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 Second Quarter Results By: Crawford & Company via Business Wire August 03, 2023 at 16:15 PM EDT Continuing Revenue Growth Leads to Earnings and Margin Expansion Crawford & Company® (NYSE: CRD-A and CRD-B), is pleased to announce its financial results for the second quarter ended June 30, 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 Second Quarter 2023 Revenues before reimbursements of $320.7 million, up 9% over $293.3 million for the 2022 second quarter Net income attributable to shareholders of $8.4 million, compared with $5.8 million in the same period last year Diluted earnings per share of $0.17 for both CRD-A and CRD-B, compared with diluted earnings per share of $0.12 for both CRD-A and CRD-B in the prior year second quarter Non-GAAP Consolidated Results Second Quarter 2023 Non-GAAP consolidated results for 2023 exclude the non-cash, after-tax adjustments for amortization of intangible assets of $1.5 million, non-service related pension costs of $1.6 million, and a contingent earnout adjustment of $0.5 million. Non-GAAP consolidated results for 2022 exclude a similar adjustment for amortization of intangible assets of $1.5 million, non-service related pension credits of $(0.4) million, and a contingent earnout adjustment of $0.2 million. Foreign currency exchange rates decreased revenues before reimbursements by $7.5 million or (3)%. Presented on a constant dollar basis to the prior year, revenues before reimbursements totaled $328.1 million, increasing 12% over the 2022 second quarter Net income attributable to shareholders, on a non-GAAP basis, totaled $12.0 million in the 2023 second quarter, compared with $7.2 million in the same period last year Diluted earnings per share, on a non-GAAP basis, totaled $0.24 for both CRD-A and CRD-B in the 2023 second quarter, compared with $0.15 for both CRD-A and CRD-B in the prior year second quarter Consolidated adjusted operating earnings, on a non-GAAP basis, were $22.8 million, or 7.1% of revenues before reimbursements in the 2023 second quarter, compared with $12.3 million, or 4.2% of revenues, in the 2022 second quarter Consolidated adjusted EBITDA, a non-GAAP financial measure, was $31.5 million, or 9.8% of revenues before reimbursements in the 2023 second quarter, compared with $21.2 million, or 7.2% of revenues, in the 2022 second quarter Management Comments “We continued our trend of growth and margin improvement with another strong performance in the second quarter. This was our eleventh consecutive quarter of consolidated revenue growth, reflecting the strength of our client relationships and the commitment of our people to excellence,” commented Rohit Verma, Chief Executive Officer of Crawford & Company. “Platform Solutions revenue grew 22% for the second quarter, related to strong activity in our Networks and Contractor Connection service lines. Revenue in our North America Loss Adjusting segment grew 15%, largely driven by the addition of specialty adjusters to our Global Technical Service team, as well as the addition of several new accounts. At Broadspire, usage of our Medical Management service increased as a result of new workers’ compensation business as well as enhanced post-pandemic stability in the sector. Our International business performed well, with improved margins reflecting work done on cost efficiency in 2022 as well as growth in the current year. “Our balance sheet and cash generation remain strong, providing Crawford the financial flexibility to continue to invest in the technologies and people who will enhance our operational excellence as we execute on our strategic initiatives to drive continued shareholder value,” Mr. Verma concluded. Segment Results for the Second Quarter North America Loss Adjusting North America Loss Adjusting revenues before reimbursements were $75.8 million in the second quarter of 2023, increasing 15.3% from $65.8 million in the second quarter of 2022. The segment had operating earnings of $3.9 million in the 2023 second quarter, increasing from $2.6 million in the second quarter of 2022. The operating margin was 5.1% in the 2023 quarter and 4.0% in the 2022 quarter. International Operations International Operations revenues before reimbursements were $95.3 million in the second quarter of 2023, up 1.7% from $93.7 million in the same period of 2022, including $0.6 million from the Van Dijk acquisition. Absent foreign exchange rate decreases of $6.2 million, revenues would have been $101.5 million for the 2023 second quarter. Operating earnings were $3.7 million in the 2023 second quarter, compared to a $(0.7) million operating loss in the 2022 period. The segment’s operating margin for the 2023 quarter was 3.9% as compared with (0.7)% in the 2022 quarter. Broadspire Broadspire segment revenues before reimbursements were $83.9 million in the 2023 second quarter, increasing 4.7% from $80.1 million in the 2022 second quarter. Broadspire recorded operating earnings of $8.1 million in the second quarter of 2023, representing an operating margin of 9.7%, increasing from $7.7 million, or 9.6% of revenues, in the 2022 second quarter. Platform Solutions Platform Solutions revenues before reimbursements were $65.6 million in the second quarter of 2023, up 22.1% from $53.7 million in the same period of 2022. Operating earnings were $8.1 million in the 2023 second quarter, increasing over the $4.6 million in the 2022 period. The segment’s operating margin for the 2023 quarter was 12.3% as compared with 8.6% in the 2022 quarter. Unallocated Corporate and Shared Costs and Credits, Net Unallocated corporate costs were $1.1 million in the second quarter of 2023, compared with $1.9 million in the same period of 2022. The decrease in the 2023 second quarter was primarily due to an offset to certain internal allocations and other cost reductions. Other Matters The Company recognized pretax contingent earnout expenses totaling $0.7 million and $0.3 million in the 2023 second 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 $2.1 million in the 2023 second quarter compared with credits of $(0.6) 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 June 30, 2023, totaled $47.5 million, compared with $46.0 million at December 31, 2022. The Company’s total debt outstanding as of June 30, 2023, totaled $242.8 million, compared with $238.9 million at December 31, 2022. The Company’s operations provided $27.2 million of cash during the first six months of 2023, compared with $(12.8) million used in 2022. The increase in cash provided was primarily driven by an increase in net income and improvement in working capital. The Company made no contributions to its U.S. defined benefit pension plan and $1.0 million in contributions to its U.K. plans for the first half of 2023, compared with no contributions to the U.S. plan and $0.3 million to the U.K. plans in 2022. There were no shares repurchased during 2023. During the first six months of 2022, the Company repurchased 2,656,474 shares of CRD-A and 963,472 shares of CRD-B at an average per share cost of $7.41 and $7.32, respectively. The total cost of share repurchases during 2022 was $26.7 million through June 30, 2022. Conference Call As previously announced, Crawford & Company will host a conference call on August 4, 2023, at 8:30 a.m. Eastern Time to discuss its second quarter 2023 results. The conference call can be accessed live by dialing 1-888-396-8049 and using Conference ID 31233038. A presentation for tomorrow’s call can also be found on the investor relations portion of the Company’s website, https://ir.crawco.com. The call will be recorded and available for replay through September 4, 2023. You may dial 1-877-674-7070 and use passcode 233038# 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 Six Months Ended (in thousands) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Geographic Area Currency USD equivalent % of total USD equivalent % of total USD equivalent % of total USD equivalent % of total U.S. USD $ 201,246 62.8 % $ 174,959 59.6 % $ 398,014 62.8 % $ 340,452 59.5 % U.K. GBP 34,725 10.8 % 33,435 11.4 % 67,849 10.7 % 67,485 11.8 % Canada CAD 24,107 7.5 % 24,676 8.4 % 48,468 7.7 % 48,936 8.5 % Australia AUD 22,926 7.1 % 23,643 8.1 % 45,920 7.2 % 42,360 7.4 % Europe EUR 14,301 4.5 % 14,372 4.9 % 28,339 4.5 % 28,910 5.1 % Rest of World Various 23,360 7.3 % 22,260 7.6 % 45,067 7.1 % 44,227 7.7 % Total Revenues, before reimbursements $ 320,665 100.0 % $ 293,345 100.0 % $ 633,657 100.0 % $ 572,370 100.0 % Following is a reconciliation of consolidated operating earnings to net income attributable to shareholders of Crawford & Company on a GAAP basis: Three Months Ended Six Months Ended (in thousands) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Operating earnings: North America Loss Adjusting $ 3,900 $ 2,649 $ 11,965 $ 6,783 International Operations 3,742 (661 ) 6,777 (3,726 ) Broadspire 8,148 7,667 16,075 14,101 Platform Solutions 8,106 4,596 18,072 12,633 Unallocated corporate and shared costs, net (1,098 ) (1,945 ) (5,217 ) (4,940 ) Consolidated operating earnings 22,798 12,306 47,672 24,851 (Deduct) add: Net corporate interest expense (4,309 ) (1,780 ) (8,708 ) (3,298 ) Stock option expense (139 ) (130 ) (295 ) (336 ) Amortization of intangible assets (1,979 ) (2,060 ) (3,878 ) (3,786 ) Non-service pension costs and credits (2,095 ) 572 (4,266 ) 1,115 Contingent earnout adjustments (725 ) (303 ) (973 ) (2,359 ) Income tax provision (5,206 ) (2,768 ) (10,477 ) (5,194 ) Net loss (income) attributable to noncontrolling interests 82 (7 ) 33 (67 ) Net income attributable to shareholders of Crawford & Company $ 8,427 $ 5,830 $ 19,108 $ 10,926 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 Six Months Ended (in thousands) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Net income attributable to shareholders of Crawford & Company $ 8,427 $ 5,830 $ 19,108 $ 10,926 Add (Deduct): Depreciation and amortization 9,191 9,356 18,241 18,455 Stock-based compensation 1,586 1,750 2,609 3,410 Net corporate interest expense 4,309 1,780 8,708 3,298 Non-service pension costs and credits 2,095 (572 ) 4,266 (1,115 ) Contingent earnout adjustments 725 303 973 2,359 Income tax provision 5,206 2,768 10,477 5,194 Non-GAAP adjusted EBITDA $ 31,539 $ 21,215 $ 64,382 $ 42,527 Following is a reconciliation of operating cash flow to free cash flow for the six months ended June 30, 2023 and 2022: Six Months Ended (in thousands) June 30, 2023 June 30, 2022 Change Net Cash Provided by (Used in) Operating Activities $ 27,169 $ (12,752 ) $ 39,921 Less: Property & Equipment Purchases, net (1,914 ) (3,123 ) 1,209 Capitalized Software (internal and external costs) (16,031 ) (12,561 ) (3,470 ) Free Cash Flow $ 9,224 $ (28,436 ) $ 37,660 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 June 30, 2023 (in thousands) Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share Diluted earnings per CRD-B share GAAP $ 13,551 $ 8,427 $ 0.17 $ 0.17 Adjustments: Amortization of intangible assets 1,979 1,484 0.03 0.03 Non-service related pension costs 2,095 1,557 0.03 0.03 Contingent earnout adjustments 725 537 0.01 0.01 Non-GAAP Adjusted $ 18,350 $ 12,005 $ 0.24 $ 0.24 Three Months Ended June 30, 2022 (in thousands) Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share(1) Diluted earnings per CRD-B share(1) GAAP $ 8,605 $ 5,830 $ 0.12 $ 0.12 Adjustments: Amortization of intangible assets 2,060 1,545 0.03 0.03 Non-service related pension credits (572 ) (444 ) (0.01 ) (0.01 ) Contingent earnout adjustments 303 224 - - Non-GAAP Adjusted $ 10,396 $ 7,155 $ 0.15 $ 0.15 Six Months Ended June 30, 2023 (in thousands) Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share(1) Diluted earnings per CRD-B share GAAP $ 29,552 $ 19,108 $ 0.39 $ 0.39 Adjustments: Amortization of intangible assets 3,878 2,909 0.06 0.06 Non-service related pension costs 4,266 3,170 0.06 0.06 Contingent earnout adjustments 973 720 0.02 0.02 Non-GAAP Adjusted $ 38,669 $ 25,907 $ 0.52 $ 0.53 Six Months Ended June 30, 2022 (in thousands) Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share Diluted earnings per CRD-B share GAAP $ 16,187 $ 10,926 $ 0.22 $ 0.22 Adjustments: Amortization of intangible assets 3,786 2,840 0.06 0.06 Non-service related pension credits (1,115 ) (865 ) (0.02 ) (0.02 ) Contingent earnout adjustments 2,359 1,747 0.03 0.03 Non-GAAP Adjusted $ 21,217 $ 14,648 $ 0.29 $ 0.29 (1) Sum of reconciling items may differ from total due to rounding of individual components. Following is information regarding the weighted average shares used in the computation of basic and diluted earnings per share: Three Months Ended Six Months Ended (in thousands) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Weighted-Average Shares Used to Compute Basic Earnings Per Share: Class A Common Stock 28,956 28,757 28,899 29,827 Class B Common Stock 19,848 19,987 19,848 20,381 Weighted-Average Shares Used to Compute Diluted Earnings Per Share: Class A Common Stock 29,770 29,145 29,456 30,151 Class B Common Stock 19,848 19,987 19,848 20,381 Further information regarding the Company’s operating results for the three and six months ended June 30, 2023, financial position as of June 30, 2023, and cash flows for the six months ended June 30, 2023 is shown on the attached unaudited condensed consolidated financial statements. About Crawford & Company Based in Atlanta, Crawford & Company (NYSE: CRD-A and CRD-B) is a leading 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. TAG: Crawford-Financial, Crawford-Investor-News-and-Events FOR FURTHER INFORMATION REGARDING THIS PRESS RELEASE, PLEASE CALL BRUCE SWAIN AT (404) 300-1051. 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. CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited (In Thousands, Except Per Share Amounts and Percentages) Three Months Ended June 30, 2023 2022 % Change Revenues: Revenues Before Reimbursements $ 320,665 $ 293,345 9 % Reimbursements 13,073 10,306 27 % Total Revenues 333,738 303,651 10 % Costs and Expenses: Costs of Services Provided, Before Reimbursements 234,031 218,134 7 % Reimbursements 13,073 10,306 27 % Total Costs of Services 247,104 228,440 8 % Selling, General, and Administrative Expenses 66,582 65,397 2 % Corporate Interest Expense, Net 4,309 1,780 142 % Total Costs and Expenses 317,995 295,617 8 % Other (Loss) Income, Net (2,192 ) 571 nm Income Before Income Taxes 13,551 8,605 57 % Provision for Income Taxes 5,206 2,768 88 % Net Income 8,345 5,837 43 % Net Loss (Income) Attributable to Noncontrolling Interests 82 (7 ) nm Net Income Attributable to Shareholders of Crawford & Company $ 8,427 $ 5,830 45 % Earnings Per Share - Basic: Class A Common Stock $ 0.17 $ 0.12 42 % Class B Common Stock $ 0.17 $ 0.12 42 % Earnings Per Share - Diluted: Class A Common Stock $ 0.17 $ 0.12 42 % Class B Common Stock $ 0.17 $ 0.12 42 % Cash Dividends Per Share: Class A Common Stock $ 0.06 $ 0.06 — Class B Common Stock $ 0.06 $ 0.06 — CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited (In Thousands, Except Per Share Amounts and Percentages) Six Months Ended June 30, 2023 2022 % Change Revenues: Revenues Before Reimbursements $ 633,657 $ 572,370 11 % Reimbursements 24,677 19,070 29 % Total Revenues 658,334 591,440 11 % Costs and Expenses: Costs of Services Provided, Before Reimbursements 461,109 423,715 9 % Reimbursements 24,677 19,070 29 % Total Costs of Services 485,786 442,785 10 % Selling, General, and Administrative Expenses 129,951 130,239 (0 )% Corporate Interest Expense, Net 8,708 3,298 164 % Total Costs and Expenses 624,445 576,322 8 % Other (Loss) Income, Net (4,337 ) 1,069 nm Income Before Income Taxes 29,552 16,187 83 % Provision for Income Taxes 10,477 5,194 102 % Net Income 19,075 10,993 74 % Net Loss (Income) Attributable to Noncontrolling Interests 33 (67 ) nm Net Income Attributable to Shareholders of Crawford & Company $ 19,108 $ 10,926 75 % Earnings Per Share - Basic: Class A Common Stock $ 0.39 $ 0.22 77 % Class B Common Stock $ 0.39 $ 0.22 77 % Earnings Per Share - Diluted: Class A Common Stock $ 0.39 $ 0.22 77 % Class B Common Stock $ 0.39 $ 0.22 77 % Cash Dividends Per Share: Class A Common Stock $ 0.12 $ 0.12 — Class B Common Stock $ 0.12 $ 0.12 — CRAWFORD & COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS As of June 30, 2023 and December 31, 2022 Unaudited (In Thousands, Except Par Values) June 30, December 31, 2023 2022 ASSETS Current Assets: Cash and Cash Equivalents $ 47,479 $ 46,007 Accounts Receivable, Net 160,333 141,106 Unbilled Revenues, at Estimated Billable Amounts 129,121 126,274 Income Taxes Receivable 9,164 9,098 Prepaid Expenses and Other Current Assets 29,032 28,782 Total Current Assets 375,129 351,267 Net Property and Equipment 25,406 27,809 Other Assets: Operating Lease Right-of-Use Asset, Net 92,535 93,334 Goodwill 76,720 76,622 Intangible Assets Arising from Business Acquisitions, Net 86,852 88,039 Capitalized Software Costs, Net 90,119 82,975 Deferred Income Tax Assets 18,812 19,573 Other Noncurrent Assets 56,201 51,888 Total Other Assets 421,239 412,431 Total Assets $ 821,774 $ 791,507 LIABILITIES AND SHAREHOLDERS’ INVESTMENT Current Liabilities: Short-Term Borrowings $ 30,552 $ 27,048 Accounts Payable 44,094 50,847 Accrued Compensation and Related Costs 76,558 79,285 Self-Insured