Crawford & Company · NYSE:CRD.A
Crawford & — Needham & Company 19th Annual Growth Conference 2017
43 slides from Crawford &'s conference presentation, Jan 10, 2017
Slide 1: Needham & Company 19th Annual Growth Conference January 2017
Needham & Company 19th Annual Growth Conference January 2017 Exhibit 99.1
Slide 2: Forward-Looking Statements
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 historical
Slide 3: Our Global Strength
$1.17 Billion Revenue Company 70+ Countries 700+ Locations 8,900+ Employees OUR GLOBAL STRENGTH
Slide 4: Global Business Services Leader
GLOBAL BUSINESS SERVICES LEADER GARDEN CITY GROUP Class Action Settlements Bankruptcy Cases Mass Tort Cases INTERNATIONAL Serves the Canadian, U.K., European, Latin American, and Asia Pacific Markets Property and Casualty Services Global Technical Services Third Party Administration Catastrophe Resp
Slide 5: Investment Highlights
INVESTMENT HIGHLIGHTS Business services leader with globally recognized brands Experienced senior leadership team Repositioning the Global Claims Management business to deliver revenue growth Broadspire and Garden City Group positioned for growth Crawford Innovative Ventures created to develop new p
Slide 6: Executive Management
EXECUTIVE MANAGEMENT Harsha V. Agadi - President and Chief Executive Officer On June 21, 2016 Harsha Agadi was named President and CEO after serving as Interim President and CEO since August 2015 30 years of experience in leadership positions at both public and private companies, including several F
Slide 7: Focus on Delivering Revenue Growth
FOCUS ON DELIVERING REVENUE GROWTH Multiple Avenues of Revenue Growth Available Globally Repositioning the Global Claims business Continued expansion of GTS and Contractor Connection Transformational acquisition of WeGoLook Broadspire’s re-entry into the U.S. disability market Returning GCG to growt
Slide 8: Global Claims Management Business
One of the world’s largest independent providers of claims management solutions with an unparalleled competitive position and globally recognized brand Delivering complex solutions to clients when speed of execution matters Integrated approach to managing national and multinational claims programs S
Slide 9: Global Technical Services (GTS)
GLOBAL TECHNICAL SERVICES (GTS) Crawford GTS has the largest, most experienced team of technical adjusters in the world Our Vision To be the world’s leading and most trusted provider of specialist loss management, forensic accounting and consulting solutions – powered by advanced analytics GTS has a
Slide 10: GTS – Complex Claims Management Solutions
GTS – Complex Claims Management Solutions “Superstorm Sandy” was the second costliest hurricane in U.S. history and the largest Atlantic hurricane (1) Estimates as of 2015 assessed the damage to have been ~$75 billion (2012 USD), a total only surpassed by Katrina In the U.S., Hurricane Sandy affecte
Slide 11: Contractor Connection – A Significant Global Opportunity
CONTRACTOR CONNECTION – A Significant Global Opportunity U.S. Contractor Managed Repair Market estimated to be $6 billion(1) U.S. Insurance Direct Market estimated to be $25 billion(1) U.S. Consumer Market estimated at ~$150 billion(1), highlighting the scale of the consumer opportunity Internationa
Slide 12: Contractor Connection - Managed Repair Model
CONTRACTOR CONNECTION - Managed Repair Model Kor: ‘Consumer/ Insurance Direct Services: ——p- Insurance Claim services: ——p- ‘Ciim submission / payment Contractor ‘Services Contactor customersatistaction 4) Request Carriers 325 proprietary ware Assignment data Estimate data oe Technology < Piatform S
Slide 13: WeGoLook – A Transformative Acquisition
WeGoLook – A Transformative Acquisition Acquisition closed on January 4, 2017 WeGoLook provides crowd sourced field services, leveraging the “gig” economy 100+ employees, headquartered in Oklahoma City 30,000+ on-demand “Looker” community Addressable market defined by nearly 200 million inspections
Slide 14: WeGoLook – How It Works
WeGoLook – How It Works WeGoLook has the ability to task a ‘Looker’ throughout the U.S. within hours of receiving instruction from WeGoLook’s automated notification system Utilizing the WeGoLook proprietary verification app, lookers provide the prescribed data and picture requirements immediately Co
Slide 15: WeGoLook – Expanding Crawford's Reach
