Crawford & Company · NYSE:CRD.A
Crawford & — 23rd Annual Needham Virtual Growth Conference (January 2021)
44 slides from Crawford &'s conference presentation, Jan 13, 2021
Slide 1: 23rd Annual Needham Virtual Growth Conference
23rd Annual Needham Virtual Growth Conference January 13, 2021 CRD - A & CRD - B (NYSE)
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: Strategic Pillars
3 Strategic Pillars Our Purpose Restoring and enhancing lives, businesses and communities. Our Values Our purpose is embedded in our values – to RESTORE is part of everything we do. espect mpowerment ustainability raining ne Crawford ecognition ntrepreneurial Spirit
Slide 4: Crawford & Company at a Glance
4 65% 35% Crawford & Company 57% 11% 13% 7% 12% Canada U.K. Australia Rest of the world BY GLOBAL SERVICE LINES 2 BY GEOGRAPHY 2 Crawford TPA Solutions (Broadspire) U.S. 39% 34% 27% Crawford Specialty Solutions (Global Technical Services & Contractor Connection) Crawford Claims Solutions (P&C Adjust
Slide 5: Financial Snapshot
5 (1) As of 1/5/2021 ( 2 ) See appendix for non - GAAP explanation and reconciliation of non - GAAP measures Overview FY 2019 GAAP FY 2019 NON - GAAP 2 $ 384 MILLION Market capitalization¹ Financial Snapshot The world’s largest publicly listed independent provider of global claims management solutio
Slide 6: Market Leading Solutions
6 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 The Crawford brands offer high - quality and technologic
Slide 7: Scope and Scale of Operations
7 7 Comprehensive experience across the spectrum of the claims world¹ Crawford Claims Solutions Global Technical Services Contractor Connection Crawford TPA Solutions: Broadspire P&C Adjusting Solutions Large or Complex Claims Managed Repair Services Global TPA $340 million Full - year 2019 revenues
Slide 8: Why Invest in Crawford?
8 8 Crawford’s leading market position in an evolving landscape provides a compelling investment narrative Attractive investment profile Experienced leadership team Strategically positioned in a rapidly changing industry Investing to drive innovation and accelerate growth Committed to environmental,
Slide 9: Attractive Investment Profile
9 9 Attractive Investment Profile Investment Profile | Leadership Team| Strategically Positioned | Driving Innovation and Growth| ESG | Financial Strength and Flexibility Technology - Enabled BPO Platform Strong Cash Flow Generation Recurring Fee for Service Revenue Model Blue - Chip Global Client B
Slide 10: Experienced Leadership Team
10 10 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 Mike Jones President, Europe Neil Lentine Global President, TPA Solutions: Broadspire Pat Van Bakel Pr
Slide 11: 2021 Change in Business Segments
11 11 2021 Change in Business Segments Investment Profile | Leadership Team| Strategically Positioned | Driving Innovation and Growth| ESG | Financial Strength and Flexibility Loss Adjusting • CCS and GTS services combined into a single Loss Adjusting (“LA”) segment • Team approach to LA gives an un
Slide 12: Strategically Positioned in a Rapidly Changing Industry
12 12 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 independent claims management provider
Slide 13: More Frequent and Destructive CAT Events
13 13 More Frequent and Destructive CAT Events Leading to Heightened Insured Losses Catastrophe - related insured losses (1970 - 2020) 1 (1) SwissRe Investment Profile | Leadership Team| Strategically Positioned | Driving Innovation and Growth| ESG | Financial Strength and Flexibility
Slide 14: Targeting National and Regional Players
14 14 2 % 63 % 6% 22% 92% 15% # of Carriers Total Premium Medium: $1B - $5B Small: Less than $1B Large: Greater than $5B 1. ~98% of carriers are small to medium sized 2. They have limited financial capacity • Insurance carriers currently operate with a large operating expense base, which is unsustai
Slide 15: Investing to Drive Innovation and Accelerate Growth