Risks 15,500 12,614 Income Taxes Payable 143 1,208 Operating Lease Liability 24,028 22,910 Other Accrued Liabilities 64,518 56,293 Deferred Revenues 33,950 29,282 Total Current Liabilities 289,343 279,487 Noncurrent Liabilities: Long-Term Debt and Finance Leases, Less Current Installments 212,217 211,810 Operating Lease Liability 82,359 84,628 Deferred Revenues 25,472 24,737 Accrued Pension Liabilities 25,250 25,914 Other Noncurrent Liabilities 37,238 41,553 Total Noncurrent Liabilities 382,536 388,642 Shareholders’ Investment: Class A Common Stock, $1.00 Par Value 28,977 28,764 Class B Common Stock, $1.00 Par Value 19,848 19,848 Additional Paid-in Capital 81,025 78,158 Retained Earnings 226,348 213,094 Accumulated Other Comprehensive Loss (204,840 ) (215,321 ) Shareholders’ Investment Attributable to Shareholders of Crawford & Company 151,358 124,543 Noncontrolling Interests (1,463 ) (1,165 ) Total Shareholders’ Investment 149,895 123,378 Total Liabilities and Shareholders’ Investment $ 821,774 $ 791,507 CRAWFORD & COMPANY SUMMARY RESULTS BY OPERATING SEGMENT WITH DIRECT COMPENSATION AND OTHER EXPENSES Unaudited (In Thousands, Except Percentages) Three Months Ended June 30, North America Loss Adjusting % International Operations % Broadspire % Platform Solutions % 2023 2022 Change 2023 2022 Change 2023 2022 Change 2023 2022 Change Revenues Before Reimbursements $ 75,827 $ 65,775 15.3% $ 95,312 $ 93,710 1.7% $ 83,888 $ 80,114 4.7% $ 65,638 $ 53,746 22.1% Direct Compensation, Fringe Benefits & Non-Employee Labor 54,619 48,349 13.0% 62,331 65,311 (4.6)% 54,500 49,801 9.4% 43,689 36,467 19.8% % of Revenues Before Reimbursements 72.0 % 73.5 % 65.4 % 69.7 % 65.0 % 62.2 % 66.6 % 67.9 % Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor 17,308 14,777 17.1% 29,239 29,060 0.6% 21,240 22,646 (6.2)% 13,843 12,683 9.1% % of Revenues Before Reimbursements 22.8 % 22.5 % 30.7 % 31.0 % 25.3 % 28.3 % 21.1 % 23.6 % Total Operating Expenses 71,927 63,126 13.9% 91,570 94,371 (3.0)% 75,740 72,447 4.5% 57,532 49,150 17.1% Operating Earnings (Loss) (1) $ 3,900 $ 2,649 47.2% $ 3,742 $ (661 ) nm $ 8,148 $ 7,667 6.3% $ 8,106 $ 4,596 76.4% % of Revenues Before Reimbursements 5.1 % 4.0 % 3.9 % (0.7 )% 9.7 % 9.6 % 12.3 % 8.6 % Six Months Ended June 30, North America Loss Adjusting % International Operations % Broadspire % Platforms Solutions % 2023 2022 Change 2023 2022 Change 2023 2022 Change 2023 2022 Change Revenues Before Reimbursements $ 152,954 $ 130,213 17.5% $ 187,175 $ 182,982 2.3% $ 165,070 $ 156,568 5.4% $ 128,458 $ 102,607 25.2% Direct Compensation, Fringe Benefits & Non-Employee Labor 108,783 94,606 15.0% 123,752 128,607 (3.8)% 107,141 97,748 9.6% 84,600 68,318 23.8% % of Revenues Before Reimbursements 71.1 % 72.7 % 66.1 % 70.3 % 64.9 % 62.4 % 65.9 % 66.6 % Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor 32,206 28,824 11.7% 56,646 58,101 (2.5)% 41,854 44,719 (6.4)% 25,786 21,656 19.1% % of Revenues Before Reimbursements 21.1 % 22.1 % 30.3 % 31.8 % 25.4 % 28.6 % 20.1 % 21.1 % Total Operating Expenses 140,989 123,430 14.2% 180,398 186,708 (3.4)% 148,995 142,467 4.6% 110,386 89,974 22.7% Operating Earnings (Loss)(1) $ 11,965 $ 6,783 76.4% $ 6,777 $ (3,726 ) nm $ 16,075 $ 14,101 14.0% $ 18,072 $ 12,633 43.1% % of Revenues Before Reimbursements 7.8 % 5.2 % 3.6 % (2.0 )% 9.7 % 9.0 % 14.1 % 12.3 % (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 June 30, 2023 and June 30, 2022 Unaudited (In Thousands) 2023 2022 Cash Flows From Operating Activities: Net income $ 19,075 $ 10,993 Reconciliation of net income to net cash provided by (used in) operating activities: Depreciation and amortization 18,241 18,455 Stock-based compensation 2,609 3,410 Loss (gain) on disposal of property and equipment 116 (1,544 ) Contingent earnout adjustments 973 2,359 Changes in operating assets and liabilities: Accounts receivable, net (15,107 ) 1,241 Unbilled revenues, net 1,828 (27,557 ) Accrued or prepaid income taxes (1,217 ) (5,275 ) Accounts payable and accrued liabilities (3,928 ) (9,403 ) Deferred revenues 4,529 (1,080 ) Accrued retirement costs 750 (3,016 ) Prepaid expenses and other operating activities (700 ) (1,335 ) Net cash provided by (used in) operating activities 27,169 (12,752 ) Cash Flows From Investing Activities: Acquisitions of property and equipment (1,914 ) (3,123 ) Capitalization of computer software costs (16,031 ) (12,561 ) Payments for business acquisitions, net of cash acquired — (25,941 ) Cash proceeds from sale of property and equipment — 3,032 Net cash used in investing activities (17,945 ) (38,593 ) Cash Flows From Financing Activities: Cash dividends paid (5,854 ) (6,034 ) Repurchases of common stock — (26,749 ) Increases in short-term and revolving credit facility borrowings 20,958 86,865 Payments on short-term and revolving credit facility borrowings (18,879 ) (6,011 ) Payments of contingent consideration on acquisitions (4,916 ) (1,654 ) Other financing activities 213 (285 ) Net cash (used in) provided by financing activities (8,478 ) 46,132 Effects of exchange rate changes on cash and cash equivalents 1,062 (1,400 ) Increase (Decrease) in cash, cash equivalents, and restricted cash(1) 1,808 (6,613 ) 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) $ 48,453 $ 47,076 (1) The 2023 amounts include beginning restricted cash of $638 at December 31, 2022, and ending restricted cash of $974 at June 30, 2023, and the 2022 amounts include beginning restricted cash of $461at December 31, 2021, and ending restricted cash of $822 at June 30, 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/20230803718952/en/Contacts Lynn Cufley +44 207 265 4067 Lynn.Cufley@crawco.uk Katie Cline +1 470 792 5678 Katie.Cline@us.crawco.com Jennifer Belodeau/Rosalyn Christian IMS Investor Relations 203 972 9200 crawford@imsinvestorrelations.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 Second Quarter Results By: Crawford & Company via Business Wire August 03, 2023 at 16:15 PM EDT Continuing Revenue Growth Leads to Earnings and Margin Expansion Crawford & Company® (NYSE: CRD-A and CRD-B), is pleased to announce its financial results for the second quarter ended June 30, 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 Second Quarter 2023 Revenues before reimbursements of $320.7 million, up 9% over $293.3 million for the 2022 second quarter Net income attributable to shareholders of $8.4 million, compared with $5.8 million in the same period last year Diluted earnings per share of $0.17 for both CRD-A and CRD-B, compared with diluted earnings per share of $0.12 for both CRD-A and CRD-B in the prior year second quarter Non-GAAP Consolidated Results Second Quarter 2023 Non-GAAP consolidated results for 2023 exclude the non-cash, after-tax adjustments for amortization of intangible assets of $1.5 million, non-service related pension costs of $1.6 million, and a contingent earnout adjustment of $0.5 million. Non-GAAP consolidated results for 2022 exclude a similar adjustment for amortization of intangible assets of $1.5 million, non-service related pension credits of $(0.4) million, and a contingent earnout adjustment of $0.2 million. Foreign currency exchange rates decreased revenues before reimbursements by $7.5 million or (3)%. Presented on a constant dollar basis to the prior year, revenues before reimbursements totaled $328.1 million, increasing 12% over the 2022 second quarter Net income attributable to shareholders, on a non-GAAP basis, totaled $12.0 million in the 2023 second quarter, compared with $7.2 million in the same period last year Diluted earnings per share, on a non-GAAP basis, totaled $0.24 for both CRD-A and CRD-B in the 2023 second quarter, compared with $0.15 for both CRD-A and CRD-B in the prior year second quarter Consolidated adjusted operating earnings, on a non-GAAP basis, were $22.8 million, or 7.1% of revenues before reimbursements in the 2023 second quarter, compared with $12.3 million, or 4.2% of revenues, in the 2022 second quarter Consolidated adjusted EBITDA, a non-GAAP financial measure, was $31.5 million, or 9.8% of revenues before reimbursements in the 2023 second quarter, compared with $21.2 million, or 7.2% of revenues, in the 2022 second quarter Management Comments “We continued our trend of growth and margin improvement with another strong performance in the second quarter. This was our eleventh consecutive quarter of consolidated revenue growth, reflecting the strength of our client relationships and the commitment of our people to excellence,” commented Rohit Verma, Chief Executive Officer of Crawford & Company. “Platform Solutions revenue grew 22% for the second quarter, related to strong activity