Good morning. My name is Julie and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Crawford & Company Second Quarter 2024 Earnings Release Conference Call. In conjunction with that call, a supplementary financial presentation is available on our website at www.crawco.com under the Investor Relations section. All lines have been placed on mute to prevent background noise. After the speakers' remarks, there will be a question-and-answer period and instructions will follow at that time. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded today, Tuesday, August 06, 2024. Now, I would like to introduce Tami Stevenson, Crawford and Company's General Counsel.

Thank you, Julie. 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 revenues and reduce our operating expenses, expectations regarding our anticipated contributions to our underfunded defined benefit pension plans, collectability of our billed and unbilled account receivables, 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. 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 anticipated 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 March 30, 2024, filed with the Securities and Exchange Commission, particularly the information under heading 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 the SEC rules. As required, a reconciliation is provided for those measures to the most directly comparable GAAP measures. I would like now to introduce Mr. Rohit Verma, Chief Executive Officer of Crawford & Company. Rohit, you may begin.

Thank you, Tami. Good morning and welcome to our Second Quarter 2024 Earnings Call. Joining me today is Bruce Swain, our Chief Financial Officer and Tami Stevenson, our General Counsel. Before we start today, the Board and I would like to give a warm welcome to our new Director, Joel Murphy. Additionally, we would like to thank departing Board Members, Charlie Ogburn and Michelle Jarrard for their service to Crawford & Company. We look forward to collaborating with Joel and wish Charlie and Michelle very well. The second quarter 2024 demonstrated the continued strength of our core non-weather businesses, which delivered strong performances. Although we did continue to see the impact of benign weather reflected in revenues of weather related business, today I will take you through the operational highlights of the quarter and then I will turn over to Bruce for a deeper review of the financial results for the second quarter. As most of you know, Crawford is a leading publicly traded claims management provider handling over $20 billion in claims annually across 70 countries and we serve a well-known base of clients, including some of the most recognizable names in the industry. With a workforce of around 10,000 skilled professionals and tens of thousands of field resources, our extensive scale and global reach distinguish us in a fragmented market, positioning us as a preferred partner for top carriers, many of whom are longstanding customers. Crawford is an organization with more than 80 years of history and our focus is on building long-term and sustained value for all stakeholders. We have faced a lot of different market dynamics since the company's founding and continue to strategically evolve the model to perform and thrive in all market environments. Extreme weather events are becoming more severe and more frequent globally,…

Thank you, Rohit. As most of you know, our business is diversified and is comprised of four segments. North America loss adjusting encompasses our loss adjusting business in the US and Canada and accounted for 24% of our second quarter 2024 revenues. Our International business is comprised of all reported service lines outside of North America and contributed 33% of revenues. Broadspire is our third-party administrator in the US and accounts for 31% of our revenues. In Platform Solutions, which includes Contractor Connection and our Networks and Subrogation businesses contributed 12%. Now let's review each of these segments. Beginning with North America loss adjusting, in the second quarter of 2024, our revenues were $76 million, consistent with the prior year quarter. Operating earnings were $4.9 million, an increase of 25% over the $3.9 million in the prior year quarter and our margin increased 132 basis points to 6.4% from 5.1% in the prior year quarter. Our margin expansion in the quarter was largely due to our ability to expand market share and grow our customer base in the GTS service line which had another record revenue quarter. International Operations revenue for the 2024 second quarter was $102.3 million and operating earnings were $5.7 million. Our revenue grew 7% from $95.3 million in the second quarter of 2023 or 9% when measured in constant currency. Our operating earnings showed a significant increase of more than 50% over the prior year quarter reflecting improved performance in the UK and Europe. We still have work to do in our International Operations to return to historical margin levels. But it is clear that our efforts to turn around this segment post-pandemic have positioned us for long-term success and growth in key markets. Broadspire showed continued strength in the quarter, setting a new quarterly revenue…

Thank you, Bruce. To conclude, we saw some very encouraging earnings growth and margin expansion this quarter in three of our four segments. I am optimistic about our overall trajectory and momentum with our strong business foundation and proven growth strategy. Thank you for your time today. Julie, please open the call for questions.

Thank you. [Operator Instructions] Your first question comes from Mark Hughes from Truist. Please go ahead.

