Crawford & Company · NYSE:CRD.A
Crawford & — Q3 2014 Earnings Presentation
27 slides from Crawford &'s earnings presentation, Nov 6, 2014
Slide 1: Third Quarter 2014 Earnings Conference Call
Crawford & Company THIRD QUARTER 2014 EARNINGS CONFERENCE CALL November 6, 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 Third Quarter 2014 Financial Review Third Quarter 2014 Review and Outlook Guidance and Future Operational Focus
Slide 5: Third Quarter 2014 Business Summary
293.8 293.3 22.9 26.3 5 Revenues ($ in millions) Consolidated Operating Earnings ($ in millions) Third Quarter 2014 Business Summary • Revenues of $293.8 million • Consolidated operating earnings of $22.9 million • Diluted earnings per share of $0.19 for CRDA and $0.17 for CRDB
Slide 6: Third Quarter 2014 Financial Review
Third Quarter 2014 Financial Review
Slide 7: Income Statement Highlights
Unaudited ($ in thousands, except per share amounts) Three Months Ended September 30, 2014 2013 % Change Revenues $293,831 $293,338 — % Costs of Services 213,442 212,375 1 % Selling, General, and Administrative Expenses 59,348 56,702 5 % Corporate Interest Expense, Net 1,680 1,519 11 % Total Costs a
Slide 8: Americas Third Quarter Financials
Pro Forma 2014/2013 2014* 2014** 2013 % Change Revenues $ 93,969 $ 92,181 $ 95,879 (3.9 )% Total Operating Expenses 86,811 85,145 86,161 (1.2 )% Operating Earnings $ 7,158 $ 7,036 $ 9,718 (27.6 )% Operating Margin 7.6 % 7.6 % 10.1 % 85. 9 6.5 95. 9 92.2 95.9 9.7 8 Revenues ($ in millions) Operating
Slide 9: U.S. Catastrophe (CAT) Adjuster Activity
9.1 85. 9 6.5 12.3 13.9 10.4 9 Revenues ($ in millions) Catastrophe Cases (In thousands) • CAT adjuster revenues of $12.3 million in the third quarter of 2014 compared with $13.9 million in the 2013 period • CAT cases numbered 7,300 in the third quarter of 2014 compared with 10,400 in the third quar
Slide 10: EMEA/AP Third Quarter Financials
84.0 4.3 Pro Forma 2014/2013 2014* 2014** 2013 % Change Revenues $ 82,733 $ 86,173 $ 84,007 2.6 % Total Operating Expenses 78,732 81,948 79,735 2.8 % Operating Earnings $ 4,001 $ 4,225 $ 4,272 (1.1 )% Operating Margin 4.8 % 4.9 % 5.1 % 10 Operating Earnings ($ in millions) Revenues ($ in millions) U
Slide 11: Broadspire Third Quarter Financials
68.2 63.3 4.4 2014 2013 % Change Revenues $ 68,242 $ 63,323 7.8 % Total Operating Expenses 63,820 61,439 3.9 % Operating Earnings $ 4,422 $ 1,884 134.7 % Operating Margin 6.5 % 3.0 % 11 Revenues ($ in millions) Operating Earnings ($ in millions) Unaudited ($ in thousands) For the quarters ended Sept
Slide 12: Legal Settlement Administration Third Quarter Financials
47.2 50.1 10.2 2014 2013 % Change Revenues $ 47,235 $ 50,129 (5.8 )% Total Operating Expenses 39,567 39,958 (1.0 )% Operating Earnings $ 7,668 $ 10,171 (24.6 )% Operating Margin 16.2 % 20.3 % 7.7 12 Revenues ($ in millions) Operating Earnings ($ in millions) Unaudited ($ in thousands) For the quarte
Slide 13: Balance Sheet Highlights
13 Unaudited ($ in thousands) September 30, 2014 December 31, 2013 Change Cash and cash equivalents $44,742 $75,953 ($31,211 ) Accounts receivable, net 187,460 160,350 27,110 Unbilled revenues, net 127,988 105,791 22,197 Total receivables 315,448 266,141 49,307 Goodwill 134,122 132,777 1,345 Deferre
Slide 14: Operating and Free Cash Flow
14 2014 2013 Variance Net Income Attributable to Shareholders of Crawford & Company $27,308 $40,152 ($12,844 ) Depreciation and Other Non-Cash Operating Items 30,105 27,546 2,559 Unbilled and Billed Receivables Change (51,649 ) (41,427 ) (10,222 ) Working Capital Change (35,162 ) (20,413 ) (14,749 )
Slide 15: Other Financial Highlights
15 Share Repurchase: • During the 2014 third quarter, Crawford repurchased 44,254 shares of CRDA at an average cost of $8.27 per share • From inception of the 2.0 million share repurchase program authorized in May 2012 through August 15, 2014, Crawford repurchased 1,544,527 shares of CRDA at an aver
Slide 16: Third Quarter 2014 Review and Outlook
Third Quarter 2014 Review and Outlook
Slide 17: Business Activities
17 Revenues ($ in millions) Cases Received (In thousands) • Results in Americas segment led by Contractor Connection growth • Continuing improvement in Broadspire revenues and operating earnings • Case referrals up 2% over prior-year quarter, mainly reflecting growth in high-frequency, low-severity
Slide 18: Americas Third 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 Long-term outsourcing project to assist major U.S. insurer partially offsets decline in weather-related claims
Slide 19: EMEA/AP Third 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. improvement driven by weather-related claims Acquisition of Buckley Scott CEMEA Claims volume increased in third quarter Continued focus on improvi
Slide 20: Broadspire Third 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 8% over prior year third quarter • Client retention remained strong • Medical management
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 $89 million as of September 30, 2014 • Focus on operating margin improvement • Activities to build new business pipeline ongoing Third Quarte
Slide 22: 2014 Guidance
22 Crawford & Company is revising its guidance range for the full year 2014 as follows: Year ending December 31, 2014 Low End High End Consolidated revenues before reimbursements $1.12 $1.14 billion Consolidated operating earnings $74.5 $82.5 million Consolidated cash provided by operating activitie
Slide 23: 2014 Operational Focus
23 • Grow business pipeline and increase 2014 revenues through broader market coverage, investment in new business platforms, and launch of new products • Implement cost initiatives to further increase operating efficiencies across the globe • Create a global GTS powerhouse by adding world-class adj
Slide 24: Third Quarter 2014
Third Quarter 2014 i) creetord
Slide 25: Non-GAAP measures and reimbursements
25 Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comparable to other similarly-titled measurem
Slide 26: Quarterly Revenues, Costs of Services, and Operating Earnings
Quarter Ended Quarter Ended September 30, September 30, Unaudited ($ in thousands) 2014 2013 Revenues Before Reimbursements Total Revenues $ 314,910 $ 313,456 Reimbursements (21,079 ) (20,118 ) Revenues Before Reimbursements $ 293,831 $ 293,338 Costs of Services Before Reimbursements Total Costs of
Slide 27: Reconciliation of Non-GAAP Items: Quarterly Revenues and Net Debt
Reconciliation of Non-GAAP Items (cont.) 27 Quarterly Revenues and Net Debt Unaudited ($ in millions) 3Q 2014 2Q 2014 1Q 2014 4Q 2013 3Q 2013 Revenues Before Reimbursements Total Revenues $ 315 $ 307 $ 289 $ 307 $ 313 Reimbursements (21 ) (19 ) (14 ) (22 ) (20 ) Revenues Before Reimbursements $ 294