Crawford & Company · NYSE:CRD.A
Crawford & — Midwest IDEAS Investor Conference 2020
37 slides from Crawford &'s conference presentation, Aug 25, 2020
Slide 1: Midwest IDEAS Investor Conference August 27, 2020
Midwest IDEAS Investor Conference August 27, 2020
Slide 2: Forward-Looking Statements and Additional Information
2 Forward - Looking Statements and Additional Information Forward - Looking Statements This presentation contains forward - looking statements, including statements about the expected future financial condition, resul ts of operations and earnings outlook of Crawford & Company. Statements, both qual
Slide 3: Crawford & Company
3 Crawford & Company The world’s largest publicly listed independent provider of global claims management solutions. Organized across global service lines: • P&C adjusting solutions (Crawford Claims Solutions) • Large and complex claims (Global Technical Services) • Global TPA solutions (Broadspire)
Slide 4: Loss resolution for carriers, brokers and corporates
Crawford & Company Loss resolution for carriers, brokers and corporates Our Mission Restoring and enhancing lives, businesses and communities. Our Vision To be the leading provider and most trusted source for expert assistance , serving those who insure and self - insure the risks of businesses and
Slide 5: Positioned for Future Growth
5 Positioned for Future Growth Noble mission that inspires our leadership team, clients and employees Unique ownership structure, providing both flexibility and resilience Consolidating a fragmented market Leveraging competitive excellence to deliver clients best - in - class solutions Leading chang
Slide 6: Market Leading Solutions
6 Loss Adjusting Third Party Administration Managed Repair Medical Management On - Demand Services Catastrophe Response We bring together thoughtful experts from around the world to offer comprehensive, intelligent solutions to our customers Market Leading Solutions The Crawford brands offer high -
Slide 7: Scope and Scale of Operations
7 Scope and Scale of Operations Comprehensive experience across the spectrum of the claims world¹ Crawford Claims Solutions Broadspire Global Technical Services Contractor Connection P&C Adjusting Solutions Global TPA Large or Complex Claims Managed Repair Services 460,000+ P&C claims managed $1.0 b
Slide 8: Update on our Response to COVID-19
8 Update on our Response to COVID - 19 Workforce Client Impact Diversity and Inclusion Market Leadership Remain committed to protecting the safety and well - being of our workforce allowing them to successfully serve our clients Continue to deliver on our mission and promise to be there for our clie
Slide 9: Why Invest in Crawford?
9 Why Invest in Crawford? Crawford’s leading market position in an evolving landscape provides a compelling investment narrative Attractive business model Experienced leadership team Industry is undergoing rapid change Investing to drive innovation and accelerate growth Committed to environmental, s
Slide 10: Attractive Business Model
10 Attractive Business Model Technology - Enabled BPO Platform Strong Cash Flow Generation Recurring Fee for Service Revenue Model Blue - Chip Global Client Base Solid Balance Sheet and Low Debt Profile Healthy Dividend Yield Global Product and Geographic Diversification Competitive Market Position
Slide 11: Experienced Leadership Team
11 Rohit Verma Chief Executive Officer Joseph Blanco President Bruce Swain Chief Financial Officer Tami Stevenson Senior Vice President, Global General Counsel Bonnie Sawdey Chief People Officer Greta Van Global Chief Strategy Officer Danielle Lisenbey Global President, TPA Solutions: Broadspire Kie
Slide 12: Industry is Undergoing Rapid Change
12 Industry is Undergoing Rapid Change Industry is looking to invest in technology and diversify business lines to improve profitability Increasing claims severity and complexity Carriers move to improve margins by cutting fixed costs and outsourcing the claims process Consolidation of TPA and indep
Slide 13: Investing to Drive Innovation and Accelerate Growth
13 At the forefront of technological disruption while maintaining industry leadership position Investing to Drive Innovation and Accelerate Growth
Slide 14: Environmental, Social, and Governance
14 Environmental, Social, and Governance Diversity and Inclusion Established an Employee Advisory Council aligned with our mission to foster a safe and inclusive working environment, where employees can bring their authentic selves to work and offer unique experiences and perspectives Human Capital
Slide 15: Financial Strength and Flexibility
15 Financial Strength and Flexibility Strong financial position with ample liquidity Increased operating cash flow by 40% over last year’s levels¹ Low leverage ratio of 1.57x EBITDA¹ Increased dividend to $0.04 per share for CRD - A and CRD - B Continuing to evaluate share repurchases as a component
Slide 16: Second Quarter 2020 Financial Summary
16 Quarter Ended June 30 , June 30 , ($ in millions, except per share amounts) 20 20 201 9 % Change Revenues $ 234.4 $ 256.9 ( 9)% Non - GAAP Revenues excluding foreign exchange fluctuations (1) $ 240.2 $ 256.9 (7)% Net Income Attributable to Shareholders of Crawford & Company $ 5.9 $ 2.6 123% Dilut
Slide 17: Balance Sheet Highlights
17 Balance Sheet Highlights Unaudited ($ in thousands) June 30 , 20 20 December 31, 201 9 Change Cash and cash equivalents $ 59,958 $ 51,802 $ 8,156 Accounts receivable, net 120,941 128,217 ( 7,276 ) Unbilled revenues, net 106,335 103,894 2,441 Total receivables 227,276 232,111 ( 4,835 ) Goodwill 62
Slide 18: Cash Flow Highlights
18 Unaudited ($ in thousands) 20 20 201 9 Change Net (Loss) Income Attributable to Shareholders of Crawford & Company $ (5,501) $ 8,751 $ ( 14,252 ) Goodwill Impairment 17,674 — 17,674 Arbitration and Claim Settlements — 11,352 (11,352 ) Loss on Disposition of Business 341 — 341 Depreciation and Oth
Slide 19: 2020 Priorities
19 2020 Priorities Employee Health & Safety Protect our workforce first and foremost Customer Excellence Provide best - in - class service to our clients regardless of the global environment Brands, Relationships & Differentiation Maintain industry leadership through our innovations and market leadi
Slide 20: Crawford & Company
20 9,000 50,000+ 70 $18B+ Employees Field Resources Countries Claims Managed Annually Crawford & Company The world’s largest publicly listed independent provider of global claims management and outsourcing solutions.
