finalcrawfordlogo100k0415a04.jpg                            nysecrdacrdbreva04.jpg
Crawford & Company®
5335 Triangle Parkway
Peachtree Corners, GA 30092

FOR IMMEDIATE RELEASE
CRAWFORD & COMPANY REPORTS 2018 SECOND QUARTER RESULTS
GENERATES CONTINUED REVENUE GROWTH DURING QUARTER
COMPANY UPDATES 2018 GUIDANCE

ATLANTA, (August 6, 2018) -- Crawford & Company (www.crawfordandcompany.com) (NYSE: CRD-A and CRD-B), the world’s largest publicly listed independent provider of claims management solutions to insurance companies and self-insured entities, today announced its financial results for the second quarter ended June 30, 2018.
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.

Consolidated Results
Second Quarter 2018 Summary

Revenues before reimbursements of $279.0 million, compared with $269.2 million for the 2017 second quarter

Pretax loss on disposition of business line of $17.8 million

Net (loss) income attributable to shareholders of $(2.4) million, compared to $10.2 million in the same period last year

Diluted (loss) earnings per share of $(0.04) for CRD-A and $(0.06) for CRD-B, compared with $0.19 for CRD-A and $0.17 for CRD-B in the prior year second quarter

Non-GAAP Consolidated Results
Second Quarter 2018 Summary

Net income attributable to shareholders, on a non-GAAP basis, before restructuring and special charges in 2017 and loss on disposition of business line in 2018, totaled $10.9 million in the 2018 second quarter, compared to $14.8 million in the same period last year

Diluted earnings per share of $0.20 for CRD-A and $0.19 for CRD-B on a non-GAAP basis in the 2018 second quarter, before restructuring and special charges and loss on disposition of business line, compared to $0.27 for CRD-A and $0.25 for CRD-B in the prior year second quarter

Consolidated operating earnings, a non-GAAP financial measure, were $21.6 million or 8% of revenues in the 2018 second quarter, compared with $29.2 million or 11% of revenues in the 2017 second quarter

Consolidated adjusted EBITDA, a non-GAAP financial measure, was $31.3 million or 11% of revenues in the 2018 second quarter, compared with $38.2 million or 14% of revenues in the 2017 period


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Mr. Harsha V. Agadi, president and chief executive officer of Crawford & Company, stated, “I am pleased with our results as the comprehensive strategy that we implemented through 2017 continues to show signs of success. Our team’s singular focus is to return Crawford & Company to sustained revenue growth and the initiatives that we have put in place through 2017 are beginning to take hold as can be seen in our second quarter results where revenues grew 4% from the prior year quarter and represent our third consecutive quarter of growth. Of note, revenues grew 6% when excluding the Garden City Group which demonstrates the building momentum in our core business.
“Our second quarter results also demonstrate our commitment to our clients which we deliver day in and day out. It is this commitment which builds brand loyalty and positions Crawford as a more valuable partner. An example of this was our response to the major wind storms in Canada during the quarter where we leveraged our global scale to deliver for clients who were suddenly inundated with a high volume of claims. Ultimately, as we continue to deliver for our clients in their times of need, we will differentiate Crawford and see our market share grow.
“A key factor to our success and ability to overcome industry challenges has been the successful achievement of our commitment to improve our sales team and our sales effectiveness. Year to date, our RFP win rate has improved to 38% and we have retained 100% of our U.S. CAT clients this season, both of which are marked improvements over prior years. I am especially pleased with both our CAT retention and the increase in catastrophe business overall given the substantial investment that we made during the unprecedented hurricane season that we encountered last year. Another noteworthy success in the quarter came in Europe where we were engaged by a top 5 global carrier to form the first of its kind pan-European response team on a weather related surge for us.
“These successes demonstrate our renewed focus on execution in order to drive improved results. Our sale of the Garden City Group in the second quarter is another key step which will further sharpen our focus as we move towards providing integrated end-to-end solutions for our clients. With the sale complete, we will now be able to focus our entire organization on our core client segments which are Corporates, Brokers, and Carriers. Additionally, we have now realigned our sales teams in our major markets to more aggressively pursue these segments. We are also increasing our investment in our Tier 1 countries of the U.S., U.K., Canada, and Australia where we are best positioned to leverage our strengths and more effectively sell ‘One Crawford’ to our clients. These investments will deliver a much higher market share than we have today and position Crawford to successfully achieve our longer term goal of delivering 5% revenue growth and 15% earnings growth, annually,” concluded Mr. Agadi.

