Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Crawford & Company Reports 2023 First Quarter Results By: Crawford & Company via Business Wire May 03, 2023 at 16:15 PM EDT Broad-Based Revenue Growth Leads to Doubling of Net Income Crawford & Company® (NYSE: CRD-A and CRD-B) is pleased to announce its financial results for the first quarter ended March 31, 2023. Based in Atlanta, Crawford & Company (NYSE: CRD-A and CRD-B) is a leading global provider of claims management and outsourcing solutions to insurance companies and self‐insured entities with an expansive network serving clients in more than 70 countries. The Company’s two classes of stock are substantially identical, except with respect to voting rights for the Class B Common Stock (CRD-B) and protections for the non-voting Class A Common Stock (CRD-A). More information is available on the Company's website. GAAP Consolidated Results First Quarter 2023 Revenues before reimbursements of $313.0 million, up 12% over $279.0 million for the 2022 first quarter Net income attributable to shareholders of $10.7 million, more than doubling the $5.1 million in the same period last year Diluted earnings per share of $0.22 for both CRD-A and CRD-B, compared with diluted earnings per share of $0.10 for both CRD-A and CRD-B in the prior year first quarter Non-GAAP Consolidated Results First Quarter 2023 Non-GAAP consolidated results for 2023 exclude the non-cash, after-tax adjustments for amortization of intangible assets of $1.4 million, non-service related pension costs of $1.6 million, and contingent earnout adjustment of $0.2 million. Non-GAAP consolidated results for 2022 exclude a similar adjustment for amortization of intangible assets of $1.3 million, non-service related pension credits of $(0.4) million, and contingent earnout adjustment of $1.5 million. Foreign currency exchange rates decreased revenues before reimbursements by $9.4 million or (3)%. Presented on a constant dollar basis to the prior year, revenues before reimbursements totaled $322.4 million, increasing 16% over the 2022 first quarter Net income attributable to shareholders, on a non-GAAP basis, totaled $13.9 million in the 2023 first quarter, compared with $7.5 million in the same period last year Diluted earnings per share, on a non-GAAP basis, totaled $0.28 for both CRD-A and CRD-B in the 2023 first quarter, compared with $0.14 for both CRD-A and CRD-B in the prior year first quarter Consolidated adjusted operating earnings, on a non-GAAP basis, were $24.9 million, or 7.9% of revenues before reimbursements in the 2023 first quarter, compared with $12.5 million, or 4.5% of revenues, in the 2022 first quarter Consolidated adjusted EBITDA, a non-GAAP financial measure, was $32.8 million, or 10.5% of revenues before reimbursements in the 2023 first quarter, compared with $21.3 million, or 7.6% of revenues, in the 2022 first quarter Management Comments “Crawford delivered exceptional first quarter results, growing revenues 12% and nearly doubling operating earnings on a year-over-year basis. We experienced growth and profit expansion across all segments, signifying the strength of our business and solid execution of our stated strategies. Platform Solutions and North America Loss Adjusting both delivered double-digit revenue growth in the quarter. We also saw continued momentum in Broadspire, including encouraging signs of recovery within Medical Management. Our International business continued its turnaround, achieving revenue growth and margin expansion during the quarter,” commented Mr. Rohit Verma, chief executive officer of Crawford & Company. “Our disciplined strategy execution along with the hard work of our dedicated team and our clients’ confidence in our products and services has enabled us to deliver these strong results. We feel good about our continued trajectory as we delivered our tenth consecutive quarter of revenue growth. We remain in an enviable financial position and are confident in our ability to deliver long-term value to our shareholders,” concluded Mr. Verma. Segment Results for the First Quarter North America Loss Adjusting North America Loss Adjusting revenues before reimbursements were $77.1 million in the first quarter of 2023, increasing 19.7% from $64.4 million in the first quarter of 2022. The segment had operating earnings of $8.1 million in the 2023 first quarter, increasing from $4.1 million in the first quarter of 2022. The operating margin was 10.5% in the 2023 quarter and 6.4% in the 2022 quarter. International Operations International Operations revenues before reimbursements were $91.9 million in the first quarter of 2023, up 2.9% from $89.3 million in the same period of 2022, including $0.7 million from the Van Dijk acquisition. Absent foreign exchange rate decreases of $7.7 million, revenues would have been $99.6 million for the 2023 first quarter. Operating earnings were $3.0 million in the 2023 first quarter, compared to a $(3.1) million operating loss in the 2022 period. The segment’s operating margin for the 2023 quarter was 3.3% as compared with (3.4)% in the 2022 quarter. Broadspire Broadspire segment revenues before reimbursements were $81.2 million in the 2023 first quarter, increasing 6.2% from $76.5 million in the 2022 first quarter. Broadspire recorded operating earnings of $7.9 million in the first quarter of 2023, representing an operating margin of 9.8%, increasing from $6.4 million, or 8.4% of revenues, in the 2022 first quarter. Platform Solutions Platform Solutions revenues before reimbursements were $62.8 million in the first quarter of 2023, up 28.6% from $48.9 million in the same period of 2022. Operating earnings were $10.0 million in the 2023 first quarter, increasing over the $8.0 million in the 2022 period. The segment’s operating margin for the 2023 quarter was 15.9% as compared with 16.5% in the 2022 quarter. Unallocated Corporate and Shared Costs and Credits, Net Unallocated corporate costs were $4.1 million in the first quarter of 2023, compared with $3.0 million in the same period of 2022. The increase in the 2023 first quarter was primarily due to a $1.8 million gain on sale of our Canadian head office building in the 2022 first quarter and an increase in self-insurance costs in 2023, partially offset by other cost reductions. Other Matters The Company recognized pretax contingent earnout expenses totaling $0.2 million and $2.1 million in the 2023 first quarter and comparable 2022 period, respectively, related to the fair value adjustment of earnout liabilities arising from recent acquisitions. This adjustment, which is not a component of operating earnings, is based on favorable changes to projections of acquired entities over the respective earnout periods, which span multiple years. The Company recognized non-service pension costs of $2.2 million in the 2023 first quarter compared with credits of $(0.5) million in the comparable 2022 period. Non-service pension costs represent the U.S. and U.K. non-service defined benefit pension costs, which are non-operating in nature as the U.S. plan is frozen and the U.K. plans are closed to new participants. Balance Sheet and Cash Flow The Company’s consolidated cash and cash equivalents position as of March 31, 2023, totaled $43.3 million, compared with $46.0 million at December 31, 2022. The Company’s total debt outstanding as of March 31, 2023, totaled $249.4 million, compared with $238.9 million at December 31, 2022. The Company’s operations used $0.4 million of cash during the first three months of 2023, compared with $15.3 million used in 2022. The decrease in cash used was primarily driven by an increase in net income, $7.7 million reduction in incentive compensation payments, and increases in accrued income taxes and deferred revenues, partially offset by reductions in other accruals. The Company made no contributions to its U.S. defined benefit pension plan and $0.5 million in contributions to its U.K. plans for the first quarter of 2023, compared with no contributions to the U.S. plan and $0.2 million to the U.K. plans in 2022. There were no shares repurchased during the 2023 first quarter. During the 2022 first quarter, the Company repurchased 1,498,084 shares of CRD-A and 719,874 shares of CRD-B at an average per share cost of $7.23 and $7.31, respectively. The total cost of share repurchases in the 2022 quarter was $16.1 million. Conference Call As previously announced, Crawford & Company will host a conference call on May 4, 2023, at 8:30 a.m. Eastern Time to discuss its first quarter 2023 results. The conference call can be accessed live by dialing 1-888-396-8049 and using Conference ID 84184847. 