Crawford & Company · NYSE:CRD.A
Crawford & — Q4 2022 Earnings Presentation
31 slides from Crawford &'s earnings presentation, Mar 7, 2023
Slide 1: Fourth Quarter and Full Year 2022 Earnings Conference Call
Crawford & Company Fourth Quarter and Full Year 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: Financial Highlights Full Year 2022
3 Financial Highlights Full Year 2022 GAAP NON-GAAP¹ KEY METRICS¹ $1.2 BILLION $63.5 MILLION $27.6 MILLION Revenues before Operating earnings Operating cash flow reimbursements $(18.3) MILLION $96.3 MILLION 2.16x Net loss Adjusted EBITDA Leverage Ratio $(0.37) $0.70 8.1% EPS CRD-A EPS CRD-B EPS CRD-
Slide 4: Evolving Crawford's Strategy for Long-Term Growth
4 Evolving Crawford’s Strategy for Long-Term Growth Our roadmap to support margin improvement involves ensuring our top line success translates into expanded profitability to support our long-term growth strategy Long-term Growth Strategy ORGANIC INORGANIC QUALITY EXPERTISE DIGITAL ADJACENCIES GEOGR
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 (Target below 2.0x EBITDA in 2023) for CRD-A and CRD-B Our M&
Slide 6: Operational Overview
Operational Overview Crawford
Slide 7: Impact Across Our Segments
7 7 Impact Across Our Segments Full Year 2022 Performance • FY 22 revenue growth of 12.7% over prior year, due to increased activity related to FY22 Revenues North America Hurricane Ian and Winter Storm Elliott in U.S., continued market recovery in Canada $274.8M and the full-year impact of the 2021
Slide 8: Customer Excellence
8 8 Customer Excellence NPS remains at a healthy level of 45 Net Promoter Score Actively looking for opportunities to improve our score Added $35.6 million in new and enhanced business in Q4 2022 ($126.9 million added in FY 2022) Retained 94% of our Broadspire business year to date New and Renewal B
Slide 9: Diversity, Equity and Inclusion Initiatives – Fundamental to How We Do Business
9 Diversity, Equity and Inclusion Initiatives – Fundamental to How We Do Business DEI Progress Example: Latin America LATAM: Favorable Pulse Survey Results • 89% of employees indicated their team and department constantly look for better Client Centricity ways to serve its customers. • 86% of employ
Slide 10: Financial Overview
Financial Overview Crawford
Slide 11: Fourth Quarter 2022 Financial Summary
11 11 Fourth Quarter 2022 Financial Summary Quarter Ended December 31, December 31, ($ in millions, except per share amounts) 2022 2021 % Change Revenues $322.2 $292.9 10% Non-GAAP Revenues excluding foreign exchange fluctuations(1) $336.7 $292.9 15% Net (Loss) Income Attributable to Shareholders of
Slide 12: North America Loss Adjusting
12 North America Loss Adjusting Three months ended (in thousands, except December 31, December 31, percentages) 2022 2021 Variance Q4 Highlights Revenues $77,720 $66,945 16.1% • Q4 revenue growth of 16.1% over prior year, due to increased activity related to Hurricane Ian and Winter Storm Elliott in
Slide 13: Broadspire
13 Broadspire Three months ended (in thousands, except December 31, December 31, percentages) 2022 2021 Variance Q4 Highlights Revenues $78,615 $75,053 4.7% • Q4 revenue growth of 4.7% over prior year, driven by increased economic activity, new and existing Direct expenses 60,726 60,127 1.0% busines
Slide 14: Platform Solutions
14 Platform Solutions Three months ended (in thousands, except December 31, December 31, percentages) 2022 2021 Variance Q4 Highlights Revenues $77,449 $62,611 23.7% • Q4 revenue growth of 23.7% over prior year, bolstered by strength in Networks Direct expenses 59,141 49,300 20.0% • Saw strong contr
Slide 15: International Operations
15 International Operations Three months ended (in thousands, except Q4 Highlights percentages) December 31, 2022 December 31, 2021 Variance • Q4 revenue growth of 0.1% from prior year or 14.6% on a constant dollar basis Revenues $88,404 $88,285 0.1% • Strength in Australia as unprecedented flooding
Slide 16: Additional Financial Matters
16 Additional Financial Matters • Unallocated corporate credits of $0.3 million in 2022 compared to costs of $9.4 Unallocated Corporate million in the prior year period and Shared Costs and • Primary components of this variance were a $3.6 million reduction in incentive Credits compensation and a $6
Slide 17: Balance Sheet Highlights
17 Balance Sheet Highlights December 31, December 31, Unaudited ($ in thousands) 2022 2021 Change Cash and cash equivalents $ 46,007 $ 53,228 $ (7,221) Accounts receivable, net 141,106 134,458 6,648 Unbilled revenues, net 126,274 118,722 7,552 Total receivables 267,380 253,180 14,200 Goodwill 76,622
Slide 18: Net Debt and Pension Liability
18 18 Net Debt and Pension Liability Net Debt Pension Liability 250,000 $192.9 million 120,000 $105.2 million 100,000 200,000 80,000 150,000 60,000 100,000 $106.4 million 40,000 $25.9 million 50,000 20,000 - - 2016 2017 2018 2019 2020 2021 Q4 2022 2016 2017 2018 2019 2020 2021 Q4 2022 Net debt at $1
Slide 19: Operating And Free Cash Flow
19 Operating And Free Cash Flow For the years ended December 31, Unaudited ($ in thousands) 2022 2021 Change Net (Loss) Income Attributable to Shareholders of Crawford & Company $ (18,305) $ 30,692 $ (48,997) Depreciation and Other Non-Cash Operating Items 48,191 44,625 3,566 Goodwill Impairment 36,
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 $18B+ employees Field Resources countries claims managed annually
Slide 21: Appendix: Non-GAAP Financial Information
21 Appendix: Non-GAAP Financial Information
Slide 22: Appendix: Non-GAAP Financial Information
22 Appendix: Non-GAAP Financial Information Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comp
Slide 23: Appendix: Non-GAAP Financial Information (cont.)
