Crawford & Company · NYSE:CRD.A
Crawford & — Q3 2021 Earnings Presentation
32 slides from Crawford &'s earnings presentation, Nov 9, 2021
Slide 1: Crawford & Company Third Quarter 2021 Earnings Conference Call
Crawford & Company Third Quarter 2021 Earnings Conference Call 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, results of operations and earnings outlook of Crawford & Company. Statements, both qualitative
Slide 3: Key Highlights Third Quarter 2021
3 Key Highlights Third Quarter 2021 Crawford’s strong revenue growth and disciplined M&A Q3 NON-GAAP activity in the third quarter propelling business forward METRICS¹ Our strategy execution is bearing favorable results • Strong revenue growth driven by US, UK, and Australian markets 14% Revenues •
Slide 4: M&A Strategy
4 M&A Strategy Our M&A is aligned to the three pillars of our strategy ▪ Bring digital enablement Digital ▪ Short circuit lead times ▪ Differentiated and entrenched ▪ Improves customer experience Expertise Quality HBA Legal ▪ Special capability in the Crawford Carvallo ▪ Enhances the quality value e
Slide 5: Operational Overview
Operational Overview Crawford
Slide 6: edjuster
6 edjuster Two decades of recognized experience in the industry and a blue-chip carrier client base • In August 2021, Crawford acquired 100% of edjuster, the contents valuation leader in North America • Total purchase price of $33.1 million, with an upfront payment of $21.0 million in cash and other
Slide 7: Praxis Consulting
7 Praxis Consulting Leader in the subrogation claims market with over 20 years of recognized experience and proven results • In October 2021, Crawford acquired the assets of Praxis Consulting, Inc. — the leading provider of outsourced subrogation claims management and recovery services in the United
Slide 8: BosBoon
8 BosBoon More than two decades of specialist loss adjusting experience and a blue-chip client base • In October 2021, Crawford acquired 100% of BosBoon Expertise Group B.V., a reputable specialist loss adjusting company based in The Netherlands • Total purchase price of $4.9 million, structured as
Slide 9: Impact Across Our Global Service Lines (GSLs)
9 9 Impact Across Our Global Service Lines (GSLs) Third Quarter Performance • Revenue growth of 12% over the prior year period Revenue Loss • Recovering economic activity in US and impact from Hurricane Ida $124.0M Adjusting • Benign claims environment and COVID pressures in Canada along with contin
Slide 10: Customer Excellence
10 10 Customer Excellence Maintained and exceeded pre-pandemic client service delivery levels Increased overall score to 49, up three points from Q2 Net Promoter Score Referenced as part of our standard operations to further improve client service Added close to $37.0 million in new and enhanced bus
Slide 11: Financial Overview
Financial Overview Crawford
Slide 12: Third Quarter 2021 Financial Summary
12 12 Third Quarter 2021 Financial Summary Quarter Ended September 30, September 30, ($ in millions, except per share amounts) 2021 2020 % Change Revenues $288.5 $253.1 14% Non-GAAP Revenues excluding foreign exchange fluctuations(1) $279.1 $253.1 10% Net Income Attributable to Shareholders of Crawf
Slide 13: Crawford Loss Adjusting
13 Crawford Loss Adjusting Three months ended (in thousands, except September 30, September 30, percentages) 2021 2020 Variance Highlights Revenues $123,965 $110,929 11.8% • Revenue growth of 12% over the prior year period • Recovering economic activity in US and impact Direct expenses 95,782 77,758
Slide 14: Crawford Platform Solutions
14 Crawford Platform Solutions Three months ended (in thousands, except September 30, September 30, percentages) 2021 2020 Variance Highlights Revenues $64,314 $53,287 20.7% • Revenue growth of 21% over the prior year period • Continued investment to build platform Direct expenses 47,879 38,886 23.1
Slide 15: Crawford TPA Solutions
15 Crawford TPA Solutions Three months ended (in thousands, except September 30, September 30, percentages) 2021 2020 Variance Revenues $100,221 $88,908 12.7% Highlights • Revenue growth of 13% over prior year period Direct expenses 80,439 71,048 13.2% • Impact of COVID still being felt in Canada an
Slide 16: Additional Financial Matters
16 Additional Financial Matters Unallocated Corporate • Unallocated corporate costs of $2.3 million compared to $1.0 million in the prior year period and Shared Costs and • Increase primarily due to an increase in professional fees compared to 2020 and Credits a reduction in CEWS benefits Canada Eme
Slide 17: Balance Sheet Highlights
