Slide 1: Third Quarter 2016 Earnings Conference Call
November 7, 2016 Third Quarter 2016 Earnings Conference Call
Slide 2: Forward-Looking Statements
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 and quantitative, that are not statements of histo
Slide 3: Global Business Services Leader
3 • One of the world's largest independent providers 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 GLOBAL BUSINESS
Slide 4: Today's Agenda
4 TODAY'S AGENDA --- Welcome and Opening Comments --- Third Quarter 2016 Financial Review --- Increased and Updated Guidance
Slide 5: Third Quarter 2016 Business Summary
5 Revenues ($ in millions) Consolidated Operating Earnings (1) ($ in millions) • Revenues for the quarter were $277.3 million, down 5% as compared with $293.3 million in the 2015 third quarter • Net income attributable to shareholders of $10.9 million, compared to net loss of $(0.9) million in the 2
Slide 6: Third Quarter 2016 Financial Review
6 THIRD QUARTER 2016 Financial Review
Slide 7: Consolidated income statement, three months ended September 30, 2016
7 Unaudited ($ in thousands, except per share amounts) Three Months Ended September 30, 2016 2015 % Change Revenues Before Reimbursements $277,286 $293,335 (5 )% Costs of Services Provided, Before Reimbursements 193,453 211,106 (8 )% Selling, General, and Administrative Expenses 60,325 61,738 (2 )%
Slide 8: U.S. Services Segment Highlights
8 Revenues by Service Line ($ in millions) Cases Received by Service Line (In thousands) Operating Results (3Q 2016 v. 3Q 2015) • Revenues of $56.5 million versus $62.1 million • Operating earnings of $9.4 million versus $10.8 million • Operating earnings margin of 16.6% versus 17.5% • Cases receive
Slide 9: International Segment Highlights
9 Revenues by Geographic Region ($ in millions) Operating Results (3Q 2016 v. 3Q 2015) • Revenues of $121.6 million versus $128.2 million • Exchange rates reduced revenues by 5%, or $6.1 million • Operating earnings of $13.2 million versus $8.0 million • Operating earnings margin of 10.9% versus 6.2
Slide 10: Broadspire Segment Highlights
10 Revenues by Service Line ($ in millions) Broadspire Cases Received (In thousands) Operating Results (3Q 2016 v. 3Q 2015) • Revenues of $76.7 million versus $74.2 million • Operating earnings of $8.3 million versus $7.4 million • Operating earnings margin of 10.8% versus 10.0% • Cases received of
Slide 11: Garden City Group Segment Highlights
11 Backlog ($ in millions) Operating Results (3Q 2016 v. 3Q 2015) • Revenues of $22.5 million versus $28.8 million • Operating earnings of $2.4 million versus $1.1 million • Operating earnings margin of 10.5% versus 4.0% • Backlog of $94 million versus $76 million Highlights • Deepwater Horizon clas
Slide 12: Balance Sheet and Liquidity
12 Unaudited ($ in thousands) September 30, 2016 December 31, 2015 Change Cash and cash equivalents $71,663 $76,066 ($4,403 ) Accounts receivable, net 166,993 164,596 2,397 Unbilled revenues, net 112,775 98,659 14,116 Total receivables 279,768 263,255 16,513 Goodwill 92,895 95,616 (2,721 ) Intangibl
Slide 13: Operating and Free Cash Flow
13 Unaudited ($ in thousands) 2016 2015 Variance Net Income Attributable to Shareholders of Crawford & Company $ 28,202 $ 6,183 $ 22,019 Depreciation and Other Non-Cash Operating Items 34,826 34,777 49 Unbilled and Billed Receivables Change (23,746 ) 5,586 (29,332 ) Working Capital Change 24,365 (11
Slide 14: 2016 Guidance
14 Crawford & Company is increasing and updating its guidance for 2016 as follows: YEAR ENDING DECEMBER 31, 2016 Low End High End Consolidated revenues before reimbursements $1.08 $1.10 billion After expected restructuring and special charges, net income attributable to shareholders of Crawford & Co
Slide 15: Looking to 2017
15 LOOKING TO 2017 Execute strategic review and realign business structure to be more client centric • Deliver customized value propositions to clients • Increase the speed of doing business enterprise wide Implement cost reduction initiatives to further drive margin expansion Capitalize on cr
Slide 16: Appendix Third Quarter 2016
16 Appendix THIRD QUARTER 2016
Slide 17: Non-GAAP Measures Explanation
17 Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comparable to other similarly-titled measurem
Slide 18: Adjusted EBITDA and Non-GAAP Adjusted Net Income
18 Adjusted EBITDA Adjusted EBITDA is used by management to evaluate, assess and benchmark our operational results and the Company believes that adjusted EBITDA is relevant and useful information widely used by analysts, investors and other interested parties. Adjusted EBITDA is defined as net incom
Slide 19: Reconciliation of Non-GAAP Items
19 Quarter Ended Quarter Ended Full Year September 30, September 30, Guidance Unaudited ($ in thousands) 2016 2015 2016 * Revenues Before Reimbursements Total Revenues $ 295,387 $ 309,984 $ 1,155,000 Reimbursements (18,101 ) (16,649 ) (80,000 ) Revenues Before Reimbursements $ 277,286 $ 293,335 $ 1,
Slide 20: Reconciliation of Non-GAAP Items: Adjusted EBITDA
20 RECONCILIATION OF NON-GAAP ITEMS (continued) Adjusted EBITDA Quarter Ended Quarter Ended Full Year September 30, September 30, Guidance Unaudited ($ in thousands) 2016 2015 2016 * Net income (loss) attributable to shareholders of Crawford & Company $ 10,945 $ (857 ) $ 32,300 Add: Depreciation and
Slide 21: Reconciliation of Non-GAAP Items: Net Debt
21 RECONCILIATION OF NON-GAAP ITEMS (continued) Net Debt September 30, December 31, Unaudited ($ in thousands) 2016 2015 Net Debt Short-term borrowings $ 8,007 $ 19,958 Current installments of capital leases 1,327 1,959 Long-term debt and capital leases, less current installments 205,248 225,365 Tot
Slide 22: Reconciliation: Non-GAAP Adjusted Net Income and Diluted EPS
22 RECONCILIATION OF NON-GAAP ITEMS (continued) Non-GAAP Adjusted Net Income and Diluted Earnings Per Share Three Months Ended September 30, 2016 Unaudited ($ in thousands) Income Before Taxes Income Taxes Net Income Net Income Attributable to Crawford & Company Diluted Earnings per CRD-A Share Dilu