EX-99.1 2 exhibit99111062017q3.htm EXHIBIT 99.1 Exhibit


finalcrawfordlogo100k0415a03.jpg                            nysecrdacrdbreva03.jpg
Crawford & Company®
5335 Triangle Parkway
Peachtree Corners, GA 30092

FOR IMMEDIATE RELEASE
CRAWFORD & COMPANY REPORTS 2017 THIRD QUARTER RESULTS
COMPANY UPDATES 2017 GUIDANCE

ATLANTA, (November 6, 2017) -- 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 third quarter ended September 30, 2017.

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
Third Quarter 2017 Summary

•
Revenues before reimbursements of $270.6 million, compared with $277.3 million for the 2016 third quarter
•
Revenues on a constant dollar basis, a non-GAAP financial measure, of $271.6 million for the 2017 third quarter after adjusting for $1.0 million in foreign exchange rate changes
•
Revenues in the 2017 quarter were net of a $5.9 million decrease related to a change in accounting for certain contracts which had no bottom line impact
•
Net income attributable to shareholders of $11.8 million, compared to $10.9 million in the same period last year
•
Diluted earnings per share of $0.22 for CRD-A and $0.20 for CRD-B, compared with $0.20 for CRD-A and $0.18 for CRD-B in the prior year third quarter
•
Diluted earnings per share of $0.23 for CRD-A and $0.22 for CRD-B on a non-GAAP basis in the 2017 third quarter, before restructuring and special charges, compared to $0.22 for CRD-A and $0.20 for CRD-B in the prior year third quarter
•
Consolidated operating earnings, a non-GAAP financial measure, were $24.1 million or 8.9% of revenues in the 2017 third quarter, compared with $26.3 million or 9.5% of revenues in the 2016 third quarter
•
Consolidated adjusted EBITDA, a non-GAAP financial measure, was $32.5 million or 12.0% of revenues in the 2017 third quarter, compared with $34.7 million or 12.5% of revenues in the 2016 period


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Mr. Harsha V. Agadi, president and chief executive officer of Crawford & Company, stated, “The hurricane activity during the quarter was almost unprecedented in terms of the storms’ severity, proximity to one another over several weeks and damage inflicted. We believe this challenged the capabilities of the entire P&C industry as it coped with assessing the claims arising from the storms. To support our clients in this time of great need, we have reached into our CAT adjuster network to find the best resources available, used our global reach to mobilize Crawford adjusters from Canada, the U.K. and Australia, and hired and trained new classes of adjusters.
“We view these efforts as a significant investment in our business which will demonstrate our strong commitment to our clients, build brand loyalty, and position Crawford as a more valuable partner for the future. Importantly, we have made this investment to differentiate Crawford in the market and better position the company to take market share, win more day-to-day business and drive revenue growth. The early results of which can be seen in our U.S. Services segment where third quarter revenues grew 12% year-over-year while operating margins declined by 140 basis points, reflecting the investments we made. Looking to the fourth quarter, we would expect margins to expand as the majority of the investment spend occurred in the third quarter.
“While our U.S. Services business has performed well, our third quarter results were impacted by soft market conditions in our Garden City Group segment which experienced a $2.0 million decline in operating earnings year-over-year. Garden City Group’s challenges have been a significant headwind to our financial results this year and will mitigate the benefits from the recent CAT activity. We are working to reinvigorate growth and improve Garden City Group’s profitability though we expect the weak results to persist through the fourth quarter and into 2018.”
Mr. Agadi concluded, “Given Garden City Group’s outlook, we have tightened our operating earnings guidance to a range of $92.5 to $97.5 million for the full year 2017. Looking forward, our imperative is clear. We must return Garden City Group to growth and profitability while also leveraging our many global resources to drive the numerous cross sell opportunities that currently exist across the company. While much progress has been made and many of our businesses are performing well, there is much more to be accomplished. Our management team remains focused on both the challenges and opportunities that lie ahead as we strive to return Crawford to sustainable revenue growth.”

