Crawford & Company · NYSE:CRD.A
Crawford & — 16th Annual Barrington Research Virtual Fall Investment Conference (September 2023)
53 slides from Crawford &'s conference presentation, Sep 14, 2023
Slide 1: Investor Presentation
® CRD-A & CRD-B (NYSE) Investor Presentation September 2023
Slide 2: Forward-Looking Statements & Additional Information
Forward-Looking Statements & Additional Information 2 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 a
Slide 3: The world's largest publicly listed independent provider of global claims management solutions
3 BY MARKET¹ 65%⎹ Carriers The world’s largest 35%⎹ Corporations publicly listed BY GLOBAL SERVICE LINES independent 24%⎹ North America Loss Adjusting provider of global 26%⎹ Broadspire (US-only) 20%⎹ Platform Solutions (US-only) claims management 30%⎹ International Operations solutions BY GEOGRAPHY
Slide 4: Global Reach; Trusted Partner
4 Global Reach; Trusted Partner 70 1.6M Countries Claims Handled Worldwide 10,000 50,000 Employees Field Resources SEPTEMBER 2023
Slide 5: Well Positioned for Growth
Well Positioned for Growth 5 Third Party Administration GROWING suite of services EXPANDING market verticals Loss Medical UNMATCHED claims diversification Adjusting Management EXPERTISE that spans continents SECOND TO NONE client base INNOVATION driving efficiencies $18B+ Claims Managed THE RIGHT ma
Slide 6: Financial Snapshot
Financial Snapshot 6 FY 2022 GAAP 1H 2023 GAAP $1.2B $27.6M $633.7M $27.2M Revenues Before Operating Revenues Before Operating Reimbursements Cash Flow Reimbursements Cash Flow FY 2022 NON-GAAP1 1H 2023 NON-GAAP1 $61.9M $94.7M $47.7M $64.4M Operating Earnings Adjusted EBITDA Operating Earnings Adjus
Slide 7: Market Opportunity
7 Market Opportunity SEPTEMBER 2023
Slide 8: Multiple Growth Drivers Benefitting Crawford
Multiple Growth Drivers Benefitting Crawford 8 Climate change Increased presence in Gaining market share Growing and Industry-leading continues to drive rapidly growing P&C within fragmented U.S. strengthening strategic Insurtech global demand in insurance markets with independent loss partnerships
Slide 9: More Frequent and Destructive CAT Events Leading to Heightened Insured Losses
9 More Frequent and Destructive Crawford uniquely positioned as insurance industry seeks cost CAT Events Leading effective solutions to address surge to Heightened events that exceed their capacity Insured Losses Lahaina, HI, post-fire, obtained through MAXAR's High-Resolution Satellite Imagery $313
Slide 10: Fragmented P&C Market Driving Demand for Outsourcing Solutions
10 Fragmented P&C Market Driving Demand for Outsourcing Solutions Carriers find themselves at an inflection point as they face a continuing cycle of external and internal challenges: • Inflation • Lack of geographic spread 92% • Geopolitical headwinds • Inability to drive technology 15% • Environmen
Slide 11: Technology Advancements Driving Industry Transformation
Technology Advancements Driving Industry 11 Transformation 2000 2022 2030 Traditional: 80% Traditional: 70% Traditional: 20% Network/Fast Track Desk: 20% Network/Virtual Desk: 30% Network/Virtual Desk: 80% Contractor Network 2% Contractor Contractor Fast Track Network Traditional Desk 18% 20% 20% Ne
Slide 12: Operational Overview
12 Operational Overview SEPTEMBER 2023
Slide 13: Operating Segments
Operating Segments 13 North America International Broadspire Platform Solutions Loss Adjusting Operations (U.S.-only) (U.S.-only) 24% 30% 26% 20% of YTD revenues of YTD revenues of YTD revenues of YTD revenues Comprised of the Following Comprised of All Reported Third Party Administration for: Servi
Slide 14: North America Loss Adjusting
North America Loss Adjusting 14 One-stop-shop delivering efficiency and savings across the U.S. and Canada Volume Major & Complex (Field) (GTS) Create differentiation to gain market share by expanding expertise Drive differentiation through quality and enable STRATEGY margin enhancement through digi
Slide 15: A Growing & Engaged Adjuster Network
