Le Lézard
Classified in: Business
Subjects: EARNINGS, Conference Call, Webcast

Crawford & Company Reports 2022 Second Quarter Results


Crawford & Company® (NYSE: CRD-A and CRD-B), the world's largest publicly listed independent provider of claims management and outsourcing solutions to carriers, brokers and corporations, today announced its financial results for the second quarter ended June 30, 2022.

The Company's two classes of stock are substantially identical, except with respect to voting rights and the Company's ability to pay greater cash dividends on the non-voting Class A Common Stock (CRD-A) than on the voting Class B Common Stock (CRD-B), subject to certain limitations. In addition, with respect to mergers or similar transactions, holders of CRD-A must receive the same type and amount of consideration as holders of CRD-B, unless different consideration is approved by the holders of 75% of CRD-A, voting as a class.

GAAP Consolidated Results

Second Quarter 2022

Non-GAAP Consolidated Results

Second Quarter 2022

Non-GAAP consolidated results for 2022 exclude the non-cash, after-tax adjustments for amortization of intangible assets of $1.5 million and the earnout adjustment of $0.2 million. Non-GAAP consolidated results for 2021 exclude a similar adjustment for amortization of intangible assets of $2.1 million.

Management Comments

"Fueled by our strategic investments in the business, Crawford delivered another quarter of strong top-line results, with revenue growth increasing 10% over the prior year period. This strength was broad-based with solid increases across all our businesses, led by Platform Solutions and North American Loss Adjusting. Our Broadspire business also grew nicely in the second quarter, aided by new business wins and the expansion of our existing client base, and International Operations is improving as expected despite persistent global pressures," commented Mr. Rohit Verma, chief executive officer of Crawford & Company.

"While we are pleased with the continued revenue growth momentum through the second quarter, we are acutely focused on converting our top-line success into operating earnings expansion and cash flow improvement to accelerate our profitability across our business, which will be our top priority for the second half of the year. As we work to improve margin on the business and navigate an uncertain macro environment, we remain confident in our ability to execute on our long-term strategy and deliver superior results for our shareholders," concluded Mr. Verma.

Segment Results for the Second Quarter

North America Loss Adjusting

North America Loss Adjusting revenues before reimbursements were $65.8 million in the second quarter of 2022, increasing 17.0% from $56.2 million in the second quarter of 2021, including $3.6 million from the edjuster, Inc. acquisition.

The segment had operating earnings of $2.7 million in the 2022 second quarter, decreasing from $3.1 million in the second quarter of 2021. The 2021 quarter had a $1.0 million benefit from Canada Emergency Wage Subsidy ("CEWS"). The operating margin was 4.1% in the 2022 quarter and 5.5% in the 2021 quarter.

International Operations

International Operations revenues before reimbursements were $93.7 million in the second quarter of 2022, up 2.7% from $91.3 million in the same period of 2021, including $0.6 million from the BosBoon acquisition. Absent foreign exchange rate decreases of $5.3 million, revenues would have been $99.0 million for the 2022 second quarter.

Operating losses were $(0.7) million in the 2022 second quarter, decreasing from earnings of $2.1 million in the 2021 period. The segment's operating margin for the 2022 quarter was (0.8)% as compared with 2.3% in the 2021 quarter.

Broadspire

Broadspire segment revenues before reimbursements were $80.1 million in the 2022 second quarter, increasing 5.5% from $75.9 million in the 2021 second quarter.

Broadspire recorded operating earnings of $7.7 million in the second quarter of 2022, representing an operating margin of 9.6%, increasing from $6.6 million, or 8.7% of revenues, in the 2021 second quarter.

Platform Solutions

Platform Solutions revenues before reimbursements were $53.7 million in the second quarter of 2022, up 21.9% from $44.1 million in the same period of 2021, including $3.8 million from the Praxis Consulting acquisition.

Operating earnings were $4.6 million in the 2022 second quarter, decreasing from $9.1 million from the 2021 period. The segment's operating margin for the 2022 quarter was 8.6% as compared with 20.6% in the 2021 quarter.

