Crawford & Company · NYSE:CRD.A
Crawford & — Investor Presentation (April 2021)
43 slides from Crawford &'s investor presentation, Apr 23, 2021
Slide 1: Investor Presentation April 2021
Investor Presentation April 2021 CRD - A & CRD - B (NYSE)
Slide 2: Forward-Looking Statements and Additional Information
2 Forward - Looking Statements and Additional Information Forward - Looking Statements This presentation contains forward - looking statements, including statements about the expected future financial condition, resul ts of operations and earnings outlook of Crawford & Company. Statements, both qual
Slide 3: Strategic Pillars
3 Strategic Pillars Our Purpose Restoring and enhancing lives, businesses and communities. Our Values Our purpose is embedded in our values – to RESTORE is part of everything we do. espect mpowerment ustainability raining ne Crawford ecognition ntrepreneurial Spirit
Slide 4: Crawford & Company At a Glance
4 Crawford & Company AT A GLANCE 1 $ 18 BILLION + Claims managed annually 1.6 MILLION Claims handled 9,000 Total employees (1) Reflects YTD Q4 2020; figures are approximate (2) Reflects FY 2020 figures BY GEOGRAPHY 2 58% ⎹ US 9% ⎹ Canada 13% ⎹ UK 7% ⎹ Australia 13% ⎹ Rest of the world BY GLOBAL SERV
Slide 5: Financial Snapshot
5 (1) As of 4/15/2021 ( 2 ) See appendix for non - GAAP explanation and reconciliation of non - GAAP measures Overview FY 2020 GAAP FY 2020 NON - GAAP 2 $ 540 MILLION Market capitalization¹ Financial Snapshot The world’s largest publicly listed independent provider of global claims management soluti
Slide 6: Market Leading Solutions
6 6 Loss Adjusting Third Party Administration Managed Repair Medical Management On - Demand Services Catastrophe Response We bring together thoughtful experts from around the world to offer comprehensive, intelligent solutions to our customers The Crawford brands offer high - quality and technologic
Slide 7: Scope and Scale of Operations
7 7 Loss Adjusting TPA: Broadspire Platform Solutions Volume and Large or Complex Claims Global Third Party Administration Networks Manage Repair Services $10B+ Indemnity Dollars $1.0B Managed Medical Spend 175,000+ Claims Calls Handled $3.0B Total Project Costs ~315,000 Claims Managed $3.3B Claims
Slide 8: Why Invest in Crawford?
8 8 Attractive investment profile Experienced leadership team Strategically positioned in a rapidly changing industry Investing to drive innovation and accelerate growth Committed to environmental, social and governance initiatives Financial strength and flexibility Why Invest in Crawford? Crawford’
Slide 9: Attractive Investment Profile
9 9 Attractive Investment Profile Investment Profile | Leadership Team| Strategically Positioned | Driving Innovation and Growth| ESG | Financial Strength and Flexibility Technology - Enabled BPO Platform Strong Cash Flow Generation Recurring Fee for Service Revenue Model Blue - Chip Global Client B
Slide 10: Experienced Leadership Team
10 10 Rohit Verma Chief Executive Officer Joseph Blanco President Bruce Swain Chief Financial Officer Tami Stevenson Senior Vice President, Global General Counsel Bonnie Sawdey Chief People Officer Mike Jones President, TPA: Broadspire, International Mike Hoberman President TPA: Broadspire, North Am
Slide 11: Global Service Lines Description, Customers and Strategy
11 Description Customers Strategy • Adjust individual claims • Claim sizes vary from $500 to $5+ billion • Two units: 1. Large and complex claims (GTS) 2. Volume claims • Carriers of all sizes • MGAs • Lloyds • Benchmark in quality and expertize • Digitally enabled for efficiency • Broadest global r
Slide 12: Strategically Positioned in a Rapidly Changing Industry
12 12 Industry is looking to invest in technology and diversify business lines to improve profitability Increasing claims severity and complexity Carriers move to improve margins by cutting fixed costs and outsourcing the claims process Consolidation of TPA and independent claims management provider
Slide 13: More Frequent and Destructive CAT Events Leading to Heightened Insured Losses
13 13 More Frequent and Destructive CAT Events Leading to Heightened Insured Losses Catastrophe - related insured losses (1970 - 2020) 1 (1) SwissRe Investment Profile | Leadership Team| Strategically Positioned | Driving Innovation and Growth| ESG | Financial Strength and Flexibility
