Crawford & Company (CRD-B) 8-K Crawford Reports 2009 First Quarter Results

WORKING TOGETHER:

the

Crawford

Difference

First Quarter 2009

Earnings Conference Call

Monday, May 4, 2009

Exhibit 99.2

WORKING TOGETHER:

the

Crawford Difference

2

First Quarter Earnings Review

May 4,

2009

•

Founded

in

1941,

Crawford

is

the

largest

independent

global

provider of claims management solutions and a fully

integrated global provider of these solutions 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.

WORKING

TOGETHER:

the

Crawford

Difference

3

Forward-looking Statements and

Segment Operating Earnings

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

historical

facts

are

“forward-looking”

statements

as

defined

in

the

Private

Securities

Litigation

Reform

Act

of

1995.

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 any 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, and the risks and uncertainties involved

in forward-looking statements, please read Crawford & Company’s reports filed with the United States

Securities

and

Exchange

Commission

and

available

at

www.sec.gov

or

in

the

Investor

Relations

section

of

Crawford

&

Company’s

website

at www.crawfordandcompany.com

.

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, net income (loss) of non-controlling interests, and special credits and

charges. Segment revenues and expenses do not include reimbursements for out-of-pocket expenses.

WORKING TOGETHER:

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Crawford Difference

Agenda

•

Welcome

•

Overview of 2009 First Quarter

•

First Quarter Financial Review

•

Segment Operating Highlights

•

Outlook for Fiscal 2009

4

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Difference

5

First Quarter Overview

•

Overview of Global Insurance Industry

•

Encouraging performance in a difficult

operating environment

First quarter revenue decline of 7.6%

Strong U.S. dollar affects revenues by $23.4

million

Net income attributable to Crawford & Company

declined 66%

•

Growth in U.S. Property & Casualty

U.S. Property & Casualty revenue up 11.2%

Cases increased 6.6%

•

International Operations revenues grew 7.0%

on a constant dollar basis

Improvements in Canada, Europe and Asia Pacific

200

210

220

230

240

250

260

1Q 2009

1Q 2008

Revenue

$ in millions

0

1

2

3

4

5

6

7

8

9

10

1Q 2009

1Q 2008

Net Income attributable to Crawford & Company

$ in millions

$236.1

$255.5

$3.1

$9.1

WORKING

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Crawford

Difference

Revenue and Earnings Per Share Bridge

1   Quarter 2008 to 2009

6

In millions, except per share amounts

Revenues before

Reimbursements

Net

Income

attributable

to Crawford

& Company

Diluted

EPS

1 

quarter

2008

results

$255.5

$9.1

$0.18

(Less)/Add:

Foreign currency impact in 2009

(23.4)

(1.4)

(0.03)

Increase in pension expense in 2009

-

(2.3)

(0.05)

Restructuring costs in 2009

-

(1.2)

(0.02)

Bad debt recovery in 2008

-

(0.9)

(0.02)

Operating changes

4.0

(0.2)

(   -

)

1 

quarter

2009

results

$236.1

$3.1

$0.06

st

st

st

WORKING TOGETHER:

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Crawford

Difference

First Quarter 2009

Financial Review

WORKING

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Crawford

Difference

8

First Quarter 2009 Financials

Quarter Ended March 31

2009

2008

% Change

Revenues:

Revenues Before Reimbursements

$236,083

$255,512

-8%

Reimbursements

14,200

19,161

-26%

Total Revenues

250,283

274,673

-9%

Costs and Expenses:

Cost of Services Before Reimbursements

175,162

186,953

-6%

Reimbursements

14,200

19,161

-26%

Total Cost of Services

189,362

206,114

-8%

Selling, General, and Administrative

51,488

50,503

2%

Corporate Interest Expense, Net

3,485

4,416

-21%

Restructuring Costs

1,815

-

nm

Total Costs and Expenses

246,150

261,033

-6%

Income Before Income Taxes

4,133

13,640

-70%

Provision for Income Taxes

1,120

4,644

-76%

Net Income

3,013

8,996

-67%

Add:  Net Loss Attributable to Noncontrolling

Interests

69

72

-4%

Net Income Attributable to Crawford & Company

$3,082

$9,068

-66%

Earnings Per Share -

Basic and Diluted

$0.06

$0.18

-67%

nm = not meaningful

CRAWFORD  &  COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Unaudited

(In Thousands, Except Earnings Per Share Amounts and Percentages)

WORKING

TOGETHER:

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Crawford

Difference

9

60

70

80

90

100

110

1Q 2009

1Q 2008

Revenue

6

6.5

7

7.5

8

8.5

9

1Q 2009

1Q 2008

Operating Earnings

$ in millions

$ in millions

First Quarter 2009 Financials

$90.9

$106.7

$7.5

$9.0

Revenues down $23.4 million due to strong U.S. dollar

Revenue increased 7.0% on a constant dollar basis

Summary Results, International Operations

For the quarters ended March 31, 2009 and 2008

in thousands except percentages

Unaudited

2009

2008

% Change

Revenues

90,872

$    

106,710

$ 

-14.8%

Total Operating Expenses

83,407

97,723

-14.6%

Operating Earnings

7,465

$      

8,987

$     

-16.9%

Operating Margin

8.2%

8.4%

WORKING

TOGETHER:

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Crawford

Difference

10

0

10

20

30

40

50

60

1Q 2009

1Q 2008

Revenue

$ in millions

$ in millions

$49.5

$55.1

Catastrophe revenue up $3.0 million from severe weather

Cases up nearly 7% in quarter

Prior year period has bad debt recovery of $400,000

First Quarter 2009 Financials

Summary Results, U.S. Property & Casualty

For the quarters ended March 31, 2009 and 2008

in thousands except percentages

Unaudited

2009

2008

% Change

Revenues

55,052

$    

49,510

$   

11.2%

Total Operating Expenses

48,882

43,561

12.2%

Operating Earnings

6,170

$      

5,949

$     

3.7%

Operating Margin

11.2%

12.0%

4.0

4.5

5.0

5.5

6.0

6.5

7.0

1Q 2009

1Q 2008

Operating Earnings

$5.9

$6.2

WORKING

TOGETHER:

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Crawford

Difference

11

$ in millions

$ in millions

$74.6

$80.3

$1.7

($2.0)

Revenues and earnings decline due to lower workers’

compensation claim referrals

Impact of economic crisis being felt most by this segment

First Quarter 2009 Financials

40

50

60

70

80

90

1Q 2009

1Q 2008

Revenue

-3

-2

-1

0

1

2

1Q 2009

1Q 2008

Operating Earnings (Loss)

Summary Results, Broadspire

For the quarters ended March 31, 2009 and 2008

in thousands except percentages

Unaudited

2009

2008

% Change

Revenues

74,601

$    

80,313

$   

-7.1%

Total Operating Expenses

76,555

78,566

-2.6%

Operating Earnings (Loss)

(1,954)

$     

1,747

$     

nm

Operating Margin

-2.6%

2.2%

WORKING

TOGETHER:

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Crawford

Difference

12

0.0

0.5

1.0

1.5

2.0

2.5

1Q 2009

1Q 2008

Operating Earnings

$ in millions

$ in millions

$15.6

$19.0

$2.5

$1.5

Revenue and operating earnings decrease reflects ongoing

slowdown in class action settlements

Bankruptcy-related revenues increasing

Backlog of $39.0 million

First Quarter 2009 Financials

Summary

Results,

Legal

Settlement

Administration

For the quarters ended March 31, 2009 and 2008

in thousands except percentages

Unaudited

2009

2008

% Change

Revenues

15,558

$    

18,979

$   

-18.0%

Total Operating Expenses

14,031

16,482

-14.9%

Operating Earnings

1,527

$      

2,497

$     

-38.8%

Operating Margin

9.8%

13.2%

10.0

12.0

14.0

16.0

18.0

20.0

1Q 2009

1Q 2008

Revenue

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Crawford

Difference

13

First Quarter 2009 Financials

Crawford & Company

Balance Sheet Highlights

As of March 31, 2009 and December 31, 2008

                                                            (in thousands)

    March 31,

    December 31,

                 2009

                 2008

Change

Cash and cash equivalents

$42,526

$73,124

($30,598)

Accounts receivable, net

148,471

157,430

(8,959)

Work in process

94,449

99,115

(4,666)

     Total receivables

242,920

256,545

(13,625)

Deferred revenues, net                   

90,541

95,670

(5,129)

Pension liabilities

178,733

179,542

(809)

Current portion of long-term debt, capital leases

and short-term borrowings

12,074

15,650

(3,576)

Long-term debt, less current portion

180,565

181,206

(641)

     Total debt

192,639

196,856

(4,217)

Total stockholders' equity

168,664

180,359

(11,695)

Net debt*

150,113

123,732

26,381

Total debt / capitalization

53%

52%

*Net debt is defined by the Company as long-term debt, capital leases and short-term borrowings, 

net of cash and cash equivalents.