Segment Results for the Third Quarter
U.S. Services
U.S. Services revenues before reimbursements were $63.1 million in the third quarter of 2017, increasing 12% from $56.5 million in the third quarter of 2016. Operating earnings were $9.5 million in the 2017 third quarter, compared with $9.4 million in the third quarter of 2016, representing operating margins of 15% in the 2017 period and 17% in the 2016 period.
International
Third quarter 2017 revenues before reimbursements for the International segment totaled $110.8 million, compared with $121.0 million in the 2016 third quarter. On a constant dollar basis, third quarter 2017 revenues were $111.8 million. International segment operating earnings were $10.2 million in the 2017 third quarter, compared with $13.5 million in the 2016 third quarter. The segment’s operating margin was 9% and 11% in the 2017 and 2016 periods, respectively.
Broadspire
Broadspire segment revenues before reimbursements were $76.7 million in the 2017 third quarter, unchanged from the 2016 third quarter. Broadspire recorded operating earnings of $8.2 million in the third quarter of 2017, representing an operating margin of 11%, compared with $8.3 million, or 11% of revenues, in the 2016 third quarter.

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Garden City Group
Garden City Group revenues before reimbursements were $20.0 million in the third quarter of 2017, compared with $23.1 million in the same period of 2016. Operating earnings were $0.2 million in the 2017 third quarter compared with $2.2 million in the 2016 period. The segment’s operating margin for the 2017 quarter was 1%, as compared to 9% in the 2016 quarter.
Unallocated Corporate and Shared Costs and Credits, Net
Unallocated corporate costs, net were $4.1 million in the third quarter of 2017, compared with $6.9 million in the same period of 2016. The decreased costs for the third quarter of 2017 were due to decreases in defined benefit pension expense and unallocated professional fees.
Restructuring and Special Charges
The Company recorded restructuring and special charges of $1.4 million and $1.5 million in the 2017 and 2016 third quarters, respectively. Restructuring costs of $1.4 million in the 2017 quarter were incurred for the implementation and phase in of the Company's Global Business Services Center and Global Technology Services Center (the "Centers"), restructuring and integration costs related to reductions of administrative costs and consolidation of management layers in certain operations, and other restructuring charges for asset impairments and lease termination costs.
Balance Sheet and Cash Flow
The Company’s consolidated cash and cash equivalents position as of September 30, 2017 totaled $73.3 million, compared with $81.6 million at December 31, 2016.
The Company’s operations provided $13.9 million of cash during the 2017 period, compared with cash provided of $50.1 million in the 2016 period. The decrease in cash provided in operating activities in the first nine months of 2017 compared with the first nine months of 2016 was primarily due to an increase in accrued compensation and bonus payments, changes in pension cost, and increases in tax and self insurance payments. During the nine months ended September 30, 2016, the Company settled a cross currency swap for $4.9 million, increasing cash from operations for the period.
2017 Guidance
Crawford & Company is updating and raising certain aspects of its guidance for 2017 as follows:
•
Consolidated revenues before reimbursements between $1.09 and $1.11 billion;
•
Net income attributable to shareholders of Crawford & Company between $37.0 and $40.0 million, or $0.69 to $0.74 diluted earnings per CRD-A share, and $0.62 to $0.67 diluted earnings per CRD-B share;
•
Consolidated operating earnings between $92.5 and $97.5 million;
•
Consolidated adjusted EBITDA between $127.5 and $132.5 million;
•
Before expected restructuring and special charges, net income attributable to shareholders of Crawford & Company on a non-GAAP basis, between $46.0 and $49.0 million, or $0.85 to $0.90 diluted earnings per CRD-A share, and $0.78 to $0.83 diluted earnings per CRD-B share.
The Company expects to incur restructuring and special charges in 2017 totaling approximately $13.0 million pretax, or $0.16 per share. This is expected to be comprised of $3.0 million related to the Centers and $10.0 million related to other restructuring activities.
The Company’s guidance also includes a one-time tax benefit of $3.0 million, or $0.05 per share, in the 2017 fourth quarter as a result of international tax planning activities completed during the quarter.