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 June 4, 2023. You may dial 1-877-674-7070 and use passcode 184847# to listen to the replay. 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, contingent earnout adjustments, non-service pension costs and credits, income taxes and net income or loss attributable to 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 adjustments for depreciation and amortization, net corporate interest expense, contingent earnout adjustments, non-service pension costs and credits, income taxes and stock-based compensation expense. 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, 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, amortization of customer-relationship intangible assets, contingent earnout adjustments, and non-service pension costs and credits 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. Contingent earnout adjustments relate to changes in the fair value of earnouts associated with our recent acquisitions. Non-service pension costs and credits represent the U.S. and U.K. non-service defined benefit pension costs, which are non-operating in nature as the U.S. plan was frozen in 2002 and the U.K. plans are closed to new participants. 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. 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 (in thousands) March 31, 2023 March 31, 2022 Geographic Area Currency USD equivalent % of total USD equivalent % of total U.S. USD $ 196,768 62.9 % $ 165,493 59.3 % U.K. GBP 33,124 10.6 % 34,050 12.2 % Canada CAD 24,361 7.8 % 24,260 8.7 % Australia AUD 22,994 7.3 % 18,717 6.7 % Europe EUR 14,038 4.5 % 14,539 5.2 % Rest of World Various 21,707 6.9 % 21,966 7.9 % Total Revenues, before reimbursements $ 312,992 100.0 % $ 279,025 100.0 % Following is a reconciliation of consolidated operating earnings to net income attributable to shareholders of Crawford & Company on a GAAP basis: Three Months Ended (in thousands) March 31, 2023 March 31, 2022 Operating earnings: North America Loss Adjusting $ 8,065 $ 4,135 International Operations 3,035 (3,067 ) Broadspire 7,927 6,434 Platform Solutions 9,966 8,038 Unallocated corporate and shared costs, net (4,119 ) (2,995 ) Consolidated operating earnings 24,874 12,545 (Deduct) add: Net corporate interest expense (4,399 ) (1,519 ) Stock option expense (156 ) (205 ) Amortization of intangible assets (1,899 ) (1,726 ) Non-service pension costs and credits (2,171 ) 543 Contingent earnout adjustments (248 ) (2,056 ) Income tax provision (5,271 ) (2,426 ) Net income attributable to noncontrolling interests (49 ) (60 ) Net income attributable to shareholders of Crawford & Company $ 10,681 $ 5,096 Following is a reconciliation of net income attributable to shareholders of Crawford & Company on a GAAP basis to non-GAAP adjusted EBITDA: Three Months Ended (in thousands) March 31, 2023 March 31, 2022 Net income attributable to shareholders of Crawford & Company $ 10,681 $ 5,096 Add (Deduct): Depreciation and amortization 9,050 9,099 Stock-based compensation 1,023 1,660 Net corporate interest expense 4,399 1,519 Non-service pension costs and credits 2,171 (543 ) Contingent earnout adjustments 248 2,056 Income tax provision 5,271 2,426 Non-GAAP adjusted EBITDA $ 32,843 $ 21,313 Following is a reconciliation of operating cash flow to free cash flow for the three months ended March 31, 2023 and 2022: Three Months Ended (in thousands) March 31, 2023 March 31, 2022 Change Net Cash Used in Operating Activities $ (445 ) $ (15,253 ) $ 14,808 Less: Property & Equipment Purchases, net (1,031 ) (1,340 ) 309 Capitalized Software (internal and external costs) (7,610 ) (6,275 ) (1,335 ) Free Cash Flow $ (9,086 ) $ (22,868 ) $ 13,782 Following are the reconciliations of GAAP Pretax Earnings, Net Income and Earnings Per Share to related non-GAAP Adjusted figures, which reflect each of 2023 and 2022 before amortization of intangible assets, non-service related pension costs (credits) and contingent earnout adjustments: Three Months Ended March 31, 2023 (in thousands) Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share Diluted earnings per CRD-B share GAAP $ 16,001 $ 10,681 $ 0.22 $ 0.22 Adjustments: Amortization of intangible assets 1,899 1,424 0.03 0.03 Non-service related pension costs 2,171 1,613 0.03 0.03 Contingent earnout adjustments 248 184 — — Non-GAAP Adjusted $ 20,319 $ 13,902 $ 0.28 $ 0.28 Three Months Ended March 31, 2022 (in thousands) Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share Diluted earnings per CRD-B share GAAP $ 7,582 $ 5,096 $ 0.10 $ 0.10 Adjustments: Amortization of intangible assets 1,726 1,295 0.02 0.02 Non-service related pension credits (543 ) (421 ) (0.01 ) (0.01 ) Contingent earnout adjustments 2,056 1,522 0.03 0.03 Non-GAAP Adjusted $ 10,821 $ 7,492 $ 0.14 $ 0.14 Following is information regarding the weighted average shares used in the computation of basic and diluted earnings per share: Three Months Ended (in thousands) March 31, 2023 March 31, 2022 Weighted-Average Shares Used to Compute Basic Earnings Per Share: Class A Common Stock 28,841 30,908 Class B Common Stock 19,848 20,780 Weighted-Average Shares Used to Compute Diluted Earnings Per Share: Class A Common Stock 29,141 31,168 Class B Common Stock 19,848 20,780 Further information regarding the Company’s operating results for the three months ended March 31, 2023, financial position as of March 31, 2023, and cash flows for the three months ended March 31, 2023 is shown on the attached unaudited condensed consolidated financial statements. For further information regarding this press release, please call Bruce Swain at 404-300-1051. About Crawford® Based in Atlanta, Crawford & Company (NYSE: CRD‐A and CRD‐B) is a leading global provider of claims management and outsourcing solutions to insurance companies and self‐insured entities with an expansive network serving clients in more than 70 countries. The Company’s two classes of stock are substantially identical, except with respect to voting rights for the Class B Common Stock (CRD-B) and protections for the non-voting Class A Common Stock (CRD-A). More information is available at www.crawco.com. 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. Tag: Crawford-Investor-News-and-Events, Crawford-Financial CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited (In Thousands, Except Per Share Amounts and Percentages) Three Months Ended March 31, 2023 2022 % Change Revenues: Revenues Before Reimbursements $ 312,992 $ 279,025 12 % Reimbursements 11,604 8,764 32 % Total Revenues 324,596 287,789 13 % Costs and Expenses: Costs of Services Provided, Before Reimbursements 227,078 205,581 10 % Reimbursements 11,604 8,764 32 % Total Costs of Services 238,682 214,345 11 % Selling, General, and Administrative Expenses 63,369 64,841 (2 )% Corporate Interest Expense, Net 4,399 1,519 190 % Total Costs and Expenses 306,450 280,705 9 % Other (Loss) Income, Net (2,145 ) 498 nm Income Before Income Taxes 16,001 7,582 111 % Provision for Income Taxes 5,271 2,426 117 % Net Income 10,730 5,156 108 % Net Income Attributable to Noncontrolling Interests (49 ) (60 ) (18 )% Net Income Attributable to Shareholders of Crawford & Company $ 10,681 $ 5,096 110 % Earnings Per Share - Basic: Class A Common Stock $ 0.22 $ 0.10 120 % Class B Common Stock $ 0.22 $ 0.10 120 % Earnings Per Share - Diluted: Class A Common Stock $ 0.22 $ 0.10 120 % Class B Common Stock $ 0.22 $ 0.10 120 % Cash Dividends Per Share: Class A Common Stock $ 0.06 $ 0.06 — Class B Common Stock $ 0.06 $ 0.06 — CRAWFORD & COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS As of March 31, 2023 and December 31, 2022 Unaudited (In Thousands, Except Par Values) March 31, December 31, 2023 2022 ASSETS Current Assets: Cash and Cash Equivalents $ 43,304 $ 46,007 Accounts Receivable, Net 145,348 141,106 Unbilled Revenues, at Estimated Billable Amounts 137,410 126,274 Income Taxes Receivable 9,098 9,098 Prepaid Expenses and Other Current Assets 33,335 28,782 Total Current Assets 368,495 351,267 Net Property and Equipment 27,053 27,809 Other