 Crawford &
Company Investor Presentation
December 8, 2011
Exhibit 99.1 |
 2
Forward Looking Statements
and Financial Information
Forward
Looking
Statements:
This presentation contains forward-looking statements, including statements
about the 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 United States
Securities and Exchange Commission and available at www.sec.gov or in the
Investor
Relations
section
of
Crawford
&
Company’s
website
at
www.crawfordandcompany.com.
Revenues
Before
Reimbursements
(“Revenues”)
Revenues
Before
Reimbursements
are
referred
to
as
“Revenues”
in
both
consolidated
and
segment
charts,
bullets
and
tables
throughout
this
presentation.
Earnings
Per
Share:
In
the
2011
third
quarter,
the
Company
paid
a
higher
dividend
on
CRDA
than
on
CRDB.
This
may
result
in
a
different
earnings
per
share
("EPS")
for
each
class of stock in the future due to the two-class method of computing EPS as
required by the guidance in Accounting Standards Codification 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. Further references
to EPS will generally be only for CRDB, as that is the more dilutive measure.
Non-GAAP
Financial
Information:
For additional information about certain non-GAAP financial information
presented herein, see the Appendix following this presentation. |
 Market-Leading Global Businesses
The world’s largest fully-integrated independent
provider of global claims management solutions.
EMEA-A/P
Americas
Broadspire
Legal Settlement
Administration
Serves the U.K., European,
Middle Eastern, African and
Asia Pacific markets
Serves the U.S., Canadian,
Caribbean and Latin
American markets
Serves large national
accounts, carriers and self-
insured entities
Provides administration for
class action settlements and
bankruptcy matters
3 |
 4
Crawford’s Award-Winning Performance
Service Provider of the Year
Crawford & Company
With an unprecedented level of natural catastrophes
across the world in 2010 and 2011, Crawford seized the
opportunity to prove its global capabilities and has been
recognized as Service Provider of the Year for its efforts.
The British Insurance Awards 2011
Loss Adjuster of the Year
Crawford & Company Australia
Australia and New Zealand Insurance Industry
Best Claims Administrator
GCG
The New York Law Journal
-
Best Vendors of 2010 and 2011
Risk Innovator of the Year
Risk
and
Insurance
magazine
Loss Adjuster of the Year
Crawford & Company UK
London Market Leaders Order of Merit 2010 -
Global Broker & Underwriters' Annual London
Market Readers
Survey
InfoWeek 500
2011 Award Winner Top 100
Insurance Industry Finalist
Annual listing of the nation's most
innovative users of Business Technology
InformationWeek
magazine
Loss Adjuster of the Year
Crawford & Company Australia
Australia and New Zealand Insurance |
 The Crawford
System of Claims Solutions SM
The Crawford System is the most comprehensive global, integrated
solution for all corporate, insurer, and re-insurer claims
administration. 5 |
 Crawford is
uniquely positioned for global growth 6 |
 Our Global
Strength $1 Billion Revenue Company
700 Locations
70+ Countries
8,900 Employees
7 |
 Americas
•
U.S. Property and Casualty
•
Market leader
•
Technology innovation
•
Benefit from U.S. market consolidation
•
Canada
•
Strong relationships with top insurers
•
End to end solutions
•
Innovation and technology
•
Latin America & Caribbean
•
Latin American emerging markets GDP
growth on average 5%
•
Targeting markets in Brazil and Mexico
•
Focus on GTS growth
Trailing 12 Months (“TTM”) Revenues
(in millions)
8 |
 •
United Kingdom
•
EMEA/AP’s largest market
•
Recruitment of GTS adjusters continues
•
Strong commercial presence
•
CEMEA
•
Expansion of TPA offerings
•
Claims volume increasing
•
Opportunity to grow market share
•
Asia/Pacific
•
Catastrophe revenues should continue for
the balance of this year
•
New market opportunities
TTM Revenues
(in millions)
EMEA/AP
9 |
 •
#3 in U.S. workers’
compensation
market
•
Revenues stabilizing
•
Fully integrated service model
•
Improved outcomes by teaming claims and
medical management
•
Superior outcomes measurement
•
Quantifiable measurements providing
insight for continued program improvement
•
Analytics
•
Exceptional medical protocols
•
Shorter durations and focused strategy
drive early, successful return to work and
