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Crawford & Company Reports 2020 First Quarter Results

05/05/2020

ATLANTA, May 05, 2020 (GLOBE NEWSWIRE) -- 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 corporates, today announced its financial results for the first quarter ended March 31, 2020.

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
First Quarter 2020

  • Revenues before reimbursements of $237.5 million, compared with $247.1 million for the 2019 first quarter
     
  • Net (loss) income attributable to shareholders of $(11.4) million, compared with $6.1 million in the same period last year
     
  • Diluted (loss) earnings per share of $(0.21) for CRD-A and $(0.23) for CRD-B, compared with $0.12 for CRD-A and $0.10 for CRD-B in the prior year first quarter

Non-GAAP Consolidated Results
First Quarter 2020

Non-GAAP results for the 2020 first quarter have been presented on a constant dollar basis to 2019 and exclude the non-cash pretax goodwill impairment of $17.7 million and pre-tax restructuring costs of $5.7 million. Non-GAAP consolidated results for the 2019 quarter contain no adjustments.

  • Revenues before reimbursements, on a non-GAAP basis, of $238.8 million, compared with $247.1 million for the 2019 first quarter
     
  • Net income attributable to shareholders, on a non-GAAP basis, totaled $1.0 million in the 2020 first quarter, compared with $6.1 million in the same period last year
     
  • Diluted earnings per share, on a non-GAAP basis, of $0.03 for CRD-A and $0.01 for CRD-B in the 2020 first quarter, compared with $0.12 for CRD-A and $0.10 for CRD-B in the prior year first quarter
     
  • Consolidated adjusted operating earnings, on a non-GAAP basis, were $7.0 million, or 2.9% of non-GAAP revenues, in the 2020 first quarter, compared with $14.7 million, or 5.9% of revenues, in the 2019 first quarter
     
  • Consolidated adjusted EBITDA, a non-GAAP financial measure, was $16.7 million, or 7.0% of non-GAAP revenues, in the 2020 first quarter, compared with $21.1 million, or 8.5% of revenues, in the 2019 first quarter

Management Comments

Mr. Harsha V. Agadi, president and chief executive officer of Crawford & Company, stated, “While we saw solid momentum from new business wins, claims volume in the first quarter continued to be impacted by benign weather and a slowdown in certain areas of the business related to reduced commercial activity as COVID-19 spread across the globe. In addition, even though there were incremental claims from the weather-related surge events in Australia and the U.K., as expected, the lower number of absolute surge events we experienced in 2019 carried into the first quarter. These factors helped trigger a goodwill impairment in the quarter. However, our team continued to build the sales pipeline, albeit at a slower pace, demonstrating Crawford’s resilience despite the current economic conditions. Crawford entered the COVID-19 crisis with a strong financial position with low debt and solid liquidity. In the face of this unprecedented volatility, we continue to make prudent investments in the business to attract, acquire and more seamlessly serve clients through the enhancement of our IT infrastructure, as our scale will undoubtedly serve us in the future.”

Mr. Agadi concluded, “Late last month, we announced that Rohit Verma will be stepping into the role of chief executive officer of Crawford & Company and Joseph Blanco will assume the role of president, each effective May 15th. I believe the Company will thrive under Rohit’s leadership as his deep industry expertise, combined with his operational prowess and vision for the business will prove critical as we execute our long-term strategy. Joseph is a proven leader who embodies our core values and brings incredible experience to his role. I am thankful for the nearly five years I have served as president and chief executive officer and am proud of what we have achieved. I look forward to sharing in Crawford’s success going forward as a Director of the Company.”

Segment Results for the First Quarter

Crawford TPA Solutions

Crawford TPA Solutions segment revenues before reimbursements were $96.9 million in the 2020 first quarter, decreasing from $97.8 million in the 2019 first quarter. Absent foreign currency rate fluctuations of $(0.3) million, first quarter 2020 revenues would have been $97.3 million, down 0.5% from prior year first quarter.

