Exhibit 99.1
Crawford & Company®
5335 Triangle Parkway
Peachtree Corners, GA 30092
FOR IMMEDIATE RELEASE
CRAWFORD & COMPANY REPORTS 2021 SECOND QUARTER RESULTS
DOUBLE DIGIT REVENUE GROWTH IN QUARTER
ATLANTA, (August 3, 2021) -- Crawford & Company® (NYSE: CRD-A and CRD-B), the world’s largest publicly listed independent provider of claims management and outsourcing solutions to carriers, brokers and corporations, today announced its financial results for the second quarter ended June 30, 2021.
The Company’s two classes of stock are substantially identical, except with respect to voting rights and the Company’s ability to pay greater cash dividends on the non-voting Class A Common Stock (CRD-A) than on the voting Class B Common Stock (CRD-B), subject to certain limitations. In addition, with respect to mergers or similar transactions, holders of CRD-A must receive the same type and amount of consideration as holders of CRD-B, unless different consideration is approved by the holders of 75% of CRD-A, voting as a class.
GAAP Consolidated Results
Second Quarter 2021
Revenues before reimbursements of $267.5 million, up 14% over $234.4 million for the 2020 second quarter
Net income attributable to shareholders of $11.8 million, double the $5.9 million in the same period last year
Diluted earnings per share of $0.22 for both CRD-A and CRD-B, compared with $0.11 for both CRD-A for CRD-B in the prior year second quarter
Non-GAAP Consolidated Results
Second Quarter 2021
Non-GAAP consolidated results for 2021 exclude the non-cash after-tax amortization of intangible assets of $2.1 million. Non-GAAP consolidated results for 2020 exclude the non-cash after-tax adjustments of amortization of intangible assets of $2.0 million, loss on disposition of business of $0.3 million, and income tax impact of the first quarter 2020 goodwill impairment of $2.2 million, as explained further on page 3.
Foreign currency exchange rates increased revenues before reimbursements by $12.2 million or 5.2%. Presented on a constant dollar basis to the prior year, revenues before reimbursements totaled $255.2 million, increasing 9% over $234.4 million for the 2020 second quarter
Net income attributable to shareholders, on a non-GAAP basis, totaled $13.8 million in the 2021 second quarter, compared with $10.4 million in the same period last year
Diluted earnings per share, on a non-GAAP basis, of $0.25 for CRD-A and $0.26 CRD-B in the 2021 second quarter, compared with $0.19 for both CRD-A and CRD-B in the prior year second quarter
Consolidated adjusted operating earnings, on a non-GAAP basis, were $19.6 million, or 7.3% of revenues before reimbursements, in the 2021 second quarter, compared with $18.2 million, or 7.8% of revenues, in the 2020 second quarter
Consolidated adjusted EBITDA, a non-GAAP financial measure, was $29.0 million, or 10.8% of revenues before reimbursements, in the 2021 second quarter, compared with $25.5 million, or 10.9% of revenues, in the 2020 second quarter
Management Comments
Mr. Rohit Verma, chief executive officer of Crawford & Company stated, “Crawford delivered outstanding results in the second quarter of 2021, including year-over-year revenue and non-GAAP CRD-A EPS growth of 14% and 32%, respectively. Importantly, we saw strength across the business despite the absence of significant weather-related activity as claim volumes rebounded in TPA and Loss Adjusting while the Platforms business continues to drive transformation in the loss adjusting industry."
Mr. Verma continued, “We are building on this momentum as we further advance our strategy. Through reimagination of the claims ecosystem and investments in technology, we remain on the cutting-edge of innovation within the insurance industry. Entering the second half of 2021, while we continue to see some potential headwinds from an uneven COVID-19 global recovery, some green shoots are emerging for our U.S. TPA business amidst signs of an increasingly robust labor market. Encouragingly, the post-pandemic insurance landscape is accelerating the pace of adoption for digital client-centric solutions bolstering the overall performance of our Platforms segment. We remain confident that our ongoing success will continue to enhance lives and will deliver value to our shareholders, businesses and communities.”
Segment Results for the Second Quarter
Crawford Loss Adjusting
Crawford Loss Adjusting revenues before reimbursements were $116.0 million in the second quarter of 2021, increasing 6.3% from $109.1 million in the second quarter of 2020. Absent foreign currency rate benefits of $8.7 million, second quarter 2021 revenues would have been $107.3 million.
The segment had operating earnings of $6.2 million in the 2021 second quarter decreasing from $10.0 million in the second quarter of 2020. The operating margin was 5.3% in the 2021 quarter and 9.2% in the 2020 quarter.
Crawford Platform Solutions
Crawford Platform Solution revenues before reimbursements were $51.1 million in the second quarter of 2021, up 39.4% from $36.7 million in the same period of 2020. Absent foreign exchange rate benefits of $0.7 million, revenues would have been $50.4 million for the three months ended June 30, 2021.
Operating earnings were $10.4 million in the 2021 second quarter increasing 45.1% over $7.1 million in the 2020 period. The segment’s operating margin for the 2021 quarter was 20.3% as compared with 19.5% in the 2020 quarter.
Crawford TPA Solutions
Crawford TPA Solutions segment revenues before reimbursements were $100.4 million in the 2021 second quarter, increasing 13.2% from $88.7 million in the 2020 second quarter. Absent foreign currency rate benefits of $2.8 million, second quarter 2021 revenues would have been $97.6 million.
