Slide 1: Second Quarter 2016 Earnings Conference Call
August 8, 2016 Second 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 --- Second Quarter 2016 Financial Review --- Reaffirming Guidance
Slide 5: Second quarter 2016 highlights: revenues and operating earnings
5 Revenues ($ in millions) Consolidated Operating Earnings (1) ($ in millions) • Revenues for the quarter were $282.3 million, down 7% as compared with $304.4 million in the 2015 second quarter • Net income attributable to shareholders of $8.6 million, more than doubling net income of $4.1 million i
Slide 6: Second Quarter 2016 Financial Review
6 SECOND QUARTER 2016 Financial Review
Slide 7: Consolidated income statement, three months ended June 30, 2016
7 Unaudited ($ in thousands, except per share amounts) Three Months Ended June 30, 2016 2015 % Change Revenues Before Reimbursements $282,343 $304,398 (7 )% Costs of Services Provided, Before Reimbursements 200,362 232,108 (14 )% Selling, General, and Administrative Expenses 61,060 57,221 7 % Corpor
Slide 8: U.S. Services Segment Highlights
8 Revenues by Service Line ($ in millions) Cases Received by Service Line (In thousands) Operating Results (2Q 2016 v. 2Q 2015) • Revenues of $58.8 million versus $66.9 million • Operating earnings of $9.6 million versus $9.8 million • Operating earnings margin of 16.3% versus 14.7% • Cases received
Slide 9: International Segment Highlights
9 Revenues by Geographic Region ($ in millions) Operating Results (2Q 2016 v. 2Q 2015) • Revenues of $123.2 million versus $129.5 million • Exchange rates reduced revenues by 5%, or $6.1 million • Operating earnings of $11.0 million versus $1.2 million • Operating earnings margin of 8.9% versus 0.9%
Slide 10: Broadspire Segment Highlights
10 Revenues by Service Line ($ in millions) Broadspire Cases Received (In thousands) Operating Results (2Q 2016 v. 2Q 2015) • Revenues of $75.1 million versus $73.7 million • Operating earnings of $6.5 million versus $6.0 million • Operating earnings margin of 8.7% versus 8.1% • Cases received of 10
Slide 11: Garden City Group Segment Highlights
11 Backlog ($ in millions) Operating Results (2Q 2016 v. 2Q 2015) • Revenues of $25.2 million versus $34.3 million • Operating earnings of $2.7 million versus $3.7 million • Operating earnings margin of 10.7% versus 10.8% • Backlog of $94 million versus $88 million Highlights • Deepwater Horizon cla
Slide 12: Balance sheet and debt, June 30, 2016
12 Unaudited ($ in thousands) June 30, 2016 December 31, 2015 Change Cash and cash equivalents $59,365 $76,066 ($16,701 ) Accounts receivable, net 170,178 164,596 5,582 Unbilled revenues, net 113,027 98,659 14,368 Total receivables 283,205 263,255 19,950 Goodwill 94,681 95,616 (935 ) Intangible asse
Slide 13: Operating and Free Cash Flow
13 Unaudited ($ in thousands) 2016 2015 Variance Net Income Attributable to Shareholders of Crawford & Company $ 17,257 $ 7,040 $ 10,217 Depreciation and Other Non-Cash Operating Items 23,040 23,139 (99 ) Unbilled and Billed Receivables Change (20,743 ) 1,831 (22,574 ) Working Capital Change 977 (12
Slide 14: 2016 Guidance
14 Crawford & Company is reaffirming guidance for 2016 as follows: YEAR ENDING DECEMBER 31, 2016 Low End High End Consolidated revenues before reimbursements $1.05 $1.10 billion After expected restructuring and special charges, net income attributable to shareholders of Crawford & Company $24.0 $30.
Slide 15: Priorities for 2016
15 PRIORITIES FOR 2016 Continue to exhibit cost discipline Be more client centric • Deliver customized value propositions to clients • Increase the speed of doing business enterprise wide Drive additional synergies in strategic initiatives Capitalize on cross-selling opportunities across the
Slide 16: Appendix Second Quarter 2016
16 Appendix SECOND QUARTER 2016
Slide 17: Non-GAAP measures and reimbursements
17 Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comparable to other similarly-titled measurem
Slide 18: Adjusted EBITDA and non-GAAP adjusted net income definitions
18 Adjusted EBITDA Adjusted EBITDA is not a term defined by GAAP and as a result our measure of adjusted EBITDA might not be comparable to similarly titled measures used by other companies. However, adjusted EBITDA is used by management to evaluate, assess and benchmark our operational results and t
Slide 19: Reconciliation of non-GAAP items: revenues and operating earnings
19 Quarter Ended Quarter Ended Full Year June 30, June 30, Guidance Unaudited ($ in thousands) 2016 2015 2016 * Revenues Before Reimbursements Total Revenues $ 297,669 $ 324,416 $ 1,155,000 Reimbursements (15,326 ) (20,018 ) (80,000 ) Revenues Before Reimbursements $ 282,343 $ 304,398 $ 1,075,000 Co
Slide 20: Reconciliation of non-GAAP items: Adjusted EBITDA
20 RECONCILIATION OF NON-GAAP ITEMS (continued) Adjusted EBITDA Quarter Ended Quarter Ended Full Year June 30, June 30, Guidance Unaudited ($ in thousands) 2016 2015 2016 * Net income attributable to shareholders of Crawford & Company $ 8,627 $ 4,054 $ 27,000 Add: Depreciation and amortization 10,26
Slide 21: Reconciliation of non-GAAP items: Net Debt
21 RECONCILIATION OF NON-GAAP ITEMS (continued) Net Debt June 30, December 31, Unaudited ($ in thousands) 2016 2015 Net Debt Short-term borrowings $ 19,371 $ 19,958 Current installments of capital leases 1,757 1,959 Long-term debt and capital leases, less current installments 216,944 225,365 Total d
Slide 22: Reconciliation of non-GAAP adjusted net income and diluted EPS
22 RECONCILIATION OF NON-GAAP ITEMS (continued) Non-GAAP Adjusted Net Income and Diluted Earnings Per Share Three Months Ended June 30, 2016 Unaudited ($ in thousands) Income Before Taxes Income Taxes Net Income Net Income Attributable to Crawford & Company Diluted Earnings per CRDA Share Diluted Ea