Unallocated Corporate and Shared Costs and Credits, Net

Unallocated corporate costs were $1.4 million in the second quarter of 2022, compared with $1.2 million in the same period of 2021. Primary components of this variance was a $1.2 million CEWS benefit in 2021, not present in 2022, partially offset by a reduction in other unallocated costs.

Other Matters

For the 2022 second quarter, the Company recognized no benefit from CEWS as compared with an overall benefit of $2.2 million in the 2021 second quarter recorded between North America Loss Adjusting and Unallocated Corporate Costs.

On April 1, 2022, the Company purchased assets associated with R.P. van Dijk B.V., a bodily injury loss adjusting company based in the Netherlands. The purchase price includes an initial cash consideration of $4.3 million and a maximum of $2.2 million payable over the next two years based on achieving certain revenue targets and other nonfinancial milestones, as defined in the purchase agreement.

In addition, the Company recognized a pretax contingent earnout expense totaling $0.3 million in the 2022 second quarter 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.

Balance Sheet and Cash Flow

The Company's consolidated cash and cash equivalents position as of June 30, 2022, totaled $46.3 million, compared with $53.2 million at December 31, 2021. The Company's total debt outstanding as of June 30, 2022, totaled $254.2 million, compared with $175.0 million at December 31, 2021.

The Company's operations used $12.8 million of cash during the first six months of 2022, compared with $10.5 million provided in 2021. The decrease in cash provided by operating activities was primarily due to a $20.5 million year-over-year increase in change in unbilled receivables primarily resulting from the flooding in Australia, increased incentive compensation payments of $6.4 million in 2022 compared to 2021, and $2.0 million of prior year benefits received related to CEWS that were not present in 2022, partially offset by a $4.6 million reduction in pension contributions.

The Company made no contributions to its U.S. defined benefit pension plan and $0.3 million in contributions to its U.K. plans for the first half of 2022, compared with $4.5 million in contributions to the U.S. plan and $0.4 million to the U.K. plans in 2021.

During 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.

Conference Call

As previously announced, Crawford & Company will host a conference call on August 9, 2022, at 8:30 a.m. Eastern Time to discuss its second quarter 2022 results. The conference call can be accessed live by dialing 1-888-396-8049 and using Conference ID 88204978. 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 9, 2022. You may dial 1-877-674-7070 and use passcode 204978# 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, 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 recurring adjustments for depreciation and amortization, net corporate interest expense, contingent earnout adjustments, 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, defined benefit pension costs or credits for our frozen U.S. pension plan, 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 and contingent earnout adjustments 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. 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,
2022

 

 

June 30,
2021

 

 

June 30,
2022

 

 

June 30,
2021

 

Geographic Area

Currency

USD equivalent

 

% of total

 

 

USD equivalent

 

% of total

 

 

USD equivalent

 

% of total

 

 

USD equivalent

 

% of total

 

U.S.

USD

$

174,961

 

 

59.6

%

 

$

155,714

 

 

58.2

%

 

$

340,453

 

 

59.5

%

 

$

301,116

 

 

57.8

%

U.K.

GBP

 

33,402

 

 

11.4

%

 

 

34,280

 

 

12.8

%

 

 

67,452

 

 

11.8

%

 

 

66,503

 

 

12.8

%

Canada

CAD

 

24,674

 

 

8.4

%

 

 

20,337

 

 

7.6

%

 

 

48,935

 

 

8.5

%

 

 

41,571

 

 

8.0

%

Australia

AUD

 

23,643

 

 

8.1

%

 

 

27,497

 

 

10.3

%

 

 

42,360

 

 

7.4

%

 

 

51,707

 

 

9.9

%

Europe

EUR

 

24,016

 

 

8.2

%

 

 

14,145

 

 

5.3

%

 

 

47,682

 

 

8.3

%

 

 

27,409

 

 

