Crawford & Company · NYSE:CRD.A
Crawford & — Q2 2024 Earnings Presentation
36 slides from Crawford &'s earnings presentation, Aug 6, 2024
Slide 1: Second Quarter 2024 Financial Results
® CRD-A & CRD-B (NYSE) Crawford & Company Second Quarter 2024 Financial Results
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: Strategic Update
3 STRATEGIC UPDATE Rohit Verma President & Chief Executive Officer Q2 2024 FINANCIAL RESULTS
Slide 4: Global Reach; Trusted Partner
Global Reach; Trusted Partner 4 70 $20B+ Countries Claims Managed Annually 10,000+ 50,000+ Employees Field Resources Q2 2024 FINANCIAL RESULTS
Slide 5: Multiple Growth Drivers Benefitting Crawford
Multiple Growth Drivers Benefitting Crawford 5 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 insurance markets with Insurtech capabilities global demand in independent loss
Slide 6: Second Quarter 2024 Summary
Second Quarter 2024 Summary • 66 Revenue • Q2 consolidated revenue and operating earnings down $324.6M $314.2M 3% as expected due to benign weather activity as compared to significant CAT activity in Q2 ’23 • Non-weather businesses continue to demonstrate solid growth • Record quarterly revenue and
Slide 7: Weather-Related Business Performance Impacted By Benign Weather Trend
Weather-Related Business Performance Impacted By 7 Benign Weather Trend Consolidated Weather-Related vs. Networks Revenue1 Insured Losses from US Severe Non-Weather-Related Revenue Convective Storms2 -3.2% -65.2% -21.3% $324.6M $314.2M $47B $38.5M $110M -21% $87M $37B +6% $13.4M $214M $227M Q2 ‘23 Q
Slide 8: Our Capital Allocation Strategy
Our Capital Allocation Strategy 8 Committed to Industry Leading Financial Strength and Employing a Disciplined Approach to Capital Allocation Investing in long-term growth Strong liquidity Paid quarterly dividend of through Cap Ex and M&A Leverage ratio below industry average $0.07 per share at 2.09
Slide 9: Operational Update
99 OPERATIONAL UPDATE Bruce Swain, Chief Financial Officer Q2 2024 FINANCIAL RESULTS
Slide 10: Second Quarter 2024 Revenue Contribution
Second Quarter 2024 Revenue Contribution 10 North America International Broadspire Platform Solutions Loss Adjusting Operations (US-only) (US-only) 24% 33% 31% 12% Comprised of the Following Comprised of All Service Lines Third Party Administration for: Comprised of the Following North American Serv
Slide 11: North America Loss Adjusting Second Quarter 2024 Results
11 11 North America Loss Adjusting Second Quarter 2024 Results $76.0M $4.9M Revenues Operating Earnings • Q2 revenue essentially flat reflecting continued benign weather patterns • Q2 operating earnings increased 25% driven by strong growth in GTS • Q2 operating margin expanded 132 bps • Record quar
Slide 12: International Operations Second Quarter 2024 Results
12 12 International Operations Second Quarter 2024 Results $102.3M $5.7M Revenues Operating Earnings • YoY revenue growth of 7%; Growth of 9% when measured in constant currency • Operating earnings increased 52% YoY • Notable strength in UK and Europe • Segment recovery continues driven by strategy
Slide 13: Broadspire Second Quarter 2024 Results
13 13 Broadspire Second Quarter 2024 Results $97.1M $15.1M Revenues Operating Earnings • Record quarter for Broadspire: o Revenues increased 11% YoY to new quarterly record o Operating earnings increased 85% YoY o Operating margin expanded 620 bps • Results driven by client wins and pricing improvem
Slide 14: Platform Solutions Second Quarter 2024 Results
