Crawford & Company · NYSE:CRD.A
Crawford & — Q3 2022 Earnings Presentation
30 slides from Crawford &'s earnings presentation, Nov 9, 2022
Slide 1: Third Quarter 2022 Earnings Conference Call
Crawford & Company Third Quarter 2022 Earnings Conference Call CRD-A & CRD-B (NYSE)
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, results of operations and earnings outlook of Crawford & Company. Statements, both qualitative
Slide 3: Key Highlights
3 3 Key Highlights Third Quarter 2022 Crawford’stop-line momentum continued in Q3, driven by strategic investments across Q3 2022 METRICS the business Growth momentum continued in both GAAP Non-GAAP Platforms Solutions and North American Loss Adjusting $294.9M $306.0M • Our efforts to increase penet
Slide 4: Our Roadmap to Support Margin Improvement
4 Our Roadmap to Support Margin Improvement Ensuring our top line success translates into expanded profitability to support our long- term growth strategy 1 2 3 4 Roll out new Aggressively Optimize cost Align pricing systems and address low structure to with the value improved productivity current m
Slide 5: Our Capital Allocation Strategy
5 Our Capital Allocation Strategy We’re committed to employing a disciplined approach to capital allocation Share buyback program Regular quarterly dividend Investing in long-term growth a core component of our capital of $0.06 per share through Cap Ex and M&A allocation strategy for CRD-A and CRD-B
Slide 6: Operational Overview
Operational Overview Crawford
Slide 7: Impact Across Our Global Service Lines (GSLs)
7 7 Impact Across Our Global Service Lines (GSLs) Third Quarter 2022 Performance Q3 Revenues • Q3 revenue growth of 3.9% over prior year, due to continued market recovery in North America Canada, increased activity related to Hurricane Fiona and inclusion of edjuster $66.8M Loss Adjusting • Prior ye
Slide 8: Executing on Our Long-Term Strategy
8 Executing on Our Long-Term Strategy Our investments in the business based on our key pillars are showing signs of progress QUALITY EXPERTISE DIGITAL that sets the industry that is deep and that simplifies benchmark eminent #1 Choice for a top-5 carrier, moving up from #6 Record # of adjusters depl
Slide 9: Customer Excellence
9 9 Customer Excellence NPS remains at a healthy level of 47 Net Promoter Score Actively looking for opportunities to improve our score Added $24.5 million in new and enhanced business in Q3 2022 Retained 95.5% of our Broadspire business year to date New and Renewal Business Activity¹ Increasing mar
Slide 10: Progressing our Diversity, Equity and Inclusion Initiatives
10 Progressing our Diversity, Equity and Inclusion Initiatives Favorable results from recent Pulse Survey on Diversity, Equity and Inclusion (DEI) at Crawford; ahead of industry benchmarks Overall Professional Crawford Services Norm I do not face any bias due to my personal identity. 88 66 Senior le
Slide 11: Financial Overview
Financial Overview Crawford
Slide 12: Third Quarter 2022 Financial Summary
12 12 Third Quarter 2022 Financial Summary Quarter Ended September 30, September 30, ($ in millions, except per share amounts) 2022 2021 % Change Revenues $294.9 $288.5 2% Non-GAAP Revenues excluding foreign exchange fluctuations(1) $306.0 $288.5 6% Net (Loss) Income Attributable to Shareholders of
Slide 13: North America Loss Adjusting
13 North America Loss Adjusting Three months ended (in thousands, except September 30, September 30, Q3 Highlights percentages) 2022 2021 Variance • Q3 revenue growth of 3.9% over prior year, driven by continued recovery in Canada, increased Revenues $66,822 $64,334 3.9% activity related to Hurrican
Slide 14: International Operations
14 International Operations Three months ended Q3 Highlights (in thousands, except September 30, September 30, percentages) 2022 2021 Variance • Q3 revenue declined 6.3% from prior year. FX rates reduced revenue by $10.1 million Revenues $86,066 $91,888 (6.3)% • Margin pressures continue to impact c
Slide 15: Broadspire
15 Broadspire Three months ended (in thousands, except September 30, September 30, percentages) 2022 2021 Variance Q3 Highlights Revenues $78,381 $75,804 3.4% • Q3 revenue growth of 3.4% over prior year, driven by increased economic activity, new and existing Direct expenses 60,494 58,775 2.9% busin
Slide 16: Platform Solutions
16 Platform Solutions Three months ended (in thousands, except September 30, September 30, percentages) 2022 2021 Variance Q3 Highlights Revenues $63,655 $56,474 12.7% • Q3 revenue growth of 12.7% over prior year, driven by increased activity in Networks and Direct expenses 48,054 42,594 12.8% inclu
