CRD.B Q1 2026 Earnings Call

Operator (AI Assigned): Good morning. My name is Dustin, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Crawford & Company Q1 2026 Earnings Release Conference Call. In conjunction with this call, a supplementary financial presentation is available on our website at www.crawco.com under the Investor Relations section. All lines are placed on mute to prevent any background noise. After the speakers' 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, 5 May 2026. Now, I would like to introduce Tami Stevenson, Crawford & Company's General Counsel.

Tami Stevenson (General Counsel): Thank you, Dustin. Some of the matters to be discussed in this conference call and in the supplementary financial presentation may include forward-looking statements that involve risks and uncertainties. These statements may relate to, among other things, our 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 billed and unbilled accounts receivable, financial 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. The company's actual results achieved in future quarters could differ materially from the results that may be implied by such forward-looking statements.

Tami Stevenson (General Counsel): The company undertakes no obligation to publicly release revisions to any forward-looking statements made in this conference call to reflect events or circumstances occurring after the date of the call or to reflect the occurrence of unanticipated events. In addition, you are reminded that operating results for any historical period are not necessarily indicative of results to be expected for any future period. For a complete discussion regarding factors which could affect the company's financial performance, please refer to the company's Form 10-Q for the quarter ended 31 March 2026, filed with the Securities and Exchange Commission, particularly the information under the headings Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operations, as well as subsequent company filings with the SEC. This presentation also includes certain non-GAAP financial measures as defined under SEC rules.

Tami Stevenson (General Counsel): As required, a reconciliation is provided for those measures to the most directly comparable GAAP measures. I would now like to introduce Mr. Bruce Swain, Chief Executive Officer of Crawford & Company. Bruce?

Bruce Swain (President and CEO): Good morning, welcome to our Q1 2026 earnings call. I'm honored to be speaking with you today as President and CEO of Crawford & Company. Joining me today is Holly Boudreau, our Chief Financial Officer, and Tami Stevenson, our General Counsel. After our prepared remarks, we will open the call for your questions. As a reminder, Crawford is a global provider of claims management and outsourcing solutions, serving large insurance carriers and self-insured entities with industry-leading expertise across the claims landscape. Our purpose is to restore lives, businesses, and communities by providing our clients with dependable and comprehensive claims solutions and outcomes. As we mentioned on our Q4 call, effective 1 January 2026, we began operating under two divisions: US Operations, comprised of our US Property and Casualty and Broadspire businesses, and International Operations, which includes all service lines outside of the US.

Bruce Swain (President and CEO): We believe this streamlined operating model will strengthen execution, improve client outcomes, and drive continued growth across the business. As we've consistently demonstrated, our ability to deliver at scale across more than 70 countries with a team of 10,000 professionals, and over $20 billion in claims managed annually sets us apart in a competitive and evolving marketplace. This global reach, combined with over eight decades of deep technical expertise and an unwavering commitment to service excellence and client success, allows us to meet the needs of the world's leading insurers and corporations, regardless of the size or complexity of the program. This combination of global presence, technical depth, and proven experience positions Crawford & Company as a trusted partner of choice for clients navigating an increasingly complex risk landscape across a variety of geographies and market conditions.

Bruce Swain (President and CEO): Our organic growth opportunities are underpinned by a combination of favorable industry dynamics and core capabilities. First, risk is becoming increasingly complex. As a result, clients are seeking partners with a demonstrated ability to handle high-severity claims with speed and efficiency, something that we're uniquely positioned to do globally. Second, as I just touched upon, we streamlined our operating structure at the start of 2026 to further improve efficiency and support continued scalable growth. It's our belief that this strengthened operating model in the US will allow us to be a more agile and unified organization as we look to provide further value to our clients and partners. Third, our deep expertise and technology capabilities remain a true differentiator. Our ongoing commitment to our people and cutting-edge technology translates into service excellence and performance differentiation in the markets we serve.

Bruce Swain (President and CEO): Fourth, natural disasters remain a significant driver of sustained demand for our services. While individual weather events are inherently unpredictable, as we've experienced the last few quarters, the broader trajectory points towards an active and complex loss environment in which Crawford's service offerings are increasingly needed. Finally, growing complexity across the claims landscape is prompting more carriers and self-insured clients to search for dependable third-party administrators. Our global TPA operations have the scope, scale, and specialized knowledge required to help clients in today's increasingly challenging claims environment. Let me take a moment to discuss our Q1 2026 results. We executed well in the quarter despite weather-related headwinds in the US that we discussed on our 2025 year-end earnings call.