17 Balance Sheet Highlights September 30, December 31, Unaudited ($ in thousands) 2021 2020 Change Cash and cash equivalents $ 36,929 $ 44,656 $ (7,727) Accounts receivable, net 136,729 123,060 13,669 Unbilled revenues, net 127,510 103,528 23,982 Total receivables 264,239 226,588 37,651 Goodwill 85,
Slide 18: Net Debt and Pension Liability
18 18 Net Debt and Pension Liability Net Debt Pension Liability 200,000 140,000 $171.2 million 180,000 120,000 160,000 $121.7 million 140,000 100,000 $103.7 million 120,000 80,000 100,000 60,000 80,000 60,000 40,000 40,000 20,000 $36.9 million 20,000 0 - 2015 2016 2017 2018 2019 2020 Q3 2021 2015 20
Slide 19: Operating And Free Cash Flow
19 Operating And Free Cash Flow For the year to date periods ended September 30, Unaudited ($ in thousands) 2021 2020 Change Net Income Attributable to Shareholders of Crawford & Company $ 29,039 $ 18,896 $ 10,143 Depreciation and Other Non-Cash Operating Items 36,242 31,658 4,584 Goodwill Impairmen
Slide 20: Strategy Overview
Strategy Overview Crawford
Slide 21: Evolving Crawford's Strategy for Long-Term Growth
21 Evolving Crawford's Strategy for Long-Term Growth Our enhanced operating structure creates a better focus for management to leverage customer synergies and simplify our capital allocation framework • Benchmark in quality and experience • Digitally enabled for productivity • Broadest global reach
Slide 22: Advancing Crawford's Strategy
22 Advancing Crawford’s Strategy We are building upon our already solid foundation as we aim to further position the business for future growth and cash generation • Hired 62 specialist adjusters year to date, marking solid progress on three-year goal • Benefiting from digital investments we have ma
Slide 23: Crawford & Company
23 23 Crawford & Company The world’s largest publicly listed independent provider of global claims management and outsourcing solutions. 9,000 50,000+ 70 $18B+ employees Field Resources countries claims managed annually
Slide 24: Appendix: Non-GAAP Financial Information
24 Appendix: Non-GAAP Financial Information
Slide 25: Appendix: Non-GAAP Financial Information
25 Appendix: Non-GAAP Financial Information Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comp
Slide 26: Appendix: Non-GAAP Financial Information (cont.)
26 Appendix: Non-GAAP Financial Information (cont.) Segment and Consolidated Gross Profit Gross profit is defined as revenues less direct expenses which exclude indirect overhead expenses allocated to the business. Indirect expenses consist of centralized administrative support costs, regional and l
Slide 27: Total Revenues Before Reimbursements by Major Currency
27 Total Revenues Before Reimbursements by Major Currency The following table illustrates revenue as a percentage of total revenue in the major currencies of the geographic areas in which Crawford does business: Three Months Ended September 30, September 30, (in thousands) 2021 2020 Geographic Area
Slide 28: Reconciliation of Non-GAAP Items
28 Reconciliation of Non-GAAP Items Revenues, Costs of Services Provided, and Operating Earnings Quarter Ended Quarter Ended September 30, September 30, Unaudited ($ in thousands) 2021 2020 Revenues Before Reimbursements Total Revenues $ 297,562 $ 261,669 Reimbursements (9,062) (8,545) Revenues Befo
Slide 29: Reconciliation of Non-GAAP Items (cont.)
29 Reconciliation of Non-GAAP Items (cont.) Adjusted EBITDA ) Quarter Ended September 30, September 30, Unaudited ($ in thousands) 2021 2020 Net income attributable to shareholders of Crawford & Company $ 11,195 $ 24,397 Add: Depreciation and amortization 9,826 10,700 Stock-based compensation 2,001
Slide 30: Reconciliation of Non-GAAP Items (cont.)
30 Reconciliation of Non-GAAP Items (cont.) Net Debt September 30, December 31, Unaudited ($ in thousands) 2021 2020 Net Debt Short-term borrowings $ 1,500 $ 1,570 Current installments of finance leases and other obligations 82 267 Long-term debt and finance leases, less current installments 139,028
Slide 31: Reconciliation of Non-GAAP Items (cont.)
31 Reconciliation of Non-GAAP Items (cont.) Segment Gross Profit Three months ended September 30, September 30, ($ in thousands) 2021 2020 Segment gross profit: Crawford Loss Adjusting $ 28,183 $ 33,171 Crawford Platform Solutions 16,435 14,401 Crawford TPA Solutions 19,782 17,860 Segment gross prof
Slide 32: Reconciliation of Third Quarter Non-GAAP Results
32 Reconciliation of Third Quarter Non-GAAP Results Three Months Ended September 30, 2021 Net Income Non-GAAP Attributable to Diluted Diluted Operating Pretax Crawford & Earnings per Earnings per Unaudited ($ in thousands) Revenues Earnings Earnings Company CRD-A Share CRD-B Share GAAP $ 288,500 $ 2