Segment Results for the Second Quarter
Crawford TPA Solutions: Broadspire
Crawford TPA Solutions: Broadspire segment revenues before reimbursements were $102.6 million in the 2018 second quarter, increasing 6% from $97.0 million in the 2017 second quarter. On a constant dollar basis, a non-GAAP measure, second quarter 2018 revenues were $101.7 million. Crawford TPA Solutions: Broadspire recorded operating earnings of $8.1 million in the second quarter of 2018, representing an operating margin of 8%, compared with $9.7 million, or 10% of revenues, in the 2017 second quarter.
Crawford Claims Solutions
Crawford Claims Solutions revenues before reimbursements were $93.2 million in the second quarter of 2018, increasing 15% from $81.1 million in the second quarter of 2017. On a constant dollar basis, second quarter 2018 revenues were $89.6 million. Operating earnings were $3.8 million in the 2018 second quarter, compared with $3.3 million in the second quarter of 2017, representing an operating margin of 4% in both the 2018 and 2017 periods.

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Crawford Specialty Solutions
Crawford Specialty Solutions revenues before reimbursements were $83.2 million in the second quarter of 2018, down 9% from $91.1 million in the same period of 2017. On a constant dollar basis, second quarter 2018 revenues were $80.5 million. Operating earnings were $10.4 million in the 2018 second quarter compared with $14.1 million in the 2017 period. The segment’s operating margin for the 2018 quarter was 12%, as compared to 15% in the 2017 quarter.
Unallocated Corporate and Shared Costs and Credits, Net
Unallocated corporate costs, net were $0.7 million in the second quarter of 2018, compared with a credit of $2.0 million in the same period of 2017. The increase for the three months ended June 30, 2018 was due an increase in unallocated professional fees during the 2018 period and certain expense credits in the prior year period.

Restructuring and Special Charges
The Company recorded no restructuring and special charges in the 2018 second quarter and restructuring charges of $6.8 million in the 2017 second quarter. Restructuring costs for the 2017 second quarter were comprised of costs related to the establishment and phase in of the Company's global business and technology service centers and other restructuring charges for asset impairments and lease termination costs.

Loss on Disposition of Business Line
On June 15, 2018, the Company completed the sale of all of the issued and outstanding equity interests in its Garden City Group business to EPIQ Class Action & Claims Solutions, Inc. for initial proceeds of $42.0 million, subject to post-closing working capital adjustments. Adjusted proceeds totaled $44.6 million including the preliminary working capital adjustment of $2.6 million. Net proceeds received were used to repay outstanding borrowings under the Company’s credit facility. The sale resulted in the recognition of a pretax loss on the sale of $17.8 million during the second quarter of 2018, after including transaction costs of $1.9 million related to the sale. The loss on sale of the GCG business is presented in the Condensed Consolidated Statements of Operations as a separate charge "Loss on Disposition of Business Line".

Balance Sheet and Cash Flow
The Company’s consolidated cash and cash equivalents position as of June 30, 2018 totaled $46.3 million, compared with $54.0 million at December 31, 2017. The Company’s total debt outstanding as of June 30, 2018 totaled $225.1 million, compared with $225.7 million at December 31, 2017.
During the three months ended June 30, 2018 the Company did not repurchase shares of CRD-A or CRD-B. During the six months ended June 30, 2018, the Company repurchased 1,011,958 shares of CRD-A and 53,888 shares of CRD-B at an average cost of $8.28 and $8.96, respectively.
The Company’s operations used $18.7 million of cash during the 2018 period, compared with $16.4 million used in the 2017 period. The increase in cash used in operating activities was primarily due to increases in unbilled receivables due to increases in weather related revenues, partially offset by lower accrued compensation and bonus payments compared to 2017.