WORKING

TOGETHER:

the

Crawford

Difference

14

First Quarter 2009 Financials

Crawford & Company

Free Cash Flow (non-GAAP)

For the year-to-date period ended March 31, 2009 and 2008

                                        (In Thousands)

     March 31,

     March 31,

              2009

             2008

Variance

Net Income Attributable to Crawford & Company

$3,082

$9,068

($5,986)

   Plus: Depreciation / Non-Cash Items

9,492

8,496

996

   Less: Working Capital Growth

(22,056)

(21,611)

(445)

   Less: U.S. Pension Contributions

(2,500)

-

(2,500)

Operating Cash Flow

(11,982)

(4,047)

(7,935)

   Less: Capital Expenditures

(2,811)

(3,551)

740

   Less: Internally Developed Software

(2,799)

(3,044)

245

   Less: Mandatory Principal Payments

(525)

(525)

-

Free Cash Flow (non-GAAP)

($18,117)

($11,167)

($6,950)

WORKING TOGETHER:

the

Crawford

Difference

First Quarter 2009

Segment Highlights

WORKING

TOGETHER:

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Crawford

Difference

16

First Quarter 2009 Financials

120

130

140

150

160

170

1Q 2009

1Q 2008

International Claims

Claims referred in 000s

150.3

154.5

International Operations

Global revenue growth of 7% before

currency impacts

1    quarter operating margin

decreased slightly to 8.2% in 2009

from 8.4% in 2008

Claims referred decreased 2.8% due

to  lower 2009 CAT claims

Improvements in Canada, Europe and

Asia Pacific

FX impact on first quarter revenues

was negative 21.9%, or $23.4 million

st

WORKING

TOGETHER:

the

Crawford

Difference

17

First Quarter 2009 Financials

U.S. Property & Casualty

Revenue growth of 11.2%

Operating margin sustained double

digits at 11.2%

Catastrophe revenue up to $4.9 million

from $1.9 million

Technology-driven efficiencies

realized

Claims referred increased 6.6% due to

increases in property and CAT-related

claims

75

85

95

105

115

125

1Q 2009

1Q 2008

U.S. P&C Claims

Claims referred in 000s

115.3

108.2

WORKING

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Difference

18

U.S. Catastrophe (CAT) Activity

0

2

4

6

1Q 2009

1Q 2008

Cases

4.5

2.1

0

1

2

3

4

5

1Q 2009

1Q 2008

Revenues

$4.9

$1.9

$ in millions

Quarter Ended March 31:

In 000s

U.S. Catastrophe

2009 reflects benefit from severe

first quarter weather

Strong incremental margins

generated from CAT adjuster

revenues

Technology and process

improvements

WORKING TOGETHER:

the

Crawford Difference

19

First Quarter 2009 Highlights

Claims referred in 000s

55.4

69.1

Broadspire

Workers’

Compensation market  remains

challenging due to rising U.S.

unemployment levels

Revenue decrease of 7.1% on 19.8%

decline in claims

Operating loss of $2.0 million in the 2009

1    quarter

Cost control program ongoing

RiskTech

implementation continues

99.6% client retention rate for 2009 1 

quarter

st

st

40

45

50

55

60

65

70

1Q 2009

1Q 2008

Broadspire

Claims

WORKING

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Crawford

Difference

20

First Quarter 2009 Highlights

Legal Settlement Administration

Continued slowdown in security class

actions

Increase in bankruptcy related

revenues

Revenue declined 18% due to

slowdown in class action settlements

Backlog

of $39 million

20

25

30

35

40

45

50

55

1Q 2009

1Q 2008

Backlog

Backlog in millions

$39.0

$50.5

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Difference

21

2009 Guidance

•

Reaffirming Full Year 2009 Guidance:

–

Consolidated revenue before reimbursements between $960

million and $980 million

–

Consolidated operating earnings between $50.5 million and

$55.8 million

–

After reflecting stock-based compensation expense, net

corporate interest expense, customer-relationship intangible

amortization expense, special credits and charges and

income taxes, net income attributed to Crawford & Company

on a GAAP basis between $22.0 million and $25.0 million

–

Earnings per share of $.41 to $.47

WORKING TOGETHER:

the

Crawford

Difference

First Quarter 2009

Earnings Conference Call

Monday, May 4, 2009