Crawford & Company · NYSE:CRD.A
Crawford & — Q2 2022 Earnings Presentation
29 slides from Crawford &'s earnings presentation, Aug 9, 2022
Slide 1: Second Quarter 2022 Earnings Conference Call
Crawford & Company Second Quarter 2022 Earnings Conference Call CRD-A & CRD-B (NYSE)
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: Key Highlights Second Quarter 2022
3 3 Key Highlights Second Quarter 2022 Q2 2022 GAAP METRICS Fueled by our strategic investments in the business, Crawford delivered its fifth consecutive quarter of double-digit revenue growth Our strategy execution continues to bear favorable results $293.3M • We generated revenue growth across all
Slide 4: Our Roadmap to Drive Margin Improvement
4 Our Roadmap to Drive Margin Improvement Ensuring our top line success translates into expanded profitability to support our long- term growth strategy 1 2 3 4 Roll out new Aggressively Optimize cost Align pricing systems and address low structure to with the value improved productivity current mar
Slide 5: Our Capital Allocation Strategy
5 Our Capital Allocation Strategy We’re committed to employing a disciplined approach to capital allocation Share buyback program Regular quarterly dividend Investing in long-term growth Purchased an additional 1.4M shares of $0.06 per share through Cap Ex and M&A of CRD-A and CRD-B in Q2 2022 for C
Slide 6: Corporate Strategy Overview
6 Corporate Strategy Overview
Slide 7: Impact Across Our Global Service Lines (GSLs)
7 7 Impact Across Our Global Service Lines (GSLs) Second Quarter 2022 Performance Q2 Revenues • Q2 revenue growth of 17.0% over prior year, driven by new client North America wins in large and complex business as well as strong pricing $65.8M Loss Adjusting • Onboarded 70 specialist adjusters year t
Slide 8: Customer Excellence
8 8 Customer Excellence Exceeded pre-pandemic client service delivery levels NPS remains at a healthy level of 48 Net Promoter Score Actively looking for opportunities to improve our score Added $23.3 million in new and enhanced business in Q2 2022 Retained 94% of our US Broadspire business year to
Slide 9: Environmental, Social and Governance
9 Environmental, Social and Governance We are continuing to look for opportunities across our enterprise to become more socially responsible and are increasingly integrating ESG best practices into our operations In Q2, we achieved two key milestones: Promoted Nidhi Verma to Chief Published inaugura
Slide 10: Financial Overview
Financial Overview Crawford
Slide 11: Second Quarter 2022 Financial Summary
11 11 Second Quarter 2022 Financial Summary Quarter Ended June 30, June 30, ($ in millions, except per share amounts) 2022 2021 % Change Revenues $293.3 $267.5 10% Non-GAAP Revenues excluding foreign exchange fluctuations(1) $299.6 $267.5 12% Net Income Attributable to Shareholders of Crawford & Com
Slide 12: North America Loss Adjusting
12 North America Loss Adjusting Three months ended (in thousands, except percentages) June 30, 2022 June 30, 2021 Variance Q2 Highlights Revenues $65,775 $56,212 17.0% • Q2 revenue growth of 17.0% over prior year, driven by new client wins in large and complex business as well as strong pricing Dire
Slide 13: International Operations
13 International Operations Three months ended (in thousands, except percentages) June 30, 2022 June 30, 2021 Variance Q2 Highlights • Q2 revenue growth of 2.7% over prior year Revenues $93,710 $91,269 2.7% • Margin pressures continue to impact certain business lines in the U.K., Europe and Asia Dir
Slide 14: Broadspire
14 Broadspire Three months ended (in thousands, except percentages) June 30, 2022 June 30, 2021 Variance Revenues $80,114 $75,902 5.5% Q2 Highlights • Q2 revenue growth of 5.5% over prior year Direct expenses 62,383 59,639 4.6% • Secured new business wins in casualty, disability, and accident and he
Slide 15: Platform Solutions
15 Platform Solutions Three months ended (in thousands, except percentages) June 30, 2022 June 30, 2021 Variance Revenues $53,746 $44,074 21.9% Q2 Highlights • Q2 revenue growth of 21.9% over prior year, Direct expenses 43,895 31,143 40.9% driven by Praxis and Networks • Margin pressures driven by a