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2018 Guidance
Crawford & Company is updating its guidance for 2018 to reflect the disposal of the Garden City Group business as follows:
Consolidated revenues before reimbursements between $1.07 and $1.12 billion;
Net income attributable to shareholders of Crawford & Company between $31.0 and $36.0 million, or $0.56 to $0.66 diluted earnings per CRD-A share, and $0.49 to $0.59 diluted earnings per CRD-B share;
Consolidated operating earnings between $85.0 and $95.0 million;
Consolidated adjusted EBITDA between $127.0 and $137.0 million;
Non-GAAP net income attributable to shareholders of Crawford & Company, before loss on disposition of business line, between $43.0 and $48.0 million, or $0.78 to $0.88 diluted earnings per CRD-A share, and $0.71 to $0.81 diluted earnings per CRD-B share.
To a significant extent, Crawford’s business depends on case volumes. The Company cannot predict the future trend of case volumes for a number of reasons, including the fact that the frequency and severity of weather-related claims and the occurrence of natural and man-made disasters, which are a significant source of claims and revenue for the Company, are generally not subject to accurate forecasting.

Conference Call
As previously announced, Crawford & Company will host a conference call on August 7, 2018 at 8:30 a.m. Eastern Time to discuss its second quarter 2018 results. The conference call can be accessed live by dialing 1-800-374-2518 and using Conference ID 3199486. A presentation for tomorrow’s call can also be found on the investor relations portion of the Company’s website, http://www.crawfordandcompany.com. The call will be recorded and available for replay through September 7, 2018. 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 and credits, but before net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, goodwill impairment charges, restructuring and special charges, loss on disposition of business line, income taxes, and net income or loss attributable to noncontrolling interests and redeemable noncontrolling interests.

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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, income taxes, restructuring and special charges, loss on disposition of business line 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. Restructuring and special charges and loss on disposition of business line are non-core items not directly related to our normal business operations, or our future performance.
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.
Income taxes are calculated for the non-GAAP presentation of net income before restructuring and special charges and loss on disposition of business line based on statutory rates in effect in the various jurisdictions in which charges exist, and vary by jurisdiction.

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Following is a reconciliation of segment and consolidated operating earnings to net (loss) income attributable to shareholders of Crawford & Company on a GAAP basis. The reconciliation of 2018 guidance is to the midpoint of the guidance range.
 
Three months ended
 
Six months ended
 
Full Year
(in thousands)
June 30, 2018
June 30, 2017
 
June 30, 2018
June 30, 2017
 
Guidance 2018
Operating earnings:
 
 
 
 
 
 
 
Crawford TPA Solutions: Broadspire
$
8,135

$
9,710

 
$
15,959

$
17,678

 
 
Crawford Claims Solutions
3,752

3,327

 
4,467

5,761

 
 
Crawford Specialty Solutions
10,387

14,085

 
20,838

22,437

 
 
Unallocated corporate and shared costs, net
(703
)
2,037

 
(1,518
)
1,576

 
 
Consolidated operating earnings
21,571

29,159

 
39,746

47,452

 
$
90,000

(Deduct) Add:
 
 
 
 
 
 
 
Net corporate interest expense
(2,440
)
(2,114
)
 
(5,004
)
(4,150
)
 
(10,000
)
Stock option expense
(512
)
(457
)
 
(962
)
(874
)
 
(1,810
)
Amortization expense
(2,791
)
(2,721
)
 
(5,556
)
(5,498
)
 
(11,000
)
Restructuring and special charges

(6,782
)
 

(7,387
)
 

