Crawford & Company · NYSE:CRD.A
Crawford & — Q1 2024 Earnings Presentation
34 slides from Crawford &'s earnings presentation, May 2, 2024
Slide 1: First Quarter 2024 Financial Results
® CRD-A & CRD-B (NYSE) Crawford & Company First 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 Q1 2024 FINANCIAL RESULTS
Slide 4: Global Reach; Trusted Partner
Global Reach; Trusted Partner 4 70 $18B+ Countries Claims Managed Annually 10,000 50,000 Employees Field Resources Q1 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: First Quarter 2024 Summary
First Quarter 2024 Summary • 66 Revenue $316.3M $301.7M • Q1 consolidated revenue & operating earnings declined as expected due to benign weather activity as compared to significant CAT activity in Q1 ‘23 • Record quarterly revenue in Broadspire segment & U.S. GTS service line Q1 ‘23 Q1 ‘24 • More t
Slide 7: Weather-Related Business Performance Impacted By Benign Weather Trend
Weather-Related Business Performance Impacted By 7 Benign Weather Trend Consolidated Weather-Related vs. Networks Revenue1 Aon Global Insured Losses2 Non-Weather-Related Revenue -4.6% -79.4% -43.3% $316.3M $301.7M $37.4M $30.0B $107M -29% $76M $17.0B +8% $209M $226M $7.7M Q1 ’23 Q1 ’24 Q1 ’23 Q1 ’24
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 at 2.06x EBITDA $0.07 per share for CRD-A and
Slide 9: First Quarter 2024 Revenue Contribution
First Quarter 2024 Revenue Contribution 9 North America International Broadspire Platform Solutions Loss Adjusting Operations (US-only) (US-only) 26% 32% 31% 11% Comprised of the Following Comprised of All Reported Third Party Administration for: Service Lines Include: North American Service Lines:
Slide 10: North America Loss Adjusting
10 10 North America Loss Adjusting First Quarter 2024 Results $77.4M $4.5M Revenues Operating Earnings • Q1 revenue essentially flat, despite headwinds related to continued benign weather patterns • Investments made in personnel and technology to support anticipated long-term growth in NALA • Record
Slide 11: International Operations
11 11 International Operations First Quarter 2024 Results $98.1M $1.7M Revenues Operating Earnings • YoY revenue growth of 7%; Growth of 6% when measured in constant currency • Operating earnings decreased compared to Q1 ‘23 which included relatively higher-margin CAT activity in Australia • Notable
Slide 12: Broadspire
12 12 Broadspire First Quarter 2024 Results $94.3M $12.8M Revenues Operating Earnings • Record quarter for Broadspire: o Revenues increased 12% to new quarterly record o Operating earnings increased 62% o Operating margin expanded 420 bps • Results driven by client wins and pricing improvements • Me
Slide 13: Platform Solutions
13 13 Platform Solutions First Quarter 2024 Results $31.9M $1.1M Revenues Operating Earnings • Revenue decreased by 49.2% o Q1 ‘23 results included carryover from Hurricane Ian and severe convective storm activity • Networks decrease driven by reduced deployment in CAT • Contractor Connection revenu
Slide 14: Financial Update
14 14 FINANCIAL UPDATE Bruce Swain, Chief Financial Officer Q1 2024 FINANCIAL RESULTS
Slide 15: Q1 2024 Financial Summary
Q1 2024 Financial Summary 15 Quarter Ended ($ in millions, except per share amounts) March 31, 2024 March 31, 2023 % Change Revenues $301.7 $316.3 (5)% Non-GAAP Revenues excluding foreign exchange fluctuations(1) $300.7 $316.3 (5)% Net Income Attributable to Shareholders of Crawford & Company $2.8 $
Slide 16: North America Loss Adjusting
North America Loss Adjusting 16 Three months ended (in thousands, except percentages) March 31, 2024 March 31, 2023 Variance Revenues $77,365 $77,597 (0.3)% Direct expenses 62,853 60,253 4.3% Gross profit 14,512 17,344 (16.3)% Indirect expenses 10,033 9,279 8.1% Operating earnings $4,479 $8,065 (44.