A Growing & Engaged Adjuster Network 15 Exceeded our goal of 200+ expert Long-term strategy focused on becoming the hires in less than three years1 industry benchmark in quality and expertise 244 Major and Complex Claims 49 • Grow organically by creating differentiation to gain market share by expan
Slide 16: International Operations: One Crawford
International Operations: One Crawford 16 UK • TPA business spearheading growth Sharing expertise & capabilities across geographies AUS • Frequency and severity of natural disasters continues to increase 11% 2% EU 70% • Efficiency improvement measures in Europe 7% driving increased margins ASIA • Th
Slide 17: Broadspire (U.S.-only)
Broadspire (U.S.-only) 17 Client-centric integrated outsourced solutions powered by innovation and data science Clients Scope & Scale Value Proposition Corporations, municipalities • 50%+ U.S. Fortune 250 corp. • Strengthen differentiation through product innovation, digitization & • MGAs, Program M
Slide 18: Platform Solutions
18 Platform Solutions Investing to Drive Innovation and Accelerate Growth
Slide 19: Platform Solutions: Next Generation Crawford
19 Platform Solutions: Next Generation Crawford Digital claim intake Transformational Driver Automated triage leveraging AI for channeling & efficiency segmentation of Digital First Notice of Loss Digital Assist claims to best resource $243.7M FY 2022 Segment Revenue Inspection Services 14.7% FY 202
Slide 20: Reimagining the Claims Process
Reimagining the Claims Process 20 Robotic process Delivering a automation Portals turnkey experience: IoT • Rapid intake • Detailed reporting API • Seamless • Compliance and Machine integrations processing regulatory support learning Key benefits: 3D virtual • Reduced claim • Improved quality realit
Slide 21: Advancing claims management through acquisitions, partnerships and proprietary technology
21 Owned Partnerships YouGoLook ® Advancing claims management through acquisitions, partnerships and proprietary technology Renovo ® SEPTEMBER 2023
Slide 22: Making the claim journey better
22 Making the claim journey better A better customer Better operational Richer data, better Ease of integration experience efficiency insights Settle claims more Deliver more Uncover trends, Connect seamlessly to quickly and improve the accuracy, lower cost manage risk and technology solutions visib
Slide 23: Financial Update: Q2 2023 Results
23 Financial Update Q2 2023 Results SEPTEMBER 2023
Slide 24: Q2 2023 Highlights
Q2 2023 Highlights 24 YoY Revenue Growth $321M $293M • 11th consecutive quarter of revenue growth 9% • Revenue growth across ALL business segments • Net income increased by nearly 50% YoY 2Q ‘22 2Q ‘23 • Operating earnings up 85% YoY • Margin expansion and improved profitability YoY Non-GAAP Adjuste
Slide 25: Margin Improvement Strategy Driving Results
Margin Improvement Strategy Driving Results 25 1. Align pricing with the value we deliver 2. Aggressively address low productivity pockets 3. Optimize cost structure to current market dynamics 4. Roll out new systems and improved processes for efficiency gains Q2 2023 Increased YoY Operating Margins
Slide 26: Q2 2023 Financial Summary
Q2 2023 Financial Summary 26 Quarter Ended ($ in millions, except per share amounts) June 30, 2023 June 30, 2022 % Change Revenues $320.7 $293.3 9% Non-GAAP Revenues excluding foreign exchange fluctuations(1) $328.1 $293.3 12% Net Income Attributable to Shareholders of Crawford & Company $8.4 $5.8 4
Slide 27: North America Loss Adjusting
North America Loss Adjusting 27 Three months ended (in thousands, except percentages) June 30, 2023 June 30, 2022 Variance Revenues $75,827 $65,775 15.3% Direct expenses 62,469 54,507 14.6% Gross profit 13,358 11,268 18.5% Indirect expenses 9,458 8,619 9.7% Operating earnings $3,900 $2,649 47.2% Gro
Slide 28: International Operations
International Operations 28 Three months ended (in thousands, except percentages) June 30, 2023 June 30, 2022 Variance Revenues $95,312 $93,710 1.7% Direct expenses 78,281 80,297 (2.5)% Gross profit 17,031 13,413 27.0% Indirect expenses 13,289 14,074 (5.6)% Operating earnings (loss) $3,742 $(661) nm
Slide 29: Broadspire
