Crawford & Company · NYSE:CRD.A
Crawford & — Q4 2019 Earnings Presentation
29 slides from Crawford &'s earnings presentation, Mar 6, 2020
Slide 1: Crawford & Company Fourth Quarter 2019 Earnings Conference Call
Slide 2: Forward-Looking Statements and Additional Information
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 a
Slide 3: Crawford & Company
Crawford & Company The world’s largest publicly listed independent provider of global outsourced claims management solutions to carriers, brokers and corporates 1.6 Million Claims handled worldwide Organized across global service lines: 9,000 • Crawford Claims Solutions (P&C adjusting solutions) Tot
Slide 4: Full Year 2019 Financial Highlights
Full Year 2019 Financial Highlights GAAP $1.0 Billion $12.5 Million Net income attributable to Revenues before reimbursements shareholders Non-GAAP $1.03 Billion $79 Million 7.7% Revenues before reimbursements1 Adjusted operating earnings1 Adjusted operating margin1 $113 Million 11.0% Consolidated a
Slide 5: 2019 Accomplishments
2019 Accomplishments Added over 600 client programs in 2019, contributing to Crawford’s growth strategy Increased free cash flow by more than $31 million year-over-year Success from ongoing sales and new product development investments Ended 2019 with the strongest sales pipeline at nearly $250 mill
Slide 6: Execution Across Our Service Lines
Execution Across Our Service Lines Crawford Claims Solutions • Momentum building with increased revenues and renewed contracts • New multi-year contract with a top-5 carrier Crawford TPA Solutions • 168 new clients this year worth $45 million annually Crawford Specialty Solutions • Global Technical
Slide 7: Impact of Weather on the Market
Impact of Weather on the Market External Catastrophe Market Stats – $12M less weather-related Weather¹ revenue in 4Q19 than in 4Q18 180 160 140 2019 surge-related revenue Insured Losses ($B) $113 120 $110 100 $27M lower than 2018 80 $83 60 40 2019 revenue growth of 1.3%2 20 excluding surge related d
Slide 8: Disciplined Capital Allocation
Disciplined Capital Allocation 1.5x Net Debt to + $31.7M Growth in EBITDA Free Cash Flow Leverage at three-year low Cash flow at three-year high 2.8M Shares $0.28 & $0.20 Repurchased in 2019 Consistent cash dividends per Outstanding shares reduced share for CRD-A and CRD-B, by 5% respectively 8
Slide 9: Fourth Quarter 2019 Financial Review
Fourth Quarter 2019 Financial Review Crawford
Slide 10: Fourth Quarter 2019 Financial Summary
Fourth Quarter 2019 Financial Summary Quarter Ended December 31, December 31, ($ in millions, except per share amounts) 2019 2018 % Change Revenues $247.2 $263.8 (6)% Non-GAAP Revenues excluding foreign exchange fluctuations(1) $253.3 $263.8 (4)% Net (Loss) Income Attributable to Shareholders of Cra
Slide 11: Crawford TPA Solutions Segment Highlights
Crawford TPA Solutions Segment Highlights Three months ended Highlights 2019 (in thousands, December December Based on except percentages) 31, 2019 31, 2018 Variance 2018 rates Variance • Record number of new business wins in 2019 Revenues $97,049 $102,183 (5.0%) $97,994 (4.1%) • Strong pipeline of
Slide 12: Crawford Claims Solutions Segment Highlights
Crawford Claims Solutions Segment Highlights Three months ended 2019 (in thousands, December December Based on Highlights except percentages) 31, 2019 31, 2018 Variance 2018 rates Variance Revenues $84,265 $92,165 (8.6%) $87,311 (5.3%) • On a global basis, weather-related losses were down in Full Ye
Slide 13: Crawford Specialty Solutions Segment Highlights
Crawford Specialty Solutions Segment Highlights Three months ended Highlights 2019 (in thousands, December December Based on except percentages) 31, 2019 31, 2018 Variance 2018 rates Variance • GTS saw revenue growth from new clients and expanded service offerings Revenues $65,872 $69,446 (5.1%) $68
Slide 14: Balance Sheet Highlights
Balance Sheet Highlights December 31, December 31, Unaudited ($ in thousands) 2019 2018 Change Cash and cash equivalents $ 51,802 $ 53,119 $ (1,317) Accounts receivable, net 128,217 131,117 (2,900) Unbilled revenues, net 103,894 108,291 (4,397) Total receivables 232,111 239,408 (7,297) Goodwill 80,6
Slide 15: Operating and Free Cash Flow
