Crawford & Company · NYSE:CRD.A
Crawford & — Q4 2018 Earnings Presentation
32 slides from Crawford &'s earnings presentation, Feb 25, 2019
Slide 1: Crawford & Company Fourth Quarter 2018 Earnings Conference Call
Slide 2: Forward-Looking Statements and Additional Information
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 a
Slide 3: Crawford & Company
Crawford & Company The world’s largest publicly listed independent provider of global claims management and oursourcing solutions | $14 sition a Claims payments snnusily Oiganized across global Service lines: VT itor ertuate * Crawford Claims Solutions (P&C adjusting solutions) 9,000 + Crawford TPA
Slide 4: See appendix for non-GAAP explanation
(1) See appendix for non-GAAP explanation and reconciliation of non-GAAP measures. 4
Slide 5: Our Mission
Our Mission Crawford & Company Our Vision loss resolution for carriers, To be the leading provider 3 st trusted source for expert brokers and corporates creator
Slide 6: 2018 Investments in Technology
2018 Investments in Technology • Drone capabilities - WeGoLook has a network of over 2,000 licensed drone operators • Intuitive Looker interface - Data collection integrated with Crawford claims systems • Internet of Things (loT) - Working with partners on leak detection sensors that will significan
Slide 7: Focus on Execution
Focus on Execution • Global Service Lines positioning Crawford to be a stronger partner to our clients • Investing in new capabilities and solutions to open large market opportunities that we are uniquely positioned to capitalize on • Targeting industries where we expect continued growth and higher
Slide 8: Disciplined Capital Allocation
Disciplined Capital Allocation • Sale of the Garden City Group business improved our focus on our core business of providing outsourced claims solutions globally • Focused on improving cash generation and delivering value to our shareholders through disciplined capital allocation • Strengthened our
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Slide 10: Fourth Quarter 2018 Financial Summary
FOURTH QUARTER 2018 FINANCIAL SUMMARY Quarter Ended December 31, December 31, ($ in millions, except per share amounts) 2018 2017 % Change Revenues $263.8 $298.8 (12)% Non-GAAP Revenues excluding GCG business (1) $263.8 $282.2 (7)% Net Income (Loss) Attributable to Shareholders of Crawford & Company
Slide 11: Reconciliation of Non-GAAP Items
RECONCILIATION OF NON-GAAP ITEMS Three Months Ended December 31, 2018 Net Income Non-GAAP Attributable to Diluted Diluted Operating Pretax Crawford & Earnings per Earnings per Unaudited ($ in thousands) Revenues Earnings Earnings Company CRD-A Share CRD-B Share GAAP $ 263,794 $ 32,229 $ 23,995 $ 11,
Slide 12: Crawford Claims Solutions Segment Highlights
CRAWFORD CLAIMS SOLUTIONS SEGMENT HIGHLIGHTS Operating Results (4Q 2018 v. 4Q 2017) Three months ended • Revenues of $92.1 million versus $114.5 million Gross profit of $20.8 million versus $24.6 million (in thousands, except December 31, December 31, • percentages) 2018 2017 Variance • Operating ea
Slide 13: Crawford TPA Solutions: Broadspire Segment Highlights
CRAWFORD TPA SOLUTIONS: BROADSPIRE SEGMENT HIGHLIGHTS Operating Results (4Q 2018 v. 4Q 2017) Three months ended • Revenues of $102.2 million versus $100.0 million • Gross profit of $29.8 million versus $28.1 million (in thousands, except December 31, December 31, percentages) 2018 2017 Variance • Op
Slide 14: Crawford Specialty Solutions Segment Highlights
CRAWFORD SPECIALTY SOLUTIONS SEGMENT HIGHLIGHTS Three months ended Operating Results (4Q 2018 v. 4Q 2017) (in thousands, except December 31, December 31, percentages) 2018 2017 Variance • Revenues of $69.5 million versus $84.3 million Revenues $69,479 $84,278 (17.6%) • Gross profit of $26.3 million
Slide 15: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS December December Unaudited ($ in thousands) 31, 2018 31, 2017 Change Cash and cash equivalents $ 53,119 $ 54,011 $ (892) Accounts receivable, net 131,117 174,172 (43,055) Unbilled revenues, net 108,291 108,745 (454) Total receivables 239,408 282,917 (43,509) Goodwill 96,890
Slide 16: Operating and Free Cash Flow
OPERATING AND FREE CASH FLOW For the year ended December 31, Unaudited ($ in thousands) 2018 2017 Variance Net Income Attributable to Shareholders of Crawford & Company $ 25,978 $ 27,665 $ (1,687) Depreciation and Other Non-Cash Operating Items 57,833 45,519 12,314 Loss on Disposition of Business Li
Slide 17: Share Repurchases
SHARE REPURCHASES • During the three months ended December 31, 2018, the Company repurchased 89,262 shares of CRD-A and 29,623 shares of CRD-B at an average cost of $9.00 and $8.99, respectively • During the twelve months ended December 31, 2018, the Company repurchased 1,144,410 shares of CRD-A and