in our Networks and Contractor Connection service lines. Revenue in our North America Loss Adjusting segment grew 15%, largely driven by the addition of specialty adjusters to our Global Technical Service team, as well as the addition of several new accounts. At Broadspire, usage of our Medical Management service increased as a result of new workers’ compensation business as well as enhanced post-pandemic stability in the sector. Our International business performed well, with improved margins reflecting work done on cost efficiency in 2022 as well as growth in the current year. “Our balance sheet and cash generation remain strong, providing Crawford the financial flexibility to continue to invest in the technologies and people who will enhance our operational excellence as we execute on our strategic initiatives to drive continued shareholder value,” Mr. Verma concluded. Segment Results for the Second Quarter North America Loss Adjusting North America Loss Adjusting revenues before reimbursements were $75.8 million in the second quarter of 2023, increasing 15.3% from $65.8 million in the second quarter of 2022. The segment had operating earnings of $3.9 million in the 2023 second quarter, increasing from $2.6 million in the second quarter of 2022. The operating margin was 5.1% in the 2023 quarter and 4.0% in the 2022 quarter. International Operations International Operations revenues before reimbursements were $95.3 million in the second quarter of 2023, up 1.7% from $93.7 million in the same period of 2022, including $0.6 million from the Van Dijk acquisition. Absent foreign exchange rate decreases of $6.2 million, revenues would have been $101.5 million for the 2023 second quarter. Operating earnings were $3.7 million in the 2023 second quarter, compared to a $(0.7) million operating loss in the 2022 period. The segment’s operating margin for the 2023 quarter was 3.9% as compared with (0.7)% in the 2022 quarter. Broadspire Broadspire segment revenues before reimbursements were $83.9 million in the 2023 second quarter, increasing 4.7% from $80.1 million in the 2022 second quarter. Broadspire recorded operating earnings of $8.1 million in the second quarter of 2023, representing an operating margin of 9.7%, increasing from $7.7 million, or 9.6% of revenues, in the 2022 second quarter. Platform Solutions Platform Solutions revenues before reimbursements were $65.6 million in the second quarter of 2023, up 22.1% from $53.7 million in the same period of 2022. Operating earnings were $8.1 million in the 2023 second quarter, increasing over the $4.6 million in the 2022 period. The segment’s operating margin for the 2023 quarter was 12.3% as compared with 8.6% in the 2022 quarter. Unallocated Corporate and Shared Costs and Credits, Net Unallocated corporate costs were $1.1 million in the second quarter of 2023, compared with $1.9 million in the same period of 2022. The decrease in the 2023 second quarter was primarily due to an offset to certain internal allocations and other cost reductions. Other Matters The Company recognized pretax contingent earnout expenses totaling $0.7 million and $0.3 million in the 2023 second 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 $2.1 million in the 2023 second quarter compared with credits of $(0.6) 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 June 30, 2023, totaled $47.5 million, compared with $46.0 million at December 31, 2022. The Company’s total debt outstanding as of June 30, 2023, totaled $242.8 million, compared with $238.9 million at December 31, 2022. The Company’s operations provided $27.2 million of cash during the first six months of 2023, compared with $(12.8) million used in 2022. The increase in cash provided was primarily driven by an increase in net income and improvement in working capital. The Company made no contributions to its U.S. defined benefit pension plan and $1.0 million in contributions to its U.K. plans for the first half of 2023, compared with no contributions to the U.S. plan and $0.3 million to the U.K. plans in 2022. There were no shares repurchased during 2023. During the first six months of 2022, the Company repurchased 2,656,474 shares of CRD-A and 963,472 shares of CRD-B at an average per share cost of $7.41 and $7.32, respectively. The total cost of share repurchases during 2022 was $26.7 million through June 30, 2022. Conference Call As previously announced, Crawford & Company will host a conference call on August 4, 2023, at 8:30 a.m. Eastern Time to discuss its second quarter 2023 results. The conference call can be accessed live by dialing 1-888-396-8049 and using Conference ID 31233038. A presentation for tomorrow’s call can also be found on the investor relations portion of the Company’s website, https://ir.crawco.com. The call will be recorded and available for replay through September 4, 2023. You may dial 1-877-674-7070 and use passcode 233038# 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 Six Months Ended (in thousands) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Geographic Area Currency USD equivalent % of total USD equivalent % of total USD equivalent % of total USD equivalent % of total U.S. USD $ 201,246 62.8 % $ 174,959 59.6 % $ 398,014 62.8 % $ 340,452 59.5 % U.K. GBP 34,725 10.8 % 33,435 11.4 % 67,849 10.7 % 67,485 11.8 % Canada CAD 24,107 7.5 % 24,676 8.4 % 48,468 7.7 % 48,936 8.5 % Australia AUD 22,926 7.1 % 23,643 8.1 % 45,920 7.2 % 42,360 7.4 % Europe EUR 14,301 4.5 % 14,372 4.9 % 28,339 4.5 % 28,910 5.1 % Rest of World Various 23,360 7.3 % 22,260 7.6 % 45,067 7.1 % 44,227 7.7 % Total Revenues, before reimbursements $ 320,665 100.0 % $ 293,345 100.0 % $ 633,657 100.0 % $ 572,370 100.0 % Following is a reconciliation of consolidated operating earnings to net income attributable to shareholders of Crawford & Company on a GAAP basis: Three Months Ended Six Months Ended (in thousands) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Operating earnings: North America Loss Adjusting $ 3,900 $ 2,649 $ 11,965 $ 6,783 International Operations 3,742 (661 ) 6,777 (3,726 ) Broadspire 8,148 7,667 16,075 14,101 Platform Solutions 8,106 4,596 18,072 12,633 Unallocated corporate and shared costs, net (1,098 ) (1,945 ) (5,217 ) (4,940 ) Consolidated operating earnings 22,798 12,306 47,672 24,851 (Deduct) add: Net corporate interest expense (4,309 ) (1,780 ) (8,708 ) (3,298 ) Stock option expense (139 ) (130 ) (295 ) (336 ) Amortization of intangible assets (1,979 ) (2,060 ) (3,878 ) (3,786 ) Non-service pension costs and credits (2,095 ) 572 (4,266 ) 1,115 Contingent earnout adjustments (725 ) (303 ) (973 ) (2,359 ) Income tax provision (5,206 ) (2,768 ) (10,477 ) (5,194 ) Net loss (income) attributable to noncontrolling interests 82 (7 ) 33 (67 ) Net income attributable to shareholders of Crawford & Company $ 8,427 $ 5,830 $ 19,108 $ 10,926 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 Six Months Ended (in thousands) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Net income attributable to shareholders of Crawford & Company $ 8,427 $ 5,830 $ 19,108 $ 10,926 Add (Deduct): Depreciation and amortization 9,191 9,356 18,241 18,455 Stock-based compensation 1,586 1,750 2,609 3,410 Net corporate interest expense 4,309 1,780 8,708 3,298 Non-service pension costs and credits 2,095 (572 ) 4,266 (1,115 ) Contingent earnout adjustments 725 303 973 2,359 Income tax provision 5,206 2,768 10,477 5,194 Non-GAAP adjusted EBITDA $ 31,539 $ 21,215 $ 64,382 $ 42,527 Following is a reconciliation of operating cash flow to free cash flow for the six months ended June 30, 2023 and 2022: Six Months Ended (in thousands) June 30, 2023 June 30, 2022 Change Net Cash Provided by (Used in) Operating Activities $ 27,169 $ (12,752 ) $ 39,921 Less: Property & Equipment Purchases, net (1,914 ) (3,123 ) 1,209 Capitalized Software (internal and external costs) (16,031 ) (12,561 ) (3,470 ) Free Cash Flow $ 9,224 $ (28,436 ) $ 37,660 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 June 30, 2023 (in thousands) Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share Diluted earnings per CRD-B share GAAP $ 13,551 $ 8,427 $ 0.17 $ 0.17 Adjustments: Amortization of intangible assets 1,979 1,484 0.03 0.03 Non-service related pension costs 2,095 1,557 0.03 0.03 Contingent earnout adjustments 725 537 0.01 0.01 Non-GAAP Adjusted $ 18,350 $ 12,005 $ 0.24 $ 0.24 Three Months Ended June 30, 2022 (in thousands) Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share(1) Diluted earnings per CRD-B share(1) GAAP $ 8,605 $ 5,830 $ 0.12 $ 0.12 Adjustments: Amortization of intangible assets 2,060 1,545 0.03 0.03 Non-service related pension credits (572 ) (444 ) (0.01 ) (0.01 ) Contingent earnout adjustments 303 224 - - Non-GAAP Adjusted $ 10,396 $ 7,155 $ 0.15 $ 0.15 Six Months Ended June 30, 2023 (in thousands) Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share(1) Diluted earnings per CRD-B share GAAP $ 29,552 $ 19,108 $ 0.39 $ 0.39 Adjustments: Amortization of intangible assets 3,878 2,909 0.06 0.06 Non-service related pension costs 4,266 3,170 0.06 0.06 Contingent earnout adjustments 973 720 0.02 0.02 Non-GAAP Adjusted $ 38,669 $ 25,907 $ 0.52 $ 0.53 Six Months Ended June 30, 2022 (in thousands) Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share Diluted earnings per CRD-B share GAAP $ 16,187 $ 10,926 $ 0.22 $ 0.22 Adjustments: Amortization of intangible assets 3,786 2,840 0.06 0.06 Non-service related pension credits (1,115 ) (865 ) (0.02 ) (0.02 ) Contingent earnout adjustments 2,359 1,747 0.03 0.03 Non-GAAP Adjusted $ 21,217 $ 14,648 $ 0.29 $ 0.29 (1) Sum of reconciling items may differ from total due to rounding of individual components. Following is information regarding the weighted average shares used in the computation of basic and diluted earnings per share: Three Months Ended Six Months Ended (in thousands) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Weighted-Average Shares Used to Compute Basic Earnings Per Share: Class A Common Stock 28,956 28,757 28,899 29,827 Class B Common Stock 19,848 19,987 19,848 20,381 Weighted-Average Shares Used to Compute Diluted Earnings Per Share: Class A Common Stock 29,770 29,145 29,456 30,151 Class B Common Stock 19,848 19,987 19,848 20,381 Further information regarding the Company’s operating results for the three and six months ended June 30, 2023, financial position as of June 30, 2023, and cash flows for the six months ended June 30, 2023 is shown on the attached unaudited condensed consolidated financial statements. About Crawford & Company Based in Atlanta, Crawford & Company (NYSE: CRD-A and CRD-B) is a leading 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. TAG: Crawford-Financial, Crawford-Investor-News-and-Events FOR FURTHER INFORMATION REGARDING THIS PRESS RELEASE, PLEASE CALL BRUCE SWAIN AT (404) 300-1051. 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. CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited (In Thousands, Except Per Share Amounts and Percentages) Three Months Ended June 30, 2023 2022 % Change Revenues: Revenues Before Reimbursements $ 320,665 $ 293,345 9 % Reimbursements 13,073 10,306 27 % Total Revenues 333,738 303,651 10 % Costs and Expenses: Costs of Services Provided, Before Reimbursements 234,031 218,134 7 % Reimbursements 13,073 10,306 27 % Total Costs of Services 247,104 228,440 8 % Selling, General, and Administrative Expenses 66,582 65,397 2 % Corporate Interest Expense, Net 4,309 1,780 142 % Total Costs and Expenses 317,995 295,617 8 % Other (Loss) Income, Net (2,192 ) 571 nm Income Before Income Taxes 13,551 8,605 57 % Provision for Income Taxes 5,206 2,768 88 % Net Income 8,345 5,837 43 % Net Loss (Income) Attributable to Noncontrolling Interests 82 (7 ) nm Net Income Attributable to Shareholders of Crawford & Company $ 8,427 $ 5,830 45 % Earnings Per Share - Basic: Class A Common Stock $ 0.17 $ 0.12 42 % Class B Common Stock $ 0.17 $ 0.12 42 % Earnings Per Share - Diluted: Class A Common Stock $ 0.17 $ 0.12 42 % Class B Common Stock $ 0.17 $ 0.12 42 % Cash Dividends Per Share: Class A Common Stock $ 0.06 $ 0.06 — Class B Common Stock $ 0.06 $ 0.06 — CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited (In Thousands, Except Per Share Amounts and Percentages) Six Months Ended June 30, 2023 2022 % Change Revenues: Revenues Before Reimbursements $ 633,657 $ 572,370 11 % Reimbursements 24,677 19,070 29 % Total Revenues 658,334 591,440 11 % Costs and Expenses: Costs of Services Provided, Before Reimbursements 461,109 423,715 9 % Reimbursements 24,677 19,070 29 % Total Costs of Services 485,786 442,785 10 % Selling, General, and Administrative Expenses 129,951 130,239 (0 )% Corporate Interest Expense, Net 8,708 3,298 164 % Total Costs and Expenses 624,445 576,322 8 % Other (Loss) Income, Net (4,337 ) 1,069 nm Income Before Income Taxes 29,552 16,187 83 % Provision for Income Taxes 10,477 5,194 102 % Net Income 19,075 10,993 74 % Net Loss (Income) Attributable to Noncontrolling Interests 33 (67 ) nm Net Income Attributable to Shareholders of Crawford & Company $ 19,108 $ 10,926 75 % Earnings Per Share - Basic: Class A Common Stock $ 0.39 $ 0.22 77 % Class B Common Stock $ 0.39 $ 0.22 77 % Earnings Per Share - Diluted: Class A Common Stock $ 0.39 $ 0.22 77 % Class B Common Stock $ 0.39 $ 0.22 77 % Cash Dividends Per Share: Class A Common Stock $ 0.12 $ 0.12 — Class B Common Stock $ 0.12 $ 0.12 — CRAWFORD & COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS As of June 30, 2023 and December 31, 2022 Unaudited (In Thousands, Except Par Values) June 30, December 31, 2023 2022 ASSETS Current Assets: Cash and Cash Equivalents $ 47,479 $ 46,007 Accounts Receivable, Net 160,333 141,106 Unbilled Revenues, at Estimated Billable Amounts 129,121 126,274 Income Taxes Receivable 9,164 9,098 Prepaid Expenses and Other Current Assets 29,032 28,782 Total Current Assets 375,129 351,267 Net Property and Equipment 25,406 27,809 Other Assets: Operating Lease Right-of-Use Asset, Net 92,535 93,334 Goodwill 76,720 76,622 Intangible Assets Arising from Business Acquisitions, Net 86,852 88,039 Capitalized Software Costs, Net 90,119 82,975 Deferred Income Tax Assets 18,812 19,573 Other Noncurrent Assets 56,201 51,888 Total Other Assets 421,239 412,431 Total Assets $ 821,774 $ 791,507 LIABILITIES AND SHAREHOLDERS’ INVESTMENT Current Liabilities: Short-Term Borrowings $ 30,552 $ 27,048 Accounts Payable 44,094 50,847 Accrued Compensation and Related Costs 76,558 79,285 Self-Insured Risks 15,500 12,614 Income Taxes Payable 143 1,208 Operating Lease Liability 24,028 22,910 Other Accrued Liabilities 64,518 56,293 Deferred Revenues 33,950 29,282 Total Current Liabilities 289,343 279,487 Noncurrent Liabilities: Long-Term Debt and Finance Leases, Less Current Installments 212,217 211,810 Operating Lease Liability 82,359 84,628 Deferred Revenues 25,472 24,737 Accrued Pension Liabilities 25,250 25,914 Other Noncurrent Liabilities 37,238 41,553 Total Noncurrent Liabilities 382,536 388,642 Shareholders’ Investment: Class A Common Stock, $1.00 Par Value 28,977 28,764 Class B Common Stock, $1.00 Par Value 19,848 19,848 Additional Paid-in Capital 81,025 78,158 Retained Earnings 226,348 213,094 Accumulated Other Comprehensive Loss (204,840 ) (215,321 ) Shareholders’ Investment Attributable to Shareholders of Crawford & Company 151,358 124,543 Noncontrolling Interests (1,463 ) (1,165 ) Total Shareholders’ Investment 149,895 123,378 Total Liabilities and Shareholders’ Investment $ 821,774 $ 791,507 CRAWFORD & COMPANY SUMMARY RESULTS BY OPERATING SEGMENT WITH DIRECT COMPENSATION AND OTHER EXPENSES Unaudited (In Thousands, Except Percentages) Three Months Ended June 30, North America Loss Adjusting % International Operations % Broadspire % Platform Solutions % 2023 2022 Change 2023 2022 Change 2023 2022 Change 2023 2022 Change Revenues Before Reimbursements $ 75,827 $ 65,775 15.3% $ 95,312 $ 93,710 1.7% $ 83,888 $ 80,114 4.7% $ 65,638 $ 53,746 22.1% Direct Compensation, Fringe Benefits & Non-Employee Labor 54,619 48,349 13.0% 62,331 65,311 (4.6)% 54,500 49,801 9.4% 43,689 36,467 19.8% % of Revenues Before Reimbursements 72.0 % 73.5 % 65.4 % 69.7 % 65.0 % 62.2 % 66.6 % 67.9 % Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor 17,308 14,777 17.1% 29,239 29,060 0.6% 21,240 22,646 (6.2)% 13,843 12,683 9.1% % of Revenues Before Reimbursements 22.8 % 22.5 % 30.7 % 31.0 % 25.3 % 28.3 % 21.1 % 23.6 % Total Operating Expenses 71,927 63,126 13.9% 91,570 94,371 (3.0)% 75,740 72,447 4.5% 57,532 49,150 17.1% Operating Earnings (Loss) (1) $ 3,900 $ 2,649 47.2% $ 3,742 $ (661 ) nm $ 8,148 $ 7,667 6.3% $ 8,106 $ 4,596 76.4% % of Revenues Before Reimbursements 5.1 % 4.0 % 3.9 % (0.7 )% 9.7 % 9.6 % 12.3 % 8.6 % Six Months Ended June 30, North America Loss Adjusting % International Operations % Broadspire % Platforms Solutions % 2023 2022 Change 2023 2022 Change 2023 2022 Change 2023 2022 Change Revenues Before Reimbursements $ 152,954 $ 130,213 17.5% $ 187,175 $ 182,982 2.3% $ 165,070 $ 156,568 5.4% $ 128,458 $ 102,607 25.2% Direct Compensation, Fringe Benefits & Non-Employee Labor 108,783 94,606 15.0% 123,752 128,607 (3.8)% 107,141 97,748 9.6% 84,600 68,318 23.8% % of Revenues Before Reimbursements 71.1 % 72.7 % 66.1 % 70.3 % 64.9 % 62.4 % 65.9 % 66.6 % Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor 32,206 