increased productivity
•
Technology
•
Single source claim and data management
of complete program history
TTM Revenues
(in millions)
Broadspire
10 |
 •
Core services:
•
GCG Class Action Services provides
administrative services to expedite high-volume
class action settlements
•
GCG Bankruptcy Services manages the
administration of Chapter 11 bankruptcy cases
•
GCG Communications specializes in legal notice
programs for case administration worldwide
•
Special project pace will slow into 2012
•
Backlog of $72.5 million at September
30, 2011
TTM Revenues
(in millions)
Legal Settlement Administration
11 |
 High Profile
Specialized Resources: Worldwide Catastrophe Response
Global Technical Services (GTS)
Contractor Connection
Garden City Group (GCG) |
 Source: MR
NatCatSERVICE 13
Crawford’s customer response to the unprecedented number
of global catastrophes has been rapid, nimble and innovative
Earthquake, tsunami
Japan, 11 March
Earthquake
New Zealand, 22 Feb
Cyclone Yasi
Australia, 2 Feb
Landslides, flash floods
Brazil, 12-16 Jan
Floods, flash floods
Australia,
Dec 2010-Jan 2011
Severe storms, tornadoes,
Hurricane Irene
USA, April-September
Severe storms, tornadoes
USA, 20–25 May
Wildfires
USA, May–June
Earthquake
New Zealand, 13 June
Floods
USA, April–June
Number of events: 355 |
 14
Global Technical Services
•
The definitive solution for large, complex claims, providing
the highest level of world-class talent and the industry’s
largest network to strategically manage large complex
losses anywhere on the globe
•
Combining regional and local adjusting strengths to
leverage scale and capabilities as a global provider
•
Tracking over 10,000 losses with $35 billion in reserves
•
425 fully accredited International Executive General
Adjusters deployed in 45 countries
•
Advanced analytics based on segmentation of assignments
in 12 industry losses, 7 product lines and 35 perils
•
Consolidated aggregation of data for trend analysis and
strategic planning
Noteworthy large losses
(reserves values)
2011 Australia,
$1.0 billion
2010
UK,
$650 million
2010
Chile
$633 million
2011 South Africa
$213 million
2010
UK,
$180 million |
 Contractor
Connection – Managed Repair Solutions
•
Dominant insurance industry leader
•
Over 4,000 contractors in the U.S. & Canada
•
Projected over $1 billion in loss estimates in 2011
•
Average 20% revenue growth over the last five years
•
Partner with 50% of top 25 carriers
•
Expanding into consumer services, real estate, and financial
markets
•
Expansion opportunities in Australia and Canada
15 |
 –
Largest securities class action administrator in the country
•
Deep expertise in mega-case settlements
•
GCG has been entrusted with more billion dollar+ securities
settlements than all competitors combined
•
No one handled more of the top 100 securities cases than GCG
•
More than 500 associates in 12 offices nationwide
GCG
Best Claims Administrator –
2011 New York Law Journal
–
Representative engagements:
•
Antitrust:
Visa/MasterCard Settlement
•
Consumer:
Contact Lens Settlement
•
Securities:
WorldCom Securities Litigation
•
Mass Tort:
Engle Tobacco Trust Fund
•
Bankruptcy:
General Motors
•
Special Projects:
Gulf Coast Claims Facility
16 |
 Financial
Review |
 Crawford
Financial Performance •
Revenue CAGR of 6.3% from 2006 to
projected 2011
•
Revenue growth driven by strong
performance in Legal Settlement
Administration, organic growth in EMEA/AP,
and acquisitions
•
Before a net special credit in 2011, CAGR of
non-GAAP adjusted net income attributable to
shareholders of Crawford & Company of
24.0% from 2006 to projected 2011*
•
Strong cash generation
•
Dividend reinstated in second quarter 2011 at
$0.02 per share; increased in third and fourth
quarters to $0.03 per CRDA share and $0.02
per CRDB share
* Based on the midpoint of the Company’s guidance as of November 7, 2011
Consolidated Revenues (in $ millions)
Non-GAAP Adjusted Net Income Attributable to
Shareholders of Crawford & Company (in $ millions)
18 |
 Nine Months 2011
Business Drivers •
Revenues and earnings reflected
continued strong performance in Legal
Settlement Administration, due to a
special project
•
Americas’
rebound driven by U.S.
catastrophe activity
•
Organic growth in EMEA/AP primarily due
to weather-related claims in Australia and
the U.K.