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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 today, November 6, 2017 at 4:30 p.m. Eastern Time to discuss its third quarter 2017 results. The conference call can be accessed live by dialing 1-800-374-2518 and using passcode 6374542. A presentation for today’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 December 6, 2017. You may dial 1-855-859-2056 to listen to the replay. The access code is 6373715.

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, restructuring and special charges, income taxes, and net income or loss attributable to noncontrolling interests. The reconciliation of operating earnings to net income attributable to shareholders of the Company on a GAAP basis is presented below.
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 and 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, 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 are non-core items not directly related to our normal business or operations, or our future performance.

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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 based on statutory rates in effect in the various jurisdictions in which charges exist, and vary by jurisdiction.

Following is a reconciliation of segment and consolidated operating earnings to net income attributable to shareholders of Crawford & Company on a GAAP basis. The reconciliation of 2017 guidance is to the midpoint of the guidance range.

 
Three months ended
 
Nine months ended
 
Full Year
(in thousands)
September 30, 2017
September 30, 2016
 
September 30, 2017
September 30, 2016
 
Guidance 2017
Operating earnings (loss):
 
 
 
 
 
 
 
U.S. Services
$
9,537

$
9,354

 
$
26,187

$
27,943

 
 
International
10,165

13,460

 
29,682

31,867

 
 
Broadspire
8,240

8,263

 
24,235

23,497

 
 
Garden City Group
188

2,152

 
(2,267
)
5,982

 
 
Unallocated corporate and shared costs, net
(4,078
)
(6,947
)
 
(6,333
)
(17,454
)
 
 
Consolidated operating earnings
24,052

26,282

 
71,504

71,835

 
$
95,000

Deduct:
 
 
 
 
 
 
 
Net corporate interest expense
(2,524
)
(2,262
)
 
(6,674
)
(7,553
)
 
(11,000
)
Stock option expense
(468
)
(176
)
 
(1,342
)
(403
)
 
(1,575
)
Amortization expense
(2,737
)
(2,401
)
 
(8,235
)
(7,280
)
 
(11,700
)
Restructuring and special charges
(1,431
)
(1,488
)
 
(8,818
)
(7,431
)
 
(13,165
)
Income taxes
(4,922
)
(8,606
)
 
(16,569
)
(20,029
)
 
(18,960
)
Net income attributable to noncontrolling interests and redeemable noncontrolling interests
(157
)
(404
)
 
(188
)
(937
)
 
(100
)
Net income attributable to shareholders of Crawford & Company
$
11,813

$
10,945

 
$
29,678

$
28,202

 
$
38,500

 
 
 
 
 
 
 
 

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Following is a reconciliation of net income attributable to shareholders of Crawford & Company on a GAAP basis to adjusted EBITDA. The reconciliation of 2017 guidance is to the midpoint of the guidance range.
 
Three months ended
 
Nine months ended
 
Full Year
(in thousands)
September 30, 2017
September 30, 2016
 
September 30, 2017
September 30, 2016
 
Guidance 2017
Net income attributable to shareholders of Crawford & Company
$
11,813

$
10,945

 
$
29,678

$
28,202

 
$
38,500

Add:
 
 
 
 
 
 
 
Depreciation and amortization
10,290

10,085

 
30,648

30,643

 
41,500

Stock-based compensation
1,568

1,289

 
4,973

3,246

 
6,875

Net corporate interest expense
2,524

2,262

 
6,674

7,553

 
11,000

Restructuring and special charges
1,431

1,488

 
8,818

7,431

 
13,165

Income taxes
4,922

8,606

 
16,569

20,029

 
18,960

Adjusted EBITDA
$
32,548

$
34,675

 
$
97,360

$
97,104

 
$
130,000

 
 
 
 
 
 
 
 

Following is information regarding the weighted average shares used in the computation of basic and diluted earnings per share.
 
