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: the Crawford Difference Agenda • Welcome • Overview of 2009 First Quarter • First Quarter Financial Review • Segment Operating Highlights • Outlook for Fiscal 2009 4 |
WORKING TOGETHER: the Crawford 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 TOGETHER: the 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: the Crawford Difference First Quarter 2009 Financial Review |
WORKING TOGETHER: the 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: the 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: the 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: the 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: the 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 |
WORKING TOGETHER: the 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: the 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 TOGETHER: the Crawford 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 TOGETHER: the 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 |
WORKING TOGETHER: the Crawford 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 |