•
Group claims increased 6.2% over the
prior year period
•
Including an arbitration award of $0.11
per share, diluted earnings per CRDB
share year-to-date were $0.75, compared
with $0.25 in the 2010 period
Revenues (in $ millions)
Cases (in 000’s)
19 |
 2010
% Change
20
Third Quarter 2011 Financials
Income Statement Highlights
Nine Months Ended September 30
2011
Revenues
$859,718
$728,940
18%
Costs of Services
629,292
538,142
17%
Selling, General, and Administrative Expenses
166,774
149,530
12%
Corporate Interest Expense, Net
12,396
11,732
6%
Arbitration Award and Special Charges
(6,992)
4,650
nm
Goodwill Impairment Charge
-
7,303
nm
Total Costs and Expenses before Reimbursements
801,470
711,357
13%
Income Before Income Taxes
58,248
17,583
231%
Provision for Income Taxes
17,337
3,938
340%
Net Income
40,911
13,645
200%
Less: Net (Loss) Income Attributable to Noncontrolling Interests
(1)
128
nm
Net Income Attributable to Shareholders of Crawford & Company
$40,912
$13,517
203%
Earnings
Per
Share
--
Basic
Class A Common Stock
$0.77
$0.26
196%
Class B Common Stock
$0.76
$0.26
192%
Earnings
Per
Share
--
Diluted
Class A Common Stock
$0.76
$0.25
204%
Class B Common Stock
$0.75
$0.25
200%
Cash Dividends per Share:
Class A Common Stock
$0.07
--
nm
Class B Common Stock
$0.06
--
nm
nm=not meaningful
CRAWFORD & COMPANY
Unaudited
(In Thousands, Except Per Share Amounts and Percentages) |
 21
Third Quarter 2011 Financials
Crawford & Company
Balance Sheet Highlights
Unaudited
September 30,
December 31,
2011
2010
Change
Cash and cash equivalents
$68,034
$93,540
($25,506)
Accounts receivable, net
179,024
142,521
36,503
Unbilled revenues, net
133,424
122,933
10,491
Total receivables
312,448
265,454
46,994
Goodwill
127,756
125,764
1,992
Deferred revenues,
net
77,716
75,526
2,190
Pension liabilities
136,399
165,030
(28,631)
Current portion of long-term debt, capital leases
and short-term borrowings
24,720
2,891
21,829
Long-term debt, less current portion
217,005
220,437
(3,432)
Total debt
241,725
223,328
18,397
Total stockholders' equity attributable to Crawford & Company
139,251
89,516
49,735
Net debt*
173,691
129,788
43,903
Total debt/capitalization
63%
71%
*Net debt is defined by the Company as long-term debt, capital leases and short-term
borrowings, net of cash and cash equivalents. (In Thousands, except percentages)
|
 Proforma
Operating Cash Flow •
Strong cash flow profile
•
Incentive compensation plan
rewards cash generation
•
Future cash generation
drives defined benefit
pension funding,
deleveraging, reinvestment
for growth, and dividend
yield
22
*Excluding a $30 million accelerated pension contribution
in the fourth quarter of 2010
TTM Operating Cash Flow*
(in millions) |
 2011 Focus and
Outlook |
 2011
Guidance •
Full Year 2011 Guidance issued as of November 7, 2011:
–
Consolidated revenues before reimbursements between $1.10 billion
and $1.13 billion
–
Consolidated operating earnings between $83.0 million and $89.0
million
–
Consolidated cash provided by operating activities between $30.0
million and $35.0 million
–
After reflecting stock-based compensation expense, net corporate
interest expense, customer-relationship intangible asset amortization
expense, special credits and charges, and income taxes, net income
attributable to shareholders of Crawford & Company on a GAAP basis
between $45.0 million and $47.5 million, or $0.81 to $0.86 diluted
earnings per CRDB share
–
Before
reflecting
a
net
special
credit
of
$1.6
million,
or
$0.04
per
share,
net income attributable to shareholders of Crawford & Company on
a
non-GAAP basis between $43.5 million and $46.0 million, or $0.77 to
$0.82 diluted earnings per CRDB share
24 |
 Operational
Focus •
Bring Broadspire to an acceptable operating level
•
Significant debt reduction
•
Continue to grow revenue and operating earnings
•
Capitalize on global opportunities
•
Enhance shareholder returns
25 |
 Crawford &
Company Investor Presentation
December 8, 2011 |
 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, we sometimes pay for certain out-of-pocket
expenses that are reimbursed by our clients. Under GAAP, these out-of-pocket
expenses and associated reimbursements are reported as revenues and expenses in our Consolidated Statements of
Operations. In this presentation, we do not believe it is informative to include the
GAAP-required gross up of our revenues and expenses for these pass-through
reimbursed expenses. The amounts of reimbursed expenses and related revenues offset each other in our Consolidated Statements
of Operations with no impact to our net income or loss. 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. Deferred Revenues, net
Deferred
Revenues,
net
is
computed
as
the
sum
of
the
current
and
noncurrent
deferred
revenues
as
reported
on
our
Consolidated
Balance
Sheets
less the sum of the current and noncurrent receivable held in trust to be released to us as
payment to service these revenues. The current portion
of
the
receivable
held
in
trust
is
reported
as
a
component
of
Accounts
Receivable
and
the
noncurrent
portion
is
reported
as
a
component
of Other Noncurrent Assets in our Consolidated Balance Sheets. The funds represented by
the amount of the receivable held in trust are released to
the
Company
over
time
to
partially
offset
the
costs
of
servicing
the
deferred
revenues.