Three months ended
 
Nine months ended
(in thousands)
September 30, 2017
September 30, 2016
 
September 30, 2017
September 30, 2016
Weighted-Average Shares Used to Compute Basic Earnings Per Share:
 
 
 
 
 
Class A Common Stock
31,276

30,922

 
31,359

30,731

Class B Common Stock
24,550

24,690

 
24,639

24,690

Weighted-Average Shares Used to Compute Diluted Earnings Per Share:
 
 
 
 
 
Class A Common Stock
32,097

31,665

 
32,156

31,200

Class B Common Stock
24,550

24,690

 
24,639

24,690

 
 
 
 
 
 

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Following are reconciliations of GAAP Net Income and Earnings Per share to non-GAAP Adjusted Net Income and Diluted Earnings Per Share.

Three months ended September 30, 2017
(in thousands)
Net income attributable to Crawford & Company
Diluted earnings per CRD-A share
Diluted earnings per CRD-B share
GAAP
$
11,813

$
0.22

$
0.20

Add back:
 
 
 
Restructuring and special charges, net of tax of $468
963

0.01

0.02

Non-GAAP Adjusted
$
12,776

$
0.23

$
0.22

 
 
 
 

Three months ended September 30, 2016
(in thousands)
Net income attributable to Crawford & Company
Diluted earnings per CRD-A share
Diluted earnings per CRD-B share
GAAP
$
10,945

$
0.20

$
0.18

Add back:
 
 
 
Restructuring and special charges, net of tax of $486
1,002

0.02

0.02

Non-GAAP Adjusted
$
11,947

$
0.22

$
0.20

 
 
 
 

Full Year Guidance 2017
(in thousands)
Net income attributable to Crawford & Company
Diluted earnings per CRD-A share
Diluted earnings per CRD-B share
GAAP
$
38,500

$
0.71

$
0.64

Add back:
 
 
 
Restructuring and special charges, net of tax of $4,344
8,821

0.16

0.16

Non-GAAP Adjusted
$
47,321

$
0.87

$
0.80

 
 
 
 

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Further information regarding the Company’s operating results and cash flows for the quarter ended September 30, 2017, and financial position as of September 30, 2017 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 traded independent provider of claims management solutions to insurance companies and self-insured entities, with an expansive global network serving clients in more than 70 countries. The Crawford Solution® offers comprehensive, integrated claims services, business process outsourcing and consulting services for major product lines including property and casualty claims management; workers' compensation claims and medical management; and legal settlement administration.
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 September 30,
2017
 
2016
 
% Change
 
 
 
 
 
 
Revenues:
 
 
 
 
 
Revenues Before Reimbursements
$
270,551

 
$
277,286

 
(2
)%
Reimbursements
16,115

 
18,101

 
(11
)%
Total Revenues
286,666

 
295,387

 
(3
)%
 
 
 
 
 
 
Costs and Expenses:
 
 
 
 
 
Costs of Services Provided, Before Reimbursements
191,977

 
193,453

 
(1
)%
Reimbursements
16,115

 
18,101

 
(11
)%
Total Costs of Services
208,092

 
211,554

 
(2
)%
 
 
 
 
 
 
Selling, General, and Administrative Expenses
57,859

 
60,325

 
(4
)%
Corporate Interest Expense, Net
2,524

 
2,262

 
12
 %
Restructuring and Special Charges
1,431

 
1,488

 
(4
)%
Total Costs and Expenses
269,906

 
275,629

 
(2
)%
 
 
 
 
 
 
Other Income
132

 
197

 
(33
)%
 
 
 
 
 
 
Income Before Income Taxes
16,892

 
19,955

 
(15
)%
Provision for Income Taxes
4,922

 
8,606

 
(43
)%
 
 
 
 
 
 
Net Income
11,970

 
11,349

 
5
 %
 
 
 
 
 
 
Net Income Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests
(157
)
 
(404
)
 
(61
)%
 
 
 
 
 
 
Net Income Attributable to Shareholders of Crawford & Company
$
11,813

 
$
10,945

 
8
 %
 
 
 
 
 
 
Earnings Per Share - Basic:
 
 
 
 
 
Class A Common Stock
$
0.22

 
$
0.21

 
5
 %
Class B Common Stock
$
0.20

 
$
0.19

 
5
 %
 
 
 
 
 
 
Earnings Per Share - Diluted:
 
 
 
 
 