WeGoLook – Expanding Crawford’s Reach
Slide 16: Broadspire
BROADSPIRE A global Third Party Administration (TPA) business specializing in servicing the claims needs of corporations, brokers and insurers who wish to take a greater control over the claims process, indemnity spend, and data capture and to access meaningful management information Largest global
Slide 17: Broadspire Segment Share vs. Total Addressable Market
Broadspire is positioned to grow market share, driven by re-entry into the U.S. Disability market (1) TAM based on Crawford & Company data (2) Total Addressable Market (TAM) based on 2015 TPA Directory (2014 results) (3) According to IBIS World Disability Insurance Report (Aug 2016) Disability Medic
Slide 18: Garden City Group
Recognized leader in providing legal administration services for class action settlements, bankruptcy cases, mass tort and legal noticing programs for over 30 years Strong senior leadership team Continuing management of the expected decline of two large projects Backlog remains robust, highlighted b
Slide 19: Garden City Group – Deepwater Horizon
GARDEN CITY GROUP – Deepwater Horizon In April 2010, a blowout on British Petroleum’s Deep Water Horizon oil rig caused an enormous explosion creating the largest oil spill in U.S. waters Crawford through Garden City Group were appointed as claims administrators which involved the establishment of c
Slide 20: Crawford Innovative Ventures
The insurance industry is experiencing rapid change, which requires innovative thinking and investment To ensure that Crawford stays at the forefront of this changing environment, Crawford has created Crawford Innovative Ventures, LLC (CIV), which will be led by Ken Fraser, EVP, chief strategy and d
Slide 21: Vigilant Expense Control
VIGILANT EXPENSE CONTROL Significant cost reductions in 2015 driving margin expansion in 2016 Further efficiency opportunities currently being explored Goal for total compensation to be under 63% of revenues Sep-16 - “Total Compensation” includes compensation, payroll taxes, and benefits provided to
Slide 22: Driving Adjusted EBITDA Margin Expansion
DRIVING ADJUSTED EBITDA MARGIN EXPANSION Goal to deliver predictable financial results while reducing weather dependence Trailing Twelve Month Non-GAAP Adjusted EBITDA Margins (1) (1) See Appendix for non-GAAP explanation and reconciliation
Slide 23: Global Business Services and Technology Centers
GLOBAL BUSINESS SERVICES AND TECHNOLOGY CENTERS SIMPLIFICATION Simplify how we do things today, both across and within divisions STANDARDIZATION Adopt the one best way of working globally and consolidate for scale in the right location OPERATIONAL EXCELLENCE Use our global scale to learn, innovate a
Slide 24: 2016 Guidance
On November 7, Crawford & Company increased its guidance for 2016 as follows GUIDANCE--YEAR ENDING DECEMBER 31, 2016 Low End High End Consolidated revenues before reimbursements $1.08 $1.10 billion After expected restructuring and special charges, net income attributable to shareholders of Crawford
Slide 25: Midpoint of 2016 Non-GAAP Guidance Projects Strong YoY Growth
Midpoint of 2016 Non – GAAP Guidance Projects Strong YoY Growth 2016 NON – GAAP GUIDANCE 2016E for Non - GAAP Diluted EPS and Adjusted EBITDA represents the midpoint of the guidance range given by Crawford (1) See Appendix for non-GAAP explanation and reconciliation
Slide 26: Looking to 2017
LOOKING TO 2017 Reposition the Global Claims Management business to deliver revenue growth and improved profitability Expand Global Technical Services (GTS) Grow Contactor Connection globally WeGoLook to transform the market for high frequency, low severity claims Continue to deliver consistent grow
Slide 27: Questions & Answers
Questions & Answers i4) Geeier
Slide 28: Appendix A: Consolidated Year-to-Date Financial Information as of September 30, 2016
Appendix A: Consolidated Year-to-Date Financial Information as of September 30, 2016
Slide 29: Third Quarter YTD 2016 Business Summary
THIRD QUARTER YTD 2016 BUSINESS SUMMARY Revenues for the nine months ended September 30, 2016 were $836.9 million, down 6% as compared with $885.5 million in the 2015 period Net income attributable to shareholders of $28.2 million, as compared with $6.2 million in the 2015 period Year-to-date consol
Slide 30: Third Quarter YTD Consolidated Revenues and Operating Results
