Crawford & Company · NYSE:CRD.A
Crawford & — Investor Presentation (March 2021)
45 slides from Crawford &'s investor presentation, Mar 24, 2021
Slide 1: Investor Presentation March 2021
Investor Presentation March 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: Our Purpose and Values
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 Crawford & Company AT A GLANCE 1 $ 18 BILLION + Claims managed annually 1.6 MILLION Claims handled 9,000 Total employees 65% 35% 58% 9% 13% 7% 13% Canada U.K. Australia Rest of the world BY GLOBAL SERVICE LINES 2 BY GEOGRAPHY 2 Crawford TPA Solutions (Broadspire) U.S. 37% 36% 27% Crawford Specialt
Slide 5: Financial Snapshot
5 (1) As of 3/16/2021 ( 2 ) See appendix for non - GAAP explanation and reconciliation of non - GAAP measures Overview FY 2020 GAAP FY 2020 NON - GAAP 2 $ 535 MILLION Market capitalization¹ Financial Snapshot The world’s largest publicly listed independent provider of global claims management soluti
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 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 460,000+ P&C claims managed 400+ Global technical adjusters 6,000 Contractors in network $1.0 billion Ma
Slide 8: Why Invest in Crawford?
8 8 Attractive investment profile Experienced leadership team Strategically positioned in a rapidly changing industry Investing to drive innovation and accelerate growth Committed to environmental, social and governance initiatives Financial strength and flexibility Why Invest in Crawford? Crawford’
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, TPA: Broadspire, International Mike Hoberman President TPA: Broadspire, North Am
Slide 11: Description, Customers and Strategy by Business
11 Description Customers Strategy • Adjust individual claims • Claim sizes vary from $500 to $5+ billion • Two units: 1. Large and complex claims (GTS) 2. Volume claims • Carriers of all sizes • MGAs • Lloyds • Benchmark in quality and expertize • Digitally enabled for efficiency • Broadest global r
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 Leading to Heightened Insured Losses
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 $5B 1. ~98% of carriers are small to medium sized 2. They have limited financial capacity • Insurance carriers currently operate with a large operating expense base, which is unsustai
Slide 15: Investing to Drive Innovation and Accelerate Growth
15 15 Investing to Drive Innovation and Accelerate Growth Investment Profile | Leadership Team| Strategically Positioned | Driving Innovation and Growth | ESG | Financial Strength and Flexibility At the forefront of technological disruption while maintaining industry leadership position (1) YouGoLoo
Slide 16: Solutions Addressing Customer and Industry Challenges
16 16 Solutions Addressing Customer and Industry Challenges Focus on Speed & Simplicity Strengthen Knowledge Disruptive Technology Innovative Solutions Continuous Quality Claims processing is evolving with customer expectations for on - demand, simplified products and services Data analytics are cha
Slide 17: US Economic Outlook
17 17 United States 1 Q2 2020 Q3 2020 Q4 2020 Unemployment rate 11.1% 7.9% 6.7% Miles driven (B) 198.3 242.5 (22.3%) 246.8 (1.8%) Housing starts (000’s) 1,079.0 1,432.3 (33%) 1,537.5 (7.4%) Retail sales ($B) 476.9 544.0 (14.1%) 549.5 (1.0%) UK Q2 2020 Q3 2020 Q4 2020 Unemployment rate 4.0% 4.8% 4.9%
Slide 18: Diversity and Inclusion, Environment, Community, Governance
18 Diversity and Inclusion Established Office of Inclusion and Diversity, 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
Slide 19: Financial Strength and Flexibility
19 Strong financial position with ample liquidity Reinstated share repurchase program as a component of our capital allocation strategy Financial Strength and Flexibility Investment Profile | Leadership Team| Strategically Positioned | Driving Innovation and Growth| ESG | Financial Strength and Flex
Slide 20: Market Expansion
20 Investment Profile | Leadership Team| Strategically Positioned | Driving Innovation and Growth| ESG | Financial Strength and Flexibility Market Expansion Extending our market position through recent acquisitions and innovative solutions HBA Group • Acquired HBA Group in 2020, a legal services pro
Slide 21: Fourth Quarter YTD 2020 Financial Summary
21 (1) See appendix for non - GAAP explanation and reconciliation of non - GAAP measures. 21 Quarter Ended December 31 , December 31 , ($ in millions, except per share amounts) 20 20 201 9 % Change Revenues $ 257.4 $ 247.2 4% Non - GAAP Revenues excluding foreign exchange fluctuations (1) $ 254.0 $
Slide 22: Balance Sheet Highlights
22 (1) See Appendix for non - GAAP explanation and reconciliation 22 Unaudited ($ in thousands) December 31 , 20 20 December 31, 201 9 Change Cash and cash equivalents $ 44,656 $ 51,802 $ (7,146 ) Accounts receivable, net 123,060 128,217 ( 5,157 ) Unbilled revenues, net 103,528 103,894 (366) Total r
Slide 23: Net Debt and Pension Liability
23 Net Debt and Pension Liability (1) As of 12/31/2020 0 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 Net Debt 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 2015 2016 2017 2018 2019 2020 Pension Liability $68.9 million $53.9 millio
Slide 24: Cash Flow and Free Cash Flow
24 (1) See Appendix for non - GAAP explanation and reconciliation 24 Unaudited ($ in thousands) 20 20 201 9 Change Net Income Attributable to Shareholders of Crawford & Company $ 28,296 $ 12,485 $ 15,811 Goodwill Impairment 17,674 17,484 190 Gain on Disposition of Businesses, Net (13,763 ) — (13,763
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 Strengthen industry leadership through our innovations and market leading solutions F
Slide 26: Global coverage that goes beyond borders
26 70 countries 9K Employees worldwide 50K field resources 6K network contractors 26 Global coverage that goes beyond borders.
