including principal payments on our long-term debt, for the next 12 months and in the long term.

The Revolving Credit Facility contains an expansion option for up to an additional $500 million of borrowing capacity, subject to the approval of participating lenders.

Additionally, the Company may, subject to satisfaction of certain conditions, including receipt of additional term loan commitments by new or existing lenders, increase either Term Loan Commitment under the existing Loan Agreement or the term loans issued thereunder or issue new tranches of term loans in an aggregate additional amount of up to $400 million.

Including the expansion options under all existing credit agreements, the Company has access to up to $1,300 million of incremental borrowing capacity as of March 31, 2025.

Cash and cash equivalents totaled $669 million at March 31, 2025 reflecting a decrease of $6 million from the $675 million balance at December 31, 2024.

Including the expansion options under all existing credit agreements, the Company has access to up to $1,700 million of incremental borrowing capacity as of June 30, 2025.

Cash and cash equivalents totaled $8,893 million at June 30, 2025 reflecting an increase of $8,218 million from the $675 million balance at December 31, 2024.

This increase is due to the proceeds from the follow-on common stock offering and senior notes issuance in the second quarter in connection with the pending acquisition of Accession.

Operating Cash Flows

Our operating cash flows are primarily derived from the net income generated during the period adjusted for non-cash expenses, which include depreciation, amortization, changes in estimated earnout payables, non-cash stock based compensation and deferred income taxes while excluding gains and losses on sales/disposals of investments, businesses, fixed assets and customer accounts, payments on acquisition earn-outs in excess of original estimated payables and changes in working capital which relate primarily to the timing of payments of accrued liabilities and receipts of receivables from commissions and fees related to our revenues.

Our ratio of current assets to current liabilities (the “current ratio”) was 1.20 and 1.10 for March 31, 2025 and December 31, 2024, respectively.

Cash flows generated from operating activities totaled $213 million and $13 million for the three-month periods ended March 31, 2025 and 2024, respectively, representing an increase of $200 million.

Our ratio of current assets to current liabilities (the “current ratio”) was 2.75 and 1.10 for June 30, 2025 and December 31, 2024, respectively.

Cash flows generated from operating activities totaled $538 million and $373 million for the six months ended June 30, 2025 and 2024, respectively, representing an increase of $165 million.

Operating cash flows generated in 2025 included $569 million from net income before non-controlling interests with $186 million of non-cash adjustments, offset by $217 million from changes in working capital.

The growth in cash from operations is primarily due to higher operating margins resulting from strong Organic Revenue growth and a $120 million reduction in our taxes paid, net of refunds related to the 2023 deferral of $121 million related to certain federal income tax payments due to Hurricane Idalia tax relief, which was announced by the Internal Revenue Service ("IRS") on August 30, 2023.

These deferred income tax payments were paid by the IRS deadline of February 15, 2024.

The growth in cash from operations is primarily due to higher operating margins resulting from strong Organic Revenue growth and continued improvements in our working capital over the same period in 2024.

Investing Cash Flows

Cash flows used for investing activities were $79 million and $88 million for the three-month periods ended March 31, 2025 and 2024, respectively, a decrease of $9 million, or 10.2%.

During the three-month period ended March 31, 2025, the Company completed 13 acquisitions (including book purchases) and paid $67 million, net of cash, and cash and cash equivalents held in a fiduciary capacity acquired, most notably for the purchase of NBS Insurance Agency for $54 million.

Net cash paid for acquisitions decreased $9 million in the three-month period ended March 31, 2025, down from $76 million during the same period in 2024.

The Company received cash proceeds from the sale of businesses, fixed assets and customer accounts totaling $9 million during the three-month period ended March 31, 2025 compared to no proceeds received in the same period in 2024.

Cash flows used for investing activities were $187 million and $77 million for the six months ended June 30, 2025 and 2024, respectively, a decrease of $110 million.

During the six months ended June 30, 2025, the Company completed 29 acquisitions (including book purchases) and paid $161 million, net of cash, and cash and cash equivalents held in a fiduciary capacity acquired, most notably for the purchase of NBS Insurance Agency for $54 million and Tim Parkman, Inc.

for $69 million.