Class A Common Stock
$
0.22

 
$
0.20

 
10
 %
Class B Common Stock
$
0.20

 
$
0.18

 
11
 %
 
 
 
 
 
 
Cash Dividends Per Share:
 
 
 
 
 
Class A Common Stock
$
0.07

 
$
0.07

 
—
 %
Class B Common Stock
$
0.05

 
$
0.05

 
—
 %
 
 
 
 
 
 



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CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands, Except Per Share Amounts and Percentages)
Nine Months Ended September 30,
2017
 
2016
 
% Change
 
 
 
 
 
 
Revenues:
 
 
 
 
 
Revenues Before Reimbursements
$
807,065

 
$
836,863

 
(4
)%
Reimbursements
43,103

 
47,101

 
(8
)%
Total Revenues
850,168

 
883,964

 
(4
)%
 
 
 
 
 
 
Costs and Expenses:
 
 
 
 
 
Costs of Services Provided, Before Reimbursements
570,858

 
595,248

 
(4
)%
Reimbursements
43,103

 
47,101

 
(8
)%
Total Costs of Services
613,961

 
642,349

 
(4
)%
 
 
 
 
 
 
Selling, General, and Administrative Expenses
175,178

 
178,182

 
(2
)%
Corporate Interest Expense, Net
6,674

 
7,553

 
(12
)%
Restructuring and Special Charges
8,818

 
7,431

 
19
 %
Total Costs and Expenses
804,631

 
835,515

 
(4
)%
 
 
 
 
 
 
Other Income
898

 
719

 
25
 %
 
 
 
 
 
 
Income Before Income Taxes
46,435

 
49,168

 
(6
)%
Provision for Income Taxes
16,569

 
20,029

 
(17
)%
 
 
 
 
 
 
Net Income
29,866

 
29,139

 
2
 %
 
 
 
 
 
 
Net Income Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests
(188
)
 
(937
)
 
(80
)%
 
 
 
 
 
 
Net Income Attributable to Shareholders of Crawford & Company
$
29,678

 
$
28,202

 
5
 %
 
 
 
 
 
 
Earnings Per Share - Basic:
 
 
 
 
 
Class A Common Stock
$
0.56

 
$
0.54

 
4
 %
Class B Common Stock
$
0.50

 
$
0.48

 
4
 %
 
 
 
 
 
 
Earnings Per Share - Diluted:
 
 
 
 
 
Class A Common Stock
$
0.55

 
$
0.53

 
4
 %
Class B Common Stock
$
0.49

 
$
0.47

 
4
 %
 
 
 
 
 
 
Cash Dividends Per Share:
 
 
 
 
 
Class A Common Stock
$
0.21

 
$
0.21

 
—
 %
Class B Common Stock
$
0.15

 
$
0.15

 
—
 %
 
 
 
 
 
 




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CRAWFORD & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2017 and December 31, 2016
Unaudited
(In Thousands, Except Par Values)
 
September 30,
 
December 31,
 
2017
 
2016
ASSETS
 
 
 
 
 
 
 
Current Assets:
 
 
 
Cash and Cash Equivalents
$
73,289

 
$
81,569

Accounts Receivable, Net
164,660

 
153,566

Unbilled Revenues, at Estimated Billable Amounts
123,783

 
101,809

Income Taxes Receivable
3,661

 
3,781

Prepaid Expenses and Other Current Assets
26,483

 
24,006

Total Current Assets
391,876

 
364,731

 
 
 
 
Net Property and Equipment
32,680

 
29,605

 
 
 
 
Other Assets:
 
 
 
Goodwill
117,362

 
91,750

Intangible Assets Arising from Business Acquisitions, Net
99,682

 
86,931

Capitalized Software Costs, Net
87,834

 
80,960

Deferred Income Tax Assets
28,252

 
30,379

Other Noncurrent Assets
60,660

 
51,503

Total Other Assets
393,790

 
341,523

 
 
 
 
Total Assets
$
818,346

 
$
735,859

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ INVESTMENT
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
Short-Term Borrowings
$
3,627

