Crawford & Company · NYSE:CRD.A
Crawford & — Q2 2020 Earnings Presentation
27 slides from Crawford &'s earnings presentation, Aug 4, 2020
Slide 1: Second Quarter 2020 Earnings Conference Call
Crawford & Company Second Quarter 2020 Earnings Conference Call
Slide 2: Forward-Looking Statements and Additional Information
Introduction 2 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, b
Slide 3: Crawford & Company
Introduction 3 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
Slide 4: Second Quarter 2020 Financial Highlights
Introduction 4 4 Second Quarter 2020 Financial Highlights GAAP $234.4 Million $5.9 Million Net income attributable to Revenues before reimbursements shareholders Non-GAAP $240.2 Million $18.7 Million 7.8% Revenues before reimbursements1 Adjusted operating earnings1 Adjusted operating margin1 $25.9 M
Slide 5: Weather And Economic Indicators
External Factors 5 5 Weather And Economic Indicators A return to normal weather activity allowed the Company to capitalize on recent client wins Estimated Economic and Insured Losses – Catastrophic Events in U.S. ($B) 5 2.475 3.675 3 2.55 1.725 1.2 1 0.6… 0.15 0.45 0.9 -1 Oct '19 Nov '19 Dec '19 Jan
Slide 6: Impact Across Our Global Service Lines (GSLs)
Claims Volume 6 6 Impact Across Our Global Service Lines (GSLs) Crawford TPA Solutions • Decreased economic activity is a headwind for our TPA business • Increase in COVID-related claims for workers’ compensation from two healthcare clients • Use of telemedicine during the quarter provided additiona
Slide 7: Customer Excellence
New Business Momentum 7 7 Customer Excellence Continued RFP activity, winning $23.6 million of new business TPA saw several new business wins totaling $11.2 million in annualized revenue and 97% renewal rate from existing business New and Renewal CCS is continuing to ramp the new major carrier win f
Slide 8: Our Capital Allocation Strategy
Disciplined Capital Allocation 8 8 Our Capital Allocation Strategy Strong financial position with liquidity surpassing expectations Increased operating cash flow by 40% over last year’s levels Low leverage ratio of 1.57x EBITDA Increased dividend to $0.04 per share for CRD-A and CRD-B Continuing to
Slide 9: Update On Our Response To COVID-19
COVID-19 9 9 Update On Our Response To COVID-19 Workforce Client Impact Diversity & Inclusion Market Leadership Remain committed Continue to deliver Foster a safe and Prioritize growth, to protecting the on our mission and inclusive working people and system safety and well- promise to be there envi
Slide 10: Second Quarter 2020 Financial Summary
Financial Results 10 10 Second Quarter 2020 Financial Summary Quarter Ended June 30, June 30, ($ in millions, except per share amounts) 2020 2019 % Change Revenues $234.4 $256.9 (9)% Non-GAAP Revenues excluding foreign exchange fluctuations(1) $240.2 $256.9 (7)% Net Income Attributable to Shareholde
Slide 11: Crawford TPA Solutions Segment Highlights
Financial Results 11 11 Crawford TPA Solutions Segment Highlights Three months ended Highlights 2020 (in thousands, June 30, June 30, Based on • Renewed 97% of our revenue YTD except percentages) 2020 2019 Variance 2019 rates Variance • COVID-19 prompted service innovation and increased use of telem
Slide 12: Crawford Claims Solutions Segment Highlights
Financial Results 12 12 Crawford Claims Solutions Segment Highlights Three months ended Highlights 2020 (in thousands, June 30, June 30, Based on • Continuing to ramp up major carrier win from the except percentages) 2020 2019 Variance 2019 rates Variance first quarter • Strong performance in U.S. a
Slide 13: Crawford Specialty Solutions Segment Highlights
Financial Results 13 13 Crawford Specialty Solutions Segment Highlights Highlights Three months ended • GTS 2020 • Implementing largest U.S. program to date (in thousands, June 30, June 30, Based on except percentages) 2020 2019 Variance 2019 rates Variance • Actively recruiting adjuster teams globa
Slide 14: Additional Financial Matters in the Second Quarter 2020