Excluding centralized indirect support costs, gross profit decreased to $23.2 million, or a gross margin of 24.0% in 2020 from $25.5 million, or a gross margin of 26.0% in 2019. After allocation of indirect costs, Crawford TPA Solutions recorded operating earnings of $6.3 million in the first quarter of 2020 representing an operating margin of 6.5% compared with $6.7 million, or 6.9% of revenues, in the 2019 first quarter.

Crawford Claims Solutions

Crawford Claims Solutions revenues before reimbursements were $77.6 million in the first quarter of 2020, decreasing from $83.3 million in the first quarter of 2019. Absent foreign currency rate fluctuations of $(0.6) million, first quarter 2020 revenues would have been $78.2 million, down 6.1% from the prior year first quarter.

Excluding centralized indirect support costs, gross profit decreased to $13.8 million, or a gross margin of 17.8% in 2020 from $17.1 million, or a gross margin of 20.5% in 2019. After the allocation of indirect costs, the segment had an operating loss of $(3.7) million in the 2020 first quarter compared with an operating loss of $(0.3) million in the first quarter of 2019. The operating margin was (4.7)% in the 2020 quarter and (0.4)% in the 2019 quarter. The first quarter 2020 goodwill impairment was related to the Crawford Claims Solutions segment.

Crawford Specialty Solutions

Crawford Specialty Solutions revenues before reimbursements were $63.0 million in the first quarter of 2020, down from $65.9 million in the same period of 2019. Absent foreign exchange rate fluctuations of $(0.3) million, revenues would have been $63.3 million for the three months ended March 31, 2020, decreasing 4.0% compared with prior year first quarter revenues.

Excluding indirect support costs, gross profit decreased to $19.0 million, or a gross margin of 30.2% in the 2020 quarter, from $22.4 million, or a gross margin of 34.0%, in the 2019 period. After allocation of indirect costs, operating earnings were $7.0 million in the 2020 first quarter compared with $12.2 million in the 2019 period. The segment’s operating margin for the 2020 quarter was 11.0% as compared with 18.5% in the 2019 quarter.

Unallocated Corporate and Shared Costs and Credits, Net

Unallocated corporate costs, net were $2.6 million in the first quarter of 2020, compared with $3.9 million in the same period of 2019. The decrease for the three months ended March 31, 2020 was due to a decrease in defined benefit pension expense and other administrative costs.

Goodwill Impairment

We recognized a non-cash goodwill impairment in the 2020 first quarter, totaling $17.7 million, related to our Crawford Claims Solutions segment, due to lower forecasts in that reporting unit and a decrease in our market capitalization. This charge was partially offset by a $6.9 million reduction in income tax expense and $1.7 million credit in noncontrolling interest expense, for a net impact of $9.1 million, or $0.18 per share. Due to the non-discrete income tax treatment of the goodwill impairment, we anticipate the income tax benefit of the impairment to normalize during the remainder of the year, resulting in a lower full year income tax benefit.

Restructuring Costs

We recorded restructuring costs of $5.7 million in 2020, related primarily to severance and other termination costs in an effort to consolidate and streamline various functions of our workforce. These costs were partially offset by a $2.4 million reduction in income tax expense, resulting in a net impact of $3.2 million, or $0.06 per share.

COVID-19

We estimate that COVID-19 negatively impacted our revenues by $3.5 million and operating earnings by $1.8 million in the three months ended March 31, 2020. We expect the ongoing global economic slowdown resulting from COVID-19 could have a material impact to our results of operations, financial condition, and cash flow in one or more future quarters.

Balance Sheet and Cash Flow

The Company’s consolidated cash and cash equivalents position as of March 31, 2020, totaled $83.1 million, compared with $51.8 million at December 31, 2019 as the Company accessed its revolving credit facility to increase its cash on hand as a result of the current economic conditions. The Company’s total debt outstanding as of March 31, 2020, totaled $227.1 million, compared with $177.0 million at December 31, 2019.