Loss on disposition of business line
(17,795
)

 
(17,795
)

 
(17,795
)
Income taxes
(461
)
(6,812
)
 
(4,427
)
(11,647
)
 
(15,195
)
Net loss (income) attributable to noncontrolling interests and redeemable noncontrolling interests
3

(72
)
 
142

(31
)
 
(700
)
Net (loss) income attributable to shareholders of Crawford & Company
$
(2,425
)
$
10,201

 
$
6,144

$
17,865

 
$
33,500

 
 
 
 
 
 
 
 

Following is a reconciliation of net (loss) income attributable to shareholders of Crawford & Company on a GAAP basis to adjusted EBITDA. The reconciliation of 2018 guidance is to the midpoint of the guidance range.
 
Three months ended
 
Six months ended
 
Full Year
(in thousands)
June 30, 2018
June 30, 2017
 
June 30, 2018
June 30, 2017
 
Guidance 2018
Net (loss) income attributable to shareholders of Crawford & Company
$
(2,425
)
$
10,201

 
$
6,144

$
17,865

 
$
33,500

Add:
 
 
 
 
 
 
 
Depreciation and amortization
11,200

10,178

 
22,640

20,358

 
48,300

Stock-based compensation
1,790

2,109

 
3,355

3,405

 
7,210

Net corporate interest expense
2,440

2,114

 
5,004

4,150

 
10,000

Restructuring and special charges

6,782

 

7,387

 

Loss on disposition of business line
17,795


 
17,795


 
17,795

Income taxes
461

6,812

 
4,427

11,647

 
15,195

Adjusted EBITDA
$
31,261

$
38,196

 
$
59,365

$
64,812

 
$
132,000

 
 
 
 
 
 
 
 

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Following are the reconciliations of GAAP Net (Loss) Income and Earnings Per share to non-GAAP Adjusted Net Income and Diluted Earnings Per Share for the three months and six months ended June 30, 2018 and 2017.
Three months ended June 30, 2018
(in thousands)
Net (loss) income attributable to Crawford & Company
Diluted (loss) earnings per CRD-A share
Diluted (loss) earnings per CRD-B share
GAAP
$
(2,425
)
$
(0.04
)
$
(0.06
)
Add back:
 
 
 
Loss on disposition of business line, net of tax of $4,494
13,301

0.24

0.25

Non-GAAP Adjusted
$
10,876

$
0.20

$
0.19

 
 
 
 
Three months ended June 30, 2017
(in thousands)
Net income attributable to Crawford & Company
Diluted earnings per CRD-A share
Diluted earnings per CRD-B share
GAAP
$
10,201

$
0.19

$
0.17

Add back:
 
 
 
Restructuring and special charges, net of tax of $2,217
4,565

0.08

0.08

Non-GAAP Adjusted
$
14,766

$
0.27

$
0.25

 
 
 
 
Six months ended June 30, 2018
(in thousands)
Net income attributable to Crawford & Company
Diluted earnings per CRD-A share
Diluted earnings per CRD-B share
GAAP
$
6,144

$
0.13

$
0.09

Add back:
 
 
 
Loss on disposition of business line, net of tax of $4,494
13,301

0.23

0.24

Non-GAAP Adjusted
$
19,445

$
0.36

$
0.33

 
 
 
 
Six months ended June 30, 2017
(in thousands)
Net income attributable to Crawford & Company
Diluted earnings per CRD-A share
Diluted earnings per CRD-B share
GAAP
$
17,865

$
0.33

$
0.29

Add back:
 
 
 
Restructuring and special charges, net of tax of $2,415
4,972

0.09

0.09

Non-GAAP Adjusted
$
22,837

$
0.42

$
0.38

 
 
 
 

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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, 2018
June 30, 2017
June 30, 2018
June 30, 2017
Weighted-Average Shares Used to Compute Basic Earnings Per Share:
 
 
 