Slide 21: Appendix A: Global Service Lines
21 Appendix A: Global Service Lines 21
Slide 22: Crawford Claims Solutions
22 Crawford Claims Solutions Value Proposition • Most extensive network of field services in the world • Widest range of innovative, end - to - end outsourced claims management solutions • Scalable and mobile workforce can respond to catastrophes anywhere in the world • Globally deployed field asset
Slide 23: Third Party Administration Solutions: Broadspire
23 Third Party Administration Solutions: Broadspire Affinity Warranty Summary Employers Liability Global Presence • Servicing customers in 16 countries • Global account management, treasury and IT infrastructure Cutting - edge Capabilities • Data - driven approaches with predictive components drivin
Slide 24: Crawford Specialty Solutions
24 Crawford Specialty Solutions • Technology – led integrated outsourced solutions leveraging service breadth • Deep roster of professional and highly credentialed contractors • Analytics - based performance management • Continuous innovation and global expansion Value Proposition Financial savings
Slide 25: Appendix B: Second Quarter 2020 Segment Results
25 Appendix B: Second Quarter 2020 Segment Results 25
Slide 26: Crawford TPA Solutions Segment Highlights
26 Crawford TPA Solutions Segment Highlights • Renewed 97% of our revenue YTD • COVID - 19 prompted service innovation and increased use of telemedicine services • Advancing technology solutions Highlights • Revenues of $86.7 million versus $99.5 million • Constant dollar revenues of $87.6 million •
Slide 27: Crawford Claims Solutions Segment Highlights
27 Crawford Claims Solutions Segment Highlights • Continuing to ramp up major carrier win from the first quarter • Strong performance in U.S. and U.K. • Providing data driven, topical, and actionable insights to market • Enhanced digital platform Highlights • Revenues of $81.5 million versus $86.0 m
Slide 28: Crawford Specialty Solutions Segment Highlights
28 Crawford Specialty Solutions Segment Highlights Highlights • GTS • Implementing largest U.S. program to date • Actively recruiting adjuster teams globally • Pursuing large scale BI opportunities • Contractor Connection • Saw largest monthly assignments in May • Onboarded a top ten carrier in June
Slide 29: Appendix C: Non-GAAP Financial Information
29 Appendix C: Non - GAAP Financial Information 29
Slide 30: Non-GAAP measures and reimbursements
30 Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not sub stitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comparable to other similar ly - titled meas
Slide 31: Segment and Consolidated Gross Profit; Adjusted EBITDA
31 Segment and Consolidated Gross Profit Gross profit is defined as revenues less direct expenses which exclude indirect overhead expenses allocated to the business. Ind irect expenses consist of centralized administrative support costs, regional and local shared services that are allocated to each
Slide 32: Total Revenues Before Reimbursements by Major Currency
32 Total Revenues Before Reimbursements by Major Currency The following table illustrates revenue as a percentage of total revenue in the major currencies of the geographic areas in which Crawford does business: Three Months Ended Six Months Ended ( in thousands ) June 30, 2020 June 30, 2019 June 30
Slide 33: Revenues, Costs of Services Provided, and Operating Earnings
33 Revenues, Costs of Services Provided, and Operating Earnings Quarter Ended Quarter Ended June 3 0 , June 30 , Unaudited ($ in thousands) 20 20 201 9 Revenues Before Reimbursements Total Revenues $ 234,416 $ 256,881 Reimbursements ( 8,459 ) ( 10,965 ) Revenues Before Reimbursements $ 242 , 875 $ 2
Slide 34: Reconciliation of Non-GAAP Items: Adjusted EBITDA
34 Reconciliation of Non - GAAP Items (cont.) Adjusted EBITDA Quarter Ended June 30 , June 3 0 , Unaudited ($ in thousands) 20 20 201 9 Net income attributable to shareholders of Crawford & Company $ 5,898 $ 2,642 Add: Depreciation and amortization 9,390 10,226 Stock - based compensation 1,118 1,646
Slide 35: Reconciliation of Non-GAAP Items: Net Debt
35 Reconciliation of Non - GAAP Items (cont.) Net Debt June 30 , December 31, Unaudited ($ in thousands) 20 20 201 9 Net Debt Short - term borrowings $ 39,887 $ 2 8,531 Current installments of capital leases 38 15 Long - term debt and capital leases, less current installments 155,649 1 48 , 408 Tota
Slide 36: Reconciliation of Non-GAAP Items: Segment Gross Profit
36 Reconciliation of Non - GAAP Items (cont.) Segment Gross Profit Three months ended ( $ in thousands) June 30 , 20 20 June 30 , 201 9 Segment gross profit: Crawford TPA Solutions $ 19 , 762 $ 2 3,678 Crawford Claims Solutions 19 , 004 19,553 Crawford Specialty Solutions 25 , 083 2 5,223 Segment gr
Slide 37: Reconciliation of Second Quarter Non-GAAP Results
37 Reconciliation of Second Quarter Non - GAAP Results Three Months Ended June 3 0 , 20 20 Unaudited ($ in thousands) Revenues Non - GAAP Operating Earnings Pretax Earnings Net Income Attributable to Crawford & Company Diluted Earnings per CRD - A Share Diluted Earnings per CRD - B Share GAAP $ 234,