Crawford & Company · NYSE:CRD.A
Crawford & — FY2016 Earnings Presentation
25 slides from Crawford &'s earnings presentation, Feb 27, 2017
Slide 1: Fourth Quarter and Full Year 2016 Earnings Conference Call
February 27, 2017 Fourth Quarter and Full Year 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 GLOBAL BUSINESS SERVICES LEADER • The world's largest publicly listed independent provider 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
Slide 4: Today's Agenda
4 TODAY'S AGENDA --- Welcome and Opening Comments --- Fourth Quarter and Full Year 2016 Financial Review --- 2017 Guidance and Strategic Initiatives
Slide 5: Fourth Quarter and Full Year 2016 Business Summary
5 FOURTH QUARTER AND FULL YEAR 2016 BUSINESS SUMMARY (1) See Appendix for non-GAAP explanation and reconciliation Quarter Ended Year Ended December 31, December 31, December 31, December 31, ($ in thousands, except per share amounts) 2016 2015 Change 2016 2015 Change Revenues $272.4 $284.9 (4)% $1,1
Slide 6: Business Highlights
6 BUSINESS HIGHLIGHTS • Vigilant cost control delivered margin expansion in the period • Andrew Robinson joined Crawford in January as the Company’s COO Ø Primary focus to optimize Crawford’s operations, sales and marketing Ø Additional mandate to expand Crawford’s product offerings globally • Strat
Slide 7: Fourth Quarter and Full Year 2016 Financial Review
7 FOURTH QUARTER AND FULL YEAR 2016 Financial Review
Slide 8: Consolidated Income Statement, Three Months Ended December 31, 2016
8 Unaudited ($ in thousands, except per share amounts) Three Months Ended December 31, 2016 2015 % Change Revenues Before Reimbursements $272,423 $284,875 (4)% Costs of Services Provided, Before Reimbursements 193,125 206,680 (7)% Selling, General, and Administrative Expenses 61,670 62,256 (1)% Corp
Slide 9: U.S. Services Segment Highlights
9 4Q 2016 4Q 2015 $25 $20 $15 $10 $5 $0 Field Ops Tech Svcs CAT Contractor Conn. 4Q 2016 4Q 2015 60 50 40 30 20 10 0 Field Ops Tech Svcs CAT Contractor Conn. Revenues by Service Line ($ in millions) Cases Received by Service Line (In thousands) Operating Results (4Q 2016 v. 4Q 2015) • Revenues of $5
Slide 10: International Segment Highlights
10 4Q 2016 4Q 2015 $50 $40 $30 $20 $10 $0 U.K. Canada Asia-Pacific Europe and ROW Revenues by Geographic Region ($ in millions)Operating Results (4Q 2016 v. 4Q 2015) • Revenues of $117.5 million versus $124.9 million • Exchange rates reduced revenues by 4%, or $6.1 million • Operating earnings of $1
Slide 11: Broadspire Segment Highlights
11 4Q 2016 4Q 2015 60 45 30 15 0 Workers' Compensation Casualty Other 4Q 2016 4Q 2015 $45 $30 $15 $0 Workers' Comp Medical Management Risk Management Revenues by Service Line ($ in millions) Broadspire Cases Received (In thousands) Operating Results (4Q 2016 v. 4Q 2015) • Revenues of $74.0 million v
Slide 12: Garden City Group Segment Highlights
12 4Q 2016 4Q 2015 $100 $75 $50 $25 $0 81 81 Backlog ($ in millions) Operating Results (4Q 2016 v. 4Q 2015) • Revenues of $23.6 million versus $27.7 million • Operating earnings of $1.3 million versus $1.7 million • Operating earnings margin of 5.5% versus 6.1% • Backlog of $81 million for both year
Slide 13: Balance Sheet
13 Unaudited ($ in thousands) December 31, 2016 December 31, 2015 Change Cash and cash equivalents $81,569 $76,066 $5,503 Accounts receivable, net 153,566 164,596 (11,030) Unbilled revenues, net 101,809 98,659 3,150 Total receivables 255,375 263,255 (7,880) Goodwill 91,750 95,616 (3,866) Intangible
Slide 14: Operating and Free Cash Flow