Financial Results 14 14 Additional Financial Matters in the Second Quarter 2020 Unallocated Corporate and Shared Costs • Unallocated corporate costs of $1.7 million • Increase driven by CEO transition costs, severance, and self-insurance expenses Estimated COVID-19 Impact on Revenues • Estimate nega
Slide 15: Balance Sheet Highlights
Financial Results 15 15 Balance Sheet Highlights June 30, December 31, Unaudited ($ in thousands) 2020 2019 Change Cash and cash equivalents $ 59,958 $ 51,802 $ 8,156 Accounts receivable, net 120,941 128,217 (7,276) Unbilled revenues, net 106,335 103,894 2,441 Total receivables 227,276 232,111 (4,83
Slide 16: Operating And Free Cash Flow
Financial Results 16 16 Operating And Free Cash Flow For the year to date periods ended June 30, Unaudited ($ in thousands) 2020 2019 Change Net (Loss) Income Attributable to Shareholders of Crawford & Company $ (5,501) $ 8,751 $ (14,252) Goodwill Impairment 17,674 — 17,674 Arbitration and Claim Set
Slide 17: 2020 Priorities
Conclusion 17 17 2020 Priorities Employee Customer Excellence Health & Safety Provide best-in-class service to our clients regardless of the global environment Protect our workforce first and foremost Brands, Relationships & Differentiation Future Growth Maintain industry leadership through our Deli
Slide 18: Crawford & Company
18 Crawford & Company The world’s largest publicly listed independent provider of global claims management and outsourcing solutions. 9,000 50,000+ 70 $18B+ Employees Field Resources Countries Claims Managed Annually
Slide 19: Appendix: Non-GAAP Financial Information
19 Appendix: Non-GAAP Financial Information
Slide 20: Appendix: Non-GAAP Financial Information
20 Appendix: Non-GAAP Financial Information Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comp
Slide 21: Appendix: Non-GAAP Financial Information (cont.)
21 Appendix: Non-GAAP Financial Information (cont.) Segment and Consolidated Gross Profit Gross profit is defined as revenues less direct expenses which exclude indirect overhead expenses allocated to the business. Indirect expenses consist of centralized administrative support costs, regional and l
Slide 22: Total Revenues Before Reimbursements by Major Currency
22 Total Revenues Before Reimbursements by Major Currency The following table illustrates revenue as a percentage of total revenue in the major currencies of the geographic areas in which Crawford does business: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2
Slide 23: Reconciliation of Non-GAAP Items
23 Reconciliation of Non-GAAP Items Revenues, Costs of Services Provided, and Operating Earnings Quarter Ended Quarter Ended June 30, June 30, Unaudited ($ in thousands) 2020 2019 Revenues Before Reimbursements Total Revenues $ 234,416 $ 256,881 Reimbursements (8,459) (10,965) Revenues Before Reimbu
Slide 24: Reconciliation of Non-GAAP Items (cont.)
24 Reconciliation of Non-GAAP Items (cont.) Adjusted EBITDA Quarter Ended June 30, June 30, Unaudited ($ in thousands) 2020 2019 Net income attributable to shareholders of Crawford & Company $ 5,898 $ 2,642 Add: Depreciation and amortization 9,390 10,226 Stock-based compensation 1,118 1,646 Net corp
Slide 25: Reconciliation of Non-GAAP Items (cont.)
25 Reconciliation of Non-GAAP Items (cont.) Net Debt June 30, December 31, Unaudited ($ in thousands) 2020 2019 Net Debt Short-term borrowings $ 39,887 $ 28,531 Current installments of capital leases 38 15 Long-term debt and capital leases, less current installments 155,649 148,408 Total debt 195,57
Slide 26: Reconciliation of Non-GAAP Items (cont.)
26 Reconciliation of Non-GAAP Items (cont.) Segment Gross Profit Three months ended June 30, 2020 June 30, 2019 ($ in thousands) Segment gross profit: Crawford TPA Solutions $ 19,762 $ 23,678 Crawford Claims Solutions 19,004 19,553 Crawford Specialty Solutions 25,083 25,223 Segment gross profit 63,8
Slide 27: Reconciliation of Second Quarter Non-GAAP Results
27 Reconciliation of Second Quarter Non-GAAP Results Three Months Ended June 30, 2020 Net Income Non-GAAP Attributable Diluted Diluted Operating Pretax to Crawford Earnings per Earnings per Unaudited ($ in thousands) Revenues Earnings Earnings & Company CRD-A Share CRD-B Share GAAP $ 234,416 $ 18,24