Broadspire 29 Three months ended (in thousands, except percentages) June 30, 2023 June 30, 2022 Variance Revenues $83,888 $80,114 4.7% Direct expenses 64,128 62,383 2.8% Gross profit 19,760 17,731 11.4% Indirect expenses 11,612 10,064 15.4% Operating earnings $8,148 $7,667 6.3% Gross profit margin 2
Slide 30: Platform Solutions
Platform Solutions 30 Three months ended (in thousands, except percentages) June 30, 2023 June 30, 2022 Variance Revenues $65,638 $53,746 22.1% Direct expenses 51,726 43,895 17.8% Gross profit 13,912 9,851 41.2% Indirect expenses 5,806 5,255 10.5% Operating earnings $8,106 $4,596 76.4% Gross profit
Slide 31: Balance Sheet Highlights
Balance Sheet Highlights 31 Unaudited ($ in thousands) June 30, 2023 Dec 31, 2022 Change Cash and cash equivalents $ 47,479 $ 46,007 $ 1,472 Accounts receivable, net 160,333 141,106 19,227 Unbilled revenues, net 129,121 126,274 2,847 Total receivables 289,454 267,380 22,074 Goodwill 76,720 76,622 98
Slide 32: Net Debt and Pension Liability
Net Debt and Pension Liability 32 Net Debt Pension Liability 250,000 100,000 $87.0M $195.3M 90,000 200,000 $171.7M 80,000 70,000 150,000 60,000 50,000 100,000 40,000 $25.3M 30,000 50,000 20,000 10,000 - - 2017 2018 2019 2020 2021 2022 Q2 2023 2017 2018 2019 2020 2021 2022 Q2 2023 Net debt at $195.3
Slide 33: Operating and Free Cash Flow
Operating and Free Cash Flow 33 Unaudited ($ in thousands) 2023 2022 Change Net Income Attributable to Shareholders of Crawford & Company $ 19,108 $ 10,926 $ 8,182 Depreciation and Other Non-Cash Operating Items 20,817 21,932 (1,115) Loss (Gain) on Disposals of Property and Equipment, net 116 (1,544
Slide 34: Our Capital Allocation Strategy
Our Capital Allocation Strategy 34 Committed to Employing a Disciplined Approach to Capital Allocation Investing in long-term growth Debt Repayment Raised quarterly dividend to through Cap Ex and M&A Reduce leverage $0.07 per share (1.80x EBITDA in Q2 2023) for CRD-A and CRD-B Returned over $120 mil
Slide 35: M&A Overview
35 M&A Overview Our M&A is aligned to the three pillars of our strategy Digital • Bring digital enablement • Short circuit lead times • Differentiated and entrenched • Improve customer experience Complement primary organic growth Increase customer stickiness and deepen market share Deliver improved
Slide 36: Summary
Summary 36 Leveraging established relationships with carriers to create “sticky” revenue Leading the industry with next generation Insurtech capabilities Positioned to capitalize on the changing landscape due to climate change and demographic shifts Financial strength and liquidity provide flexibili
Slide 37: Appendix: Non-GAAP Financial Information
37 37 Appendix: Non-GAAP Financial Information SEPTEMBER 2023
Slide 38: Non-GAAP Financial Information
Non-GAAP Financial Information 38 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 comparable to
Slide 39: Non-GAAP Financial Information (cont.)
Non-GAAP Financial Information (cont.) 39 Segment and Consolidated Operating Earnings Operating earnings is the primary financial performance measure used by our senior management and chief operating decision maker to evaluate the financial performance of our Company and operating segments and make
Slide 40: 2Q YTD '23 Total Revenue Before Reimbursements by Major Currency
2Q YTD ‘23 Total Revenue Before 40 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: Six Months Ended (in thousands) June 30, 2023 June 30, 2022 Geographic Area Cu
Slide 41: 2Q '23 Reconciliation of Non-GAAP Items
2Q ‘23 Reconciliation of Non-GAAP Items 41 Revenues and Costs of Services Provided Quarter Ended Quarter Ended Unaudited ($ in thousands) June 30, 2023 June 30, 2022 Revenues Before Reimbursements Total Revenues $ 333,738 $ 303,651 Reimbursements (13,073) (10,306) Revenues Before Reimbursements 320,
Slide 42: 2Q '23 Reconciliation of Non-GAAP Items (cont.)
2Q ‘23 Reconciliation of Non-GAAP Items (cont.) 42 Operating Earnings Quarter Ended Quarter Ended June 30, 2023 June 30,2022 Unaudited ($ in thousands) North America Loss Adjusting $ 3,900 $ 2,649 International Operations 3,742 (661) Broadspire 8,148 7,667 Platform Solutions 8,106 4,596 Unallocated
Slide 43: 2Q '23 Reconciliation of Non-GAAP items (cont.)