Slide 27: Appendix A: Global Service Lines & Fourth Quarter 2020 Segment Results
27 27 Appendix A: Global Service Lines & Fourth 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 Q4 2020 Results
29 Highlights • Weather - related claims in the US drove revenue increase • Increases in case volume driven by WeGoLook • Operating earnings more than double prior year quarter Operating Results (4Q 2020 v. 4Q 2019) • Revenues of $99.0 million versus $84.3 million • Constant dollar revenues of $97.1
Slide 30: Crawford Claims Solutions Full Year 2020 Results
30 30 Year ended (in thousands, except percentages) December 31, 2020 December 31 , 201 9 Variance 20 20 Based on 201 9 rates Variance Revenues $ 356,447 $ 339,837 4.9 % $ 358,819 5.6 % Direct expenses 278,968 263,116 6.0 % 280,503 6.6 % Gross profit 77,479 76,721 1.0 % 78,316 2.1% Indirect expenses
Slide 31: Crawford Specialty Solutions: Value Proposition
31 • 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 32: Crawford Specialty Solutions Q4 2020 Results
32 Highlights • Contractor Connection • Traction with new carrier clients in the US delivered the strongest second half in recent history • Increased average daily assignment levels year over year • GTS • Positioned to continue benefitting from BI claims • Made strategic hires in the US and intern
Slide 33: Crawford Specialty Solutions Full Year 2020 Results
33 33 Year ended (in thousands, except percentages) December 31, 2020 December 3 1 , 201 9 Variance 20 20 Based on 201 9 rates Variance Revenues $ 261,062 $ 272 , 109 ( 4.1 %) $263,475 ( 3.2 %) Direct expenses 164 , 441 176,702 (6.9 % ) 165,909 (6.1 % ) Gross profit 96,621 95 , 407 1.3 % 97,566 2.3%
Slide 34: Crawford TPA Solutions: Value Proposition
34 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 35: Crawford TPA Solutions Q4 2020 Results
35 35 Three months ended (in thousands, except percentages) December 31, 2020 December 31 , 201 9 Variance 20 20 Based on 201 9 rates Variance Revenues $ 94,113 $ 97,049 ( 3.0 %) $ 93,550 ( 3.6 %) Direct expenses 69,714 7 3 , 216 (4.8 % ) 69,238 (5.4 % ) Gross profit 24,399 23,833 2.4 % 24,312 2.0%
Slide 36: Crawford TPA Solutions Full Year 2020 Results
36 36 Year ended (in thousands, except percentages) December 31, 2020 December 31 , 201 9 Variance 20 20 Based on 201 9 rates Variance Revenues $ 364,983 $393,856 ( 7.3 %) $ 365,959 ( 7.1 %) Direct expenses 277,308 294 , 172 (5.7 % ) 277,876 (5.5 % ) Gross profit 87,675 99,684 (12.0 % ) 88,083 (11.6
Slide 37: Appendix B: Non-GAAP Financial Information
37 37 Appendix B: Non - GAAP Financial Information 37
Slide 38: Non-GAAP Measures Explanation
38 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 39: Segment and Consolidated Gross Profit, Adjusted EBITDA Definitions
39 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 40: Total Revenues Before Reimbursements by Major Currency
40 40 Three Months Ended Twelve Months Ended ( in thousands ) December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 Geographic Area Currency USD equivalent % of total USD equivalent % of total USD equivalent % of total USD equivalent % of total U.S. USD $ 151,758 59.0% $ 136,913 55
Slide 41: Reconciliation of Non-GAAP Items
41 41 Quarter Ended Quarter Ended December 3 1 , December 31 , Unaudited ($ in thousands) 20 20 201 9 Revenues Before Reimbursements Total Revenues $ 265,605 $ 257,562 Reimbursements ( 8,184 ) ( 10,376 ) Revenues Before Reimbursements 257 , 421 2 47,186 Costs of Services Provided, Before Reimburseme
Slide 42: Adjusted EBITDA Reconciliation
42 42 ) Quarter Ended December 31 , December 3 1 , Unaudited ($ in thousands) 20 20 201 9 Net income (loss) attributable to shareholders of Crawford & Company $ 9,400 $ (7,312 ) Add: Depreciation and amortization 9,961 10,427 Stock - based compensation 1,652 1,499 Net corporate interest expense 1 ,
Slide 43: Net Debt Reconciliation
43 43 December 31 , December 31, Unaudited ($ in thousands) 20 20 201 9 Net Debt Short - term borrowings $ 1,570 $ 2 8,531 Current installments of finance leases and other obligations 267 15 Long - term debt and finance leases, less current installments 111,758 1 48 , 408 Total debt 113,595 1 76 , 9
Slide 44: Segment Gross Profit Reconciliation
44 44 Three months ended ( $ in thousands) December 31 , 20 20 December 31 , 201 9 Segment gross profit: Crawford Claims Solutions $ 22 , 008 $ 20,339 Crawford Specialty Solutions 24 , 297 2 2,941 Crawford TPA Solutions 24,399 23,833 Segment gross profit 70 , 704 67,113 Segment indirect costs: Crawf
Slide 45: GAAP to Non-GAAP Adjusted Earnings Reconciliation
45 45 Three Months Ended December 3 1 , 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 $ 257,421 $ 18,518 $ 11,862 $ 9,400 $ 0. 18 $ 0. 18