Bruce Swain (President and CEO): Q1 revenues were $309.5 million, down slightly compared to last year, and reflected the continued trend of lower industry-wide property claims activity in the US as we saw a continuation of relatively benign weather conditions to start the year. Importantly, our non-weather-dependent businesses reflected quarter-over-quarter growth, with Broadspire and International Operations reporting increased revenues compared to the prior year period, highlighting the benefit of our diversified operations. Consolidated operating earnings decreased by 23.2% year-over-year as a result of lower results in our US Property and Casualty business and higher unallocated and corporate costs, partially offset by improved operating earnings in International Operations. Our non-GAAP EPS was $0.16 for both CRDA and CRDB, compared to $0.21 for both share classes in the prior year quarter.

Bruce Swain (President and CEO): Operating cash flow was $3.3 million in Q1 2026, improving by $17.2 million year over year and providing us with continued financial strength and flexibility. We added $24 million in new and enhanced business during Q1. Pipeline activity in the quarter was encouraging, and we have a continued focus on further sharpening our go-to-market approach to turn these opportunities into wins. Our leverage ratio was 1.62 times EBITDA, well below industry levels, reflecting our disciplined capital management approach. We continue to have a thoughtful approach to capital allocation, strategically investing in our business with an eye towards long-term growth while ensuring continued balance sheet and liquidity strength. We maintained our quarterly dividend and opportunistically engaged in share repurchases during the quarter.

Bruce Swain (President and CEO): Beyond organic investment in returning capital to shareholders, we continually evaluate external growth opportunities, including targeting acquisitions and acqui-hires that can meaningfully broaden our capabilities and strengthen our position in the market. With that, I'll turn the call over to Holly for a deeper look at our Q1 financial performance.

Holly Boudreau (CFO): Thank you. As Bruce noted earlier, effective 1 January 2026, we streamlined our operating structure and began operating under two divisions: US Operations, which includes our US Property and Casualty business and Broadspire, and International Operations, which is made up of all service lines outside the US. In Q1 2026, US Property and Casualty, which consists of our US loss adjusting and networks businesses, contributed 23% of revenues. Broadspire, our US-based third-party administration business, represented 34% of revenues, and International Operations accounted for 43% of revenues. US Property and Casualty revenues decreased 11.3% year over year, reflecting the absence of revenues associated with Hurricanes Helene and Milton, recognized in Q1 2025, and continuing the trend of lower industry-wide property claims activity in the US.

Holly Boudreau (CFO): Operating earnings in the segment decreased by $2.2 million, or 22.1% year over year, with operating margin down 150 basis points. Despite the extended trend of benign weather we're seeing, we remain well-positioned to serve our clients with a strong pool of high-caliber, experienced adjusters with expertise serving major and complex claims to drive future growth. Broadspire delivered quarterly revenues of $104.8 million, an increase of 1% from the prior year period, reflecting a slow ramp for certain new client wins. Our retention rate of 86% is related to the loss of a client in the quarter, and it's not indicative of any broader trend.

Holly Boudreau (CFO): The segment delivered operating earnings of $10.9 million, decreasing by $1.1 million, or 9.4% year over year, with operating margin decreasing by 120 basis points, reflecting planned hiring in anticipation of new business wins. International Operations Q1 2026 revenue increased 4.5% to $131.9 million compared to the prior year. Revenue decreased 1.7% on a constant currency basis due to foreign exchange fluctuations. Operating earnings increased by $1.8 million, or 80%, with operating margin increasing by 120 basis points. International's Q1 operating performance reflects the strong demand across key markets, as Australia and Asia specifically saw an increase in catastrophe-related claims events. Additionally, Canada saw margin accretion from cost control initiatives started in 2025.

Holly Boudreau (CFO): For further context around the ongoing weather cycles, Q1 2026 saw a 16% decline in US severe storms report compared to the prior year, translating into a roughly 6% reduction in weather-related revenues to Crawford in the quarter. Notably, our weather-related revenues remained stable on a year-over-year basis, a testament to the balanced nature of our business and the strength of our underlying operations. Now for a look at our consolidated results. In Q1 2026, company-wide revenues before reimbursements were $309.5 million, a decrease of 1% compared to the prior year period. Foreign exchange rates increased revenue before reimbursements by $7.8 million, or 2.5%.