Assets: Operating Lease Right-of-Use Asset, Net 95,224 93,334 Goodwill 76,626 76,622 Intangible Assets Arising from Business Acquisitions, Net 88,511 88,039 Capitalized Software Costs, Net 86,255 82,975 Deferred Income Tax Assets 19,335 19,573 Other Noncurrent Assets 54,526 51,888 Total Other Assets 420,477 412,431 Total Assets $ 816,025 $ 791,507 LIABILITIES AND SHAREHOLDERS’ INVESTMENT Current Liabilities: Short-Term Borrowings $ 39,053 $ 27,048 Accounts Payable 46,776 50,847 Accrued Compensation and Related Costs 61,438 79,285 Self-Insured Risks 13,703 12,614 Income Taxes Payable 4,621 1,208 Operating Lease Liability 24,367 22,910 Other Accrued Liabilities 63,812 56,293 Deferred Revenues 32,517 29,282 Total Current Liabilities 286,287 279,487 Noncurrent Liabilities: Long-Term Debt and Finance Leases, Less Current Installments 210,342 211,810 Operating Lease Liability 84,994 84,628 Deferred Revenues 25,029 24,737 Accrued Pension Liabilities 25,653 25,914 Other Noncurrent Liabilities 41,893 41,553 Total Noncurrent Liabilities 387,911 388,642 Shareholders’ Investment: Class A Common Stock, $1.00 Par Value 28,925 28,764 Class B Common Stock, $1.00 Par Value 19,848 19,848 Additional Paid-in Capital 79,094 78,158 Retained Earnings 220,850 213,094 Accumulated Other Comprehensive Loss (205,503 ) (215,321 ) Shareholders’ Investment Attributable to Shareholders of Crawford & Company 143,214 124,543 Noncontrolling Interests (1,387 ) (1,165 ) Total Shareholders’ Investment 141,827 123,378 Total Liabilities and Shareholders’ Investment $ 816,025 $ 791,507 CRAWFORD & COMPANY SUMMARY RESULTS BY OPERATING SEGMENT WITH DIRECT COMPENSATION AND OTHER EXPENSES Unaudited (In Thousands, Except Percentages) Three Months Ended March 31, North America Loss Adjusting % International Operations % Broadspire % Platform Solutions % 2023 2022 Change 2023 2022 Change 2023 2022 Change 2023 2022 Change Revenues Before Reimbursements $ 77,127 $ 64,438 19.7 % $ 91,863 $ 89,272 2.9 % $ 81,182 $ 76,454 6.2 % $ 62,820 $ 48,861 28.6 % Direct Compensation, Fringe Benefits & Non-Employee Labor 54,164 46,497 16.5 % 61,421 63,006 (2.5 )% 52,641 47,949 9.8 % 40,911 31,851 28.4 % % of Revenues Before Reimbursements 70.2 % 72.2 % 66.9 % 70.6 % 64.8 % 62.7 % 65.1 % 65.2 % Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor 14,898 13,806 7.9 % 27,407 29,333 (6.6 )% 20,614 22,071 (6.6 )% 11,943 8,972 33.1 % % of Revenues Before Reimbursements 19.3 % 21.4 % 29.8 % 32.9 % 25.4 % 28.9 % 19.0 % 18.4 % Total Operating Expenses 69,062 60,303 14.5 % 88,828 92,339 (3.8 )% 73,255 70,020 4.6 % 52,854 40,823 29.5 % Operating Earnings (Loss) (1) $ 8,065 $ 4,135 95.0 % $ 3,035 $ (3,067 ) nm $ 7,927 $ 6,434 23.2 % $ 9,966 $ 8,038 24.0 % % of Revenues Before Reimbursements 10.5 % 6.4 % 3.3 % (3.4 )% 9.8 % 8.4 % 15.9 % 16.5 % (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, non-service pension costs and credits, contingent earnout adjustments, and certain unallocated corporate and shared costs and credits. See pages 3 and 4 for additional information about segment operating earnings. CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Year to Date Period Ended March 31, 2023 and March 31, 2022 Unaudited (In Thousands) 2023 2022 Cash Flows From Operating Activities: Net income $ 10,730 $ 5,156 Reconciliation of net income to net cash used in operating activities: Depreciation and amortization 9,050 9,099 Stock-based compensation 1,023 1,660 Loss (gain) on sale of property and equipment 20 (1,747 ) Contingent earnout adjustments 248 2,056 Changes in operating assets and liabilities: Accounts receivable, net (17 ) 6,542 Unbilled revenues, net (6,333 ) (13,022 ) Accrued or prepaid income taxes 3,895 266 Accounts payable and accrued liabilities (15,818 ) (14,902 ) Deferred revenues 2,841 402 Accrued retirement costs (2,887 ) (4,738 ) Prepaid expenses and other operating activities (3,197 ) (6,025 ) Net cash used in operating activities (445 ) (15,253 ) Cash Flows From Investing Activities: Acquisitions of property and equipment (1,031 ) (1,340 ) Capitalization of computer software costs (7,610 ) (6,275 ) Payments for business acquisitions, net of cash acquired — (21,273 ) Cash proceeds from sale of property and equipment — 3,032 Net cash used in investing activities (8,641 ) (25,856 ) Cash Flows From Financing Activities: Cash dividends paid (2,925 ) (3,114 ) Repurchases of common stock — (16,089 ) Increases in short-term and revolving credit facility borrowings 19,394 61,816 Payments on short-term and revolving credit facility borrowings (10,265 ) (3,989 ) Payments of contingent consideration on acquisitions (848 ) (746 ) Other financing activities (169 ) (270 ) Net cash provided by financing activities 5,187 37,608 Effects of exchange rate changes on cash and cash equivalents 1,195 (321 ) Decrease in cash, cash equivalents, and restricted cash(1) (2,704 ) (3,822 ) Cash, cash equivalents, and restricted cash at beginning of year(1) 46,645 53,689 Cash, cash equivalents, and restricted cash at end of period(1) $ 43,941 $ 49,867 (1) The 2023 amounts include beginning restricted cash of $638 at December 31, 2022, and ending restricted cash of $637 at March 31, 2023, and the 2022 amounts include beginning restricted cash of $461 at December 31, 2021, and ending restricted cash of $782 at March 31, 2022, which we present as part of "Prepaid expenses and other current assets" on the Balance Sheets. View source version on businesswire.com: https://www.businesswire.com/news/home/20230503005739/en/Contacts Media Contacts: mediarelations@us.crawco.com Lynn Cufley +44 207 265 4067 Lynn.Cufley@crawco.uk Katie Cline +1 470 792 5678 katie.cline@us.crawco.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Crawford & Company Reports 2023 First Quarter Results By: Crawford & Company via Business Wire May 03, 2023 at 16:15 PM EDT Broad-Based Revenue Growth Leads to Doubling of Net Income Crawford & Company® (NYSE: CRD-A and CRD-B) is pleased to announce its financial results for the first quarter ended March 31, 2023. Based in Atlanta, Crawford & Company (NYSE: CRD-A and CRD-B) is a leading global provider of claims management and outsourcing solutions to insurance companies and self‐insured entities with an expansive network serving clients in more than 70 countries. The Company’s two classes of stock are substantially identical, except with respect to voting rights for the Class B Common Stock (CRD-B) and protections for the non-voting Class A Common Stock (CRD-A). More information is available on the Company's website. GAAP Consolidated Results First Quarter 2023 Revenues before reimbursements of $313.0 million, up 12% over $279.0 million for the 2022 first quarter Net income attributable to shareholders of $10.7 million, more than doubling the $5.1 million in the same period last year Diluted earnings per share of $0.22 for both CRD-A and CRD-B, compared with diluted earnings per share of $0.10 for both CRD-A and CRD-B in the prior year first quarter Non-GAAP Consolidated Results First Quarter 2023 Non-GAAP consolidated results for 2023 exclude the non-cash, after-tax adjustments for amortization of intangible assets of $1.4 million, non-service related pension costs of $1.6 million, and contingent earnout adjustment of $0.2 million. Non-GAAP consolidated results for 2022 exclude a similar adjustment for amortization of intangible assets of $1.3 million, non-service related pension credits of $(0.4) million, and contingent earnout adjustment of $1.5 million. Foreign currency exchange rates decreased revenues before reimbursements by $9.4 million or (3)%. Presented on a constant dollar basis to the prior year, revenues before reimbursements totaled $322.4 million, increasing 16% over the 2022 first quarter Net income attributable to shareholders, on a non-GAAP basis, totaled $13.9 million in the 2023 first quarter, compared with $7.5 million in the same period last year Diluted earnings per share, on a non-GAAP basis, totaled $0.28 for both CRD-A and CRD-B in the 2023 first quarter, compared with $0.14 for both CRD-A and CRD-B in the prior year first quarter Consolidated adjusted operating earnings, on a non-GAAP basis, were $24.9 million, or 7.9% of revenues before reimbursements in the 2023 first quarter, compared with $12.5 million, or 4.5% of revenues, in the 2022 first quarter Consolidated adjusted