the STRENGTH of WORKING TOGETHER SM First Quarter 2008 Earnings Conference Call Monday, May 5, 2008 Exhibit 99.2 |
2 First Quarter Earnings Review May 5, 2008 • Founded in 1941, Crawford is the largest independent global provider of claims management solutions and a fully integrated global provider for the growing multi-national market. • Crawford is divided into four reporting segments that support the strategic positioning of the company in a changing market place: – U.S. Property & Casualty • Serves the U.S. insurance company market – International Operations • Serves the global insurance industry and multinational corporations – Broadspire • Serves large national accounts, carriers and self-insured entities – Legal Settlement Administration • Provides administration for class action settlements and bankruptcy matters • The Company’s independence, global presence and diversified business lines are key competitive advantages which set Crawford apart from its competitors. |
3 Forward-looking Statements and Segment Operating Earnings Forward Looking Statements: Some of the matters discussed in this presentation include forward-looking statements that involve risks and uncertainties. The Company’s actual results achieved in future quarters may differ materially from results that might be implied by such forward-looking statements. The Company undertakes no obligation to publicly release any revisions to any forward-looking statement made in this presentation to reflect events or circumstances occurring after the date of this presentation, or to reflect the occurrence of unanticipated events. For a complete discussion regarding factors which could affect the Company’s financial performance, please refer to the Company’s Form 10K for the year ended December 31, 2007 filed with the Securities and Exchange Commission, particularly the information under the headings “Business”, “Risk Factors”, “Legal Proceedings”, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Segment Operating Earnings: Segment operating earnings represent earnings before net corporate interest expense, amortization of customer-relationship intangible assets, stock option expense, income tax expense, unallocated corporate and shared costs, and gains on asset sales. |
4 “The Strength of Working Together” “The Strength of Working Together” is unifying the Company around consistent goals: Adaptive leadership team responding to economic conditions Increasing emphasis on sources of additional revenue growth – Cross selling Crawford services into the existing client base – Identifying new large client opportunities – Mid-market competition as economy weighs on “Mom & Pops” Driving technology forward – Point of competitive strength – Firm delivery dates and increased support Crawford continues to restore and improve its reputation – Quality improving at the branch level – Investing in training Being a target-driven organization – Achieving financial goals |
5 First Quarter 2008 Overview • Strong performance in a difficult operating environment Revenue growth of 4.9% supported by cost reduction initiatives Net Income up 174% • Strong revenue growth internationally offset declines in U.S. businesses International growth (before currency effects) of 15.8% Revenue declines at U.S. P&C, Broadspire, and L.S.A. • Solid earnings per share performance at $0.18 Double-digit operating earnings in U.S. P&C and L.S.A. All four segments reported positive operating earnings and margin improvement SG&A costs reduced by 8.1% • Planned for difficult U.S. economy Continued growth trends internationally Ongoing emphasis on growing existing client base through cross selling Focus on cost control US claims value holding steady 0 20 40 60 80 100 120 1Q 2008 1Q 2007 Revenue $ in millions 0 2 4 6 8 10 1Q 2008 1Q 2007 Net Income $ in millions $255.5 $243.6 $9.1 $3.3 |
6 First Quarter 2008 Highlights • Broadspire Revenue decline of 5.0% Positive operating earnings of $1.7 million in 2008 Claims frequency down 5.7% in worker’s compensation Increased cross selling, new RFP activity, Expanding BPO operations • U.S. Property & Casualty Revenue decline of 2.9% Operating margin of 12.0% in 2008 from 6.6% in 2007 Operating earnings up 76% Property claims up 2.2% Strong margin growth in tough environment 66 68 70 72 74 76 1Q 2008 1Q 2007 Broadspire Claims Claims referred in 000s 69.1 75.4 85 90 95 100 105 110 1Q 2008 1Q 2007 USP&C Claims Claims referred in 000s 93.9 106.3 |
7 First Quarter 2008 Highlights • Legal Settlement Administration Revenue declined 21.4% Operating margin increased to 13.2% in 2008 from 10.9% in 2007 Operating earnings declined 5.3% Growing backlog of $50.5 million 0 10 20 30 40 50 1Q 2008 1Q 2007 Backlog Backlog in millions 150 152 154 156 158 160 1Q 2008 1Q 2007 International Claims Claims referred in 000s • International Strong global revenue growth of 27.1% Operating margin increased to 8.4% in 2008 from 4.7% in 2007 Operating earnings increased 127% Strength in Canada, UK and Asia Pacific Claims referred increased 3.4% 159.0 153.8 $50.5 $31.1 |
