Q2 2025 Crawford & Co Earnings Call
Good morning. My name is Angeline and I will be your conference facilitator. Today at this time, I would like to welcome everyone to the Crawford & Company, second quarter 2025 earnings release conference, call in conjunction with this call is supplementary. Financial presentation is available on our website at www.crow.com under the investor relation section. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. Instructions will follow at that time. Should anyone need assistance at any time? During this conference? Please press star then zero and an operator will assist you as a reminder. Ladies and gentlemen, this conference is being recorded today, Tuesday, August 5th, 2025 now. I would like to introduce Tammy Stevenson.
Crawford and companies general counsel, please go ahead.
Thank you Angeline. Some of the matters to be discussed in this conference call and in the supplementary Financial presentations. May include forward-looking statements that involve risks and uncertainties
These statements May relate to among other things are expected future, operating results and financial condition. Our ability to grow our revenues and reduce our operating expenses. Expectations regarding our anticipated contributions, to our underfunded defined benefit pension plans, collectibility of our bills. And unbuild accounts receivable results from our recently. Completed Acquisitions, our continued compliance with the financial and other covenants. Contained in our financing agreements, our long-term capital resource, and liquidity requirements, and our ability to pay dividends in the future.
Statements made in this conference call to reflect events or circumstances occurring, after the day of the call, or to reflect the occurrence of unanticipated events.
In addition, you are reminded the operating results for any historical period are not necessarily indicative of the results to be expected for any future periods.
For a complete discussion regarding factors which could affect the company's financial performance. Please refer to the company's form 10q for the quarter end of June, 3020, 2025 filed with the Securities and Exchange Commission. Particularly the information under, the headings risk factors and management Management's discussion and Analysis of financial conditions and results of operation as well as subsequent company filings with the SEC.
This presentation also includes certain non-gaap Financial measures as defined under the SEC rules as required. A Reconciliation is provided for these matters.
To those most directly comparable gaap measures I would like now to now introduce Mr. Road Verma Chief Executive Officer of Crawford company. Grow it.
Thank you. Tammy good morning and Welcome to our second quarter 2025 earnings call. Joining me today is Bruce Wayne our Chief Financial Officer and Tammy Stevenson our general counsel. After our prepared remarks, we will open the call for your questions.
This quarter, we continue to make progress on our strategic objectives. Consolidated Revenue, grew year-over-year with 3 of our 4 segments, delivering Topline growth.
While we're seeing the effects of lower property claims frequency in the US, which puts some pressure on revenues in our North America, Los adjusting and platform Solutions segments, we saw encouraging results across the broader business.
Notably, we achieved growth in our non-weather segments, highlighting the effect of nest of our diverse business model, and disciplined execution, and navigating various Market options.
This morning, I'll review our segment operations for the second quarter before. Handing it over to Bruce for a deeper dive into our financial performance.
As you've heard me say before our scale expertise and long-standing Legacy of service Excellence are true, differentiators in the marketplace.
We operate in over 70 countries with 10,000 employees and access to more than 50,000 field resources and was 1 of the only companies with the capability to respond to complex claims of any size anywhere.
Each year we manage more than 20 billion dollars in claims globally reflecting our reliability in meeting. The needs of the world's leading carriers corporations and public entities.
Our Global presence deep technical expertise and over 8 Decades of experience position us. Competitively, as a critical partner to clients, navigating increased complexity and risk across a wide range of geographies and market conditions.
We see several core components driving our growth.
First, the global frequency of weather events continues to add volatility to claim staffing needs are carriers.
That heightens demand for our proven capabilities in managing complex weather related claims.
at the same time, our Diversified business model ensures that we're not solely dependent on whether
When 1 area experiences lower claims volume, like we've been seeing in US property that downturn can be offset by growth in non-weather related areas of our businesses like broadspire and parts of international operations.
We continue to gain market, share where carriers are, increasingly prioritizing, reliability scalability and compliance signaling a flight to quality service providers.
As a trusted well-established partner, We Believe Crawford is uniquely positioned to surpass those expectations.
We have formed many valuable strategic Partnerships with clients across the globe and remain focused on deepening, those relationships across multiple service lines and new geographies.
Finally, our Market leadership is reinforced by our deep bench of technical expertise and our investment in Cutting Edge technology.
These capabilities not only set us apart from competitors, but are also a key factor in winning new business and enhancing profitability.