 
Class A Common Stock
30,580

31,394

30,888

31,401

Class B Common Stock
24,448

24,678

24,460

24,684

Weighted-Average Shares Used to Compute Diluted Earnings Per Share:
 
 
 
 
Class A Common Stock
30,580

32,119

31,470

32,181

Class B Common Stock
24,448

24,678

24,460

24,684

 
 
 
 
 

Further information regarding the Company’s operating results for the quarter and six months ended June 30, 2018, and financial position as of June 30, 2018, and cash flows for the six months ended June 30, 2018 is shown on the attached unaudited condensed consolidated financial statements.
About Crawford & Company
Based in Atlanta, Georgia, Crawford & Company (www.crawfordandcompany.com) is the world's largest publicly listed independent provider of claims management solutions to the risk management and insurance industry, as well as to self-insured entities, 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.
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.crawfordandcompany.com.



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CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands, Except Per Share Amounts and Percentages)
Three Months Ended June 30,
2018
 
2017
 
% Change
 
 
 
 
 
 
Revenues:
 
 
 
 
 
Revenues Before Reimbursements
$
279,044

 
$
269,247

 
4
 %
Reimbursements
14,165

 
14,725

 
(4
)%
Total Revenues
293,209

 
283,972

 
3
 %
 
 
 
 
 
 
Costs and Expenses:
 
 
 
 
 
Costs of Services Provided, Before Reimbursements
197,523

 
186,471

 
6
 %
Reimbursements
14,165

 
14,725

 
(4
)%
Total Costs of Services
211,688

 
201,196

 
5
 %
 
 
 
 
 
 
Selling, General, and Administrative Expenses
64,000

 
57,327

 
12
 %
Corporate Interest Expense, Net
2,440

 
2,114

 
15
 %
Restructuring and Special Charges

 
6,782

 
nm

Loss on Disposition of Business Line
17,795

 

 
nm

Total Costs and Expenses
295,923

 
267,419

 
11
 %
 
 
 
 
 
 
Other Income
747

 
532

 
40
 %
 
 
 
 
 
 
(Loss) Income Before Income Taxes
(1,967
)
 
17,085

 
(112
)%
Provision for Income Taxes
461

 
6,812

 
(93
)%
 
 
 
 
 
 
Net (Loss) Income
(2,428
)
 
10,273

 
(124
)%
 
 
 
 
 
 
Net Loss (Income) Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests
3

 
(72
)
 
(104
)%
 
 
 
 
 
 
Net (Loss) Income Attributable to Shareholders of Crawford & Company
$
(2,425
)
 
$
10,201

 
(124
)%
 
 
 
 
 
 
(Loss) Earnings Per Share - Basic:
 
 
 
 
 
Class A Common Stock
$
(0.04
)
 
$
0.19

 
(121
)%
Class B Common Stock
$
(0.06
)
 
$
0.17

 
(135
)%
 
 
 
 
 
 
(Loss) Earnings Per Share - Diluted:
 
 
 
 
 
Class A Common Stock
$
(0.04
)
 
$
0.19

 
(121
)%
Class B Common Stock
$
(0.06
)
 
$
0.17

 
(135
)%
 
 
 
 
 
 
Cash Dividends Per Share:
 
 
 
 
 
Class A Common Stock
$
0.07

 
$
0.07

 
 %
Class B Common Stock
$
0.05

 
$
0.05

 
 %
 
 
 
 
 
 



nm = not meaningful


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CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands, Except Per Share Amounts and Percentages)
Six Months Ended June 30,
2018
 
2017
 
% Change
 
 
 
 
 
 
Revenues:
 
 
 
 
 
Revenues Before Reimbursements
$
552,148

 
$
536,514

 
3
 %
Reimbursements
31,448

 
26,988

 
17
 %
Total Revenues
583,596

 
563,502

 
4
 %
 
 
 
 
 
 
Costs and Expenses:
 
 
 
 
 
