Crawford & Company · NYSE:CRD.A
Crawford & — Investor Presentation (May 2019)
52 slides from Crawford &'s investor presentation, May 22, 2019
Slide 1: Crawford & Company Investor Presentation May 2019
Crawford & Company Investor Presentation May 2019 ® Exhibit 99.1
Slide 2: Forward-Looking Statements and Additional Information
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 a
Slide 3: Crawford & Company
Crawford & Company Crawford Claims Solutions (P&C adjusting solutions) Crawford TPA Solutions (Broadspire) Crawford Specialty Solutions (Global Technical Services & Contractor Connection) The world’s largest publicly listed independent provider of global outsourced claims management solutions 1.7 Mi
Slide 4: Loss resolution for carriers, brokers and corporates
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 com
Slide 5: Comprehensive, intelligent outsourced solutions
We bring together thoughtful experts from around the world to offer comprehensive, intelligent outsourced solutions to our customers Loss Adjusting Third Party Administration Managed Repair Medical Management On-Demand Services Catastrophe Response
Slide 6: Value Proposition and Value Delivery System
Crawford & Company Value Proposition and Value Delivery System Customer-focused solutions driven by data and executed by experts globally to mitigate risk for carriers, brokers and corporates Value Proposition High-performing, caring and capable employees globally Flexible workforce with vast experi
Slide 7: End-to-End Outsourced Solutions
End-to-End Outsourced Solutions Multi-channel FNOL Pre & Post Loss Inspections Liability, Auto, WC & Disability Claims Property Claims Desk Adjusting CAT, Property & Auto Field Adjusting Business Interruption & Forensic Accounting Managed Repair ANALYTICS & REPORTING
Slide 8: Scope and Scale of Operations
Scope and Scale of Operations Comprehensive experience across the spectrum of the claims world1 Crawford Claims Solutions P&C Adjusting Solutions 1.2 million P&C claims managed 70 Countries with physical location 50,000 Field Resources Global Technical Services Large or Complex Claims 400+ Global te
Slide 9: Crawford—Attractive Business Model
Crawford—Attractive Business Model Experienced Management Team Aligned with Shareholders Global Product and Geographic Diversification Recurring Fee For Service Revenue Model Strong Cash Flow Generation Technology Enabled BPO Platform Blue Chip Global Client Base with Long-Term Relationships Solid B
Slide 10: Investment Thesis: 5% revenue growth and 15% earnings growth
4 Management’s primary goal is to translate innovation and investment spending into sustained 5% revenue growth and 15% earnings growth, annually Deliver 5% Revenue and 15% Earnings Growth, Annually Goal: Deliver Sustained Revenue and Earnings Growth 5 Strong Balance Sheet & Cash Flow Characteristic
Slide 11: Experienced Executive Management Team
Experienced Executive Management Team 1 Name Background Experience Harsha V. Agadi President and Chief Executive Officer Leadership positions at both public and private companies, including several Fortune 500 companies Member of the Crawford Board of Directors since 2010 30+ Years Rohit Verma Chief
Slide 12: Insurance Industry Claims Trends
Insurance Industry Claims Trends Our businesses stand to benefit from a rising level of carrier outsourcing, increasing claim volume and severity, customer demand for scale, and an infusion of alternative capital Increasing Global Claim Volume and Severity The severity of P&C claims has consistently
Slide 13: Outsourced Solutions Addressing Client and Industry Challenges
Crawford is Delivering Outsourced Solutions that Address Client and Industry Challenges Knowledge Insurtech will fast track claims to facilitate virtual claims handling Claims volatility will increase due to extreme weather events and increased construction along coast lines and other water sources
Slide 14: Case Study: A Vineyard Impacted by the California Wild Fires
Outsourced Claims Advantage Case Study: A Vineyard Impacted by the California Wild Fires Background The 2017 California wildfires approached an unprecedented $12 billion of insured losses A historic number of fires burned over 500,000 acres causing damage to almost 30 wineries in Napa, Sonoma and Me
Slide 15: Terminix: 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: The significant time commitment required for local branch managers to inspect alleged termite damage Managing
Slide 16: 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 and falls, and cuts or breaks
Slide 17: Belmond (UK) Limited: Leveraging Integrated Solutions
Belmont (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 local communi
Slide 18: Investments in Market Leading Technology
Investments in Market Leading Technology At Crawford, we’re not just embracing change, we’re leading it. Some of the significant investments we have made to develop solutions to meet clients’ needs and drive growth: Drone capabilities - WeGoLook has a network of over 2,000 licensed drone operators I
Slide 19: Innovating to Accelerate Growth, Improve Client Experience and Reduce Costs
Innovating to Accelerate Growth, Improve Client Experience and Reduce Costs TruLook Claims triage process leverages self-service app, WeGoLook Lookers and traditional field adjusters to reduce costs and improve cycle times. Industry Solutions Focus on developing a complete range of specialized solut
Slide 20: TruLook
TruLook Client receives comprehensive report and documentation Client Submits claim via email, phone, or existing ordering platform TruLookTM desk services Licensed adjuster assesses complexity of claim: low, mid or high YouGoLook (Low complexity) End user collects data via smartphone WeGoLook® (Mid