With these drivers in place, we are confident in our ability to generate sustainable long-term growth. Regardless of quarter to quarter weather fluctuations,
In the second quarter, Consolidated Revenue grew 2.8% with North America, Los adjusting International operations, and broadspire. Each contributing to our Topline growth and broadspire having another record, Revenue quarter.
Consolidated, operating earnings were largely consistent with last year's second quarter and improved sequentially compared to first quarter 2025
Recording International tax item Consolidated. Operating margin would have been 7.8% representing an improvement over the second quarter of 2024,
Bruce will share more details on that shortly.
North America, Los adjusting saw an year-over-year, decrease in operating earnings due to lower us property, claims, activity and broadspire. Operating earnings decrease year-over-year due to strategic headcount additions and investment in technology.
International operations and platform Solutions, posted improve operating earnings and margin expansion.
We continue to see strong new business of momentum, which is encouraging for future growth.
Based on the company's solid performance and confidence. In our continued growth, our board has approved an increase in the quarterly dividends to 7 and a half cents per share for both crda and crdb.
Our balance sheet remains strong with liquidity, well-maintained, and a leverage ratio study at 1.75 times ibida.
in the second quarter storm activity, was relatively stable year-over-year up, just 1%
A 3.8% decline in weather related Revenue in the quarter was offset by Revenue. Growth of 5.2% in our non-weather businesses, enabling us to achieve Consolidated Revenue growth in the quarter.
We are seeing a lower frequency of claims filed for comparable events.
We believe this is largely related to affordability, Dynamics playing in the residential property Market in the US.
our deductible and concern for increased Insurance pricing, has suppressed residential property claims filing,
We view the lower us property, claims frequency, as a temporary Dynamic, and not a structural shift.
As reinsurance pricing stabilizes, we expect this trend to normalize over the next 12 to 18 months.
In the meantime, the resilience of our non-weather segments, and the strength of our balance model continues to support steady sustainable growth.
This Top Line, results, demonstrates the effectiveness of our Diversified business model, which enables us to respond and grow in an environment of changing weather patterns and market dynamics.
Our Capital allocation strategy is rooted in discipline and long-term value creation. We remain focused on deploying capital in ways that support sustainable growth, strengthen our competitive position and return value to short shareholders.
We continue to invest in our core business, with an emphasis on operational, excellence initiatives, technology, enhancements and talent development. Ensuring we are well, positioned to serve clients and expand market share.
We are also open to evaluating m&a opportunities. That can expand our capabilities and our Geographic reach.
Our balance sheet, reflects our progress in reducing leverage and our liquidity position is strong, giving us the financial flexibility to respond to both opportunities and challenges as they arise.
We remain committed to returning Capital to shareholders, and are pleased to have had the opportunity to raise our dividend.
With that, let me turn over the call to Bruce for a deeper. Look at our segment, operational and financial performance. Thank you Rowan, Crawford operates through our 4 core segments that represent the global reach of our business, North America law suggesting, which includes our loss adjusting operations in the US, and Canada accounted for 24% of second quarter of 2025 revenues.
International operations, covering all service lines outside North America, contributed 34% of quarterly revenues and broadspire, our us-based third-party administration business represented, 31% of quarterly revenues.
Platform Solutions, which includes contractor connection networks and subregion services accounted for 11% of revenues.
Our North America law, suggesting segment, delivered 2.7% Revenue growth in the second quarter driven by continued strength in our Global Technical Services business.
Performance in US field operations, was impacted by reduced property, claims activity, an industry-wide Trend related to affordability, pressures, and lower claim frequency.
As a result operating earnings in the segment declined 6%, year-over-year and operating margin decreased by 54 basis points.
As growth mentioned, we don't anticipate this pattern to be a long-term Trend and we expect industry Trends to stabilize over the next 12 to 18 months.
Crawford remains a destination for top tier, specialized adjusting talent and we continue to invest in building a best-in-class team to meet the evolving needs of our clients.
International operations delivered, another strong quarter with revenues, increasing 6.6% year-over-year or 6.9% in constant currency.
UK Europe and Asia. Were organic new business growth and weather related claims activity supported the Top Line.
Operating earnings grew 34%, with the operating margin expanding by 143 basis points. This reflects our focus on pricing, productivity, and disciplined execution.
While the second quarter was a strong result for this segment, we are mindful about potential margin fluctuation as we move through the balance of the year.