The Company’s operations used $8.0 million of cash during 2020, compared with $0.5 million provided in 2019. The decrease in cash provided by operating activities was primarily due to an increase in pension contributions and lower operating earnings. Free cash flow decreased by $12.7 million compared with 2019, reflecting higher capital expenditures in 2020 compared with 2019.

The Company made $3.0 million in contributions to its U.S. defined benefit pension plan and $0.2 million to its U.K. plans for 2020, compared with no contributions to the U.S. plan and $0.2 million to the U.K. plans in 2019.

During 2020, the Company repurchased 155,351 shares of CRD-A and 161,459 of CRD-B at an average cost of $8.42 per share. The total cost of share repurchases during 2020 was $2.7 million. The Company has decided to place a hold on its current share repurchase plan for the foreseeable future in order to preserve capital.

2020 Guidance

As announced in our April 6, 2020 press release, Crawford & Company has withdrawn its 2020 guidance provided on the Company’s fourth quarter and full year 2019 earnings call on March 5, 2020. Crawford & Company will provide additional business updates during its first quarter 2020 earnings call.

Conference Call

As previously announced, Crawford & Company will host a conference call on May 6, 2020 at 8:30 a.m. Eastern Time to discuss its first quarter 2020 results. The conference call can be accessed live by dialing 1-800-374-2518 and using Conference ID 3377243. A presentation for tomorrow’s call can also be found on the investor relations portion of the Company’s website, http://www.crawco.com. The call will be recorded and available for replay through June 6, 2020. You may dial 1-855-859-2056 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, goodwill impairment, restructuring costs, income taxes, and net income or loss attributable to noncontrolling interests and redeemable noncontrolling interests.

Gross profit is defined as revenues less direct expenses which exclude indirect overhead expenses allocated to the business. Indirect expenses consist of centralized administrative support costs, regional and local shared services that are allocated to each segment based on usage.

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, income taxes, stock-based compensation expense and foreign exchange fluctuations. Additionally, adjustments for non-recurring expenses for goodwill impairment and restructuring costs have been included in the calculation of adjusted EBITDA.

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, and amortization of customer-relationship intangible assets 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. None of these costs relate directly to the performance of our services or operating activities and, therefore, are excluded from segment operating earnings in order to better assess the results of each segment's operating activities on a consistent basis.

A significant portion of our operations are international. These international operations subject us to foreign exchange fluctuations. The following table illustrates revenue as a percentage of total revenue for the major currencies of the geographic areas that Crawford does business:

    Three Months Ended
(in thousands) March 31,
 2020
  March 31,
 2019
Geographic Area  Currency USD equivalent % of total   USD equivalent % of total
U.S. USD $ 134,448   56.6 %   $ 139,598   56.5 %
U.K. GBP 32,382   13.6 %   31,581   12.8 %
Canada CAD 25,220   10.6 %   29,884   12.1 %
Australia AUD 15,545   6.6 %   16,255   6.6 %
Europe EUR 13,389   5.6 %   12,865   5.2 %
Rest of World Various 16,547   7.0 %   16,875   6.8 %
Total Revenues, before reimbursements $ 237,531   100.0 %   $ 247,058   100.0 %
             

Following is a reconciliation of segment and consolidated operating earnings to net (loss) income attributable to shareholders of Crawford & Company on a GAAP basis.

  Three months ended
(in thousands) March 31, 2020 March 31, 2019
Operating earnings:    
Crawford TPA Solutions $ 6,285   $ 6,733  
Crawford Claims Solutions (3,679 ) (313 )
Crawford Specialty Solutions 6,957   12,195  
         
Unallocated corporate and shared costs, net (2,550 ) (3,914 )
Consolidated operating earnings 7,013   14,701  
(Deduct) add:    
Net corporate interest expense (2,224 ) (2,716 )
Stock option expense (290 ) (485 )
Amortization expense (2,756 ) (2,798 )
Goodwill impairment (17,674 )  
Restructuring costs (5,714 )  
Income tax benefit (provision) 8,486   (2,933 )
Net loss attributable to noncontrolling interests and redeemable noncontrolling interests 1,760   340  
Net (loss) income attributable to shareholders of Crawford & Company $ (11,399 ) $ 6,109  
     

Following is a reconciliation of net (loss) income attributable to shareholders of Crawford & Company on a GAAP basis to non-GAAP adjusted EBITDA.