Slide 21: WeGoLook
WeGoLook 46K ~4.7 ~42.5 36% 100% Lookers Day turnaround Years of age Selection rate Quality Assurance Complete coverage across the nation with rapid delivery and infinite scale 3 Lookers Drone Operators WeGoLook combines technology with an on-demand workforce to gather and validation information any
Slide 22: Managed Repair
Managed Repair Reduce time-in-process and support your customers all the way to restoration Faster service Through rigorous performance management and consistent application of expectations, we improve cycle times and increase customer satisfaction. Accurate estimates Leveraging technology, people p
Slide 23: TPA Solutions
3 Scale to support Service depth to deliver Results that matter Presence in 22 countries 550+ clients globally $11B+ total incurred on open claims (as of 11/30/18) 248K claims managed in 2017 Fully integrated medical management program Data-driven approach with predictive components Artificial intel
Slide 24: TPA Capabilities: Claims Handling Volume
3 TPA Capabilities: Claims Handling Volume US Claims Handled in 2018 # of claims in ‘000 372K U.S. claims handled annually
Slide 25: 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 Tailored Industry Verticals and Solutions Industry Verticals Integrated Solutions Construction Hospitality Transportation Total Prope
Slide 26: Driving Growth
Driving Growth 5 % 15 % 4 Goal: Deliver 5% revenue growth and 15% earnings growth, annually. By holding indirect costs flat, with a 30% contribution margin, 5% revenue growth drives earnings growth of 15% and a 100 bps improvement in operating margins.
Slide 27: Strong Balance Sheet and Cash Flows
Strong Balance Sheet and Cash Flows 5 Balance Sheet Strengthened the Company’s balance sheet by paying down $35.3 million in debt and contributing $24.0 million to pension plans in 2018 Repurchased $10.4 million of common shares through 2018 and an additional $16.4 million in January 2019 representi
Slide 28: Focused on Consistent Shareholder Returns
Focused on Consistent Shareholder Returns Crawford continues to return capital to shareholders in the form of quarterly cash dividends and share repurchases During the year ended December 31, 2018, the Company repurchased 1,144,410 shares of CRD-A and 94,378 shares of CRD-B at an average cost of $8.
Slide 29: 2019 Guidance
YEAR ENDING DECEMBER 31, 2019 Low End High End Consolidated revenues before reimbursements $1.05 $1.10 billion Net income attributable to shareholders of Crawford & Company $46.0 $51.0 million Diluted earnings per share--CRD-A $0.85 $0.95 per share Diluted earnings per share--CRD-B $0.78 $0.88 per s
Slide 30: Positioned For A Return To Growth
Positioned For A Return To Growth Growth: Increasing the velocity of revenue growth through continuous innovation as we work to deliver our goal of achieving 5% revenue growth and 15% earnings growth annually Looking forward, Crawford has four primary objectives for 2019: 1 2 3 4 System Readiness: P
Slide 31: Appendix A: Global Service Lines
Appendix A: Global Service Lines
Slide 32: Crawford Claims Solutions
Crawford Claims Solutions Value Proposition Enhancing the policy holder experience through scalable field adjusting solutions and optimizing claim expense for clients Value Delivery System Most extensive network of field services in the world Widest range of innovative, end-to-end outsourced claims
Slide 33: Third Party Administration Solutions: Broadspire
Third Party Administration Solutions: Broadspire Value Proposition Consistent and predictable reductions in clients’ total cost of risk delivered by comprehensive service teams Value Delivery System Client-centric integrated outsourced solutions powered by innovation and data science Analytically in
Slide 34: Crawford Specialty Solutions
Crawford Specialty Solutions Value Proposition Financial savings powered by analytics-driven insights delivered by world leading experts Value Delivery System Integrated end-to-end and project managed outsourced claims solutions Specialty practice groups Vast experience delivering expertise globally
Slide 35: Appendix B: First Quarter 2019 Segment Results
Appendix B: First Quarter 2019 Segment Results
Slide 36: Crawford Claims Solutions Segment Highlights
Crawford Claims Solutions Segment Highlights Revenues of $83.3 million versus $90.4 million Gross profit of $17.1 million versus $17.9 million Gross profit margin of 20.5% versus 19.8% Operating earnings of $(0.3) million versus $1.1 million Operating earnings margin of (0.4)% versus 1.3% Revenues d
Slide 37: Crawford TPA Solutions: Broadspire Segment Highlights
Crawford TPA Solutions: Broadspire Segment Highlights Revenues of $97.8 million versus $100.2 million Gross profit of $25.5 million versus $26.4 million Gross profit margin of 26.0% versus 26.3% Operating earnings of $6.7 million versus $7.8 million Operating earnings margin of 6.9% versus 7.8% Decr
Slide 38: Crawford Specialty Solutions Segment Highlights
Crawford Specialty Solutions Segment Highlights Revenues of $65.9 million versus $82.4 million Gross profit of $22.4 million versus $26.9 million Gross profit margin of 34.0% versus 32.6% Operating earnings of $12.2 million versus $10.0 million Operating margin of 18.5% versus 12.2% Garden City Grou
Slide 39: Appendix C: First Quarter 2019 Consolidated Financial Results
Appendix C: First Quarter 2019 Consolidated Financial Results
Slide 40: First Quarter 2019 Financial Summary
1) See Appendix for non-GAAP explanation and reconciliation First Quarter 2019 Financial Summary Quarter Ended March 31, March 31, ($ in millions, except per share amounts) 2019 2018 % Change Revenues $247.1 $273.1 (10 )% Non-GAAP Revenues excluding GCG business and foreign exchange impacts(1) $252.