That said, we're pleased by the momentum. We're seeing an optimistic about driving continued success in our international business.
Broadspire delivered record, quarterly revenues of 100.6 million in the second quarter, reflecting your overview of your growth of 3.6%.
We saw consistent growth across all service lines driven by new client wins.
We have a strong retention rate of 95.4% which we view as a testament to the quality of our service and the trust we built with our clients.
In the second quarter we continue to strategically. Add headcount to support new client on boarding and this activity, as well as higher investments in technology impacted operating earnings and margin.
We believe these Investments, strengthen our team and position us. Well to support growth in the second half of the year and Beyond broadspire continues to build momentum and remains a key contributor to the strength of our non-weather dependent portfolio.
Turning to platform solutions, revenues declined 9.2% year-over-year.
Due to a significant pullback and claims Outsourcing from 1 of our key networks clients. However, we achieved year-over-year Revenue growth in both contractor connections up 2% and subregion or our practice business which grew 2.8%.
Platforms delivered, operating earnings growth of 113% and expanded operating margin by over 500 basis points.
This performance was driven by a higher margin business, mix and meaningful improvements in operational efficiency, particularly within the Network's business.
platform Solutions, continues to execute well and as an important component of our comprehensive portfolio of offerings,
And now for a look at our Consolidated financials.
In the 2025 second quarter companywide revenues. Before reimbursements were 323 million, an increase of 2.8% compared to the prior year period.
Foreign exchange rates decreased revenues before reimbursements for approximately 500,000 or 0.2%.
Gaap net income attributable to shareholders totaled, 7.8 million compared to 8.6 million in the same period of 2024.
Gap diluted EPS in the 2025 second quarter was 16 cents, a slight decrease from 17 cents for both share classes, CRDA and CRDB, in the 2024 period on a non-GAAP basis. Diluted EPS was 22 cents for both CRDA and CRDB compared to 25 cents for both share classes in the prior year period.
The company's non-gaap operating earnings totaled 22 million in the 2025 second quarter or 6.8% of revenues compared to 22.1 million or 7% of revenues in the prior year period.
Consolidated adjusted, Evita was 31.4 million in the 2025. Second quarter compared to 30.6 million in the 2024 quarter. The EBA margin of 9.7% was consistent with last year's. Second quarter,
The company's cash and cash equivalents as of June 3020, total 58.5 million compared to 55.4% for 31 2024.
Total receivables were 281.4 million. As of June 3025 up 8.3 million from the 2024 year end.
The company's total debt outstanding as of June 3020 as of December 312022.
Net debt was 166.9 Million as of June 3225, while our us pension liability was 20.5 million reflecting a funded ratio of 93.5%.
We made no discretionary contributions to our us defined benefit Pension Plan during the second quarter of 2025 and we do not intend to make contributions through the remainder of the year.
Operating cash flow for the second quarter of 2025 was $21.1 million, with free cash flow of $2.6 million.
With free cash flow of negative, 26.7 million.
The significant Improvement in operating a free cash flow in the 20125. Second quarter was primarily due to improved earnings and Improvement in working capital levels.
Unallocated corporate costs were 7 million in the 2025. Second quarter compared to cost of 5.1 million in the 2024 period.
The increase was primarily due to a non-recurring. Indirect tax expense of 3.1 million related, to an international tax law change, and an increase in Self Insurance expense partially offset by a decrease in professional fees.
During the Q2 2025 non-service pension costs were $2.4 million, consistent with the same period of 2024.
We recognized pre-tax contingent earnout cost of 80,000 and the 2025 second quarter compared to cost of 430,000 in the 2024 period.
During the second quarter of 2025, the company did not repurchase any shares of crda or crdb?
As a reminder, approximately 1.1 million Shares are eligible to be repurchased under our 2021. Share repurchase authorization.
With that, I'll turn the call back over to Rowan for concluding remarks.
Thank you Bruce, as we enter the second half of the year. We remain focused on delivering high-quality outcomes for our clients.
Historically, the second half of any year, often brings heightened weather activity and our teams are well prepared to respond.
We remain confident in our strategy and the long-term growth opportunity ahead for Crawford. Our second quarter results, reflect continued, execution of our Global platform, strong performance in key segments, and progress, on our journey towards margin Improvement.
With a solid balance sheet, or robust business model and a highly experienced team. We remain focused on delivering for our clients. Deepening strategic Partnerships and continuing to drive value for our shareholders.