EBITDA, a non-GAAP financial measure, was $32.8 million, or 10.5% of revenues before reimbursements in the 2023 first quarter, compared with $21.3 million, or 7.6% of revenues, in the 2022 first quarter Management Comments “Crawford delivered exceptional first quarter results, growing revenues 12% and nearly doubling operating earnings on a year-over-year basis. We experienced growth and profit expansion across all segments, signifying the strength of our business and solid execution of our stated strategies. Platform Solutions and North America Loss Adjusting both delivered double-digit revenue growth in the quarter. We also saw continued momentum in Broadspire, including encouraging signs of recovery within Medical Management. Our International business continued its turnaround, achieving revenue growth and margin expansion during the quarter,” commented Mr. Rohit Verma, chief executive officer of Crawford & Company. “Our disciplined strategy execution along with the hard work of our dedicated team and our clients’ confidence in our products and services has enabled us to deliver these strong results. We feel good about our continued trajectory as we delivered our tenth consecutive quarter of revenue growth. We remain in an enviable financial position and are confident in our ability to deliver long-term value to our shareholders,” concluded Mr. Verma. Segment Results for the First Quarter North America Loss Adjusting North America Loss Adjusting revenues before reimbursements were $77.1 million in the first quarter of 2023, increasing 19.7% from $64.4 million in the first quarter of 2022. The segment had operating earnings of $8.1 million in the 2023 first quarter, increasing from $4.1 million in the first quarter of 2022. The operating margin was 10.5% in the 2023 quarter and 6.4% in the 2022 quarter. International Operations International Operations revenues before reimbursements were $91.9 million in the first quarter of 2023, up 2.9% from $89.3 million in the same period of 2022, including $0.7 million from the Van Dijk acquisition. Absent foreign exchange rate decreases of $7.7 million, revenues would have been $99.6 million for the 2023 first quarter. Operating earnings were $3.0 million in the 2023 first quarter, compared to a $(3.1) million operating loss in the 2022 period. The segment’s operating margin for the 2023 quarter was 3.3% as compared with (3.4)% in the 2022 quarter. Broadspire Broadspire segment revenues before reimbursements were $81.2 million in the 2023 first quarter, increasing 6.2% from $76.5 million in the 2022 first quarter. Broadspire recorded operating earnings of $7.9 million in the first quarter of 2023, representing an operating margin of 9.8%, increasing from $6.4 million, or 8.4% of revenues, in the 2022 first quarter. Platform Solutions Platform Solutions revenues before reimbursements were $62.8 million in the first quarter of 2023, up 28.6% from $48.9 million in the same period of 2022. Operating earnings were $10.0 million in the 2023 first quarter, increasing over the $8.0 million in the 2022 period. The segment’s operating margin for the 2023 quarter was 15.9% as compared with 16.5% in the 2022 quarter. Unallocated Corporate and Shared Costs and Credits, Net Unallocated corporate costs were $4.1 million in the first quarter of 2023, compared with $3.0 million in the same period of 2022. The increase in the 2023 first quarter was primarily due to a $1.8 million gain on sale of our Canadian head office building in the 2022 first quarter and an increase in self-insurance costs in 2023, partially offset by other cost reductions. Other Matters The Company recognized pretax contingent earnout expenses totaling $0.2 million and $2.1 million in the 2023 first quarter and comparable 2022 period, respectively, related to the fair value adjustment of earnout liabilities arising from recent acquisitions. This adjustment, which is not a component of operating earnings, is based on favorable changes to projections of acquired entities over the respective earnout periods, which span multiple years. The Company recognized non-service pension costs of $2.2 million in the 2023 first quarter compared with credits of $(0.5) million in the comparable 2022 period. Non-service pension costs represent the U.S. and U.K. non-service defined benefit pension costs, which are non-operating in nature as the U.S. plan is frozen and the U.K. plans are closed to new participants. Balance Sheet and Cash Flow The Company’s consolidated cash and cash equivalents position as of March 31, 2023, totaled $43.3 million, compared with $46.0 million at December 31, 2022. The Company’s total debt outstanding as of March 31, 2023, totaled $249.4 million, compared with $238.9 million at December 31, 2022. The Company’s operations used $0.4 million of cash during the first three months of 2023, compared with $15.3 million used in 2022. The decrease in cash used was primarily driven by an increase in net income, $7.7 million reduction in incentive compensation payments, and increases in accrued income taxes and deferred revenues, partially offset by reductions in other accruals. The Company made no contributions to its U.S. defined benefit pension plan and $0.5 million in contributions to its U.K. plans for the first quarter of 2023, compared with no contributions to the U.S. plan and $0.2 million to the U.K. plans in 2022. There were no shares repurchased during the 2023 first quarter. During the 2022 first quarter, the Company repurchased 1,498,084 shares of CRD-A and 719,874 shares of CRD-B at an average per share cost of $7.23 and $7.31, respectively. The total cost of share repurchases in the 2022 quarter was $16.1 million. Conference Call As previously announced, Crawford & Company will host a conference call on May 4, 2023, at 8:30 a.m. Eastern Time to discuss its first quarter 2023 results. The conference call can be accessed live by dialing 1-888-396-8049 and using Conference ID 84184847. 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 June 4, 2023. You may dial 1-877-674-7070 and use passcode 184847# to listen to the replay. 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, contingent earnout adjustments, non-service pension costs and credits, income taxes and net income or loss attributable to 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 adjustments for depreciation and amortization, net corporate interest expense, contingent earnout adjustments, non-service pension costs and credits, income taxes and stock-based compensation expense. 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, 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, amortization of customer-relationship intangible assets, contingent earnout adjustments, and non-service pension costs and credits 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. Contingent earnout adjustments relate to changes in the fair value of earnouts associated with our recent acquisitions. Non-service pension costs and credits represent the U.S. and U.K. non-service defined benefit pension costs, which are non-operating in nature as the U.S. plan was frozen in 2002 and the U.K. plans are closed to new participants. 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. 