Crawford & Company · NYSE:CRD.A
Crawford & — Investor Presentation (August 2016)
38 slides from Crawford &'s investor presentation, Aug 15, 2016
Slide 1: August 2016 Investor Presentation
August 2016 Investor Presentation
Slide 2: Forward-Looking Statements
2 • 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 and quantitative, that are not statements of histo
Slide 3: Our Global Strength
3 OUR GLOBAL STRENGTH $1.17 Billion Revenue Company 70+ Countries 700+ Locations 8,900+ Employees
Slide 4: Global Business Services Leader
4 GLOBAL BUSINESS SERVICES LEADER GARDEN CITY GROUP • Class Action Settlements • Bankruptcy Cases • Mass Tort Cases INTERNATIONAL • Serves the Canadian, U.K., European, Latin American, and Asia Pacific Markets • Property and Casualty Services • Global Technical Services • Third Party Administration
Slide 5: Investment Highlights
5 Experienced senior leadership team Leading independent global claims management business Instilling an entrepreneurial culture focused on cross selling and growth Repositioning Crawford to deliver more predictable financial results Utilizing technology and strategic outsourcing to improv
Slide 6: Executive Management
6 EXECUTIVE MANAGEMENT Harsha V. Agadi - President and Chief Executive Officer • On June 21, 2016 Harsha Agadi was named President and CEO after serving as Interim President and CEO since August 2015 • 30 years of experience in leadership positions at both public and private companies, including sev
Slide 7: Global Claims Business
7 • One of the world’s largest independent providers of claims management solutions with an unparalleled competitive position and globally recognized brand • Delivering complex solutions to clients when speed of execution matters • Integrated approach to managing national and multinational claims pr
Slide 8: Vigilant Expense Control
8 70.3% 68.9% 70.1% 70.1% 68.9% 67.1% 62.0% 64.0% 66.0% 68.0% 70.0% Ratio of T o ta l Com p e ns a tion to Re v e nue s Actual VIGILANT EXPENSE CONTROL • $45 million of total costs eliminated in 2015 • Further efficiency opportunities currently being explored • Goal for total compensation to be unde
Slide 9: Driving Adjusted EBITDA Margin Expansion
9 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% Q315 Q415 Q116 Q216 T rai lin g T we lv e M o n th N o n -GAA P A d ju st ed E BI T D A M ar g in s (1 ) DRIVING ADJUSTED EBITDA MARGIN EXPANSION 10.2% 9.2% 8.6% • Goal to deliver predictable financial results while reducing weather dependence 10.9% (1)
Slide 10: Global Business Services and Technology Centers
10 GLOBAL BUSINESS SERVICES AND TECHNOLOGY CENTERS SIMPLIFICATION Simplify how we do things today, both across and within divisions STANDARDIZATION Adopt the one best way of working globally and consolidate for scale in the right location OPERATIONAL EXCELLENCE Use our global scale to learn, innovat
Slide 11: Focus on Delivering Revenue Growth
11 FOCUS ON DELIVERING REVENUE GROWTH Continued expansion of Contractor Connection Broadspire’s re-entry into the U.S. disability market Global TPA opportunities Growth in global high end claims Capitalizing on cross selling Multiple Avenues of Revenue Growth Available Globally
Slide 12: Contractor Connection – North America
12 CONTRACTOR CONNECTION – NORTH AMERICA A technology-enabled, best-in-class industry leader of contractor managed repair networks for residential and commercial losses • Network of 5,500 general and specialty contractors • Year to date 2016 revenue growth rate of 25% over 2015 • 6 of the top 10 ins
Slide 13: Broadspire
13 BROADSPIRE A global Third Party Administration (TPA) business specializing in servicing the claims needs of corporations, brokers and insurers who wish to take a greater control over the claims process, indemnity spend, and data capture and to access meaningful management information • Largest gl