  Three months ended
(in thousands) March 31, 2020 March 31, 2019
Net (loss) income attributable to shareholders of Crawford & Company $ (11,399 ) $ 6,109  
Add (Deduct):    
Depreciation and amortization 10,060   9,624  
Stock-based compensation 880   (247 )
Net corporate interest expense 2,224   2,716  
Goodwill impairment 17,674    
Restructuring costs 5,714    
Income tax (benefit) provision (8,486 ) 2,933  
Foreign exchange fluctuations 16    
Non-GAAP adjusted EBITDA $ 16,683   $ 21,135  
     

Following is a reconciliation of operating cash flow to free cash flow for the three months ended March 31, 2020 and March 31, 2019:

Three months ended
(in thousands) March 31, 2020   March 31, 2019   Change
Net Cash (Used in) Provided by Operating Activities $ (7,978 )   $ 523     $ (8,501 )
Less:          
  Property & Equipment Purchases, net (2,708 )   (1,737 )   (971 )
  Capitalized Software (internal and external costs) (4,803 )   (1,605 )   (3,198 )
Free Cash Flow $ (15,489 )   $ (2,819 )   $ (12,670 )
           

Following are the reconciliations of GAAP Revenue, Operating Earnings, Pretax (Loss) Earnings, Net (Loss) Income and (Loss) Earnings Per Share to related non-GAAP Adjusted figures, which reflect 2020 on a constant dollar basis before goodwill impairment and restructuring costs. There were no such adjustments applicable to the 2019 period.

Three months ended March 31, 2020
(in thousands) Revenues Non-GAAP Operating earnings Pretax loss Net (loss) income attributable to Crawford & Company(1) Diluted (loss) earnings per CRD-A share(1) Diluted (loss) earnings per CRD-B share(1)
GAAP $ 237,531   $ 7,013   $ (21,645 ) $ (11,399 ) $ (0.21 ) $ (0.23 )
Adjustments:            
Goodwill impairment     17,674   9,133   0.18   0.18  
Restructuring costs     5,714   3,263   0.06   0.06  
Foreign exchange fluctuations 1,268   9   16   (10 )    
Non-GAAP Adjusted $ 238,799   $ 7,022   $ (3,955 ) $ 987   $ 0.03   $ 0.01  
             

 

Three months ended March 31, 2019
(in thousands) Revenues Non-GAAP Operating earnings Pretax earnings Net income attributable to Crawford & Company Diluted earnings per CRD-A share Diluted earnings per CRD-B share
GAAP $ 247,058   $ 14,701   $ 8,702   $ 6,109   $ 0.12   $ 0.10  
Adjustments:            
Non-GAAP Adjusted $ 247,058   $ 14,701   $ 8,702   $ 6,109   $ 0.12   $ 0.10  
             

(1) The income tax impact of goodwill impairment and restructuring costs is based on the estimated annual effective income tax rate. Due to the non-discrete income tax treatment of the goodwill impairment and restructuring costs, we anticipate the income tax benefit to normalize as income is earned during the remainder of the year, resulting in a lower full year income tax benefit.

Following is information regarding the weighted average shares used in the computation of basic and diluted (loss) earnings per share.

  Three months ended
(in thousands) March 31, 2020 March 31, 2019
GAAP    
Weighted-Average Shares Used to Compute Basic (Loss) Earnings Per Share:    
Class A Common Stock 30,562   30,658  
Class B Common Stock 22,578   23,367  
Weighted-Average Shares Used to Compute Diluted (Loss) Earnings Per Share:    
Class A Common Stock 30,562   31,106  
Class B Common Stock 22,578   23,367  
     
Non-GAAP (1)    
Weighted-Average Shares Used to Compute Diluted Earnings Per Share:    
Class A Common Stock 30,770   31,106  
Class B Common Stock 22,578   23,367  
     

(1) The Company had a net loss for GAAP reporting during the first quarter, resulting in no additional dilutive securities added to the basic weighted average shares in calculating diluted weighted average shares for GAAP reporting as their impact would be anti-dilutive. As the Company has Non-GAAP positive net income for the quarter ended March 31, 2020, these dilutive securities were added back to calculate Non-GAAP earnings per share.

