Crawford & Company · NYSE:CRD.A
Crawford & — Investor Presentation (May 2020)
46 slides from Crawford &'s investor presentation, May 20, 2020
Slide 1: Investor Presentation May 2020
Investor Presentation May 2020
Slide 2: Forward-Looking Statements and Additional Information
2 Forward - Looking Statements and Additional Information Forward - Looking Statements This presentation contains forward - looking statements, including statements about the expected future financial condition, resul ts of operations and earnings outlook of Crawford & Company. Statements, both qual
Slide 3: Crawford & Company: Mission and Vision
Crawford & Company Loss resolution for carriers, brokers and corporates Our Mission Restoring and enhancing lives, businesses and communities. Our Vision To be the leading provider and most trusted source for expert assistance , serving those who insure and self - insure the risks of businesses and
Slide 4: The world's largest publicly listed independent provider of global claims management
4 Crawford & Company The world’s largest publicly listed independent provider of global claims management solutions. Organized across global service lines: • P&C adjusting solutions (Crawford Claims Solutions) • Large and complex claims (Global Technical Services) • Global TPA solutions (Broadspire)
Slide 5: Scope and Scale of Operations
5 Scope and Scale of Operations Comprehensive experience across the spectrum of the claims world¹ Crawford Claims Solutions Global Technical Services Contractor Connection Broadspire P&C Adjusting Solutions Large or Complex Claims Managed Repair Services Global TPA 460,000+ P&C claims managed 400+ G
Slide 6: Crawford's Response to COVID-19
6 Crawford’s Response to COVID - 19 Workforce Client Solutions Market Leadership Over 93% Switched to working remote within 7 to 10 days Remote Claims Management Rolled out globally Global Scale With Crawford teams serving clients across more than 70 countries PPE & Expert Training Provided to adjus
Slide 7: Investment Thesis
7 Investment Thesis Global Product and Geographic Diversification Financial Strength and Flexibility Competitive Market Position Goal: Achieve Sustained Revenue and Earnings Growth Largest Publicly - Listed Claims Service Provider 80 - Year History of Industry Leadership Blue - Chip Global Client Ba
Slide 8: Positioned for Future Growth
8 Positioned for Future Growth Noble mission that inspires our management team, clients and employees Unique ownership structure, providing both flexibility and resilience Consolidating a fragmented market Leveraging competitive excellence to deliver clients best - in - class solutions Growing brand
Slide 9: Experienced Executive Management Team
9 Experienced Executive Management Team With an average of over 30 years of experience Rohit Verma Chief Executive Officer Bruce Swain Chief Financial Officer Joseph Blanco President Danielle Lisenbey Global President, TPA Solutions: Broadspire Larry Thomas Global President, Crawford Specialty Solut
Slide 10: Comprehensive, intelligent solutions from experts around the world
We bring together thoughtful experts from around the world to offer comprehensive, intelligent solutions to our customers. Loss Adjusting Third Party Administration Managed Repair Medical Management On - Demand Services Catastrophe Response 10
Slide 11: Insurance Industry Claims Trends
11 Insurance Industry Claims Trends Well - positioned to benefit from rising industry trends Increasing global claim volume and severity Rising level of carrier outsourcing Customer demand for scale Infusion of alternative capital Climate change
Slide 12: Targeting National and Regional Players
12 Targeting National and Regional Players 2 % 63 % 6% 22% 92% 15% # of Carriers Total Premium Medium: $1B - $5B Small: Less than $1B Large: Greater than $5B 1. ~98% of carriers are small to medium sized 2. They have limited financial capacity • Insurance carriers currently operate with a large oper
Slide 13: Solutions Addressing Client and Industry Challenges
13 Solutions Addressing Client and Industry Challenges • Claims processing is evolving with customer expectations for on - demand, simplified products and services Focus on Speed & Simplicity • Data analytics are changing how insurers understand and determine risk Knowledge • Insurtech will fast tra
Slide 14: Innovating to Accelerate Growth, Improve Client Experience and Reduce Costs
14 Innovating to Accelerate Growth, Improve Client Experience and Reduce Costs Claims triage process leverages self - service app, WeGoLook Lookers and traditional field adjusters to reduce costs and improve cycle times Contractor Connection Industry Solutions Investing in Technology TruLook The ind
Slide 15: TruLook
