Crawford & Company · NYSE:CRD.A
Crawford & — Q3 2015 Earnings Presentation
23 slides from Crawford &'s earnings presentation, Nov 9, 2015
Slide 1: Third Quarter 2015 Earnings Conference Call
Third Quarter 2015 Earnings Conference Call November 9, 2015 Crawford & Company
Slide 2: Forward-Looking Statements
PAGE 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 and quantitative, that are not statements of
Slide 3: Global Business Services Leader
PAGE 3 • The world's largest independent provider of global claims management solutions • Multiple globally recognized brand names: Crawford, Broadspire, GCG • Clients include multinational insurance carriers, brokers and local insurance firms as well as 200 of the Fortune 500 GLOBAL BUSINESS SERVIC
Slide 4: Today's Agenda
TODAY'S AGENDA --- Welcome and Opening Comments --- Third Quarter 2015 Financial Review --- Updated Guidance
Slide 5: Third Quarter 2015 Business Summary
PAGE 5 22.9 293 294 Revenues ($ in millions) Consolidated Operating Earnings (1) ($ in millions) • Harsha V. Agadi appointed as interim President and Chief Executive Officer • Extensive strategic business review undertaken to identify both cost and revenue synergies • $25 - $28 million restructuring
Slide 6: Focused on Profitability and Predictable Results
PAGE 6 FOCUSED ON PROFITABILITY AND PREDICTABLE RESULTS Previously announced restructuring plans targeted to provide $22 million in cost savings • Headcount reduction in the Americas and the U.K. • Senior management realignment to improve execution • GBSC migration and GAB Robins integration $25
Slide 7: Third Quarter 2015 Financial Review
THIRD QUARTER 2015 Financial Review
Slide 8: Consolidated Income Statement Three Months Ended September 30, 2015
PAGE 8 Unaudited ($ in thousands, except per share amounts) Three Months Ended September 30, 2015 2014 % Change Revenues Before Reimbursements $293,335 $293,831 — % Costs of Services Provided, Before Reimbursements 211,106 213,442 (1 )% Selling, General, and Administrative Expenses 61,738 59,348 4 %
Slide 9: Americas Segment Highlights
PAGE 9 U.S. Canada Latin America/ Caribbean Revenues by Geographic Region ($ in millions) Americas Cases Received (In thousands) U.S. Canada Latin America/ Caribbean Operating Results (3Q 2015 v. 3Q 2014) • Revenues of $92.0 million versus $92.2 million • Exchange rates reduced revenues by 6.3% • Op
Slide 10: Americas Segment Highlights (cont.)
PAGE 10 9.1 85.9 6.5 19.5 12.3 7.3 Revenues ($ in millions) Catastrophe Cases (In thousands) U.S. Catastrophe (CAT) Adjuster Activity • CAT revenues in the 2015 period included $13.2 million under an outsourcing arrangement with a major U.S. insurer where the Company supplies adjusters to the client
Slide 11: EMEA/AP Segment Highlights
PAGE 11 U.K. Europe U.K. Asia-Pacific Asia-Pacific Europe Revenues by Geographic Region ($ in millions) EMEA/AP Cases Received (In thousands) Operating Results (3Q 2015 v. 3Q 2014) • Revenues of $98.3 million versus $86.2 million • Exchange rates reduced revenues by 14.5% • Operating earnings of $6.
Slide 12: Broadspire Segment Highlights
PAGE 12 Revenues by Service Line ($ in millions) Broadspire Cases Received (In thousands) Risk Mgmt Info. Svcs. Other Medical Mgmt. Casualty Workers' Comp. Workers' Comp. Operating Results (3Q 2015 v. 3Q 2014) • Revenues of $74.2 million versus $68.2 million • Operating earnings of $7.4 million vers
Slide 13: Legal Settlement Administration Segment Highlights
PAGE 13 Backlog ($ in millions) Operating Results (3Q 2015 v. 3Q 2014) • Revenues of $28.8 million versus $47.2 million • Operating earnings of $1.1 million versus $7.7 million • Operating earnings margin of 4.0% versus 16.2% • Backlog at $76 million versus $89 million Legal Settlement Administratio
Slide 14: Balance Sheet Highlights
PAGE 14 Unaudited ($ in thousands) September 30, 2015 December 31, 2014 Change Cash and cash equivalents $58,329 $52,456 $5,873 Accounts receivable, net 178,571 180,096 (1,525 ) Unbilled revenues, net 112,073 103,163 8,910 Total receivables 290,644 283,259 7,385 Goodwill and intangible assets arisin
Slide 15: Operating and Free Cash Flow
PAGE 15 Unaudited ($ in thousands) 2015 2014 Variance Net Income Attributable to Shareholders of Crawford & Company $ 6,183 $ 27,308 $ (21,125 ) Depreciation and Other Non-Cash Operating Items 34,777 30,105 4,672 Unbilled and Billed Receivables Change 5,586 (51,649 ) 57,235 Working Capital Change (1
Slide 16: $47 - $50 Million of Cost Take-Out Targeted
PAGE 16 $47 - $50 MILLION OF COST TAKE-OUT TARGETED Restructuring and Special Charges Totals: 2015 ~ $32,000 - $37,000 2016 ~ $11,000 $25,300 to $28,300 $47,400 to $50,400
Slide 17: 2015 Guidance
PAGE 17 Crawford & Company is revising its guidance for 2015 as follows: YEAR ENDING DECEMBER 31, 2015 Low End High End Consolidated revenues before reimbursements $1.15 $1.17 billion Consolidated operating earnings $60.0 $65.0 million Consolidated cash provided by operating activities $20.0 $30.0 m
Slide 18: Looking to 2016
PAGE 18 LOOKING TO 2016 Exhibit cost discipline Be more client centric • Deliver customized value propositions to clients • Increase the speed of doing business enterprise wide Continue to drive synergies in strategic initiatives
Slide 19: Appendix Third Quarter 2015
Appendix THIRD QUARTER 2015
Slide 20: Non-GAAP Measures Explanation
PAGE 20 Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comparable to other similarly-titled mea
Slide 21: Reconciliation of Non-GAAP Items
PAGE 21 Quarter Ended Quarter Ended Full Year September 30, September 30, Guidance Unaudited ($ in thousands) 2015 2014 2015 * Revenues Before Reimbursements Total Revenues $ 309,984 $ 314,910 $ 1,240,000 Reimbursements (16,649 ) (21,079 ) (80,000 ) Revenues Before Reimbursements $ 293,335 $ 293,831
Slide 22: Reconciliation of Non-GAAP Items: Net Debt
PAGE 22 RECONCILIATION OF NON-GAAP ITEMS (cont.) Net Debt September 30, December 31, Unaudited ($ in thousands) 2015 2014 Net Debt Short-term borrowings $ 6,566 $ 2,002 Current installments of long-term debt and capital leases 1,808 763 Long-term debt and capital leases, less current installments 25
Slide 23: Non-GAAP Adjusted Net Income and Diluted EPS
PAGE 23 RECONCILIATION OF NON-GAAP ITEMS (cont.) Non-GAAP Adjusted Net Income and Diluted Earnings Per Share Three Months Ended September 30, 2015 Unaudited ($ in thousands) Income Before Taxes Tax Expense Net (Loss) Income Net (Loss) Income Attributable to Crawford & Company Diluted (Loss) Earnings