Further information regarding the Company’s operating results for the quarter ended March 31, 2020, financial position as of March 31, 2020, and cash flows for the quarter ended March 31, 2020 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 the world's largest publicly listed independent provider of claims management and outsourcing solutions to carriers, brokers and corporates with an expansive global network serving clients in more than 70 countries. The Company’s shares are traded on the NYSE under the symbols CRD-A and CRD-B. 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 than on the voting Class B Common Stock, subject to certain limitations. In addition, with respect to mergers or similar transactions, holders of Class A Common Stock must receive the same type and amount of consideration as holders of Class B Common Stock, unless different consideration is approved by the holders of 75% of the Class A Common Stock, 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.

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 March 31, 2020   2019   % Change
           
Revenues:          
Revenues Before Reimbursements $ 237,531     $ 247,058     (4 )%
Reimbursements 8,515     9,319     (9 )%
Total Revenues 246,046     256,377     (4 )%
           
Costs and Expenses:          
Costs of Services Provided, Before Reimbursements 177,604     177,888     %
Reimbursements 8,515     9,319     (9 )%
Total Costs of Services 186,119     187,207     (1 )%
           
Selling, General, and Administrative Expenses 55,754     58,659     (5 )%
Corporate Interest Expense, Net 2,224     2,716     (18 )%
Goodwill Impairment 17,674         nm  
Restructuring Costs 5,714         nm  
Total Costs and Expenses 267,485     248,582     8 %
           
Other (Expense) Income (206 )   907     (123 )%
           
(Loss) Income Before Income Taxes (21,645 )   8,702     (349 )%
Provision for Income Taxes (8,486 )   2,933     (389 )%
           
Net (Loss) Income (13,159 )   5,769     (328 )%
           
Net Loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests 1,760     340     418 %
           
Net (Loss) Income Attributable to Shareholders of Crawford & Company $ (11,399 )   $ 6,109     (287 )%
           
(Loss) Earnings Per Share - Basic:          
Class A Common Stock $ (0.21 )   $ 0.12     (275 )%
Class B Common Stock $ (0.23 )   $ 0.10     (330 )%
           
(Loss) Earnings Per Share - Diluted:          
Class A Common Stock $ (0.21 )   $ 0.12     (275 )%
Class B Common Stock $ (0.23 )   $ 0.10     (330 )%
           
Cash Dividends Per Share:          
Class A Common Stock $ 0.07     $ 0.07     %
Class B Common Stock $ 0.05     $ 0.05     %
           

nm = not meaningful

 

CRAWFORD & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2020 and December 31, 2019
Unaudited
(In Thousands, Except Par Values)

  March 31   December 31,
  2020   2019
ASSETS      
       
Current Assets:      
Cash and Cash Equivalents $ 83,110     $ 51,802  
Accounts Receivable, Net 121,230     128,217  
Unbilled Revenues, at Estimated Billable Amounts 108,898     103,894  
Income Taxes Receivable 13,289     7,820  
Prepaid Expenses and Other Current Assets 23,470     23,476  
Total Current Assets 349,997     315,209  
       
Net Property and Equipment 30,680     31,425  
       
Other Assets:      
Operating Lease Right-of-Use Asset, Net 108,974     102,354  
Goodwill 62,883     80,642  
Intangible Assets Arising from Business Acquisitions, Net 72,625     75,083  
Capitalized Software Costs, Net 65,850     66,445  
Deferred Income Tax Assets 19,221     17,971  
Other Noncurrent Assets 71,442     70,884  
Total Other Assets 400,995     413,379  
       
