Crawford & Company · NYSE:CRD.A
Crawford & — Q4 2023 Earnings Presentation
38 slides from Crawford &'s earnings presentation, Mar 3, 2025
Slide 1: Fourth Quarter & Full Year 2023 Financial Results
Fourth Quarter & Full Year 2023 Financial Results CRD-A & CRD-B (NYSE) ® Crawford & Company
Slide 2: Forward-Looking Statements & Additional Information
Forward-Looking Statements & Additional Information Q4 & FY 2023 FINANCIAL RESULTS 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. S
Slide 3: Strategic Update
STRATEGIC UPDATE Rohit Verma President & Chief Executive Officer 3 Q4 & FY 2023 FINANCIAL RESULTS
Slide 4: Global Reach; Trusted Partner
Countries 70 Employees 10,000 50,000 Field Resources $18B+ Claims Managed Annually Global Reach; Trusted Partner Q4 & FY 2023 FINANCIAL RESULTS
Slide 5: Multiple Growth Drivers Benefitting Crawford
Climate change continues to drive global demand in weather-related claims Gaining market share within fragmented U.S. independent loss adjusting market Industry-leading Insurtech capabilities creating significant growth in Platform Solutions segment Growing and strengthening strategic partnerships a
Slide 6: Full Year 2023 Highlights
Full Year 2023 Highlights Record FY revenue; third consecutive year of both revenue growth and the addition of more than $100 million in new and enhanced business Operating earnings up 38% Margin expansion and improved profitability in three of our segments Operating cash flow of $100M+ for the year
Slide 7: Margin Improvement Strategy Driving Results
Margin Improvement Strategy Driving Results Full Year 2023 Operating Margin Improved Across Three of Four Business Segments International Operations 2.9% +655 bps Broadspire 11.8% +316 bps North America Loss Adjusting 7.6% +68 bps -201 bps 12.7% Platform Solutions Align pricing with the value we del
Slide 8: Our Capital Allocation Strategy
Our Capital Allocation Strategy Committed to Industry Leading Financial Strength and Employing a Disciplined Approach to Capital Allocation Investing in long-term growth through Cap Ex and M&A Net debt reduced by $42M in 2023 Significantly reducing leverage to 1.60x EBITDA Raised quarterly dividend
Slide 9: Full Year 2023 Revenue Contribution by Segment
Comprised of All Reported Service Lines Outside of North America: UK Europe Australia Asia Latin America Legal Services International Operations 30% Third Party Administration for: Workers' Compensation Auto and Liability Claims Medical Management Disability RMIS Accident and Health Service Lines In
Slide 10: North America Loss Adjusting Full Year 2023 Results
Revenue growth of 11% driven by improved utilization and expert additions in GTS and new account wins in Field Operations Operating margin expanded 68 bps Continue to be an attractive employer for large and complex adjusting talent North America Loss Adjusting Full Year 2023 Results Q4 & FY 2023 FIN
Slide 11: International Operations Full Year 2023 Results
Revenue growth of 7% and 10% when measured in constant currency Operating earnings increased 186% resulting in operating margin expansion of 655bps Strength across all geographies with the exception of Australia which saw a tough comparison from record catastrophe activity in 2022 Segment recovery d
Slide 12: Broadspire Full Year 2023 Results
Record year for Broadspire: Revenues increased 13% Operating earnings increased 55% Operating margin expanded 316 bps Results driven by client wins and pricing improvements Medical Management revenue grew 13% Retained 94.7% of Broadspire business Broadspire Full Year 2023 Results Q4 & FY 2023 FINANC
Slide 13: Platform Solutions Full Year 2023 Results
Revenue decreased by 7.5% 2022 results included revenue from Hurricane Ian and severe convective storm activity Networks decrease driven by reduced deployment in CAT Contractor Connection revenues increased 13% driven by pricing momentum and increase in higher-severity assignments Subrogation revenu
Slide 14: Financial Update
FINANCIAL UPDATE Bruce Swain, Chief Financial Officer Q4 & FY 2023 FINANCIAL RESULTS 14
Slide 15: Q4 2023 Financial Summary