5.3

%

Rest of World

Various

 

12,650

 

 

4.3

%

 

 

15,484

 

 

5.8

%

 

 

25,488

 

 

4.5

%

 

 

32,332

 

 

6.2

%

Total Revenues, before reimbursements

$

293,345

 

 

100.0

%

 

$

267,457

 

 

100.0

%

 

$

572,370

 

 

100.0

%

 

$

520,638

 

 

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, 2022

 

June 30, 2021

 

 

June 30, 2022

 

June 30, 2021

 

Operating earnings:

 

 

 

 

 

 

 

 

 

North America Loss Adjusting

$

2,695

 

$

3,081

 

 

$

6,831

 

$

7,442

 

International Operations

 

(707

)

 

2,126

 

 

 

(3,774

)

 

1,453

 

Broadspire

 

7,667

 

 

6,570

 

 

 

14,101

 

 

13,304

 

Platform Solutions

 

4,596

 

 

9,091

 

 

 

12,633

 

 

13,109

 

Unallocated corporate and shared costs, net

 

(1,373

)

 

(1,248

)

 

 

(3,825

)

 

(2,662

)

Consolidated operating earnings

 

12,878

 

 

19,620

 

 

 

25,966

 

 

32,646

 

(Deduct) add:

 

 

 

 

 

 

 

 

 

Net corporate interest expense

 

(1,780

)

 

(1,213

)

 

 

(3,298

)

 

(2,795

)

Stock option expense

 

(130

)

 

(264

)

 

 

(336

)

 

(404

)

Amortization expense

 

(2,060

)

 

(2,750

)

 

 

(3,786

)

 

(5,549

)

Contingent earnout adjustments

 

(303

)

 

?

 

 

 

(2,359

)

 

?

 

Income tax provision

 

(2,768

)

 

(3,590

)

 

 

(5,194

)

 

(6,061

)

Net (income) loss attributable to noncontrolling interests

 

(7

)

 

(23

)

 

 

(67

)

 

7

 

Net income attributable to shareholders of Crawford & Company

$

5,830

 

$

11,780

 

 

$

10,926

 

$

17,844

 

 

 

 

 

 

 

 

 

 

 

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,
2022

 

June 30,
2021

 

 

June 30,
2022

 

June 30,
2021

 

Net income attributable to shareholders of Crawford & Company

$

5,830

 

$

11,780

 

 

$

10,926

 

$

17,844

 

Add:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

9,356

 

 

10,464

 

 

 

18,455

 

 

20,942

 

Stock-based compensation

 

1,750

 

 

1,954

 

 

 

3,410

 

 

3,563

 

Net corporate interest expense

 

1,780

 

 

1,213

 

 

 

3,298

 

 

2,795

 

Contingent earnout adjustments

 

303

 

 

?

 

 

 

2,359

 

 

?

 

Income tax provision

 

2,768

 

 

3,590

 

 

 

5,194

 

 

6,061

 

Non-GAAP adjusted EBITDA

$

21,787

 

$

29,001

 

 

$

43,642

 

$

51,205

 

 

 

 

 

 

 

 

 

 

 

Following is a reconciliation of operating cash flow to free cash flow for the six months ended June 30, 2022 and 2021:

Six Months Ended

 

(in thousands)

June 30, 2022

 

 

June 30, 2021

 

 

Change

 

Net Cash (Used in) Provided by Operating Activities

$

(12,752

)

 

$

10,532

 

 

$

(23,284

)

Less:

 

 

 

 

 

 

 

 

Property & Equipment Purchases, net

 

(3,123

)

 

 

(2,120

)

 

 

(1,003

)

Capitalized Software (internal and external costs)

 

(12,561

)

 

 

(10,083

)

 

 

(2,478

)

Free Cash Flow

$

(28,436

)

 

$

(1,671

)

 

$

(26,765

)

 

 

 

 

 

 

 

 

 

Following are the reconciliations of GAAP Pretax Earnings, Net Income and Earnings Per Share to related non-GAAP Adjusted figures, which reflect 2022 before amortization of intangible assets and contingent earnout adjustments, and for 2021 exclude the amortization of intangible assets:

Three 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(1)

 

GAAP

$

8,605

 

$

5,830

 

$

0.12

 

$

0.12

 

Adjustments:

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

2,060

 

 

1,545

 

 

0.03

 

 

0.03

 

Contingent earnout adjustments

 

303

 

 

224

 

 

?