2Q ‘23 Reconciliation of Non-GAAP items (cont.) 43 Adjusted EBITDA Quarter Ended Quarter Ended June 30, 2023 June 30, 2022 Unaudited ($ in thousands) Net income attributable to shareholders of Crawford & Company $ 8,427 $ 5,830 Add (Deduct): Depreciation and amortization 9,191 9,356 Stock-based comp
Slide 44: 2Q '23 Non-GAAP Financial Information (cont.)
2Q ‘23 Non-GAAP Financial Information (cont.) 44 Net Debt June 30, 2023 Dec 31, 2022 Unaudited ($ in thousands) Short-term borrowings $ 30,494 $ 26,990 Current installments of finance leases and other obligations 58 58 Long-term debt and finance leases, less current installments 212,217 211,810 Tota
Slide 45: 2Q '23 Non-GAAP Financial Information (cont.)
2Q ‘23 Non-GAAP Financial Information (cont.) 45 Segment Gross Profit Three months ended ($ in thousands) June 30, 2023 June 30, 2022 North America Loss Adjusting $ 13,358 $ 11,268 International Operations 17,031 13,413 Broadspire 19,760 17,731 Platform Solutions 13,912 9,851 Segment gross profit 64
Slide 46: 2Q YTD '23 Reconciliation of Non-GAAP Items
2Q YTD ‘23 Reconciliation of Non-GAAP Items 46 Operating Earnings Six Months Ended Six Months Ended June 30, 2023 June 30,2022 Unaudited ($ in thousands) North America Loss Adjusting $ 11,965 $ 6,783 International Operations 6,777 (3,726) Broadspire 16,075 14,101 Platform Solutions 18,072 12,633 Una
Slide 47: 2Q YTD '23 Reconciliation of Non-GAAP items (cont.)
2Q YTD ‘23 Reconciliation of Non-GAAP items (cont.) 47 Adjusted EBITDA Six Months Ended Six Months Ended June 30, 2023 June 30, 2022 Unaudited ($ in thousands) Net income attributable to shareholders of Crawford & Company $ 19,108 $ 10,926 Add (Deduct): Depreciation and amortization 18,241 18,455 St
Slide 48: 2022 Reconciliation of Non-GAAP Items
2022 Reconciliation of Non-GAAP Items 48 Operating Earnings Year Ended December 31, 2022 Unaudited ($ in thousands) North America Loss Adjusting $ 19,431 International Operations (13,269) Broadspire 27,021 Platform Solutions 35,746 Unallocated corporate and shared costs and credits, net (7,050) Cons
Slide 49: 2022 Reconciliation of Non-GAAP items (cont.)
2022 Reconciliation of Non-GAAP items (cont.) 49 Adjusted EBITDA Year Ended December 31, 2022 Unaudited ($ in thousands) Net loss attributable to shareholders of Crawford & Company $ (18,305) Add (Deduct): Depreciation and amortization 36,098 Stock-based compensation 4,923 Net corporate interest exp
Slide 50: Reconciliation of 2Q '23 Non-GAAP Results
Reconciliation of 2Q ‘23 Non-GAAP Results 50 Three Months Ended June 30, 2023 Net Income Attributable to Crawford & Diluted Earnings Diluted Earnings Unaudited ($ in thousands) Pretax Earnings Company per CRD-A Share per CRD-B Share GAAP $ 13,551 $ 8,427 $ 0.17 $ 0.17 Adjustments: Amortization of in
Slide 51: Reconciliation of Year-to-Date Non-GAAP Results
Reconciliation of Year-to-Date Non-GAAP Results 51 Six Months Ended June 30, 2023 Net Income Attributable to Crawford & Diluted Earnings Diluted Earnings Unaudited ($ in thousands) Pretax Earnings Company per CRD-A Share(1) per CRD-B Share GAAP $ 29,552 $ 19,108 $ 0.39 $ 0.39 Adjustments: Amortizati
Slide 52: Reconciliation of Full-Year Non-GAAP Results
Reconciliation of Full-Year Non-GAAP Results 52 Year Ended December 31, 2022 Net (Loss) Income Attributable to Diluted (Loss) Diluted Earnings Crawford & Earnings per CRD-A (Loss) per CRD-B Unaudited ($ in thousands) Pretax Earnings Company Share Share GAAP $ 5,046 $ (18,305) $ (0.37) $ (0.37) Adjus
Slide 53: CRD-A & CRD-B (NYSE)
53 CRD-A & CRD-B (NYSE)