Crawford & Company · NYSE:CRD.A
Crawford & — Q1 2020 Earnings Presentation
28 slides from Crawford &'s earnings presentation, May 6, 2020
Slide 1: Crawford & Company First Quarter 2020 Earnings Conference Call
Crawford & Company First Quarter 2020 Earnings Conference Call
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: Crawford & Company
3 Crawford & Company The world’s largest publicly listed $18+ Billion independent provider of global claims Claims managed annually management solutions. 1.6 Million Claims handled worldwide Organized across global service lines: • P&C adjusting solutions (Crawford Claims Solutions) 9,000 Total empl
Slide 4: First Quarter 2020 Financial Highlights
4 First Quarter 2020 Financial Highlights GAAP $237.5 Million $11.4 Million Net loss attributable to Revenues before reimbursements shareholders Non-GAAP $238.8 Million $7.0 Million 2.9% Revenues before reimbursements1 Adjusted operating earnings1 Adjusted operating margin1 $16.7 Million 7.0% Consol
Slide 5: Crawford's Response to COVID-19
5 Crawford’s Response to COVID-19 Workforce Client Solutions Market Leadership Over 93% Remote Claims Management Global Scale Switched to working remote within 7 With Crawford teams serving clients Rolled out globally to 10 days across more than 70 countries PPE & Expert Training YouGoLook Competiti
Slide 6: First Quarter 2020 Performance
6 First Quarter 2020 Performance Claims volume was negatively impacted by the continuation of benign weather trends in the first quarter Record warm temperatures and no named storms in the U.S. during the 2020 first quarter Source: National Centers for Environmental Information, 5km Gridded Dataset
Slide 7: Execution Across Our Service Lines
7 Execution Across Our Service Lines Crawford TPA Solutions • 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 Crawford Claims Solutions • Secured new Dallas site w
Slide 8: Current Market Trends
8 Current Market Trends COVID-19 is driving a global drop in claims frequency, especially in auto and workers compensation Carriers are redeploying adjusters or moving operations in-house Acceleration of industry-wide cost reduction measures Expected increase in weather claims as we enter the northe
Slide 9: Disciplined Capital Allocation
9 Disciplined Capital Allocation Strong financial position to remain resilient, with liquidity in excess of $180 million Streamlined various functions of our workforce resulting in $15 million of annualized savings Reprioritized capital expenditures, reducing spending by 25% Increased client and mar
Slide 10: First Quarter 2020 Financial Review
10 First Quarter 2020 Financial Review
Slide 11: First Quarter 2020 Financial Summary
11 First Quarter 2020 Financial Summary Quarter Ended March 31, March 31, ($ in millions, except per share amounts) 2020 2019 % Change Revenues $237.5 $247.1 (4)% Non-GAAP Revenues excluding foreign exchange fluctuations(1) $238.8 $247.1 (3)% Net (Loss) Income Attributable to Shareholders of Crawfor
Slide 12: Crawford TPA Solutions Segment Highlights
12 Crawford TPA Solutions Segment Highlights Three months ended Highlights 2020 (in thousands, March 31, March 31, Based on except percentages) 2020 2019 Variance 2019 rates Variance • U.S. client renewal rate at 98% and several new client wins in the quarter Revenues $96,935 $97,794 (0.9%) $97,278
Slide 13: Crawford Claims Solutions Segment Highlights
13 Crawford Claims Solutions Segment Highlights Three months ended 2020 (in thousands, March 31, March 31, Based on Highlights except percentages) 2020 2019 Variance 2019 rates Variance • Secured new Dallas site with over 600 staff Revenues $77,587 $83,319 (6.9%) $78,211 (6.1%) members to support ou
Slide 14: Crawford Specialty Solutions Segment Highlights
14 Crawford Specialty Solutions Segment Highlights Three months ended Highlights 2020 (in thousands, March 31, March 31, Based on except percentages) 2020 2019 Variance 2019 rates Variance • GTS added several new programs across the globe, and we expanded our presence in Japan, the Revenues $63,009
