Crawford & Company · NYSE:CRD.A
Crawford & — William Blair New York (May 2014)
36 slides from Crawford &'s conference presentation, May 16, 2014
Slide 1: Crawford & Company William Blair New York May 16, 2014
Crawford & Company William Blair New York May 16, 2014
Slide 2: Forward-Looking Statements
• Forward-Looking Statements —This presentation contains forward-looking statements, including statements about the future financial condition, results of operations and earnings outlook of Crawford & Company. Statements, both qualitative and quantitative, that are not statements of historical fact
Slide 3: Crawford & Company at a Glance
Crawford & Company at a Glance at market close May 2, 2014 Exchange/Tickers: NYSE: CRDA and CRDB Trailing 52 week High/Low: CRDA: $4.82-$9.83 CRDB: $5.62-12.12 Market Capitalization : $560.1 million Quarterly Dividend: CRDA: $0.05/share CRDB: $0.04/share Analyst Coverage: Adam Klauber, William Blair
Slide 4: A Business Services Leader since 1941
A Business Services Leader since 1941 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 over 200 of th
Slide 5: Crawford Provides More Than Claims Services
Crawford Provides More Than Claims Services P&C outsourced claims services provided about $579 million, or 50%, of 2013 Crawford revenue • Claims services is a mature business in most geographies • Revenues are driven by claims volume, which is affected by regional economies, economic growth • Sever
Slide 6: Driving Performance With Disciplined Strategy
Consolidated Operating Earnings Revenues Revenues • Revenues grew 20% from 2009 to 2013 • Improved diversification of revenue streams • Growth in EMEA/AP, Contractor Connection and Legal Settlement Administration Operating Earnings • Consolidated operating earnings increased 78% from 2009 to 2013 •
Slide 7: Growth Opportunities
Growth Opportunities
Slide 8: Why Do We Care about Claims?
Why Do We Care about Claims? Factors 2013 Rank 2011 Rank 2009 Rank 2007 Rank Claims service & settlement 1 3 3 4 Financial stability / rating 2 1 1 1 Value for money / price 3 2 2 2 Industry experience 4 4 5 6 Capacity 5 7 4 Not Ranked Long-term relationship 6 6 6 Not Ranked Flexibility / innovation
Slide 9: Broaden Market Coverage
$1.2 Billion in Revenues 700 Locations 70+ Countries 8,500 Employees Broaden Market Coverage North American vertical Positioned to benefit from global consolidation of TPA vendors Global expansion of Contractor Connection Investment in Specialty Market business line 9
Slide 10: Americas
Americas $0 $50 $100 $150 $200 $250 U.S. Canada Latin America Revenues by Geographic Region ($ in millions) 2013 vs. 2012 0 100,000 200,000 300,000 400,000 500,000 U.S. Canada Latin America Americas Cases Received At a glance: 2013 Revenues: $342 million 2013 Operating earnings: $18.5 million Market
Slide 11: Crawford Contractor Connection
Crawford Contractor Connection℠ Contractor Connection is a technology-enabled BPO platform and best-in-class industry leader of contractor managed repair networks for residential and commercial losses. North American network of nearly 5,000 general and specialty contractors Fully credentialed co
Slide 12: Shift to Direct Repair Networks
Source: KPMG Analysis, SNL Financial, and Industry Expert Interviews Shift to Direct Repair Networks Direct-to-repair through Managed Networks ‘11= 2.07m 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 06 07 08 09 10 11 12 13 14F P & C C la im V o lumes ( m ill io n s ) “Addressable” carrier P&C volume of claims (U
Slide 13: EMEA/AP
EMEA/AP $0 $20 $40 $60 $80 $100 $120 $140 $160 U.K. CEMEA Asia-Pacific Revenues by Geographic Region ($ in millions) 0 50,000 100,000 150,000 200,000 250,000 U.K. CEMEA Asia-Pacific EMEA/AP Cases Received 2013 vs. 2012 At a glance: 2013 Revenues: $350 million 2013 Operating earnings: $32.2 million G
Slide 14: Investment in Growing Business Platforms: Global Technical Services
Investment in Growing Business Platforms: Global Technical Services A global resource that serves reinsurers, international corporate market, major loss / catastrophe divisions of composite insurers such as the London market, Lloyd’s syndicates as well as captives, risk managers and their brokers
Slide 15: Natural catastrophes worldwide 1980 – 2012
Natural catastrophes worldwide 1980 – 2012 Natural catastrophes per year more than doubled over period Crawford is uniquely positioned to respond on a global basis Number of Events Meteorological events (Storm) Hydrological events (Flood, mass movement) Climatological events (Extreme temperature, dr
Slide 16: Broadspire
Broadspire $0 $20 $40 $60 $80 $100 $120 $140 Worker's Comp. Casualty Other Revenues by Service Line ($ in millions) 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 Worker's Comp. Medical Mgmt. Risk Mgmt. Info. Svcs. Broadspire Cases Received 2013 vs. 2012 At a glance: 2013 Reve
Slide 17: Investment in Growing Business Platforms: Medical Management
Investment in Growing Business Platforms: Medical Management • Medical costs are currently 60% of workers compensation cost and are estimated to be over 70% by 2016, increasing the importance of effective medical cost containment. • Broadspire case managers proactively manage medical treatment in th