15 15 Investing to Drive Innovation and Accelerate Growth Investment Profile | Leadership Team| Strategically Positioned | Driving Innovation and Growth | ESG | Financial Strength and Flexibility At the forefront of technological disruption while maintaining industry leadership position (1) YouGoLoo
Slide 16: Solutions Addressing Customer and Industry Challenges
16 16 Solutions Addressing Customer and Industry Challenges Focus on Speed & Simplicity Strengthen Knowledge Disruptive Technology Innovative Solutions Continuous Quality Claims processing is evolving with customer expectations for on - demand, simplified products and services Data analytics are cha
Slide 17: US Economic Outlook
17 17 United States Q1 2020 Q2 2020 Q3 2020 Unemployment rate 4.4% 11.1% 7.9% Miles driven (B) 235.1 197.2 ( - 16.2%) 239.7 (21.5%) Housing starts (000’s) 1,484 1,079 ( - 27.3%) 1,454 (34.7%) Retail sales ($B) 481.1 476.9 ( - 0.9%) 536.0 (12.4%) UK Q1 2020 Q2 2020 Q3 2020 Unemployment rate 3.9% 3.9%
Slide 18: ESG: Diversity, Human Capital, Environment, Community
18 Diversity and Inclusion Established Employee Resource Groups and an Employee Advisory Council aligned with our purpose 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 Developme
Slide 19: Financial Strength and Flexibility
19 35 % 1.11x $ 0.05 Proactively manage capital allocation across the business and adapt to opportunities increase in operating cash flow over last year¹ net funded debt - to - EBITDA, a seven - year low leverage ratio¹ OPERATING CASH FLOW¹ $57.3M Strong financial position with liquidity surpassing
Slide 20: Reinvigorated M&A Pipeline
20 Investment Profile | Leadership Team| Strategically Positioned | Driving Innovation and Growth| ESG | Financial Strength and Flexibility Reinvigorated M&A Pipeline Latin American and Australian Expansion Crawford Carvallo • In October 2020, Crawford acquired Crawford Carvallo , recognized as the
Slide 21: Third Quarter YTD 2020 Financial Summary
21 Third Quarter YTD 2020 Financial Summary (1) See appendix for non - GAAP explanation and reconciliation of non - GAAP measures. Nine Months Ended September 30 , September 30 , ($ in millions, except per share amounts) 20 20 201 9 % Change Revenues $ 725.1 $ 758.6 ( 4%) Non - GAAP Revenues excludi
Slide 22: Balance Sheet Highlights
22 (1) See Appendix for non - GAAP explanation and reconciliation Unaudited ($ in thousands) September 30 , 20 20 December 31, 201 9 Change Cash and cash equivalents $ 48,739 $ 51,802 $ (3,063 ) Accounts receivable, net 123,563 128,217 ( 4,654 ) Unbilled revenues, net 106,610 103,894 2,716 Total rec
Slide 23: Net Debt and Pension Liability
23 Net Debt and Pension Liability - 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 2015 2016 2017 2018 2019 2020 Q3 Net Debt - 20,000 40,000 60,000 80,000 100,000 120,000 140,000 2015 2016 2017 2018 2019 2020 Q3 Pension Liability $79.0 million $56.5 million Net debt at l
Slide 24: Operating and Free Cash Flow
24 (1) See Appendix for non - GAAP explanation and reconciliation Operating and Free Cash Flow Unaudited ($ in thousands) 20 20 201 9 Change Net Income Attributable to Shareholders of Crawford & Company $ 18,896 $ 19,797 $ ( 901 ) Goodwill Impairment 17,674 — 17,674 Gain on Disposition of Businesses
Slide 25: 2021 Priorities
25 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 leading solutions Fut
Slide 26: Crawford & Company
26 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 27: Appendix A: Global Service Lines & Third Quarter 2020 Segment Results
27 Appendix A: Global Service Lines & Third Quarter 2020 Segment Results 27
Slide 28: Crawford Claims Solutions Value Proposition
28 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 assets supported by technical a
Slide 29: Crawford Claims Solutions Segment Highlights
29 Crawford Claims Solutions Segment Highlights 3Q 2020 Highlights • Saw major lift in claims from large carrier clients • Strong performance in the U.S. from storm activity • WeGoLook had the highest “look” volumes in its history Operating Results (9M 2020 v. 9M 2019) • Revenues of $257.4 million v