Total Assets $ 781,672     $ 760,013  
       
LIABILITIES AND SHAREHOLDERS’ INVESTMENT      
       
Current Liabilities:      
Short-Term Borrowings $ 39,784     $ 28,531  
Accounts Payable 33,335     34,377  
Operating Lease Liability 29,277     30,765  
Accrued Compensation and Related Costs 58,140     68,499  
Self-Insured Risks 10,594     11,311  
Income Taxes Payable     3,030  
Other Accrued Liabilities 35,948     31,449  
Deferred Revenues 31,265     28,288  
Current Installments of Finance Leases 38     15  
Total Current Liabilities 238,381     236,265  
       
Noncurrent Liabilities:      
Long-Term Debt and Finance Leases, Less Current Installments 187,271     148,408  
Operating Lease Liability 95,522     87,064  
Deferred Revenues 24,042     24,080  
Accrued Pension Liabilities 60,548     65,909  
Other Noncurrent Liabilities 31,677     33,410  
Total Noncurrent Liabilities 399,060     358,871  
       
Redeemable Noncontrolling Interests 430     2,310  
       
Shareholders’ Investment:      
Class A Common Stock, $1.00 Par Value 30,519     30,610  
Class B Common Stock, $1.00 Par Value 22,510     22,671  
Additional Paid-in Capital 63,949     63,392  
Retained Earnings 231,927     249,551  
Accumulated Other Comprehensive Loss (207,876 )   (206,907 )
Shareholders’ Investment Attributable to Shareholders of Crawford & Company 141,029     159,317  
Noncontrolling Interests 2,772     3,250  
Total Shareholders’ Investment 143,801     162,567  
       
Total Liabilities and Shareholders’ Investment $ 781,672     $ 760,013  

 

 

CRAWFORD & COMPANY
SUMMARY RESULTS BY OPERATING SEGMENT WITH DIRECT COMPENSATION AND OTHER EXPENSES
Unaudited
(In Thousands, Except Percentages)

Three Months Ended March 31,

  Crawford TPA Solutions % Crawford Claims Solutions % Crawford Specialty Solutions %
  2020 2019 Change 2020 2019 Change 2020 2019 Change
                   
Revenues Before Reimbursements $ 96,935   $ 97,794   (0.9 )% $ 77,587   $ 83,319   (6.9 )% $ 63,009   $ 65,945   (4.5 )%
                   
Direct Compensation, Fringe Benefits & Non-Employee Labor 58,929   58,381   0.9 % 53,380   55,901   (4.5 )% 35,871   34,958   2.6 %
% of Revenues Before Reimbursements 60.8 % 59.7 %   68.8 % 67.1 %   56.9 % 53.0 %  
                   
Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor 31,721   32,680   (2.9 )% 27,886   27,731   0.6 % 20,181   18,792   7.4 %
% of Revenues Before Reimbursements 32.7 % 33.4 %   35.9 % 33.3 %   32.0 % 28.5 %  
                   
Total Operating Expenses 90,650   91,061   (0.5 )% 81,266   83,632   (2.8 )% 56,052   53,750   4.3 %
                   
Operating Earnings (1) $ 6,285   $ 6,733   (6.7 )% $ (3,679 ) $ (313 ) 1,075.4 % $ 6,957   $ 12,195   (43.0 )%
% of Revenues Before Reimbursements 6.5 % 6.9 %   (4.7 )% (0.4 )%   11.0 % 18.5 %  

(1) A non-GAAP financial measurement which represents net income attributable to the applicable reporting segment excluding income taxes, net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, goodwill impairment, restructuring costs, and certain unallocated corporate and shared costs and credits. See pages 4-5 for additional information about segment operating earnings.

