Crawford & Company · NYSE:CRD.A
Crawford & — Q3 2024 Earnings Presentation
35 slides from Crawford &'s earnings presentation, Nov 5, 2024
Slide 1: Third Quarter 2024 Financial Results
® CRD-A & CRD-B (NYSE) Crawford & Company Third Quarter 2024 Financial Results
Slide 2: Forward-Looking Statements & Additional Information
Forward-Looking Statements & Additional Information 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 a
Slide 3: Strategic Update
3 STRATEGIC UPDATE Rohit Verma President & Chief Executive Officer Q3 2024 FINANCIAL RESULTS
Slide 4: Global Reach; Trusted Partner
Global Reach; Trusted Partner 4 70 $20B+ Countries Claims Managed Annually 10,000+ 50,000+ Employees Field Resources Q3 2024 FINANCIAL RESULTS
Slide 5: Multiple Growth Drivers Benefitting Crawford
Multiple Growth Drivers Benefitting Crawford 5 Climate change Increased presence in Gaining market share Growing and Industry-leading continues to drive rapidly growing P&C within fragmented U.S. strengthening strategic insurance markets with Insurtech capabilities global demand in independent loss
Slide 6: Third Quarter 2024 Summary
Third Quarter 2024 Summary • 66 Revenue $329.4M $330.1M • Q3 consolidated revenue consistent YoY • Q3 operating earnings decrease related to reduced storm activity and increased corporate unallocated costs as compared to previous year • Revenue and operating earnings growth in 2 segments Q3 ‘24 Q3 ‘
Slide 7: Occurrence of Severe Storms in the U.S. Decreased Year Over Year
Occurrence of Severe Storms in the U.S. Decreased Year 7 Over Year U.S. Severe Storm Reports1 Consolidated Weather-Related vs. Networks Revenue2 Non-Weather-Related Revenue -48.1% -0.2% -39.1% 15,596 $330.1M $329.4M $34.2M $109M -11% $97M 8,093 $20.8M +5% $222M $232M Q3 ‘23 Q3 ‘24 Q3 ‘23 Q3 ‘24 Q3 ’
Slide 8: Our Capital Allocation Strategy
Our Capital Allocation Strategy 8 Committed to Industry Leading Financial Strength and Employing a Disciplined Approach to Capital Allocation Investing in long-term growth Strong liquidity Paid quarterly dividend of through Cap Ex and M&A Leverage ratio below industry average $0.07 per share at 2.22
Slide 9: Operational Update
99 OPERATIONAL UPDATE Bruce Swain, Chief Financial Officer Q3 2024 FINANCIAL RESULTS
Slide 10: Third Quarter 2024 Revenue Contribution
Third Quarter 2024 Revenue Contribution 10 North America International Broadspire Platform Solutions Loss Adjusting Operations (U.S.-only) (US-only) 24% 32% 30% 14% Comprised of the Following Comprised of All Service Lines Third Party Administration for: Comprised of the Following North American Ser
Slide 11: North America Loss Adjusting
11 11 North America Loss Adjusting Third Quarter 2024 Results $79.3M $5.4M Revenues Operating Earnings • Q3 revenue consistent YoY • U.S. GTS achieved record quarterly revenues with 19% growth driven by new business wins • Q3 operating earnings decreased by 48% • U.S. Field Ops and Canada revenue re
Slide 12: International Operations
12 12 International Operations Third Quarter 2024 Results $105.7M $5.1M Revenues Operating Earnings • YoY revenue growth of 8%; Growth of 10% when measured in constant currency • Operating earnings more than doubled YoY • Operating margin expanded 262 bps • Segment turnaround continues driven by str
Slide 13: Broadspire
13 13 Broadspire Third Quarter 2024 Results $99.0M $14.4M Revenues Operating Earnings • Record quarterly revenue reflected increase of 7% YoY • Company leading operating margin of 14.5% • Client wins and pricing improvements drove strong performance • 94% of Broadspire business renewed YTD Q3 2024 F
Slide 14: Platform Solutions
14 14 Platform Solutions Third Quarter 2024 Results $45.3M $3.8M Revenues Operating Earnings • Revenue decreased by 24% • Decrease in weather-related business consistent with reduction in U.S. severe storms • We continue to add new clients and grow services – creating greater potential for revenue g
Slide 15: Financial Update
15 15 FINANCIAL UPDATE Bruce Swain, Chief Financial Officer Q3 2024 FINANCIAL RESULTS
Slide 16: Q3 2024 Financial Summary
Q3 2024 Financial Summary 16 Quarter Ended Unaudited ($ in millions, except per share amounts) September 30, 2024 September 30, 2023 % Change Revenues $329.4 $330.1 (0)% Non-GAAP Revenues excluding foreign exchange fluctuations(1) $331.6 $330.1 0% Net Income Attributable to Shareholders of Crawford
Slide 17: Balance Sheet Highlights
Balance Sheet Highlights 17 Unaudited ($ in thousands) Sept 30, 2024 Dec 31, 2023 Change Cash and cash equivalents $ 52,340 $ 58,363 $ (6,023) Accounts receivable, net 131,352 131,362 (10) Unbilled revenues, net 134,998 116,611 18,387 Total receivables 266,350 247,973 18,377 Goodwill 76,631 76,724 (
Slide 18: Net Debt and Pension Liability
Net Debt and Pension Liability 18 Net Debt Pension Liability 250,000 80,000 $74.3M 70,000 200,000 $186.0M 60,000 $137.3M 50,000 150,000 40,000 100,000 30,000 $23.1M 20,000 50,000 10,000 - - 2018 2019 2020 2021 2022 2023 Q3 2024 2018 2019 2020 2021 2022 2023 Q3 2024 Net debt at $186.0 million Pension
Slide 19: Operating and Free Cash Flow
