Crawford B’s Q2 Earnings Call: Corporate Expense Hike and Broadspire Pipeline Forecasts at Odds

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Date of Call: Aug 4, 2026

Financials Results

• Revenue: $321.4 million, down slightly year-over-year
• EPS: GAAP diluted EPS: $0.27 and $0.28 for CRDA and CRDB, up from $0.16 for both share classes in the prior year. Non-GAAP diluted EPS: $0.38 for both CRDA and CRDB, up from $0.22 in the prior year.
• Operating Margin: Non-GAAP operating margin: 9.2%, up from 6.8% in the prior year. Adjusted EBITDA margin: 11.7%, up from 9.7% in the prior year.

Business Commentary:

Revenue and Operating Earnings Growth:

• Crawford & Company reported second quarter revenues of $321.4 million, which was slightly down year-over-year. However, consolidated operating earnings increased by 34% over the prior year quarter.
• The growth in operating earnings was driven by strong performance in Broadspire and international operations, particularly due to heightened weather-related revenues in Australia and Asia.

International Operations Performance:

• International operations accounted for 43% of revenues, with a revenue increase of 4.2% to $138 million compared to the prior year, excluding the impact from the exit of Crawford Legal Services and foreign currency exchange rate movements.
• This performance was driven by heightened weather-related claims, revenue from Australia and Asia, and improved performance in Canada due to cost control initiatives.

Broadspire Segment Growth:

• Broadspire, the U.S.-based third-party administration business, represented 34% of revenues, with a notable increase in both revenues and profits.
• The growth was attributed to new business in the alternative markets, such as MGAs and captives, which require turnkey claim solutions.

Dividend Increase and Share Repurchase:

• The company declared a dividend increase to $0.08 per share, up from $0.075, and repurchased approximately 295,000 shares of CRDA and 38,000 shares of CRDB during the second quarter.
• These actions reflect the company's commitment to capital allocation and returning value to shareholders, supported by consistent profitability and strong cash generation.

Cost Management and Margin Improvement:

• The company achieved a reduction in SG&A costs and administrative expenses, contributing to a 70 basis points increase in operating margin in the U.S. property and casualty segment.
• This improvement was driven by a focus on administrative cost efficiency and a shift in business mix, including lower-margin staff augmentation work being internalized by carriers.

Sentiment Analysis:

Overall Tone: Positive

• CEO stated: 'We delivered a solid second quarter... this quarter had the best overall operating earnings since the 2023 third quarter.' CFO noted: 'We are encouraged by the number and size of opportunities we're seeing in the marketplace.' Company reports increased operating earnings and margins, and raised the quarterly dividend.

Q&A:

• Question from Mark Hughes (Truist): Could you expand on the reduction in centralized indirect support expenses and what that means for go-forward margins?
  Response: Reductions in SG&A and administrative expenses are part of a focus on cost efficiency, but the primary vehicle for earnings improvement is profitable revenue growth, which will deliver incremental margins.

• Question from Mark Hughes (Truist): What is the duration of beneficial weather trends in international operations and visibility for Q3?
  Response: Carryover benefits from weather events in Australia and Asia are winding down, with much less impact expected in Q3 and especially Q4.

• Question from Mark Hughes (Truist): Why did U.S. P&T margin improve year-over-year despite a top-line decline?
  Response: Margin improvement is due to a mix shift (reductions in lower-margin catastrophe staff augmentation work) and cost focus across businesses, including SG&A reductions.

• Question from Mark Hughes (Truist): Could you talk about the magnitude of outsourced MGA benefits for Broadspire and the end markets?
  Response: Alternative markets (MGAs, captives) represent a significant growth opportunity, with new business in casualty and complex casualty. The company is investing in sales and marketing to unlock these opportunities.

• Question from Mark Hughes (Truist): Is the corporate expense run rate of $4.3 million a good starting point?
  Response: Yes, the $4.3 million is a good starting point as the prior year had a one-time non-recurring expense.

• Question from Mark Hughes (Truist): What is driving the lower claims volume in the networks business and its potential for turnaround?
  Response: Lower property claim volumes due to fewer major weather events and carriers internalizing work; future events could drive recovery.

• Question from Kevin Steinke (Barrington Research): How is new business ramping at Broadspire and what is the pipeline like?
  Response: Broadspire performed well in Q2 with revenues, profits, and margins up. The pipeline is active and weighted toward TPA and alternative markets, with advanced hiring supporting future growth.