 

 

?

 

Non-GAAP Adjusted

$

10,968

 

$

7,599

 

$

0.15

 

$

0.16

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2021

 

(in thousands)

Pretax earnings

 

Net income
attributable to Crawford &
Company

 

Diluted
earnings per
CRD-A
share(1)

 

Diluted
earnings per
CRD-B
share

 

GAAP

$

15,393

 

$

11,780

 

$

0.22

 

$

0.22

 

Adjustments:

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

2,750

 

 

2,063

 

 

0.04

 

 

0.04

 

Non-GAAP Adjusted

$

18,143

 

$

13,843

 

$

0.25

 

$

0.26

 

 

 

 

 

 

 

 

 

 

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

 

Contingent earnout adjustments

 

2,359

 

 

1,747

 

 

0.03

 

 

0.03

 

Non-GAAP Adjusted

$

22,332

 

$

15,512

 

$

0.31

 

$

0.31

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2021

 

(in thousands)

Pretax earnings

 

Net income
attributable to Crawford &
Company

 

Diluted
earnings per
CRD-A
share

 

Diluted
earnings per
CRD-B
share

 

GAAP

$

23,898

 

$

17,844

 

$

0.33

 

$

0.33

 

Adjustments:

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

5,549

 

 

4,162

 

 

0.08

 

 

0.08

 

Non-GAAP Adjusted

$

29,447

 

$

22,006

 

$

0.41

 

$

0.41

 

 

 

 

 

 

 

 

 

 

(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, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

 

Weighted-Average Shares Used to Compute Basic Earnings Per Share:

 

 

 

 

 

 

 

 

Class A Common Stock

 

28,757

 

 

30,826

 

 

29,827

 

 

30,825

 

Class B Common Stock

 

19,987

 

 

22,445

 

 

20,381

 

 

22,454

 

Weighted-Average Shares Used to Compute Diluted Earnings Per Share:

 

 

 

 

 

 

 

 

Class A Common Stock

 

29,145

 

 

31,997

 

 

30,151

 

 

31,897

 

Class B Common Stock

 

19,987

 

 

22,445

 

 

20,381

 

 

22,454

 

 

 

 

 

 

 

 

 

 

Further information regarding the Company's operating results for the three and six months ended June 30, 2022, financial position as of June 30, 2022, and cash flows for the six months ended June 30, 2022 is shown on the attached unaudited condensed consolidated financial statements.

About Crawford®

Based in Atlanta, Crawford & Company (NYSE: CRD-A and CRD-B) is the world's largest publicly listed independent provider of claims management and outsourcing solutions to carriers, brokers and corporations with an expansive global network serving clients in more than 70 countries. The Company's two classes of stock are substantially identical, except with respect to voting rights and the Company's ability to pay greater cash dividends on the non-voting Class A Common Stock (CRD-A) than on the voting Class B Common Stock (CRD-B), subject to certain limitations. In addition, with respect to mergers or similar transactions, holders of CRD-A must receive the same type and amount of consideration as holders of CRD-B, unless different consideration is approved by the holders of 75 percent of CRD-A, voting as a class. More information is available at www.crawco.com.

Earnings per share may be different between CRD-A and CRD-B due to the payment of a higher per share dividend on CRD-A than CRD-B, and the impact that has on the earnings per share calculation according to generally accepted accounting principles.