14 14 Platform Solutions Second Quarter 2024 Results $38.8M $1.5M Revenues Operating Earnings • Revenue decreased by 41% o Q2 ‘23 results included higher revenue from severe convective storms, whereas Q2 ’24 had lower storm damage and carriers maintained capacity due to benign weather • Contractor C
Slide 15: Financial Update
15 15 FINANCIAL UPDATE Bruce Swain, Chief Financial Officer Q2 2024 FINANCIAL RESULTS
Slide 16: Q2 2024 Financial Summary
Q2 2024 Financial Summary 16 Quarter Ended Unaudited ($ in millions, except per share amounts) June 30, 2024 June 30, 2023 % Change Revenues $314.2 $324.6 (3)% Non-GAAP Revenues excluding foreign exchange fluctuations(1) $316.1 $324.6 (3)% Net Income Attributable to Shareholders of Crawford & Compan
Slide 17: Balance Sheet Highlights
Balance Sheet Highlights 17 Unaudited ($ in thousands) June 30, 2024 Dec 31, 2023 Change Cash and cash equivalents $ 46,742 $ 58,363 $ (11,621) Accounts receivable, net 133,847 131,362 2,485 Unbilled revenues, net 131,119 116,611 14,508 Total receivables 264,966 247,973 16,993 Goodwill 76,572 76,724
Slide 18: Net Debt and Pension Liability
Net Debt and Pension Liability 18 Net Debt Pension Liability 250,000 80,000 $74.3M 70,000 200,000 $187.1M 60,000 $137.3M 50,000 150,000 40,000 100,000 30,000 $23.2M 20,000 50,000 10,000 - - 2018 2019 2020 2021 2022 2023 Q2 2024 2018 2019 2020 2021 2022 2023 Q2 2024 Net debt at $187.1 million Pension
Slide 19: Operating and Free Cash Flow
Operating and Free Cash Flow 19 Unaudited ($ in thousands) 2024 2023 Change Net Income Attributable to Shareholders of Crawford & Company $ 11,421 $ 19,108 $ (7,687) Depreciation and Other Non-Cash Operating Items 20,836 20,817 19 Contingent Earnout Adjustments 581 973 (392) Billed Receivables Chang
Slide 20: Summary
Summary 20 Leveraging strong relationships to enhance market position Leading the industry with next generation Insurtech capabilities Capitalizing on the changing landscape due to climate change and demographic shifts Financial strength and liquidity provide flexibility to pursue market opportuniti
Slide 21: Appendix: Segment Results and Non-GAAP Financial Information
21 21 Appendix: Segment Results and Non-GAAP Financial Information Q2 2024 FINANCIAL RESULTS
Slide 22: North America Loss Adjusting
North America Loss Adjusting 22 Three months ended Unaudited (in thousands, except percentages) June 30, 2024 June 30, 2023 Variance Revenues $76,030 $76,362 (0.4)% Direct expenses 61,473 63,004 (2.4)% Gross profit 14,557 13,358 9.0% Indirect expenses 9,672 9,458 2.3% Operating earnings $4,885 $3,90
Slide 23: International Operations
International Operations 23 Three months ended Unaudited (in thousands, except percentages) June 30, 2024 June 30, 2023 Variance Revenues $102,283 $95,312 7.3% Direct expenses 83,096 78,281 6.2% Gross profit 19,187 17,031 12.7% Indirect expenses 13,485 13,289 1.5% Operating earnings $5,702 $3,742 52
Slide 24: Broadspire
Broadspire 24 Three months ended Unaudited (in thousands, except percentages) June 30, 2024 June 30, 2023 Variance Revenues $97,087 $87,244 11.3% Direct expenses 70,744 67,484 4.8% Gross profit 26,343 19,760 33.3% Indirect expenses 11,252 11,612 (3.1)% Operating earnings $15,091 $8,148 85.2% Gross p
Slide 25: Platform Solutions
Platform Solutions 25 Three months ended Unaudited (in thousands, except percentages) June 30, 2024 June 30, 2023 Variance Revenues $38,827 $65,638 (40.8)% Direct expenses 31,511 51,726 (39.1)% Gross profit 7,316 13,912 (47.4)% Indirect expenses 5,847 5,806 0.7% Operating earnings $1,469 $8,106 (81.