Slide 17: Additional Financial Matters
17 Additional Financial Matters • Unallocated corporate costs of $1.9 million in 2022 compared to $2.2 million in Unallocated Corporate the prior year period and Shared Costs and • Primary components of this variance were a reduction in incentive Credits compensation, partially offset by the Canada
Slide 18: Balance Sheet Highlights
18 Balance Sheet Highlights September 30, December 31, Unaudited ($ in thousands) 2022 2021 Change Cash and cash equivalents $ 33,099 $ 53,228 $ (20,129) Accounts receivable, net 137,360 134,458 2,902 Unbilled revenues, net 134,646 118,722 15,924 Total receivables 272,006 253,180 18,826 Goodwill 76,
Slide 19: Net Debt and Pension Liability
19 19 Net Debt and Pension Liability Net Debt Pension Liability 250,000 $224.3 million 120,000 $105.2 million 100,000 200,000 80,000 150,000 60,000 100,000 $106.4 million 40,000 $10.2 million 50,000 20,000 0 - 2016 2017 2018 2019 2020 2021 Q3 2022 2016 2017 2018 2019 2020 2021 Q3 2022 Net debt at $2
Slide 20: Operating And Free Cash Flow
20 Operating And Free Cash Flow For the period ended September 30, Unaudited ($ in thousands) 2022 2021 Change Net (Loss) Income Attributable to Shareholders of Crawford & Company $ (4,218) $ 29,039 $ (33,257) Depreciation and Other Non-Cash Operating Items 31,556 36,242 (4,686) Goodwill Impairment
Slide 21: Crawford & Company
20 20 21 Crawford & Company The world’s largest publicly listed independent provider of global claims management and outsourcing solutions. 10,000+ 50,000+ 70 $18B+ employees Field Resources countries claims managed annually
Slide 22: Appendix: Non-GAAP Financial Information
22 Appendix: Non-GAAP Financial Information
Slide 23: Appendix: Non-GAAP Financial Information
23 Appendix: Non-GAAP Financial Information Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comp
Slide 24: Appendix: Non-GAAP Financial Information (cont.)
24 Appendix: Non-GAAP Financial Information (cont.) Segment and Consolidated Gross Profit Gross profit is defined as revenues less direct expenses which exclude indirect overhead expenses allocated to the business. Indirect expenses consist of centralized administrative support costs, regional and l
Slide 25: Total Revenues Before Reimbursements by Major Currency
25 Total Revenues Before Reimbursements by Major Currency The following table illustrates revenue as a percentage of total revenue in the major currencies of the geographic areas in which Crawford does business: Three Months Ended September 30, September 30, (in thousands) 2022 2021 Geographic Area
Slide 26: Reconciliation of Non-GAAP Items
26 Reconciliation of Non-GAAP Items Revenues, Costs of Services Provided, and Operating Earnings Quarter Ended Quarter Ended September 30, September 30, Unaudited ($ in thousands) 2022 2021 Revenues Before Reimbursements Total Revenues $ 306,417 $ 297,562 Reimbursements (11,493) (9,062) Revenues Bef
Slide 27: Reconciliation of Non-GAAP Items (cont.)
27 Reconciliation of Non-GAAP Items (cont.) Adjusted EBITDA ) Quarter Ended September 30, September 30, Unaudited ($ in thousands) 2022 2021 Net (loss) income attributable to shareholders of Crawford & Company $ (15,144) $ 11,195 Add: Depreciation and amortization 8,924 9,826 Stock-based compensatio
Slide 28: Reconciliation of Non-GAAP Items (cont.)
28 Reconciliation of Non-GAAP Items (cont.) Net Debt September 30, December 31, Unaudited ($ in thousands) 2022 2021 Net Debt Short-term borrowings $ 37,639 $ 10,643 Current installments of finance leases and other obligations 57 61 Long-term debt and finance leases, less current installments 219,68
Slide 29: Reconciliation of Non-GAAP Items (cont.)
29 Reconciliation of Non-GAAP Items (cont.) Segment Gross Profit Three months ended September 30, 2022 September 30, 2021 ($ in thousands) Segment gross profit: North America Loss Adjusting $ 12,164 $ 12,631 International Operations 9,619 13,984 US Broadspire 17,887 17,029 Platform Solutions 15,601
Slide 30: Reconciliation of Third Quarter Non-GAAP Results
30 Reconciliation of Third Quarter Non-GAAP Results Three Months Ended September 30, 2022 Net (Loss) Income Attributable to Diluted (Loss) Diluted(Loss) Pretax (Loss) Crawford & Earnings per CRD- Earnings per CRD- Unaudited ($ in thousands) Earnings Company A Share B Share GAAP $ (28,538) $ (15,144)