Slide 17: International Operations
International Operations 17 Three months ended (in thousands, except percentages) March 31, 2024 March 31, 2023 Variance Revenues $98,092 $91,863 6.8% Direct expenses 82,111 76,159 7.8% Gross profit 15,981 15,704 1.8% Indirect expenses 14,291 12,669 12.8% Operating earnings $1,690 $3,035 (44.3)% Gro
Slide 18: Broadspire
Broadspire 18 Three months ended (in thousands, except percentages) March 31, 2024 March 31, 2023 Variance Revenues $94,298 $84,054 12.2% Direct expenses 69,993 64,805 8.0% Gross profit 24,305 19,249 26.3% Indirect expenses 11,501 11,322 1.6% Operating earnings $12,804 $7,927 61.5% Gross profit marg
Slide 19: Platform Solutions
Platform Solutions 19 Three months ended (in thousands, except percentages) March 31, 2024 March 31, 2023 Variance Revenues $31,899 $62,820 (49.2)% Direct expenses 24,668 47,285 (47.8)% Gross profit 7,231 15,535 (53.5)% Indirect expenses 6,116 5,569 9.8% Operating earnings $1,115 $9,966 (88.8)% Gros
Slide 20: Additional Financial Matters
Additional Financial Matters 20 Unallocated • Unallocated corporate costs of $8.0 million in Q1 ‘24 compared to corporate costs of $4.1 million in Q1 ‘23 Corporate and Shared • Variance was primarily due to increases in professional fees, Costs and Credits compensation-related costs, and other reser
Slide 21: Balance Sheet Highlights
Balance Sheet Highlights 21 Unaudited ($ in thousands) March 31, 2024 Dec 31, 2023 Change Cash and cash equivalents $ 45,196 $ 58,363 $ (13,167) Accounts receivable, net 125,985 131,362 (5,377) Unbilled revenues, net 127,597 116,611 10,986 Total receivables 253,582 247,973 5,609 Goodwill 76,621 76,7
Slide 22: Net Debt and Pension Liability
Net Debt and Pension Liability 22 Net Debt Pension Liability 250,000 80,000 $74.3M 70,000 200,000 $185.0M 60,000 $137.3M 50,000 150,000 40,000 100,000 30,000 $23.4M 20,000 50,000 10,000 - - 2018 2019 2020 2021 2022 2023 Q1 2024 2018 2019 2020 2021 2022 2023 Q1 2024 Net debt at $185.0 million Pension
Slide 23: Operating and Free Cash Flow
Operating and Free Cash Flow 23 Unaudited ($ in thousands) 2024 2023 Change Net Income Attributable to Shareholders of Crawford & Company $ 2,837 $ 10,681 $ (7,844) Depreciation and Other Non-Cash Operating Items 10,459 10,122 337 (Gain) Loss on Disposals of Property and Equipment, net (81) 20 (101)
Slide 24: Summary
Summary 24 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 25: Appendix: Non-GAAP Financial Information
25 25 Appendix: Non-GAAP Financial Information Q1 2024 FINANCIAL RESULTS
Slide 26: Non-GAAP Financial Information
Non-GAAP Financial Information 26 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 27: Non-GAAP Financial Information (cont.)
Non-GAAP Financial Information (cont.) 27 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 28: Total Revenue Before Reimbursements by Major Currency
Total Revenue Before Reimbursements by Major Currency 28 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 (in thousands) March 31, 2024 March 31, 2023 Geographic Area Currency
Slide 29: Reconciliation of Non-GAAP Items
Reconciliation of Non-GAAP Items 29 Revenues and Costs of Services Provided Quarter Ended Quarter Ended Unaudited ($ in thousands) March 31, 2024 March 31, 2023 Revenues Before Reimbursements Total Revenues $ 313,073 $ 327,938 Reimbursements (11,419) (11,604) Revenues Before Reimbursements 301,654 3
Slide 30: Reconciliation of Non-GAAP Items (cont.)
Reconciliation of Non-GAAP Items (cont.) 30 Operating Earnings Quarter Ended Quarter Ended March 31, 2024 March 31,2023 Unaudited ($ in thousands) North America Loss Adjusting $ 4,479 $ 8,065 International Operations 1,690 3,035 Broadspire 12,804 7,927 Platform Solutions 1,115 9,966 Unallocated corp
Slide 31: Reconciliation of Non-GAAP Items (cont.)
Reconciliation of Non-GAAP items (cont.) 31 Adjusted EBITDA Quarter Ended Quarter Ended March 31, 2024 March 31, 2023 Unaudited ($ in thousands) Net Income Attributable to Shareholders of Crawford & Company $ 2,837 $ 10,681 Add: Depreciation and amortization 9,299 9,050 Stock-based compensation 1,21
Slide 32: Non-GAAP Financial Information (cont.)
Non-GAAP Financial Information (cont.) 32 Net Debt March 31, 2024 December 31, 2023 Unaudited ($ in thousands) Short-term borrowings $ 19,296 $ 14,762 Current installments of finance leases and other obligations 58 51 Long-term debt and finance leases, less current installments 210,823 194,335 Total
Slide 33: Non-GAAP Financial Information (cont.)
Non-GAAP Financial Information (cont.) 33 Segment Gross Profit Three months ended ($ in thousands) March 31, 2024 March 31, 2023 North America Loss Adjusting $ 14,512 $ 17,344 International Operations 15,981 15,704 Broadspire 24,305 19,249 Platform Solutions 7,231 15,535 Segment gross profit 62,029
Slide 34: Reconciliation of First Quarter Non-GAAP Results
Reconciliation of First Quarter Non-GAAP Results Three Months Ended March 31, 2024 34 Net Income Attributable to Crawford & Diluted Earnings Diluted Earnings Unaudited ($ in thousands) Pretax Earnings Company per CRD-A Share per CRD-B Share GAAP $ 3,826 $ 2,837 $ 0.06 $ 0.06 Adjustments: Amortizatio