Crawford & Company · NYSE:CRD.A
Crawford & — Q1 2023 Earnings Presentation
29 slides from Crawford &'s earnings presentation, May 3, 2023
Slide 1: Crawford & Company First Quarter 2023 Earnings Conference Call
Crawford & Company First Quarter 2023 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 First Quarter 2023
3 Key Highlights First Quarter 2023 Q1 2023 METRICS Achieving tenth consecutive quarter of revenue growth, highlighting the effectiveness of our long-term strategy GAAP Non-GAAP Revenue growth across all businesses, led by $313.0M $322.4M North America Loss Adjusting and Platforms Revenues • Revenue
Slide 4: Crawford's Long-Term Strategy Driving Profitability
4 Crawford’s Long-Term Strategy Driving Profitability As promised, our margin improvement actions are ensuring our top line success translates into expanded profitability to support our long-term growth strategy Margin Improvement Actions 1 2 3 4 Roll out new Aggressively Optimize cost Align pricing
Slide 5: Our Capital Allocation Strategy
5 Our Capital Allocation Strategy We are committed to employing a disciplined approach to capital allocation Debt Repayment Regular quarterly dividend Investing in long-term growth Reduce leverage of $0.06 per share through Cap Ex and M&A (2.07x EBITDA in Q1 2023) for CRD-A and CRD-B Returned over $
Slide 6: Operational Overview
Operational Overview Crawford
Slide 7: Impact Across Our Segments
7 7 Impact Across Our Segments First Quarter 2023 Performance • Q1 revenue growth of 19.7% over prior year, driven by adjuster additions, increased Q1 Revenues North America utilization, and carryover from Hurricane Ian and winter storms in the U.S. $77.1M Loss Adjusting • Surpassed our 3-year goal
Slide 8: Customer Excellence
8 8 Customer Excellence NPS remains at a healthy level of 47 Net Promoter Score Actively looking for opportunities to improve our score Added $36.3 million in new and enhanced business in Q1 2023 Retained 97% of our Broadspire business year to date New and Renewal Business Activity Increasing market
Slide 9: Environmental, Social and Governance
9 Environmental, Social and Governance Diversity, Equity and Inclusion (DEI) and human capital initiatives continue to be our top strategic priority and core to our culture Favorable results from recent Pulse Survey on DEI at Crawford Professional scoring ahead of industry benchmarks Overall Crawf
Slide 10: Financial Overview
Financial Overview Crawford
Slide 11: First Quarter 2023 Financial Summary
11 11 First Quarter 2023 Financial Summary Quarter Ended March 31, March 31, ($ in millions, except per share amounts) 2023 2022 % Change Revenues $313.0 $279.0 12% Non-GAAP Revenues excluding foreign exchange fluctuations(1) $322.4 $279.0 16% Net Income Attributable to Shareholders of Crawford & Co
Slide 12: North America Loss Adjusting
12 North America Loss Adjusting Three months ended (in thousands, except percentages) March 31, 2023 March 31, 2022 Variance Q1 Highlights Revenues $77,127 $64,438 19.7% • Q1 revenue growth of 19.7% over prior year, driven by adjuster additions, increased utilization, Direct expenses 59,783 53,370 1
Slide 13: International Operations
13 International Operations Three months ended (in thousands, except percentages) March 31, 2023 March 31, 2022 Variance Q1 Highlights Revenues $91,863 $89,272 2.9% • Q1 revenue growth of 2.9% over prior year led by Australia and the UK; constant dollar revenue Direct expenses 76,159 79,308 (4.0)% g
Slide 14: Broadspire
14 Broadspire Three months ended (in thousands, except percentages) March 31, 2023 March 31, 2022 Variance Revenues $81,182 $76,454 6.2% Q1 Highlights Direct expenses 61,933 60,038 3.2% • Q1 revenue growth of 6.2% over prior year, aided by accelerated medical management revenue growth of 11% over pr
Slide 15: Platform Solutions
15 Platform Solutions Three months ended (in thousands, except percentages) March 31, 2023 March 31, 2022 Variance Q1 Highlights • Q1 revenue growth of 29% over prior year led by Revenues $62,820 $48,861 28.6% Networks and Contractor Connection • Networks revenues grew 36% year-over-year Direct expe
Slide 16: Additional Financial Matters
