Crawford & Company · NYSE:CRD.A
Crawford & — Q2 2014 Earnings Presentation
27 slides from Crawford &'s earnings presentation, Aug 4, 2014
Slide 1: Second Quarter 2014 Earnings Conference Call
Crawford & Company SECOND QUARTER 2014 EARNINGS CONFERENCE CALL August 4, 2014
Slide 2: Forward-Looking Statements
• Forward-Looking Statements —This presentation contains forward-looking statements, including statements about the future financial condition, results of operations and earnings outlook of Crawford & Company. Statements, both qualitative and quantitative, that are not statements of historical fact
Slide 3: Global Business Services Leader
3 • The world’s largest independent provider of global claims management solutions • Multiple globally recognized brand names: Crawford, Broadspire, GCG • Clients include multinational insurance carriers, brokers and local insurance firms as well as 200 of the Fortune 500 EMEA-A/P Broadspire Legal S
Slide 4: Today's Agenda
Today’s Agenda Welcome and Opening Comments Second Quarter 2014 Financial Review Second Quarter 2014 Review and Outlook Guidance and Future Operational Focus
Slide 5: Second Quarter 2014 Business Summary
288.2 298.9 20.9 30.4 5 Revenues ($ in millions) Consolidated Operating Earnings ($ in millions) Second Quarter 2014 Business Summary • Revenues of $288.2 million • Consolidated operating earnings of $20.9 million • Diluted earnings per share of $0.19 for CRDA and $0.18 for CRDB
Slide 6: Second Quarter 2014 Financial Review
Second Quarter 2014 Financial Review
Slide 7: Income Statement Highlights
Unaudited ($ in thousands, except per share amounts) Three Months Ended June 30, 2014 2013 % Change Revenues $288,216 $298,947 (4 )% Costs of Services 208,249 212,333 (2 )% Selling, General, and Administrative Expenses 60,902 58,425 4 % Corporate Interest Expense, Net 1,551 1,600 (3 )% Total Costs a
Slide 8: Americas Second Quarter Financials
Pro Forma 2014/2013 2014* 2014** 2013 % Change Revenues $ 96,125 $ 93,601 $ 82,634 13.3 % Total Operating Expenses 87,904 85,459 78,217 9.3 % Operating Earnings $ 8,221 $ 8,142 $ 4,417 84.3 % Operating Margin 8.6 % 8.7 % 5.3 % 85. 9 6.5 95. 9 93.6 82.6 4.4 8 Revenues ($ in millions) Operating Earnin
Slide 9: U.S. Catastrophe (CAT) Adjuster Activity
9.1 85. 9 6.5 11.5 6.3 8.7 9 Revenues ($ in millions) Catastrophe Cases (In thousands) • CAT adjuster revenues of $11.5 million in second quarter of 2014 compared with $6.3 million in 2013 period • CAT cases numbered 7,000 in the second quarter of 2014 compared with 8,700 in the second quarter of 20
Slide 10: EMEA/AP Second Quarter Financials
87.6 8.4 Pro Forma 2014/2013 2014* 2014** 2013 % Change Revenues $ 86,871 $ 87,246 $ 87,593 (0.4 )% Total Operating Expenses 81,970 82,936 79,201 4.7 % Operating Earnings $ 4,901 $ 4,310 $ 8,392 (48.6 )% Operating Margin 5.6 % 4.9 % 9.6 % 10 Operating Earnings ($ in millions) Revenues ($ in millions
Slide 11: Broadspire Second Quarter Financials
66.7 65.8 2.7 2014 2013 % Change Revenues $ 66,706 $ 65,768 1.4 % Total Operating Expenses 63,991 61,409 4.2 % Operating Earnings $ 2,715 $ 4,359 (37.7 )% Operating Margin 4.1 % 6.6 % 11 Revenues ($ in millions) Operating Earnings ($ in millions) Unaudited ($ in thousands) For the quarters ended Jun
Slide 12: Legal Settlement Administration Second Quarter Financials
40.7 63.0 16.5 2014 2013 % Change Revenues $ 40,663 $ 62,952 (35.4 )% Total Operating Expenses 34,963 46,422 (24.7 )% Operating Earnings $ 5,700 $ 16,530 (65.5 )% Operating Margin 14.0 % 26.3 % 5.7 12 Revenues ($ in millions) Operating Earnings ($ in millions) Unaudited ($ in thousands) For the quar
Slide 13: Balance Sheet Highlights
13 Unaudited ($ in thousands) June 30, 2014 December 31, 2013 Change Cash and cash equivalents $47,734 $75,953 ($28,219 ) Accounts receivable, net 185,856 160,350 25,506 Unbilled revenues, net 118,870 105,791 13,079 Total receivables 304,726 266,141 38,585 Goodwill 133,026 132,777 249 Deferred reven
Slide 14: Operating and Free Cash Flow
