Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 5, 2019
CRAWFORD & COMPANY
 
(Exact Name of Registrant as Specified in Its Charter)
Georgia
 
(State or Other Jurisdiction of Incorporation)
1-10356
 
58-0506554
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
 
 
5335 Triangle Parkway, Peachtree Corners, Georgia
 
30092
 
(Address of Principal Executive Offices)
 
(Zip Code)
(404) 300-1000
 
(Registrant's Telephone Number, Including Area Code)
N/A
 
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Act of 1934.
Emerging growth company     o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     o
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A Common Stock — $1.00 Par Value

CRD-A
New York Stock Exchange, Inc.
Class B Common Stock — $1.00 Par Value

CRD-B
New York Stock Exchange, Inc.






ITEM 2.02. Results of Operations and Financial Condition
On August 5, 2019, Crawford & Company (the "Company") issued a press release containing information about the Company's financial results for the second quarter 2019. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by this reference.

ITEM 7.01. Regulation FD Disclosure
The Company has made available on the Company's website at www.crawco.com a presentation designed to enhance the information presented at its quarterly earnings conference call on Tuesday, August 6, 2019 at 8:30 a.m. Eastern Time. A copy of the presentation is attached hereto as Exhibit 99.2 and is incorporated herein by this reference.

ITEM 9.01. Financial Statements and Exhibits

(d) The following exhibits are being filed herewith:
 
 
 
Exhibit No.
 
Description
99.1
 
 
 
 
99.2
 
The information contained in this current report on Form 8-K and in the accompanying exhibits shall not be incorporated by reference into any filing of the Company with the SEC, whether made before or after the date hereof, regardless of any general incorporation by reference language in such filing, unless expressly incorporated by specific reference to such filing. The information, including the exhibits hereto, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

2



SIGNATURE
     Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
CRAWFORD & COMPANY
              (Registrant)

 
 
By:
/s/ W. BRUCE SWAIN
 
 
 
W. Bruce Swain
 
 
 
Executive Vice President -
Chief Financial Officer
 
 
Dated: August 5, 2019


3
Exhibit


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13042251&doc=33                            http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13042251&doc=34
Crawford & Company®
5335 Triangle Parkway
Peachtree Corners, GA 30092

FOR IMMEDIATE RELEASE
CRAWFORD & COMPANY REPORTS 2019 SECOND QUARTER RESULTS
GENERATES SEQUENTIAL IMPROVEMENT OVER FIRST QUARTER

ATLANTA, (August 5, 2019) -- Crawford & Company (www.crawco.com) (NYSE: CRD-A and CRD-B), the world’s largest publicly listed independent provider of claims management and outsourcing solutions to insurance companies and self-insured entities, today announced its financial results for the second quarter ended June 30, 2019.
The Company’s two classes of stock are substantially identical, except with respect to voting rights and the Company’s ability to pay greater cash dividends on the non-voting Class A Common Stock (CRD-A) than on the voting Class B Common Stock (CRD-B), subject to certain limitations. In addition, with respect to mergers or similar transactions, holders of CRD-A must receive the same type and amount of consideration as holders of CRD-B, unless different consideration is approved by the holders of 75% of CRD-A, voting as a class.
GAAP Consolidated Results
Second Quarter 2019

Revenues before reimbursements of $256.9 million, compared with $279.0 million for the 2018 second quarter, which included $13.9 million of revenues from the Garden City Group business line which was disposed of in June 2018

Net income attributable to shareholders of $2.6 million, compared to a $(2.4) million loss in the same period last year

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

Non-GAAP Consolidated Results
Second Quarter 2019

Non-GAAP results for 2019 have been presented on a constant dollar basis to 2018 and excluding the pretax arbitration settlement charges of $11.4 million in the 2019 period. Non-GAAP consolidated results for the 2018 quarter have been calculated excluding the net operating results of the Garden City Group business, the “GCG business”, disposed of on June 15, 2018 and the loss on disposition of business line.

Revenues before reimbursements, on a non-GAAP basis, of $264.2 million, which remained relatively flat compared with $265.1 million for the 2018 second quarter

Net income attributable to shareholders, on a non-GAAP basis, totaled $11.3 million in the 2019 second quarter, compared to $11.0 million in the same period last year

Diluted earnings per share, on a non-GAAP basis, of $0.21 for CRD-A and $0.19 for CRD-B in the 2019 second quarter unchanged from $0.21 for CRD-A and $0.19 for CRD-B in the prior year second quarter

Consolidated adjusted operating earnings, on a non-GAAP basis, were $22.9 million, or 8.7% of revenues, in the 2019 second quarter, compared with $21.7 million, or 8.2% of revenues, in the 2018 second quarter

Consolidated adjusted EBITDA, a non-GAAP financial measure, was $30.6 million, or 11.6% of non-GAAP revenues, in the 2019 second quarter, compared with $32.5 million, or 12.3% of revenues, in the 2018 period

Page 1 of 15


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13042251&doc=33



Management Comments
Mr. Harsha V. Agadi, president and chief executive officer of Crawford & Company, stated, “For the 2019 second quarter, on a constant currency basis and excluding GCG, we delivered 6% operating earnings growth on revenues that were essentially flat year over year and strong sequential improvement over our first quarter operating earnings. Importantly, the strategic investments that we have made in our salespeople to drive market share and in new product development are firmly taking hold. This can clearly be seen in our new business development where we have seen a sharp acceleration in new client wins. Through the second quarter we have signed $47.0 million in annual revenue value from new customers, which compares to $30.0 million for the first six months of 2018. This success and our growing new business development pipeline provide confidence in our full year outlook.
We have also been working to transition Crawford towards more predictable, recurring revenue business as we strive to reduce the volatility from weather. To accomplish this, we have shifted our investment in technology over the last year towards transformational efforts versus maintenance spending as we work to create solutions designed to solve our clients’ most complex challenges. Our goal is to be a leader in the outsourced claims market and offer our clients industry-leading solutions designed to solve their most complex challenges. Along these lines, I am very excited with a key new client win with a top 15 P&C carrier in the United States who outsourced the handling of their small business claims to us. Claims management is our expertise, and we can offer an industry-leading end-to-end solution at a more effective cost to the client. Looking forward, handling small and medium carriers’ claims on an outsourced basis represents a large and untapped market opportunity which will ultimately increase the predictability of our revenues and cash flow.
While I am pleased with where our business is positioned and confident in the outlook, I am also very encouraged with the success that we have achieved improving our cash generation while remaining disciplined on expenses. Through the second quarter, we generated a $27.4 million year-over-year increase in operating cash flow and our free cash flow improved by $37.1 million over the prior year period. We will continue to be disciplined and use our capital to drive value for shareholders through a disciplined capital allocation strategy focused on investment in the business, accretive M&A, and returning capital to shareholders through a consistent quarterly dividend and share repurchases. Of note, we have bought back 701,506 shares of CRD-A and 1,449,240 of CRD-B at an average cost of $9.11 per share, year to date, representing 4% of our outstanding shares.”
Mr. Agadi concluded, “We continue to make strong progress positioning Crawford not only for growth but also for continued leadership in the outsourced claims industry. Our new business wins are accelerating as a result of our investment in people, products, and innovation. Additionally, our clients are seeing the many benefits that we can provide and are beginning to outsource large portions of their claims to Crawford which is an exciting growth opportunity. While our new clients’ business will take time to ramp, we remain firmly on track to deliver our longer term goal of achieving 5% revenue growth and 15% earnings growth, annually.”


Page 2 of 15


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13042251&doc=33



Segment Results for the Second Quarter
Crawford Claims Solutions
Crawford Claims Solutions revenues before reimbursements were $86.0 million in the second quarter of 2019, decreasing from $93.1 million in the second quarter of 2018 partially due to a decrease in weather related activity in the U.S., as 2018 revenues included $4.1 million from the runoff of 2017 hurricane claims. On a constant dollar basis, second quarter 2019 revenues were $89.6 million.
Excluding centralized indirect support costs, gross profit decreased to $19.6 million, or a gross margin of 22.7% in 2019 from $21.5 million, or a gross margin of 23.1% in 2018, due primarily to lower earnings in Canada and Europe compared to the prior year. After the allocation of indirect costs, operating earnings were $1.7 million in the 2019 second quarter compared with operating earnings of $4.1 million in the second quarter of 2018, representing an operating margin of 2.0% in the 2019 quarter and 4.4% in the 2018 quarter.
Crawford TPA Solutions: Broadspire
Crawford TPA Solutions: Broadspire segment revenues before reimbursements were $99.5 million in the 2019 second quarter, decreasing from $102.6 million in the 2018 second quarter. Changes in foreign exchange rates resulted in a decrease in revenues of approximately 1.3%, or $1.3 million, for the three months ended June 30, 2019, as compared with the 2018 period. Additionally, 2019 revenues were negatively impacted by decreased cases received.
Excluding centralized indirect support costs, gross profit decreased to $23.7 million, or a gross margin of 23.8% in 2019 from $26.5 million, or a gross margin of 25.8% in 2018, as lower direct expenses did not offset the lower revenues. After allocation of indirect costs, Crawford TPA Solutions: Broadspire recorded operating earnings of $5.0 million in the second quarter of 2019 representing an operating margin of 5.1% compared with $8.1 million, or 7.9% of revenues, in the 2018 second quarter.
Crawford Specialty Solutions
Crawford Specialty Solutions revenues before reimbursements were $71.4 million in the second quarter of 2019, down from $83.3 million in the same period of 2018, which included $13.9 million of GCG revenues. Non-GAAP segment revenues excluding GCG were $69.4 million in the 2018 period. Changes in foreign exchange rates resulted in a decrease of our Crawford Specialty Solutions segment revenues by approximately 2.8%, or $2.4 million for the three months ended June 30, 2019, as compared with the 2018 period. Absent foreign exchange rate fluctuations, Crawford Specialty Solutions segment revenues would have been $73.8 million for the three months ended June 30, 2019, increasing 6% over prior year non-GAAP revenues of $69.4 million.
Excluding indirect support costs, gross profit decreased to $25.2 million, or a gross margin of 35.3%, in 2019 from $26.8 million, or a gross margin of 32.1%, in 2018, due primarily to the absence of the Garden City Group. After allocation of indirect costs, operating earnings were $12.6 million in the 2019 second quarter compared with $10.0 million in the 2018 period. The segment’s operating margin for the 2019 quarter was 17.7% as compared to 12.0% in the 2018 quarter. This improvement was primarily due to the absence of the Garden City Group business which had an operating loss in the 2018 period after the allocation of indirect costs.
Unallocated Corporate and Shared Costs and Credits, Net
Unallocated corporate costs, net were a credit of $3.2 million in the second quarter of 2019, compared with costs of $0.7 million in the same period of 2018. The decrease for the three months ended June 30, 2019 was due to decreases in professional fees, bad debt expense and other administrative costs, partially offset by an increase in defined benefit pension expense.

Page 3 of 15


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13042251&doc=33



Arbitration Settlement Charges
During the three months ended June 30, 2019, the Company recognized pretax charges in the amount of $11.4 million, or $0.15 per share after income taxes, related to an arbitration panel award to three of the four former executives of the Company's former Garden City Group associated with their departure from that company on December 31, 2015. The expense is classified as "Arbitration Settlement Charges" on the Company's unaudited Condensed Consolidated Statements of Operations.

Balance Sheet and Cash Flow
The Company’s consolidated cash and cash equivalents position as of June 30, 2019, totaled $39.2 million, compared with $53.1 million at December 31, 2018. The Company’s total debt outstanding as of June 30, 2019, totaled $202.8 million, compared with $190.4 million at December 31, 2018.
The Company’s operations provided $8.7 million of cash during the 2019 period, compared with a use of cash of $18.7 million in the 2018 period. The $27.4 million increase in cash provided by operating activities was primarily due to better accounts receivable management and lower working capital requirements, including the positive cash flow impact of the Garden City Group disposal, and a decrease in discretionary U.S. and U.K. pension contributions in 2019 compared to 2018. Free cash flow improved by $37.1 million over 2018 for the six month period.
As expected, the Company made no contributions to its U.S defined benefit pension plan and $0.3 million to its U.K. plans for the 2019 six month period, compared with contributions of $6.0 million and $2.8 million, respectively, in the 2018 six month period.
During the six months ended June 30, 2019, the Company repurchased 701,506 shares of CRD-A and 1,449,240 of CRD-B at an average cost of $9.11 per share.

2019 Guidance
The Company is updating its 2019 guidance to reflect the impact of foreign exchange on revenues and the GCG arbitration settlement as follows:
Consolidated revenues before reimbursements between $1.02 and $1.07 billion;
Net income attributable to shareholders of Crawford & Company between $38.0 and $43.0 million, or $0.70 to $0.80 diluted earnings per CRD-A share, and $0.63 to $0.73 diluted earnings per CRD-B share;
Non-GAAP net income attributable to shareholders of Crawford & Company, before arbitration settlement charges, between $46.0 and $51.0 million, or $0.85 to $0.95 diluted earnings per CRD-A share, and $0.78 to $0.88 diluted earnings per CRD-B share;
Consolidated operating earnings between $90.0 and $100.0 million;
Consolidated adjusted EBITDA between $130.0 and $140.0 million;
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 6, 2019 at 8:30 a.m. Eastern Time to discuss its second quarter 2019 results. The conference call can be accessed live by dialing 1-800-374-2518 and using Conference ID 6551409. A presentation for tomorrow’s call can also be found on the investor relations portion of the Company’s website, http://www.crawco.com. The call will be recorded and available for replay through September 6, 2019. You may dial 1-855-859-2056 to listen to the replay.

Page 4 of 15


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13042251&doc=33



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, loss on disposition of business line, arbitration settlement charges, income taxes, and net income or loss attributable to noncontrolling interests and redeemable noncontrolling interests.
Gross profit is defined as revenues less direct expenses which exclude indirect overhead expenses allocated to the business. Indirect expenses consist of centralized administrative support costs, regional and local shared services that are allocated to each segment based on usage.
Adjusted EBITDA is not a term defined by GAAP and as a result our measure of adjusted EBITDA might not be comparable to similarly titled measures used by other companies. However, adjusted EBITDA is used by management to evaluate, assess and benchmark our operational results. The Company believes that adjusted EBITDA is relevant and useful information widely used by analysts, investors and other interested parties. Adjusted EBITDA is defined as net income attributable to shareholders of the Company with recurring adjustments for depreciation and amortization, net corporate interest expense, income taxes and stock-based compensation expense and foreign exchange. Additionally, adjustments for non-recurring expenses for arbitration settlement charges, loss on disposition of business line and the disposed GCG business results have been included in the calculation of adjusted EBITDA.
Unallocated corporate and shared costs and credits include expenses and credits related to our chief executive officer and Board of Directors, certain provisions for bad debt allowances or subsequent recoveries such as those related to bankrupt clients, defined benefit pension costs or credits for our frozen U.S. pension plan, certain unallocated professional fees, and certain self-insurance costs and recoveries that are not allocated to our individual operating segments.
Income taxes, net corporate interest expense, stock option expense, and amortization of customer-relationship intangible assets are recurring components of our net income, but they are not considered part of our segment operating earnings because they are managed on a corporate-wide basis. Income taxes are calculated for the Company on a consolidated basis based on statutory rates in effect in the various jurisdictions in which we provide services, and vary significantly by jurisdiction. Net corporate interest expense results from capital structure decisions made by senior management and the Board of Directors, affecting the Company as a whole. Stock option expense represents the non-cash costs generally related to stock options and employee stock purchase plan expenses which are not allocated to our operating segments. Amortization expense is a non-cash expense for finite-lived customer-relationship and trade name intangible assets acquired in business combinations. None of these costs relate directly to the performance of our services or operating activities and, therefore, are excluded from segment operating earnings in order to better assess the results of each segment's operating activities on a consistent basis.

Page 5 of 15


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13042251&doc=33



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 full year 2019 guidance is to the midpoint of the guidance range.

 
Three months ended
 
Six months ended
 
Midpoint
(in thousands)
June 30, 2019
June 30, 2018
 
June 30, 2019
June 30, 2018
 
Guidance 2019
Operating earnings:
 
 
 
 
 
 
 
Crawford TPA Solutions: Broadspire
$
5,026

$
8,132

 
$
11,759

$
15,959

 
 
Crawford Claims Solutions
1,710

4,100

 
1,397

5,245

 
 
Crawford Specialty Solutions
12,612

10,036

 
24,807

20,060

 
 
Unallocated corporate and shared credits (costs), net
3,170

(697
)
 
(744
)
(1,518
)
 
 
Consolidated operating earnings
22,518

21,571

 
37,219

39,746

 
$
95,000

(Deduct) Add:
 
 
 
 
 
 
 
Net corporate interest expense
(2,468
)
(2,440
)
 
(5,184
)
(5,004
)
 
(10,800
)
Stock option expense
(413
)
(512
)
 
(898
)
(962
)
 
(2,000
)
Amortization expense
(2,802
)
(2,791
)
 
(5,600
)
(5,556
)
 
(11,200
)
Arbitration settlement charges
(11,352
)

 
(11,352
)

 
(11,352
)
Loss on disposition of business line

(17,795
)
 

(17,795
)
 

Income taxes
(2,859
)
(461
)
 
(5,792
)
(4,427
)
 
(18,248
)
Net loss (income) attributable to noncontrolling interests and redeemable noncontrolling interests
18

3

 
358

142

 
(900
)
Net income (loss) attributable to shareholders of Crawford & Company
$
2,642

$
(2,425
)
 
$
8,751

$
6,144

 
$
40,500

 
 
 
 
 
 
 
 


Page 6 of 15


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13042251&doc=33



Following is a reconciliation of net income attributable to shareholders of Crawford & Company on a GAAP basis to non-GAAP adjusted EBITDA. The reconciliation of full year 2019 guidance is to the midpoint of the guidance range.
 
Three months ended
 
Six months ended
 
Midpoint
(in thousands)
June 30, 2019
June 30, 2018
 
June 30, 2019
June 30, 2018
 
Guidance 2019
Net income (loss) attributable to shareholders of Crawford & Company
$
2,642

$
(2,425
)
 
$
8,751

$
6,144

 
$
40,500

Add (Deduct):
 
 
 
 
 
 
 
Depreciation and amortization
9,206

12,350

 
19,850

22,640

 
45,700

Stock-based compensation
1,646

1,790

 
1,399

3,355

 
8,400

Net corporate interest expense
2,468

2,440

 
5,184

5,004

 
10,800

Arbitration settlement charges
11,352


 
11,352


 
11,352

Loss on disposition of business line

17,795

 

17,795

 

Income taxes
2,859

461

 
5,792

4,427

 
18,248

Foreign exchange impacts
380


 
704


 

Removal of the impact of the disposed GCG business

128

 

1,007

 

Non-GAAP adjusted EBITDA
$
30,553

$
32,539

 
$
53,032

$
60,372

 
$
135,000

 
 
 
 
 
 
 
 

Following are the reconciliations of GAAP Revenue, Operating Earnings, Pretax Earnings, Net Income and Earnings Per Share to related non-GAAP Adjusted figures, which reflect 2019 on a constant dollar basis before arbitration settlement charges and exclude the results of the disposal of the GCG business and the loss on disposition of business line for the three months and six months ended June 30, 2018.

Three months ended June 30, 2019
(in thousands)
Revenues
Non-GAAP Operating earnings
Pretax earnings
Net income attributable to Crawford & Company
Diluted earnings per CRD-A share
Diluted earnings per CRD-B share
GAAP
$
256,881

$
22,518

$
5,483

$
2,642

$
0.06

$
0.04

Adjustments:
 
 
 
 
 
 
Arbitration settlement charges


11,352

8,389

0.15

0.15

Foreign exchange impacts
7,346

380

380

249



Non-GAAP Adjusted
$
264,227

$
22,898

$
17,215

$
11,280

$
0.21

$
0.19

 
 
 
 


 
 

Page 7 of 15


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13042251&doc=33



Three months ended June 30, 2018
(in thousands)
Revenues
Non-GAAP Operating earnings
Pretax (loss) earnings
Net income (loss) attributable to Crawford & Company
Diluted (loss) earnings per CRD-A share
Diluted (loss) earnings per CRD-B share
GAAP
$
279,044

$
21,571

$
(1,967
)
$
(2,425
)
$
(0.04
)
$
(0.06
)
Adjustments:
 
 
 
 
 
 
Loss on disposition of business line, net of tax of $4,494


17,795

13,301

0.25

0.25

GCG business results
(13,922
)
1,410

1,407

952

0.02

0.02

Retained corporate overhead charged to GCG

(1,279
)
(1,279
)
(866
)
(0.02
)
(0.02
)
Non-GAAP Adjusted
$
265,122

$
21,702

$
15,956

$
10,962

$
0.21

$
0.19

 
 
 
 
 
 
 
Six months ended June 30, 2019
(in thousands)
Revenues
Non-GAAP Operating earnings
Pretax earnings
Net income attributable to Crawford & Company
Diluted earnings per CRD-A share
Diluted earnings per CRD-B share
GAAP
$
503,939

$
37,219

$
14,185

$
8,751

$
0.18

$
0.14

Adjustments:
 
 
 
 
 
 
Arbitration settlement charges


11,352

8,389

0.15

0.15

Foreign exchange impacts
14,400

704

704

463

0.01

0.01

Non-GAAP Adjusted
$
518,339

$
37,923

$
26,241

$
9,214

$
0.34

$
0.30

 
 
 
 
 
 
 
Six months ended June 30, 2018
(in thousands)
Revenues
Non-GAAP Operating earnings
Pretax earnings
Net income attributable to Crawford & Company
Diluted earnings per CRD-A share
Diluted earnings per CRD-B share
GAAP
$
552,148

$
39,746

$
10,429

$
6,144

$
0.13

$
0.09

Adjustments:
 
 
 
 
 
 
Loss on disposition of business line, net of tax of $4,494


17,795

13,301

0.24

0.24

GCG business results
(29,875
)
3,935

3,932

2,670

0.05

0.05

Retained corporate overhead charged to GCG

(2,925
)
(2,925
)
(1,986
)
(0.04
)
(0.04
)
Non-GAAP Adjusted
$
522,273

$
40,756

$
29,231

$
20,129

$
0.38

$
0.34

 
 
 
 
 
 
 

Page 8 of 15


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13042251&doc=33



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, 2019
June 30, 2018
June 30, 2019
June 30, 2018
Weighted-Average Shares Used to Compute Basic Earnings Per Share:
 
 
 
 
Class A Common Stock
30,799

30,580

30,729

30,888

Class B Common Stock
23,021

24,480

23,193

24,460

Weighted-Average Shares Used to Compute Diluted Earnings Per Share:
 
 
 
 
Class A Common Stock
31,113

30,580

31,110

31,470

Class B Common Stock
23,021

24,448

23,193

24,472

 
 
 
 
 
Further information regarding the Company’s operating results for the quarter and six months ended June 30, 2019, and financial position as of June 30, 2019, and cash flows for the six months ended June 30, 2019 is shown on the attached unaudited condensed consolidated financial statements.
About Crawford & Company
Based in Atlanta, Georgia, Crawford & Company (www.crawco.com) is the world's largest publicly listed independent provider of claims management and outsourcing 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.crawco.com.



Page 9 of 15



http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13042251&doc=33

CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands, Except Per Share Amounts and Percentages)
Three Months Ended June 30,
2019
 
2018
 
% Change
 
 
 
 
 
 
Revenues:
 
 
 
 
 
Revenues Before Reimbursements
$
256,881

 
$
279,044

 
(8
)%
Reimbursements
10,965

 
14,165

 
(23
)%
Total Revenues
267,846

 
293,209

 
(9
)%
 
 
 
 
 
 
Costs and Expenses:
 
 
 
 
 
Costs of Services Provided, Before Reimbursements
174,927

 
197,523

 
(11
)%
Reimbursements
10,965

 
14,165

 
(23
)%
Total Costs of Services
185,892

 
211,688

 
(12
)%
 
 
 
 
 
 
Selling, General, and Administrative Expenses
60,184

 
64,000

 
(6
)%
Corporate Interest Expense, Net
2,468

 
2,440

 
1
 %
Arbitration Settlement Charges
11,352

 

 
nm

Loss on Disposition of Business Line

 
17,795

 
nm

Total Costs and Expenses
259,896

 
295,923

 
(12
)%
 
 
 
 
 
 
Other (Expense) Income
(2,467
)
 
747

 
(430
)%
 
 
 
 
 
 
Income (Loss) Before Income Taxes
5,483

 
(1,967
)
 
379
 %
Provision for Income Taxes
2,859

 
461

 
520
 %
 
 
 
 
 
 
Net Income (Loss)
2,624

 
(2,428
)
 
208
 %
 
 
 
 
 
 
Net Loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests
18

 
3

 
500
 %
 
 
 
 
 
 
Net Income (Loss) Attributable to Shareholders of Crawford & Company
$
2,642

 
$
(2,425
)
 
209
 %
 
 
 
 
 
 
Earnings (Loss) Per Share - Basic:
 
 
 
 
 
Class A Common Stock
$
0.06

 
$
(0.04
)
 
250
 %
Class B Common Stock
$
0.04

 
$
(0.06
)
 
167
 %
 
 
 
 
 
 
Earnings (Loss) Per Share - Diluted:
 
 
 
 
 
Class A Common Stock
$
0.06

 
$
(0.04
)
 
250
 %
Class B Common Stock
$
0.04

 
$
(0.06
)
 
167
 %
 
 
 
 
 
 
Cash Dividends Per Share:
 
 
 
 
 
Class A Common Stock
$
0.07

 
$
0.07

 
 %
Class B Common Stock
$
0.05

 
$
0.05

 
 %
 
 
 
 
 
 



nm = not meaningful


Page 10 of 15



http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13042251&doc=33

CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands, Except Per Share Amounts and Percentages)
Six Months Ended June 30,
2019
 
2018
 
% Change
 
 
 
 
 
 
Revenues:
 
 
 
 
 
Revenues Before Reimbursements
$
503,939

 
$
552,148

 
(9
)%
Reimbursements
20,284

 
31,448

 
(35
)%
Total Revenues
524,223

 
583,596

 
(10
)%
 
 
 
 
 
 
Costs and Expenses:
 
 
 
 
 
Costs of Services Provided, Before Reimbursements
352,815

 
395,142

 
(11
)%
Reimbursements
20,284

 
31,448

 
(35
)%
Total Costs of Services
373,099

 
426,590

 
(13
)%
 
 
 
 
 
 
Selling, General, and Administrative Expenses
118,843

 
125,660

 
(5
)%
Corporate Interest Expense, Net
5,184

 
5,004

 
4
 %
Arbitration Settlement Charges
11,352

 

 
nm

Loss on Disposition of Business line

 
17,795

 
nm

Total Costs and Expenses
508,478

 
575,049

 
(12
)%
 
 
 
 
 
 
Other (Expense) Income
(1,560
)
 
1,882

 
(183
)%
 
 
 
 
 
 
Income Before Income Taxes
14,185

 
10,429

 
36
 %
Provision for Income Taxes
5,792

 
4,427

 
31
 %
 
 
 
 
 
 
Net Income
8,393

 
6,002

 
40
 %
 
 
 
 
 
 
Net Loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests
358

 
142

 
152
 %
 
 
 
 
 
 
Net Income Attributable to Shareholders of Crawford & Company
$
8,751

 
$
6,144

 
42
 %
 
 
 
 
 
 
Earnings Per Share - Basic:
 
 
 
 
 
Class A Common Stock
$
0.18

 
$
0.13

 
38
 %
Class B Common Stock
$
0.14

 
$
0.09

 
56
 %
 
 
 
 
 
 
Earnings Per Share - Diluted:
 
 
 
 
 
Class A Common Stock
$
0.18

 
$
0.13

 
38
 %
Class B Common Stock
$
0.14

 
$
0.09

 
56
 %
 
 
 
 
 
 
Cash Dividends Per Share:
 
 
 
 
 
Class A Common Stock
$
0.14

 
$
0.14

 
 %
Class B Common Stock
$
0.10

 
$
0.10

 
 %
 
 
 
 
 
 


nm = not meaningful


Page 11 of 15



http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13042251&doc=33
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 30, 2019 and December 31, 2018
Unaudited
(In Thousands, Except Par Values)
 
June 30,
 
December 31,
 
2019
 
2018
ASSETS
 
 
 
 
 
 
 
Current Assets:
 
 
 
Cash and Cash Equivalents
$
39,150

 
$
53,119

Accounts Receivable, Net
137,175

 
131,117

Unbilled Revenues, at Estimated Billable Amounts
120,920

 
108,291

Income Taxes Receivable
4,093

 
4,084

Prepaid Expenses and Other Current Assets
22,304

 
24,237

Total Current Assets
323,642

 
320,848

 
 
 
 
Net Property and Equipment
31,678

 
34,303

 
 
 
 
Other Assets:
 
 
 
Operating Lease Right-of-Use Asset, Net
102,078

 

Goodwill
97,186

 
96,890

Intangible Assets Arising from Business Acquisitions, Net
79,950

 
85,023

Capitalized Software Costs, Net
68,436

 
72,210

Deferred Income Tax Assets
20,545

 
22,146

Other Noncurrent Assets
70,725

 
70,022

Total Other Assets
438,920

 
346,291

 
 
 
 
Total Assets
$
794,240

 
$
701,442

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ INVESTMENT
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
Short-Term Borrowings
$
36,629

 
$
23,195

Accounts Payable
31,970

 
37,834

Operating Lease Liability
29,697

 

Accrued Compensation and Related Costs
56,390

 
66,530

Self-Insured Risks
13,906

 
15,246

Income Taxes Payable
1,012

 
3,145

Deferred Rent

 
15,919

Other Accrued Liabilities
45,435

 
32,391

Deferred Revenues
29,931

 
30,961

Current Installments of Finance Leases
24

 
89

Total Current Liabilities
244,994

 
225,310

 
 
 
 
Noncurrent Liabilities:
 
 
 
Long-Term Debt and Finance Leases, Less Current Installments
166,155

 
167,126

Operating Lease Liability
87,453

 

Deferred Revenues
23,750

 
21,713

Accrued Pension Liabilities
72,130

 
74,323

Other Noncurrent Liabilities
30,242

 
32,024

Total Noncurrent Liabilities
379,730

 
295,186

 
 
 
 
Redeemable Noncontrolling Interests
5,117

 
5,500

 
 
 
 
Shareholders’ Investment:
 
 
 
Class A Common Stock, $1.00 Par Value
30,667

 
30,927

Class B Common Stock, $1.00 Par Value
22,958

 
24,408

Additional Paid-in Capital
60,601

 
58,793

Retained Earnings
258,329

 
273,607

Accumulated Other Comprehensive Loss
(211,634
)
 
(216,447
)
Shareholders’ Investment Attributable to Shareholders of Crawford & Company
160,921

 
171,288

Noncontrolling Interests
3,478

 
4,158

Total Shareholders’ Investment
164,399

 
175,446

 
 
 
 
Total Liabilities and Shareholders’ Investment
$
794,240

 
$
701,442


Page 12 of 15



http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13042251&doc=33
CRAWFORD & COMPANY
SUMMARY RESULTS BY OPERATING SEGMENT WITH DIRECT COMPENSATION AND OTHER EXPENSES
Unaudited
(In Thousands, Except Percentages)

Three Months Ended June 30,
 
Crawford TPA Solutions: Broadspire
%
Crawford Claims Solutions
%
Crawford Specialty Solutions
%
 
2019
2018
Change
2019
2018
Change
2019
2018
Change
 
 
 
 
 
 
 
 
 
 
Revenues Before Reimbursements
$
99,518

$
102,644

(3.0
)%
$
86,003

$
93,110

(7.6
)%
$
71,360

$
83,290

(14.3
)%
 
 
 
 
 
 
 
 
 
 
Direct Compensation, Fringe Benefits & Non-Employee Labor
60,936

59,842

1.8
 %
56,065

59,801

(6.2
)%
35,052

42,399

(17.3
)%
% of Revenues Before Reimbursements
61.2
%
58.3
%
 
65.2
%
64.2
%
 
49.1
%
50.9
%
 
 
 
 
 
 
 
 
 
 
 
Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor
33,556

34,670

(3.2
)%
28,228

29,209

(3.4
)%
23,696

30,855

(23.2
)%
% of Revenues Before Reimbursements
33.7
%
33.8
%
 
32.8
%
31.4
%
 
33.2
%
37.0
%
 
 
 
 
 
 
 
 
 
 
 
Total Operating Expenses
94,492

94,512

 %
84,293

89,010

(5.3
)%
58,748

73,254

(19.8
)%
 
 
 
 
 
 
 
 
 
 
Operating Earnings (1)
$
5,026

$
8,132

(38.2
)%
$
1,710

$
4,100

(58.3
)%
$
12,612

$
10,036

25.7
 %
% of Revenues Before Reimbursements
5.1
%
7.9
%
 
2.0
%
4.4
%
 
17.7
%
12.0
%
 

Six Months Ended June 30,
 
Crawford TPA Solutions: Broadspire
%
Crawford Claims Solutions
%
Crawford Specialty Solutions
%
 
2019
2018
Change
2019
2018
Change
2019
2018
Change
 
 
 
 
 
 
 
 
 
 
Revenues Before Reimbursements
$
197,312

$
202,881

(2.7
)%
$
169,322

$
183,556

(7.8
)%
$
137,305

$
165,711

(17.1
)%
 
 
 
 
 
 
 
 
 
 
Direct Compensation, Fringe Benefits & Non-Employee Labor
119,317

118,560

0.6
 %
111,966

120,471

(7.1
)%
70,010

86,063

(18.7
)%
% of Revenues Before Reimbursements
60.5
%
58.4
%
 
66.1
%
65.6
%
 
51.0
%
51.9
%
 
 
 
 
 
 
 
 
 
 
 
Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor
66,236

68,362

(3.1
)%
55,959

57,840

(3.3
)%
42,488

59,588

(28.7
)%
% of Revenues Before Reimbursements
33.6
%
33.7
%
 
33.0
%
31.5
%
 
30.9
%
36.0
%
 
 
 
 
 
 
 
 
 
 
 
Total Operating Expenses
185,553

186,922

(0.7
)%
167,925

178,311

(5.8
)%
112,498

145,651

(22.8
)%
 
 
 
 
 
 
 
 
 
 
Operating Earnings (1)
$
11,759

$
15,959

(26.3
)%
$
1,397

$
5,245

(73.4
)%
$
24,807

$
20,060

23.7
 %
% of Revenues Before Reimbursements
6.0
%
7.9
%
 
0.8
%
2.9
%
 
18.1
%
12.1
%
 
(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, loss on disposition of business line, arbitration settlement charges, and certain unallocated corporate and shared costs and credits. See pages 5-6 for additional information about segment operating earnings.

Page 13 of 15


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13042251&doc=33



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

Three Months Ended June 30,
 
Crawford TPA Solutions: Broadspire
%
Crawford Claims Solutions
%
Crawford Specialty Solutions
%
 
2019
2018
Change
2019
2018
Change
2019
2018
Change
 
 
 
 
 
 
 
 
 
 
Revenues Before Reimbursements
$
99,518

$
102,644

(3.0
)%
$
86,003

$
93,110

(7.6
)%
$
71,360

$
83,290

(14.3
)%
 
 
 
 
 
 
 
 
 
 
Direct Expense
75,840

76,112

(0.4
)%
66,450

71,589

(7.2
)%
46,137

56,517

(18.4
)%
% of Revenues Before Reimbursements
76.2
%
74.2
%
 
77.3
%
76.9
%
 
64.7
%
67.9
%
 
 
 
 
 
 
 
 
 
 
 
Segment Gross Profit
23,678

26,532

(10.8
)%
19,553

21,521

(9.1
)%
25,223

26,773

(5.8
)%
% of Revenues Before Reimbursements
23.8
%
25.8
%
 
22.7
%
23.1
%
 
35.3
%
32.1
%
 
 
 
 
 
 
 
 
 
 
 
Indirect Costs
18,652

18,400

1.4
 %
17,843

17,421

2.4
 %
12,611

16,737

(24.7
)%
% of Revenues Before Reimbursements
18.7
%
17.9
%
 
20.7
%
18.7
%
 
17.7
%
20.1
%
 
 
 
 
 
 
 
 
 
 
 
Operating Earnings (1)
$
5,026

$
8,132

(38.2
)%
$
1,710

$
4,100

(58.3
)%
$
12,612

$
10,036

25.7
 %
% of Revenues Before Reimbursements
5.1
%
7.9
%
 
2.0
%
4.4
%
 
17.7
%
12.0
%
 

Six Months Ended June 30,
 
Crawford TPA Solutions: Broadspire
%
Crawford Claims Solutions
%
Crawford Specialty Solutions
%
 
2019
2018
Change
2019
2018
Change
2019
2018
Change
 
 
 
 
 
 
 
 
 
 
Revenues Before Reimbursements
$
197,312

$
202,881

(2.7
)%
$
169,322

$
183,556

(7.8
)%
$
137,305

$
165,711

(17.1
)%
 
 
 
 
 
 
 
 
 
 
Direct Expense
148,171

149,943

(1.2
)%
132,692

144,089

(7.9
)%
89,641

112,080

(20.0
)%
% of Revenues Before Reimbursements
75.1
%
73.9
%
 
78.4
%
78.5
%
 
65.3
%
67.6
%
 
 
 
 
 
 
 
 
 
 
 
Segment Gross Profit
49,141

52,938

(7.2
)%
36,630

39,467

(7.2
)%
47,664

53,631

(11.1
)%
% of Revenues Before Reimbursements
24.9
%
26.1
%

21.6
%
21.5
%
 
34.7
%
32.4
%
 
 
 
 
 
 
 
 
 
 
 
Indirect Costs
37,382

36,979

1.1
 %
35,233

34,222

3.0
 %
22,857

33,571

(31.9
)%
% of Revenues Before Reimbursements
18.9
%
18.2
%
 
20.8
%
18.6
%
 
16.6
%
20.3
%
 
 
 
 
 
 
 
 
 
 
 
Operating Earnings (1)
$
11,759

$
15,959

(26.3
)%
$
1,397

$
5,245

(73.4
)%
$
24,807

$
20,060

23.7
 %
% of Revenues Before Reimbursements
6.0
%
7.9
%


0.8
%
2.9
%


18.1
%
12.1
%
 
(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, loss on disposition of business line, arbitration settlement charges and certain unallocated corporate and shared costs and credits. See pages 5-6 for additional information about segment operating earnings.

Page 14 of 15



http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13042251&doc=33
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2019 and June 30, 2018
Unaudited
(In Thousands)
 
 
2019
 
2018
Cash Flows From Operating Activities:
 
 
 
 
Net Income
 
$
8,393

 
$
6,002

Reconciliation of Net Income to Net Cash Provided by (Used in) Operating Activities:
 
 
 
 
Depreciation and Amortization
 
19,850

 
22,640

Arbitration Settlement Charges
 
11,352

 

Stock-Based Compensation Costs
 
1,399

 
3,355

Loss on Disposition of Business Line
 

 
17,795

Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions:
 
 
 
 
Accounts Receivable, Net
 
(4,086
)
 
(539
)
Unbilled Revenues, Net
 
(11,848
)
 
(28,346
)
Accrued or Prepaid Income Taxes
 
(563
)
 
250

Accounts Payable and Accrued Liabilities
 
(16,048
)
 
(19,985
)
Deferred Revenues
 
962

 
(390
)
Accrued Retirement Costs
 
(343
)
 
(12,932
)
Prepaid Expenses and Other Operating Activities
 
(329
)
 
(6,549
)
Net Cash Provided by (Used in) Operating Activities
 
8,739

 
(18,699
)
 
 
 
 
 
Cash Flows From Investing Activities:
 
 
 
 
Acquisitions of Property and Equipment
 
(3,729
)
 
(9,538
)
Cash Proceeds from Disposition of Business Line
 

 
41,165

Capitalization of Computer Software Costs
 
(4,369
)
 
(8,270
)
Net Cash (Used in) Provided by Investing Activities
 
(8,098
)
 
23,357

 
 
 
 
 
Cash Flows From Financing Activities:
 
 
 
 
Cash Dividends Paid
 
(6,595
)
 
(6,784
)
Proceeds from Shares Purchased Under Employee Stock-Based Compensation Plans
 
850

 
323

Repurchases of Common Stock
 
(19,585
)
 
(5,570
)
Increases in Short-Term and Revolving Credit Facility Borrowings
 
51,408

 
63,547

Payments on Short-Term and Revolving Credit Facility Borrowings
 
(40,611
)
 
(63,978
)
Payments on Finance Lease Obligations
 
(61
)
 
(320
)
Dividends Paid to Noncontrolling Interests
 
(280
)
 
(167
)
Net Cash Used In Financing Activities
 
(14,874
)
 
(12,949
)
 
 
 
 
 
Effects of Exchange Rate Changes on Cash and Cash Equivalents
 
264

 
603

Decrease in Cash and Cash Equivalents
 
(13,969
)
 
(7,688
)
Cash and Cash Equivalents at Beginning of Year
 
53,119

 
54,011

Cash and Cash Equivalents at End of Period
 
$
39,150

 
$
46,323


Page 15 of 15

exhibit99263019r26052da0


 
Forward-Looking Statements and Additional Information Forward-Looking Statements This presentation 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 statements of historical fact may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 and other 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. Results for any interim period presented herein are not necessarily indicative of results to be expected for the full year or for any other future period. For further information regarding Crawford & Company, and the risks and uncertainties involved in forward-looking statements, please read Crawford & Company's reports filed with the Securities and Exchange Commission and available at www.sec.gov or in the Investor Relations section of Crawford & Company's website at www.crawco.com. Crawford's business is dependent, to a significant extent, 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 cases and revenue for the Company, are generally not subject to accurate forecasting. Revenues Before Reimbursements ("Revenues") Revenues Before Reimbursements are referred to as "Revenues" in both consolidated and segment charts, bullets and tables throughout this presentation. Segment and Consolidated Operating Earnings Under the Financial Accounting Standards Board's Accounting Standards Codification ("ASC") Topic 280, "Segment Reporting," the Company has defined segment operating earnings as the primary measure used by the Company to evaluate the results of each of its three operating segments. Segment operating earnings represent segment earnings, including the direct and indirect costs of certain administrative functions required to operate our business, but excludes unallocated corporate and shared costs and credits, net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, loss on disposition of business line, arbitration settlement charges, income taxes, and net income or loss attributable to noncontrolling interests and redeemable noncontrolling interests. Earnings Per Share 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. In certain periods, the Company has paid a higher dividend on CRD-A than on CRD-B. This may result in a different earnings per share ("EPS") for each class of stock due to the two-class method of computing EPS as required by ASC Topic 260 - "Earnings Per Share". The two-class method is an earnings allocation method under which EPS is calculated for each class of common stock considering both dividends declared and participation rights in undistributed earnings as if all such earnings had been distributed during the period. Segment Gross Profit Segment gross profit is defined as revenues, less direct costs, which exclude indirect centralized administrative support costs allocated to the business. Indirect expenses consist of centralized administrative support costs, regional and local shared services that are allocated to each segment based on usage. Non-GAAP Financial Information For additional information about certain non-GAAP financial information presented herein, see the Appendix following this presentation. 2


 
3


 
() See appendix for non-GAAP explanation and reconciliation of non-GAAP measures. 4


 
2019 New Client Momentum • Strategic investments in our global sales team are driving real momentum in our business • Delivering on our growth commitment through the recruitment of experienced, solution based sales people to improve our capabilities • Through the second quarter, have signed $47 million in new annual revenues compared to $30 million in the 2018 period • Signed 38 more new customers in our GTS business in 2019 than in the first half of 2018 • New business pipelines remain at high levels which speaks to the momentum we have in our sales organization • The magnitude of new business wins combined with the Company's strong pipeline provides us confidence in our ability to deliver our full year 2019 guidance 5


 
Investing in Innovation • Crawford remains the preeminent independent provider of outsourced claims management solutions with globally recognized, market leading brands • Transitioning our business model towards more predictable, recurring revenue, while maintaining our competitive position in weather related segments • Launched industry verticals and integrated solutions for the construction, hospitality and transportation industries and have 40 new clients and 170 opportunities in the pipeline • Launching solutions targeting the Real Estate and Retail verticals later in the year • Introduced the industry's first smart water detection and mitigation solution to address water damage claims - the largest non-weather peril for property insurers - and recently won the 2019 Business Insurance Innovative Award • These solutions provide Crawford a market leading position as well as critical differentiation where we can demonstrate our expertise and drive distinctive business value for our customers. 6


 
Focus on Execution • An essential element of our strategy is putting innovation into action with our clients • Won an outsourcing contract with a top 15 insurer in the U.S. to administer its Small Business Program, with claims exceeding 10,000 in the first full year • Started a pilot with a Small and Medium Carrier utilizing our TruLook triage model with over 2,500 claims to date • These new programs are validations of our value proposition and demonstrate the benefits we provide to carriers • The outsourcing market for internally run claims departments is significant and our client engagement is encouraging as we are deepening our client relationships at the most strategic levels • Our Net Promoter Score reached 47 this year which validates the quality service and value we are providing to our customers 7


 
Disciplined Capital Allocation • Focused on improving cash generation and delivering value to our shareholders through disciplined capital allocation • Free cash flows improved by $37.1 million over the prior six month period • Repurchased nearly 2.2 million shares of CRD-A and CRD-B during the six month period, representing 4% of our outstanding shares • Our priorities for capital allocation are investments back into the business, dividends to shareholders, debt repayment, share repurchases and opportunistic M&A • We will continue to remain disciplined in order to maintain our strong balance sheet which provides us a significant competitive advantage 8


 
9


 
SECOND QUARTER 2019 FINANCIAL SUMMARY Quarter Ended June 30, June 30, ($ in millions, except per share amounts) 2019 2018 % Change Revenues $256.9 $279.0 (8)% Non-GAAP Revenues excluding GCG business and foreign exchange impacts(1) $264.2 $265.1 — % Net Income Attributable to Shareholders of Crawford & Company $2.6 ($2.4) 208 % Diluted Earnings per Share CRD-A $0.06 ($0.04) 250 % CRD-B $0.04 ($0.06) 167 % Non-GAAP Diluted Earnings per Share (1) CRD-A $0.21 $0.21 — % CRD-B $0.19 $0.19 — % Adjusted Operating Earnings (1) $22.9 $21.7 6 % Adjusted Operating Margin (1) 8.7% 8.2% 50bps Adjusted EBITDA (1) $30.6 $32.5 (6)% Adjusted EBITDA Margin (1) 11.6% 12.3% (70)bps (1) See appendix for non-GAAP explanation and reconciliation of non-GAAP measures. 10


 
RECONCILIATION OF NON-GAAP RESULTS Three Months Ended June 30, 2019 Net Income Non-GAAP Attributable Diluted Diluted Operating Pretax to Crawford & Earnings per Earnings per Unaudited ($ in thousands) Revenues Earnings Earnings Company CRD-A Share CRD-B Share GAAP $ 256,881 $ 22,518 $ 5,483 $ 2,642 $ 0.06 $ 0.04 Adjustments: Arbitration settlement charges — — 11,352 8,389 0.15 0.15 Foreign exchange impacts 7,346 380 380 249 — — Non-GAAP Adjusted (3) $ 264,227 $ 22,898 $ 17,215 $ 11,280 $ 0.21 $ 0.19 Three Months Ended June 30, 2018 Net (Loss) Income Non-GAAP Attributable Diluted (Loss) Diluted (Loss) Operating Pretax (Loss) to Crawford & Earnings per Earnings per Unaudited ($ in thousands) Revenues Earnings Earnings Company CRD-A Share CRD-B Share GAAP $ 279,044 $ 21,571 $ (1,967) $ (2,425) $ (0.04) $ (0.06) Adjustments: Loss on disposition of business line — — 17,795 13,301 0.25 0.25 GCG business (1) (13,922) 1,410 1,407 952 0.02 0.02 Retained corporate overhead (2) — (1,279) (1,279) (866) (0.02) (0.02) Non-GAAP Adjusted (3) $ 265,122 $ 21,702 $ 15,956 $ 10,962 $ 0.21 $ 0.19 (1) Removes the operating results for the 2018 periods of the GCG business disposed on June 15, 2018. (2) Overhead allocated to the GCG business that would have been retained at the parent level. (3) Differences may exist due to rounding. 11


 
CRAWFORD CLAIMS SOLUTIONS SEGMENT HIGHLIGHTS Operating Results (2Q 2019 v. 2Q 2018) Three months ended Revenues of $86.0 million versus $93.1 million • (in thousands, except June 30, June 30, percentages) 2019 2018 Variance • Gross profit of $19.6 million versus $21.5 million • Gross profit margin of 22.7% versus 23.1% Revenues $86,003 $93,110 (7.6%) • Operating earnings of $1.7 million versus $4.1 million Direct expenses 66,450 71,589 (7.2%) • Operating earnings margin of 2.0% versus 4.4% Gross profit 19,553 21,521 (9.1%) Highlights Indirect expenses 17,843 17,421 2.4% • Revenues down from 2018 when we experienced $4.1 Operating earnings $1,710 $4,100 (58.3%) million in additional revenues from the runoff of 2017 hurricane activity Gross profit margin 22.7% 23.1% (0.4%) • On a constant dollars basis, revenues of $89.6 million Operating margin 2.0% 4.4% (2.4%) • Gaining traction with small and medium carrier outsourcing programs Total cases received 121,794 130,574 (6.7%) • Winner 2019 Business Insurance Innovation Award Full time equivalent employees 2,899 3,002 (3.4%) 12


 
CRAWFORD TPA SOLUTIONS: BROADSPIRE SEGMENT HIGHLIGHTS Three months ended Operating Results (2Q 2019 v. 2Q 2018) (in thousands, except June 30, June 30, • Revenues of $99.5 million versus $102.6 million percentages) 2019 2018 Variance • Gross profit of $23.7 million versus $26.5 million Revenues $99,518 $102,644 (3.0%) • Gross profit margin of 23.8% versus 25.8% Direct expenses 75,840 76,112 (0.4%) • Operating earnings of $5.0 million versus $8.1 million Gross profit 23,678 26,532 (10.8%) • Operating earnings margin of 5.1% versus 7.9% Indirect expenses 18,652 18,400 1.4% Highlights Operating earnings $5,026 $8,132 (38.2%) • Decreases in revenues due to drop in cases received Gross profit margin 23.8% 25.8% (2.0%) • Revenues were negatively impacted by 1.3% or $1.3 million Operating margin 5.1% 7.9% (2.8%) from foreign currency changes Total cases received 197,013 214,132 (8.0%) • Strong pipeline of opportunities being pursued with many new program wins starting in second half of year Full time equivalent employees 3,170 3,147 0.7% 13


 
CRAWFORD SPECIALTY SOLUTIONS SEGMENT HIGHLIGHTS Three months ended (in thousands, except June 30, June 30, Operating Results (2Q 2019 v. 2Q 2018) percentages) 2019 2018 Variance • Revenues of $71.4 million versus $83.3 million Revenues $71,360 $83,290 (14.3%) • Gross profit of $25.2 million versus $26.8 million Direct expenses 46,137 56,517 (18.4%) Gross profit 25,223 26,773 (5.8%) • Gross profit margin of 35.3% versus 32.1% Indirect expenses 12,611 16,737 (24.7%) • Operating earnings of $12.6 million versus $10.0 million Operating earnings $12,612 $10,036 25.7% • Operating margin of 17.7% versus 12.0% Gross profit margin 35.3% 32.1% 3.2% Operating margin 17.7% 12.0% 5.7% Highlights Total cases received 83,650 93,812 (10.8%) Full time equivalent • Garden City Group revenues of $13.9 million in the 2018 employees 1,476 1,717 (14.0%) quarter Non-GAAP Excluding GCG • Absent foreign exchange decreases of $2.4 million and impact Business of Garden City Group in 2018, pro forma revenues up 6.3% in Revenues $71,360 $69,368 2.9% the quarter Direct expenses 46,137 45,412 1.6% • GTS service line and major U.S. carrier program in Contractor Gross profit 25,223 23,956 5.3% Connection continue to expand Indirect expenses 12,611 13,789 (8.5%) Operating earnings $12,612 $10,167 24.0% Gross profit margin 35.3% 34.5% 0.8% Operating margin 17.7% 14.7% 3.0% 14


 
BALANCE SHEET HIGHLIGHTS June 30, December Unaudited ($ in thousands) 2019 31, 2018 Change Cash and cash equivalents $ 39,150 $ 53,119 $ (13,969) Accounts receivable, net 137,175 131,117 6,058 Unbilled revenues, net 120,920 108,291 12,629 Total receivables 258,095 239,408 18,687 Goodwill 97,186 96,890 296 Intangible assets arising from business acquisitions, net 79,950 85,023 (5,073) Deferred revenues 53,681 52,674 1,007 Pension liabilities 72,130 74,323 (2,193) Short-term borrowings and current portion of finance leases 36,653 23,284 13,369 Long-term debt, less current portion 166,155 167,126 (971) Total debt 202,808 190,410 12,398 Total stockholders' equity attributable to Crawford & Company 160,921 171,288 (10,367) Net debt (1) 163,658 137,291 26,367 (1) See Appendix for non-GAAP explanation and reconciliation 15


 
OPERATING AND FREE CASH FLOW For the six months ended June 30, Unaudited ($ in thousands) 2019 2018 Variance Net Income Attributable to Shareholders of Crawford & Company $ 8,751 $ 6,144 $ 2,607 Depreciation and Other Non-Cash Operating Items 20,891 25,853 (4,962) Arbitration Settlement Charges 11,352 — 11,352 Loss on Disposition of Business Line — 17,795 (17,795) Billed Receivables Change (4,086) (539) (3,547) Unbilled Receivables Change (11,848) (28,346) 16,498 Change in Accrued Compensation and 401K (11,941) (18,994) 7,053 Change in Accrued and Prepaid Income Taxes (563) 250 (813) Other Working Capital Changes (3,472) (12,038) 8,566 U.S. and U.K. Pension Contributions (345) (8,824) 8,479 Cash Flows from Operating Activities 8,739 (18,699) 27,438 Property & Equipment Purchases, net (3,729) (9,538) 5,809 Capitalized Software (internal and external costs) (4,369) (8,270) 3,901 Free Cash Flow(1) $ 641 $ (36,507) $ 37,148 (1) See Appendix for non-GAAP explanation and reconciliation 16


 
SHARE REPURCHASES • During the three months ended June 30, 2019, the Company repurchased approximately 280 thousand shares of CRD-A and 72 thousand shares of CRD-B at a weighted average cost of $9.02 • During the six months ended June 30, 2019, the Company repurchased approximately 700 thousand shares of CRD-A and 1.4 million shares of CRD-B at a weighted average cost of $9.11 • At June 30, 2019, the Company had remaining authorization to repurchase approximately 1.65 million shares under the 2019 Repurchase Authorization 17


 
2019 GUIDANCE Crawford & Company is updating its guidance for 2019 for the effect of foreign exchange on revenues and the GCG arbitration settlement as follows: YEAR ENDING DECEMBER 31, 2019 Low End High End Consolidated revenues before reimbursements $1.02 $1.07 billion Net income attributable to shareholders of Crawford & Company $38.0 $43.0 million Diluted earnings per share--CRD-A $0.70 $0.80 per share Diluted earnings per share--CRD-B $0.63 $0.73 per share Non-GAAP net income attributable to shareholders of Crawford & Company, before arbitration settlement $46.0 $51.0 million Non-GAAP diluted earnings per share--CRD-A $0.85 $0.95 per share Non-GAAP diluted earnings per share--CRD-B $0.78 $0.88 per share Consolidated operating earnings $90.0 $100.0 million Consolidated adjusted EBITDA $130.0 $140.0 million 18


 
CONCLUSION Looking forward Crawford has four primary objectives for 2019: • Growth: Increasing the velocity of revenue growth through continuous innovation as we work to deliver our goal of achieving 5% revenue growth and 15% earnings growth annually • System Readiness: Prioritizing IT investments across the globe to be at the forefront of innovation and disruption • People Readiness: Attract, develop, engage and retain the caring and capable people who deliver the Company’s mission. Continue to advance employee training and leadership development • Fiscal Responsibility: Focusing on cash generation capabilities and improving the Company’s free cash flow. Maintain prudent expense management and a conservative balance sheet while maximizing our return on capital investment and providing a return to shareholders 19


 
20


 
21


 
APPENDIX: NON-GAAP FINANCIAL INFORMATION Measurements of financial performance not calculated in accordance with GAAP should be considered as supplements to, and not substitutes for, performance measurements calculated or derived in accordance with GAAP. Any such measures are not necessarily comparable to other similarly-titled measurements employed by other companies. Reimbursements for Out-of-Pocket Expenses In the normal course of our business, our operating segments incur certain out-of-pocket expenses that are thereafter reimbursed by our clients. Under 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 this presentation, we do not believe it is informative to include in reported revenues the amounts of reimbursed expenses and related revenues, as they offset each other in our consolidated results of operations with no impact to our net income or operating earnings. As a result, unless noted in this presentation, revenue and expense amounts exclude reimbursements for out-of-pocket expenses. Net Debt Net debt is computed as the sum of long-term debt, capital leases and short-term borrowings less cash and cash equivalents. Management believes that net debt is useful because it provides investors with an estimate of what the Company's debt would be if all available cash was used to pay down the debt of the Company. The measure is not meant to imply that management plans to use all available cash to pay down debt. Free Cash Flow Management believes free cash flow is useful to investors as it presents the amount of cash the Company has generated that can be used for other purposes, including additional contributions to the Company's defined benefit pension plans, discretionary prepayments of outstanding borrowings under our credit agreement, and return of capital to shareholders, among other purposes. It does not represent the residual cash flow of the Company available for discretionary expenditures. Segment and Consolidated Operating Earnings Operating earnings is the primary financial performance measure used by our senior management and chief operating decision maker to evaluate the financial performance of our Company and operating segments, and make resource allocation and certain compensation decisions. Management believes operating earnings is useful to others in that it allows them to evaluate segment and consolidated operating performance using the same criteria our management and chief operating decision maker use. 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, loss on disposition of business line, arbitration settlement charges and net income or loss attributable to noncontrolling interests. 22


 
APPENDIX: NON-GAAP FINANCIAL INFORMATION (continued) Segment and Consolidated Gross Profit Gross profit is defined as revenues less direct expenses which exclude indirect overhead expenses allocated to the business. Indirect expenses consist of centralized administrative support costs, regional and local shared services that are allocated to each segment based on usage.   Adjusted EBITDA 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 with adjustments for depreciation and amortization, interest expense-net, loss on disposition of business line, arbitration settlement charges, income tax provision and non-cash stock-based compensation expense and excluding the impacts of the GCG business and foreign exchange impact. 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. Adjusted Revenue, Operating Earnings, Pretax Earnings, Net Income, Diluted Earnings per Share and EBITDA Excluding the GCG Business Included in non-GAAP adjusted measurements as an add back or subtraction to GAAP measurements, are impacts of the disposed of GCG business, loss on disposition of business line and arbitration settlement charges and foreign exchange impacts, which arise from non-core items not directly related to our normal business or operations, or our future performance. Management believes it is useful to exclude these charges when comparing net income and diluted earnings per share across periods, as these charges are not from ordinary operations. 23


 
RECONCILIATION OF NON-GAAP ITEMS Revenues, Costs of Services Provided, and Operating Earnings Quarter Ended Quarter Ended Full Year June 30, June 30, Guidance Unaudited ($ in thousands) 2019 2018 2019 * Revenues Before Reimbursements Total Revenues $ 267,846 $ 293,209 $ 1,100,000 Reimbursements (10,965) (14,165) (55,000) Revenues Before Reimbursements $ 256,881 $ 279,044 $ 1,045,000 Costs of Services Provided, Before Reimbursements Total Costs of Services $ 185,892 $ 211,688 Reimbursements (10,965) (14,165) Costs of Services Provided, Before Reimbursements $ 174,927 $ 197,523 Quarter Ended Quarter Ended Full Year June 30, June 30, Guidance Unaudited ($ in thousands) 2019 2018 2019 * Operating Earnings: Crawford Claims Solutions $ 1,710 $ 4,100 Crawford TPA Solutions: Broadspire 5,026 8,132 Crawford Specialty Solutions 12,612 10,036 Unallocated corporate and shared costs and credits, net 3,170 (697) Consolidated Operating Earnings 22,518 21,571 $ 95,000 Deduct: Net corporate interest expense (2,468) (2,440) (10,800) Stock option expense (413) (512) (2,000) Amortization expense (2,802) (2,791) (11,200) Arbitration settlement charges (11,352) — (11,352) Loss on disposition of business line — (17,795) Income taxes (2,859) (461) (18,248) Net loss (income) attributable to non-controlling interests and redeemable noncontrolling interests 18 3 (900) Net Income (Loss) Attributable to Shareholders of Crawford & Company $ 2,642 $ (2,425) $ 40,500 * Midpoints of Company's Guidance, issued August 5, 2019 24


 
RECONCILIATION OF NON-GAAP ITEMS (continued) Adjusted EBITDA Quarter Ended Full Year June 30, June 30, Guidance Unaudited ($ in thousands) 2019 2018 2019 * Net income attributable to shareholders of Crawford & Company $ 2,642 $ (2,425) $ 40,500 Add: Depreciation and amortization 9,206 12,350 45,700 Stock-based compensation 1,646 1,790 8,400 Net corporate interest expense 2,468 2,440 10,800 Arbitration settlement charges 11,352 — 11,352 Loss on disposition of business line — 17,795 — Income taxes 2,859 461 18,248 Foreign exchange impacts 380 — — Removal of the impact of the disposed GCG business — 128 — Adjusted EBITDA $ 30,553 $ 32,539 $ 135,000 * Midpoints of Company's Guidance, issued August 5, 2019 25


 
RECONCILIATION OF NON-GAAP ITEMS (continued) Net Debt June 30, December 31, Unaudited ($ in thousands) 2019 2018 Net Debt Short-term borrowings $ 36,629 $ 23,195 Current installments of capital leases 24 89 Long-term debt and capital leases, less current installments 166,155 167,126 Total debt 202,808 190,410 Less: Cash and cash equivalents 39,150 53,119 Net debt $ 163,658 $ 137,291 26


 
RECONCILIATION OF NON-GAAP ITEMS (continued) Segment Gross Profit Three months ended June 30, 2019 June 30, 2018 (in thousands) Segment gross profit: Crawford TPA Solutions: Broadspire $ 23,678 $ 26,532 Crawford Claims Solutions 19,553 21,521 Crawford Specialty Solutions 25,223 26,773 Segment gross profit 68,454 74,826 Segment indirect costs: Crawford TPA Solutions: Broadspire (18,652) (18,400) Crawford Claims Solutions (17,843) (17,421) Crawford Specialty Solutions (12,611) (16,737) Unallocated corporate and shared credits (costs), net 3,170 (697) Consolidated operating earnings 22,518 21,571 Net corporate interest expense (2,468) (2,440) Stock option expense (413) (512) Amortization expense (2,802) (2,791) Arbitration Settlement Charges (11,352) — Loss on disposition of business line — (17,795) Income taxes (2,859) (461) Net loss attributable to noncontrolling interests and redeemable noncontrolling interests 18 3 Net income (loss) attributable to shareholders of Crawford & Company $ 2,642 $ (2,425) 27


 
NON-GAAP RESULTS FOR CRAWFORD SPECIALTY SOLUTIONS SEGMENT EXCLUDING GCG BUSINESS Three Months Ended June 30, 2019 Direct Indirect Operating Unaudited ($ in thousands) Revenues Expenses Gross Profit Expenses Earnings Crawford Specialty Solutions $ 71,360 $ 46,137 $ 25,223 $ 12,611 $ 12,612 Adjustments: — — — — — Crawford Specialty Solutions excluding GCG $ 71,360 $ 46,137 $ 25,223 $ 12,611 $ 12,612 Three Months Ended June 30, 2018 Direct Indirect Operating Unaudited ($ in thousands) Revenues Expenses Gross Profit Expenses Earnings Crawford Specialty Solutions $ 83,290 $ 56,517 $ 26,773 $ 16,737 $ 10,036 Adjustments: GCG business (13,922) (11,105) (2,817) (2,948) 131 Crawford Specialty Solutions excluding GCG $ 69,368 $ 45,412 $ 23,956 $ 13,789 $ 10,167 28


 
RECONCILIATION OF NON-GAAP RESULTS Three Months Ended June 30, 2019 Net Income Non-GAAP Attributable Diluted Diluted Operating Pretax to Crawford & Earnings per Earnings per Unaudited ($ in thousands) Revenues Earnings Earnings Company CRD-A Share CRD-B Share GAAP $ 256,881 $ 22,518 $ 5,483 $ 2,642 $ 0.06 $ 0.04 Adjustments: Arbitration settlement charges — — 11,352 8,389 0.15 0.15 Foreign exchange impacts 7,346 380 380 249 — — Non-GAAP Adjusted (3) $ 264,227 $ 22,898 $ 17,215 $ 11,280 $ 0.21 $ 0.19 Three Months Ended June 30, 2018 Net (Loss) Income Non-GAAP Attributable Diluted (Loss) Diluted (Loss) Operating Pretax (Loss) to Crawford & Earnings per Earnings per Unaudited ($ in thousands) Revenues Earnings Earnings Company CRD-A Share CRD-B Share GAAP $ 279,044 $ 21,571 $ (1,967) $ (2,425) $ (0.04) $ (0.06) Adjustments: Loss on disposition of business line — — 17,795 13,301 0.25 0.25 GCG business (1) (13,922) 1,410 1,407 952 0.02 0.02 Retained corporate overhead (2) — (1,279) (1,279) (866) (0.02) (0.02) Non-GAAP Adjusted (3) $ 265,122 $ 21,702 $ 15,956 $ 10,962 $ 0.21 $ 0.19 (1) Removes the operating results for the 2018 periods of the GCG business disposed on June 15, 2018. (2) Overhead allocated to the GCG business that would have been retained at the parent level. (3) Differences may exist due to rounding. 29