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 (in thousands) March 31, 2023 March 31, 2022 Geographic Area Currency USD equivalent % of total USD equivalent % of total U.S. USD $ 196,768 62.9 % $ 165,493 59.3 % U.K. GBP 33,124 10.6 % 34,050 12.2 % Canada CAD 24,361 7.8 % 24,260 8.7 % Australia AUD 22,994 7.3 % 18,717 6.7 % Europe EUR 14,038 4.5 % 14,539 5.2 % Rest of World Various 21,707 6.9 % 21,966 7.9 % Total Revenues, before reimbursements $ 312,992 100.0 % $ 279,025 100.0 % Following is a reconciliation of consolidated operating earnings to net income attributable to shareholders of Crawford & Company on a GAAP basis: Three Months Ended (in thousands) March 31, 2023 March 31, 2022 Operating earnings: North America Loss Adjusting $ 8,065 $ 4,135 International Operations 3,035 (3,067 ) Broadspire 7,927 6,434 Platform Solutions 9,966 8,038 Unallocated corporate and shared costs, net (4,119 ) (2,995 ) Consolidated operating earnings 24,874 12,545 (Deduct) add: Net corporate interest expense (4,399 ) (1,519 ) Stock option expense (156 ) (205 ) Amortization of intangible assets (1,899 ) (1,726 ) Non-service pension costs and credits (2,171 ) 543 Contingent earnout adjustments (248 ) (2,056 ) Income tax provision (5,271 ) (2,426 ) Net income attributable to noncontrolling interests (49 ) (60 ) Net income attributable to shareholders of Crawford & Company $ 10,681 $ 5,096 Following is a reconciliation of net income attributable to shareholders of Crawford & Company on a GAAP basis to non-GAAP adjusted EBITDA: Three Months Ended (in thousands) March 31, 2023 March 31, 2022 Net income attributable to shareholders of Crawford & Company $ 10,681 $ 5,096 Add (Deduct): Depreciation and amortization 9,050 9,099 Stock-based compensation 1,023 1,660 Net corporate interest expense 4,399 1,519 Non-service pension costs and credits 2,171 (543 ) Contingent earnout adjustments 248 2,056 Income tax provision 5,271 2,426 Non-GAAP adjusted EBITDA $ 32,843 $ 21,313 Following is a reconciliation of operating cash flow to free cash flow for the three months ended March 31, 2023 and 2022: Three Months Ended (in thousands) March 31, 2023 March 31, 2022 Change Net Cash Used in Operating Activities $ (445 ) $ (15,253 ) $ 14,808 Less: Property & Equipment Purchases, net (1,031 ) (1,340 ) 309 Capitalized Software (internal and external costs) (7,610 ) (6,275 ) (1,335 ) Free Cash Flow $ (9,086 ) $ (22,868 ) $ 13,782 Following are the reconciliations of GAAP Pretax Earnings, Net Income and Earnings Per Share to related non-GAAP Adjusted figures, which reflect each of 2023 and 2022 before amortization of intangible assets, non-service related pension costs (credits) and contingent earnout adjustments: Three Months Ended March 31, 2023 (in thousands) Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share Diluted earnings per CRD-B share GAAP $ 16,001 $ 10,681 $ 0.22 $ 0.22 Adjustments: Amortization of intangible assets 1,899 1,424 0.03 0.03 Non-service related pension costs 2,171 1,613 0.03 0.03 Contingent earnout adjustments 248 184 — — Non-GAAP Adjusted $ 20,319 $ 13,902 $ 0.28 $ 0.28 Three Months Ended March 31, 2022 (in thousands) Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share Diluted earnings per CRD-B share GAAP $ 7,582 $ 5,096 $ 0.10 $ 0.10 Adjustments: Amortization of intangible assets 1,726 1,295 0.02 0.02 Non-service related pension credits (543 ) (421 ) (0.01 ) (0.01 ) Contingent earnout adjustments 2,056 1,522 0.03 0.03 Non-GAAP Adjusted $ 10,821 $ 7,492 $ 0.14 $ 0.14 Following is information regarding the weighted average shares used in the computation of basic and diluted earnings per share: Three Months Ended (in thousands) March 31, 2023 March 31, 2022 Weighted-Average Shares Used to Compute Basic Earnings Per Share: Class A Common Stock 28,841 30,908 Class B Common Stock 19,848 20,780 Weighted-Average Shares Used to Compute Diluted Earnings Per Share: Class A Common Stock 29,141 31,168 Class B Common Stock 19,848 20,780 Further information regarding the Company’s operating results for the three months ended March 31, 2023, financial position as of March 31, 2023, and cash flows for the three months ended March 31, 2023 is shown on the attached unaudited condensed consolidated financial statements. For further information regarding this press release, please call Bruce Swain at 404-300-1051. About Crawford® Based in Atlanta, Crawford & Company (NYSE: CRD‐A and CRD‐B) is a leading global provider of claims management and outsourcing solutions to insurance companies and self‐insured entities with an expansive network serving clients in more than 70 countries. The Company’s two classes of stock are substantially identical, except with respect to voting rights for the Class B Common Stock (CRD-B) and protections for the non-voting Class A Common Stock (CRD-A). More information is available at www.crawco.com. 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. Tag: Crawford-Investor-News-and-Events, Crawford-Financial CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited (In Thousands, Except Per Share Amounts and Percentages) Three Months Ended March 31, 2023 2022 % Change Revenues: Revenues Before Reimbursements $ 312,992 $ 279,025 12 % Reimbursements 11,604 8,764 32 % Total Revenues 324,596 287,789 13 % Costs and Expenses: Costs of Services Provided, Before Reimbursements 227,078 205,581 10 % Reimbursements 11,604 8,764 32 % Total Costs of Services 238,682 214,345 11 % Selling, General, and Administrative Expenses 63,369 64,841 (2 )% Corporate Interest Expense, Net 4,399 1,519 190 % Total Costs and Expenses 306,450 280,705 9 % Other (Loss) Income, Net (2,145 ) 498 nm Income Before Income Taxes 16,001 7,582 111 % Provision for Income Taxes 5,271 2,426 117 % Net Income 10,730 5,156 108 % Net Income Attributable to Noncontrolling Interests (49 ) (60 ) (18 )% Net Income Attributable to Shareholders of Crawford & Company $ 10,681 $ 5,096 110 % Earnings Per Share - Basic: Class A Common Stock $ 0.22 $ 0.10 120 % Class B Common Stock $ 0.22 $ 0.10 120 % Earnings Per Share - Diluted: Class A Common Stock $ 0.22 $ 0.10 120 % Class B Common Stock $ 0.22 $ 0.10 120 % Cash Dividends Per Share: Class A Common Stock $ 0.06 $ 0.06 — Class B Common Stock $ 0.06 $ 0.06 — CRAWFORD & COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS As of March 31, 2023 and December 31, 2022 Unaudited (In Thousands, Except Par Values) March 31, December 31, 2023 2022 ASSETS Current Assets: Cash and Cash Equivalents $ 43,304 $ 46,007 Accounts Receivable, Net 145,348 141,106 Unbilled Revenues, at Estimated Billable Amounts 137,410 126,274 Income Taxes Receivable 9,098 9,098 Prepaid Expenses and Other Current Assets 33,335 28,782 Total Current Assets 368,495 351,267 Net Property and Equipment 27,053 27,809 Other Assets: Operating Lease Right-of-Use Asset, Net 95,224 93,334 Goodwill 76,626 76,622 Intangible Assets Arising from Business Acquisitions, Net 88,511 88,039 Capitalized Software Costs, Net 86,255 82,975 Deferred Income Tax Assets 19,335 19,573 Other Noncurrent Assets 54,526 51,888 Total Other Assets 420,477 412,431 Total Assets $ 816,025 $ 791,507 LIABILITIES AND SHAREHOLDERS’ INVESTMENT Current Liabilities: Short-Term Borrowings $ 39,053 $ 27,048 Accounts Payable 46,776 50,847 Accrued Compensation and Related Costs 61,438 79,285 Self-Insured Risks 13,703 12,614 Income Taxes Payable 4,621 1,208 Operating Lease Liability 24,367 22,910 Other Accrued Liabilities 63,812 56,293 Deferred Revenues 32,517 29,282 Total Current Liabilities 286,287 279,487 Noncurrent Liabilities: Long-Term Debt and Finance Leases, Less Current Installments 210,342 211,810 Operating Lease Liability 84,994 84,628 Deferred Revenues 25,029 24,737 Accrued Pension Liabilities 25,653 25,914 Other Noncurrent Liabilities 41,893 41,553 Total Noncurrent Liabilities 387,911 388,642 Shareholders’ Investment: Class A Common Stock, $1.00 Par Value 28,925 28,764 Class B Common Stock, $1.00 Par Value 19,848 19,848 Additional Paid-in Capital 79,094 78,158 Retained Earnings 220,850 213,094 Accumulated Other Comprehensive Loss (205,503 ) (215,321 ) Shareholders’ Investment Attributable to Shareholders of Crawford & Company 143,214 124,543 Noncontrolling Interests (1,387 ) (1,165 ) Total Shareholders’ Investment 141,827 123,378 Total Liabilities and Shareholders’ Investment $ 816,025 $ 791,507 CRAWFORD & COMPANY SUMMARY RESULTS BY OPERATING SEGMENT WITH DIRECT COMPENSATION AND OTHER EXPENSES Unaudited (In Thousands, Except Percentages) Three Months Ended March 31, North America Loss Adjusting % International Operations % Broadspire % Platform Solutions % 2023 2022 Change 2023 2022 Change 2023 2022 Change 2023 2022 Change Revenues Before Reimbursements $ 77,127 $ 64,438 19.7 % $ 91,863 $ 89,272 2.9 % $ 81,182 $ 76,454 6.2 % $ 62,820 $ 48,861 28.6 % Direct Compensation, Fringe Benefits & Non-Employee Labor 54,164 46,497 16.5 % 61,421 63,006 (2.5 )% 52,641 47,949 9.8 % 40,911 31,851 28.4 % % of Revenues Before Reimbursements 70.2 % 72.2 % 66.9 % 70.6 % 64.8 % 62.7 % 65.1 % 65.2 % Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor 14,898 13,806 7.9 % 27,407 29,333 (6.6 )% 20,614 22,071 (6.6 )% 11,943 8,972 33.1 % % of Revenues Before Reimbursements 19.3 % 21.4 % 29.8 % 32.9 % 25.4 % 28.9 % 19.0 % 18.4 % Total Operating Expenses 69,062 60,303 14.5 % 88,828 92,339 (3.8 )% 73,255 70,020 4.6 % 52,854 40,823 29.5 % Operating Earnings (Loss) (1) $ 8,065 $ 4,135 95.0 % $ 3,035 $ (3,067 ) nm $ 7,927 $ 6,434 23.2 % $ 9,966 $ 8,038 24.0 % % of Revenues Before Reimbursements 10.5 % 6.4 % 3.3 % (3.4 )% 9.8 % 8.4 % 15.9 % 16.5 % (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, non-service pension costs and credits, contingent earnout adjustments, and certain unallocated corporate and shared costs and credits. See pages 3 and 4 for additional information about segment operating earnings. CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Year to Date Period Ended March 31, 2023 and March 31, 2022 Unaudited (In Thousands) 2023 2022 Cash Flows From Operating Activities: Net income $ 10,730 $ 5,156 Reconciliation of net income to net cash used in operating activities: Depreciation and amortization 9,050 9,099 Stock-based compensation 1,023 1,660 Loss (gain) on sale of property and equipment 20 (1,747 ) Contingent earnout adjustments 248 2,056 Changes in operating assets and liabilities: Accounts receivable, net (17 ) 6,542 Unbilled revenues, net (6,333 ) (13,022 ) Accrued or prepaid income taxes 3,895 266 Accounts payable and accrued liabilities (15,818 ) (14,902 ) Deferred revenues 2,841 402 Accrued retirement costs (2,887 ) (4,738 ) Prepaid expenses and other operating activities (3,197 ) (6,025 ) Net cash used in operating activities (445 ) (15,253 ) Cash Flows From Investing Activities: Acquisitions of property and equipment (1,031 ) (1,340 ) Capitalization of computer software costs (7,610 ) (6,275 ) Payments for business acquisitions, net of cash acquired — (21,273 ) Cash proceeds from sale of property and equipment — 3,032 Net cash used in investing activities (8,641 ) (25,856 ) Cash Flows From Financing Activities: Cash dividends paid (2,925 ) (3,114 ) Repurchases of common stock — (16,089 ) Increases in short-term and revolving credit facility borrowings 19,394 61,816 Payments on short-term and revolving credit facility borrowings (10,265 ) (3,989 ) Payments of contingent consideration on acquisitions (848 ) (746 ) Other financing activities (169 ) (270 ) Net cash provided by financing activities 5,187 37,608 Effects of exchange rate changes on cash and cash equivalents 1,195 (321 ) Decrease in cash, cash equivalents, and restricted cash(1) (2,704 ) (3,822 ) Cash, cash equivalents, and restricted cash at beginning of year(1) 46,645 53,689 Cash, cash equivalents, and restricted cash at end of period(1) $ 43,941 $ 49,867 (1) The 2023 amounts include beginning restricted cash of $638 at December 31, 2022, and ending restricted cash of $637 at March 31, 2023, and the 2022 amounts include beginning restricted cash of $461 at December 31, 2021, and ending restricted cash of $782 at March 31, 2022, which we present as part of "Prepaid expenses and other current assets" on the Balance Sheets. View source version on businesswire.com: https://www.businesswire.com/news/home/20230503005739/en/Contacts Media Contacts: mediarelations@us.crawco.com Lynn Cufley +44 207 265 4067 Lynn.Cufley@crawco.uk Katie Cline +1 470 792 5678 katie.cline@us.crawco.com
Crawford & Company® (NYSE: CRD-A and CRD-B) is pleased to announce its financial results for the first quarter ended March 31, 2023. Based in Atlanta, Crawford & Company (NYSE: CRD-A and CRD-B) is a leading global provider of claims management and outsourcing solutions to insurance companies and self‐insured entities with an expansive network serving clients in more than 70 countries. The Company’s two classes of stock are substantially identical, except with respect to voting rights for the Class B Common Stock (CRD-B) and protections for the non-voting Class A Common Stock (CRD-A). More information is available on the Company's website. GAAP Consolidated Results First Quarter 2023 Revenues before reimbursements of $313.0 million, up 12% over $279.0 million for the 2022 first quarter Net income attributable to shareholders of $10.7 million, more than doubling the $5.1 million in the same period last year Diluted earnings per share of $0.22 for both CRD-A and CRD-B, compared with diluted earnings per share of $0.10 for both CRD-A and CRD-B in the prior year first quarter Non-GAAP Consolidated Results First Quarter 2023 Non-GAAP consolidated results for 2023 exclude the non-cash, after-tax adjustments for amortization of intangible assets of $1.4 million, non-service related pension costs of $1.6 million, and contingent earnout adjustment of $0.2 million. Non-GAAP consolidated results for 2022 exclude a similar adjustment for amortization of intangible assets of $1.3 million, non-service related pension credits of $(0.4) million, and contingent earnout adjustment of $1.5 million. Foreign currency exchange rates decreased revenues before reimbursements by $9.4 million or (3)%. Presented on a constant dollar basis to the prior year, revenues before reimbursements totaled $322.4 million, increasing 16% over the 2022 first quarter Net income attributable to shareholders, on a non-GAAP basis, totaled $13.9 million in the 2023 first quarter, compared with $7.5 million in the same period last year Diluted earnings per share, on a non-GAAP basis, totaled $0.28 for both CRD-A and CRD-B in the 2023 first quarter, compared with $0.14 for both CRD-A and CRD-B in the prior year first quarter Consolidated adjusted operating earnings, on a non-GAAP basis, were $24.9 million, or 7.9% of revenues before reimbursements in the 2023 first quarter, compared with $12.5 million, or 4.5% of revenues, in the 2022 first quarter Consolidated adjusted EBITDA, a non-GAAP financial measure, was $32.8 million, or 10.5% of revenues before reimbursements in the 2023 first quarter, compared with $21.3 million, or 7.6% of revenues, in the 2022 first quarter Management Comments “Crawford delivered exceptional first quarter results, growing revenues 12% and nearly doubling operating earnings on a year-over-year basis. We experienced growth and profit expansion across all segments, signifying the strength of our business and solid execution of our stated strategies. Platform Solutions and North America Loss Adjusting both delivered double-digit revenue growth in the quarter. We also saw continued momentum in Broadspire, including encouraging signs of recovery within Medical Management. Our International business continued its turnaround, achieving revenue growth and margin expansion during the quarter,” commented Mr. Rohit Verma, chief executive officer of Crawford & Company. “Our disciplined strategy execution along with the hard work of our dedicated team and our clients’ confidence in our products and services has enabled us to deliver these strong results. We feel good about our continued trajectory as we delivered our tenth consecutive quarter of revenue growth. We remain in an enviable financial position and are confident in our ability to deliver long-term value to our shareholders,” concluded Mr. Verma. Segment Results for the First Quarter North America Loss Adjusting North America Loss Adjusting revenues before reimbursements were $77.1 million in the first quarter of 2023, increasing 19.7% from $64.4 million in the first quarter of 2022. The segment had operating earnings of $8.1 million in the 2023 first quarter, increasing from $4.1 million in the first quarter of 2022. The operating margin was 10.5% in the 2023 quarter and 6.4% in the 2022 quarter. International Operations International Operations revenues before reimbursements were $91.9 million in the first quarter of 2023, up 2.9% from $89.3 million in the same period of 2022, including $0.7 million from the Van Dijk acquisition. Absent foreign exchange rate decreases of $7.7 million, revenues would have been $99.6 million for the 2023 first quarter. Operating earnings were $3.0 million in the 2023 first quarter, compared to a $(3.1) million operating loss in the 2022 period. The segment’s operating margin for the 2023 quarter was 3.3% as compared with (3.4)% in the 2022 quarter. Broadspire Broadspire segment revenues before reimbursements were $81.2 million in the 2023 first quarter, increasing 6.2% from $76.5 million in the 2022 first quarter. Broadspire recorded operating earnings of $7.9 million in the first quarter of 2023, representing an operating margin of 9.8%, increasing from $6.4 million, or 8.4% of revenues, in the 2022 first quarter. Platform Solutions Platform Solutions revenues before reimbursements were $62.8 million in the first quarter of 2023, up 28.6% from $48.9 