Operating and Free Cash Flow For the years ended December 31 Unaudited ($ in thousands) 2019 2018 Change Net Income Attributable to Shareholders of Crawford & Company $ 12,485 $ 25,978 $ (13,493) Goodwill and Intangible Asset Impairment Charges 17,484 1,056 16,428 Depreciation and Other Non-Cash Ope
Slide 16: Share Repurchases
Share Repurchases During the three months ended December 31, 2019, the Company repurchased approximately 56 thousand shares of CRD-B at a weighted average cost of $9.65 During the year ended December 31, 2019, the Company repurchased approximately 1.1 million shares of CRD-A and 1.7 million shares o
Slide 17: 2020 Guidance
2020 Guidance Crawford & Company is providing initial guidance for 2020 as follows: Year ending December 31, 2020 Low End High End Consolidated revenues before reimbursements $1.00 $1.05 billion Net income attributable to shareholders of Crawford & Company $37.5 $42.5 million Diluted earnings per sh
Slide 18: Conclusion
Conclusion Looking forward at Crawford’s primary objectives: Maximize Growth System Readiness Continue new business momentum and Strategically invest in technology to add achieve sustained revenue and earnings value to customers and maintain a growth competitive edge People Readiness Fiscal Responsi
Slide 19: Crawford – Attractive Business Model
19 Crawford – Attractive Business Model Experienced Management Team Technology Enabled BPO Aligned with Shareholders Platform Global Product and Geographic Blue Chip Global Client Base Diversification with Long-Term Relationships Recurring Fee For Service Solid Balance Sheet and Low Reve
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Slide 21: Appendix: Non-GAAP Financial Information
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 compara
Slide 22: Appendix: Non-GAAP Financial Information (cont.)
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 loca
Slide 23: Total Revenues Before Reimbursements by Major Currency
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 Twelve Months Ended December 31, December 31, December 31, December 31,
Slide 24: Reconciliation of Non-GAAP Items
Reconciliation of Non-GAAP Items Revenues, Costs of Services Provided, and Operating Earnings Quarter Ended Quarter Ended Full Year December 31, December 31, Guidance Unaudited ($ in thousands) 2019 2018 2020 * Revenues Before Reimbursements Total Revenues $ 257,562 $ 274,520 $ 1,068,000 Reimburseme
Slide 25: Reconciliation of Non-GAAP Items (cont.)
Reconciliation of Non-GAAP Items (cont.) Adjusted EBITDA Quarter Ended Full Year December 31, December 31, Guidance Unaudited ($ in thousands) 2019 2018 2020* Net (loss) income attributable to shareholders of Crawford & Company $ (7,312) $ 11,938 $ 40,000 Add: Depreciation and amortization 10,427 10
Slide 26: Reconciliation of Non-GAAP Items (cont.)
Reconciliation of Non-GAAP Items (cont.) Net Debt December 31, December 31, Unaudited ($ in thousands) 2019 2018 Net Debt Short-term borrowings $ 28,531 $ 23,195 Current installments of capital leases 15 89 Long-term debt and capital leases, less current installments 148,408 167,126 Total debt 176,9
Slide 27: Reconciliation of Non-GAAP Items (cont.)
Reconciliation of Non-GAAP Items (cont.) Segment Gross Profit Three months ended December 31, December 31, ($ in thousands) 2019 2018 Segment gross profit: Crawford TPA Solutions $ 23,833 $ 29,753 Crawford Claims Solutions 20,339 21,112 Crawford Specialty Solutions 22,941 25,974 Segment gross profit
Slide 28: Reconciliation of Fourth Quarter Non-GAAP Results
Reconciliation of Fourth Quarter Non-GAAP Results Three Months Ended December 31, 2019 Net (Loss) Income Diluted Diluted Non-GAAP Attributable (Loss) (Loss) Operating Pretax (Loss) to Crawford Earnings per Earnings per Unaudited ($ in thousands) Revenues Earnings Earnings & Company CRD-A Share CRD-B
Slide 29: Reconciliation of Full Year Non-GAAP Results
Reconciliation of Full Year Non-GAAP Results Year Ended December 31, 2019 Net Income Non-GAAP Attributable to Diluted Diluted Operating Pretax Crawford & Earnings per Earnings per Unaudited ($ in thousands) Revenues Earnings Earnings Company CRD-A Share CRD-B Share GAAP $ 1,005,802 $ 77,609 $ 23,637