Operating and Free Cash Flow 19 Unaudited ($ in thousands) 2024 2023 Change Net Income Attributable to Shareholders of Crawford & Company $ 20,874 $ 31,427 $ (10,553) Depreciation and Other Non-Cash Operating Items 30,477 31,456 (979) Contingent Earnout Adjustments (1,547) 3,100 (4,647) Billed Recei
Slide 20: Additional Financial Matters
Additional Financial Matters 20 Unallocated • Unallocated corporate costs of $7.0 million in Q3 ‘24 compared to corporate costs of $4.8 million in Q3 ‘23 Corporate and Shared • Variance was primarily due to increases in self-insured expense, Costs and Credits professional fees, and other reserves •
Slide 21: Summary
Summary 21 Leveraging strong relationships to enhance market position Leading the industry with next generation Insurtech capabilities Capitalizing on the changing landscape due to climate change and demographic shifts Financial strength and liquidity provide flexibility to pursue market opportuniti
Slide 22: Appendix: Segment Results and Non-GAAP Financial Information
22 21 Appendix: Segment Results and Non-GAAP Financial Information Q3 2024 FINANCIAL RESULTS
Slide 23: North America Loss Adjusting
North America Loss Adjusting 23 Three months ended Unaudited (in thousands, except percentages) September 30, 2024 September 30, 2023 Variance Revenues $79,329 $79,987 (0.8)% Direct expenses 64,572 60,250 7.2% Gross profit 14,757 19,737 (25.2)% Indirect expenses 9,314 9,269 0.5% Operating earnings $
Slide 24: International Operations
International Operations 24 Three months ended Unaudited (in thousands, except percentages) September 30, 2024 September 30, 2023 Variance Revenues $105,741 $98,066 7.8% Direct expenses 87,198 83,592 4.3% Gross profit 18,543 14,474 28.1% Indirect expenses 13,407 12,277 9.2% Operating earnings $5,136
Slide 25: Broadspire
Broadspire 25 Three months ended Unaudited (in thousands, except percentages) September 30, 2024 September 30, 2023 Variance Revenues $99,009 $92,229 7.4% Direct expenses 73,409 66,729 10.0% Gross profit 25,600 25,500 0.4% Indirect expenses 11,198 11,968 (6.4)% Operating earnings $14,402 $13,532 6.4
Slide 26: Platform Solutions
Platform Solutions 26 Three months ended Unaudited (in thousands, except percentages) September 30, 2024 September 30, 2023 Variance Revenues $45,296 $59,839 (24.3)% Direct expenses 35,545 45,761 (22.3)% Gross profit 9,751 14,078 (30.7)% Indirect expenses 5,918 5,555 6.5% Operating earnings $3,833 $
Slide 27: Non-GAAP Financial Information
Non-GAAP Financial Information 27 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
Slide 28: Non-GAAP Financial Information (cont.)
Non-GAAP Financial Information (cont.) 28 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
Slide 29: Total Revenue Before Reimbursements by Major Currency
Total Revenue Before Reimbursements by Major Currency 29 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 Unaudited (in thousands) September 30, 2024 September 30, 2023 Geograp
Slide 30: Reconciliation of Non-GAAP Item
Reconciliation of Non-GAAP Item 30 Revenues and Costs of Services Provided Quarter Ended Quarter Ended Unaudited ($ in thousands) September 30, 2024 September 30, 2023 Revenues Before Reimbursements Total Revenues $ 342,726 $ 342,187 Reimbursements (13,351) (12,066) Revenues Before Reimbursements 32
Slide 31: Reconciliation of Non-GAAP Items (cont.)
Reconciliation of Non-GAAP Items (cont.) 31 Operating Earnings Quarter Ended Quarter Ended September 30, 2024 September 30,2023 Unaudited ($ in thousands) North America Loss Adjusting $ 5,443 $ 10,468 International Operations 5,136 2,197 Broadspire 14,402 13,532 Platform Solutions 3,833 8,523 Unallo
Slide 32: Reconciliation of Non-GAAP items (cont.)
Reconciliation of Non-GAAP items (cont.) 32 Adjusted EBITDA Quarter Ended Quarter Ended September 30, 2024 September 30, 2023 Unaudited ($ in thousands) Net Income Attributable to Shareholders of Crawford & Company $ 9,453 $ 12,319 Add (Deduct): Depreciation and amortization 8,813 9,115 Stock-based
Slide 33: Non-GAAP Financial Information (cont.)
Non-GAAP Financial Information (cont.) 33 Net Debt September 30, 2024 December 31, 2023 Unaudited ($ in thousands) Short-term borrowings $ 32,364 $ 14,762 Current installments of finance leases and other obligations 76 51 Long-term debt and finance leases, less current installments 205,918 194,335 T
Slide 34: Non-GAAP Financial Information (cont.)
Non-GAAP Financial Information (cont.) 34 Segment Gross Profit Three months ended Unaudited ($ in thousands) September 30, 2024 September 30, 2023 North America Loss Adjusting $ 14,757 $ 19,737 International Operations 18,543 14,474 Broadspire 25,600 25,500 Platform Solutions 9,751 14,078 Segment gr
Slide 35: Reconciliation of Third Quarter Non-GAAP Results
Reconciliation of Third Quarter Non-GAAP Results 35 Three Months Ended September 30, 2024 Net Income Attributable to Crawford & Diluted Earnings Diluted Earnings Unaudited ($ in thousands) Pretax Earnings Company per CRD-A Share per CRD-B Share GAAP $ 14,720 $ 9,453 $ 0.19 $ 0.19 Adjustments: Amorti