Crawford TPA Solutions recorded operating earnings of $4.7 million in the second quarter of 2021, representing an operating margin of 4.7%, increasing from $3.1 million, or 3.5% of revenues, in the 2020 second quarter.
Unallocated Corporate and Shared Costs and Credits, Net
Unallocated corporate costs were $1.7 million in the second quarter of 2021, compared with $2.1 million in the same period of 2020. The decrease for the three months ended June 30, 2021 was primarily due to a decrease in severance costs present in 2020, partially offset by an increase in self-insurance costs and professional fees, and a lower credit from the Canada Emergency Wage Subsidy ("CEWS").
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CEWS
During the 2021 second quarter, the Company recognized a pretax benefit from CEWS totaling $2.2 million as compared to benefits of $4.3 million in the 2020 second quarter. The Company does not expect to recognize any further benefits from CEWS during the remainder of 2021.
Income Tax Impact of First Quarter 2020 Goodwill Impairment
The Company recognized a non-cash goodwill impairment in the 2020 first quarter, totaling $17.7 million. Due to the non-discrete income tax treatment of the goodwill impairment, the initial income tax benefit related to the impairment normalized during the year, resulting in a lower full year income tax benefit. During the 2020 second quarter, the impact of this treatment decreased the income tax benefit by $2.2 million, or $0.04 per share. There was no goodwill impairment in 2021.
Loss on Disposition of Business
There was a pretax loss on disposal totaling $0.3 million in the 2020 second quarter related to the disposal of a business in our Crawford Platform Solutions reporting segment. There was no loss on disposal in 2021.
COVID-19
The Company has experienced some recovery from the negative economic impact of COVID-19 in recent months, particularly in the U.S., compared to the significant reductions experienced in the prior year. Due to continued negative impacts in multiple regions, it is uncertain whether such recovery can be sustained and continue. We expect that the economic impact from COVID-19 could have a material impact to our results of operations, financial condition, and cash flows in one or more future quarters. In addition, it is possible that changes in economic conditions and steps taken by international, federal, state and/or local governments in response to COVID-19 could have negative impacts, including labor shortages which could increase compensation costs and other expenses, unless mitigated by government assistance programs to corporations.
Balance Sheet and Cash Flow
The Company’s consolidated cash and cash equivalents position as of June 30, 2021, totaled $44.7 million, unchanged from December 31, 2020. The Company’s total debt outstanding as of June 30, 2021, totaled $125.0 million, compared with $113.6 million at December 31, 2020.
The Company’s operations provided $10.5 million of cash during 2021, compared with $12.0 million in 2020. The decrease in cash provided by operating activities was primarily due to higher pension contributions and growth in receivables, offset by higher net income in the current period.
The Company made $4.5 million in contributions to its U.S. defined benefit pension plan and $0.4 million to its U.K. plans for 2021, compared with $3.0 million in contributions to the U.S. plan and $0.3 million to the U.K. plans in 2020.
During 2021, the Company repurchased 256,213 shares of CRD-A and 80,952 shares of CRD-B at an average per share cost of $9.09 and $8.28, respectively. The total cost of share repurchases during 2021 was $3.0 million.
Conference Call
As previously announced, Crawford & Company will host a conference call on August 4, 2021, at 8:30 a.m. Eastern Time to discuss its second quarter 2021 results. The conference call can be accessed live by dialing 1-833-968-1973 and using Conference ID 9538728. A presentation for tomorrow’s call can also be found on the investor relations portion of the Company’s website, https://ir.crawco.com. The call will be recorded and available for replay through September 4, 2021. You may dial 1-800-585-8367 to listen to the replay.
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Non-GAAP Presentation
In the normal course of business, our operating segments incur certain out-of-pocket expenses that are thereafter reimbursed by our clients. Under U.S. generally accepted accounting principles (“GAAP”), these out-of-pocket expenses and associated reimbursements are required to be included when reporting expenses and revenues, respectively, in our consolidated results of operations. In the foregoing discussion and analysis of segment results of operations, we do not include a gross up of segment expenses and revenues for these pass-through reimbursed expenses. The amounts of reimbursed expenses and related revenues offset each other in our results of operations with no impact to our net income or operating earnings. A reconciliation of revenues before reimbursements to consolidated revenues determined in accordance with GAAP is self-evident from the face of the accompanying unaudited condensed consolidated statements of operations.
Operating earnings is the primary financial performance measure used by our senior management and chief operating decision maker (“CODM”) to evaluate the financial performance of our Company and operating segments, and make resource allocation and certain compensation decisions. Unlike net income, segment operating earnings is not a standard performance measure found in GAAP. We believe this measure is useful to others in that it allows them to evaluate segment and consolidated operating performance using the same criteria used by our senior management and CODM. Consolidated operating earnings represent segment earnings including certain unallocated corporate and shared costs, but before net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, goodwill impairment, restructuring costs, loss on disposition of business, income taxes and net income or loss attributable to noncontrolling interests and redeemable noncontrolling interests.
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. 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 attributable to shareholders of the Company with recurring adjustments for depreciation and amortization, net corporate interest expense, income taxes and stock-based compensation expense. Additionally, adjustments for non-recurring expenses for goodwill impairment, restructuring costs and loss on disposition of business have been included in the calculation of adjusted EBITDA.
Unallocated corporate and shared costs and credits include expenses and credits related to our chief executive officer and Board of Directors, certain provisions for bad debt allowances or subsequent recoveries such as those related to bankrupt clients, defined benefit pension costs or credits for our frozen U.S. pension plan, certain unallocated professional fees and certain self-insurance costs and recoveries that are not allocated to our individual operating segments.