28,824 11.7% 56,646 58,101 (2.5)% 41,854 44,719 (6.4)% 25,786 21,656 19.1% % of Revenues Before Reimbursements 21.1 % 22.1 % 30.3 % 31.8 % 25.4 % 28.6 % 20.1 % 21.1 % Total Operating Expenses 140,989 123,430 14.2% 180,398 186,708 (3.4)% 148,995 142,467 4.6% 110,386 89,974 22.7% Operating Earnings (Loss)(1) $ 11,965 $ 6,783 76.4% $ 6,777 $ (3,726 ) nm $ 16,075 $ 14,101 14.0% $ 18,072 $ 12,633 43.1% % of Revenues Before Reimbursements 7.8 % 5.2 % 3.6 % (2.0 )% 9.7 % 9.0 % 14.1 % 12.3 % (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 June 30, 2023 and June 30, 2022 Unaudited (In Thousands) 2023 2022 Cash Flows From Operating Activities: Net income $ 19,075 $ 10,993 Reconciliation of net income to net cash provided by (used in) operating activities: Depreciation and amortization 18,241 18,455 Stock-based compensation 2,609 3,410 Loss (gain) on disposal of property and equipment 116 (1,544 ) Contingent earnout adjustments 973 2,359 Changes in operating assets and liabilities: Accounts receivable, net (15,107 ) 1,241 Unbilled revenues, net 1,828 (27,557 ) Accrued or prepaid income taxes (1,217 ) (5,275 ) Accounts payable and accrued liabilities (3,928 ) (9,403 ) Deferred revenues 4,529 (1,080 ) Accrued retirement costs 750 (3,016 ) Prepaid expenses and other operating activities (700 ) (1,335 ) Net cash provided by (used in) operating activities 27,169 (12,752 ) Cash Flows From Investing Activities: Acquisitions of property and equipment (1,914 ) (3,123 ) Capitalization of computer software costs (16,031 ) (12,561 ) Payments for business acquisitions, net of cash acquired — (25,941 ) Cash proceeds from sale of property and equipment — 3,032 Net cash used in investing activities (17,945 ) (38,593 ) Cash Flows From Financing Activities: Cash dividends paid (5,854 ) (6,034 ) Repurchases of common stock — (26,749 ) Increases in short-term and revolving credit facility borrowings 20,958 86,865 Payments on short-term and revolving credit facility borrowings (18,879 ) (6,011 ) Payments of contingent consideration on acquisitions (4,916 ) (1,654 ) Other financing activities 213 (285 ) Net cash (used in) provided by financing activities (8,478 ) 46,132 Effects of exchange rate changes on cash and cash equivalents 1,062 (1,400 ) Increase (Decrease) in cash, cash equivalents, and restricted cash(1) 1,808 (6,613 ) 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) $ 48,453 $ 47,076 (1) The 2023 amounts include beginning restricted cash of $638 at December 31, 2022, and ending restricted cash of $974 at June 30, 2023, and the 2022 amounts include beginning restricted cash of $461at December 31, 2021, and ending restricted cash of $822 at June 30, 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/20230803718952/en/Contacts Lynn Cufley +44 207 265 4067 Lynn.Cufley@crawco.uk Katie Cline +1 470 792 5678 Katie.Cline@us.crawco.com Jennifer Belodeau/Rosalyn Christian IMS Investor Relations 203 972 9200 crawford@imsinvestorrelations.com
Crawford & Company® (NYSE: CRD-A and CRD-B), is pleased to announce its financial results for the second quarter ended June 30, 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 Second Quarter 2023 Revenues before reimbursements of $320.7 million, up 9% over $293.3 million for the 2022 second quarter Net income attributable to shareholders of $8.4 million, compared with $5.8 million in the same period last year Diluted earnings per share of $0.17 for both CRD-A and CRD-B, compared with diluted earnings per share of $0.12 for both CRD-A and CRD-B in the prior year second quarter Non-GAAP Consolidated Results Second Quarter 2023 Non-GAAP consolidated results for 2023 exclude the non-cash, after-tax adjustments for amortization of intangible assets of $1.5 million, non-service related pension costs of $1.6 million, and a contingent earnout adjustment of $0.5 million. Non-GAAP consolidated results for 2022 exclude a similar adjustment for amortization of intangible assets of $1.5 million, non-service related pension credits of $(0.4) million, and a contingent earnout adjustment of $0.2 million. Foreign currency exchange rates decreased revenues before reimbursements by $7.5 million or (3)%. Presented on a constant dollar basis to the prior year, revenues before reimbursements totaled $328.1 million, increasing 12% over the 2022 second quarter Net income attributable to shareholders, on a non-GAAP basis, totaled $12.0 million in the 2023 second quarter, compared with $7.2 million in the same period last year Diluted earnings per share, on a non-GAAP basis, totaled $0.24 for both CRD-A and CRD-B in the 2023 second quarter, compared with $0.15 for both CRD-A and CRD-B in the prior year second quarter Consolidated adjusted operating earnings, on a non-GAAP basis, were $22.8 million, or 7.1% of revenues before reimbursements in the 2023 second quarter, compared with $12.3 million, or 4.2% of revenues, in the 2022 second quarter Consolidated adjusted EBITDA, a non-GAAP financial measure, was $31.5 million, or 9.8% of revenues before reimbursements in the 2023 second quarter, compared with $21.2 million, or 7.2% of revenues, in the 2022 second quarter Management Comments “We continued our trend of growth and margin improvement with another strong performance in the second quarter. This was our eleventh consecutive quarter of consolidated revenue growth, reflecting the strength of our client relationships and the commitment of our people to excellence,” commented Rohit Verma, Chief Executive Officer of Crawford & Company. “Platform Solutions revenue grew 22% for the second quarter, related to strong activity in our Networks and Contractor Connection service lines. Revenue in our North America Loss Adjusting segment grew 15%, largely driven by the addition of specialty adjusters to our Global Technical Service team, as well as the addition of several new accounts. At Broadspire, usage of our Medical Management service increased as a result of new workers’ compensation business as well as enhanced post-pandemic stability in the sector. Our International business performed well, with improved margins reflecting work done on cost efficiency in 2022 as well as growth in the current year. “Our balance sheet and cash generation remain strong, providing Crawford the financial flexibility to continue to invest in the technologies and people who will enhance our operational excellence as we execute on our strategic initiatives to drive continued shareholder value,” Mr. Verma concluded. Segment Results for the Second Quarter North America Loss Adjusting North America Loss Adjusting revenues before reimbursements were $75.8 million in the second quarter of 2023, increasing 15.3% from $65.8 million in the second quarter of 2022. The segment had operating earnings of $3.9 million in the 2023 second quarter, increasing from $2.6 million in the second quarter of 2022. The operating margin was 5.1% in the 2023 quarter and 4.0% in the 2022 quarter. International Operations International Operations revenues before reimbursements were $95.3 million in the second quarter of 2023, up 1.7% from $93.7 million in the same period of 2022, including $0.6 million from the Van Dijk acquisition. Absent foreign exchange rate decreases of $6.2 million, revenues would have been $101.5 million for the 2023 second quarter. Operating earnings were $3.7 million in the 2023 second quarter, compared to a $(0.7) million operating loss in the 2022 period. The segment’s operating margin for the 2023 quarter was 3.9% as compared with (0.7)% in the 2022 quarter. Broadspire Broadspire segment revenues before reimbursements were $83.9 million in the 2023 second quarter, increasing 4.7% from $80.1 million in the 2022 second quarter. Broadspire recorded operating earnings of $8.1 million in the second quarter of 2023, representing an operating margin of 9.7%, increasing from $7.7 million, or 9.6% of revenues, in the 2022 second quarter. Platform Solutions Platform Solutions revenues before reimbursements were $65.6 million in the second quarter of 2023, up 22.1% from $53.7 million in the same period of 2022. Operating earnings were $8.1 million in the 2023 second quarter, increasing over the $4.6 million in the 2022 period. The segment’s operating margin for the 2023 quarter was 12.3% as compared with 8.6% in the 2022 quarter. Unallocated Corporate and Shared Costs and Credits, Net Unallocated corporate costs were $1.1 million in the second quarter of 2023, compared with $1.9 million in the same period of 2022. The decrease in the 2023 second quarter was primarily due to an offset to certain internal allocations and other cost reductions. Other Matters The Company