Slide 26: Additional Financial Matters
Additional Financial Matters 26 Unallocated • Unallocated corporate costs of $5.1 million in Q2 ‘24 compared to corporate costs of $1.1 million in Q2 ‘23 Corporate and Shared • Variance was primarily due to increases in professional fees and other Costs and Credits reserves • During Q2 ‘24 non-servi
Slide 27: Non-GAAP Financial Information
Non-GAAP Financial Information 27 Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comparable to
Slide 28: Non-GAAP Financial Information (cont.)
Non-GAAP Financial Information (cont.) 28 Segment and Consolidated Operating Earnings Operating earnings is the primary financial performance measure used by our senior management and chief operating decision maker to evaluate the financial performance of our Company and operating segments and make
Slide 29: Total Revenue Before Reimbursements by Major Currency
Total Revenue Before Reimbursements by Major Currency 29 The following table illustrates revenue as a percentage of total revenue in the major currencies of the geographic areas in which Crawford does business: Three Months Ended Unaudited (in thousands) June 30, 2024 June 30, 2023 Geographic Area C
Slide 30: Reconciliation of Non-GAAP Items
Reconciliation of Non-GAAP Items 30 Revenues and Costs of Services Provided Quarter Ended Quarter Ended Unaudited ($ in thousands) June 30, 2024 June 30, 2023 Revenues Before Reimbursements Total Revenues $ 326,853 $ 337,629 Reimbursements (12,626) (13,073) Revenues Before Reimbursements 314,227 324
Slide 31: Reconciliation of Non-GAAP Items (cont.)
Reconciliation of Non-GAAP Items (cont.) 31 Operating Earnings Quarter Ended Quarter Ended June 30, 2024 June 30,2023 Unaudited ($ in thousands) North America Loss Adjusting $ 4,885 $ 3,900 International Operations 5,702 3,742 Broadspire 15,091 8,148 Platform Solutions 1,469 8,106 Unallocated corpor
Slide 32: Reconciliation of Non-GAAP items (cont.)
Reconciliation of Non-GAAP items (cont.) 32 Adjusted EBITDA Quarter Ended Quarter Ended June 30, 2024 June 30, 2023 Unaudited ($ in thousands) Net Income Attributable to Shareholders of Crawford & Company $ 8,584 $ 8,427 Add: Depreciation and amortization 8,845 9,191 Stock-based compensation 1,613 1
Slide 33: Non-GAAP Financial Information (cont.)
Non-GAAP Financial Information (cont.) 33 Net Debt June 30, 2024 December 31, 2023 Unaudited ($ in thousands) Short-term borrowings $ 24,350 $ 14,762 Current installments of finance leases and other obligations 75 51 Long-term debt and finance leases, less current installments 209,410 194,335 Total
Slide 34: Non-GAAP Financial Information (cont.)
Non-GAAP Financial Information (cont.) 34 Segment Gross Profit Three months ended Unaudited ($ in thousands) June 30, 2024 June 30, 2023 North America Loss Adjusting $ 14,557 $ 13,358 International Operations 19,187 17,031 Broadspire 26,343 19,760 Platform Solutions 7,316 13,912 Segment gross profit
Slide 35: Reconciliation of Second Quarter Non-GAAP Results
Reconciliation of Second Quarter Non-GAAP Results 35 Three Months Ended June 30, 2024 Net Income Attributable to Crawford & Diluted Earnings Diluted Earnings Unaudited ($ in thousands) Pretax Earnings Company per CRD-A Share per CRD-B Share GAAP $ 12,988 $ 8,584 $ 0.17 $ 0.17 Adjustments: Amortizati
Slide 36: Reconciliation of Year to Date Non-GAAP Results
Reconciliation of Year to Date Non-GAAP Results 36 Six Months Ended June 30, 2024 Net Income Attributable to Crawford & Diluted Earnings Diluted Earnings Unaudited ($ in thousands) Pretax Earnings Company per CRD-A Share per CRD-B Share GAAP $ 16,814 $ 11,421 $ 0.23 $ 0.23 Adjustments: Amortization