Income taxes, net corporate interest expense, stock option expense and amortization of customer-relationship intangible assets are recurring components of our net income, but they are not considered part of our segment operating earnings because they are managed on a corporate-wide basis. Income taxes are calculated for the Company on a consolidated basis based on statutory rates in effect in the various jurisdictions in which we provide services and vary significantly by jurisdiction. Net corporate interest expense results from capital structure decisions made by senior management and the Board of Directors, affecting the Company as a whole. Stock option expense represents the non-cash costs generally related to stock options and employee stock purchase plan expenses which are not allocated to our operating segments. Amortization expense is a non-cash expense for finite-lived customer-relationship and trade name intangible assets acquired in business combinations. None of these costs relate directly to the performance of our services or operating activities and, therefore, are excluded from segment operating earnings to better assess the results of each segment's operating activities on a consistent basis.
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A significant portion of our operations are international. These international operations subject us to foreign exchange fluctuations. The following table illustrates revenue as a percentage of total revenue for the major currencies of the geographic areas that Crawford does business:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | Six Months Ended | |
(in thousands) | | June 30,
2021 | | | June 30,
2020 | | | June 30,
2021 | | | June 30,
2020 | |
Geographic Area | Currency | USD equivalent | | % of total | | | USD equivalent | | % of total | | | USD equivalent | | % of total | | | USD equivalent | | % of total | |
U.S. | USD | $ | 155,714 | | | 58.2 | % | | $ | 131,889 | | | 56.3 | % | | $ | 301,116 | | | 57.8 | % | | $ | 266,335 | | | 56.4 | % |
U.K. | GBP | | 34,280 | | | 12.8 | % | | | 32,559 | | | 13.9 | % | | | 66,503 | | | 12.8 | % | | | 64,942 | | | 13.8 | % |
Canada | CAD | | 20,337 | | | 7.6 | % | | | 20,853 | | | 8.9 | % | | | 41,571 | | | 8.0 | % | | | 46,073 | | | 9.8 | % |
Australia | AUD | | 27,497 | | | 10.3 | % | | | 18,778 | | | 8.0 | % | | | 51,707 | | | 9.9 | % | | | 34,325 | | | 7.3 | % |
Europe | EUR | | 14,145 | | | 5.3 | % | | | 14,019 | | | 6.0 | % | | | 27,409 | | | 5.3 | % | | | 27,408 | | | 5.8 | % |
Rest of World | Various | | 15,484 | | | 5.8 | % | | | 16,318 | | | 6.9 | % | | | 32,332 | | | 6.2 | % | | | 32,864 | | | 6.9 | % |
Total Revenues, before reimbursements | $ | 267,457 | | | 100.0 | % | | $ | 234,416 | | | 100.0 | % | | $ | 520,638 | | | 100.0 | % | | $ | 471,947 | | | 100.0 | % |
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Following is a reconciliation of segment and consolidated operating earnings to net income (loss) attributable to shareholders of Crawford & Company on a GAAP basis:
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| Three months ended | | | Six Months Ended | |
(in thousands) | June 30, 2021 | | June 30, 2020 | | | June 30, 2021 | | June 30, 2020 | |
Operating earnings: | | | | | | | | | |
Crawford Loss Adjusting | $ | 6,199 | | $ | 10,043 | | | $ | 11,061 | | $ | 10,715 | |
Crawford Platform Solutions | | 10,368 | | | 7,145 | | | | 14,969 | | | 10,284 | |
Crawford TPA Solutions | | 4,715 | | | 3,122 | | | | 9,431 | | | 9,420 | |
Unallocated corporate and shared costs, net | | (1,662 | ) | | (2,066 | ) | | | (2,815 | ) | | (5,162 | ) |
Consolidated operating earnings | | 19,620 | | | 18,244 | | | | 32,646 | | | 25,257 | |
(Deduct) add: | | | | | | | | | |
Net corporate interest expense | | (1,213 | ) | | (2,452 | ) | | | (2,795 | ) | | (4,676 | ) |
Stock option expense | | (264 | ) | | (286 | ) | | | (404 | ) | | (576 | ) |
Amortization expense | | (2,750 | ) | | (2,732 | ) | | | (5,549 | ) | | (5,488 | ) |
Goodwill impairment | | — | | | — | | | | — | | | (17,674 | ) |
Restructuring costs | | — | | | — | | | | — | | | (5,714 | ) |
Loss on disposition of business | | — | | | (341 | ) | | | — | | | (341 | ) |
Income tax (provision) benefit | | (3,590 | ) | | (6,311 | ) | | | (6,061 | ) | | 2,175 | |
Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests | | (23 | ) | | (224 | ) | | | 7 | | | 1,536 | |
Net income (loss) attributable to shareholders of Crawford & Company | $ | 11,780 | | $ | 5,898 | | | $ | 17,844 | | $ | (5,501 | ) |
| | | | | | | | | |
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Following is a reconciliation of net income (loss) attributable to shareholders of Crawford & Company on a GAAP basis to non-GAAP adjusted EBITDA:
| | | | | | | | | | | | | |
| Three months ended | | | Six Months Ended | |
(in thousands) | June 30, 2021 | | June 30, 2020 | | | June 30, 2021 | | June 30, 2020 | |
Net income (loss) attributable to shareholders of Crawford & Company | $ | 11,780 | | $ | 5,898 | | | $ | 17,844 | | $ | (5,501 | ) |