recognized pretax contingent earnout expenses totaling $0.7 million and $0.3 million in the 2023 second 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 $2.1 million in the 2023 second quarter compared with credits of $(0.6) 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 June 30, 2023, totaled $47.5 million, compared with $46.0 million at December 31, 2022. The Company’s total debt outstanding as of June 30, 2023, totaled $242.8 million, compared with $238.9 million at December 31, 2022. The Company’s operations provided $27.2 million of cash during the first six months of 2023, compared with $(12.8) million used in 2022. The increase in cash provided was primarily driven by an increase in net income and improvement in working capital. The Company made no contributions to its U.S. defined benefit pension plan and $1.0 million in contributions to its U.K. plans for the first half of 2023, compared with no contributions to the U.S. plan and $0.3 million to the U.K. plans in 2022. There were no shares repurchased during 2023. During the first six months of 2022, the Company repurchased 2,656,474 shares of CRD-A and 963,472 shares of CRD-B at an average per share cost of $7.41 and $7.32, respectively. The total cost of share repurchases during 2022 was $26.7 million through June 30, 2022. Conference Call As previously announced, Crawford & Company will host a conference call on August 4, 2023, at 8:30 a.m. Eastern Time to discuss its second quarter 2023 results. The conference call can be accessed live by dialing 1-888-396-8049 and using Conference ID 31233038. A presentation for tomorrow’s call can also be found on the investor relations portion of the Company’s website, https://ir.crawco.com. The call will be recorded and available for replay through September 4, 2023. You may dial 1-877-674-7070 and use passcode 233038# 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 Six Months Ended (in thousands) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Geographic Area Currency USD equivalent % of total USD equivalent % of total USD equivalent % of total USD equivalent % of total U.S. USD $ 201,246 62.8 % $ 174,959 59.6 % $ 398,014 62.8 % $ 340,452 59.5 % U.K. GBP 34,725 10.8 % 33,435 11.4 % 67,849 10.7 % 67,485 11.8 % Canada CAD 24,107 7.5 % 24,676 8.4 % 48,468 7.7 % 48,936 8.5 % Australia AUD 22,926 7.1 % 23,643 8.1 % 45,920 7.2 % 42,360 7.4 % Europe EUR 14,301 4.5 % 14,372 4.9 % 28,339 4.5 % 28,910 5.1 % Rest of World Various 23,360 7.3 % 22,260 7.6 % 45,067 7.1 % 44,227 7.7 % Total Revenues, before reimbursements $ 320,665 100.0 % $ 293,345 100.0 % $ 633,657 100.0 % $ 572,370 100.0 % Following is a reconciliation of consolidated operating earnings to net income attributable to shareholders of Crawford & Company on a GAAP basis: Three Months Ended Six Months Ended (in thousands) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Operating earnings: North America Loss Adjusting $ 3,900 $ 2,649 $ 11,965 $ 6,783 International Operations 3,742 (661 ) 6,777 (3,726 ) Broadspire 8,148 7,667 16,075 14,101 Platform Solutions 8,106 4,596 18,072 12,633 Unallocated corporate and shared costs, net (1,098 ) (1,945 ) (5,217 ) (4,940 ) Consolidated operating earnings 22,798 12,306 47,672 24,851 (Deduct) add: Net corporate interest expense (4,309 ) (1,780 ) (8,708 ) (3,298 ) Stock option expense (139 ) (130 ) (295 ) (336 ) Amortization of intangible assets (1,979 ) (2,060 ) (3,878 ) (3,786 ) Non-service pension costs and credits (2,095 ) 572 (4,266 ) 1,115 Contingent earnout adjustments (725 ) (303 ) (973 ) (2,359 ) Income tax provision (5,206 ) (2,768 ) (10,477 ) (5,194 ) Net loss (income) attributable to noncontrolling interests 82 (7 ) 33 (67 ) Net income attributable to shareholders of Crawford & Company $ 8,427 $ 5,830 $ 19,108 $ 10,926 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 Six Months Ended (in thousands) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Net income attributable to shareholders of Crawford & Company $ 8,427 $ 5,830 $ 19,108 $ 10,926 Add (Deduct): Depreciation and amortization 9,191 9,356 18,241 18,455 Stock-based compensation 1,586 1,750 2,609 3,410 Net corporate interest expense 4,309 1,780 8,708 3,298 Non-service pension costs and credits 2,095 (572 ) 4,266 (1,115 ) Contingent earnout adjustments 725 303 973 2,359 Income tax provision 5,206 2,768 10,477 5,194 Non-GAAP adjusted EBITDA $ 31,539 $ 21,215 $ 64,382 $ 42,527 Following is a reconciliation of operating cash flow to free cash flow for the six months ended June 30, 2023 and 2022: Six Months Ended (in thousands) June 30, 2023 June 30, 2022 Change Net Cash Provided by (Used in) Operating Activities $ 27,169 $ (12,752 ) $ 39,921 Less: Property & Equipment Purchases, net (1,914 ) (3,123 ) 1,209 Capitalized Software (internal and external costs) (16,031 ) (12,561 ) (3,470 ) Free Cash Flow $ 9,224 $ (28,436 ) $ 37,660 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 June 30, 2023 (in thousands) Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share Diluted earnings per CRD-B share GAAP $ 13,551 $ 8,427 $ 0.17 $ 0.17 Adjustments: Amortization of intangible assets 1,979 1,484 0.03 0.03 Non-service related pension costs 2,095 1,557 0.03 0.03 Contingent earnout adjustments 725 537 0.01 0.01 Non-GAAP Adjusted $ 18,350 $ 12,005 $ 0.24 $ 0.24 Three Months Ended June 30, 2022 (in thousands) Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share(1) Diluted earnings per CRD-B share(1) GAAP $ 8,605 $ 5,830 $ 0.12 $ 0.12 Adjustments: Amortization of intangible assets 2,060 1,545 0.03 0.03 Non-service related pension credits (572 ) (444 ) (0.01 ) (0.01 ) Contingent earnout adjustments 303 224 - - Non-GAAP Adjusted $ 10,396 $ 7,155 $ 0.15 $ 0.15 Six Months Ended June 30, 2023 (in thousands) Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share(1) Diluted earnings per CRD-B share GAAP $ 29,552 $ 19,108 $ 0.39 $ 0.39 Adjustments: Amortization of intangible assets 3,878 2,909 0.06 0.06 Non-service related pension costs 4,266 3,170 0.06 0.06 Contingent earnout adjustments 973 720 0.02 0.02 Non-GAAP Adjusted $ 38,669 $ 25,907 $ 0.52 $ 0.53 Six Months Ended June 30, 2022 (in thousands) Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share Diluted earnings per CRD-B share GAAP $ 16,187 $ 10,926 $ 0.22 $ 0.22 Adjustments: Amortization of intangible assets 3,786 2,840 0.06 0.06 Non-service related pension credits (1,115 ) (865 ) (0.02 ) (0.02 ) Contingent earnout adjustments 2,359 1,747 0.03 0.03 Non-GAAP Adjusted $ 21,217 $ 14,648 $ 0.29 $ 0.29 (1) Sum of reconciling items may differ from total due to rounding of individual components. Following is information regarding the weighted average shares used in the computation of basic and diluted earnings per share: Three Months Ended Six Months Ended (in thousands) June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Weighted-Average Shares Used to Compute Basic Earnings Per Share: Class A Common Stock 28,956 28,757 28,899 29,827 Class B Common Stock 19,848 19,987 19,848 20,381 Weighted-Average Shares Used to Compute Diluted Earnings Per Share: Class A Common Stock 29,770 29,145 29,456 30,151 Class B Common Stock 19,848 19,987 19,848 20,381 Further information regarding the Company’s operating results for the three and six months ended June 30, 2023, financial position as of June 30, 2023, and cash flows for the six months ended June 30, 2023 is shown on the attached unaudited condensed consolidated financial statements. About Crawford & Company Based in Atlanta, Crawford & Company (NYSE: CRD-A and CRD-B) is a leading 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. TAG: Crawford-Financial, Crawford-Investor-News-and-Events FOR FURTHER INFORMATION REGARDING THIS PRESS RELEASE, PLEASE CALL BRUCE SWAIN AT (404) 300-1051. 