million in the same period of 2022. Operating earnings were $10.0 million in the 2023 first quarter, increasing over the $8.0 million in the 2022 period. The segment’s operating margin for the 2023 quarter was 15.9% as compared with 16.5% in the 2022 quarter. Unallocated Corporate and Shared Costs and Credits, Net Unallocated corporate costs were $4.1 million in the first quarter of 2023, compared with $3.0 million in the same period of 2022. The increase in the 2023 first quarter was primarily due to a $1.8 million gain on sale of our Canadian head office building in the 2022 first quarter and an increase in self-insurance costs in 2023, partially offset by other cost reductions. Other Matters The Company recognized pretax contingent earnout expenses totaling $0.2 million and $2.1 million in the 2023 first quarter and comparable 2022 period, respectively, related to the fair value adjustment of earnout liabilities arising from recent acquisitions. This adjustment, which is not a component of operating earnings, is based on favorable changes to projections of acquired entities over the respective earnout periods, which span multiple years. The Company recognized non-service pension costs of $2.2 million in the 2023 first quarter compared with credits of $(0.5) million in the comparable 2022 period. Non-service pension costs represent the U.S. and U.K. non-service defined benefit pension costs, which are non-operating in nature as the U.S. plan is frozen and the U.K. plans are closed to new participants. Balance Sheet and Cash Flow The Company’s consolidated cash and cash equivalents position as of March 31, 2023, totaled $43.3 million, compared with $46.0 million at December 31, 2022. The Company’s total debt outstanding as of March 31, 2023, totaled $249.4 million, compared with $238.9 million at December 31, 2022. The Company’s operations used $0.4 million of cash during the first three months of 2023, compared with $15.3 million used in 2022. The decrease in cash used was primarily driven by an increase in net income, $7.7 million reduction in incentive compensation payments, and increases in accrued income taxes and deferred revenues, partially offset by reductions in other accruals. The Company made no contributions to its U.S. defined benefit pension plan and $0.5 million in contributions to its U.K. plans for the first quarter of 2023, compared with no contributions to the U.S. plan and $0.2 million to the U.K. plans in 2022. There were no shares repurchased during the 2023 first quarter. During the 2022 first quarter, the Company repurchased 1,498,084 shares of CRD-A and 719,874 shares of CRD-B at an average per share cost of $7.23 and $7.31, respectively. The total cost of share repurchases in the 2022 quarter was $16.1 million. Conference Call As previously announced, Crawford & Company will host a conference call on May 4, 2023, at 8:30 a.m. Eastern Time to discuss its first quarter 2023 results. The conference call can be accessed live by dialing 1-888-396-8049 and using Conference ID 84184847. 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 June 4, 2023. You may dial 1-877-674-7070 and use passcode 184847# to listen to the replay. 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, contingent earnout adjustments, non-service pension costs and credits, income taxes and net income or loss attributable to 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 adjustments for depreciation and amortization, net corporate interest expense, contingent earnout adjustments, non-service pension costs and credits, income taxes and stock-based compensation expense. 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, 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, amortization of customer-relationship intangible assets, contingent earnout adjustments, and non-service pension costs and credits 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. Contingent earnout adjustments relate to changes in the fair value of earnouts associated with our recent acquisitions. Non-service pension costs and credits represent the U.S. and U.K. non-service defined benefit pension costs, which are non-operating in nature as the U.S. plan was frozen in 2002 and the U.K. plans are closed to new participants. 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. 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 (in thousands) March 31, 2023 March 31, 2022 Geographic Area Currency USD equivalent % of total USD equivalent % of total U.S. USD $ 196,768 62.9 % $ 165,493 59.3 % U.K. GBP 33,124 10.6 % 34,050 12.2 % Canada CAD 24,361 7.8 % 24,260 8.7 % Australia AUD 22,994 7.3 % 18,717 6.7 % Europe EUR 14,038 4.5 % 14,539 5.2 % Rest of World Various 21,707 6.9 % 21,966 7.9 % Total Revenues, before reimbursements $ 312,992 100.0 % $ 279,025 100.0 % Following is a reconciliation of consolidated operating earnings to net income attributable to shareholders of Crawford & Company on a GAAP basis: Three Months Ended (in thousands) March 31, 2023 March 31, 2022 Operating earnings: North America Loss Adjusting $ 8,065 $ 4,135 International Operations 3,035 (3,067 ) Broadspire 7,927 6,434 Platform Solutions 9,966 8,038 Unallocated corporate and shared costs, net (4,119 ) (2,995 ) Consolidated operating earnings 24,874 12,545 (Deduct) add: Net corporate interest expense (4,399 ) (1,519 ) Stock option expense (156 ) (205 ) Amortization of intangible assets (1,899 ) (1,726 ) Non-service pension costs and credits (2,171 ) 543 Contingent earnout adjustments (248 ) (2,056 ) Income tax provision (5,271 ) (2,426 ) Net income attributable to noncontrolling interests (49 ) (60 ) Net income attributable to shareholders of Crawford & Company $ 10,681 $ 5,096 Following is a reconciliation of net income attributable to shareholders of Crawford & Company on a GAAP basis to non-GAAP adjusted EBITDA: Three Months Ended (in thousands) March 31, 2023 March 31, 2022 Net income attributable to shareholders of Crawford & Company $ 10,681 $ 5,096 Add (Deduct): Depreciation and amortization 9,050 9,099 Stock-based compensation 1,023 1,660 Net corporate interest expense 4,399 1,519 Non-service pension costs and credits 2,171 (543 ) Contingent earnout adjustments 248 2,056 Income tax provision 5,271 2,426 Non-GAAP adjusted EBITDA $ 32,843 $ 21,313 Following is a reconciliation of operating cash flow to free cash flow for the three months ended March 31, 2023 and 2022: Three Months Ended (in thousands) March 31, 2023 March 31, 2022 Change Net Cash Used in Operating Activities $ (445 ) $ (15,253 ) $ 14,808 Less: Property & Equipment Purchases, net (1,031 ) (1,340 ) 309 Capitalized Software (internal and external costs) (7,610 ) (6,275 ) (1,335 ) Free Cash Flow $ (9,086 ) $ (22,868 ) $ 13,782 Following are the reconciliations of GAAP Pretax Earnings, Net Income and Earnings Per Share to related non-GAAP Adjusted figures, which reflect each of 2023 and 2022 before amortization of intangible assets, non-service related pension costs (credits) and contingent earnout adjustments: Three Months Ended March 31, 2023 (in thousands) Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share Diluted earnings per CRD-B share GAAP $ 16,001 $ 10,681 $ 0.22 $ 0.22 Adjustments: Amortization of intangible assets 1,899 1,424 0.03 0.03 Non-service related pension costs 2,171 1,613 0.03 0.03 Contingent earnout adjustments 248 184 — — Non-GAAP Adjusted $ 20,319 $ 13,902 $ 0.28 $ 0.28 Three Months Ended March 31, 2022 (in thousands) Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share Diluted earnings per CRD-B share GAAP $ 7,582 $ 5,096 $ 0.10 $ 0.10 Adjustments: Amortization of intangible assets 1,726 1,295 0.02 0.02 Non-service related pension credits (543 ) (421 ) (0.01 ) (0.01 ) Contingent earnout adjustments 2,056 1,522 0.03 0.03 Non-GAAP Adjusted $ 10,821 $ 7,492 $ 0.14 $ 0.14 Following is information regarding the weighted average shares used in the computation of basic and diluted earnings per share: Three Months Ended (in thousands) March 31, 2023 March 31, 2022 Weighted-Average Shares Used to Compute Basic Earnings Per Share: Class A Common Stock 28,841 30,908 Class B Common Stock 19,848 20,780 Weighted-Average Shares Used to Compute Diluted Earnings Per Share: Class A Common Stock 29,141 31,168 Class B Common Stock 19,848 20,780 Further information regarding the Company’s operating results for the three months ended March 31, 2023, financial position as of March 31, 2023, and cash flows for the three months ended March 31, 2023 is shown on the attached unaudited condensed consolidated financial statements. For further information regarding this press release, please call Bruce Swain at 404-300-1051. About Crawford® Based in Atlanta, Crawford & Company (NYSE: CRD‐A and CRD‐B) is a leading global provider of claims management and outsourcing solutions to insurance companies and self‐insured entities with an expansive network serving clients in more than 70 countries. The Company’s two classes of stock are substantially identical, except with respect to voting rights for the Class B Common Stock (CRD-B) and protections for the non-voting Class A Common Stock (CRD-A). More information is available at www.crawco.com. 