8 Updating 2008 Outlook • Consolidated revenue before reimbursements between $990 million and $1.02 billion • Consolidated operating earnings between $56.0 million and $61.6 million • After reflecting stock-based compensation expense, net corporate interest expense, amortization of customer- relationship intangible assets and income taxes, consolidated net income on a GAAP basis between $20.2 million and $23.3 million • Earnings per share of $.40 to $.46 • Continue to focus on cost reduction • Continue to improve operational quality • Strong global growth should offset U.S. declines • Emphasis on expanded sales and marketing activities |
the STRENGTH of WORKING TOGETHER SM First Quarter 2008 Financial Review |
10 First Quarter 2008 Financials Quarter Ended March 31 2008 2007 % Change Revenues: Revenues Before Reimbursements $255,512 $243,608 5% Reimbursements 19,161 19,416 -1% Total Revenues 274,673 263,024 4% Costs and Expenses: Cost of Services Before Reimbursements 186,743 182,707 2% Reimbursements 19,161 19,416 -1% Total Cost of Services 205,904 202,123 2% Selling, General, and Administrative 50,641 55,109 -8% Corporate Interest Expense, Net 4,416 4,368 1% Total Costs and Expenses 260,961 261,600 0% Gain on Disposal of Subrogation Business - 3,978 nm Income Before Income Taxes 13,712 5,402 154% Income Taxes 4,644 2,095 122% Net Income $9,068 $3,307 174% Earnings Per Share - After Gain on Disposal $0.18 $0.07 173% Earnings Per Share - Before Gain on Disposal $0.18 $0.02 800% nm = not meaningful CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Per Share Amounts) Unaudited |
11 0 10 20 30 40 50 60 1Q 2008 1Q 2007 Revenue 0 1 2 3 4 5 6 1Q 2008 1Q 2007 Operating Earnings $ in millions $ in millions First Quarter 2008 Financials $51.0 $49.5 $3.4 $5.9 Improved margins through strong cost management Catastrophe revenue flat from 2007 to 2008 Reduction in claim referrals due to major client decision to insource high volume, low margin vehicle claims. U.S. Property & Casualty Summary Results For the quarter ended March 31, 2008 and 2007 in Thousands Except Percentages Unaudited 2008 2007 % Change Revenues 49,510 $ 50,996 $ -2.9% Total Operating Expenses 43,561 47,620 -8.5% Operating Earnings 5,949 $ 3,376 $ 76.2% Operating Margin 12.0% 6.6% 5.4% |
12 0 20 40 60 80 100 120 1Q 2008 1Q 2007 Revenue 0 2 4 6 8 10 1Q 2008 1Q 2007 Operating Earnings $ in millions $ in millions First Quarter 2008 Financials $106.7 $83.9 $9.0 $4.0 Revenue increased 15.8% on a constant dollar basis Significant new client wins in Canada International Summary Results For the quarter ended March 31, 2008 and 2007 in Thousands Except Percentages Unaudited 2008 2007 % Change Revenues 106,710 $ 83,940 $ 27.1% Total Operating Expenses 97,723 79,976 22.2% Operating Earnings 8,987 $ 3,964 $ 126.7% Operating Margin 8.4% 4.7% 3.7% |
13 0 20 40 60 80 100 1Q 2008 1Q 2007 Revenue -0.8 -0.6 -0.4 -0.2 0 0.2 0.4 0.6 0.8 1 1Q 2008 1Q 2007 Operating Earnings $ in millions $ in millions First Quarter 2008 Financials $80.3 $84.5 ($0.7) $1.7 Improved margin through strong cost management Strong client retention Broadspire Summary Results For the quarter ended March 31, 2008 and 2007 in Thousands Except Percentages Unaudited 2008 2007 % Change Revenues 80,313 $ 84,520 $ -5.0% Total Operating Expenses 78,566 85,201 -7.8% Operating Earnings (Loss) 1,747 $ (681) $ 356.5% Operating Margin 2.2% -0.8% 3.0% |
14 0 5 10 15 20 25 1Q 2008 1Q 2007 Revenue 0 0.5 1 1.5 2 2.5 3 1Q 2008 1Q 2007 Operating Earnings $ in millions $ in millions First Quarter 2008 Financials $19.0 $24.2 $2.6 $2.5 Improved margins through strong cost management Backlog of over $50 million Legal Settlement Administration Summary Results For the quarter ended March 31, 2008 and 2007 in Thousands Except Percentages Unaudited 2008 2007 % Change Revenues 18,979 $ 24,152 $ -21.4% Total Operating Expenses 16,482 21,516 -23.4% Operating Earnings 2,497 $ 2,636 $ -5.3% Operating Margin 13.2% 10.9% 2.3% |
15 First Quarter 2008 Financials Crawford & Company Consolidated Balance Sheet Highlights As of March 31, 2008 and December 31, 2007 (in thousands) Unaudited March 31, December 31, 2008 2007* Change Cash and cash equivalents $42,841 $50,855 ($8,014) Accounts receivable, net 191,078 178,528 12,550 Work in process 130,007 136,652 (6,645) Total receivables 321,085 315,180 5,905 Deferred revenues, net 108,538 109,603 (1,065) Pension liabilities 74,362 76,977 (2,615) Current portion of long-term debt, capital leases and short-term borrowings 37,328 31,864 5,464 Long-term debt 182,955 183,449 (494) Total debt 220,283 215,313 4,970 Total stockholders' equity 257,861 254,215 3,646 Net debt** 177,442 164,458 12,984 Total debt / capitalization 46% 46% * Derived from the audited Consolidated Balance Sheet **Net debt is defined by the Company as long-term debt, capital leases and short-term borrowings, net of cash and cash equivalents. |
16 First Quarter 2008 Financials Crawford & Company Free Cash Flow For the year-to-date period ended March 31, 2008 and 2007 Unaudited (In Thousands) March 31, March 31, 2008 2007 Operating Cash Flow (Use) ($4,137) ($32,225) Less: Capital Expenditures (2,211) (3,293) Less: Capitalized Software (4,384) (2,675) Less: Required Debt Payment (525) (525) Free Cash Flow (Use) ($11,257) ($38,718) |
the STRENGTH of WORKING TOGETHER SM |