14 2014 2013 Variance Net Income Attributable to Shareholders of Crawford & Company $17,116 $26,747 ($9,631 ) Depreciation and Other Non-Cash Operating Items 19,381 18,098 1,283 Unbilled and Billed Receivables Change (39,930 ) (28,305 ) (11,625 ) Working Capital Change (44,236 ) (26,594 ) (17,642 )
Slide 15: Other Financial Highlights
15 Share Repurchase: • During the 2014 second quarter, Crawford repurchased 163,830 shares of CRDA at an average cost of $8.54 per share • From inception through June 30, 2014, Crawford has repurchased 1,500,273 shares of CRDA at an average cost of $6.16 per share and 7,000 shares of CRDB at an aver
Slide 16: Second Quarter 2014 Review and Outlook
Second Quarter 2014 Review and Outlook
Slide 17: Business Activities
17 Revenues ($ in millions) Cases Received (In thousands) • Solid results in Americas segment led by Canada and Contractor Connection • Continuing improvement in Broadspire revenues and operating earnings • Case referrals up 9% over prior-year quarter, mainly reflecting growth in high-frequency, low
Slide 18: Americas Second Quarter Review and Outlook
18 U.S. Canada Latin America/ Caribbean Revenues by Geographic Region ($ in millions) Americas Cases Received (In thousands) U.S. Canada Latin America/ Caribbean U.S. Property and Casualty Long-term special project to assist major U.S. insurer Continued Contractor Connection network expansion and gr
Slide 19: EMEA/AP Second Quarter Review and Outlook
19 U.K. CEMEA U.K. Asia-Pacific Asia-Pacific CEMEA Revenues by Geographic Region ($ in millions) EMEA/AP Cases Received (In thousands) EMEA/AP U.K. U.K. improvement driven by weather-related claims Investment in Specialty Markets CEMEA Claims volume increased in second quarter Continued focus on imp
Slide 20: Broadspire Second Quarter Review and Outlook
20 Revenues by Service Line ($ in millions) Broadspire Cases Received (In thousands) Risk Mgmt Info. Svcs. Other Medical Mgmt. Casualty Workers' Comp. Workers' Comp. Broadspire • Broadspire case volume increased 11% over prior year second quarter • Client retention remained strong • Medical manageme
Slide 21: Legal Settlement Administration Backlog
21 Backlog ($ in millions) Legal Settlement Administration • Deepwater Horizon and other significant class action projects continued to wind down • Backlog at $97 million as of June 30, 2014 • Focus on operating margin improvement • Activities to build new business pipeline ongoing Second Quarter Re
Slide 22: 2014 Guidance
22 Crawford & Company is reaffirming its guidance range for 2014 as follows: Year ending December 31, 2014 Low End High End Consolidated revenues before reimbursements $1.08 $1.12 billion Consolidated operating earnings $84.0 $98.5 million Consolidated cash provided by operating activities $50.0 $60
Slide 23: 2014 Operational Focus
23 • Grow business pipeline and increase 2014 revenues through broader market coverage, investment in new business platforms, and launch of new products • Implement cost initiatives to further increase operating efficiencies across the globe • Create a global GTS powerhouse by adding world-class adj
Slide 24: Second Quarter 2014 Appendix
Second Quarter 2014 Appendix
Slide 25: Non-GAAP Measures and Reimbursements for Out-of-Pocket Expenses
25 Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comparable to other similarly-titled measurem
Slide 26: Quarterly Revenues, Costs of Services, and Operating Earnings
Quarter Ended Quarter Ended June 30, June 30, Unaudited ($ in thousands) 2014 2013 Revenues Before Reimbursements Total Revenues $ 307,053 $ 326,128 Reimbursements (18,837 ) (27,181 ) Revenues Before Reimbursements $ 288,216 $ 298,947 Costs of Services Before Reimbursements Total Costs of Services $
Slide 27: Reconciliation of Non-GAAP Items: Quarterly Revenues and Net Debt
Reconciliation of Non-GAAP Items (cont.) 27 Quarterly Revenues and Net Debt Unaudited ($ in millions) 2Q 2014 1Q 2014 4Q 2013 3Q 2013 2Q 2013 Revenues Before Reimbursements Total Revenues $ 307 $ 289 $ 307 $ 313 $ 326 Reimbursements (19 ) (14 ) (22 ) (20 ) (27 ) Revenues Before Reimbursements $ 288