15 TruLook Reduce cost and accelerate time in process with end - to - end handling of self - service, on - demand, and field adjusting needs Client receives comprehensive report and documentation Client Submits claim via email, phone, or existing ordering platform TruLook TM desk services Licensed a
Slide 16: Contractor Connection
16 Contractor Connection “Quality Focused – Performance Driven” Faster Service Through rigorous performance management & consistent application of expectations, we improve cycle times & increase customer satisfaction. Accurate Estimates Leveraging technology, people, processes, and industry best pra
Slide 17: Tailored Industry Verticals and Solutions
17 Tailored Industry Verticals and Solutions Focused on developing a complete range of specialized outsourced solutions focusing on industry verticals for managing risks specific to the targeted industry’s needs Industry Verticals Integrated Solutions Construction Hospitality Transportation Energy H
Slide 18: Leading Change with Investments in Market-Leading Technology
18 Leading Change with Investments in Market - Leading Technology • Drone Capabilities: WeGoLook has a network of over 2,000 licensed drone operators • YouGoLook Self - Service Application : Supports FNOL and claims documentation processes by policyholders for direct upload to claims systems • Escap
Slide 19: Disciplined Capital Allocation
19 Disciplined Capital Allocation Strong financial position to remain resilient, with liquidity in excess of $180 million¹ Streamlined various functions of our workforce resulting in $15 million of annualized savings Reprioritized capital expenditures, reducing spending by 25% Increased client and m
Slide 20: 2020 Primary Objectives
20 2020 Primary Objectives Maintain Resilience Enhance current market leading position and focus on Crawford’s long - term growth strategy Financial Stability Uphold financial strength and flexibility while preserving long - term value for our shareholders System Readiness Prudently invest in techno
Slide 21: Crawford & Company
9,000 50,000+ 70 $18B+ employees Field Resources countries claims managed annually Crawford & Company The world’s largest publicly listed independent provider of global claims management and outsourcing solutions. 21
Slide 22: Appendix A: Global Service Lines
22 Appendix A: Global Service Lines 22
Slide 23: Crawford Claims Solutions
23 Crawford Claims Solutions Value Proposition • Most extensive network of field services in the world • Widest range of innovative, end - to - end outsourced claims management solutions • Scalable and mobile workforce can respond to catastrophes anywhere in the world • Globally deployed field asset
Slide 24: Third Party Administration Solutions: Broadspire
24 Third Party Administration Solutions: Broadspire Affinity Warranty Summary Employers Liability Global Presence • Only TPA with global presence – servicing customers in 16 countries • Global account management, treasury and IT infrastructure Cutting - edge Capabilities • Data - driven approaches w
Slide 25: Crawford Specialty Solutions
25 Crawford Specialty Solutions • Technology – led integrated outsourced solutions leveraging service breadth • Deep roster of professional and highly credentialed contractors • Analytics - based performance management • Continuous innovation and global expansion Value Proposition Financial savings
Slide 26: Outsourced Claims Advantage Case Study: A Vineyard
26 Outsourced Claims Advantage Case Study: A Vineyard impacted by the California wildfires Background o The 2017 California wildfires approached an unprecedented $12 billion of insured losses o A historic number of fires burned over 500,000 acres causing damage to almost 30 wineries in Napa, Sonoma
Slide 27: TPA Outsourcing: Terminix
27 TPA Outsourcing Terminix: A case study in the value of transitioning to an outsourced TPA model Terminix • Terminix is one of the largest pest control companies in the world, operating in 47 states and 22 countries • With an internal third - party liability model, they faced two challenges: o The
Slide 28: 99 Cents Only Stores
28 99 Cents Only Stores Background • 99 Cents Only Stores is a deep - discount retailer with more than 350 stores in four states • As a retailer with over 17,000 employees, 99 Cents Only Stores struggled to manage the large number of employee injuries caused by overexertion, repetitive strain, slips
Slide 29: Belmond (UK) Limited
29 Belmond (UK) Limited Leveraging Crawford’s integrated solutions Background • Belmond La Samanna and Belmond Cap Juluca were left devastated by the powerful hurricanes of 2017 • Strong winds and sea surges caused significant property damage and interrupted business • As major employers in the loca
Slide 30: Appendix B: First Quarter 2020 Segment Results
30 Appendix B: First Quarter 2020 Segment Results 30
Slide 31: Crawford TPA Solutions