• Question from Kevin Steinke (Barrington Research): Where did the $22 million of new/enhanced business in the quarter come from?
  Response: New business came from all segments, including Broadspire and U.S. property and casualty.

• Question from Kevin Steinke (Barrington Research): What drove the improvement in international margins and where is the business in its margin progression?
  Response: Margin improvement was due to weather-related revenue and cost control. International margins are expected to continue improving toward a long-term goal in the 10% neighborhood, though quarterly variance will occur.

• Question from Kevin Steinke (Barrington Research): What is the hiring pipeline and growth strategy for Global Technical Services (GTS)?
  Response: GTS growth is driven by organic revenue growth, aqua-hires (recruiting talent), and potential tuck-in acquisitions to become a global market leader.

• Question from Kevin Steinke (Barrington Research): Any updated thoughts on insurance affordability pressures and the market direction?
  Response: The property market is soft with premiums coming down and coverage terms loosening, and casualty markets are also showing some softness.

• Question from Kevin Steinke (Barrington Research): What is the updated annual revenue figure for the exited legal services businesses?
  Response: The prior year revenue was $18.8 million. The company took a $1.3 million loss on the sale in Q2 and expects an additional $1.3 million expense when the UK entity is fully closed.

Contradiction Point 1

Financial Impact and Timeline of Corporate Expense Reductions

Contradiction on the materiality and trend of corporate expense increases.

Mark Hughes (Truist) - Mark Hughes (Truist)

2026Q2: The $4.3 million corporate expense is a good starting run rate, compared to a one-time $3.1 million indirect tax expense in the prior year. - [Holly Boudreau](CFO)

Could you expand on the reduction in centralized indirect support expenses and its impact on go-forward margins, the duration and visibility of beneficial weather trends in international operations for Q3, and why U.S. P&T margins improved year-over-year despite a top-line decline? - Mark Hughes (Truist Securities)

2026Q1: The increase in Unallocated Corporate costs in Q1 was approximately $800,000. No major increases are expected in future quarters. - [Holly Boudreau](CFO)

Contradiction Point 2

Growth Outlook for the Alternative Market (MGAs)

Contradiction on the primary growth drivers and market focus for Broadspire.

Mark Hughes (Truist) - Mark Hughes (Truist)

2026Q2: The alternative market (MGAs, MGUs, captives) represents a significant growth opportunity. Capital is flowing into this space... New business in Q2 contributed to this pipeline. - [Bruce Swayne](CEO)

What is the magnitude of outsourced MGA benefits for Broadspire and the end markets they operate in? - Kevin Sanka (Barrington Research)

2026Q1: The pipeline is strong, particularly in Broadspire and U.S. Property & Casualty, and is building due to the new unified U.S. sales structure. - [Bruce Wayne](CEO)

Contradiction Point 3

Performance and Expectations for Broadspire's New Business Pipeline

Contradiction on the growth drivers and performance indicators for Broadspire's new business.

Kevin Steinke (Barrington Research) - Kevin Steinke (Barrington Research)

2026Q2: Broadspire performed well in Q2 with revenue, profit, and margin growth. The pipeline is active and weighted toward the TPA market... Early hiring investments made in anticipation of new business helped support the ramp. - [Bruce Swayne](CEO)

What is the current status of Broadspire's new business ramping and pipeline? - Mark Hughes (Truist Securities)

2026Q1: Broadspire is expected to grow in 2026. Q1 growth was modest due to some new business start dates being later in the year and an outlier client loss (which would have represented a ~93% retention rate, not indicative of broader trends). - [Bruce Wayne](CEO)

Contradiction Point 4

Carriers Internalizing Claims Management

Contradiction on the driver and sustainability of carriers moving claims management in-house.

What are your thoughts on Truist's earnings results? - Mark Hughes (Truist)

2026Q2: The decline [in networks business] is due to... carriers internalizing some large staff-augmentation programs in catastrophe services. - [Bruce Swayne](CEO)

Was the lower claims volume in the networks business driven by broader market trends or customer shifts, and what is the potential for a turnaround? - Kevin Steinke (Barrington Research Associates, Inc.)

2025Q4: Carrier insourcing is currently due to lower claims frequency and increased internal capacity, not AI... This trend is cyclical and tied to claims volume and carrier capacity. - [Bruce W. Swain](CEO)

Contradiction Point 5

Outlook and Drivers for International Margins

Contradiction on the primary driver and expected timing for achieving long-term international margin targets.