Thank you for your time today Angeline. Please open the call for questions.
Thank you.
At this time, if you would like to ask a question, please press star. Then the number 1 on your telephone keypad to enjoy your question.
Press the pound key. If you are using a speaker-phone, please pick up your handset before. Asking your question, we'll pause for a moment to compile the Q&A roster.
Your first question comes from Maxwell richer with the truist Securities. Please go ahead.
Hi, good morning. I'm on for Mark Hughes. Um, did you call out the specific GTS growth number? Um, if not what? What was the exact number there? And um
Uh, what, what has been your experience lately with with adding headcount, and, and GTS?
Alat Bruce, uh, get to you on the number. But, you know, our experience continues to be very strong in terms of adding expertise. As you know, we had a target of adding 200 back in 2023. And we, we hit that Target. Well before time since then we've continued to add resources, um, to uh, to our to our GTS unit in the US as well as globally.
Uh, our GTS is, um, pad, you know, modest growth this year. Mainly because of the suppressed, uh, frequency of, uh, of weather claims.
but overall we are very pleased with the trajectory of um what's happening with uh with GTS both in the US um as well as
As well as globally.
Yeah, I don't have the specific GTS growth number, but I would tell you that substantially all of our growth in North America, Los adjusting is coming from the the GTS business.
Great, thank you. And then, do you have any observations you can share with us on on how the weather has trended. Thus far into 3 Q? Obviously, no big Southeastern storms. Um, but broadly speaking, what are you observing?
Yeah. The weather continues to be um, you know, sort of flat to last year. I think the biggest thing that we continue to see is the suppressed frequency of um, claims being filed in US property and we believe, as I said on the call generally related to excuse me, the affordability challenges that we're seeing with insurance in the US market where um, deductibles have increased and uh, and pricing on insurance is increased. And that is dissuading um, filing of any claims, um, or comparable claims I should say or similar whether events as we've seen in the prior years.
Thank you understood. And then, in regards to workers comp, are you, are you seeing any change in severity or frequency there? Any signs of of emerging medical inflation?
Nothing, nothing. Um, out of the ordinary. I mean, the workers comp claims continue to be of similar Trend as we've seen in the past. And then, you know, you're seeing the general inflation in medical costs that we've seen on a year-to-year basis. But nothing that I would say is off trend,
Great, thank you very much.
Thank you, Max.
Angeline, do we have another question?
Angeline.
I lost the operator. I think we may have lost.
Folks, give us just 1 minute.
Angeline.
Apologies, 1 moment.
We're waiting for the next person that is in queue for question. Angeline Angeline. We're waiting for the next person please. Sure, your next question comes from. Kevin SRI with barington. Please go ahead.
Hey, good morning.
The discussion about uh, lower property claims frequency in the US related to affordability. And, um, you mentioned, uh, that
you expect that to be temporary uh, and
Stabilize um over the next 12 to 18 months just based on um you know the industry adjusting I guess uh but so could you just dig into that?
uh, comments a little bit more and, and why you would expect that,
Sure. Kevin as you are very familiar with that, the insurance industry has overall been experiencing. What would be termed as a hard market for property over the last? I would say 3 to 5 years. Um, reinsurance rates are particularly hardened. Um, as a result of it, and we had seen significant, um, severity in the property space, um, coming from wildfires as well as severe convective storms. And, and to some extent hurricane activity, that created some, um, pressure in terms of pricing and many of the carriers responded with high deductibles and higher pricing. Uh, you can actually see that now in the results that we're seeing from the carriers as far as their property loss, ratios are concerned the most recent reinsurance, renewals that, we've been watching seem to have softened quite a bit and and we believe that that will continue to soften unless we see some major storm activity.
Uh, as they continue to soften, We Believe market dynamics will play out and, um, pricing will start to ease up and deductibles will start to come down, which will then trigger back the um, sort of normalization of claims frequency.
And we believe that it could take anywhere from 12 to 18 months for this Dynamic to play out. So, that's the reason why we're thinking that, um, the claims frequency should return back to normaly, because market dynamics will eventually play out as reinsurance pricing eases up.
Okay, thanks that's that's helpful. Um, also wanted to um,
Ask about broadspire. Um,
Talked about the continued new business momentum there. Uh, and and some continued Investments and Staffing and Technology, uh, to to meet that, uh, demand and business momentum. I just
Kind of wondering where we are in the cycle of those investments relative to.