Yes. Thank you. Good morning.

Good morning, Mark.

Good morning, Mark.

The Broadspire profitability is very good in the quarter. Anything unusual boosting that or is this a level that might be sustainable?

Hi, Mark. This is Rohit. As you know, we've been investing significantly in Broadspire and we've been developing a strategy, which has been focused on developing an unbundled technology and med management offering as well as focusing on the alternative insurance market. All those strategies are working and clicking well. We believe that the work that we have done is showing the results. We expect to continue making investments from a technology standpoint and be the leading technology-led provider in terms of Broadspire services. So we feel very good about where we are. We've also had a good run of new business there. I think you've heard that in a strong retention at over 95%. So all those factors are contributing. And we expect to maintain those factors which should continue to add to the profitability or maintain the profitability I should say.

Yes. On GTS you talked about the good growth there, I think, record revenue. Is that utilization or have you been adding staff there, driving the top line?

Yes, so I think we were, as you know, we had shared this at least two years ago now, maybe close to three years ago that our strategy in GTS was to build an expertise-led model and continue to add to that expertise. We had made a commitment of adding 200 plus resources, which we were supposed to meet by the end of 2023, but we actually met that goal early part of 2023. And since then we have had an opportunity to continue to add additional expertise and resources to that and gain more nominated accounts over the period. So all that has contributed to the growth. And again we're not stopping. We'll opportunistically continue to add experts when we find them and where we find them.

In the International business, you had some nice recovery in margin. Have you taken the steps that you're able to take and perhaps the margin is more dependent on top line from here or are there more internal actions you can take to help improve profitability?

Look, we are very pleased with the recovery that we've seen in International as well. We do believe that this is a multiyear journey, as we've shared before, and we are partly into that journey. We expect to continue to make some more changes in the coming quarters. So we should see the profitability continue to move. Is it where we want it to be? No, not yet. But we are on a journey to bring it back to pre-COVID levels and we believe that we'll get there.

And then one more, if I might. In the weather-related lines where you've seen some pressure lately, is your cost structure, fixed variable, is that where you want it to be under the circumstances and there's obviously some infrastructure you're just going to have to keep and some costs you bear in that business or are there likewise additional steps you can take there to help even out some of the drier periods?

It's a very good question, Mark. There are elements of that cost structure, which are variable, and we have flexed those variables that to make sure that we account for the benign weather. We do have certain parts that we are still maintaining and we're maintaining at a relatively higher level than what we could only because we want to stay differentiated in the marketplace and stand ready. All the experts have talked about this being one of the most active weather seasons we've seen and early hurricane and we've seen a second one come through. There's another system developing on the back. We just don't want to be caught flat-footed to serve our clients.

Thank you very much.

Thank you.

[Operator Instructions] Your next question comes from Kevin Steinke from Barrington Research. Please go ahead.

Good morning. Thank you.

Good morning, Kevin.

Hi, Kevin.

Hello. I think you may have touched on this a bit, Bruce, but you had flat revenues in North America loss adjusting, but still a pickup in operating earnings year-over-year. Could you speak to that a little bit more? Any factors that might help drive that?

Yes. I think we've seen good growth in the GTS business and that's attracted good margins. The North America loss adjusting business is comprised of GTS and we also have what we call US field operations. And they were able to manage their cost well in light of some volatility with weather-related claim referrals as well. So an improvement in profitability, but there operating margin for the quarter at 6.5%, it's pretty good considering the weather, but not where we want it to be ultimately, so still a little work to do there.

Okay. Any specific work you need to do there or is it just a matter of the kind of the weather-related impact?

I think it's weather related primarily. As we bring on new GTS adjusters, as Rohit was mentioning earlier, there is a little bit of a ramp period there before they're kind of reached their peak profitability. But no I don't think there's anything really structurally we need to do in the North America loss adjusting business.

Okay. Thanks. And as I look at the trend in Networks revenue for the third quarter over the last three years, third quarter 2023, it looked like a solid quarter, but it was the lowest revenue quarter of the last three years, '21 through '23. I suppose it's hard to judge now, but it looks like the comp is easing a little bit, but I suppose it's also just going to be obviously highly dependent on what sort of weather activity we have here. But just kind of any thoughts on, did we have unusually strong weather events last year to contributing to the third quarter or is that kind of maybe a little bit more normalized?

