Crawford & Company · NYSE:CRD.A
Crawford & — Q1 2019 Earnings Presentation
29 slides from Crawford &'s earnings presentation, May 6, 2019
Slide 1: Crawford & Company First 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 $14 Billion independent provider of global claims il management and outsourcing Claims payments annually (cad 1.7 Million solutions Sas Claims handled worldwide Organized across global service lines: 2 9,000 * Crawford Claims Solutions (P&C adju
Slide 4: () See appendix for non-GAAP explanation and reconciliation of non-GAAP measures. 4
() See appendix for non-GAAP explanation and reconciliation of non-GAAP measures. 4
Slide 5: Our Mission
Our Mission Restoring and enhancing lives, businesses and communities Crawford & Company Loss resolution for carriers, Our Vision brokers and corporates To be the leading provider and most trusted source for expert assistance, serving those who insure and self- insure the risks of businesses and com
Slide 6: 2019 Focus on Growth
2019 Focus on Growth • Global Service Lines positioning Crawford to be a stronger partner to our clients • Delivering on our growth commitment through the recruitment of experienced, solution based sales people to improve our capabilities • We have announced the creation of a strategic account manag
Slide 7: Focus on Execution
Focus on Execution • Investing in new capabilities and solutions to open large market opportunities that we are uniquely positioned to capitalize on • Targeting industries where we expect continued growth and higher loss frequencies • Introducing industry verticals and integrated solutions which we
Slide 8: Disciplined Capital Allocation
Disciplined Capital Allocation • Focused on improving cash generation and delivering value to our shareholders through disciplined capital allocation • Free cash flows improved by $21.7 million over the prior year period • Repurchased 1.8 million shares of CRD-A and CRD-B during the first quarter at
Slide 9: First Quarter 2019 Financial Review
First Quarter 2019 Financial Review Crawford
Slide 10: First Quarter 2019 Financial Summary
FIRST QUARTER 2019 FINANCIAL SUMMARY Quarter Ended March 31, March 31, ($ in millions, except per share amounts) 2019 2018 % Change Revenues $247.1 $273.1 (10)% Non-GAAP Revenues excluding GCG business and foreign exchange impacts(1) $252.0 $257.2 (2)% Net Income Attributable to Shareholders of Craw
Slide 11: Reconciliation of Non-GAAP Items
RECONCILIATION OF NON-GAAP ITEMS Three Months Ended March 31, 2019 Net Income Non-GAAP Attributable to Diluted Diluted Operating Pretax Crawford & Earnings per Earnings per Unaudited ($ in thousands) Revenues Earnings Earnings Company CRD-A Share CRD-B Share GAAP $ 247,058 $ 14,701 $ 8,702 $ 6,109 $
Slide 12: Crawford Claims Solutions Segment Highlights
CRAWFORD CLAIMS SOLUTIONS SEGMENT HIGHLIGHTS Three months ended Operating Results (1Q 2019 v. 1Q 2018) (in thousands, except March 31, March 31, • Revenues of $83.3 million versus $90.4 million percentages) 2019 2018 Variance • Gross profit of $17.1 million versus $17.9 million Revenues $83,319 $90,
Slide 13: Crawford TPA Solutions: Broadspire Segment Highlights
CRAWFORD TPA SOLUTIONS: BROADSPIRE SEGMENT HIGHLIGHTS Three months ended Operating Results (1Q 2019 v. 1Q 2018) Revenues of $97.8 million versus $100.2 million (in thousands, except March 31, March 31, • percentages) 2019 2018 Variance • Gross profit of $25.5 million versus $26.4 million Revenues $9
Slide 14: Crawford Specialty Solutions Segment Highlights
CRAWFORD SPECIALTY SOLUTIONS SEGMENT HIGHLIGHTS Three months ended (in thousands, except March 31, March 31, Operating Results (1Q 2019 v. 1Q 2018) percentages) 2019 2018 Variance • Revenues of $65.9 million versus $82.4 million Revenues $65,945 $82,421 (20.0%) • Gross profit of $22.4 million versus
Slide 15: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS March 31, December Unaudited ($ in thousands) 2019 31, 2018 Change Cash and cash equivalents $ 49,674 $ 53,119 $ (3,445) Accounts receivable, net 130,842 131,117 (275) Unbilled revenues, net 118,271 108,291 9,980 Total receivables 249,113 239,408 9,705 Goodwill 97,585 96,890
Slide 16: Operating and Free Cash Flow