Slide 30: Crawford Specialty Solutions Value Proposition
30 • 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 powered by analytics - driven
Slide 31: Crawford Specialty Solutions Segment Highlights
31 3Q 2020 Highlights • Contractor Connection • Strong level of daily assignments in the third quarter • Won a top personal lines carrier contract in Canada • Saw traction of decontamination service in the U.K. • GTS • Won one of its largest claims due to the delay of a significant global event in A
Slide 32: Crawford TPA Solutions Value Proposition
32 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 driving claim and clinical cost savings • Artificial in
Slide 33: Crawford TPA Solutions Segment Highlights
33 Crawford TPA Solutions Segment Highlights 3Q 2020 Highlights • Renewed 96% of U.S. business year - to - date • Continued robust traction in the pipeline • Onboarded users to advanced technology solutions Operating Results (9M 2020 v. 9M 2019) • Revenues of $270.9 million versus $296.8 million • C
Slide 34: Appendix B: Non-GAAP Financial Information
34 Appendix B: Non - GAAP Financial Information 34
Slide 35: Non-GAAP Measures Explanation
35 35 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 similarly - titled me
Slide 36: Segment Gross Profit and Adjusted EBITDA Definitions
36 36 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 ea
Slide 37: Total Revenues Before Reimbursements by Major Currency
37 37 Total Revenues Before Reimbursements by Major Currency Nine Months Ended ( in thousands ) September 30, 2020 September 30, 2019 Geographic Area Currency USD equivalent % of total USD equivalent % of total U.S. USD $ 419,064 57.8% $ 432,292 57.0% U.K. GBP 95,003 13.1% 93,967 12.4% Canada CAD 68
Slide 38: Revenues, Costs of Services, and Operating Earnings Reconciliation
38 38 Revenues, Costs of Services Provided, and Operating Earnings Reconciliation of Non - GAAP Items Nine Months Ended Nine Months Ended Unaudited ($ in thousands) September 3 0 , 2020 September 30 , 2019 Revenues Before Reimbursements Total Revenues $ 750,590 $ 790,065 Reimbursements ( 25,519 ) (
Slide 39: Adjusted EBITDA Reconciliation (cont.)
39 39 Adjusted EBITDA Reconciliation of Non - GAAP Items (cont.) Nine Months Ended September 30 , September 3 0 , Unaudited ($ in thousands) 20 20 201 9 Net income attributable to shareholders of Crawford & Company $ 18,896 $ 19,797 Add: Depreciation and amortization 30,150 30,086 Stock - based comp
Slide 40: Adjusted EBITDA Year Ended December 2019
40 40 Adjusted EBITDA Year Ended December 31 , Unaudited ($ in thousands) 20 19 Net income attributable to shareholders of Crawford & Company $ 12,485 Add: Depreciation and amortization 40,513 Stock - based compensation 4,109 Net corporate interest expense 10 , 774 Goodwill and intangible asset impa
Slide 41: Net Debt Reconciliation
41 41 Net Debt Reconciliation of Non - GAAP Items (cont.) September 30 , December 31, December 31, Unaudited ($ in thousands) 20 20 201 9 2015 Net Debt Short - term borrowings $ 3,028 $ 2 8,531 $ 19,958 Current installments of capital leases 49 15 1,959 Long - term debt and capital leases, less curr
Slide 42: Segment Gross Profit Reconciliation
42 42 Segment Gross Profit Reconciliation of Non - GAAP Items (cont.) Nine months ended ( $ in thousands) September 30 , 20 20 September 30 , 201 9 Segment gross profit: Crawford Claims Solutions $ 55 , 471 $ 56,382 Crawford Specialty Solutions 72 , 324 72,466 Crawford TPA Solutions 63,276 75,851 Se
Slide 43: Reconciliation of Third Quarter YTD Non-GAAP Results
43 43 Reconciliation of Third Quarter YTD Non - GAAP Results Nine Months Ended September 3 0 , 201 9 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 G
Slide 44: Reconciliation of Full Year Non-GAAP Results
44 44 Reconciliation of Full Year Non - GAAP Results Year Ended December 31, 2019 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 $ 1,005,802 $ 7
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