Slide 16: Additional Financial Matters
16 Additional Financial Matters • Unallocated corporate costs of $1.4 million in 2022 compared to $1.2 million in Unallocated Corporate the prior year period and Shared Costs and • Primary components of this variance were a Canada Emergency Wage Subsidy Credits ("CEWS") benefit in 2021 (not present
Slide 17: Balance Sheet Highlights
17 Balance Sheet Highlights June 30, December 31, Unaudited ($ in thousands) 2022 2021 Change Cash and cash equivalents $ 46,254 $ 53,228 $ (6,974) Accounts receivable, net 129,162 134,458 (5,296) Unbilled revenues, net 141,879 118,722 23,157 Total receivables 271,041 253,180 17,861 Goodwill 114,801
Slide 18: Net Debt and Pension Liability
18 18 Net Debt and Pension Liability Net Debt Pension Liability 250,000 $207.9 million 120,000 $105.2 million 100,000 200,000 80,000 150,000 60,000 100,000 $106.4 million 40,000 $12.6 million 50,000 20,000 0 - 2016 2017 2018 2019 2020 2021 Q2 2022 2016 2017 2018 2019 2020 2021 Q2 2022 Net debt at $2
Slide 19: Operating And Free Cash Flow
19 Operating And Free Cash Flow For the period ended June 30, Unaudited ($ in thousands) 2022 2021 Change Net Income Attributable to Shareholders of Crawford & Company $ 10,926 $ 17,844 $ (6,918) Depreciation and Other Non-Cash Operating Items 21,932 24,498 (2,566) (Gain) Loss on Disposals of Proper
Slide 20: Crawford & Company
20 20 Crawford & Company The world’s largest publicly listed independent provider of global claims management and outsourcing solutions. 10,000+ 50,000+ 70 $18B+ employees Field Resources countries claims managed annually
Slide 21: Appendix: Non-GAAP Financial Information
21 Appendix: Non-GAAP Financial Information
Slide 22: Appendix: Non-GAAP Financial Information
22 Appendix: Non-GAAP Financial Information Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comp
Slide 23: Appendix: Non-GAAP Financial Information (cont.)
23 Appendix: Non-GAAP Financial Information (cont.) Segment and Consolidated Gross Profit Gross profit is defined as revenues less direct expenses which exclude indirect overhead expenses allocated to the business. Indirect expenses consist of centralized administrative support costs, regional and l
Slide 24: Total Revenues Before Reimbursements by Major Currency
24 Total Revenues Before Reimbursements by Major Currency The following table illustrates revenue as a percentage of total revenue in the major currencies of the geographic areas in which Crawford does business: Three Months Ended June 30, June 30, (in thousands) 2022 2021 Geographic Area Currency U
Slide 25: Reconciliation of Non-GAAP Items
25 Reconciliation of Non-GAAP Items Revenues, Costs of Services Provided, and Operating Earnings Quarter Ended Quarter Ended June 30, June 30, Unaudited ($ in thousands) 2022 2021 Revenues Before Reimbursements Total Revenues $ 303,651 $ 276,545 Reimbursements (10,306) (9,088) Revenues Before Reimbu
Slide 26: Reconciliation of Non-GAAP Items (cont.)
26 Reconciliation of Non-GAAP Items (cont.) Adjusted EBITDA ) Quarter Ended June 30, June 30, Unaudited ($ in thousands) 2022 2021 Net income attributable to shareholders of Crawford & Company $ 5,830 $ 11,780 Add: Depreciation and amortization 9,356 10,464 Stock-based compensation 1,750 1,954 Net c
Slide 27: Reconciliation of Non-GAAP Items (cont.)
27 Reconciliation of Non-GAAP Items (cont.) Net Debt June 30, December 31, Unaudited ($ in thousands) 2022 2021 Net Debt Short-term borrowings $ 39,718 $ 10,643 Current installments of finance leases and other obligations 58 61 Long-term debt and finance leases, less current installments 214,409 164
Slide 28: Reconciliation of Non-GAAP Items (cont.)
28 Reconciliation of Non-GAAP Items (cont.) Segment Gross Profit Three months ended June 30, 2022 June 30, 2021 ($ in thousands) Segment gross profit: North America Loss Adjusting $ 11,189 $ 11,269 International Operations 13,492 13,878 US Broadspire 17,731 16,263 Platform Solutions 9,851 12,931 Seg
Slide 29: Reconciliation of Second Quarter Non-GAAP Results
29 Reconciliation of Second Quarter Non-GAAP Results Three Months Ended June 30, 2022 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(1) GAAP $ 293,345 $ 12