Holly Boudreau (CFO): GAAP net income attributable to shareholders totaled $4.9 million compared to net income of $6.7 million in the same period of 2025. GAAP diluted EPS in the 2026 Q1 was $0.10 for both CRDA and CRDB, a decrease from earnings of $0.13 for both share classes in the 2025 period. On a non-GAAP basis, diluted EPS was $0.16 for CRDA and CRDB, decreasing from $0.21 for both share classes in the prior year period. The company's non-GAAP operating earnings totaled $13.7 million in the 2026 Q1, or 4.4% of revenues, compared to $17.8 million, or 5.7% of revenues in the prior year period.

Holly Boudreau (CFO): Consolidated adjusted EBITDA was $22.4 million in Q1 2026, or 7.2% of revenues, decreasing from $26.8 million or 8.6% of revenues in Q1 2025. The company's cash and cash equivalents as of 31 March 2026 totaled $54.5 million, compared to $64.1 million at 31 December 2025. Total receivables were $260.8 million as of 31 March 2026, up $18.2 million from 2025 year-end. The company's debt outstanding as of 31 March 2026 totaled $194.1 million, up $5 million from 31 December 2025.

Holly Boudreau (CFO): Net debt was approximately $140 million as of 31 March 2026, while our US pension liability was $16.7 million, reflecting a funded ratio of 93.2%. We made no discretionary contributions to our US defined pension benefit plan during Q1 2026. Cash flows provided by operating activities for Q1 2026 was $3.3 million, increasing from a use of cash of $13.9 million in the prior year quarter. Free cash flow was -$4.6 million in the 2026 Q1, improving from -$23.2 million in Q1 2025. Unallocated corporate costs were $8.8 million in the 2026 Q1, compared to cost of $6.1 million in the 2025 period.

Holly Boudreau (CFO): The variance was driven by an increase in unallocated compensation expense and self-insurance reserves. Non-service pension costs were $2 million in the 2026 Q1, a decrease from $2.3 million in the same period of 2025. During the 2026 Q1, we paid a quarterly dividend of $0.075 a share. The company repurchased over 525,000 shares of CRDA and CRDB during the 2026 Q1. Approximately 1.6 million shares remain eligible to be repurchased under our existing share purchase program as of 31 March 2026. Now I'll turn the call back over to Bruce.

Bruce Swain (President and CEO): Thank you, Holly. As we conclude Q1 of 2026, I'm proud of the progress we achieved despite weather-related headwinds to start the year. While recent claims activity has tracked below historical norms, our Q1 emphasis has been on building resilience by strengthening our operating foundation, sharpening our go-to-market approach, and positioning Crawford to be prepared when claim volumes return. As we continue through 2026, our focus remains on execution and creating the right conditions for our teams and ultimately our clients to succeed. We have a strong operational, financial, and leadership foundation, and I am confident that we're executing against the right priorities to deliver further shareholder value moving forward. Thank you for your time today and for your continued interest in Crawford. We look forward to updating you on our progress throughout 2026. Dustin, please open the call for questions.

Operator (AI Assigned): Thank you. At this time, if you'd like to ask a question, please press star then the number one on your telephone keypad. To withdraw your question, press the pound key. If you're using a speakerphone, please pick up your handset before asking a question. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Mark Hughes from Truist Securities. Please go ahead.

Mark Hughes (Equity Analyst): Yeah, thank you. Good morning.

Bruce Swain (President and CEO): Hey, good morning, Mark.

Holly Boudreau (CFO): Good Morning.

Mark Hughes (Equity Analyst): The Broadspire business, up a little bit. I think you talked about kind of a delay in new onboarding and maybe a particular client loss. How should that trend through the balance of the year? Are those gonna kind of keep it steadied up a little bit, or would you expect that to potentially accelerate?

Bruce Swain (President and CEO): Yeah.

Mark Hughes (Equity Analyst): What does that mean from a margin standpoint?