Slide 41: Balance Sheet Highlights
Balance Sheet Highlights (1) See appendix for non-GAAP explanation and reconciliation of non-GAAP Earnings per Share. Unaudited ($ in thousands) March 31, 2019 March 31, 2019 December 31, 2018 December 31, 2018 Change Change Cash and cash equivalents $ 49,674 $ 53,119 $ (3,445 ) Accounts receivable,
Slide 42: Operating And Free Cash Flow
Operating And Free Cash Flow (1) See Appendix for non-GAAP explanation and reconciliation Unaudited ($ in thousands) 2019 2019 2018 2018 Variance Variance Net Income Attributable to Shareholders of Crawford & Company $ 6,109 $ 8,569 $ (2,460 ) Depreciation and Other Non-Cash Operating Items 9,037 12
Slide 43: Appendix D: Non-GAAP Financial Information
Appendix D: Non-GAAP Financial Information
Slide 44: Appendix: Non-GAAP Financial Information
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 compara
Slide 45: Appendix: Non-GAAP Financial Information (continued)
Appendix: Non-GAAP Financial Information (continued) 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
Slide 46: Revenues, Costs of Services Provided, and Operating Earnings
Revenues, Costs of Services Provided, and Operating Earnings * Midpoints of Company's Guidance, issued May 6, 2019 Reconciliation of Non-GAAP Items Quarter Ended Quarter Ended Quarter Ended Quarter Ended Full Year Full Year March 31, March 31, March 31, March 31, Guidance Guidance Unaudited ($ in th
Slide 47: Adjusted EBITDA
Adjusted EBITDA * Midpoints of Company's Guidance, issued May 6, 2019 Reconciliation of Non-GAAP Items (continued) Quarter Ended Quarter Ended Full Year Full Year March 31, March 31, March 31, March 31, Guidance Guidance Unaudited ($ in thousands) 2019 2019 2018 2018 2019 * 2019 * Net income attribu
Slide 48: Net Debt
Net Debt Reconciliation of Non-GAAP Items (continued) March 31, March 31, December 31, December 31, Unaudited ($ in thousands) 2019 2019 2018 2018 Net Debt Short-term borrowings $ 31,558 $ 23,195 Current installments of capital leases 41 89 Long-term debt and capital leases, less current installment
Slide 49: Segment Gross Profit
Segment Gross Profit Reconciliation of Non-GAAP Items (continued) Three months ended Three months ended (in thousands) March 31, 2019 March 31, 2019 March 31, 2018 March 31, 2018 Segment gross profit: Crawford TPA Solutions: Broadspire $ 25,463 $ 26,406 Crawford Claims Solutions 17,077 17,946 Crawfo
Slide 50: Non-GAAP Results for Crawford Specialty Solutions Excluding GCG Business
NON-GAAP RESULTS FOR CRAWFORD SPECIALTY SOLUTIONS SEGMENT EXCLUDING GCG BUSINESS Three Months Ended March 31, 2019 Unaudited ($ in thousands) Revenues Revenues Direct Expenses Direct Expenses Gross Profit Gross Profit Indirect Expenses Indirect Expenses Operating Earnings Operating Earnings Crawford
Slide 51: Non-GAAP Results Excluding GCG Business and Foreign Exchange Impacts
(1) Removes the operating results for the 2018 periods of the GCG business disposed on June 15, 2018. (2) Overhead allocated to the GCG business that would have been retained at the parent level. . NON-GAAP RESULTS EXCLUDING GCG BUSINESS IN 2018 AND FOREIGN EXCHANGE IMPACTS IN 2019 Three Months Ende
Slide 52: Crawford & Company
Crawford & Company ®