Q4 2023 Financial Summary (1) See Appendix for non-GAAP explanation and reconciliation Quarter Ended ($ in millions, except per share amounts) December 31, 2023 December 31, 2022 % Change Revenues $296.1 $322.2 (8)% Non-GAAP Revenues excluding foreign exchange fluctuations(1) $292.7 $322.2 (9)% Net
Slide 16: North America Loss Adjusting
North America Loss Adjusting Three months ended (in thousands, except percentages) December 31, 2023 December 31, 2022 Variance Revenues $69,684 $77,720 (10.3)% Direct expenses 57,968 60,941 (4.9)% Gross profit 11,716 16,779 (30.2)% Indirect expenses 10,964 8,204 33.6% Operating earnings $752 $8,575
Slide 17: International Operations
International Operations Three months ended (in thousands, except percentages) December 31, 2023 December 31, 2022 Variance Revenues $97,152 $88,404 9.9% Direct expenses 83,992 79,769 5.3% Gross profit 13,160 8,635 52.4% Indirect expenses 10,953 13,933 (21.4)% Operating earnings (loss) $2,207 $(5,29
Slide 18: Broadspire
Broadspire Three months ended (in thousands, except percentages) December 31, 2023 December 31, 2022 Variance Revenues $92,123 $78,615 17.2% Direct expenses 67,998 60,726 12.0% Gross profit 24,125 17,889 34.9% Indirect expenses 11,859 11,167 6.2% Operating earnings $12,266 $6,722 82.5% Gross profit
Slide 19: Platform Solutions
Platform Solutions Three months ended (in thousands, except percentages) December 31, 2023 December 31, 2022 Variance Revenues $37,162 $77,449 (52.0)% Direct expenses 29,101 59,141 (50.8)% Gross profit 8,061 18,308 (56.0)% Indirect expenses 6,115 5,276 15.9% Operating earnings $1,946 $13,032 (85.1)%
Slide 20: Additional Financial Matters
Additional Financial Matters Unallocated Corporate and Shared Costs and Credits Unallocated corporate costs of $9.4 million in Q4 ‘23 compared to corporate credits of $0.3 million in Q4 ‘22 Variance was primarily due to increases in self-insurance costs, professional fees, compensation and other sup
Slide 21: Presentation Revision of 2023 Quarters
Presentation Revision of 2023 Quarters Q4 & FY 2023 FINANCIAL RESULTS Revenues before reimbursements for the 2023 fourth quarter includes income earned which offsets the costs of managing the funds maintained to administer claims for certain Company customers. These amounts were previously presented
Slide 22: Balance Sheet Highlights
Balance Sheet Highlights (1) See Appendix for non-GAAP explanation and reconciliation Unaudited ($ in thousands) Dec 31, 2023 December 31, 2019 Dec 31, 2022 December 31, 2018 Change Change Cash and cash equivalents $ 58,363 $ 46,007 $ 12,356 Accounts receivable, net 131,362 141,106 (9,744 ) Unbilled
Slide 23: Net Debt and Pension Liability
Net Debt and Pension Liability $150.8M Net debt at $150.8 million $171.7M Leverage Ratio of 1.60x EBITDA at end of Q4 2023 $22.3M Pension liability at $22.3 million $87.0M Funded Ratio of US pension plan is 92.1% at end of Q4 2023 Q4 & FY 2023 FINANCIAL RESULTS
Slide 24: Operating and Free Cash Flow
Operating and Free Cash Flow (1) See Appendix for non-GAAP explanation and reconciliation Unaudited ($ in thousands) 2023 2019 2022 2018 Change Change Net Income (Loss) Attributable to Shareholders of Crawford & Company $ 30,609 $ (18,305 ) $ 48,914 Depreciation and Other Non-Cash Operating Items 40
Slide 25: Weather-Related Revenue Pressure Continuing Through Q1 2024
Weather-Related Revenue Pressure Continuing Through Q1 2024 Expected decrease in profit contribution Benign weather patterns observed in the back half of 2023 have continued and are expected to impact Q1 ’24 NALA and Platform Solutions face a tough comparison in Q1 ’24 due to significant weather-rel
Slide 26: Summary
Financial strength and liquidity provide flexibility to pursue market opportunities Capitalizing on the changing landscape due to climate change and demographic shifts Leading the industry with next generation Insurtech capabilities Leveraging strong relationships to enhance market position Summary
Slide 27: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information Q4 & FY 2023 FINANCIAL RESULTS 27
Slide 28: Non-GAAP Financial Information
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 comparable to oth
Slide 29: Non-GAAP Financial Information (cont.)