Slide 15: Balance Sheet Highlights
15 Balance Sheet Highlights March 31, December 31, Unaudited ($ in thousands) 2020 2019 Change Cash and cash equivalents $ 83,110 $ 51,802 $ 31,308 Accounts receivable, net 121,230 128,217 (6,987) Unbilled revenues, net 108,898 103,894 5,004 Total receivables 230,128 232,111 (1,983) Goodwill 62,883
Slide 16: Operating and Free Cash Flow
16 Operating and Free Cash Flow For the year to date periods ended March 31, Unaudited ($ in thousands) 2020 2019 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-Cash Operating Items 9,1
Slide 17: 2020 Outlook
17 2020 Outlook • On April 6, withdrew 2020 guidance Resilient Business Financial Strength Model and Flexibility • Ongoing slowdown resulting from the COVID-19 crisis could have a material impact to CRD’s operations, financial results, and cash flows in future quarters Competitive Global Product Pos
Slide 18: Conclusion
18 Conclusion Looking forward at Crawford’s primary objectives: Maintain Resilience Financial Stability Enhance current market leading position Uphold financial strength and flexibility and focus on the long-term growth while preserving long-term value for our strategy shareholders System Readiness
Slide 19: Crawford & Company
19 Crawford & Company The world’s largest publicly listed independent provider of global claims management and outsourcing solutions. 9,000 50,000+ 70 $18B+ employees Field Resources countries claims managed annually
Slide 20: Appendix: Non-GAAP Financial Information
20 Appendix: Non-GAAP Financial Information
Slide 21: Appendix: Non-GAAP Financial Information
21 Appendix: Non-GAAP Financial Information Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comp
Slide 22: Appendix: Non-GAAP Financial Information (cont.)
22 Appendix: Non-GAAP Financial Information (cont.) Segment and Consolidated Gross Profit Gross profit is defined as revenues less direct expenses which exclude indirect overhead expenses allocated to the business. Indirect expenses consist of centralized administrative support costs, regional and l
Slide 23: Total Revenues Before Reimbursements by Major Currency
23 Total Revenues Before Reimbursements by Major Currency The following table illustrates revenue as a percentage of total revenue in the major currencies of the geographic areas in which Crawford does business: Three Months Ended March 31, March 31, (in thousands) 2020 2019 USD % of USD Geographic
Slide 24: Reconciliation of Non-GAAP Items
24 Reconciliation of Non-GAAP Items Revenues, Costs of Services Provided, and Operating Earnings Quarter Ended Quarter Ended March 31, March 31, Unaudited ($ in thousands) 2020 2019 Revenues Before Reimbursements Total Revenues $ 246,046 $ 256,377 Reimbursements (8,515) (9,319) Revenues Before Reimb
Slide 25: Reconciliation of Non-GAAP Items (cont.)
25 Reconciliation of Non-GAAP Items (cont.) Adjusted EBITDA Quarter Ended March 31, March 31, Unaudited ($ in thousands) 2020 2019 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
Slide 26: Reconciliation of Non-GAAP Items (cont.)
26 Reconciliation of Non-GAAP Items (cont.) Net Debt March 31, December 31, Unaudited ($ in thousands) 2020 2019 Net Debt Short-term borrowings $ 39,784 $ 28,531 Current installments of capital leases 38 15 Long-term debt and capital leases, less current installments 187,271 148,408 Total debt 227,0
Slide 27: Reconciliation of Non-GAAP Items (cont.)
27 Reconciliation of Non-GAAP Items (cont.) Segment Gross Profit Three months ended March 31, 2020 March 31, 2019 ($ in thousands) Segment gross profit: Crawford TPA Solutions $ 23,241 $ 25,463 Crawford Claims Solutions 13,787 17,077 Crawford Specialty Solutions 19,002 22,441 Segment gross profit 56
Slide 28: Reconciliation of First Quarter Non-GAAP Results
28 Reconciliation of First Quarter Non-GAAP Results Three Months Ended March 31, 2020 Net (Loss) Income Diluted Diluted Non-GAAP Attributable (Loss) (Loss) Operating to Crawford Earnings per Earnings per Unaudited ($ in thousands) Revenues Earnings Pretax Loss & Company CRD-A Share CRD-B Share GAAP