Tag: Crawford-Investor-News-and-Events, Crawford-Financial

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,

 

2022

 

 

2021

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Revenues Before Reimbursements

 

$

293,345

 

 

$

267,457

 

 

 

10

%

Reimbursements

 

 

10,306

 

 

 

9,088

 

 

 

13

%

Total Revenues

 

 

303,651

 

 

 

276,545

 

 

 

10

%

 

 

 

 

 

 

 

 

 

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

Costs of Services Provided, Before Reimbursements

 

 

218,134

 

 

 

193,157

 

 

 

13

%

Reimbursements

 

 

10,306

 

 

 

9,088

 

 

 

13

%

Total Costs of Services

 

 

228,440

 

 

 

202,245

 

 

 

13

%

 

 

 

 

 

 

 

 

 

 

Selling, General, and Administrative Expenses

 

 

65,397

 

 

 

58,658

 

 

 

11

%

Corporate Interest Expense, Net

 

 

1,780

 

 

 

1,213

 

 

 

47

%

Total Costs and Expenses

 

 

295,617

 

 

 

262,116

 

 

 

13

%

 

 

 

 

 

 

 

 

 

 

Other Income, Net

 

 

571

 

 

 

964

 

 

 

(41

)%

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

 

8,605

 

 

 

15,393

 

 

 

(44

)%

Provision for Income Taxes

 

 

2,768

 

 

 

3,590

 

 

 

(23

)%

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

5,837

 

 

 

11,803

 

 

 

(51

)%

 

 

 

 

 

 

 

 

 

 

Net Income Attributable to Noncontrolling Interests

 

 

(7

)

 

 

(23

)

 

 

(70

)%

 

 

 

 

 

 

 

 

 

 

Net Income Attributable to Shareholders of Crawford & Company

 

$

5,830

 

 

$

11,780

 

 

 

(51

)%

 

 

 

 

 

 

 

 

 

 

Earnings Per Share - Basic:

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

$

0.12

 

 

$

0.22

 

 

 

(45

)%

Class B Common Stock

 

$

0.12

 

 

$

0.22

 

 

 

(45

)%

 

 

 

 

 

 

 

 

 

 

Earnings Per Share - Diluted:

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

$

0.12

 

 

$

0.22

 

 

 

(45

)%

Class B Common Stock

 

$

0.12

 

 

$

0.22

 

 

 

(45

)%

 

 

 

 

 

 

 

 

 

 

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,

 

2022

 

 

2021

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Revenues Before Reimbursements

 

$

572,370

 

 

$

520,638

 

 

 

10

%

Reimbursements

 

 

19,070

 

 

 

18,062

 

 

 

6

%

Total Revenues

 

 

591,440

 

 

 

538,700

 

 

 

10

%

 

 

 

 

 

 

 

 

 

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

Costs of Services Provided, Before Reimbursements

 

 

423,715

 

 

 

378,359

 

 

 

12

%

Reimbursements

 

 

19,070

 

 

 

18,062

 

 

 

6

%

Total Costs of Services

 

 

442,785

 

 

 

396,421

 

 

 

12

%

 

 

 

 

 

 

 

 

 

 

Selling, General, and Administrative Expenses

 

 

130,239

 

 

 

117,360

 

 

 

11

%

Corporate Interest Expense, Net

 

 

3,298

 

 

 

2,795

 

 

 

18

%

Total Costs and Expenses

 

 

576,322

 

 

 

516,576

 

 

 

12

%

 

 

 

 

 

 

 

 

 

 

Other Income, Net

 

 

1,069

 

 

 

1,774

 

 

 

(40

)%

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

 

16,187

 

 

 

23,898

 

 

 

(32

)%

Provision for Income Taxes

 

 

5,194

 

 

 

6,061

 

 

 

(14

)%

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

10,993

 

 

 

17,837

 

 

 

(38

)%

 

 

 

 

 

 

 

 

 

 

Net (Income) Loss Attributable to Noncontrolling Interests

 

 

(67

)

 

 

7

 

 

nm

 

 

 

 

 

 

 

 

 

 

 