Net cash paid for acquisitions increased $63 million in the six months ended June 30, 2025, up from $98 million during the same period in 2024.

The Company received cash proceeds from the sale of businesses, fixed assets and customer accounts totaling $10 million during the six months ended June 30, 2025, compared to $58 million proceeds received in the same period in 2024.

The decrease is attributed to the proceeds received during the second quarter of 2024 of $57 million from the settlement of two of the contingent payments related to the sale of certain third-party claims administration and adjusting services businesses in the fourth quarter of 2023.

Capital Expenditures

Capital expenditures amounted to $17 million and $13 million in the three-month periods ended March 31 2025 and 2024, respectively, and included purchases of furniture and fixtures, leasehold improvements related to office moves and hardware and software purchases related to information technology investments.

Capital expenditures amounted to $32 million and $39 million in the six months ended June 30, 2025 and 2024, respectively, and included purchases of furniture and fixtures, leasehold improvements related to office moves and hardware and software purchases related to information technology investments.

Financing Cash Flows

Cash flows used in financing activities totaled $218 million and $67 million in the three-month periods ended March 31, 2025 and 2024, respectively, an increase of $151 million.

Net cash flows provided by financing activities totaled $7,981 million and $375 million in the six months ended June 30, 2025 and 2024, respectively, an increase of $7,606 million.

Fiduciary Receivables and Liabilities

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The net change in fiduciary cash is represented by the net change in fiduciary liabilities and fiduciary receivables and is presented as cash flows from financing activities in the statement of cash flows.

Financing cash flows reflect a decrease of $90 million and $26 million in the three-month periods ended March 31, 2025 and 2024, respectively, related to fiduciary receivables and liabilities.

Financing cash flows reflect an increase of $119 million and $248 million in the six months ended June 30, 2025 and 2024, respectively, related to fiduciary receivables and liabilities.

Acquisition Earn-outs

Payments on acquisition earn-outs related to the original acquisition date estimates totaled $26 million and $39 million in the three-month periods ended March 31, 2025 and 2024, respectively.

During the three-month periods ended March 31, 2025 and 2024, respectively, the Company paid cash dividends of $43 million and $38 million, respectively, an increase of $5 million, or 13.2%.

On April 28, 2025, the board of directors approved a quarterly cash dividend of $0.15 per share to be paid on May 21, 2025.

Net payments from long term debt totaled $19 million in the three-month period ended March 31, 2025, compared to net cash proceeds of $87 million in the same period of 2024.

Total debt at March 31, 2025 was $3,806 million net of unamortized discount and debt issuance costs, which was a decrease of $18 million compared to December 31, 2024.

The decrease includes the repayment of $169 million of floating-rate debt balance, offset by $150 million of net additions to the Revolving Credit Facility and the amortization of discounted debt related to our various unsecured senior notes and debt issuance cost amortization of $1 million.

During the three months ended March 31, 2025, the Company repaid $7 million of principal related to the Second Amended and Restated Credit Agreement term loan through the quarterly scheduled principal payments.

The Second Amended and Restated Credit Agreement term loan had an outstanding balance of $187 million as of March 31, 2025.

The Company's next scheduled principal payment is due in June 2025 and is equal to $6 million.

During the three months ended March 31, 2025, the Company repaid $12 million of principal related to the Term Loans issued under the Term A-2 Loan Commitment (“Term A-2 Loans”) through quarterly scheduled principal payments.

The Term A-2 Loans had an outstanding balance of $400 million as of March 31, 2025.

The Company’s next scheduled principal payment is $13 million due in June 2025.

During the three months ended March 31, 2025, the Company repaid the outstanding balance on the Term A-1 Loan Commitment (the “Term A-1 Loan Commitment”) of $150 million related to the Loan Agreement, in accordance with the terms of the Loan Agreement using proceeds from the Revolving Credit Facility in connection with the Second Amended and Restated Credit Agreement.

