Crawford & Company · NYSE:CRD.A
Crawford & — Q1 2014 Earnings Presentation
27 slides from Crawford &'s earnings presentation, May 5, 2014
Slide 1: First Quarter 2014 Earnings Conference Call
Crawford & Company FIRST QUARTER 2014 EARNINGS CONFERENCE CALL May 5, 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 First Quarter 2014 Financial Review First Quarter 2014 Review and Outlook Guidance and Future Operational Focus
Slide 5: First Quarter 2014 Business Summary
275.3 286.3 14.1 18.0 5 Revenues ($ in millions) Consolidated Operating Earnings ($ in millions) First Quarter 2014 Business Summary • Revenues of $275.3 million • Consolidated operating earnings of $14.1 million • Diluted earnings per share of $0.12 for CRDA and $0.11 for CRDB • Dividends paid of $
Slide 6: First Quarter 2014 Financial Review
First Quarter 2014 Financial Review
Slide 7: Income Statement Highlights
Unaudited ($ in thousands, except per share amounts) Three Months Ended March 31, 2014 2013 % Change Revenues $275,349 $286,281 (4 )% Costs of Services 203,893 213,341 (4 )% Selling, General, and Administrative Expense 59,730 58,950 1 % Corporate Interest Expense, Net 1,301 1,643 (21 )% Total Costs
Slide 8: Americas First Quarter Financials
Pro Forma 2014/2013 2014* 2014** 2013 % Change Revenues $ 91,091 $ 87,891 $ 84,244 4.3 % Total Operating Expenses 84,127 80,957 81,024 (0.1 )% Operating Earnings $ 6,964 $ 6,934 $ 3,220 115.3 % Operating Margin 7.6 % 7.9 % 3.8 % 85 .9 6. 5 95 .9 87.9 84.2 3.2 8 Revenues ($ in millions) Operating Ear
Slide 9: U.S. Catastrophe (CAT) Adjuster Activity
9. 1 85 .9 6. 5 6.3 10.8 11.2 9 Revenues ($ in millions) Catastrophe Cases (In thousands) • Superstorm Sandy claims largely completed in the 2013 first quarter • CAT adjuster revenues of $6.3 million in first quarter of 2014 compared with $10.8 million in 2013 period • CAT cases numbered 7,400 in th
Slide 10: EMEA/AP First Quarter Financials
87.6 6.8 Pro Forma 2014/2013 2014* 2014** 2013 % Change Revenues $ 82,155 $ 80,336 $ 87,589 (8.3 )% Total Operating Expenses 80,066 78,436 80,767 (2.9 )% Operating Earnings $ 2,089 $ 1,900 $ 6,822 (72.1 )% Operating Margin 2.5 % 2.4 % 7.8 % 10 Operating Earnings ($ in millions) Revenues ($ in millio
Slide 11: Broadspire First Quarter Financials
64.8 57.8 2.0 2014 2013 % Change Revenues $ 64,758 $ 57,797 12.0 % Total Operating Expenses 62,755 59,565 5.4 % Operating Earnings (Loss) $ 2,003 $ (1,768 ) 213.3 % Operating Margin 3.1 % -3.1 % 11 Revenues ($ in millions) Operating Earnings (Loss) ($ in millions) Unaudited ($ in thousands) For the
Slide 12: Legal Settlement Administration First Quarter Financials
42.4 56.7 12.0 2014 2013 % Change Revenues $ 42,364 $ 56,651 (25.2 )% Total Operating Expenses 37,397 44,638 (16.2 )% Operating Earnings $ 4,967 $ 12,013 (58.7 )% Operating Margin 11.7 % 21.2 % 5.0 12 Revenues ($ in millions) Operating Earnings ($ in millions) Unaudited ($ in thousands) For the quar
Slide 13: Balance Sheet Highlights
13 Unaudited ($ in thousands) March 31, 2014 December 31, 2013 Change Cash and cash equivalents $48,511 $75,953 ($27,442 ) Accounts receivable, net 168,374 160,350 8,024 Unbilled revenues, net 120,202 105,791 14,411 Total receivables 288,576 266,141 22,435 Goodwill 130,716 132,777 (2,061 ) Deferred
Slide 14: Operating and Free Cash Flow
14 2014 2013 Variance Net Income Attributable to Shareholders of Crawford & Company $6,652 $9,739 ($3,087 ) Depreciation and Other Non-Cash Operating Items 8,331 8,789 (458 ) Unbilled and Billed Receivables Change (26,340 ) (14,041 ) (12,299 ) Working Capital Change (51,306 ) (43,979 ) (7,327 ) U.S.
Slide 15: Other Financial Highlights
15 Dividends: • During the 2014 first quarter, Crawford paid a dividend of $0.05 on CRDA and $0.04 on CRDB Share Repurchase: • During the 2014 first quarter, Crawford repurchased 174,108 shares of CRDA at an average cost of $7.99 per share • From inception through March 31, 2014, Crawford has repurc
Slide 16: First Quarter 2014 Review and Outlook
First Quarter 2014 Review and Outlook
Slide 17: Business Activities First Quarter Review and Outlook
17 Revenues ($ in millions) Cases Received (In thousands) • Continuing improvement in Broadspire revenues and operating earnings • Case referrals up 20% over prior-year quarter, mainly reflecting growth in high-frequency, low-severity claims • New revenue pipeline developing to help offset special p
Slide 18: Americas First 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 Severe winter weather drives field operations Continued Contractor Connection network expansion and growth in m
Slide 19: EMEA/AP First 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. claims declined due to benign weather Investment in Specialty Markets U.K. transformation project providing cost savings CEMEA Claims volume increa
Slide 20: Broadspire First 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 5% over prior year first quarter • Retention remained strong • Medical management revenu
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 $101 million as of March 31, 2014 • Focus on operating margin improvement • Activities to build new business pipeline ongoing First Quarter R
Slide 22: 2014 Guidance
22 Crawford & Company is revising 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 $60.0
Slide 23: 2014 Operational Focus
23 • Grow business pipeline and increase 2014 revenues through broader market coverage, investment in new business platforms, and launch of new products • Implement cost initiatives to further increase operating efficiencies across the globe • Create a global GTS powerhouse by adding world-class adj
Slide 24: First Quarter 2014
First Quarter 2014 i) creetord
Slide 25: Non-GAAP Measures and Reimbursements for Out-of-Pocket Expenses
25 Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comparable to other similarly-titled measurem
Slide 26: Quarterly Revenues, Costs of Services, and Operating Earnings
Quarter Ended Quarter Ended March 31, March 31, Unaudited ($ in thousands) 2014 2013 Revenues Before Reimbursements Total Revenues $ 289,358 $ 307,126 Reimbursements (14,009 ) (20,845 ) Revenues Before Reimbursements $ 275,349 $ 286,281 Costs of Services Before Reimbursements Total Costs of Services
Slide 27: Reconciliation of Non-GAAP Items (cont.)
Reconciliation of Non-GAAP Items (cont.) 27 Quarterly Revenues and Net Debt Unaudited ($ in millions) 1Q 2014 4Q 2013 3Q 2013 2Q 2013 1Q 2013 Revenues Before Reimbursements Total Revenues $ 289 $ 307 $ 313 $ 326 $ 307 Reimbursements (14 ) (22 ) (20 ) (27 ) (21 ) Revenues Before Reimbursements $ 275