Net Income Attributable to Shareholders of Crawford & Company

 

$

10,926

 

 

$

17,844

 

 

 

(39

)%

 

 

 

 

 

 

 

 

 

 

Earnings Per Share - Basic:

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

$

0.22

 

 

$

0.33

 

 

 

(33

)%

Class B Common Stock

 

$

0.22

 

 

$

0.33

 

 

 

(33

)%

 

 

 

 

 

 

 

 

 

 

Earnings Per Share - Diluted:

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

$

0.22

 

 

$

0.33

 

 

 

(33

)%

Class B Common Stock

 

$

0.22

 

 

$

0.33

 

 

 

(33

)%

 

 

 

 

 

 

 

 

 

 

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, 2022 and December 31, 2021

Unaudited

(In Thousands, Except Par Values)

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

46,254

 

 

$

53,228

 

Accounts Receivable, Net

 

 

129,162

 

 

 

134,458

 

Unbilled Revenues, at Estimated Billable Amounts

 

 

141,879

 

 

 

118,722

 

Income Taxes Receivable

 

 

8,726

 

 

 

4,936

 

Prepaid Expenses and Other Current Assets

 

 

36,313

 

 

 

34,576

 

Total Current Assets

 

 

362,334

 

 

 

345,920

 

 

 

 

 

 

 

 

Net Property and Equipment

 

 

30,165

 

 

 

33,721

 

 

 

 

 

 

 

 

Other Assets:

 

 

 

 

 

 

Operating Lease Right-of-Use Asset, Net

 

 

100,087

 

 

 

99,369

 

Goodwill

 

 

114,801

 

 

 

116,526

 

Intangible Assets Arising from Business Acquisitions, Net

 

 

94,686

 

 

 

97,571

 

Capitalized Software Costs, Net

 

 

76,936

 

 

 

75,802

 

Deferred Income Tax Assets

 

 

19,789

 

 

 

21,266

 

Other Noncurrent Assets

 

 

61,231

 

 

 

62,464

 

Total Other Assets

 

 

467,530

 

 

 

472,998

 

 

 

 

 

 

 

 

Total Assets

 

$

860,029

 

 

$

852,639

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' INVESTMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Short-Term Borrowings

 

$

39,776

 

 

$

10,704

 

Accounts Payable

 

 

44,737

 

 

 

48,470

 

Accrued Compensation and Related Costs

 

 

77,989

 

 

 

96,018

 

Self-Insured Risks

 

 

19,009

 

 

 

13,222

 

Income Taxes Payable

 

 

?

 

 

 

1,200

 

Operating Lease Liability

 

 

23,938

 

 

 

25,238

 

Other Accrued Liabilities

 

 

62,537

 

 

 

76,884

 

Deferred Revenues

 

 

29,495

 

 

 

32,119

 

Total Current Liabilities

 

 

297,481

 

 

 

303,855

 

 

 

 

 

 

 

 

Noncurrent Liabilities:

 

 

 

 

 

 

Long-Term Debt and Finance Leases, Less Current Installments

 

 

214,409

 

 

 

164,315

 

Operating Lease Liability

 

 

89,910

 

 

 

88,408

 

Deferred Revenues

 

 

24,471

 

 

 

23,786

 

Accrued Pension Liabilities

 

 

12,578

 

 

 

17,892

 

Other Noncurrent Liabilities

 

 

36,672

 

 

 

42,986

 

Total Noncurrent Liabilities

 

 

378,040

 

 

 

337,387

 

 

 

 

 

 

 

 

Shareholders' Investment:

 

 

 

 

 

 

Class A Common Stock, $1.00 Par Value

 

 

28,428

 

 

 

30,996

 

Class B Common Stock, $1.00 Par Value

 

 

19,848

 

 

 

20,812

 

Additional Paid-in Capital

 

 

77,550

 

 

 

74,229

 

Retained Earnings

 

 

248,133

 

 

 

266,369

 

Accumulated Other Comprehensive Loss

 