Kevin Steinke (Barrington Research) - Kevin Steinke (Barrington Research)

2026Q2: International margins were boosted by carryover weather-related claims in Australia/Asia, reaching nearly 8% in Q2 (higher than recent years). This benefit is expected to moderate. Ongoing improvements will come from technology investments, pricing discipline, and profitable revenue growth. Long-term goal is to improve toward the 10% neighborhood, but this will take a few years due to the challenges of managing 28 countries at scale. - [Bruce Swayne](CEO)

Okay, let's see. The user wants me to rewrite the input into one concise earnings-call question. The input is "Can you discuss the margin progression and cost base in the International segment?" First, I need to make sure I follow all the hard output rules. The output must be exactly one line, only the final question text, end with a question mark if possible. No explanations or any other text.The original input is already a question, so I need to check if it's concise enough. "Discuss" might be a bit vague. Maybe "discuss" can be replaced with something more specific like "explain" or "provide details on." But the user might want to keep the original intent. "Margin progression" and "cost base" are specific terms used in financial contexts, so they should stay. The segment is "International," so that's clear. Is there a way to make it more concise? Maybe "Can you explain the margin trends and cost structure in the International segment?" But the original uses "progression" and "cost base." "Progression" could be "trends" or "changes." However, the user might prefer to keep the exact terms. Alternatively, "Can you detail the margin progression and cost base in the International segment?" But the original is already a question. The user might want to keep it as is but ensure it's a single line. Wait, the original input is already a question. The instruction says if the input is a question, rewrite it into one concise question. But the input is already a question. So maybe it's already acceptable. However, the user might want it to be more concise. "Discuss" is a bit broad. Maybe "Can you provide details on the margin progression and cost base in the International segment?" But the original is shorter. The original is "Can you discuss the margin progression and cost base in the International segment?" That's already one line. Maybe the user wants it to be more direct. Perhaps "How have margins and costs progressed in the International segment?" But that changes the wording. Wait, the original uses "margin progression" and "cost base." Maybe those terms are specific to their reporting. Changing them might lose meaning. So perhaps the original is acceptable. But the user wants it concise. Let me check the input again. The input is a question, so according to the rules, if it's a question, we need to rewrite it into one concise question. If it's already a clear question, maybe we can leave it as is. But the instruction says to output exactly one line, which the input already is. However, the user might want it rephrased to be more concise. Alternatively, maybe "Discuss" is too vague. Maybe "Can you explain the margin progression and cost base in the International segment?" But "discuss" and "explain" are similar. I think the original input is already a valid question, but perhaps the user wants it to be more concise. However, since the input is already a single line and ends with a question mark, maybe the answer should be the same as the input. Wait, the instruction says if the input is already a question, and can be rewritten, then output the rewritten version. If not, output as-is. But the input is a question. Is it possible to make it more concise? Maybe "Can you discuss International segment margins and cost base?" But that's shorter. However, "margin progression" is more specific than just "margins." The original asks about the progression (trend over time) and the cost base (structure or level). So maybe the original is more precise. Alternatively, "Can you discuss the International segment's margin trends and cost structure?" But again, changing terms. Since the original uses specific financial jargon, it's better to keep the terms as they are. Therefore, the original input is already a concise question. However, the user's instruction says to rewrite it into one concise question. So perhaps the answer is the same as the input, but maybe the user wants a slight rephrase. Wait, the input is "Can you discuss the margin progression and cost base in the International segment?" It's already one line, ends with a question mark. So according to the rules, if it's a valid question and can be rewritten into a concise one, then do so. But maybe the user considers it already concise. Therefore, the answer would be the same as the input. However, the instruction says to output exactly one line, which the input already is. But the user might want a more concise version. Hmm. Maybe the answer is the same as the input. Because if it's already a question and concise, then no need to change. The user's instruction says if the input is not a question, too vague, or lacks info, output as-is. But if it's a valid question, rewrite into one concise. Wait, the input is - Mark Hughes (Truist Securities, Inc.)

2025Q3: The margin improvement was driven by a combination of weather-related claims in Australia, the U.K., and Europe, along with new client wins. The long-term target for international margins is 10%, and the business is on a trajectory to improve, though there will be quarterly fluctuations due to weather and cyclicality. - [Rohit Verma](CEO)

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