Slide 14: Broadspire – Strong Experience, Strong Partnerships
14 BROADSPIRE – STRONG EXPERIENCE, STRONG PARTNERSHIPS
Slide 15: Global Technical Services
15 GLOBAL TECHNICAL SERVICES Global Technical Services (GTS) has the largest, most experienced team of technical adjusters in the world • Global footprint • 500 executive general adjusters • Industry-specific expertise • Specialists in providing quality end to end claims management • Consultancy ser
Slide 16: Garden City Group
16 Recognized leader in providing legal administration services for class action settlements, bankruptcy cases, mass tort and legal noticing programs for over 30 years • Senior leadership transition successfully completed • Continuing to manage the expected decline of two large projects • Second qua
Slide 17: Growth Initiatives
17 GROWTH INITIATIVES Expand Contactor Connection in North America and Internationally Continue to deliver consistent growth and margin expansion at Broadspire in the U.S. and explore global TPA opportunities Growth in high end claims services delivered by our GTS adjusters Garden City Group
Slide 18: Crawford Is Focused on Shareholder Returns
18 CRAWFORD IS FOCUSED ON SHAREHOLDER RETURNS • Crawford continues to deliver shareholder returns in the form of dividends • Increased dividends on both the A and B shares over the last 3 years *Includes one time special dividend of $0.06 per share in 2012 $0.10 $0.20 $0.18 $0.24 $0.28 $0.08 $0.16 $
Slide 19: Reaffirmed 2016 Guidance
19 Crawford & Company reaffirmed guidance for 2016 is as follows: GUIDANCE--YEAR ENDING DECEMBER 31, 2016 Low End High End ACTUAL RESULTS--YEAR ENDED DECEMBER 31, 2015 Consolidated revenues before reimbursements $1.05 $1.10 billion $1.17 billion After expected restructuring and special charges, net
Slide 20: Midpoint of 2016 Non-GAAP Guidance Projects Strong YoY Growth
20 Midpoint of 2016 Non – GAAP Guidance Projects Strong YoY Growth 2016 NON – GAAP GUIDANCE • 2016E for Non - GAAP Diluted EPS and Adjusted EBITDA is at the midpoint of the guidance range given by Crawford (1) See Appendix for non-GAAP explanation and reconciliation 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 CRD
Slide 21: Priorities for Remainder of 2016
21 PRIORITIES FOR REMAINDER OF 2016 Continue to exhibit cost discipline Be more client centric • Deliver customized value propositions to clients • Increase the speed of doing business enterprise wide Drive additional synergies in strategic initiatives Capitalize on cross-selling opportuniti
Slide 22: Questions & Answers
22 Questions & Answers
Slide 23: Appendix A: Consolidated Year-to-Date 2016 Financial Information
23 Appendix A: Consolidated Year-to-Date 2016 Financial Information
Slide 24: Second Quarter 2016 Business Summary
24 SECOND QUARTER 2016 BUSINESS SUMMARY (1) See Appendix for non-GAAP explanation and reconciliation • Revenues for the 2016 period were $559.6 million, down 6% as compared with $592.2 million in the 2015 period due to lower revenues from major projects at GCG which are in run-off, FX headwinds from
Slide 25: YTD Consolidated Revenues and Operating Results
25 YTD CONSOLIDATED REVENUES AND OPERATING RESULTS YTD (1) See Appendix for non-GAAP explanation and reconciliation 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% June 30, 2016 June 30, 2015 Operating Margins (%) 8.1% 4.8% $0 $100 $200 $300 $400 $500 $600 $700 June 30, 2016 June 30, 2015 Revenues ($ in millio
Slide 26: YTD Segment Revenues and Operating Earnings: International, Broadspire
26 $0 $50 $100 $150 $200 June 30, 2016 June 30, 2015 $0 $5 $10 $15 $20 June 30, 2016 June 30, 2015 YTD SEGMENT REVENUES AND OPERATING EARNINGS International YTD (1) See Appendix for non-GAAP explanation and reconciliation 631,032 Broadspire YTD 15.2 9.5 253,508 240,757 Revenues ($ in millions) Segme