Add (Deduct): | | | | | | | | | |
Depreciation and amortization | | 10,464 | | | 9,390 | | | | 20,942 | | | 19,450 | |
Stock-based compensation | | 1,954 | | | 1,118 | | | | 3,563 | | | 1,998 | |
Net corporate interest expense | | 1,213 | | | 2,452 | | | | 2,795 | | | 4,676 | |
Goodwill impairment | | — | | | — | | | | — | | | 17,674 | |
Restructuring costs | | — | | | — | | | | — | | | 5,714 | |
Loss on disposition of business | | — | | | 341 | | | | — | | | 341 | |
Income tax provision (benefit) | | 3,590 | | | 6,311 | | | | 6,061 | | | (2,175 | ) |
Non-GAAP adjusted EBITDA | $ | 29,001 | | $ | 25,510 | | | $ | 51,205 | | $ | 42,177 | |
| | | | | | | | | |
Following is a reconciliation of operating cash flow to free cash flow for the six months ended June 30, 2021 and 2020:
| | | | | | | | | | | |
Six months ended | |
(in thousands) | June 30, 2021 | | | June 30, 2020 | | | Change | |
Net Cash Provided by Operating Activities | $ | 10,532 | | | $ | 12,032 | | | $ | (1,500 | ) |
Less: | | | | | | | | |
Property & Equipment Purchases, net | | (2,120 | ) | | | (5,476 | ) | | | 3,356 | |
Capitalized Software (internal and external costs) | | (10,083 | ) | | | (8,823 | ) | | | (1,260 | ) |
Free Cash Flow | $ | (1,671 | ) | | $ | (2,267 | ) | | $ | 596 | |
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Following are the reconciliations of GAAP Revenue, Operating Earnings, Pretax Earnings (Loss), Net Income (Loss) and Earnings (Loss) Per Share to related non-GAAP Adjusted figures, which reflect 2021 before amortization of intangible assets, and for 2020 exclude the amortization of intangible assets, goodwill impairment, loss on disposition of business and restructuring costs:
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Three Months Ended June 30, 2021 | |
(in thousands) | Revenues | | Non-GAAP
Operating earnings | | Pretax earnings | | Net income
attributable to Crawford & Company | | Diluted earnings per
CRD-A
share(1) | | Diluted earnings per
CRD-B
share | |
GAAP | $ | 267,457 | | $ | 19,620 | | $ | 15,393 | | $ | 11,780 | | $ | 0.22 | | $ | 0.22 | |
Adjustments: | | | | | | | | | | | | |
Amortization of intangible assets | | — | | | — | | | 2,750 | | | 2,063 | | | 0.04 | | | 0.04 | |
Non-GAAP Adjusted | $ | 267,457 | | $ | 19,620 | | $ | 18,143 | | $ | 13,843 | | $ | 0.25 | | $ | 0.26 | |
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| | | | | | | | | | | | | | | | | | |
Three Months Ended June 30, 2020 | |
(in thousands) | Revenues | | Non-GAAP Operating earnings | | Pretax (loss) earnings | | Net income
attributable to Crawford & Company(2) | | Diluted earnings per
CRD-A
share(2) | | Diluted earnings per
CRD-B
share(2) | |
GAAP | $ | 234,416 | | $ | 18,244 | | $ | 12,433 | | $ | 5,898 | | $ | 0.11 | | $ | 0.11 | |
Adjustments: | | | | | | | | | | | | |
Amortization of intangible assets | | — | | | — | | | 2,732 | | | 2,049 | | | 0.04 | | | 0.04 | |
Income tax impact of first quarter goodwill impairment | | — | | | — | | | — | | | 2,206 | | | 0.04 | | | 0.04 | |
Loss on disposition of business | | — | | | — | | | 341 | | | 265 | | | - | | | - | |
Non-GAAP Adjusted | $ | 234,416 | | $ | 18,244 | | $ | 15,506 | | $ | 10,418 | | $ | 0.19 | | $ | 0.19 | |
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| | | | | | | | | | | | | | | | | | |
Six Months Ended June 30, 2021 | |
(in thousands) | Revenues | | Non-GAAP
Operating earnings | | Pretax income | | Net income attributable to Crawford & Company | | Diluted earnings per
CRD-A
share(1) | | Diluted earnings per
CRD-B
share | |
GAAP | $ | 520,638 | | $ | 32,646 | | $ | 23,898 | | $ | 17,844 | | $ | 0.33 | | $ | 0.33 | |
Adjustments: | | | | | | | | | | | | |
Amortization of Intangible Assets | | — | | | — | | | 5,549 | | | 4,162 | | | 0.08 | | | 0.08 | |
Non-GAAP Adjusted | $ | 520,638 | | $ | 32,646 | | $ | 29,447 | | $ | 22,006 | | $ | 0.40 | | $ | 0.41 | |
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Six Months Ended June 30, 2020 | |
(in thousands) | Revenues | | Non-GAAP Operating earnings | | Pretax (loss) earnings | | Net (loss) income attributable to Crawford & Company(2) | | Diluted (loss) earnings per CRD-A share(2) | | Diluted (loss) earnings per CRD-B share(2) | |
GAAP | $ | 471,947 | | $ | 25,257 | | $ | (9,212 | ) | $ | (5,501 | ) | $ | (0.10 | ) | $ | (0.12 | ) |
Adjustments: | | | | | | | | | | | | |
Goodwill impairment | | — | | | — | | | 17,674 | | | 11,339 | | | 0.21 | | | 0.21 | |
Restructuring costs | | — | | | — | | | 5,714 | | | 3,263 | | | 0.06 | | | 0.06 | |
Loss on disposition of business | | — | | | — | | | 341 | | | 265 | | | 0.01 | | | 0.01 | |
Amortization of Intangible Assets | | — | | | — | | | 5,488 | | | 4,116 | | | 0.08 | | | 0.08 | |
Non-GAAP Adjusted | $ | 471,947 | | $ | 25,257 | | $ | 20,005 | | $ | 13,482 | | $ | 0.26 | | $ | 0.24 | |
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(1) Sum of reconciling items may differ from total due to rounding of individual components.