Slide 14: Targeting National and Regional Players
14 14 2 % 63 % 6% 22% 92% 15% # of Carriers Total Premium Medium: $1B - $5B Small: Less than $1B Large: Greater than $5B 1. ~98% of carriers are small to medium sized¹ 2. They have limited financial capacity¹ • Insurance carriers currently operate with a large operating expense base, which is unsust
Slide 15: Investing to Drive Innovation and Accelerate Growth
15 15 Investing to Drive Innovation and Accelerate Growth Investment Profile | Leadership Team| Strategically Positioned | Driving Innovation and Growth | ESG | Financial Strength and Flexibility At the forefront of technological disruption while maintaining industry leadership position (1) YouGoLoo
Slide 16: Solutions Addressing Customer and Industry Challenges
16 16 Solutions Addressing Customer and Industry Challenges Focus on Speed & Simplicity Strengthen Knowledge Disruptive Technology Innovative Solutions Continuous Quality Claims processing is evolving with customer expectations for on - demand, simplified products and services Data analytics are cha
Slide 17: US Economic Outlook
17 17 United States 1 Q2 2020 Q3 2020 Q4 2020 Unemployment rate 11.1% 7.9% 6.7% Miles driven (B) 198.3 242.5 (22.3%) 246.8 (1.8%) Housing starts (000’s) 1,079.0 1,432.3 (33%) 1,537.5 (7.4%) Retail sales ($B) 476.9 544.0 (14.1%) 549.5 (1.0%) UK Q2 2020 Q3 2020 Q4 2020 Unemployment rate 4.0% 4.8% 4.9%
Slide 18: ESG: Diversity, Human Capital, Environment, Community, Governance
18 Diversity and Inclusion Established Office of Inclusion and Diversity, Employee Resource Groups, and an Employee Advisory Council aligned with our purpose to foster a safe and inclusive working environment, where employees can bring their authentic selves to work and offer unique experiences and
Slide 19: Financial Strength and Flexibility
19 Strong financial position with ample liquidity Reinstated share repurchase program as a component of our capital allocation strategy Financial Strength and Flexibility Investment Profile | Leadership Team| Strategically Positioned | Driving Innovation and Growth| ESG | Financial Strength and Flex
Slide 20: Market Expansion
20 Investment Profile | Leadership Team| Strategically Positioned | Driving Innovation and Growth| ESG | Financial Strength and Flexibility Market Expansion Extending our market position through recent acquisitions and innovative solutions HBA Group • Acquired HBA Group in 2020, a legal services pro
Slide 21: Full Year 2020 Financial Summary
21 (1) See appendix for non - GAAP explanation and reconciliation of non - GAAP measures. 21 Year Ended December 31 , December 31 , ($ in millions, except per share amounts) 20 20 201 9 % Change Revenues $ 982.5 $ 1,005.8 (2%) Net Income Attributable to Shareholders of Crawford & Company $ 28.3 $12.
Slide 22: Balance Sheet Highlights
22 (1) See Appendix for non - GAAP explanation and reconciliation 22 Unaudited ($ in thousands) December 31 , 20 20 December 31, 201 9 Change Cash and cash equivalents $ 44,656 $ 51,802 $ (7,146 ) Accounts receivable, net 123,060 128,217 ( 5,157 ) Unbilled revenues, net 103,528 103,894 (366) Total r
Slide 23: Net Debt and Pension Liability
23 Net Debt and Pension Liability (1) As of 12/31/2020 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 2015 2016 2017 2018 2019 2020 Net Debt ¹ 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 2015 2016 2017 2018 2019 2020 Pension Liability ¹ $68.9 million $53.9 mi
Slide 24: Free Cash Flow Reconciliation
24 (1) See Appendix for non - GAAP explanation and reconciliation 24 Unaudited ($ in thousands) 20 20 201 9 Change Net Income Attributable to Shareholders of Crawford & Company $ 28,296 $ 12,485 $ 15,811 Goodwill Impairment 17,674 17,484 190 Gain on Disposition of Businesses, Net (13,763 ) — (13,763
Slide 25: 2021 Priorities
25 Employee Health & Safety Protect our workforce first and foremost Customer Excellence Provide best - in - class service to our clients regardless of the global environment Brands, Relationships & Differentiation Strengthen industry leadership through our innovations and market leading solutions F
Slide 26: Global coverage that goes beyond borders
26 70 countries 9K Employees worldwide 50K field resources 6K network contractors 26 Global coverage that goes beyond borders.