Non-GAAP Financial Information (cont.) Segment and Consolidated Operating Earnings Operating earnings is the primary financial performance measure used by our senior management and chief operating decision maker to evaluate the financial performance of our Company and operating segments and make res
Slide 30: Total Revenue 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: Total Revenue Before Reimbursements by Major Currency Three Months Ended (in thousands) December 31, 2023 December 31, 2022 Geographic Area Curren
Slide 31: Revenues and Costs of Services Provided Reconciliation
Revenues and Costs of Services Provided Reconciliation of Non-GAAP Items Quarter Ended Quarter Ended Quarter Ended Quarter Ended Unaudited ($ in thousands) December 31, 2023 December 31, December 31, 2022 December 31, 2019 2018 Revenues Before Reimbursements Total Revenues $ 309,165 $ 333,369 Reimbu
Slide 32: Operating Earnings Reconciliation of Non-GAAP Items (cont.)
Operating Earnings Reconciliation of Non-GAAP Items (cont.) Quarter Ended Quarter Ended Quarter Ended Quarter Ended December 31, 2023 December 31, December 31,2022 December 31, Unaudited ($ in thousands) 2019 2018 North America Loss Adjusting $ 752 $ 8,575 International Operations 2,207 (5,298 ) Bro
Slide 33: Operating Earnings Reconciliation of Non-GAAP Items (cont.)
Operating Earnings Reconciliation of Non-GAAP Items (cont.) Year Ended Quarter Ended Year Ended Quarter Ended December 31, 2023 December 31, December 31,2022 December 31, Unaudited ($ in thousands) 2019 2018 North America Loss Adjusting $ 23,185 $ 19,108 International Operations 11,181 (12,946 ) Bro
Slide 34: Adjusted EBITDA Reconciliation of Non-GAAP items
Adjusted EBITDA Reconciliation of Non-GAAP items (cont.) Quarter Ended December 31, Quarter Ended December 31, December 31, 2023 December 31, December 31, 2022 December 31, Unaudited ($ in thousands) 2019 2018 Net loss attributable to shareholders of Crawford & Company $ (818 ) $ (14,087 ) Add (Dedu
Slide 35: Net Debt Non-GAAP Financial Information (cont.)
Net Debt Non-GAAP Financial Information (cont.) December 31, 2023 December 31, December 31, 2022 December 31, Unaudited ($ in thousands) 2019 2018 Short-term borrowings $ 14,762 $ 26,966 Current installments of finance leases and other obligations 51 82 Long-term debt and finance leases, less curren
Slide 36: Segment Gross Profit Non-GAAP Financial Information (cont.)
Segment Gross Profit Non-GAAP Financial Information (cont.) Three months ended Three months ended ($ in thousands) December 31, 2023 December 31, 2019 December 31, 2022 December 31, 2018 North America Loss Adjusting $ 11,716 $ 16,779 International Operations 13,160 8,635 Broadspire 24,125 17,889 Pla
Slide 37: Reconciliation of Fourth Quarter Non-GAAP Results
Reconciliation of Fourth Quarter Non-GAAP Results Three Months Ended December 31, 2023 Unaudited ($ in thousands) Pretax (Loss) Earnings Pretax (Loss) Earnings Net (Loss) Income Attributable to Crawford & Company Net (Loss) Income Attributable to Crawford & Company Diluted (Loss) Earnings per CRD-A
Slide 38: Reconciliation of Full-Year Non-GAAP Results
Reconciliation of Full-Year Non-GAAP Results Year Ended December 31, 2023 Unaudited ($ in thousands) Pretax Earnings Pretax (Loss) Earnings Net Income Attributable to Crawford & Company Net (Loss) Income Attributable to Crawford & Company Diluted Earnings per CRD-A Share(1) Diluted (Loss) Earnings p