Slide 27: YTD Segment Revenues and Operating Earnings: US Services, Garden City Group
27 $0 $20 $40 $60 $80 June 30, 2016 June 30, 2015 $0 $2 $4 $6 $8 $10 June 30, 2016 June 30, 2015 $0 $20 $40 $60 $80 $100 $120 $140 June 30, 2016 June 30, 2015 $0 $5 $10 $15 $20 June 30, 2016 June 30, 2015 YTD SEGMENT REVENUES AND OPERATING EARNINGS US Services YTD (1) See Appendix for non-GAAP expla
Slide 28: Statement of Operations Highlights
28 STATEMENT OF OPERATIONS HIGHLIGHTS Unaudited ($ in thousands, except per share amounts) Year-to-Date Periods Ended June 30, 2016 2015 % Change Revenues Before Reimbursements $ 559,577 $ 592,175 (6)% Costs of Services Provided, Before Reimbursements 401,795 451,431 (11)% Selling, General, and Admi
Slide 29: Balance Sheet Highlights
29 Unaudited ($ in thousands) June 30, 2016 December 31, 2015 Change Cash and cash equivalents $59,365 $76,066 ($16,701 ) Accounts receivable, net 170,178 164,596 5,582 Unbilled revenues, net 113,027 98,659 14,368 Total receivables 283,205 263,255 19,950 Goodwill 94,681 95,616 (935 ) Intangible asse
Slide 30: Operating and Free Cash Flow
30 Unaudited ($ in thousands) 2016 2015 Variance Net Income Attributable to Shareholders of Crawford & Company $ 17,257 $ 7,040 $ 10,217 Depreciation and Other Non-Cash Operating Items 23,040 23,139 (99 ) Unbilled and Billed Receivables Change (20,743 ) 1,831 (22,574 ) Working Capital Change 977 (12
Slide 31: Appendix B: Non-GAAP Financial Information
31 Appendix B: Non-GAAP Financial Information
Slide 32: Non-GAAP Measures Explanation
32 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 33: Adjusted EBITDA and Non-GAAP Adjusted Net Income Definitions
33 Adjusted EBITDA Adjusted EBITDA is used by management to evaluate, assess and benchmark our operational results and the Company believes that adjusted EBITDA is relevant and useful information widely used by analysts, investors and other interested parties. Adjusted EBITDA is defined as net incom
Slide 34: Reconciliation of Non-GAAP Items
34 RECONCILIATION OF NON-GAAP ITEMS Revenues and Trailing Twelve Months Adjusted EBITDA Margins Q414 Q115 Q215 Q315 Q415 Q116 Q216 Unaudited ($ in thousands) Total revenues $ 305,642 $ 306,616 $ 324,416 $ 309,984 $ 300,504 $ 290,908 $ 297,669 Reimbursements (20,187) (18,839) (20,018) (16,649) (15,62
Slide 35: Reconciliation of Non-GAAP Items (continued)
35 RECONCILIATION OF NON-GAAP ITEMS (continued) Revenues, Costs of Services, and Operating Earnings Unaudited ($ in thousands) Year-to-date Period Ended June 30, 2016 Year-to-date Period Ended June 30, 2015 Full Year Actuals 2015 Full Year Guidance 2016 * Revenues Before Reimbursements Total Revenue
Slide 36: Reconciliation of Non-GAAP Items: Revenues and Adjusted EBITDA
36 RECONCILIATION OF NON-GAAP ITEMS (continued) Revenues and Adjusted EBITDA * Midpoints of Company's Guidance Year-to-date Period Ended June 30, 2016 Year-to-date Period Ended June 30, 2015 Full Year Actuals 2015 Full Year Guidance 2016 * Unaudited ($ in thousands) Total revenues $ 588,577 $ 631,03
Slide 37: Reconciliation of Non-GAAP Items: Net Debt
37 RECONCILIATION OF NON-GAAP ITEMS (continued) Net Debt June 30, December 31, Unaudited ($ in thousands) 2016 2015 Net Debt Short-term borrowings $ 19,371 $ 19,958 Current installments of capital leases 1,757 1,959 Long-term debt and capital leases, less current installments 216,944 225,365 Total d
Slide 38: Non-GAAP Adjusted Net Income and Diluted EPS
38 RECONCILIATION OF NON-GAAP ITEMS (continued) Non-GAAP Adjusted Net Income and Diluted Earnings Per Share Guidance for year ending December 31, 2016 based on midpoints Unaudited ($ in thousands) Income Before Taxes Income Taxes Net Income Net Income Attributable to Crawford & Company Diluted Earni