Payments on acquisition earn-outs related to the original acquisition date estimates totaled $45 million and $65 million in the six months ended June 30, 2025 and 2024, respectively.

During the six months ended June 30, 2025 and 2024, the Company paid cash dividends of $86 million and $75 million, respectively, an increase of $11 million, or 14.7%.

On July 23, 2025, the Board of Directors approved a quarterly cash dividend of $0.15 per share to be paid on August 20, 2025.

Net cash proceeds from long term debt totaled $3,718 million in the six months ended June 30, 2025, compared to net cash proceeds of $319 million in the same period of 2024.

Total debt at June 30, 2025 was $7,545 million net of unamortized discount and debt issuance costs, which was an increase of $3,721 million compared to December 31, 2024.

The increase includes the issuance of $4,192 million of senior notes net of the unamortized debt discounts and the amortization of discounted debt related to our various unsecured senior notes and debt issuance cost amortization of $2 million, offset by the net repayment of the Revolving Credit Facility of $250 million, the addition of deferred debt issuance costs of $36 million and $188 million of payments on outstanding term loan balances.

During the six months ended June 30, 2025, the Company repaid $13 million of principal related to the Second Amended and Restated Credit Agreement term loan through the quarterly scheduled principal payments.

The Second Amended and Restated Credit Agreement term loan had an outstanding balance of $181 million as of June 30, 2025.

The Company's next scheduled principal payment is due in September 2025 and is equal to $6 million.

During the six months ended June 30, 2025, the Company repaid $24 million of principal related to the Term Loans issued under the Term A-2 Loan Commitment (“Term A-2 Loans”) through quarterly scheduled principal payments.

The Term A-2 Loans had an outstanding balance of $388 million as of June 30, 2025.

The Company’s next scheduled principal payment is $13 million due in September 2025.

During the six months ended June 30, 2025, the Company repaid the outstanding balance on the Term A-1 Loan Commitment (the “Term A-1 Loan Commitment”) of $150 million related to the Loan Agreement, in accordance with the terms of the Loan Agreement using proceeds from the Revolving Credit Facility in connection with the Second Amended and Restated Credit Agreement.

On June 11, 2025, the Company entered into an Underwriting Agreement (the “Notes Underwriting Agreement”) with BofA Securities, Inc.

Morgan Securities LLC, as representatives of the several underwriters named therein (collectively, the “Notes Underwriters”), with respect to the offer and sale by the Company of $400 million principal amount of its 4.600% Senior Notes due 2026 (the “2026 Notes”), $500 million principal amount of its 4.700% Senior Notes due 2028 (the “2028 Notes”), $800 million principal amount of its 4.900% Senior Notes due 2030 (the “2030 Notes”), $500 million principal amount of its 5.250% Senior Notes due 2032 (the “2032 Notes”), $1,000 million principal amount of its 5.550% Senior Notes due 2035 (the “2035 Notes”) and $1,000 million principal amount of its 6.250% Senior Notes due 2055 (the “2055 Notes” and, together with the 2026 Notes, the 2028 Notes, the 2030 Notes, the 2032 Notes, and the 2035 Notes, the “Notes”).

The Notes Underwriting Agreement contains customary representations, warranties and covenants of the Company, conditions to closing, termination provisions and other terms and conditions customary in agreements of this type.

The Notes Underwriting Agreement also contains customary indemnification and contribution rights and obligations of the Company and the Notes Underwriters.

The Company intends to use the net proceeds from the offering of the shares of Common Stock and cash on hand, to fund the cash consideration payable under the previously announced Agreement and Plan of Merger (the “Merger Agreement”), by and among RSC, the Company, Encore Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company ( “Merger Sub”) and Kelso RSC (Investor), L.P., a Delaware limited partnership, solely in its capacity as the equityholder representative, pursuant to which the Company will acquire Accession, and to pay fees and expenses associated with the foregoing.

If the acquisition of Accession is not consummated, each of the notes described above has a special mandatory redemption feature and would require repayment except for the 2035 Notes, which the Company would intend to use those proceeds for general corporate purposes.