OPERATING AND FREE CASH FLOW For the three months ended March 31, Unaudited ($ in thousands) 2019 2018 Variance Net Income Attributable to Shareholders of Crawford & Company $ 6,109 $ 8,569 $ (2,460) Depreciation and Other Non-Cash Operating Items 9,037 12,866 (3,829) Billed Receivables Change 1,571
Slide 17: Share Repurchases
SHARE REPURCHASES • During the three months ended March 31, 2019, the Company repurchased 421,427 shares of CRD-A and 1,376,889 shares of CRD-B at an average cost of $9.13 • At March 31, 2019, the Company had remaining authorization to repurchase 427,883 shares under the 2017 Repurchase Authorizatio
Slide 18: 2019 Guidance
2019 GUIDANCE Crawford & Company is reaffirming its guidance for 2019 as follows: YEAR ENDING DECEMBER 31, 2019 Low End High End Consolidated revenues before reimbursements $1.05 $1.10 billion Net income attributable to shareholders of Crawford & Company $46.0 $51.0 million Diluted earnings per shar
Slide 19: Conclusion
CONCLUSION Looking forward Crawford has four primary objectives for 2019: • Growth: Increasing the velocity of revenue growth through continuous innovation as we work to deliver our goal of achieving 5% revenue growth and 15% earnings growth annually • System Readiness: Prioritizing IT investments a
Slide 20: Crawford—Attractive Business Model
Crawford—Attractive Business Model > Experienced Management Team > Technology Enabled BPO Aligned with Shareholders Platform > Global Product and Geographic > Blue Chip Global Client Base Diversification with Long-Term Relationships > Recurring Fee For Service > Solid Balance Sheet and Low Revenue M
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Slide 22: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily compara
Slide 23: Appendix: Non-GAAP Financial Information (continued)
APPENDIX: NON-GAAP FINANCIAL INFORMATION (continued) Segment and Consolidated Gross Profit Gross profit is defined as revenues less direct expenses which exclude indirect overhead expenses allocated to the business. Indirect expenses consist of centralized administrative support costs, regional and
Slide 24: Reconciliation of Non-GAAP Items
RECONCILIATION OF NON-GAAP ITEMS Revenues, Costs of Services Provided, and Operating Earnings Quarter Ended Quarter Ended Full Year March 31, March 31, Guidance Unaudited ($ in thousands) 2019 2018 2019 * Revenues Before Reimbursements Total Revenues $ 256,377 $ 290,387 $ 1,143,000 Reimbursements (9
Slide 25: Reconciliation of Non-GAAP Items: Adjusted EBITDA
RECONCILIATION OF NON-GAAP ITEMS (continued) Adjusted EBITDA Quarter Ended Full Year March 31, March 31, Guidance Unaudited ($ in thousands) 2019 2018 2019 * Net income attributable to shareholders of Crawford & Company $ 6,109 $ 8,569 $ 48,500 Add: Depreciation and amortization 9,624 11,440 45,700
Slide 26: Reconciliation of Non-GAAP Items: Net Debt
RECONCILIATION OF NON-GAAP ITEMS (continued) Net Debt March 31, December 31, Unaudited ($ in thousands) 2019 2018 Net Debt Short-term borrowings $ 31,558 $ 23,195 Current installments of capital leases 41 89 Long-term debt and capital leases, less current installments 178,508 167,126 Total debt 210,
Slide 27: Reconciliation of Non-GAAP Items: Segment Gross Profit
RECONCILIATION OF NON-GAAP ITEMS (continued) Segment Gross Profit Three months ended March 31, 2019 March 31, 2018 (in thousands) Segment gross profit: Crawford TPA Solutions: Broadspire $ 25,463 $ 26,406 Crawford Claims Solutions 17,077 17,946 Crawford Specialty Solutions 22,441 26,858 Segment gros
Slide 28: Non-GAAP Results for Crawford Specialty Solutions Excluding GCG Business
NON-GAAP RESULTS FOR CRAWFORD SPECIALTY SOLUTIONS SEGMENT EXCLUDING GCG BUSINESS Three Months Ended March 31, 2019 Direct Indirect Operating Unaudited ($ in thousands) Revenues Expenses Gross Profit Expenses Earnings Crawford Specialty Solutions $ 65,945 $ 43,504 $ 22,441 $ 10,246 $ 12,195 Adjustmen
Slide 29: Non-GAAP Results Excluding GCG Business and Foreign Exchange Impacts
NON-GAAP RESULTS EXCLUDING GCG BUSINESS IN 2018 AND FOREIGN EXCHANGE IMPACTS IN 2019 Three Months Ended March 31, 2019 Net Income Non-GAAP Attributable Diluted Diluted Operating Pretax to Crawford & Earnings per Earnings per Unaudited ($ in thousands) Revenues Earnings Earnings Company CRD-A Share C