31 Crawford TPA Solutions Segment Highlights • U.S. client renewal rate at 98% and several new client wins in the quarter • Economic weakness caused claims volume headwinds, with slight increase in claims from the healthcare sector Highlights • Revenues of $96.9 million versus $97.8 million • Consta
Slide 32: Crawford Claims Solutions
32 Crawford Claims Solutions Segment Highlights • Secured new Dallas site with over 600 staff members to support our newest large carrier • Accelerated deployment of YouGoLook, video collaboration, and other new adjusting capabilities • Benign weather in North America with no named storms and warm t
Slide 33: Crawford Specialty Solutions
33 Crawford Specialty Solutions Segment Highlights • GTS added several new programs across the globe, and we expanded our presence in Japan, the world’s third largest insurance market • Beginning to see COVID - 19 - related BI claims activity • Lower assignments in North America for Contractor Conne
Slide 34: Appendix C: First Quarter 2020 Consolidated Financial Results
34 Appendix C: First Quarter 2020 Consolidated Financial Results 34
Slide 35: First Quarter 2020 Financial Summary
35 First Quarter 2020 Financial Summary (1) See appendix for non - GAAP explanation and reconciliation of non - GAAP measures. Quarter Ended March 31, March 31, ($ in millions, except per share amounts) 20 20 201 9 % Change Revenues $ 237.5 $ 247.1 ( 4)% Non - GAAP Revenues excluding foreign exchang
Slide 36: Balance Sheet Highlights
36 (1) See Appendix for non - GAAP explanation and reconciliation Balance Sheet Highlights Unaudited ($ in thousands) March 31, 20 20 December 31, 201 9 Change Cash and cash equivalents $ 83,110 $ 51,802 $ 31,308 Accounts receivable, net 121,230 128,217 ( 6,987 ) Unbilled revenues, net 108,898 103,8
Slide 37: Operating and Free Cash Flow
37 (1) See Appendix for non - GAAP explanation and reconciliation Operating and Free Cash Flow Unaudited ($ in thousands) 20 20 201 9 Change Net Income Attributable to Shareholders of Crawford & Company $ (11,399) $ 6,109 $ ( 17,508 ) Goodwill Impairment 17,674 — 17,674 Depreciation and Other Non -
Slide 38: Appendix D: Non-GAAP Financial Information
38 Appendix D: Non - GAAP Financial Information 38
Slide 39: Appendix: Non-GAAP Financial Information
39 Appendix: Non - GAAP Financial Information Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not sub stitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily c
Slide 40: Appendix: Non-GAAP Financial Information (cont.)
40 Appendix: Non - GAAP Financial Information (cont.) Segment and Consolidated Gross Profit Gross profit is defined as revenues less direct expenses which exclude indirect overhead expenses allocated to the business. Ind irect expenses consist of centralized administrative support costs, regional an
Slide 41: Total Revenues Before Reimbursements by Major Currency
41 Total Revenues Before Reimbursements by Major Currency The following table illustrates revenue as a percentage of total revenue in the major currencies of the geographic areas in which Crawford does business: T hre e Months Ended (in thousands) March 31, 20 20 March 3 1, 201 9 Geographic Area Cur
Slide 42: Reconciliation of Non-GAAP Items
42 Reconciliation of Non - GAAP Items Revenues, Costs of Services Provided, and Operating Earnings Quarter Ended Quarter Ended March 31, March 31, Unaudited ($ in thousands) 20 20 201 9 Revenues Before Reimbursements Total Revenues $ 2 46,046 $ 2 56 , 377 Reimbursements ( 8,515 ) ( 9,319 ) Revenues
Slide 43: Reconciliation of Non-GAAP Items (cont.)
43 Reconciliation of Non - GAAP Items (cont.) Quarter Ended March 31, March 31, Unaudited ($ in thousands) 20 20 201 9 Net (loss) income attributable to shareholders of Crawford & Company $ ( 11,399 ) $ 6,109 Add: Depreciation and amortization 10, 060 9,624 Stock - based compensation 880 (247 ) Net
Slide 44: Reconciliation of Non-GAAP Items (cont.): Net Debt
44 Reconciliation of Non - GAAP Items (cont.) March 31, December 31, Unaudited ($ in thousands) 20 20 201 9 Net Debt Short - term borrowings $ 39,784 $ 2 8,531 Current installments of capital leases 38 15 Long - term debt and capital leases, less current installments 187,271 1 48 , 408 Total debt 22
Slide 45: Reconciliation of Non-GAAP Items (cont.)
45 Reconciliation of Non - GAAP Items (cont.) Three months ended ( $ in thousands) March 31, 20 20 March 31, 201 9 Segment gross profit: Crawford TPA Solutions $ 23, 241 $ 2 5,463 Crawford Claims Solutions 13 , 787 17,077 Crawford Specialty Solutions 19 , 002 2 2,441 Segment gross profit 56 , 030 64
Slide 46: Reconciliation of First Quarter Non-GAAP Results
46 Reconciliation of First Quarter Non - GAAP Results Three Months Ended March 31, 20 20 Unaudited ($ in thousands) Revenues Non - GAAP Operating Earnings Pretax Loss Net (Loss) Income Attributable to Crawford & Company Diluted (Loss) Earnings per CRD - A Share Diluted (Loss) Earnings per CRD - B Sh