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. Tag: Crawford-Investor-News-and-Events, Crawford-Financial CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited (In Thousands, Except Per Share Amounts and Percentages) Three Months Ended March 31, 2023 2022 % Change Revenues: Revenues Before Reimbursements $ 312,992 $ 279,025 12 % Reimbursements 11,604 8,764 32 % Total Revenues 324,596 287,789 13 % Costs and Expenses: Costs of Services Provided, Before Reimbursements 227,078 205,581 10 % Reimbursements 11,604 8,764 32 % Total Costs of Services 238,682 214,345 11 % Selling, General, and Administrative Expenses 63,369 64,841 (2 )% Corporate Interest Expense, Net 4,399 1,519 190 % Total Costs and Expenses 306,450 280,705 9 % Other (Loss) Income, Net (2,145 ) 498 nm Income Before Income Taxes 16,001 7,582 111 % Provision for Income Taxes 5,271 2,426 117 % Net Income 10,730 5,156 108 % Net Income Attributable to Noncontrolling Interests (49 ) (60 ) (18 )% Net Income Attributable to Shareholders of Crawford & Company $ 10,681 $ 5,096 110 % Earnings Per Share - Basic: Class A Common Stock $ 0.22 $ 0.10 120 % Class B Common Stock $ 0.22 $ 0.10 120 % Earnings Per Share - Diluted: Class A Common Stock $ 0.22 $ 0.10 120 % Class B Common Stock $ 0.22 $ 0.10 120 % Cash Dividends Per Share: Class A Common Stock $ 0.06 $ 0.06 — Class B Common Stock $ 0.06 $ 0.06 — CRAWFORD & COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS As of March 31, 2023 and December 31, 2022 Unaudited (In Thousands, Except Par Values) March 31, December 31, 2023 2022 ASSETS Current Assets: Cash and Cash Equivalents $ 43,304 $ 46,007 Accounts Receivable, Net 145,348 141,106 Unbilled Revenues, at Estimated Billable Amounts 137,410 126,274 Income Taxes Receivable 9,098 9,098 Prepaid Expenses and Other Current Assets 33,335 28,782 Total Current Assets 368,495 351,267 Net Property and Equipment 27,053 27,809 Other Assets: Operating Lease Right-of-Use Asset, Net 95,224 93,334 Goodwill 76,626 76,622 Intangible Assets Arising from Business Acquisitions, Net 88,511 88,039 Capitalized Software Costs, Net 86,255 82,975 Deferred Income Tax Assets 19,335 19,573 Other Noncurrent Assets 54,526 51,888 Total Other Assets 420,477 412,431 Total Assets $ 816,025 $ 791,507 LIABILITIES AND SHAREHOLDERS’ INVESTMENT Current Liabilities: Short-Term Borrowings $ 39,053 $ 27,048 Accounts Payable 46,776 50,847 Accrued Compensation and Related Costs 61,438 79,285 Self-Insured Risks 13,703 12,614 Income Taxes Payable 4,621 1,208 Operating Lease Liability 24,367 22,910 Other Accrued Liabilities 63,812 56,293 Deferred Revenues 32,517 29,282 Total Current Liabilities 286,287 279,487 Noncurrent Liabilities: Long-Term Debt and Finance Leases, Less Current Installments 210,342 211,810 Operating Lease Liability 84,994 84,628 Deferred Revenues 25,029 24,737 Accrued Pension Liabilities 25,653 25,914 Other Noncurrent Liabilities 41,893 41,553 Total Noncurrent Liabilities 387,911 388,642 Shareholders’ Investment: Class A Common Stock, $1.00 Par Value 28,925 28,764 Class B Common Stock, $1.00 Par Value 19,848 19,848 Additional Paid-in Capital 79,094 78,158 Retained Earnings 220,850 213,094 Accumulated Other Comprehensive Loss (205,503 ) (215,321 ) Shareholders’ Investment Attributable to Shareholders of Crawford & Company 143,214 124,543 Noncontrolling Interests (1,387 ) (1,165 ) Total Shareholders’ Investment 141,827 123,378 Total Liabilities and Shareholders’ Investment $ 816,025 $ 791,507 CRAWFORD & COMPANY SUMMARY RESULTS BY OPERATING SEGMENT WITH DIRECT COMPENSATION AND OTHER EXPENSES Unaudited (In Thousands, Except Percentages) Three Months Ended March 31, North America Loss Adjusting % International Operations % Broadspire % Platform Solutions % 2023 2022 Change 2023 2022 Change 2023 2022 Change 2023 2022 Change Revenues Before Reimbursements $ 77,127 $ 64,438 19.7 % $ 91,863 $ 89,272 2.9 % $ 81,182 $ 76,454 6.2 % $ 62,820 $ 48,861 28.6 % Direct Compensation, Fringe Benefits & Non-Employee Labor 54,164 46,497 16.5 % 61,421 63,006 (2.5 )% 52,641 47,949 9.8 % 40,911 31,851 28.4 % % of Revenues Before Reimbursements 70.2 % 72.2 % 66.9 % 70.6 % 64.8 % 62.7 % 65.1 % 65.2 % Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor 14,898 13,806 7.9 % 27,407 29,333 (6.6 )% 20,614 22,071 (6.6 )% 11,943 8,972 33.1 % % of Revenues Before Reimbursements 19.3 % 21.4 % 29.8 % 32.9 % 25.4 % 28.9 % 19.0 % 18.4 % Total Operating Expenses 69,062 60,303 14.5 % 88,828 92,339 (3.8 )% 73,255 70,020 4.6 % 52,854 40,823 29.5 % Operating Earnings (Loss) (1) $ 8,065 $ 4,135 95.0 % $ 3,035 $ (3,067 ) nm $ 7,927 $ 6,434 23.2 % $ 9,966 $ 8,038 24.0 % % of Revenues Before Reimbursements 10.5 % 6.4 % 3.3 % (3.4 )% 9.8 % 8.4 % 15.9 % 16.5 % (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, non-service pension costs and credits, contingent earnout adjustments, and certain unallocated corporate and shared costs and credits. See pages 3 and 4 for additional information about segment operating earnings. CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Year to Date Period Ended March 31, 2023 and March 31, 2022 Unaudited (In Thousands) 2023 2022 Cash Flows From Operating Activities: Net income $ 10,730 $ 5,156 Reconciliation of net income to net cash used in operating activities: Depreciation and amortization 9,050 9,099 Stock-based compensation 1,023 1,660 Loss (gain) on sale of property and equipment 20 (1,747 ) Contingent earnout adjustments 248 2,056 Changes in operating assets and liabilities: Accounts receivable, net (17 ) 6,542 Unbilled revenues, net (6,333 ) (13,022 ) Accrued or prepaid income taxes 3,895 266 Accounts payable and accrued liabilities (15,818 ) (14,902 ) Deferred revenues 2,841 402 Accrued retirement costs (2,887 ) (4,738 ) Prepaid expenses and other operating activities (3,197 ) (6,025 ) Net cash used in operating activities (445 ) (15,253 ) Cash Flows From Investing Activities: Acquisitions of property and equipment (1,031 ) (1,340 ) Capitalization of computer software costs (7,610 ) (6,275 ) Payments for business acquisitions, net of cash acquired — (21,273 ) Cash proceeds from sale of property and equipment — 3,032 Net cash used in investing activities (8,641 ) (25,856 ) Cash Flows From Financing Activities: Cash dividends paid (2,925 ) (3,114 ) Repurchases of common stock — (16,089 ) Increases in short-term and revolving credit facility borrowings 19,394 61,816 Payments on short-term and revolving credit facility borrowings (10,265 ) (3,989 ) Payments of contingent consideration on acquisitions (848 ) (746 ) Other financing activities (169 ) (270 ) Net cash provided by financing activities 5,187 37,608 Effects of exchange rate changes on cash and cash equivalents 1,195 (321 ) Decrease in cash, cash equivalents, and restricted cash(1) (2,704 ) (3,822 ) Cash, cash equivalents, and restricted cash at beginning of year(1) 46,645 53,689 Cash, cash equivalents, and restricted cash at end of period(1) $ 43,941 $ 49,867 (1) The 2023 amounts include beginning restricted cash of $638 at December 31, 2022, and ending restricted cash of $637 at March 31, 2023, and the 2022 amounts include beginning restricted cash of $461 at December 31, 2021, and ending restricted cash of $782 at March 31, 2022, which we present as part of "Prepaid expenses and other current assets" on the Balance Sheets. 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Media Contacts: mediarelations@us.crawco.com Lynn Cufley +44 207 265 4067 Lynn.Cufley@crawco.uk Katie Cline +1 470 792 5678 katie.cline@us.crawco.com