Kevin, we definitely had higher levels of activity, particularly in Q2 of last year. What that did was it filled up the available capacity at the carriers as a result of that which more claims in Q3 that were coming into the carriers ended up getting outsourced. So that's what led to that. We have the same set of clients still. We continue to maintain a very strong NPS with them. So we believe that if the weather activity holds then we should start to see similar kind of work come our way. With the two hurricanes Debby as well as Beryl, we believe that while the claim activity has been low, it has given enough work to the carriers to be at capacity. So if we see another weather event come through, that should push more work towards us. But as history has taught me being in the insurance industry for a long time that never try to predict the weather until it's already happened.

Right. Makes sense. That's fair enough. Yes. So you spoke to the momentum you have in Broadspire and it sounds like you expect that to continue. Maybe again can you just expand on what's driving the new client wins and the sustainability of the momentum there and your what you feel might be helping drive those wins in terms of maybe competitive differentiation?

Certainly. Look, there are three factors, I believe, that are driving the success in Broadspire, first and foremost, being the technology investment that we've made, which is really differentiating us in the marketplace. The second, a very focused strategy on not only growing the traditional business, but also focused on the alternative insurance market, which focuses on MGAs and carriers and captives and program business, that has gotten quite a lot of traction. And then the third and final thing is the investments that we've made in training and development. We've been onboarding a new class of adjusters every year for the last three years or so. That has really helped us maintain our staffing levels much better than what we hear in the marketplace from some of our competitors. And as a result of which, we can provide a lot more stability of -- stability in terms of level of service to our clients. Those are the three biggest factors that I would say have led us to the growth. And again we're not relenting on any of those three. So we believe that, that should help us continue the momentum.

Okay. Great. You referred to the staffing levels there. It sounds like that's something you're going to continue to invest in Broadspire, I suppose, given the growth momentum there, but maybe speak to your ability to add staff and your attractiveness as a destination there maybe relative to -- you mentioned maybe others not staffing up as much, but any comment there on just the labor trends in that business?

Yes. As you know, that is a market that continue, I mean, claims in general is a market which continues to age. What we've been investing in Broadspire is to bring in what we call very early tenure adjusters people that may have had some experience in an allied kind of line or allied kind of industry, however, not directly in claims to bringing them in and training them from the ground up. I think what makes us attractive is the kind of benefits that we offer, the kind of culture environment that we provide, the career opportunities and the growth potential. Our vision statement is to be a place where experts want to be. And we believe that that's resonating in the marketplace and our actions are demonstrating that we are living to that vision. And those are the reasons we believe that we're able to attract workforce.

Okay. Great. And then just lastly, on the Medical Management side and Broadspire, it feels like that business has been fully recovered from the effects of the pandemic, but maybe any trends you're seeing there in terms of number of cases flowing or are you starting to see kind of maybe cases that have been delayed or coming back? Any sort of backlog or trends there in Medical Management?

Yes. I would say that since the second quarter of 2023, we've been seeing a recovery back to the pre-pandemic levels. And I would say that right now, we're trending to be a little bit above the pre-pandemic levels. It's not always easy to make that comparison, but some of that is just related to growth in our underlying business as well. So when we look at our case load on the Medical Management side, we believe that we've had a full recovery on the work that we had pre-pandemic. But then the additional cases that or additional clients that we've added are now having cases that are in line with what we would expect them to have based on the claims load that we see there. So we believe that we're fully recovered and moving well on that path.

Okay. Great. That's helpful. Thank you for taking the questions. I will turn it back over.

Thanks.

Thank you. Thank you, Kevin. Always a pleasure.

And there are no further questions at this time. I will turn the call back over to Mr. Verma for closing remarks.

Thank you so much, Julie, and thank you to all our employees, clients and shareholders for your continued commitment to Crawford & Company. Thank you very much for your time today. God bless.

Thank you for participating in today's Crawford & Company Conference Call. This call will be available for replay beginning at 11:30 A.M. Eastern Time today through 11:59 P.M. Eastern Time on September 5th, 2024. The conference ID number for the replay is 332233. The number to dial for the replay is 877-674-7070. Thank you. You may now disconnect.