Slide 27: Appendix A: Global Service Lines & 2020 Segment Results
27 27 Appendix A: Global Service Lines & 2020 Segment Results 27
Slide 28: Crawford Loss Adjusting: Clients, Scope & Scale, Strategy
28 Clients Scope & Scale Strategy • Carriers of all sizes • MGAs • Lloyds • Brokers • Corporations • Claims sizes vary from $500 - $5B+ • ~315K Claims managed annually, $10B+ indemnity dollars • Nearly 2,500 claims professionals • 700+ executive general adjusters with an average of 25 years of exper
Slide 29: Crawford Loss Adjusting Highlights and Results
29 29 Highlights • Launched new digital solutions across all our operations • Focused on expanding through recruitment of teams and M&A in GTS • Solid margin expansion during 2020 Operating Results (FY 2020 v. FY 2019) • Revenues of $438.5 million versus $457.5 million • Gross profit of $118.9 milli
Slide 30: Crawford TPA Solutions: Broadspire Clients, Scope & Scale
30 Clients Scope & Scale Strategy • Corporations, municipalities • MGAs, Program Managers, Captives • Carriers of all sizes • 50%+ U.S. Fortune 250 corporations served • $1.0B Managed medical spend • $3.3B Claims Paid • 813,000 Claims Managed Strengthen differentiation through product innovation, di
Slide 31: Crawford TPA Solutions: Broadspire Highlights and Results
31 31 Highlights • Ongoing investment in new technologies and client service capabilities • US client retention for 2020 was 96% • Focused on digitization and developing integrated solutions for our global clients Operating Results (FY 2020 v. FY 2019) • Revenues of $371.4 million versus $397.6 mill
Slide 32: Crawford Platform Solutions: Clients, Scope & Scale
32 For clients looking for speed , cost savings, customer satisfaction and quality through end - to - end digitized solutions, Crawford Platform Solutions is reimagining claims management by uniquely architecting networks, technology and Insurtech innovations. Clients Scope & Scale Strategy • Carrie
Slide 33: Digital FNOL, Digital Assist, Digital Desk, Asservio
33 Digital FNOL Digital Assist Digital Desk ¹ Asservio • Digital claim intake process • Increased scale & efficiency in claim capture • Omni - Channel approach: Web, SMS, Alexa, iOT sensors • Assisted self - service (YouGoLook) ¹ • On - demand field inspection services (ladder assist / interior) • D
Slide 34: Crawford Platform Solutions Highlights and Results
34 34 Highlights • Launched cutting - edge estimate review platform in Contractor Connection • Traction with new carrier clients in the US delivered the strongest second half in recent history for Contractor Connection • Highest ever look volume in 2020 for WeGoLook , driven by improved client uptak
Slide 35: Appendix B: Non-GAAP Financial Information
35 35 Appendix B: Non - GAAP Financial Information 35
Slide 36: Non-GAAP Measures Explanation
36 Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not sub stitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comparable to other similar ly - titled meas
Slide 37: Segment Gross Profit and Adjusted EBITDA Definitions
37 Segment and Consolidated Gross Profit Gross profit is defined as revenues less direct expenses which exclude indirect overhead expenses allocated to the business. Ind irect expenses consist of centralized administrative support costs, regional and local shared services that are allocated to each
Slide 38: Revenues Before Reimbursements by Major Currency
38 38 Three Months Ended Twelve Months Ended ( in thousands ) December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 Geographic Area Currency USD equivalent % of total USD equivalent % of total USD equivalent % of total USD equivalent % of total U.S. USD $ 151,758 59.0% $ 136,913 55
Slide 39: Reconciliation of Non-GAAP Items
39 39 Year Ended Yea r Ended December 3 1 , December 31 , Unaudited ($ in thousands) 20 20 20 19 Revenues Before Reimbursements Total Revenues $ 1,016,195 $ 1,047,627 Reimbursements ( 33,703 ) ( 41,825 ) Revenues Before Reimbursements 982,492 1,005,802 Costs of Services Provided, Before Reimbursemen
Slide 40: Adjusted EBITDA Reconciliation
40 40 ) Year Ended December 31 , December 3 1 , Unaudited ($ in thousands) 20 20 201 9 Net income (loss) attributable to shareholders of Crawford & Company $ 28,296 $ 12,485 Add: Depreciation and amortization 40,111 40,513 Stock - based compensation 4,384 14,109 Net corporate interest expense 7 , 92
Slide 41: Net Debt Reconciliation
41 41 December 31 , December 31, Unaudited ($ in thousands) 20 20 201 9 Net Debt Short - term borrowings $ 1,570 $ 2 8,531 Current installments of finance leases and other obligations 267 15 Long - term debt and finance leases, less current installments 111,758 1 48 , 408 Total debt 113,595 1 76 , 9
Slide 42: Segment Gross Profit Reconciliation
42 42 Year ended ( $ in thousands) December 31 , 20 20 December 31 , 20 29 Segment gross profit: Crawford Loss Adjusting $ 118,853 $ 116,827 Crawford Platform Solutions 43,619 41,944 Crawford TPA Solutions 76,665 89,276 Segment gross profit 239 , 137 248,047 Segment indirect costs: Crawford Loss Adj
Slide 43: Non-GAAP Diluted Earnings per Share Reconciliation
43 43 Year Ended December 3 1 , 20 20 Unaudited ($ in thousands) Revenues Non - GAAP Operating Earnings Pretax Earnings Net Income Attributable to Crawford & Company Diluted Earnings per CRD - A Share Diluted Earnings per CRD - B Share GAAP $ 982,492 $ 71,830 $ 39,088 $ 28,296 $ 0. 54 $ 0. 52 Adjust