 

 

CRAWFORD & COMPANY
SUMMARY RESULTS BY OPERATING SEGMENT WITH DIRECT AND INDIRECT COSTS
Unaudited
(In Thousands, Except Percentages)

Three Months Ended March 31,

  Crawford TPA Solutions % Crawford Claims Solutions % Crawford Specialty Solutions %
  2020 2019 Change 2020 2019 Change 2020 2019 Change
                   
Revenues Before Reimbursements $ 96,935   $ 97,794   (0.9 )% $ 77,587   $ 83,319   (6.9 )% $ 63,009   $ 65,945   (4.5 )%
                   
Direct Expense 73,694   72,331   1.9 % 63,800   66,242   (3.7 )% 44,007   43,504   1.2 %
% of Revenues Before Reimbursements 76.0 % 74.0 %   82.2 % 79.5 %   69.8 % 66.0 %  
                   
Segment Gross Profit 23,241   25,463   (8.7 )% 13,787   17,077   (19.3 )% 19,002   22,441   (15.3 )%
% of Revenues Before Reimbursements 24.0 % 26.0 %   17.8 % 20.5 %   30.2 % 34.0 %  
                   
Indirect Costs 16,956   18,730   (9.5 )% 17,466   17,390   0.4 % 12,045   10,246   17.6 %
% of Revenues Before Reimbursements 17.5 % 19.2 %   22.5 % 20.9 %   19.1 % 15.5 %  
                   
Operating Earnings (1) $ 6,285   $ 6,733   (6.7 )% $ (3,679 ) $ (313 ) 1,075.4 % $ 6,957   $ 12,195   (43.0 )%
% of Revenues Before Reimbursements 6.5 % 6.9 %   (4.7 )% (0.4 )%   11.0 % 18.5 %  

(1) A non-GAAP financial measurement which represents net income attributable to the applicable reporting segment excluding income taxes, net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, goodwill impairment, restructuring costs, and certain unallocated corporate and shared costs and credits. See pages 4-5 for additional information about segment operating earnings.

 

 

CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended March 31, 2020 and March 31, 2019
Unaudited
(In Thousands)

    2020   2019
Cash Flows From Operating Activities:        
Net (Loss) Income   $ (13,159 )   $ 5,769  
Reconciliation of Net (Loss) Income to Net Cash (Used in) Provided by Operating Activities:        
Depreciation and Amortization   10,060     9,624  
Goodwill Impairment   17,674      
Stock-Based Compensation Costs   880     (247 )
Changes in Operating Assets and Liabilities:        
Accounts Receivable, Net   6,084     1,571  
Unbilled Revenues, Net   (7,240 )   (8,361 )
Accrued or Prepaid Income Taxes   (10,355 )   1,922  
Accounts Payable and Accrued Liabilities   (4,617 )   (8,257 )
Deferred Revenues   2,898     1,578  
Accrued Retirement Costs   (8,638 )   (3,393 )
Prepaid Expenses and Other Operating Activities   (1,565 )   317  
Net Cash (Used in) Provided by Operating Activities   (7,978 )   523  
         
Cash Flows From Investing Activities:        
Acquisitions of Property and Equipment   (2,708 )   (1,737 )
Capitalization of Computer Software Costs   (4,803 )   (1,605 )
Net Cash Used in Investing Activities   (7,511 )   (3,342 )
         
Cash Flows From Financing Activities:        
Cash Dividends Paid   (3,268 )   (3,282 )
Proceeds from Shares Purchased Under Employee Stock-Based Compensation Plans   10     (110 )
Repurchases of Common Stock   (2,666 )   (16,418 )
Increases in Revolving Credit Facility Borrowings   65,179     30,385  
Payments on Revolving Credit Facility Borrowings   (11,910 )   (11,578 )
Increases in Finance Lease Obligations   138      
Payments on Finance Lease Obligations   (2 )   (54 )
Acquisition of Noncontrolling Interests   (292 )    
Dividends Paid to Noncontrolling Interests       (84 )
Net Cash Provided by (Used In) Financing Activities   47,189     (1,141 )
         
Effects of Exchange Rate Changes on Cash and Cash Equivalents   (392 )   515  
Increase (Decrease) in Cash and Cash Equivalents   31,308     (3,445 )
Cash and Cash Equivalents at Beginning of Year   51,802     53,119  
Cash and Cash Equivalents at End of Period   $ 83,110     $ 49,674  

 

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