Slide 1: First Quarter 2016 Earnings Conference Call
May 9, 2016 First Quarter 2016 Earnings Conference Call
Slide 2: Forward-Looking Statements
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 histo
Slide 3: Global Business Services Leader
3 • One of the world's largest independent providers 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
Slide 4: Today's Agenda
4 TODAY'S AGENDA --- Welcome and Opening Comments --- First Quarter 2016 Financial Review --- Reaffirmed and Updated Guidance
Slide 5: First Quarter 2016 Business Summary
5 Revenues ($ in millions) Consolidated Operating Earnings (1) ($ in millions) • First quarter operating earnings grew 103%, year over year, to $21.7 million driven by strong margin expansion as a result of expense reduction combined with strength in Contractor Connection and Broadspire • U.S. Servi
Slide 6: First Quarter 2016 Financial Review
6 FIRST QUARTER 2016 Financial Review
Slide 7: Consolidated income statement, three months ended March 31, 2016
7 Unaudited ($ in thousands, except per share amounts) Three Months Ended March 31, 2016 2015 % Change Revenues Before Reimbursements $277,234 $287,777 (4 )% Costs of Services Provided, Before Reimbursements 201,433 219,323 (8 )% Selling, General, and Administrative Expenses 56,797 60,387 (6 )% Corp
Slide 8: U.S. Services Segment Highlights
8 Revenues by Service Line ($ in millions) Cases Received by Service Line (In thousands) Operating Results (1Q 2016 v. 1Q 2015) • Revenues of $58.5 million versus $56.7 million • Operating earnings of $9.1 million versus $4.2 million • Operating earnings margin of 15.5% versus 7.3% • Cases received
Slide 9: International Segment Highlights
9 Revenues by Geographic Region ($ in millions) Operating Results (1Q 2016 v. 1Q 2015) • Revenues of $117.5 million versus $124.0 million • Exchange rates reduced revenues by 9%, or $11.3 million • Operating earnings of $7.0 million versus $2.3 million • Operating earnings margin of 6.0% versus 1.9%
Slide 10: Broadspire Segment Highlights
10 Revenues by Service Line ($ in millions) Broadspire Cases Received (In thousands) Operating Results (1Q 2016 v. 1Q 2015) • Revenues of $76.2 million versus $69.7 million • Operating earnings of $8.7 million versus $3.5 million • Operating earnings margin of 11.4% versus 5.1% • Cases received of 1
Slide 11: Garden City Group Segment Highlights
11 Backlog ($ in millions) Operating Results (1Q 2016 v. 1Q 2015) • Revenues of $25.0 million versus $37.4 million • Operating earnings of $1.5 million versus $5.0 million • Operating earnings margin of 6.0% versus 13.2% • Backlog of $103 million at end of 1Q 2016 and 1Q 2015 Highlights • Deepwater
Slide 12: Balance Sheet Summary
12 Unaudited ($ in thousands) March 31, 2016 December 31, 2015 Change Cash and cash equivalents $53,626 $76,066 ($22,440 ) Accounts receivable, net 159,634 164,596 (4,962 ) Unbilled revenues, net 107,754 98,659 9,095 Total receivables 267,388 263,255 4,133 Goodwill 94,155 95,616 (1,461 ) Intangible
Slide 13: Operating and Free Cash Flow
13 Unaudited ($ in thousands) 2016 2015 Variance Net Income Attributable to Shareholders of Crawford & Company $ 8,630 $ 2,986 $ 5,644 Depreciation and Other Non-Cash Operating Items 10,847 11,545 (698 ) Unbilled and Billed Receivables Change (7,918 ) (1,105 ) (6,813 ) Working Capital Change (12,146
Slide 14: 2016 Guidance
14 Crawford & Company is reaffirming and updating guidance for 2016 as follows: YEAR ENDING DECEMBER 31, 2016 Low End High End Consolidated revenues before reimbursements $1.05 $1.10 billion Consolidated operating earnings $80.0 $90.0 million Consolidated adjusted EBITDA $120.0 $130.0 million Before
Slide 15: Priorities for 2016
15 PRIORITIES FOR 2016 Continue to exhibit cost discipline Be more client centric • Deliver customized value propositions to clients • Increase the speed of doing business enterprise wide Drive synergies in strategic initiatives Capitalize on cross-sell opportunities across the company Con
Slide 16: Appendix First Quarter 2016
16 Appendix FIRST QUARTER 2016
Slide 17: Non-GAAP measures and reimbursements for out-of-pocket expenses
17 Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comparable to other similarly-titled measurem
Slide 18: Adjusted EBITDA and Non-GAAP Adjusted Net Income definitions
18 Adjusted EBITDA Adjusted EBITDA is not a term defined by GAAP and as a result our measure of adjusted EBITDA might not be comparable to similarly titled measures used by other companies. However, adjusted EBITDA is used by management to evaluate, assess and benchmark our operational results and t
Slide 19: Reconciliation of Non-GAAP Items: revenues and operating earnings
19 Quarter Ended Quarter Ended Full Year March 31, March 31, Guidance Unaudited ($ in thousands) 2016 2015 2016 * Revenues Before Reimbursements Total Revenues $ 290,908 $ 306,616 $ 1,155,000 Reimbursements (13,674 ) (18,839 ) (80,000 ) Revenues Before Reimbursements $ 277,234 $ 287,777 $ 1,075,000
Slide 20: Reconciliation of Non-GAAP Items: Adjusted EBITDA
20 RECONCILIATION OF NON-GAAP ITEMS (continued) Adjusted EBITDA Quarter Ended Quarter Ended Full Year March 31, March 31, Guidance Unaudited ($ in thousands) 2016 2015 2016 * Net income attributable to shareholders of Crawford & Company $ 8,630 $ 2,986 $ 27,000 Add: Depreciation and amortization 10,
Slide 21: Reconciliation of Non-GAAP Items: Net Debt
21 RECONCILIATION OF NON-GAAP ITEMS (continued) Net Debt March 31, December 31, Unaudited ($ in thousands) 2016 2015 Net Debt Short-term borrowings $ 23,118 $ 19,958 Current installments of capital leases 1,767 1,959 Long-term debt and capital leases, less current installments 214,255 225,365 Total
Slide 22: Reconciliation of Non-GAAP Items: Adjusted Net Income and EPS
22 RECONCILIATION OF NON-GAAP ITEMS (continued) Non-GAAP Adjusted Net Income and Diluted Earnings Per Share Three Months Ended March 31, 2016 Unaudited ($ in thousands) Income Before Taxes Income Taxes Net Income Net Income Attributable to Crawford & Company Diluted Earnings per CRDA Share Diluted E