 

(188,572

)

 

 

(180,441

)

Shareholders' Investment Attributable to Shareholders of Crawford & Company

 

 

185,387

 

 

 

211,965

 

Noncontrolling Interests

 

 

(879

)

 

 

(568

)

Total Shareholders' Investment

 

 

184,508

 

 

 

211,397

 

 

 

 

 

 

 

 

Total Liabilities and Shareholders' Investment

 

$

860,029

 

 

$

852,639

 

 

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

%

 

 

2022

 

 

2021

 

Change

 

2022

 

 

2021

 

Change

 

2022

 

 

2021

 

Change

 

2022

 

 

2021

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues Before Reimbursements

$

65,775

 

$

56,212

 

17.0%

$

93,710

 

$

91,269

 

2.7%

$

80,114

 

$

75,902

 

5.5%

$

53,746

 

$

44,074

 

21.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct Compensation, Fringe Benefits & Non-Employee Labor

 

48,413

 

 

40,411

 

19.8%

 

65,298

 

 

62,768

 

4.0%

 

49,799

 

 

46,169

 

7.9%

 

36,467

 

 

26,297

 

38.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

% of Revenues Before Reimbursements

73.6%

 

71.9%

 

 

 

69.7%

 

68.8%

 

 

 

62.2%

 

60.8%

 

 

 

67.9%

 

59.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor

 

14,667

 

 

12,720

 

15.3%

 

29,119

 

 

26,375

 

10.4%

 

22,648

 

 

23,163

 

(2.2)%

 

12,683

 

 

8,686

 

46.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

% of Revenues Before Reimbursements

22.3%

 

22.6%

 

 

 

31.1%

 

28.9%

 

 

 

28.3%

 

30.5%

 

 

 

23.6%

 

19.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Operating Expenses

 

63,080

 

 

53,131

 

18.7%

 

94,417

 

 

89,143

 

5.9%

 

72,447

 

 

69,332

 

4.5%

 

49,150

 

 

34,983

 

40.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Earnings (Loss) (1)

$

2,695

 

$

3,081

 

(12.5)%

$

(707

)

$

2,126

 

133.3%

$

7,667

 

$

6,570

 

16.7%

$

4,596

 

$

9,091

 

(49.4)%

 

 

 

 

 

 

 

 

 

 

 

 

 

% of Revenues Before Reimbursements

4.1%

 

5.5%

 

 

 

(0.8)%

 

2.3%

 

 

 

9.6%

 

8.7%

 

 

 

8.6%

 

20.6%

 

 

Six Months Ended June 30,

 

 

North America Loss Adjusting

%

International Operations

%

Broadspire

%

Platforms Solutions

%

 

 

2022

 

 

2021

 

Change

 

2022

 

 

2021

 

Change

 

2022

 

 

2021

 

Change

 

2022

 

 

2021

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues Before Reimbursements

$

130,213

 

$

112,510

 

15.7%

$

182,982

 

$

177,736

 

3.0%

$

156,568

 

$

150,178

 

4.3%

$

102,607

 

$

80,214

 

27.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct Compensation, Fringe Benefits & Non-Employee Labor

 

94,910

 

 

80,698

 

17.6%

 

128,304

 

 

123,124

 

4.2%

 

97,748

 

 

91,839

 

6.4%

 

68,318

 

 

49,568

 

37.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

% of Revenues Before Reimbursements

 

72.9

%

 

71.7

%

 

 

70.1

%

 

69.3

%

 

 

62.4

%

 

61.2

%

 

 

66.6

%

 

61.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor

 

28,473

 

 

24,370

 

16.8%

 

58,452

 

 

53,159

 

10.0%

 

44,719

 

 

45,035

 

(0.7)%

 

21,655

 

 

17,537

 

23.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

% of Revenues Before Reimbursements

 

21.9

%

 

21.7

%

 

 

31.9

%

 

29.9

%

 

 

28.6

%

 

30.0

%

 