Costs of Services Provided, Before Reimbursements
395,142

 
379,208

 
4
 %
Reimbursements
31,448

 
26,988

 
17
 %
Total Costs of Services
426,590

 
406,196

 
5
 %
 
 
 
 
 
 
Selling, General, and Administrative Expenses
125,660

 
117,319

 
7
 %
Corporate Interest Expense, Net
5,004

 
4,150

 
21
 %
Restructuring and Special Charges

 
7,387

 
nm

Loss on Disposition of Business line
17,795

 

 
nm

Total Costs and Expenses
575,049

 
535,052

 
7
 %
 
 
 
 
 
 
Other Income
1,882

 
1,093

 
72
 %
 
 
 
 
 
 
Income Before Income Taxes
10,429

 
29,543

 
(65
)%
Provision for Income Taxes
4,427

 
11,647

 
(62
)%
 
 
 
 
 
 
Net Income
6,002

 
17,896

 
(66
)%
 
 
 
 
 
 
Net Loss (Income) Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests
142

 
(31
)
 
(558
)%
 
 
 
 
 
 
Net Income Attributable to Shareholders of Crawford & Company
$
6,144

 
$
17,865

 
(66
)%
 
 
 
 
 
 
Earnings Per Share - Basic:
 
 
 
 
 
Class A Common Stock
$
0.13

 
$
0.34

 
(62
)%
Class B Common Stock
$
0.09

 
$
0.30

 
(70
)%
 
 
 
 
 
 
Earnings Per Share - Diluted:
 
 
 
 
 
Class A Common Stock
$
0.13

 
$
0.33

 
(61
)%
Class B Common Stock
$
0.09

 
$
0.29

 
(69
)%
 
 
 
 
 
 
Cash Dividends Per Share:
 
 
 
 
 
Class A Common Stock
$
0.14

 
$
0.14

 
 %
Class B Common Stock
$
0.10

 
$
0.10

 
 %
 
 
 
 
 
 


nm = not meaningful


Page 10 of 13






finalcrawfordlogo100k0415a04.jpg
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 30, 2018 and December 31, 2017
Unaudited
(In Thousands, Except Par Values)
 
June 30,
 
December 31,
 
2018
 
2017
ASSETS
 
 
 
 
 
 
 
Current Assets:
 
 
 
Cash and Cash Equivalents
$
46,323

 
$
54,011

Accounts Receivable, Net
143,330

 
174,172

Unbilled Revenues, at Estimated Billable Amounts
121,969

 
108,745

Income Taxes Receivable
3,086

 
7,987

Prepaid Expenses and Other Current Assets
29,786

 
25,452

Total Current Assets
344,494

 
370,367

 
 
 
 
Net Property and Equipment
36,182

 
41,664

 
 
 
 
Other Assets:
 
 
 
Goodwill
97,503

 
96,916

Intangible Assets Arising from Business Acquisitions, Net
92,767

 
97,147

Capitalized Software Costs, Net
75,629

 
89,824

Deferred Income Tax Assets
28,235

 
24,359

Other Noncurrent Assets
77,958

 
67,659

Total Other Assets
372,092

 
375,905

 
 
 
 
Total Assets
$
752,768

 
$
787,936

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ INVESTMENT
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
Short-Term Borrowings
$
29,808

 
$
24,641

Accounts Payable
40,942

 
49,303

Accrued Compensation and Related Costs
56,834

 
75,892

Self-Insured Risks
15,837

 
13,407

Income Taxes Payable
3,780

 
2,703

Deferred Rent
14,315

 
15,717

Other Accrued Liabilities
39,391

 
36,563

Deferred Revenues
34,916

 
37,794

Current Installments of Capital Leases
201

 
571

Total Current Liabilities
236,024

 
256,591

 
 
 
 
Noncurrent Liabilities:
 
 
 
Long-Term Debt and Capital Leases, Less Current Installments
195,120

 
200,460

Deferred Revenues
22,804

 
22,515

Accrued Pension Liabilities
76,543

 
87,035

Other Noncurrent Liabilities
28,928

 
27,596

Total Noncurrent Liabilities
323,395

 
337,606

 
 