Slide 18: Investment in Growing Business Platforms: Global Broadspire TPA Capabilities
Investment in Growing Business Platforms: Global Broadspire TPA Capabilities Through a Crawford network of 700 offices in 70 countries and the capability to handle claims throughout the world, Broadspire offers global account management, control and compliance for global programs through: • Central
Slide 19: Legal Settlement Administration
Legal Settlement Administration $0 $50 $100 $150 $200 $250 2013 2012 Revenues ($ in millions) At a glance: 2013 Revenues: $219 million 2013 Operating earnings: $46.8 million Garden City Group (GCG) provides: • Class Action Services providing technology-intensive administrative services for counsel a
Slide 20: Garden City Group Ranks First Among Claims Administrators
Garden City Group Ranks First Among Claims Administrators 20 Garden City Group (37), $21.3 Gilardi & Co. (22), $15.5 Heffler Radetich & Saitta (7), $4.7 Rust Consulting (9), $3.8 BMC Group (4), $1.9 Others (21), $3.3 Top 100 Cases Handled Total Amount Settled: $50.5 billion Source: Securities Class
Slide 21: Enhance Shareholder Returns
Enhance Shareholder Returns
Slide 22: Capital Structure and Governance
Capital Structure and Governance Class A and B Shares: As of April 30, 2014, there were approximately 30.3 million shares of Class A Common Stock and 24.7 million shares of Class B Common Stock outstanding. The two classes of stock are substantially identical, except with respect to voting rights an
Slide 23: Shareholder Returns
Dividends: • In 2013, Crawford paid dividends of $0.18 per share on CRDA and $0.14 per share on CRDB • In 2014, Crawford has paid a dividend of $0.05 on CRDA and $0.04 on CRDB and declared a second comparable dividend payable on June 6 Share Repurchases: • From inception through December 31, 2013, C
Slide 24: Crawford Capital Structure Improving
Crawford Capital Structure 24 Improving Balance Sheet Supports Return to Shareholders Debt reduced by $43.6 million, or 24% from 2009 through 2013 Pension risk management program driving positive results Material improvement in cash flow from both operations and working capital management Ne
Slide 25: Management Alignment with Shareholders
Management Alignment with Shareholders Short-Term Incentive Compensation Plan Matrix: Metric: Weight: Revenues 30% Operating Earnings 25% Operating Margin 25% DSO 20% 25 Stock Ownership Guidelines: Multiple of Officer: Base Salary: President/CEO 3x CFO/EVPs 2x Balanced short and long term compensa
Slide 26: Conclusion
Conclusion
Slide 27: 2014 Guidance
On May 5, 2014 Crawford & Company revised its guidance range for 2014 as follows: Year ending December 31, 2014 Low End High End Consolidated revenues before reimbursements $1.08 $1.12 billion Consolidated operating earnings $84.0 $98.5 million Consolidated cash provided by operating activities $50.
Slide 28: Recognized for Award Winning Technology & Service
Recognized for Award Winning Technology & Service Six Consecutive Years! 28
Slide 29: The Crawford Solution
THE CRAWFORD SOLUTION* Busini Claims Servic sulting Outsourcing Our portfolio of integrated global solutions is known as The Crawford Solution™ The Crawford Solution maximizes our global resources, delivers industry-leading quality and efficiency as well as award-winning technology, and integrates o
Slide 30: 2014 Operational Focus
30 • Grow business pipeline and increase 2014 revenues through broader market coverage, investment in new business platforms, and launch of new products • Implement cost initiatives to further increase operating efficiencies across the globe • Create a global GTS powerhouse by adding world-class adj
Slide 31: Crawford is Positioned for Shareholder Returns
Global Footprint World’s Largest Independent Provider of Claims Management Solutions Global BPO Platform Global Catastrophe Response Innovative Technology Platforms Analytics RiskTech Risk Sciences Group/Dmitri Global Claims Management System (CMS) Command Center Specialized Resources Legal Settleme
Slide 32: Appendix
Appendix
Slide 33: Appendix: Non-GAAP Financial Information
Appendix: Non-GAAP Financial Information Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily compara
Slide 34: Reconciliation of Non-GAAP Items
34 Reconciliation of Non-GAAP Items Unaudited ($ in millions) 2009 2010 2011 2012 2013 2014G* Revenues Before Reimbursements Total Revenues 1,048$ 1,111$ 1,211$ 1,266$ 1,253$ 1,190$ Reimbursements (78) (81) (86) (89) (90) (90) Revenues Before Reimbursements 970$ 1,030$ 1,125$ 1,177$ 1,163$ 1,100$ Un
Slide 35: Reconciliation of Non-GAAP Items (cont.)
35 Reconciliation of Non-GAAP Items (cont.) Unaudited ($ in thousands) 2009 2010 2011 2012 2013 Net Debt Short-term borrowings 32$ $ — 1,794$ 13,275$ 35,000$ Current installments of long-term debt and capital leases 8,189 2,891 410 838 875 Long-term debt and capital leases, less current installments
Slide 36: Crawford
Crawford BROADSPIRE® | CONTRACTOR CONNECTION™ | EDUCATIONAL SERVICES | GCG° GLOBAL TECHNICAL SERVICES” | PROPERTY & CASUALTY | RISK SCIENCES GROUP® SPECIALIST LIABILITY SERVICES™ | STRATEGIC WARRANTY SERVICES™