Uh, margins. And um,
if we start to see margins or if we continue to see margins improve, uh, as we move through the back, half of the year, as you, you know, Revenue growth ramps up and you, you know, you leverage those Investments.
Up or down. So, we believe that this is a very normal margin. Fluctuation for us in, uh, in in broadspire as we go through the investment cycle. Um, we have quite a lot of new business, uh, that we expect to start early part of next year and some later part of this year. And, and those and where we've been Staffing for that as, you know, a key element of, um,
Service in this business is making sure that we have solid staff. Um, that is trained and ready to go. As new clients are on boarded, and that's what leads to a higher level of NPS. That we continue to see in a higher level of retention that we see in this business, um, I expect that, you know, we would probably stay on that same investment journey and it will be more like, next year when we start to see some of the results of this. But as we continue to add new business, we will continue to add the Staffing. I think that the margin fluctuation somewhere between say 13 to 16% is where um we will we will fluctuate.
Okay. Yeah, that makes sense. Uh, appreciate that. Um, I also want to ask about
Uh, International operations. Uh, can you just also discuss the
um,
New business momentum there. That you mentioned, maybe dig into that a little bit more and then I had a follow-up on International as well.
Absolutely, as you know, International has continuously been a turnaround story for us for the last 3 years or 4 years, I would say, um, as we've, uh, tried to change the mix of business and improve the margin as a result of that, mixed postco. Uh, when we look at the international business and the growth that we've seen, which is about 7% in, in Revenue, it's largely been coming from our operations in in UK.
As well as as well as Europe. Um, both those regions we believe we have significant head rooms still to grow. We've also seen a return, uh, in our Asia business or return to revenue growth in our Asia business.
But largely, I believe that our largest more near-term opportunities lie in, uh, in Europe as well as UK.
And we'll continue to see that.
Okay, great. And then you also, um,
Mentioned in your comments. Uh potential margin fluctuation in international. Is that is there something specific we should be thinking about there? Or is that just kind of
Typical quarter to quarter, potential volatility. Um, I would say it's typical quarter.
Um better and and that's been sort of a continuous uh trend for us to to move the margin up. Uh,
However, as we look at, uh, quarter to quarter, you know, there are weather fluctuations, there are investment fluctuations, there are some technology fluctuations, and I think those things will drive the margin. So I think we were just trying to make sure that there was an understanding of that.
Okay, great. And then
lastly, maybe if you can, uh,
touch on Capital allocation a bit more, you raised the dividend, which was nice to see. Um, didn't repurchase any shares. But, you know, I assume you still might have an appetite for that. Um, you know, market conditions are, uh, favorable but any, any more, uh, comments on how you intend to approach, I'll probably start. And then let Bruce
To invest in our margin for the long term growth and profitability and the health of the health of the business. Uh, that'll always be the first priority, so that you'll see that in the form of capex, you'll see that in the form of any, um, Acquisitions that we make, so that will always remain the first priority. Um, then uh, when we looked at our cash flow, the health of our business, the quality of our
Growth opportunities. And you know feel we've got the balance sheet strength and liquidity to, uh, to be opportunistic out in the marketplace if there are uh, compelling, uh, assets that that come on the market. So while we haven't, uh, you know, done any uh, m&a this year, that doesn't mean we're not out there. Uh, scouting for businesses that could uh add value to the company's platform.
and we have been doing much more Aqua hires, which is
You know, sort of acquisition of teams as opposed to acquisition of companies or legal entities. Yeah, that's where a lot of the GTS growth has come from. Yep.
Okay, great. Thanks again. Uh, for all the insights.
Okay, thank you. Kevin. Thank you. Kevin always a pleasure.
Ladies and gentlemen, as a reminder, if you do have a question, please press star, followed by 1.
There seems to be no further questions at this time. I'd now like to turn the call back over to Mr. Verma, for closing remarks, please go ahead.
Thank you, angelene. And thank you to all our employees clients and shareholders for your continued commitment to Crawford & Company. Thank you. And God bless.
Thank you for the participation. In today's Crawford & Company conference call this call will be available for replay beginning at 11:30 a.m. eastern standard time today through 11:59 p.m. Eastern Standard Time on August 12th of 20125.
The conference ID number for the replay is 35518 pound. And the number to dial for the replay is 1888660 6264. Thank you. And you may now disconnect have a great day.