THIRD QUARTER YTD CONSOLIDATED REVENUES AND OPERATING RESULTS (1) See Appendix for non-GAAP explanation and reconciliation Operating Margins (%) Revenues ($ in millions) Consolidated Operating Earnings (1) ($ in millions) Net Income ($ in millions)
Slide 31: Third Quarter YTD Segment Revenues and Operating Earnings
THIRD QUARTER YTD SEGMENT REVENUES AND OPERATING EARNINGS International (1) See Appendix for non-GAAP explanation and reconciliation Broadspire Revenues ($ in millions) Revenues ($ in millions) Segment Operating Earnings (1) ($ in millions) Segment Operating Earnings (1) ($ in millions)
Slide 32: Third Quarter YTD Segment Revenues and Operating Earnings
THIRD QUARTER YTD SEGMENT REVENUES AND OPERATING EARNINGS US Services (1) See Appendix for non-GAAP explanation and reconciliation Garden City Group Revenues ($ in millions) Revenues ($ in millions) Segment Operating Earnings (1) ($ in millions) Segment Operating Earnings (1) ($ in millions)
Slide 33: Statement of Operations Highlights
STATEMENT OF OPERATIONS HIGHLIGHTS Unaudited ($ in thousands, except per share amounts) Year-to-Date Periods Ended September 30, 2016 2015 % Change Revenues Before Reimbursements $ 836,863 $ 885,510 (6)% Costs of Services Provided, Before Reimbursements 595,248 662,537 (10)% Selling, General, and Ad
Slide 34: Balance Sheet Highlights
Unaudited ($ in thousands) September 30, 2016 December 31, 2015 Change Cash and cash equivalents $71,663 $76,066 ($4,403 ) Accounts receivable, net 166,993 164,596 2,397 Unbilled revenues, net 112,775 98,659 14,116 Total receivables 279,768 263,255 16,513 Goodwill 92,895 95,616 (2,721 ) Intangible a
Slide 35: Operating and Free Cash Flow
Unaudited ($ in thousands) 2016 2016 2015 2015 Variance Variance Net Income Attributable to Shareholders of Crawford & Company $ 28,202 $ 6,183 $ 22,019 Depreciation and Other Non-Cash Operating Items 34,826 34,777 49 Unbilled and Billed Receivables Change (23,746 ) 5,586 (29,332 ) Working Capital C
Slide 36: Appendix B: Non-GAAP Financial Information
Appendix B: Non-GAAP Financial Information
Slide 37: Non-GAAP Financial Measures
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 measurement
Slide 38: Adjusted EBITDA and Non-GAAP Adjusted Net Income
Adjusted EBITDA Adjusted EBITDA is used by management to evaluate, assess and benchmark our operational results and the Company believes that adjusted EBITDA is relevant and useful information widely used by analysts, investors and other interested parties. Adjusted EBITDA is defined as net income w
Slide 39: Reconciliation of Non-GAAP Items
RECONCILIATION OF NON-GAAP ITEMS Revenues and Trailing Twelve Months Adjusted EBITDA Margins Q115 Q215 Q315 Q415 Q116 Q216 Q316 Unaudited ($ in thousands) Total revenues $ 306,616 $ 324,416 $ 309,984 $ 300,504 $ 290,908 $ 297,669 $ 295,387 Reimbursements (18,839) (20,018) (16,649) (15,629) (13,674)
Slide 40: Reconciliation of Non-GAAP Items (continued)
RECONCILIATION OF NON-GAAP ITEMS (continued) Revenues, Costs of Services, and Operating Earnings Unaudited ($ in thousands) Year-to-date Period Ended September 30, 2016 Year-to-date Period Ended September 30, 2015 Full Year Actuals 2015 Full Year Guidance 2016* Revenues Before Reimbursements Total R
Slide 41: Reconciliation of Non-GAAP Items (continued)
RECONCILIATION OF NON-GAAP ITEMS (continued) Revenues and Adjusted EBITDA * Midpoints of Company's Guidance Year-to-date Period Ended September 30, 2016 Year-to-date Period Ended September 30, 2015 Full Year Actuals 2015 Full Year Guidance 2016 * Unaudited ($ in thousands) Total revenues $883,964 $9
Slide 42: Reconciliation of Non-GAAP Items (continued) – Net Debt
RECONCILIATION OF NON-GAAP ITEMS (continued) Net Debt September 30, June 30, December 31, December 31, Unaudited ($ in thousands) 2016 2016 2015 2015 Net Debt Short-term borrowings $ 8,007 $ 19,958 Current installments of capital leases 1,327 1,959 Long-term debt and capital leases, less current ins
Slide 43: Reconciliation of Non-GAAP Items (continued) – Adjusted Net Income and EPS
RECONCILIATION OF NON-GAAP ITEMS (continued) Non-GAAP Adjusted Net Income and Diluted Earnings Per Share Guidance for year ending December 31, 2016 based on midpoints Unaudited ($ in thousands) Income Before Taxes Income Taxes Net Income Net Income Attributable to Crawford & Company Diluted Earnings
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