Bruce Swain (President and CEO): For Broadspire, we expect growth this year. The new business that's coming on, we brought on a good bit of a new business in the Q1, within Broadspire a little bit delayed, some with start dates later in the year. The impact in the Q1 also was due to the loss of that one program that was a little bit larger-

Bruce Swain (President and CEO): than normal, which resulted in the 86% retention rate for that particular client, our retention rate would've been 93% or so. You know, we look at that one loss, it's just kind of an outlier, was related to, you know, relationships that the company had with other providers, and they had a change in risk management. Those things happen. We win programs that way, and sometimes we lose programs that way. That was just kind of an isolated item that we don't think is indicative of any, you know, longer term trends in the business. You know, Broadspire's got a great pipeline, and, you know, we feel, you know, great about that business and look forward to them continuing to grow as they go through 2026.

Mark Hughes (Equity Analyst): Any observations about the underlying trend and just claims activity, the workers' comp claims, the need for claims management, any change there?

Bruce Swain (President and CEO): You know, our workers' compensation claims year over year held pretty steady. I think, you know, industry-wide, there's a general decline in comp claims, severity certainly is going up. We're seeing severity increase in our book as well. That's what we're observing.

Mark Hughes (Equity Analyst): How about in the US Property and Casualty, the Global Technical Services? I think, outside of the weather-related claims, look like you held steady in US Property and Casualty. What are you seeing in GTS? How do you think about recruiting? I think you've mentioned the word acqui-hires.

Bruce Swain (President and CEO): Yeah

Mark Hughes (Equity Analyst): what's the prospect in 2026 there?

Bruce Swain (President and CEO): Yeah. You know, a lot of our GTS growth in the US in particular, has come from acquihire, where we've been recruiting teams and bringing them into Crawford to, you know, to serve our clients. Typically, they bring a book with them as well. That's really driven a lot of growth in the US. We are active in that recruiting or acquihire initiative across the globe. It's not just centered in the US. We're doing it around the globe as well. We see, you know, Global Technical Services overall, not just within the US, but as a global proposition, as one of the key growth drivers for us going forward.

Mark Hughes (Equity Analyst): In the unallocated corporate, you had, it looked like a bump in self-insurance expense. How much was that? I think you referred to a little higher administrative payroll. When you take those into account, how does that trend in the coming quarters?

Holly Boudreau (CFO): Yeah. That was about $800,000 in the quarter.

Mark Hughes (Equity Analyst): Okay.

Holly Boudreau (CFO): I think trend in the coming quarters, I think it's probably, you know, no major increase expected.

Mark Hughes (Equity Analyst): Okay. All right. Very good. Thank you very much.

Bruce Swain (President and CEO): Okay. Thank you, Mark.

Operator (AI Assigned): Thank you. Our next question comes from the line of Kevin Steinke from Barrington Research. Please go ahead.

Kevin Steinke (VP and Senior Research Analyst): Thank you. Good morning.

Bruce Swain (President and CEO): Good morning, Kevin.

Kevin Steinke (VP and Senior Research Analyst): I wanted to start off by asking about in your prepared comments, you mentioned encouraging pipeline activity, and I believe you kind of tied that to your updated go-to-market strategy under the new segment operating structure. Maybe just any comments on initial traction you're seeing with the go-to-market strategy and what sort of opportunities you're seeing in the pipeline?

Bruce Swain (President and CEO): We do have a very strong pipeline, and a lot of it's related to the change in the operating structure in the US, where we've unified our sales organization in the US to be not just related to, you know, Broadspire or US Loss Adjusting or networks, but it all comes together into one unified whole. You know, we're still in the process of bedding in all of our process changes and organizational changes and go-to-market strategies and approaches in the business. We are seeing recognition in the marketplace of the benefits of a unified go-to-market approach. We're hearing that from our customers who see us as easier to engage and do business with.

Bruce Swain (President and CEO): It allows us to bring kind of the full strength of our service solutions to our customers in solving their underlying needs and objectives. That's the whole reason for doing this. It's gonna allow our teams to operate faster and more efficiently in serving our clients and provide a more integrated client experience. You know, we think that the benefits are just beginning to unfold and are really quite excited about this change in the US. We think it's going to deliver, you know, sustained value as we move forward through, you know, this year and into the future.