(2) The income tax impact of goodwill impairment was based on the estimated annual effective income tax rate. Due to the non-discrete income tax treatment of the first quarter 2020 goodwill impairment, the income tax benefit normalized as income was earned during the remainder of the year, resulting in a lower full year income tax benefit during 2020.
Following is information regarding the weighted average shares used in the computation of basic and diluted earnings per share:
| | | | | | | | | | | | |
| Three months ended | | Six months ended | |
(in thousands) | June 30, 2021 | | June 30, 2020 | | June 30, 2021 | | June 30, 2020 | |
Weighted-Average Shares Used to Compute Basic Earnings (Loss) Per Share: | | | | | | | | |
Class A Common Stock | | 30,826 | | | 30,521 | | | 30,825 | | | 30,541 | |
Class B Common Stock | | 22,445 | | | 22,510 | | | 22,454 | | | 22,544 | |
Weighted-Average Shares Used to Compute Diluted Earnings (Loss) Per Share: | | | | | | | | |
Class A Common Stock | | 31,997 | | | 30,690 | | | 31,897 | | | 30,541 | |
Class B Common Stock | | 22,445 | | | 22,510 | | | 22,454 | | | 22,544 | |
| | | | | | | | |
Further information regarding the Company’s operating results for the quarter and six months ended June 30, 2021, financial position as of June 30, 2021, and cash flows for the six months ended June 30, 2021 is shown on the attached unaudited condensed consolidated financial statements.
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About Crawford & Company
Based in Atlanta, Crawford & Company (NYSE: CRD-A and CRD-B) is the world's largest publicly listed independent provider of claims management and outsourcing solutions to carriers, brokers and corporations with an expansive global network serving clients in more than 70 countries. The Company’s shares are traded on the NYSE under the symbols CRD-A and CRD-B. The Company's two classes of stock are substantially identical, except with respect to voting rights and the Company's ability to pay greater cash dividends on the non-voting Class A Common Stock than on the voting Class B Common Stock, subject to certain limitations. In addition, with respect to mergers or similar transactions, holders of Class A Common Stock must receive the same type and amount of consideration as holders of Class B Common Stock, unless different consideration is approved by the holders of 75% of the Class A Common Stock, voting as a class. More information is available at www.crawco.com.
Earnings per share may be different between CRD-A and CRD-B due to the payment of a higher per share dividend on CRD-A than CRD-B, and the impact that has on the earnings per share calculation according to generally accepted accounting principles.
TAG: Crawford-Financial, Crawford-Investor-News-and-Events
FOR FURTHER INFORMATION REGARDING THIS PRESS RELEASE, PLEASE CALL BRUCE SWAIN AT (404) 300-1051.
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This press release 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 historical facts may be “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from historical experience or Crawford & Company’s present expectations. Accordingly, no one should place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Crawford & Company does not undertake to update forward-looking statements to reflect the impact of circumstances or events that may arise or not arise after the date the forward-looking statements are made. For further information regarding Crawford & Company, including factors that could cause our actual financial condition, results or earnings to differ from those described in any forward-looking statements, please read Crawford & Company’s reports filed with the SEC and available at www.sec.gov and in the Investor Relations section of Crawford & Company’s website at www.crawco.com. |
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CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands, Except Per Share Amounts and Percentages)
| | | | | | | | | | | | |
Three Months Ended June 30, | | 2021 | | | 2020 | | | % Change | |
| | | | | | | | | |
Revenues: | | | | | | | | | |
Revenues Before Reimbursements | | $ | 267,457 | | | $ | 234,416 | | | | 14 | % |
Reimbursements | | | 9,088 | | | | 8,459 | | | | 7 | % |
Total Revenues | | | 276,545 | | | | 242,875 | | | | 14 | % |
| | | | | | | | | |
Costs and Expenses: | | | | | | | | | |
Costs of Services Provided, Before Reimbursements | | | 193,157 | | | | 163,598 | | | | 18 | % |
Reimbursements | | | 9,088 | | | | 8,459 | | | | 7 | % |
Total Costs of Services | | | 202,245 | | | | 172,057 | | | | 18 | % |
| | | | | | | | | |