Slide 18: 2019 Guidance
2019 GUIDANCE Crawford & Company is providing initial guidance for 2019 as follows: YEAR ENDING DECEMBER 31, 2019 Low End High End Consolidated revenues before reimbursements $1.05 $1.10 billion Net income attributable to shareholders of Crawford & Company $46.0 $51.0 million Diluted earnings per sh
Slide 19: 2018 Accomplishments
2018 ACCOMPLISHMENTS • Launched our Global Service Lines • Implemented industry verticals and solutions • Advanced our “Cultural Renaissance” across the Company and reinforced our ‘One Crawford’ values • Implemented cutting-edge technologies such as RENOVO, Robotic Process Automation, Drones, and mo
Slide 20: Conclusion: Looking Forward
CONCLUSION Looking forward Crawford has four primary objectives for 2019: • Growth: Increasing the velocity of revenue growth through continuous innovation as we work to deliver our goal of achieving 5% revenue growth and 15% earnings growth annually • System Readiness: Prioritizing IT investments a
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Slide 22: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily compara
Slide 23: Appendix: Non-GAAP Financial Information (continued)
APPENDIX: NON-GAAP FINANCIAL INFORMATION (continued) Segment and Consolidated Gross Profit Gross profit is defined as revenues less direct expenses which exclude indirect overhead expenses allocated to the business. Indirect expenses consist of centralized administrative support costs, regional and
Slide 24: Fourth Quarter and Full Year 2018 Business Summary
FOURTH QUARTER AND FULL YEAR 2018 BUSINESS SUMMARY Quarter Ended Year Ended December 31, December 31, December 31, December 31, ($ in millions, except per share amounts) 2018 2017 % Change 2018 2017 % Change Revenues $263.8 $298.8 (12)% $1,071.0 $1,105.8 (3)% Non-GAAP Revenues excluding GCG business
Slide 25: Quarterly Operating and Free Cash Flow
QUARTERLY OPERATING AND FREE CASH FLOW Unaudited ($ in thousands) Three Months Three Months Three Months Three Months Year Ended Ended Ended Ended Ended March 31, June 30, September 30, December 31, December 31, 2018 2018 2018 2018 2018 Net Income Attributable to Shareholders of Crawford & Company $
Slide 26: Reconciliation of Non-GAAP Items
RECONCILIATION OF NON-GAAP ITEMS Revenues, Costs of Services Provided, and Operating Earnings Quarter Ended Quarter Ended Full Year December 31, December 31, Guidance Unaudited ($ in thousands) 2018 2017 2019 * Revenues Before Reimbursements Total Revenues $ 274,520 $ 313,541 $ 1,143,000 Reimburseme
Slide 27: Reconciliation of Non-GAAP Items: Adjusted EBITDA
RECONCILIATION OF NON-GAAP ITEMS (continued) Adjusted EBITDA Quarter Ended Full Year December 31, December 31, Guidance Unaudited ($ in thousands) 2018 2017 2019 * Net income (loss) attributable to shareholders of Crawford & Company $ 11,938 $ (2,013) $ 48,500 Add: Depreciation and amortization 10,7
Slide 28: Reconciliation of Non-GAAP Items: Net Debt
RECONCILIATION OF NON-GAAP ITEMS (continued) Net Debt December 31, December 31, Unaudited ($ in thousands) 2018 2017 Net Debt Short-term borrowings $ 23,195 $ 24,641 Current installments of capital leases 89 571 Long-term debt and capital leases, less current installments 167,126 200,460 Total debt
Slide 29: Reconciliation of Non-GAAP Items: Segment Gross Profit
RECONCILIATION OF NON-GAAP ITEMS (continued) Segment Gross Profit Three months ended Years ended December 31, December 31, December 31, December 31, (in thousands) 2018 2017 2018 2017 Segment gross profit: Crawford TPA Solutions: Broadspire $ 29,753 $ 28,142 $ 109,224 $ 106,054 Crawford Claims Solut
Slide 30: Non-GAAP Results Excluding GCG Business
NON-GAAP RESULTS EXCLUDING GCG BUSINESS Three Months Ended December 31, 2018 Direct Indirect Operating Unaudited ($ in thousands) Revenues Expenses Gross Profit Expenses Earnings Crawford Specialty Solutions $ 69,479 $ 43,147 $ 26,332 $ 11,013 $ 15,319 Adjustments: GCG business — — — — — Crawford Sp
Slide 31: Non-GAAP Results Excluding GCG Business
NON-GAAP RESULTS EXCLUDING GCG BUSINESS Three Months Ended December 31, 2018 Net Income Non-GAAP Attributable Diluted Diluted Operating Pretax to Crawford & Earnings per Earnings per Unaudited ($ in thousands) Revenues Earnings Earnings Company CRD-A Share CRD-B Share GAAP $ 263,794 $ 32,229 $ 23,99
Slide 32: Non-GAAP Results Excluding GCG Business
NON-GAAP RESULTS EXCLUDING GCG BUSINESS Three Months Ended December 31, 2017 Net Income (Loss) Non-GAAP Attributable to Diluted (Loss) Diluted (Loss) Operating Pretax (Loss) Crawford & Earnings per Earnings per Unaudited ($ in thousands) Revenues Earnings Earnings Company CRD-A Share CRD-B Share GAA