 
$
30

Accounts Payable
49,670

 
51,991

Accrued Compensation and Related Costs
71,423

 
74,466

Self-Insured Risks
12,284

 
14,771

Income Taxes Payable
8,154

 
3,527

Deferred Rent
11,142

 
12,142

Other Accrued Liabilities
39,893

 
34,922

Deferred Revenues
36,987

 
37,456

Current Installments of Capital Leases
372

 
982

Total Current Liabilities
233,552

 
230,287

 
 
 
 
Noncurrent Liabilities:
 
 
 
Long-Term Debt and Capital Leases, Less Current Installments
246,083

 
187,002

Deferred Revenues
24,443

 
25,884

Accrued Pension Liabilities
91,265

 
105,175

Other Noncurrent Liabilities
23,878

 
28,247

Total Noncurrent Liabilities
385,669

 
346,308

 
 
 
 
Redeemable Noncontrolling Interests
7,085

 
—

 
 
 
 
Shareholders’ Investment:
 
 
 
Class A Common Stock, $1.00 Par Value
31,243

 
31,296

Class B Common Stock, $1.00 Par Value
24,515

 
24,690

Additional Paid-in Capital
53,138

 
48,108

Retained Earnings
276,304

 
261,562

Accumulated Other Comprehensive Loss
(197,280
)
 
(211,773
)
Shareholders’ Investment Attributable to Shareholders of Crawford & Company
187,920

 
153,883

Noncontrolling Interests
4,120

 
5,381

Total Shareholders’ Investment
192,040

 
159,264

 
 
 
 
Total Liabilities and Shareholders’ Investment
$
818,346

 
$
735,859


Page 11 of 13




finalcrawfordlogo100k0415a03.jpg
CRAWFORD & COMPANY
SUMMARY RESULTS BY OPERATING SEGMENT
Unaudited
(In Thousands, Except Percentages)

Three Months Ended September 30,

 
U.S. Services
%
International
%
Broadspire
%
Garden City Group
%
 
2017
2016
Change
2017
2016
Change
2017
2016
Change
2017
2016
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues Before Reimbursements
$
63,052

$
56,530

12
 %
$
110,784

$
120,950

(8
)%
$
76,683

$
76,676

—
 %
$
20,032

$
23,130

(13
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct Compensation, Fringe Benefits & Non-Employee Labor
39,051

32,608

20
 %
72,472

75,829

(4
)%
42,061

41,891

—
 %
14,003

14,975

(6
)%
% of Revenues Before Reimbursements
62
%
58
%
 
65
%
63
%
 
55
%
55
%
 
70
%
65
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor
14,464

14,568

(1
)%
28,147

31,661

(11
)%
26,382

26,522

(1
)%
5,841

6,003

(3
)%
% of Revenues Before Reimbursements
23
%
26
%
 
25
%
26
%
 
34
%
35
%
 
29
%
26
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Operating Expenses
53,515

47,176

13
 %
100,619

107,490

(6
)%
68,443

68,413

—
 %
19,844

20,978

(5
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Earnings (1)
$
9,537

$
9,354

2
 %
$
10,165

$
13,460

(24
)%
$
8,240

$
8,263

—
 %
$
188

$
2,152

(91
)%
% of Revenues Before Reimbursements
15
%
17
%
 
9
%
11
%
 
11
%
11
%
 
1
%
9
%
 

Nine Months Ended September 30,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Services
%
International
%
Broadspire
%
Garden City Group
%
 
2017
2016
Change
2017
2016
Change
2017
2016
Change
2017
2016
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues Before Reimbursements
$
184,843

$
173,969

6
 %
$
331,019

$
360,425

(8
)%
$
231,544

$
227,975

2
%
$
59,659

$
74,494

(20
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct Compensation, Fringe Benefits & Non-Employee Labor
111,352

100,613

11
 %
215,049

229,396

(6
)%
128,314

125,753

2
%
41,830

48,795

(14
)%
% of Revenues Before Reimbursements
60
%
58
%
 
65
%
64
%
 
55
%
55
%
 
70
 %
66
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor
47,304

45,413

4
 %
86,288

99,162

(13
)%
78,995

78,725

—
%
20,096

19,717

2
 %
% of Revenues Before Reimbursements
26
%
26
%
 
26
%
28
%
 
34
%
35
%
 
34
 %
26
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Operating Expenses
158,656

146,026

9
 %
301,337

328,558

(8
)%
207,309

204,478

1
%
61,926

68,512

(10
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Earnings (Loss) (1)
$
26,187

$
27,943

(6
)%
$
29,682

$
31,867

(7
)%
$
24,235

$
23,497

3
%
$
(2,267
)
$
5,982

(138
)%
% of Revenues Before Reimbursements
14
%
16
%
 
9
%
9
%
 
10
%
10
%
 
(4
)%
8
%
 
NOTE: “Direct Compensation, Fringe Benefits & Non-Employee Labor” and “Expenses Other Than Direct Compensation, Fringe Benefits & Non-Employee Labor” components are not comparable across
segments, but are comparable within each segment across periods.
(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, and certain unallocated corporate and shared costs and credits. See pages 4-5 for additional information about segment operating earnings.

Page 12 of 13



finalcrawfordlogo100k0415a03.jpg

CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 2017 and September 30, 2016
Unaudited
(In Thousands)
 
 
2017
 
2016
Cash Flows From Operating Activities:
 
 
 
 
Net Income
 
$
29,866

 
$
29,139

Reconciliation of Net Income to Net Cash Provided by Operating Activities:
 
 
 
 
Depreciation and Amortization
 
30,648

 
30,643

Stock-Based Compensation Costs
 
4,973

 
3,246

Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions:
 
 
 
 
Accounts Receivable, Net
 
(6,181
)
 
(7,628
)
Unbilled Revenues, Net
 
(16,996
)
 
(16,118
)
Accrued or Prepaid Income Taxes
 
5,202

 
9,067

Accounts Payable and Accrued Liabilities
 
(16,233
)
 
5,410

Deferred Revenues
 
(2,352
)
 
(4,153
)
Accrued Retirement Costs
 
(13,360
)
 
(7,128
)
Prepaid Expenses and Other Operating Activities
 
(1,683
)
 
7,605

Net Cash Provided by Operating Activities
 
13,884

 
50,083

 
 
 
 
 
Cash Flows From Investing Activities:
 
 
 
 
Acquisitions of Property and Equipment
 
(10,465
)
 
(5,782
)
Capitalization of Computer Software Costs
 
(19,906
)
 
(13,653
)
Payments for Business Acquisitions, Net of Cash Acquired
 
(36,029
)
 
(3,672
)
Other Investing Activities
 
(2,148
)
 
(95
)
Net Cash Used in Investing Activities
 
(68,548
)
 
(23,202
)
 
 
 
 
 
Cash Flows From Financing Activities:
 
 
 
 
Cash Dividends Paid
 
(10,288
)
 
(10,162
)
Payments Related to Shares Received for Withholding Taxes Under Stock-Based Compensation Plans
 
(547
)
 
(15
)
Proceeds from Shares Purchased Under Employee Stock-Based Compensation Plans
 
1,048

 
1,208

Decrease in Note Payable for Stock Repurchase
 
—

 
(2,206
)
Repurchases of Common Stock
 
(6,066
)
 
—

Increases in Short-Term and Revolving Credit Facility Borrowings
 
82,905

 
79,664

Payments on Short-Term and Revolving Credit Facility Borrowings
 
(22,697
)
 
(95,855
)
Payments on Capital Lease Obligations
 
(964
)
 
(1,119
)
Dividends Paid to Noncontrolling Interests
 
(291
)
 
(381
)
Other Financing Activities
 
—

 
(12
)
Net Cash Provided by (Used in) Financing Activities
 
43,100

 
(28,878
)
 
 
 
 
 
Effects of Exchange Rate Changes on Cash and Cash Equivalents
 
3,284

 
(2,406
)
Decrease in Cash and Cash Equivalents
 
(8,280
)
 
(4,403
)
Cash and Cash Equivalents at Beginning of Year
 
81,569

 
76,066

Cash and Cash Equivalents at End of Period
 
$
73,289

 
$
71,663


Page 13 of 13