Selling, General, and Administrative Expenses | | | 58,658 | | | | 55,508 | | | | 6 | % |
Corporate Interest Expense, Net | | | 1,213 | | | | 2,452 | | | | (51 | )% |
Loss on disposition of business | | | - | | | | 341 | | | nm | |
Total Costs and Expenses | | | 262,116 | | | | 230,358 | | | | 14 | % |
| | | | | | | | | |
Other Income (Expense), Net | | | 964 | | | | (84 | ) | | | 1248 | % |
| | | | | | | | | |
Income Before Income Taxes | | | 15,393 | | | | 12,433 | | | | 24 | % |
Provision for Income Taxes | | | 3,590 | | | | 6,311 | | | | (43 | )% |
| | | | | | | | | |
Net Income | | | 11,803 | | | | 6,122 | | | | 93 | % |
| | | | | | | | | |
Net Income Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests | | | (23 | ) | | | (224 | ) | | | (90 | )% |
| | | | | | | | | |
Net Income Attributable to Shareholders of Crawford & Company | | $ | 11,780 | | | $ | 5,898 | | | | 100 | % |
| | | | | | | | | |
Earnings Per Share - Basic: | | | | | | | | | |
Class A Common Stock | | $ | 0.22 | | | $ | 0.11 | | | | 100 | % |
Class B Common Stock | | $ | 0.22 | | | $ | 0.11 | | | | 100 | % |
| | | | | | | | | |
Earnings Per Share - Diluted: | | | | | | | | | |
Class A Common Stock | | $ | 0.22 | | | $ | 0.11 | | | | 100 | % |
Class B Common Stock | | $ | 0.22 | | | $ | 0.11 | | | | 100 | % |
| | | | | | | | | |
Cash Dividends Per Share: | | | | | | | | | |
Class A Common Stock | | $ | 0.06 | | | $ | 0.03 | | | | 100 | % |
Class B Common Stock | | $ | 0.06 | | | $ | 0.03 | | | | 100 | % |
9
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands, Except Per Share Amounts and Percentages)
| | | | | | | | | | | | |
Six Months Ended June 30, | | 2021 | | | 2020 | | | % Change | |
| | | | | | | | | |
Revenues: | | | | | | | | | |
Revenues Before Reimbursements | | $ | 520,638 | | | $ | 471,947 | | | | 10 | % |
Reimbursements | | | 18,062 | | | | 16,974 | | | | 6 | % |
Total Revenues | | | 538,700 | | | | 488,921 | | | | 10 | % |
| | | | | | | | | |
Costs and Expenses: | | | | | | | | | |
Costs of Services Provided, Before Reimbursements | | | 378,359 | | | | 341,202 | | �� | | 11 | % |
Reimbursements | | | 18,062 | | | | 16,974 | | | | 6 | % |
Total Costs of Services | | | 396,421 | | | | 358,176 | | | | 11 | % |
| | | | | | | | | |
Selling, General, and Administrative Expenses | | | 117,360 | | | | 111,262 | | | | 5 | % |
Corporate Interest Expense, Net | | | 2,795 | | | | 4,676 | | | | (40 | )% |
Goodwill Impairment | | | - | | | | 17,674 | | | nm | |
Restructuring Costs | | | - | | | | 5,714 | | | nm | |
Gain on Disposition of Businesses, Net | | | - | | | | 341 | | | nm | |
Total Costs and Expenses | | | 516,576 | | | | 497,843 | | | | 4 | % |
| | | | | | | | | |
Other Income (Expense), Net | | | 1,774 | | | | (290 | ) | | | 712 | % |
| | | | | | | | | |
Income (Loss) Before Income Taxes | | | 23,898 | | | | (9,212 | ) | | | 359 | % |
Provision (benefit) for Income Taxes | | | 6,061 | | | | (2,175 | ) | | | 379 | % |
| | | | | | | | | |
Net Income (Loss) | | | 17,837 | | | | (7,037 | ) | | | 353 | % |
| | | | | | | | | |
Net Loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests | | | 7 | | | | 1,536 | | | | (100 | )% |
| | | | | | | | | |
Net Income (Loss) Attributable to Shareholders of Crawford & Company | | $ | 17,844 | | | $ | (5,501 | ) | | | 424 | % |
| | | | | | | | | |
Earnings (Loss) Per Share - Basic: | | | | | | | | | |
Class A Common Stock | | $ | 0.33 | | | $ | (0.10 | ) | | | 430 | % |
Class B Common Stock | | $ | 0.33 | | | $ | (0.12 | ) | | | 375 | % |
| | | | | | | | | |
Earnings (Loss) Per Share - Diluted: | | | | | | | | | |
Class A Common Stock | | $ | 0.33 | | | $ | (0.10 | ) | | | 430 | % |
Class B Common Stock | | $ | 0.33 | | | $ | (0.12 | ) | | | 375 | % |
| | | | | | | | | |
Cash Dividends Per Share: | | | | | | | | | |
Class A Common Stock | | $ | 0.12 | | | $ | 0.10 | | | | 20 | % |
Class B Common Stock | | $ | 0.12 | | | $ | 0.08 | | | | 50 | % |
10
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 30, 2021 and December 31, 2020
Unaudited
(In Thousands, Except Par Values)
| | | | | | | | |
| | June 30, | | | December 31, | |
| | 2021 | | | 2020 | |
ASSETS | | | | | | |
| | | | | | |
Current Assets: | | | | | | |
Cash and Cash Equivalents | | $ | 44,708 | | | $ | 44,656 | |
Accounts Receivable, Net | | | 124,651 | | | | 123,060 | |
Unbilled Revenues, at Estimated Billable Amounts | | | 115,489 | | | | 103,528 | |
Income Taxes Receivable | | | 1,785 | | | | 1,269 | |
Prepaid Expenses and Other Current Assets | | | 32,739 | | | | 29,490 | |
Total Current Assets | | | 319,372 | | | | 302,003 | |
| | | | | | |
Net Property and Equipment | | | 34,107 | | | | 36,402 | |
| | | | | | |
