CRAWFORD & CO (CRD-A)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 delivered margin-led earnings strength despite softer revenue: Revenues before reimbursements fell 2% to $322.2M, but GAAP diluted EPS rose 32% YoY to $0.25 and non-GAAP EPS to $0.32; adjusted operating earnings and adjusted EBITDA increased 22% and 23% YoY, respectively .
• Versus Wall Street: EPS beat by $0.03 (0.32 vs 0.29*) while revenue missed by ~$22.2M (322.2M vs 344.3M*); adjusted EBITDA was modestly above consensus (36.3M vs 35.7M*) — a narrative of cost discipline offsetting weather-driven revenue softness .
• Segments: Broadspire and International posted record quarterly revenues and margin expansion; North America Loss Adjusting margins improved; Platform Solutions revenues declined as staff augmentation slowed but mix shifts and cost controls improved margin .
• Capital return catalysts: Board authorized +2.0M shares to buyback program (through 12/31/2027) and declared $0.075 quarterly dividend payable Dec 5, 2025; the company repurchased ~276K shares in Q3 .
• Operating context: Consolidated weather-related activity fell (NOAA severe storm reports down to 6,659 from 10,180), underpinning lower U.S. claims volumes; leverage remains low at ~1.64x, supporting repurchases and dividends .

What Went Well and What Went Wrong

What Went Well

• Broadspire achieved record quarterly revenues ($103.4M, +4.4% YoY) and higher operating margin (15.1%); management highlighted “expanded client relationships and new business momentum” .
• International Operations delivered record revenues ($112.9M, +6.7% YoY) and margin expansion (6.6% vs 4.9%) on higher-value UK claims, Thailand earthquake claims, and increased Australian weather claims .
• Company-wide margin improvement and earnings growth: adjusted operating earnings +22% YoY to $26.6M and adjusted EBITDA +23% to $36.3M; CEO: “solid third-quarter results… improved margins across all segments” .

What Went Wrong

• Consolidated revenue declined 2% YoY driven by continued absence of significant weather events and lower U.S. claims activity, pressuring North America Loss Adjusting and Platform Solutions .
• Platform Solutions revenue fell 36.1% YoY to $28.9M due to lower staff augmentation, with operating earnings down $1.2M YoY despite margin mix benefits from Contractor Connection and Subrogation .
• FX and SG&A: Constant-dollar revenue decreased 3%; SG&A declined $2.1M YoY in Q3 but was up $1.2M YTD on a one-time indirect tax expense, reflecting some non-operating cost headwinds .

Financial Results

Consolidated Performance vs Prior Year and Prior Quarter

Consensus vs Actual (Q3 2025)

Segment Revenues and Operating Earnings (Q3)

Segment Operating Margins (Q3)

KPIs

Non-GAAP adjustments that bridge GAAP to non-GAAP: amortization ($2.126M pretax), non-service pension costs ($2.363M pretax), and contingent earnout ($0.06M) — collectively lifting non-GAAP diluted EPS to $0.32 from GAAP $0.25 .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO Rohit Verma: “Our Company delivered solid third-quarter results with a 22% increase in operating earnings and improved margins across all segments… Broadspire and International Operations performed particularly well, but consolidated revenue decreased slightly due to the continued absence of significant weather events and lower U.S. claims activity” .
• On commercial momentum: “Expanded client relationships and new business momentum… focus remains on delivering operational excellence and deepening engagement with existing clients” .
• CFO slide highlights: leverage ratio ~1.64x EBITDA, low vs industry; strong liquidity; disciplined capital allocation across capex/M&A/repurchases/dividends .

Q&A Highlights

• Themes centered on margin expansion amidst weather headwinds, Broadspire and International resilience, and capital deployment (dividends/buybacks) supported by low leverage; management reaffirmed long-term growth trajectory and operational efficiency focus .
• Clarifications on weather impact and case volumes: reduced severe storm activity correlating with lower U.S. property claims; diversified revenue streams mitigate volatility .
• Capital returns: confirmation of repurchase authorization expansion and dividend policy consistency given balance sheet strength .

Estimates Context

• EPS beat: $0.32 actual vs $0.29* consensus (beat $0.03). Revenue miss: $322.2M actual vs $344.3M* consensus (miss $22.2M). Adjusted EBITDA modestly above consensus: $36.3M actual vs $35.7M* consensus .
  Values retrieved from S&P Global.*

Where estimates may adjust:

• We expect sell-side to lift margin and EPS assumptions near term given consolidated margin expansion and cost controls, but to trim revenue assumptions for U.S. property claims activity absent a pickup in weather events .

Key Takeaways for Investors

• Margin-driven earnings strength: With adjusted operating margin at 8.3% and adjusted EBITDA margin at 11.3%, execution offsets top-line softness — favor companies with cost discipline in low-claims environments .
• Segment mix quality: Broadspire and International provide ballast and structural growth; Platform actions (mix shift, admin reductions) support margins even amid revenue decline .
• Capital return supports total return: Fresh buyback capacity (+2.0M shares) and $0.075 dividend indicate confidence; low leverage (~1.64x) preserves flexibility .
• Weather trough risk: NOAA severe storm count decline underscores near-term U.S. claims headwind; watch seasonal patterns and catastrophe activity for revenue inflection .
• Estimate dispersion likely: EPS revisions up on margins; revenue forecasts down where weather exposure is material (NALA, Platform) .
• Tactical: Near-term stock performance may hinge on updated sell-side models and capital return cadence; monitor share repurchase pacing and any Q4/U.S. storm activity .
• Medium-term thesis: Diversified global footprint, next-gen Insurtech capabilities, and improved operating efficiency position Crawford to expand margins and compound cash generation through cycles .