 
 
Redeemable Noncontrolling Interests
6,140

 
6,775

 
 
 
 
Shareholders’ Investment:
 
 
 
Class A Common Stock, $1.00 Par Value
30,598

 
31,439

Class B Common Stock, $1.00 Par Value
24,448

 
24,502

Additional Paid-in Capital
56,677

 
53,170

Retained Earnings
261,894

 
269,686

Accumulated Other Comprehensive Loss
(191,574
)
 
(196,477
)
Shareholders’ Investment Attributable to Shareholders of Crawford & Company
182,043

 
182,320

Noncontrolling Interests
5,166

 
4,644

Total Shareholders’ Investment
187,209

 
186,964

 
 
 
 
Total Liabilities and Shareholders’ Investment
$
752,768

 
$
787,936


Page 11 of 13






finalcrawfordlogo100k0415a04.jpg
CRAWFORD & COMPANY
SUMMARY RESULTS BY OPERATING SEGMENT
Unaudited
(In Thousands, Except Percentages)

Three Months Ended June 30,

 
Crawford TPA Solutions: Broadspire
%
Crawford Claims Solutions
%
Crawford Specialty Solutions
%
 
2018
2017
Change
2018
2017
Change
2018
2017
Change
 
 
 
 
 
 
 
 
 
 
Revenues Before Reimbursements
$
102,644

$
97,037

5.8
 %
$
93,188

$
81,140

14.8
%
$
83,212

$
91,070

(8.6
)%
 
 
 
 
 
 
 
 
 
 
Direct Compensation, Fringe Benefits & Non-Employee Labor
59,842

54,554

9.7
 %
60,104

51,982

15.6
%
42,097

42,333

(0.6
)%
% of Revenues Before Reimbursements
58.3
%
56.2
%
 
64.5
%
64.1
%
 
50.6
%
46.5
%
 
 
 
 
 
 
 
 
 
 
 
Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor
34,667

32,773

5.8
 %
29,332

25,831

13.6
%
30,728

34,652

(11.3
)%
% of Revenues Before Reimbursements
33.8
%
33.8
%
 
31.5
%
31.8
%
 
36.9
%
38.0
%
 
 
 
 
 
 
 
 
 
 
 
Total Operating Expenses
94,509

87,327

8.2
 %
89,436

77,813

14.9
%
72,825

76,985

(5.4
)%
 
 
 
 
 
 
 
 
 
 
Operating Earnings (1)
$
8,135

$
9,710

(16.2
)%
$
3,752

$
3,327

12.8
%
$
10,387

$
14,085

(26.3
)%
% of Revenues Before Reimbursements
7.9
%
10.0
%
 
4.0
%
4.1
%
 
12.5
%
15.5
%
 
                            
Six Months Ended June 30,
 
Crawford TPA Solutions: Broadspire
%
Crawford Claims Solutions
%
Crawford Specialty Solutions
%
 
2018
2017
Change
2018
2017
Change
2018
2017
Change
 
 
 
 
 
 
 
 
 
 
Revenues Before Reimbursements
$
202,881

$
193,363

4.9
 %
$
183,630

$
164,288

11.8
 %
$
165,637

$
178,863

(7.4
)%
 
 
 
 
 
 
 
 
 
 
Direct Compensation, Fringe Benefits & Non-Employee Labor
118,560

110,144

7.6
 %
121,052

107,450

12.7
 %
85,483

83,854

1.9
 %
% of Revenues Before Reimbursements
58.4
%
57.0
%
 
65.9
%
65.4
%
 
51.6
%
46.9
%
 
 
 
 
 
 
 
 
 
 
 
Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor
68,362

65,541

4.3
 %
58,111

51,077

13.8
 %
59,316

72,572

(18.3
)%
% of Revenues Before Reimbursements
33.7
%
33.9
%
 
31.6
%
31.1
%
 
35.8
%
40.6
%
 
 
 
