Crawford & Company · NYSE:CRD.A
Crawford & — Q4 2011 Earnings Presentation
27 slides from Crawford &'s earnings presentation, Feb 13, 2012
Slide 1: Fourth Quarter 2011 Earnings Conference Call
FOURTH QUARTER 2011 :: Earnings Conference Call Monday, February 13, 2012
Slide 2: Forward-Looking Statements, Segment Operating Earnings, and Additional Information
FORWARD-LOOKING STATEMENTS, SEGMENT OPERATING EARNINGS, AND ADDITIONAL INFORMATION 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
Slide 3: Market-Leading Global Businesses
MARKET-LEADING GLOBAL BUSINESSES The world’s largest fully-integrated independent provider of global claims management solutions. EMEA-A/P Americas Broadspire Legal Settlement Administration Serves the U.K., European, Middle Eastern, African and Asia Pacific markets Serves the U.S., Canadian and Lat
Slide 4: Today's Agenda
TODAY’S AGENDA Welcome and Opening Comments Fourth Quarter and Full Year 2011 Financial Review Fourth Quarter 2011 Operational Review 2012 Guidance and Future Operational Focus 4
Slide 5: Full Year 2011 Business Summary
FULL YEAR 2011 BUSINESS SUMMARY • Record revenues increased 9.2% over 2010 to $1.125 billion • Net income attributable to shareholders of Crawford & Company increased 60% over 2010 to $45.4 million • Claims volume grew 6.7% over 2010 • Crawford entered into a new five-year $325 million revolving cre
Slide 6: Business Summary
FOURTH QUARTER 2011 BUSINESS SUMMARY • Revenues and earnings were affected by an expected decline in Legal Settlement Administration • Organic growth in EMEA/AP due to weather-related claims in Asia Pacific region • Broadspire results reflect sequential quarterly improvement • Americas’ results incl
Slide 7: Financial Review
FOURTH QUARTER 2011 :: Financial Review
Slide 8: Income Statement Highlights
FOURTH QUARTER 2011 FINANCIALS Crawford & Company Income Statement Highlights Unaudited ($ in thousands, except per share amounts and percentages) Quarter Ended December 31 2011 2010 % Change Revenues $265,637 $301,477 -12% Costs of Services 202,630 220,721 -8% Selling, General, and Administrative E
Slide 9: 2010 to 2011 Fourth Quarter Bridge
FOURTH QUARTER 2011 FINANCIALS 2010 to 2011 Fourth Quarter Bridge Unaudited ($ in millions except per share amounts) 9 Revenues Net Income Attributable to Shareholders of Crawford & Company CRDB Diluted EPS Fourth quarter 2010 results $301.5 $14.8 $0.28 Add (deduct): 2011 special charge - (2.9) (0.0
Slide 10: Summary Results, Americas
82.0 82.1 0 10 20 30 40 50 60 70 80 90 4Q 2011 4Q 2010 -0.2 2.4 -1.0 0.0 1.0 2.0 3.0 4.0 4Q 2011 4Q 2010 • Weak industry-wide claims volume in 2011 fourth quarter • Exchange rate impact was negligible during the quarter 10 *At 2010 average FX rates **At 2011 average FX rates REVENUES ($ in millions)
Slide 11: Summary Results, U.S. Catastrophe (CAT) Activity
• CAT revenues of $9.1 million in fourth quarter of 2011 compared with $5.5 million in 2010 period • CAT cases numbered 12,800 in the fourth quarter of 2011 compared with 3,500 in the fourth quarter of 2010 • Volumes reflect claims related to Hurricane Irene 11 REVENUES ($ in millions) CATASTROPHE C
Slide 12: Summary Results, EMEA/AP
REVENUES ($ in millions) OPERATING EARNINGS ($ in millions) 86.2 77.9 40 50 60 70 80 90 100 4Q 2011 4Q 2010 8.0 9.6 0.0 2.0 4.0 6.0 8.0 10.0 12.0 4Q 2011 4Q 2010 • Revenues grew 11% quarter over quarter largely due to weather in Australia • Revenue increased $3.8 million from a positive exchange rat
Slide 13: Summary Results, Broadspire
REVENUES ($ in millions) 58.2 60.7 40 45 50 55 60 65 4Q 2011 4Q 2010 -2.3 -6.9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 4Q 2011 4Q 2010 • Decline in revenues reflects client bankruptcy in 2010 and small change in the mix of claims • Cost control initiatives and increased business development continued to be a
Slide 14: Summary Results, Legal Settlement Administration