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. CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited (In Thousands, Except Per Share Amounts and Percentages) Three Months Ended June 30, 2023 2022 % Change Revenues: Revenues Before Reimbursements $ 320,665 $ 293,345 9 % Reimbursements 13,073 10,306 27 % Total Revenues 333,738 303,651 10 % Costs and Expenses: Costs of Services Provided, Before Reimbursements 234,031 218,134 7 % Reimbursements 13,073 10,306 27 % Total Costs of Services 247,104 228,440 8 % Selling, General, and Administrative Expenses 66,582 65,397 2 % Corporate Interest Expense, Net 4,309 1,780 142 % Total Costs and Expenses 317,995 295,617 8 % Other (Loss) Income, Net (2,192 ) 571 nm Income Before Income Taxes 13,551 8,605 57 % Provision for Income Taxes 5,206 2,768 88 % Net Income 8,345 5,837 43 % Net Loss (Income) Attributable to Noncontrolling Interests 82 (7 ) nm Net Income Attributable to Shareholders of Crawford & Company $ 8,427 $ 5,830 45 % Earnings Per Share - Basic: Class A Common Stock $ 0.17 $ 0.12 42 % Class B Common Stock $ 0.17 $ 0.12 42 % Earnings Per Share - Diluted: Class A Common Stock $ 0.17 $ 0.12 42 % Class B Common Stock $ 0.17 $ 0.12 42 % Cash Dividends Per Share: Class A Common Stock $ 0.06 $ 0.06 — Class B Common Stock $ 0.06 $ 0.06 — CRAWFORD & COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited (In Thousands, Except Per Share Amounts and Percentages) Six Months Ended June 30, 2023 2022 % Change Revenues: Revenues Before Reimbursements $ 633,657 $ 572,370 11 % Reimbursements 24,677 19,070 29 % Total Revenues 658,334 591,440 11 % Costs and Expenses: Costs of Services Provided, Before Reimbursements 461,109 423,715 9 % Reimbursements 24,677 19,070 29 % Total Costs of Services 485,786 442,785 10 % Selling, General, and Administrative Expenses 129,951 130,239 (0 )% Corporate Interest Expense, Net 8,708 3,298 164 % Total Costs and Expenses 624,445 576,322 8 % Other (Loss) Income, Net (4,337 ) 1,069 nm Income Before Income Taxes 29,552 16,187 83 % Provision for Income Taxes 10,477 5,194 102 % Net Income 19,075 10,993 74 % Net Loss (Income) Attributable to Noncontrolling Interests 33 (67 ) nm Net Income Attributable to Shareholders of Crawford & Company $ 19,108 $ 10,926 75 % Earnings Per Share - Basic: Class A Common Stock $ 0.39 $ 0.22 77 % Class B Common Stock $ 0.39 $ 0.22 77 % Earnings Per Share - Diluted: Class A Common Stock $ 0.39 $ 0.22 77 % Class B Common Stock $ 0.39 $ 0.22 77 % Cash Dividends Per Share: Class A Common Stock $ 0.12 $ 0.12 — Class B Common Stock $ 0.12 $ 0.12 — CRAWFORD & COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS As of June 30, 2023 and December 31, 2022 Unaudited (In Thousands, Except Par Values) June 30, December 31, 2023 2022 ASSETS Current Assets: Cash and Cash Equivalents $ 47,479 $ 46,007 Accounts Receivable, Net 160,333 141,106 Unbilled Revenues, at Estimated Billable Amounts 129,121 126,274 Income Taxes Receivable 9,164 9,098 Prepaid Expenses and Other Current Assets 29,032 28,782 Total Current Assets 375,129 351,267 Net Property and Equipment 25,406 27,809 Other Assets: Operating Lease Right-of-Use Asset, Net 92,535 93,334 Goodwill 76,720 76,622 Intangible Assets Arising from Business Acquisitions, Net 86,852 88,039 Capitalized Software Costs, Net 90,119 82,975 Deferred Income Tax Assets 18,812 19,573 Other Noncurrent Assets 56,201 51,888 Total Other Assets 421,239 412,431 Total Assets $ 821,774 $ 791,507 LIABILITIES AND SHAREHOLDERS’ INVESTMENT Current Liabilities: Short-Term Borrowings $ 30,552 $ 27,048 Accounts Payable 44,094 50,847 Accrued Compensation and Related Costs 76,558 79,285 Self-Insured Risks 15,500 12,614 Income Taxes Payable 143 1,208 Operating Lease Liability 24,028 22,910 Other Accrued Liabilities 64,518 56,293 Deferred Revenues 33,950 29,282 Total Current Liabilities 289,343 279,487 Noncurrent Liabilities: Long-Term Debt and Finance Leases, Less Current Installments 212,217 211,810 Operating Lease Liability 82,359 84,628 Deferred Revenues 25,472 24,737 Accrued Pension Liabilities 25,250 25,914 Other Noncurrent Liabilities 37,238 41,553 Total Noncurrent Liabilities 382,536 388,642 Shareholders’ Investment: Class A Common Stock, $1.00 Par Value 28,977 28,764 Class B Common Stock, $1.00 Par Value 19,848 19,848 Additional Paid-in Capital 81,025 78,158 Retained Earnings 226,348 213,094 Accumulated Other Comprehensive Loss (204,840 ) (215,321 ) Shareholders’ Investment Attributable to Shareholders of Crawford & Company 151,358 124,543 Noncontrolling Interests (1,463 ) (1,165 ) Total Shareholders’ Investment 149,895 123,378 Total Liabilities and Shareholders’ Investment $ 821,774 $ 791,507 CRAWFORD & COMPANY SUMMARY RESULTS BY OPERATING SEGMENT WITH DIRECT COMPENSATION AND OTHER EXPENSES Unaudited (In Thousands, Except Percentages) Three Months Ended June 30, North America Loss Adjusting % International Operations % Broadspire % Platform Solutions % 2023 2022 Change 2023 2022 Change 2023 2022 Change 2023 2022 Change Revenues Before Reimbursements $ 75,827 $ 65,775 15.3% $ 95,312 $ 93,710 1.7% $ 83,888 $ 80,114 4.7% $ 65,638 $ 53,746 22.1% Direct Compensation, Fringe Benefits & Non-Employee Labor 54,619 48,349 13.0% 62,331 65,311 (4.6)% 54,500 49,801 9.4% 43,689 36,467 19.8% % of Revenues Before Reimbursements 72.0 % 73.5 % 65.4 % 69.7 % 65.0 % 62.2 % 66.6 % 67.9 % Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor 17,308 14,777 17.1% 29,239 29,060 0.6% 21,240 22,646 (6.2)% 13,843 12,683 9.1% % of Revenues Before Reimbursements 22.8 % 22.5 % 30.7 % 31.0 % 25.3 % 28.3 % 21.1 % 23.6 % Total Operating Expenses 71,927 63,126 13.9% 91,570 94,371 (3.0)% 75,740 72,447 4.5% 57,532 49,150 17.1% Operating Earnings (Loss) (1) $ 3,900 $ 2,649 47.2% $ 3,742 $ (661 ) nm $ 8,148 $ 7,667 6.3% $ 8,106 $ 4,596 76.4% % of Revenues Before Reimbursements 5.1 % 4.0 % 3.9 % (0.7 )% 9.7 % 9.6 % 12.3 % 8.6 % Six Months Ended June 30, North America Loss Adjusting % International Operations % Broadspire % Platforms Solutions % 2023 2022 Change 2023 2022 Change 2023 2022 Change 2023 2022 Change Revenues Before Reimbursements $ 152,954 $ 130,213 17.5% $ 187,175 $ 182,982 2.3% $ 165,070 $ 156,568 5.4% $ 128,458 $ 102,607 25.2% Direct Compensation, Fringe Benefits & Non-Employee Labor 108,783 94,606 15.0% 123,752 128,607 (3.8)% 107,141 97,748 9.6% 84,600 68,318 23.8% % of Revenues Before Reimbursements 71.1 % 72.7 % 66.1 % 70.3 % 64.9 % 62.4 % 65.9 % 66.6 % Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor 32,206 28,824 11.7% 56,646 58,101 (2.5)% 41,854 44,719 (6.4)% 25,786 21,656 19.1% % of Revenues Before Reimbursements 21.1 % 22.1 % 30.3 % 31.8 % 25.4 % 28.6 % 20.1 % 21.1 % Total Operating Expenses 140,989 123,430 14.2% 180,398 186,708 (3.4)% 148,995 142,467 4.6% 110,386 89,974 22.7% Operating Earnings (Loss)(1) $ 11,965 $ 6,783 76.4% $ 6,777 $ (3,726 ) nm $ 16,075 $ 14,101 14.0% $ 18,072 $ 12,633 43.1% % of Revenues Before Reimbursements 7.8 % 5.2 % 3.6 % (2.0 )% 9.7 % 9.0 % 14.1 % 12.3 % (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 June 30, 2023 and June 30, 2022 Unaudited (In Thousands) 2023 2022 Cash Flows From Operating Activities: Net income $ 19,075 $ 10,993 Reconciliation of net income to net cash provided by (used in) operating activities: Depreciation and amortization 18,241 18,455 Stock-based compensation 2,609 3,410 Loss (gain) on disposal of property and equipment 116 (1,544 ) Contingent earnout adjustments 973 2,359 Changes in operating assets and liabilities: Accounts receivable, net (15,107 ) 1,241 Unbilled revenues, net 1,828 (27,557 ) Accrued or prepaid income taxes (1,217 ) (5,275 ) Accounts payable and accrued liabilities (3,928 ) (9,403 ) Deferred revenues 4,529 (1,080 ) Accrued retirement costs 750 (3,016 ) Prepaid expenses and other operating activities (700 ) (1,335 ) Net cash provided by (used in) operating activities 27,169 (12,752 ) Cash Flows From Investing Activities: Acquisitions of property and equipment (1,914 ) (3,123 ) Capitalization of computer software costs (16,031 ) (12,561 ) Payments for business acquisitions, net of cash acquired — (25,941 ) Cash proceeds from sale of property and equipment — 3,032 Net cash used in investing activities (17,945 ) (38,593 ) Cash Flows From Financing Activities: Cash dividends paid (5,854 ) (6,034 ) Repurchases of common stock — (26,749 ) Increases in short-term and revolving credit facility borrowings 20,958 86,865 Payments on short-term and revolving credit facility borrowings (18,879 ) (6,011 ) Payments of contingent consideration on acquisitions (4,916 ) (1,654 ) Other financing activities 213 (285 ) Net cash (used in) provided by financing activities (8,478 ) 46,132 Effects of exchange rate changes on cash and cash equivalents 1,062 (1,400 ) Increase (Decrease) in cash, cash equivalents, and restricted cash(1) 1,808 (6,613 ) 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) $ 48,453 $ 47,076 (1) The 2023 amounts include beginning restricted cash of $638 at December 31, 2022, and ending restricted cash of $974 at June 30, 2023, and the 2022 amounts include beginning restricted cash of $461at December 31, 2021, and ending restricted cash of $822 at June 30, 2022, which we present as part of "Prepaid expenses and other current assets" on the Balance Sheets. 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Lynn Cufley +44 207 265 4067 Lynn.Cufley@crawco.uk Katie Cline +1 470 792 5678 Katie.Cline@us.crawco.com Jennifer Belodeau/Rosalyn Christian IMS Investor Relations 203 972 9200 crawford@imsinvestorrelations.com