16 Additional Financial Matters • Unallocated corporate costs of $4.1 million in 2023 compared to costs of $3.0 Unallocated Corporate million in the prior year period and Shared Costs and • Variance was primarily due to a $1.8 million gain on sale of our Canadian head Credits office building in the
Slide 17: Balance Sheet Highlights
17 Balance Sheet Highlights December 31, Unaudited ($ in thousands) March 31, 2023 2022 Change Cash and cash equivalents $ 43,304 $ 46,007 $ (2,703) Accounts receivable, net 145,348 141,106 4,242 Unbilled revenues, net 137,410 126,274 11,136 Total receivables 282,758 267,380 15,378 Goodwill 76,626 7
Slide 18: Net Debt and Pension Liability
18 18 Net Debt and Pension Liability Net Debt Pension Liability 250,000 $206.1 million 100,000 $87.0 million 90,000 200,000 $171.7 million 80,000 70,000 150,000 60,000 50,000 100,000 40,000 $25.7 million 30,000 50,000 20,000 10,000 - - 2017 2018 2019 2020 2021 2022 Q1 2023 2017 2018 2019 2020 2021 2
Slide 19: Operating And Free Cash Flow
19 Operating And Free Cash Flow For the period ended March 31, Unaudited ($ in thousands) 2023 2022 Change Net Income Attributable to Shareholders of Crawford & Company $ 10,681 $ 5,096 $ 5,585 Depreciation and Other Non-Cash Operating Items 10,122 10,819 (697) Loss (Gain) on Disposals of Property a
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 $18B+ employees Field Resources countries claims managed annually
Slide 21: Appendix: Non-GAAP Financial Information
21 Appendix: Non-GAAP Financial Information
Slide 22: Appendix: Non-GAAP Financial Information
22 Appendix: Non-GAAP Financial Information Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comp
Slide 23: Appendix: Non-GAAP Financial Information (cont.)
23 Appendix: Non-GAAP Financial Information (cont.) Segment and Consolidated Gross Profit Gross profit is defined as revenues less direct expenses which exclude indirect overhead expenses allocated to the business. Indirect expenses consist of centralized administrative support costs, regional and l
Slide 24: Total Revenues Before Reimbursements by Major Currency
24 Total Revenues Before Reimbursements by Major Currency The following table illustrates revenue as a percentage of total revenue in the major currencies of the geographic areas in which Crawford does business: Three Months Ended March 31, March 31, (in thousands) 2023 2022 Geographic Area Currency
Slide 25: Reconciliation of Non-GAAP Items
25 Reconciliation of Non-GAAP Items Revenues, Costs of Services Provided, and Operating Earnings Quarter Ended Quarter Ended March 31, March 31, Unaudited ($ in thousands) 2023 2022 Revenues Before Reimbursements Total Revenues $ 324,596 $ 287,789 Reimbursements (11,604) (8,764) Revenues Before Reim
Slide 26: Reconciliation of Non-GAAP Items (cont.)
26 Reconciliation of Non-GAAP Items (cont.) Adjusted EBITDA Quarter Ended ) March 31, March 31, Unaudited ($ in thousands) 2023 2022 Net income attributable to shareholders of Crawford & Company $ 10,681 $ 5,096 Add (Deduct): Depreciation and amortization 9,050 9,099 Stock-based compensation 1,023 1
Slide 27: Reconciliation of Non-GAAP Items (cont.)
27 Reconciliation of Non-GAAP Items (cont.) Net Debt March 31, December 31, Unaudited ($ in thousands) 2023 2022 Net Debt Short-term borrowings $ 38,993 $ 26,990 Current installments of finance leases and other obligations 60 58 Long-term debt and finance leases, less current installments 210,342 21
Slide 28: Reconciliation of Non-GAAP Items (cont.)
28 Reconciliation of Non-GAAP Items (cont.) Segment Gross Profit Three months ended March 31, 2023 March 31, 2022 ($ in thousands) Segment gross profit: North America Loss Adjusting $ 17,344 $ 11,068 International Operations 15,704 9,964 Broadspire 19,249 16,416 Platform Solutions 15,535 12,531 Segm
Slide 29: Reconciliation of First Quarter Non-GAAP Results
29 Reconciliation of First Quarter Non-GAAP Results Three Months Ended March 31, 2023 Net Income Attributable to Crawford & Diluted Earnings Diluted Earnings Unaudited ($ in thousands) Pretax Earnings Company per CRD-A Share per CRD-B Share GAAP $ 16,001 $ 10,681 $ 0.22 $ 0.22 Adjustments: Amortizat