As of June 30, 2025, the aggregate outstanding balance of these notes was $4,200 million exclusive of the associated discount balance.

During the second quarter, the Company repaid the outstanding balance on the Revolving Credit Facility of $400 million with cash on hand.

On June 10, 2025, the Company entered into an Underwriting Agreement (the “Common Stock Underwriting Agreement”) with J.P.

Morgan Securities LLC and BofA Securities, Inc., as representatives of the several underwriters named therein (collectively, the “Common Stock Underwriters”), with respect to the offer and sale by the Company of 43,137,254 shares of the Company’s common stock, par value $0.10 (the “Common Stock”) at a per share offering price of $102.00 for an aggregate purchase price for net proceeds of $4,315 million after underwriting discounts and fees and expenses.

The Company closed the offering of the shares of Common Stock on June 12, 2025.

The Company intends to use the net proceeds of the offerings of the shares of Common Stock and the Notes, together with cash on hand, to fund the cash consideration payable under the previously announced acquisition of Accession and to pay fees and expenses associated with the foregoing.

If the acquisition of Accession is not consummated, the Company intends to use the proceeds from the offerings of shares of common stock for general corporate purposes.

Additionally, as part of the consideration for the acquisition of Accession, the Company intends to issue approximately $1,300 million of additional shares of the Company’s common stock, par value $0.10 per share (the “Common Stock Consideration”) to the selling shareholders.

The number of shares comprising the Common Stock Consideration will be determined using the $110.57 per share closing price of the Company’s common stock on June 6, 2025.

Contractual Cash Obligations

As of March 31, 2025, our contractual cash obligations were as follows:

As of June 30, 2025, our contractual cash obligations were as follows:

Payments Due by Period

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Total contractual cash obligations (3)

(1) Includes $23 million of future lease commitments expected to commence later in 2025.

(2) Includes $151 million of current and non-current estimated acquisition earn-out payables.

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Four of the estimated acquisition earn-out payables assumed included provisions with no maximum potential earn-out amount.

The amount recorded for these acquisitions as of March 31, 2025 is $1 million.

The Company believes a significant increase in this amount is unlikely.

(2) Does not include approximately $43 million of current liability for a dividend of $0.15 per share approved by the Board of Directors on April 28, 2025.

The amount recorded for these acquisitions as of June 30, 2025 is $1 million.

The Company believes a significant increase to this amount is unlikely.

(3) Does not include approximately $51 million of current liability for a dividend of $0.1500 per share approved by the Board of Directors on July 23, 2025 to be paid on August 20, 2025.

Quantitative and Qualita tive Disclosures About Market Risk

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These investments are subject to interest rate risk.

The fair value of our invested assets at March 31, 2025 and December 31, 2024 approximated their respective carrying values due to their short-term duration and therefore, such market risk is not considered to be material.

The fair value of our invested assets at June 30, 2025 and December 31, 2024 approximated their respective carrying values due to their short-term duration and therefore, such market risk is not considered to be material.

We do not actively invest or trade in equity securities.

In addition, we generally dispose of any significant equity securities received in conjunction with an acquisition shortly after the acquisition date.

As of March 31, 2025, we had $987 million outstanding under the Second Amended and Restated Credit Agreement and the Loan Agreement tied to the Secured Overnight Financing Rate (“SOFR”).

As of June 30, 2025, we had $569 million outstanding under the Second Amended and Restated Credit Agreement and the Loan Agreement tied to the Secured Overnight Financing Rate (“SOFR”).

These agreements bear interest on a floating basis and are therefore subject to changes in the associated interest expense.

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in the following functional currencies, British pounds, Canadian dollar, and euros.

Based upon our foreign currency rate exposure as of March 31, 2025, an immediate 10% hypothetical change of foreign currency exchange rates would not have a material effect on our Condensed Consolidated Financial Statements.

Based upon our foreign currency rate exposure as of June 30, 2025, an immediate 10% hypothetical change of foreign currency exchange rates would not have a material effect on our Condensed Consolidated Financial Statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis