Crawford & Company Reports 2024 Third Quarter Results

ATLANTA--(BUSINESS WIRE)--Nov 4, 2024--

Crawford & Company® (NYSE: CRD-A and CRD-B), is pleased to announce its financial results for the third quarter ended September 30, 2024.

GAAP Consolidated Results

Third Quarter 2024

Revenues before reimbursements of $329.4 million, compared to $330.1 million for the 2023 third quarter
Net income attributable to shareholders of $9.5 million, compared to $12.3 million in the same period last year
Diluted earnings per share of $0.19 for both CRD-A and CRD-B, compared to diluted earnings per share of $0.25 for both share classes in the prior year third quarter

Non-GAAP Consolidated Results

Third Quarter 2024

Diluted earnings per share, on a non-GAAP basis, totaled $0.22 for both CRD-A and CRD-B in the 2024 third quarter, compared with $0.35 for CRD-A and $0.36 for CRD-B in the prior year third quarter
Net income attributable to shareholders, on a non-GAAP basis, totaled $10.9 million in the 2024 third quarter, compared with $17.7 million in the same period last year
Consolidated adjusted operating earnings, on a non-GAAP basis, were $21.8 million, or 6.6% of revenues before reimbursements in the 2024 third quarter, compared with $29.9 million, or 9.1% of revenues, in the 2023 third quarter
Consolidated adjusted EBITDA, a non-GAAP financial measure, was $29.6 million, or 9.0% of revenues before reimbursements in the 2024 third quarter, compared with $38.6 million, or 11.7% of revenues, in the 2023 third quarter
Foreign currency exchange rates decreased revenues before reimbursements by $2.2 million or less than (1)%. Presented on a constant dollar basis to the prior year period, revenues before reimbursements totaled $331.6 million, increasing less than 1% from the 2023 third quarter

Mr. Rohit Verma, president and chief executive officer of Crawford & Company, commented, “Consolidated third quarter revenues were consistent with the previous year, reflecting our ability to drive continued momentum in our core non-weather-dependent businesses. Broadspire achieved a new quarterly revenue record and our International Operations also demonstrated revenue growth and margin expansion, with growth across key markets. Our third quarter results also reflected the ongoing benign weather environment which impacted growth at our North America Loss Adjusting and Platform Solutions segments. Storm activity in the third quarter of 2024 was notably lower than historical levels, with Hurricane Helene occurring late in the quarter and Hurricane Milton following approximately two weeks later. We expect to see activity related to these two storms reflected in our fourth quarter performance."

Mr. Verma continued, “These results underscore the strength of our diversified business lines, which enable us to mitigate challenges encountered in one part of the business with growth from other segments. As we move forward, our focus remains on delivering sustainable growth, winning new customers, establishing strategic partnerships and delivering operational excellence as we continue to drive value for our stakeholders."

Segment Results for the Third Quarter

North America Loss Adjusting

North America Loss Adjusting revenues before reimbursements were $79.3 million in the third quarter of 2024, relatively consistent compared with $80.0 million in the third quarter of 2023.

The segment had operating earnings of $5.4 million in the 2024 third quarter, decreasing from $10.5 million in the third quarter of 2023. The operating margin was 6.9% in the 2024 quarter and 13.1% in the 2023 quarter driven by decreased revenues in U.S. Field Operations and Canada compared to the prior year quarter which had increased weather related activity and increased costs in U.S. Global Technical Services.

International Operations

International Operations revenues before reimbursements were $105.7 million in the third quarter of 2024, up 7.8% from $98.1 million in the same period of 2023 driven by growth in the U.K. and Europe. Absent foreign exchange rate decreases of $1.8 million, revenues would have been $107.6 million for the 2024 third quarter.

Operating earnings were $5.1 million in the 2024 third quarter, increasing from $2.2 million in the 2023 period. The segment’s operating margin for the 2024 quarter increased to 4.9% compared with 2.2% in the 2023 quarter driven by U.K. and Europe revenue growth.

Broadspire

Broadspire segment revenues before reimbursements were a new quarterly record of $99.0 million in the 2024 third quarter, increasing 7.4% from $92.2 million in the 2023 third quarter driven by increases in medical case management and casualty claims revenues.

Broadspire recorded operating earnings of $14.4 million in the third quarter of 2024, representing an operating margin of 14.5%, compared to $13.5 million, or 14.7% of revenues, in the 2023 third quarter. The Company increased staffing levels in response to revenue growth in the quarter which slightly impacted operating margin.

Platform Solutions

Platform Solutions revenues before reimbursements were $45.3 million in the third quarter of 2024, down from $59.8 million in the same period of 2023 as the Networks service line had significantly reduced weather-related claim volumes.

Operating earnings were $3.8 million in the 2024 third quarter, decreasing from the $8.5 million in the 2023 period. The segment’s operating margin for the 2024 quarter was 8.5% as compared with 14.2% in the 2023 quarter. Operating earnings were impacted by less weather-related activity and a corresponding decrease in demand for staff augmentation services in the third quarter of 2024 as compared to the third quarter of 2023.

Unallocated Corporate and Shared Costs and Credits, Net

Unallocated corporate costs were $7.0 million in the third quarter of 2024, compared with $4.8 million in the same period of 2023. The increase in the 2024 third quarter was primarily due to an increase in self-insured reserves, professional fees, and other reserves.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses (“SG&A”) decreased $2.9 million, or (3.9)%, in the three months ended September 30, 2024 as compared with the 2023 period. The decrease was primarily due to a reduction in the estimated payout for contingent earnout adjustments.

Other Matters

The Company recognized pretax contingent earnout benefits totaling ($2.1) million in the 2024 third quarter, compared to expenses of $2.1 million in the same period of 2023, related to the fair value adjustment of earnout liabilities arising from acquisitions. These adjustments, which are not a component of operating earnings, are based on changes to projections of acquired entities over the respective earnout periods, which span multiple years.

The Company recognized non-service pension costs of $2.4 million in the 2024 third quarter compared with $2.2 million in the 2023 period. Non-service pension costs represent the U.S. and U.K. non-service defined benefit pension costs, which are non-operating in nature as the U.S. plan is frozen and the U.K. plans are closed to new participants.

Balance Sheet and Cash Flow

The Company’s consolidated cash and cash equivalents position as of September 30, 2024, totaled $52.3 million, compared with $58.4 million at December 31, 2023. The Company’s total debt outstanding as of September 30, 2024, totaled $238.4 million, compared with $209.1 million at December 31, 2023.

The Company’s operations provided $11.1 million of cash during the first nine months of 2024, compared with $68.1 million in 2023. The decrease in cash provided was due primarily to $21.6 million lower operating earnings, $20.6 million net change in incentive compensation, and a $11.0 million decrease in other working capital items over the prior year.

The Company made no contributions to its U.S. defined benefit pension plan and $1.9 million in contributions to its U.K. plans for the first nine months of 2024, compared with no contributions to the U.S. plan and $1.8 million to the U.K. plans in 2023.

During the first nine months of 2024 and 2023, the Company did not repurchase any shares of CRD-A. In the first nine months of 2024, the Company repurchased 385,544 shares of CRD-B at an average per share cost of $9.34, compared to 63,103 shares of CRD-B repurchased in the first nine months of 2023 at an average share cost of $9.24. The total cost of shares repurchased during 2024 was $3.6 million for the first nine months of 2024.

Conference Call

As previously announced, Crawford & Company will host a conference call on November 5, 2024, at 8:30 a.m. Eastern Time to discuss its third quarter 2024 results. The conference call can be accessed live by dialing 1-800-549-8228 and using Conference ID 04164. A presentation for tomorrow’s call can also be found on the investor relations portion of the Company’s website, https://ir.crawco.com. The call will be recorded and available for replay through December 5, 2024. You may dial 1-888-660-6264 and use passcode 04164# 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 acquisition-related intangible assets, contingent earnout adjustments, non-service pension costs, income taxes and net income or loss attributable to noncontrolling interests.

Adjusted EBITDA is not a term defined by GAAP and as a result our measure of adjusted EBITDA might not be comparable to similarly titled measures used by other companies. However, adjusted EBITDA is used by management to evaluate, assess and benchmark our operational results. The Company believes that adjusted EBITDA is relevant and useful information widely used by analysts, investors and other interested parties. Adjusted EBITDA is defined as net income attributable to shareholders of the Company with adjustments for depreciation and amortization, net corporate interest expense, contingent earnout adjustments, non-service pension costs, income taxes and stock-based compensation expense.

Unallocated corporate and shared costs and credits include expenses and credits related to our chief executive officer and Board of Directors, certain provisions for bad debt allowances or subsequent recoveries such as those related to bankrupt clients, certain unallocated professional fees and certain self-insurance costs and recoveries that are not allocated to our individual operating segments.

Income taxes, net corporate interest expense, stock option expense, amortization of acquisition-related intangible assets, contingent earnout adjustments, and non-service pension costs are recurring components of our net income, but they are not considered part of our segment operating earnings because they are managed on a corporate-wide basis. Income taxes are calculated for the Company on a consolidated basis based on statutory rates in effect in the various jurisdictions in which we provide services and vary significantly by jurisdiction. Net corporate interest expense results from capital structure decisions made by senior management and the Board of Directors, affecting the Company as a whole. Stock option expense represents the non-cash costs generally related to stock options and employee stock purchase plan expenses which are not allocated to our operating segments. Amortization expense is a non-cash expense for finite-lived customer-relationship and trade name intangible assets acquired in business combinations. Contingent earnout adjustments relate to changes in the fair value of earnouts associated with our recent acquisitions. Non-service pension costs represent the U.S. and U.K. non-service defined benefit pension costs, which are non-operating in nature as the U.S. plan was frozen in 2002 and the U.K. plans are closed to new participants. None of these costs relate directly to the performance of our services or operating activities and, therefore, are excluded from segment operating earnings to better assess the results of each segment's operating activities on a consistent basis.

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

		Three Months Ended		Nine Months Ended
( in thousands )		September 30, 2024		September 30, 2023		September 30, 2024	September 30, 2023
Geographic Area	Currency	USD equivalent	% of total		USD equivalent	% of total		USD equivalent	% of total	USD equivalent	% of total
U.S.	USD	$	200,160			60.8	%		$	207,565			62.9	%		$	569,624		60.3	%		$	612,276		63.1	%
U.K.	GBP		42,265			12.8	%			38,290			11.6	%			123,940		13.1	%			106,139		10.9	%
Canada	CAD		23,474			7.1	%			24,490			7.4	%			69,516		7.4	%			73,494		7.6	%
Australia	AUD		23,530			7.1	%			22,867			6.9	%			65,507		6.9	%			68,787		7.1	%
Europe	EUR		15,260			4.6	%			14,629			4.4	%			45,806		4.8	%			42,968		4.4	%
Rest of World	Various		24,686			7.6	%			22,280			6.8	%			70,863		7.5	%			67,347		6.9	%
Total Revenues, before reimbursements	$	329,375			100.0	%		$	330,121			100.0	%		$	945,256		100.0	%		$	971,011		100.0	%

Following is a reconciliation of consolidated operating earnings to net income attributable to shareholders of Crawford & Company on a GAAP basis:

	Three Months Ended		Nine Months Ended
( in thousands )	September 30, 2024	September 30, 2023		September 30, 2024	September 30, 2023
Operating earnings:
North America Loss Adjusting	$	5,443		$	10,468		$	14,807		$	22,433
International Operations		5,136			2,197			12,528			8,974
Broadspire		14,402			13,532			42,297			29,607
Platform Solutions		3,833			8,523			6,417			26,595
Unallocated corporate and shared costs, net		(6,979	)		(4,781	)		(20,065	)		(9,998	)
Consolidated operating earnings		21,835			29,939			55,984			77,611
(Deduct) add:
Net corporate interest expense		(4,682	)		(4,556	)		(12,534	)		(13,264	)
Stock option expense		(188	)		(145	)		(494	)		(440	)
Amortization of intangible assets		(1,932	)		(1,986	)		(5,656	)		(5,864	)
Non-service pension costs		(2,441	)		(2,170	)		(7,313	)		(6,436	)
Contingent earnout adjustments		2,128			(2,127	)		1,547			(3,100	)
Income tax provision		(5,333	)		(6,781	)		(10,866	)		(17,258	)
Net loss attributable to noncontrolling interests		66			145			206			178
Net income attributable to shareholders of Crawford & Company	$	9,453		$	12,319		$	20,874		$	31,427

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

	Three Months Ended		Nine Months Ended
( in thousands )	September 30, 2024	September 30, 2023		September 30, 2024	September 30, 2023
Net income attributable to shareholders of Crawford & Company	$	9,453		$	12,319	$	20,874		$	31,427
Add (Deduct):
Depreciation and amortization		8,813			9,115		26,957			27,356
Stock-based compensation		988			1,574		3,819			4,183
Net corporate interest expense		4,682			4,556		12,534			13,264
Non-service pension costs		2,441			2,170		7,313			6,436
Contingent earnout adjustments		(2,128	)		2,127		(1,547	)		3,100
Income tax provision		5,333			6,781		10,866			17,258
Non-GAAP adjusted EBITDA	$	29,582		$	38,642	$	80,816		$	103,024

Following is a reconciliation of operating cash flow to free cash flow for the nine months ended September 30, 2024 and 2023:

Nine Months Ended
( in thousands )	September 30, 2024		September 30, 2023	Change
Net Cash Provided by Operating Activities	$	11,093		$	68,077		$	(56,984	)
Less:
Property & Equipment Purchases, net		(2,992	)		(3,360	)		368
Capitalized Software (internal and external costs)		(26,453	)		(24,323	)		(2,130	)
Free Cash Flow	$	(18,352	)	$	40,394		$	(58,746	)

Non-GAAP consolidated results for 2024 and 2023 exclude the non-cash, after-tax adjustments for amortization of intangible assets, non-service-related pension costs, and contingent earnout adjustment.

Following are the reconciliations of GAAP Pretax Earnings, Net Income and Earnings Per Share to related non-GAAP Adjusted figures, which reflect each of 2024 and 2023 before amortization of intangible assets, non-service related pension costs and contingent earnout adjustments:

Three Months Ended September 30, 2024
( in thousands )	Pretax earnings	Net income attributable to Crawford & Company	Diluted earnings per CRD-A share	Diluted earnings per CRD-B share
GAAP	$	14,720		$	9,453		$	0.19		$	0.19
Adjustments:
Amortization of intangible assets		1,932			1,668			0.03			0.03
Non-service related pension costs		2,441			1,910			0.04			0.04
Contingent earnout adjustments		(2,128	)		(2,179	)		(0.04	)		(0.04	)
Non-GAAP Adjusted	$	16,965		$	10,852		$	0.22		$	0.22

Three Months Ended September 30, 2023
( in thousands )	Pretax earnings	Net income attributable to Crawford & Company	Diluted earnings per CRD-A share	Diluted earnings per CRD-B share (1)
GAAP	$	18,955		$	12,319	$	0.25	$	0.25
Adjustments:
Amortization of intangible assets		1,986			1,711		0.03		0.03
Non-service related pension costs		2,170			1,612		0.03		0.03
Contingent earnout adjustments		2,127			2,101		0.04		0.04
Non-GAAP Adjusted	$	25,238		$	17,743	$	0.35	$	0.36

Nine Months Ended September 30, 2024
( in thousands )	Pretax earnings	Net income attributable to Crawford & Company	Diluted earnings per CRD-A share	Diluted earnings per CRD-B share
GAAP	$	31,534		$	20,874		$	0.42		$	0.42
Adjustments:
Amortization of intangible assets		5,656			4,807			0.10			0.10
Non-service related pension costs		7,313			5,714			0.11			0.11
Contingent earnout adjustments		(1,547	)		(1,605	)		(0.03	)		(0.03	)
Non-GAAP Adjusted	$	42,956		$	29,790		$	0.60		$	0.60

Nine Months Ended September 30, 2023
( in thousands )	Pretax earnings	Net income attributable to Crawford & Company	Diluted earnings per CRD-A share	Diluted earnings per CRD-B share
GAAP	$	48,507		$	31,427	$	0.63	$	0.64
Adjustments:
Amortization of intangible assets		5,864			5,039		0.10		0.10
Non-service related pension costs		6,436			4,782		0.10		0.10
Contingent earnout adjustments		3,100			2,503		0.05		0.05
Non-GAAP Adjusted	$	63,907		$	43,751	$	0.88	$	0.89

(1) Sum of reconciling items may differ from total due to rounding of individual components.

Following is information regarding the weighted average shares used in the computation of basic and diluted earnings per share:

	Three Months Ended	Nine Months Ended
( in thousands )	September 30, 2024	September 30, 2023	September 30, 2024	September 30, 2023
Weighted-Average Shares Used to Compute Basic Earnings Per Share:
Class A Common Stock		29,880			29,140	29,732	28,980
Class B Common Stock		19,255			19,837	19,390	19,845
Weighted-Average Shares Used to Compute Diluted Earnings Per Share:
Class A Common Stock		30,472			30,063	30,308	29,659
Class B Common Stock		19,255			19,837	19,390	19,845

Further information regarding the Company’s operating results for the three and nine months ended September 30, 2024, financial position as of September 30, 2024, and cash flows for the nine months ended September 30, 2024 is shown on the attached unaudited condensed consolidated financial statements.

About Crawford & Company

Based in Atlanta, Crawford & Company (NYSE: CRD-A and CRD-B) is a leading provider of claims management and outsourcing solutions to insurance companies and self-insured entities with an expansive network serving clients in more than 70 countries. The Company's two classes of stock are substantially identical, except with respect to voting rights for the Class B Common Stock (CRD-B) and protections for the non-voting Class A Common Stock (CRD-A). More information is available at www.crawco.com.

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

FOR FURTHER INFORMATION REGARDING THIS PRESS RELEASE, PLEASE CALL BRUCE SWAIN AT (404) 300-1051.

This press release contains forward-looking statements, including statements about the expected future financial condition, results of operations and earnings outlook of Crawford & Company. Statements, both qualitative and quantitative, that are not historical facts may be “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from historical experience or Crawford & Company’s present expectations. Accordingly, no one should place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Crawford & Company does not undertake to update forward-looking statements to reflect the impact of circumstances or events that may arise or not arise after the date the forward-looking statements are made. For further information regarding Crawford & Company, including factors that could cause our actual financial condition, results or earnings to differ from those described in any forward-looking statements, please read Crawford & Company’s reports filed with the SEC and available at www.sec.gov and in the Investor Relations section of Crawford & Company’s website at www.crawco.com.

CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands, Except Per Share Amounts and Percentages)

Three Months Ended September 30,	2024		2023	% Change

Revenues:
Revenues Before Reimbursements	$	329,375		$	330,121		(0	)%
Reimbursements		13,351			12,066		11	%
Total Revenues		342,726			342,187		0	%

Costs and Expenses:
Costs of Services Provided, Before Reimbursements		235,957			229,969		3	%
Reimbursements		13,351			12,066		11	%
Total Costs of Services		249,308			242,035		3	%

Selling, General, and Administrative Expenses		71,526			74,447		(4	)%
Corporate Interest Expense, Net		4,682			4,556		3	%
Total Costs and Expenses		325,516			321,038		1	%

Other Loss, Net		(2,490	)		(2,194	)	13	%

Income Before Income Taxes		14,720			18,955		(22	)%
Provision for Income Taxes		5,333			6,781		(21	)%

Net Income		9,387			12,174		(23	)%

Net Loss Attributable to Noncontrolling Interests		66			145		(54	)%

Net Income Attributable to Shareholders of Crawford & Company	$	9,453		$	12,319		(23	)%

Earnings Per Share - Basic:
Class A Common Stock	$	0.19		$	0.25		(24	)%
Class B Common Stock	$	0.19		$	0.25		(24	)%

Earnings Per Share - Diluted:
Class A Common Stock	$	0.19		$	0.25		(24	)%
Class B Common Stock	$	0.19		$	0.25		(24	)%

Cash Dividends Per Share:
Class A Common Stock	$	0.07		$	0.06		17	%
Class B Common Stock	$	0.07		$	0.06		17	%

CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands, Except Per Share Amounts and Percentages)

Nine Months Ended September 30,	2024		2023	% Change

Revenues:
Revenues Before Reimbursements	$	945,256		$	971,011		(3	)%
Reimbursements		37,396			36,743		2	%
Total Revenues		982,652			1,007,754		(2	)%

Costs and Expenses:
Costs of Services Provided, Before Reimbursements		672,611			691,078		(3	)%
Reimbursements		37,396			36,743		2	%
Total Costs of Services		710,007			727,821		(2	)%

Selling, General, and Administrative Expenses		221,116			211,631		4	%
Corporate Interest Expense, Net		12,534			13,264		(6	)%
Total Costs and Expenses		943,657			952,716		(1	)%

Other Loss, Net		(7,461	)		(6,531	)	14	%

Income Before Income Taxes		31,534			48,507		(35	)%
Provision for Income Taxes		10,866			17,258		(37	)%

Net Income		20,668			31,249		(34	)%

Net Loss Attributable to Noncontrolling Interests		206			178		16	%

Net Income Attributable to Shareholders of Crawford & Company	$	20,874		$	31,427		(34	)%

Earnings Per Share - Basic:
Class A Common Stock	$	0.42		$	0.64		(34	)%
Class B Common Stock	$	0.42		$	0.64		(34	)%

Earnings Per Share - Diluted:
Class A Common Stock	$	0.42		$	0.63		(33	)%
Class B Common Stock	$	0.42		$	0.64		(34	)%

Cash Dividends Per Share:
Class A Common Stock	$	0.21		$	0.19		11	%
Class B Common Stock	$	0.21		$	0.19		11	%

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CRAWFORD & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2024and December 31, 2023
Unaudited
(In Thousands, Except Par Values)

	September 30,		December 31,
	2024		2023
ASSETS

Current Assets:
Cash and Cash Equivalents	$	52,340		$	58,363
Accounts Receivable, Net