Other Assets: | | | | | | |
Operating Lease Right-of-Use Asset, Net | | | 106,433 | | | | 109,315 | |
Goodwill | | | 74,728 | | | | 66,537 | |
Intangible Assets Arising from Business Acquisitions, Net | | | 69,316 | | | | 71,176 | |
Capitalized Software Costs, Net | | | 72,048 | | | | 71,021 | |
Deferred Income Tax Assets | | | 25,501 | | | | 25,595 | |
Other Noncurrent Assets | | | 69,084 | | | | 70,935 | |
Total Other Assets | | | 417,110 | | | | 414,579 | |
| | | | | | |
Total Assets | | $ | 770,589 | | | $ | 752,984 | |
| | | | | | |
LIABILITIES AND SHAREHOLDERS’ INVESTMENT | | | | | | |
| | | | | | |
Current Liabilities: | | | | | | |
Short-Term Borrowings | | $ | 7,084 | | | $ | 1,837 | |
Accounts Payable | | | 40,786 | | | | 41,544 | |
Accrued Compensation and Related Costs | | | 71,003 | | | | 81,848 | |
Self-Insured Risks | | | 11,147 | | | | 11,390 | |
Income Taxes Payable | | | — | | | | 5,822 | |
Operating Lease Liability | | | 30,193 | | | | 32,745 | |
Other Accrued Liabilities | | | 43,652 | | | | 40,375 | |
Deferred Revenues | | | 28,365 | | | | 27,233 | |
Total Current Liabilities | | | 232,230 | | | | 242,794 | |
| | | | | | |
Noncurrent Liabilities: | | | | | | |
Long-Term Debt and Finance Leases, Less Current Installments | | | 117,878 | | | | 111,758 | |
Operating Lease Liability | | | 92,467 | | | | 93,228 | |
Deferred Revenues | | | 23,923 | | | | 24,136 | |
Accrued Pension Liabilities | | | 44,223 | | | | 53,886 | |
Other Noncurrent Liabilities | | | 44,314 | | | | 40,254 | |
Total Noncurrent Liabilities | | | 322,805 | | | | 323,262 | |
| | | | | | |
Shareholders’ Investment: | | | | | | |
Class A Common Stock, $1.00 Par Value | | | 30,723 | | | | 30,847 | |
Class B Common Stock, $1.00 Par Value | | | 22,429 | | | | 22,510 | |
Additional Paid-in Capital | | | 70,813 | | | | 67,193 | |
Retained Earnings | | | 274,033 | | | | 265,245 | |
Accumulated Other Comprehensive Loss | | | (182,235 | ) | | | (198,856 | ) |
Shareholders’ Investment Attributable to Shareholders of Crawford & Company | | | 215,763 | | | | 186,939 | |
Noncontrolling Interests | | | (209 | ) | | | (11 | ) |
Total Shareholders’ Investment | | | 215,554 | | | | 186,928 | |
| | | | | | |
Total Liabilities and Shareholders’ Investment | | $ | 770,589 | | | $ | 752,984 | |
11
CRAWFORD & COMPANY
SUMMARY RESULTS BY OPERATING SEGMENT WITH DIRECT COMPENSATION AND OTHER EXPENSES
Unaudited
(In Thousands, Except Percentages)
Three Months Ended June 30,
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Crawford Loss Adjusting | | | % | | Crawford Platform Solutions | % | | | Crawford TPA Solutions | | | % | |
| | 2021 | | | 2020 | | | Change | | | 2021 | | | 2020 | | | Change | | | 2021 | | | 2020 | | | Change | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues Before Reimbursements | | $ | 115,956 | | | $ | 109,062 | | | | 6.3 | % | | $ | 51,127 | | | $ | 36,686 | | | | 39.4 | % | | $ | 100,374 | | | $ | 88,668 | | | | 13.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Direct Compensation, Fringe Benefits & Non-Employee Labor | | | 75,557 | | | | 65,571 | | | | 15.2 | % | | | 30,489 | | | | 21,170 | | | | 44.0 | % | | | 63,880 | | | | 56,937 | | | | 12.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
% of Revenues Before Reimbursements | | | 65.2 | % | | | 60.1 | % | | | | | | 59.6 | % | | | 57.7 | % | | | | | | 63.6 | % | | | 64.2 | % | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor | | | 34,200 | | | | 33,448 | | | | 2.2 | % | | | 10,270 | | | | 8,371 | | | | 22.7 | % | | | 31,779 | | | | 28,609 | | | | 11.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
% of Revenues Before Reimbursements | | | 29.5 | % | | | 30.7 | % | | | | | | 20.1 | % | | | 22.8 | % | | | | | | 31.7 | % | | | 32.3 | % | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Operating Expenses | | | 109,757 | | | | 99,019 | | | | 10.8 | % | | | 40,759 | | | | 29,541 | | | | 38.0 | % | | | 95,659 | | | | 85,546 | | | | 11.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating Earnings (1) | | $ | 6,199 | | | $ | 10,043 | | | | (38.3 | )% | | $ | 10,368 | | | $ | 7,145 | | | | 45.1 | % | | $ | 4,715 | | | $ | 3,122 | | | | 51.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
% of Revenues Before Reimbursements | | | 5.3 | % | | | 9.2 | % | | | | | | 20.3 | % | | | 19.5 | % | | | | | | 4.7 | % | | | 3.5 | % | | | |
Six Months Ended June 30,
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Crawford Loss Adjusting | | | % | | Crawford Platform Solutions | % | | | Crawford TPA Solutions | | | % | |