REVENUES ($ in millions) 39.2 80.8 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 4Q 2011 4Q 2010 8.8 27.8 0.0 5.0 10.0 15.0 20.0 25.0 30.0 4Q 2011 4Q 2010 • Revenues and operating earnings declines reflect continuing wind down of GCCF special project • Backlog of $64.0 million at December 31, 201
Slide 15: Balance Sheet Highlights
Crawford & Company Balance Sheet Highlights FOURTH QUARTER 2011 FINANCIALS 15 Unaudited As of December 31, 2011 and 2010 December 31 December 31 2011 2010 Change Cash and cash equivalents $77,613 $93,540 ($15,927) Accounts receivable, net 161,543 142,521 19,022 Unbilled revenues, net 107,494 122,933
Slide 16: Operating and Free Cash Flow
Crawford & Company Operating and Free Cash Flow FOURTH QUARTER 2011 FINANCIALS 16 For the years ended December 31, 2011 and 2010 (In Thousands) December 31 December 31 2011 2010 Variance Net Income Attributable to Shareholders of Crawford & Company $45,692 $28,328 $17,364 Plus: Non-Cash Goodwill Imp
Slide 17: Operational Review
FOURTH QUARTER 2011 :: Operational Review
Slide 18: Fourth Quarter Business Drivers
REVENUES ($ in millions) CASES (in thousands) • Consolidated case decline of 3.8% as compared to 2010 fourth quarter • Global catastrophic events continued to drive claims activity • Hurricane Irene • Australia: Queensland and Victoria flooding • New Zealand earthquakes • Thailand flooding • Special
Slide 19: Americas: Revenues by Geographic Region
REVENUES BY GEOGRAPHIC REGION ($ in millions) AMERICAS CLAIMS REFERRED (in thousands) 0 20 40 60 80 100 120 U.S. Prop & Cas Canada Lat.Am. & Car. U.S. Property and Casualty • Weak industry-wide claims volumes • Continued expansion of Global Technical Services and Contractor Connection Canada • Lack
Slide 20: EMEA/AP Revenues by Geographic Region
0 10 20 30 40 50 U.K. CEMEA Asia/Pacific U.K. • New business acquisition continues in U.K., despite marketwide reduction in claims frequency • Increased recruitment of Global Technical Services adjusters continues • Operational efficiencies being implemented CEMEA • Claims volume increased in fourth
Slide 21: Broadspire Revenues by Service Line
0 10 20 30 40 Worker's Comp. Casualty Other • Worker’s Compensation claims volume improved over prior year • Broadspire’s fully-integrated offering continued to resonate in the market • New client wins remained strong • Cost management initiatives continued • Stabilization of revenues through custom
Slide 22: Legal Settlement Administration Backlog
64.0 90.0 20 30 40 50 60 70 80 90 100 4Q 2011 4Q 2010 • Special project pace slowed during the fourth quarter • Pace of bankruptcies in the U.S. has increased • New business wins • Core businesses continued to perform well • Backlog at $64.0 million • Named claims administrator of the year – New Yor
Slide 23: Initial Full Year 2012 Guidance
Initial Full Year 2012 Guidance: Crawford’s business is dependent, to a significant extent, on case volumes. The Company cannot predict the future trend of case volumes for a number of reasons, including the fact that the frequency and severity of weather-related claims and the occurrence of natural
Slide 24: Operational Focus
• Bring Broadspire to an acceptable earnings profile • Significant debt reduction • Continue to grow revenue and operating earnings • Capitalize on global opportunities • Enhance shareholder returns OPERATIONAL FOCUS 24
Slide 25: Appendix
FOURTH QUARTER 2011 :: Appendix
Slide 26: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION 26 Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comp
Slide 27: Non-GAAP Reconciliation Tables
Crawford & Company ($ in thousands) December 31, December 31, 2011 2010 Deferred Revenues, Net Deferred revenues, current 53,844$ 48,198$ Deferred revenues, noncurrent 27,856 30,048 Total deferred revenues 81,700 78,246 Less: Receivable held in trust included in accounts receivable 908 1,661 Receiva