23 Appendix: Non-GAAP Financial Information (cont.) Segment and Consolidated Gross Profit Gross profit is defined as revenues less direct expenses which exclude indirect overhead expenses allocated to the business. Indirect expenses consist of centralized administrative support costs, regional and l
Slide 24: Total Revenues Before Reimbursements by Major Currency
24 Total Revenues Before Reimbursements by Major Currency The following table illustrates revenue as a percentage of total revenue in the major currencies of the geographic areas in which Crawford does business: Three Months Ended December 31, December 31, (in thousands) 2022 2021 Geographic Area Cu
Slide 25: Reconciliation of Non-GAAP Items
25 Reconciliation of Non-GAAP Items Revenues, Costs of Services Provided, and Operating Earnings Quarter Ended Quarter Ended December 31, December 31, Unaudited ($ in thousands) 2022 2021 Revenues Before Reimbursements Total Revenues $ 333,369 $ 302,969 Reimbursements (11,181) (10,075) Revenues Befo
Slide 26: Reconciliation of Non-GAAP Items
26 Reconciliation of Non-GAAP Items Revenues, Costs of Services Provided, and Operating Earnings Year Ended Year Ended December 31, December 31, Unaudited ($ in thousands) 2022 2021 Revenues Before Reimbursements Total Revenues $ 1,231,226 $ 1,139,231 Reimbursements (41,744) (37,199) Revenues Before
Slide 27: Reconciliation of Non-GAAP Items (cont.)
27 Reconciliation of Non-GAAP Items (cont.) Adjusted EBITDA Quarter Ended ) December 31, December 31, Unaudited ($ in thousands) 2022 2021 Net (loss) income attributable to shareholders of Crawford & Company $ (14,087) $ 1,653 Add: Depreciation and amortization 8,719 9,408 Stock-based compensation 7
Slide 28: Reconciliation of Non-GAAP Items (cont.)
28 Reconciliation of Non-GAAP Items (cont.) Net Debt December 31, December 31, Unaudited ($ in thousands) 2022 2021 Net Debt Short-term borrowings $ 26,966 $ 10,616 Current installments of finance leases and other obligations 82 88 Long-term debt and finance leases, less current installments 211,810
Slide 29: Reconciliation of Non-GAAP Items (cont.)
29 Reconciliation of Non-GAAP Items (cont.) Segment Gross Profit Three months ended December 31, 2022 December 31, 2021 ($ in thousands) Segment gross profit: North America Loss Adjusting $ 16,628 $ 11,578 International Operations 8,787 11,146 Broadspire 17,889 14,926 Platform Solutions 18,308 13,31
Slide 30: Reconciliation of Fourth Quarter Non-GAAP Results
30 Reconciliation of Fourth Quarter Non-GAAP Results Three Months Ended December 31, 2022 Net (Loss) Income Attributable to Diluted (Loss) Diluted(Loss) Crawford & Earnings per CRD- Earnings per CRD- Unaudited ($ in thousands) Pretax Earnings Company(1) A Share(1) B Share(1) GAAP $ 17,397 $ (14,087)
Slide 31: Reconciliation of Full-Year Non-GAAP Results
31 Reconciliation of Full-Year Non-GAAP Results Year Ended December 31, 2022 Net (Loss) Income Attributable to Diluted (Loss) Diluted(Loss) Crawford & Earnings per CRD- Earnings per CRD- Unaudited ($ in thousands) Pretax Earnings Company A Share B Share GAAP $ 5,046 $ (18,305) $ (0.37) $ (0.37) Adju