| | 2021 | | | 2020 | | | Change | | | 2021 | | | 2020 | | | Change | | | 2021 | | | 2020 | | | Change | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues Before Reimbursements | | $ | 228,493 | | | $ | 216,166 | | | | 5.7 | % | | $ | 93,526 | | | $ | 69,116 | | | | 35.3 | % | | $ | 198,619 | | | $ | 186,665 | | | | 6.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Direct Compensation, Fringe Benefits & Non-Employee Labor | | | 149,142 | | | | 136,144 | | | | 9.5 | % | | | 57,858 | | | | 41,579 | | | | 39.2 | % | | | 126,835 | | | | 118,337 | | | | 7.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
% of Revenues Before Reimbursements | | | 65.3 | % | | | 63.0 | % | | | | | | 61.9 | % | | | 60.2 | % | | | | | | 63.9 | % | | | 63.4 | % | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor | | | 68,290 | | | | 69,307 | | | | (1.5 | )% | | | 20,699 | | | | 17,253 | | | | 20.0 | % | | | 62,353 | | | | 58,908 | | | | 5.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
% of Revenues Before Reimbursements | | | 29.9 | % | | | 32.1 | % | | | | | | 22.1 | % | | | 25.0 | % | | | | | | 31.4 | % | | | 31.6 | % | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Operating Expenses | | | 217,432 | | | | 205,451 | | | | 5.8 | % | | | 78,557 | | | | 58,832 | | | | 33.5 | % | | | 189,188 | | | | 177,245 | | | | 6.7 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating Earnings (1) | | $ | 11,061 | | | $ | 10,715 | | | | 3.2 | % | | $ | 14,969 | | | $ | 10,284 | | | | 45.6 | % | | $ | 9,431 | | | $ | 9,420 | | | | 0.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
% of Revenues Before Reimbursements | | | 4.8 | % | | | 5.0 | % | | | | | | 16.0 | % | | | 14.9 | % | | | | | | 4.7 | % | | | 5.0 | % | | | |
(1) A non-GAAP financial measurement which represents net income attributable to the applicable reporting segment excluding income taxes, net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, goodwill impairment, restructuring costs, loss on disposition of business, and certain unallocated corporate and shared costs and credits. See pages 3 and 4 for additional information about segment operating earnings.
12
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year to Date Period Ended June 30, 2021 and June 30, 2020
Unaudited
(In Thousands)
| | | | | | | | |
| | 2021 | | | 2020 | |
Cash Flows From Operating Activities: | | | | | | |
Net income (loss) | | $ | 17,837 | | | $ | (7,037 | ) |
Reconciliation of net income (loss) to net cash provided by operating activities: | | | | | | |
Depreciation and amortization | | | 20,942 | | | | 19,450 | |
Goodwill impairment | | | — | | | | 17,674 | |
Stock-based compensation | | | 3,563 | | | | 1,998 | |
Loss on disposition of business | | | — | | | | 341 | |
Changes in operating assets and liabilities: | | | | | | |
Accounts receivable, net | | | 3,111 | | | | 5,473 | |
Unbilled revenues, net | | | (7,026 | ) | | | (7,000 | ) |
Accrued or prepaid income taxes | | | (7,424 | ) | | | (6,806 | ) |
Accounts payable and accrued liabilities | | | (11,331 | ) | | | (3,405 | ) |
Deferred revenues | | | (189 | ) | | | (457 | ) |
Accrued retirement costs | | | (9,879 | ) | | | (4,975 | ) |
Prepaid expenses and other operating activities | | | 928 | | | | (3,224 | ) |
Net cash provided by operating activities | | | 10,532 | | | | 12,032 | |
| | | | | | |
Cash Flows From Investing Activities: | | | | | | |
Acquisitions of property and equipment | | | (2,120 | ) | | | (5,476 | ) |
Capitalization of computer software costs | | | (10,083 | ) | | | (8,823 | ) |
Proceeds from settlement of life insurance policies | | | 4,198 | | | | — | |
Payments for business acquisitions, net of cash acquired | | | (3,786 | ) | | | — | |
Other investing | | | — | | | | (87 | ) |
Net cash used in investing activities | | | (11,791 | ) | | | (14,386 | ) |
| | | | | | |
Cash Flows From Financing Activities: | | | | | | |
Cash dividends paid | | | (6,394 | ) | | | (4,859 | ) |
Repurchases of common stock | | | (2,999 | ) | | | (2,666 | ) |
Increases in short-term and revolving credit facility borrowings | | | 29,983 | | | | 73,340 | |
Payments on short-term and revolving credit facility borrowings | | | (18,986 | ) | | | (54,124 | ) |
Payments of contingent consideration on acquisitions | | | (1,683 | ) | | | — | |
Other financing activities | | | (282 | ) | | | (292 | ) |
Net cash (used in) provided by financing activities | | | (361 | ) | | | 11,399 | |
| | | | | | |
Effects of exchange rate changes on cash and cash equivalents | | | 1,672 | | | | (889 | ) |
Increase in cash and cash equivalents | | | 52 | | | | 8,156 | |
Cash and cash equivalents at beginning of year | | | 44,656 | | | | 51,802 | |
Cash and cash equivalents at end of period | | $ | 44,708 | | | $ | 59,958 | |
13