Kevin Steinke (VP and Senior Research Analyst): Okay. That's helpful. When we think about the pipeline activity as well as the $24 million in new and enhanced business that you won in the quarter, any particular segments that you're really seeing increased activity? Should we think about that as mostly Broadspire? Is it kind of more broad-based across the segments?

Bruce Swain (President and CEO): You know, I would say that our strongest pipeline is within Broadspire. The pipeline is building within the US and Property and Casualty business as well, and we see that continuing to strengthen. In terms of the wins, a mix of Broadspire wins, a few US Property and Casualty wins, and then we had a nice win in our International Operations segment as well that made up the $24 million.

Kevin Steinke (VP and Senior Research Analyst): Okay. You know, I think the changes you made with go-to-market were, you talked about primarily in the US, but have there been any tweaks in the International Operations segment as well? You just mentioned a win there internationally, so just wondering if you've kind of changed up the approach at all there as well.

Bruce Swain (President and CEO): I mean, within the realignment that we did, we moved Canada, which was previously in our North America Loss Adjusting segment. We moved that into International. Now all non-US operations are in our International segment. You know, I would say that the go-to-market approach change has been most pronounced in the, in the US because in the US, as you remember, we were operating under as three distinct segment operations. You know, in International, they were one business before. They just have another component that got added to them. Their go-to-market approach is, if you were in the UK, it was a UK business approaching the UK market as one. That was the same last year, and it hasn't changed.

Bruce Swain (President and CEO): I would say that the overall thing that we're doing within the company, and it touches all aspects of our operation, is, you know, being conscious and working to be more client-centric and putting, you know, our client success at the forefront of everything that we do and making client success our North Star. Driving that culture within the company is something that's transcending all aspects of our operations. You know, the core go-to-market approach in International is largely unchanged.

Kevin Steinke (VP and Senior Research Analyst): Okay, great. Yeah, that makes sense. You know, you've been talking about the industry-wide level of outsourced claims activity being down just due to the more benign weather. Any updated thoughts on some of the affordability pressures you've talked about before in the US, just the residential property market? Any signs maybe of loosening there in the industry?

Bruce Swain (President and CEO): Yeah. I think there are certainly signs of loosening, you know, particularly in the property market in the US. We saw that kind of exiting 2025, I think, in the renewal cycle so far in Q1. Rates are continuing to grind down. You know, from everything that I see, it's starting to impact the casualty lines as well. As, you know, property rates have been coming down, I think the carriers are looking at, you know, the casualty lines to compete in, that's starting to put downward pressure on rates, and, you know, the excess and surplus market is softening as well.

Bruce Swain (President and CEO): I see, you know, kind of that hitting the softening, kind of across the board in the US, maybe excepting certain, really troubling lines. Generally we're seeing softness. As, in the first quarter in the US Property and Casualty, we were impacted by the lack of carryover of claims coming from hurricanes that didn't occur in Q4 of 2025, and we had some carryover from Hurricane Helene and Hurricane Milton that didn't repeat. You also had some capacity in the market, in the marketplace that kind of had our revenues and earnings down quarter over quarter.

Bruce Swain (President and CEO): You know, in March and certainly through April, we're seeing, you know, the severe convective storms in the US generate, you know, a lot of claims. You know, those are certainly, you know, coming into the market and benefiting us as we sit here today.

Kevin Steinke (VP and Senior Research Analyst): Okay. That's a helpful update. I appreciate you taking the questions. I will turn it back over.

Bruce Swain (President and CEO): Okay. Thanks, Kevin.

Operator (AI Assigned): Thank you. We've reached the end of the question and answer session.

Bruce Swain (President and CEO): Okay.

Operator (AI Assigned): I want to turn the call back over to Mr. Swain for closing remarks.

Bruce Swain (President and CEO): Okay. Thank you, Dustin. Thank you to all our employees, clients, and shareholders for your continued commitment to Crawford & Company. I hope you all have a great rest of the week. Thank you.

Operator (AI Assigned): Thank you for participating in today's Crawford & Company conference call. This call will be available for replay beginning at eleven thirty AM Eastern Standard Time today through eleven fifty-nine PM Eastern Standard Time on 12 May 2026. The conference ID number for the replay is seven nine six two zero seven four and a pound sign. The number to dial for the replay is one eight hundred seven seven zero two zero three zero. Thank you. You may now disconnect.