14 Unaudited ($ in thousands) 2016 2015 Variance Net Income (Loss) Attributable to Shareholders of Crawford & Company $ 35,966 $ (45,488) $ 81,454 Depreciation and Other Non-Cash Operating Items 58,302 50,374 7,928 Unbilled and Billed Receivables Change (5,001) 29,579 (34,580) Working Capital Change
Slide 15: 2017 Guidance
15 Crawford & Company is issuing its initial guidance for 2017 as follows: YEAR ENDING DECEMBER 31, 2017 Low End High End Consolidated revenues before reimbursements $1.10 $1.13 billion After expected restructuring and special charges, net income attributable to shareholders of Crawford & Company $3
Slide 16: Looking to 2017
16 LOOKING TO 2017 • Execute Strategic Review and realign business structure to be more client centric Ø Implement cost reduction initiatives to drive further margin expansion Ø Deliver customized value propositions to clients Ø Increase the speed of doing business enterprise wide • Explore new mark
Slide 17: Appendix
17 Appendix FOURTH QUARTER AND FULL YEAR 2016
Slide 18: Non-GAAP Measures and Reimbursements Explanation
18 Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comparable to other similarly-titled measurem
Slide 19: Adjusted EBITDA and Non-GAAP Adjusted Net Income
19 Adjusted EBITDA Adjusted EBITDA is used by management to evaluate, assess and benchmark our operational results and the Company believes that adjusted EBITDA is relevant and useful information widely used by analysts, investors and other interested parties. Adjusted EBITDA is defined as net incom
Slide 20: Full Year Revenues and Operating Earnings Reconciliation
20 Full Year Guidance Unaudited ($ in thousands) 2016 2015 2017 * Revenues Before Reimbursements Total Revenues $ 1,177,588 $ 1,241,520 $ 1,183,000 Reimbursements (68,302) (71,135) (68,000) Revenues Before Reimbursements $ 1,109,286 $ 1,170,385 $ 1,115,000 Costs of Services Provided, Before Reimburs
Slide 21: Fourth Quarter Revenues and Operating Earnings Reconciliation
21 Quarter Ended Quarter Ended December 31, December 31, Unaudited ($ in thousands) 2016 2015 Revenues Before Reimbursements Total Revenues $ 293,624 $ 300,504 Reimbursements (21,201) (15,629) Revenues Before Reimbursements $ 272,423 $ 284,875 Costs of Services Provided, Before Reimbursements Total
Slide 22: Reconciliation of Non-GAAP Items: Adjusted EBITDA
22 RECONCILIATION OF NON-GAAP ITEMS (continued) Adjusted EBITDA Quarter Ended Year Ended Full Year December 31, December 31, December 31, December 31, Guidance Unaudited ($ in thousands) 2016 2015 2016 2015 2017 * Net income (loss) attributable to shareholders of Crawford & Company $ 7,764 $ (51,671
Slide 23: Reconciliation of Non-GAAP Items: Net Debt
23 RECONCILIATION OF NON-GAAP ITEMS (continued) Net Debt December 31, December 31, Unaudited ($ in thousands) 2016 2015 Net Debt Short-term borrowings $ 30 $ 19,958 Current installments of capital leases 982 1,959 Long-term debt and capital leases, less current installments 187,002 225,365 Total deb
Slide 24: Non-GAAP Adjusted Net Income and EPS: Fourth Quarter
24 RECONCILIATION OF NON-GAAP ITEMS (continued) Non-GAAP Adjusted Net Income and Diluted Earnings Per Share--Fourth Quarter Three Months Ended December 31, 2016 Unaudited ($ in thousands) Income Before Taxes Income Taxes Net Income Net Income Attributable to Crawford & Company Diluted Earnings per C
Slide 25: Non-GAAP Adjusted Net Income and EPS: Full Year
25 RECONCILIATION OF NON-GAAP ITEMS (continued) Non-GAAP Adjusted Net Income and Diluted Earnings Per Share--Full Year Year Ended December 31, 2016 Unaudited ($ in thousands) Income Before Taxes Income Taxes Net Income Net Income Attributable to Crawford & Company Diluted Earnings per CRD-A Share Di