 

21.1

%

 

21.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Operating Expenses

 

123,383

 

 

105,068

 

17.4%

 

186,756

 

 

176,283

 

5.9%

 

142,467

 

 

136,874

 

4.1%

 

89,973

 

 

67,105

 

34.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Earnings (1)

$

6,830

 

$

7,442

 

(8.2)%

$

(3,774

)

$

1,453

 

(359.7)%

$

14,101

 

$

13,304

 

6.0%

$

12,634

 

$

13,109

 

(3.6)%

 

 

 

 

 

 

 

 

 

 

 

 

 

% of Revenues Before Reimbursements

 

5.2

%

 

6.6

%

 

 

(2.1

)%

 

0.8

%

 

 

9.0

%

 

8.9

%

 

 

12.3

%

 

16.3

%

 

(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, 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, 2022 and June 30, 2021

Unaudited

(In Thousands)

 

 

 

2022

 

 

2021

 

Cash Flows From Operating Activities:

 

 

 

 

 

 

Net income

 

$

10,993

 

 

$

17,837

 

Reconciliation of net income to net cash (used in) provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

18,455

 

 

 

20,942

 

Stock-based compensation

 

 

3,410

 

 

 

3,563

 

Gain on sale of property and equipment

 

 

(1,544

)

 

 

6

 

Increase in contingent consideration valuation

 

 

2,359

 

 

 

?

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

1,241

 

 

 

3,111

 

Unbilled revenues, net

 

 

(27,557

)

 

 

(7,026

)

Accrued or prepaid income taxes

 

 

(5,275

)

 

 

(7,424

)

Accounts payable and accrued liabilities

 

 

(9,403

)

 

 

(11,331

)

Deferred revenues

 

 

(1,080

)

 

 

(189

)

Accrued retirement costs

 

 

(3,016

)

 

 

(9,879

)

Prepaid expenses and other operating activities

 

 

(1,335

)

 

 

922

 

Net cash (used in) provided by operating activities

 

 

(12,752

)

 

 

10,532

 

 

 

 

 

 

 

 

Cash Flows From Investing Activities:

 

 

 

 

 

 

Acquisitions of property and equipment

 

 

(3,123

)

 

 

(2,120

)

Capitalization of computer software costs

 

 

(12,561

)

 

 

(10,083

)

Proceeds from settlement of life insurance policies

 

 

?

 

 

 

4,198

 

Payments for business acquisitions, net of cash acquired

 

 

(25,941

)

 

 

(3,786

)

Cash proceeds from sale of property and equipment

 

 

3,032

 

 

 

?

 

Net cash used in investing activities

 

 

(38,593

)

 

 

(11,791

)

 

 

 

 

 

 

 

Cash Flows From Financing Activities:

 

 

 

 

 

 

Cash dividends paid

 

 

(6,034

)

 

 

(6,394

)

Repurchases of common stock

 

 

(26,749

)

 

 

(2,999

)

Increases in short-term and revolving credit facility borrowings

 

 

86,865

 

 

 

29,983

 

Payments on short-term and revolving credit facility borrowings

 

 

(6,011

)

 

 

(18,986

)

Payments of contingent consideration on acquisitions

 

 

(1,654

)

 

 

(1,683

)

Other financing activities

 

 

(285

)

 

 

(282

)

Net cash provided by (used in) financing activities

 

 

46,132

 

 

 

(361

)

 

 

 

 

 

 

 

Effects of exchange rate changes on cash and cash equivalents

 

 

(1,400

)

 

 

1,672

 

Decrease in cash, cash equivalents, and restricted cash(1)

 

 

(6,613

)

 

 

52

 

Cash, cash equivalents, and restricted cash at beginning of year(1)

 

 

53,689

 

 

 

44,656

 

Cash, cash equivalents, and restricted cash at end of period(1)

 

$

47,076

 

 

$

44,708

 

(1)The 2022 amounts include beginning restricted cash of $461 at 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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