 
 
 
 
 
 
 
 
Total Operating Expenses
186,922

175,685

6.4
 %
179,163

158,527

13.0
 %
144,799

156,426

(7.4
)%
 
 
 
 
 
 
 
 
 
 
Operating Earnings (1)
$
15,959

$
17,678

(9.7
)%
$
4,467

$
5,761

(22.5
)%
$
20,838

$
22,437

(7.1
)%
% of Revenues Before Reimbursements
7.9
%
9.1
%
 
2.4
%
3.5
%
 
12.6
%
12.5
%
 
(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, restructuring and special charges, loss on disposition of business line, goodwill impairment charges and certain unallocated corporate and shared costs and credits. See pages 4-5 for additional information about segment operating earnings.

Page 12 of 13





finalcrawfordlogo100k0415a04.jpg
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2018 and June 30, 2017
Unaudited
(In Thousands)
 
 
2018
 
2017
Cash Flows From Operating Activities:
 
 
 
 
Net Income
 
$
6,002

 
$
17,896

Reconciliation of Net Income to Net Cash Used In Operating Activities:
 
 
 
 
Depreciation and Amortization
 
22,640

 
20,358

Deferred Income Taxes
 
(525
)
 

Stock-Based Compensation Costs
 
3,355

 
3,405

Loss on Disposition of Business Line
 
17,795

 

Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions:
 
 
 
 
Accounts Receivable, Net
 
(539
)
 
(12,192
)
Unbilled Revenues, Net
 
(28,346
)
 
(10,899
)
Accrued or Prepaid Income Taxes
 
775

 
4,078

Accounts Payable and Accrued Liabilities
 
(19,985
)
 
(24,626
)
Deferred Revenues
 
(390
)
 
(658
)
Accrued Retirement Costs
 
(12,932
)
 
(10,409
)
Prepaid Expenses and Other Operating Activities
 
(6,549
)
 
(3,312
)
Net Cash Used in Operating Activities
 
(18,699
)
 
(16,359
)
 
 
 
 
 
Cash Flows From Investing Activities:
 
 
 
 
Acquisitions of Property and Equipment
 
(9,538
)
 
(3,767
)
Cash proceeds from disposition of business line
 
41,165

 

Capitalization of Computer Software Costs
 
(8,270
)
 
(12,155
)
Payments for Business Acquisitions, Net of Cash Acquired
 

 
(36,029
)
Other Investing Activities
 

 
59

Net Cash Provided by (Used in) Investing Activities
 
23,357

 
(51,892
)
 
 
 
 
 
Cash Flows From Financing Activities:
 
 
 
 
Cash Dividends Paid
 
(6,784
)
 
(6,869
)
Payments Related to Shares Received for Withholding Taxes Under Stock-Based Compensation Plans
 
(43
)
 
(435
)
Proceeds from Shares Purchased Under Employee Stock-Based Compensation Plans
 
366

 
297

Repurchases of Common Stock
 
(5,570
)
 
(3,434
)
Increases in Short-Term and Revolving Credit Facility Borrowings
 
63,547

 
61,318

Payments on Short-Term and Revolving Credit Facility Borrowings
 
(63,978
)
 
(4,897
)
Payments on Capital Lease Obligations
 
(320
)
 
(693
)
Dividends paid to noncontrolling interests
 
(167
)
 

Net Cash (Used In) Provided by Financing Activities
 
(12,949
)
 
45,287

 
 
 
 
 
Effects of Exchange Rate Changes on Cash and Cash Equivalents
 
603

 
1,357

Decrease in Cash and Cash Equivalents
 
(7,688
)
 
(21,607
)
Cash and Cash Equivalents at Beginning of Year
 
54,011

 
81,569

Cash and Cash Equivalents at End of Period
 
$
46,323

 
$
59,962


Page 13 of 13



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