Management
believes
that
subtracting
the
receivable
held in trust from deferred revenues provides investors with a snapshot of what the net cash
costs will be to service the deferred revenues in the future.
Non-GAAP Adjusted Net Income Attributable to Shareholders of Crawford & Company
Non-GAAP adjusted net income attributable to shareholders of Crawford & Company
excludes Broadspire acquisition-related goodwill impairment charges and a related
credit for a purchase price arbitration award. Management believes this is useful to investors as it presents a measure that
can be more easily compared to other periods that do not have such charges.
27 |
 28
Reconciliation of Non-GAAP Items
*Midpoint of Company’s guidance as of November 7, 2011
*
(in
$millions
except
Earnings
Per
Share
Amounts)
2006
2007
2008
Revenues Before Reimbursements
Total Revenues
900
$
1,051
$
1,136
$
1,048
$
1,110
$
1,204
$
Reimbursements
(80)
(76)
(87)
(78)
(80)
(89)
Revenues Before Reimbursements
820
$
975
$
1,049
$
970
$
1,030
$
1,115
$
2011 Projected
Non-GAAP Adjusted Net Income Attributable to Shareholders of Crawford &
Company Earnings Per CRDB Share
Net Income (Loss) Attributable to Shareholders of Crawford & Company
15
$
16
$
32
$
(116)
$
28
$
46
$
$0.84
Goodwill
Impairment
Charge/(Special
Credit)
141
$
11
$
(2)
$
Tax
Impact
of
Goodwill
Impairment
Charge/(Special
Credit)
-
-
-
-
141
(1)
10
-
(2)
(0.04)
Non-GAAP
Adjusted
Net
Income
Attributable
to
Shareholders
of
Crawford
&
Company
15
$
16
$
32
$
25
$
38
$
44
$
$0.80
2009
2010
2011 Projected* |
 29
Reconciliation of Non-GAAP Items (cont.)
(in $millions)
1Q
2Q
3Q
4Q
1Q
2Q
3Q
Revenues Before Reimbursements
Total Revenues
252
$
256
$
278
$
324
$
304
$
314
$
308
$
Reimbursements
(16)
(18)
(23)
(23)
(19)
(22)
(25)
Revenues Before Reimbursements
236
$
238
$
255
$
301
$
285
$
292
$
283
$
2010
2011 |
 Reconciliation
of Non-GAAP Items (cont.) 30
Crawford & Company
(in $ 000s)
September 30,
December 31,
2011
2010
Deferred Revenues, Net
Deferred revenues, current
50,454
$
48,198
$
Deferred revenues,
noncurrent 28,623
30,048
Total deferred revenues
79,077
78,246
Less:
Receivable held in trust included in accounts receivable
1,361
1,661
Receivable held in trust included in other noncurrent assets
-
1,059
Deferred revenues, net
77,716
$
75,526
$
Net Debt
Short-term borrowings
21,749
$
-
$
Current installments of long-term debt and capital leases
2,971
2,891
Long-term debt and capital leases, less current installments
217,005
220,437
Total debt
241,725
223,328
Less:
Cash and cash equivalents
68,034
93,540
Net debt
173,691
$
129,788
$
Nine Months Ended
Nine Months Ended
September 30,
September 30,
2011
2010
Revenues Before Reimbursements
Total Revenues
926,409
$
786,149
$
Reimbursements
(66,691)
(57,209)
Revenues Before Reimbursements
859,718
$
728,940
$
Costs of Services Before Reimbursements
Total Costs of Services
695,983
$
595,351
$
Reimbursements
(66,691)
(57,209)
Costs of Services Before Reimbursements
629,292
$
538,142
$
|
 Reconciliation
of Non-GAAP Items (cont.) 31
Operating
Operating
Operating
Cash
Cash
Cash
Flow
Flow
Flow
for the
Additional
for the
for the
Prior
4th Quarter
Non-GAAP
Current
Prior
December
Operating
2010
Operating
YTD
YTD
YTD
Cash
Pension
Cash
Period
Less
Period
Plus
Period
Equals
Flow (TTM)
Plus
Contribution
Equals
Flow (TTM)
March 31, 2010
(24)
$
(12)
$
52
$
40
$
-
$
40
$
June 30, 2010
(30)
4
52
18
-
18
September 30, 2010
(25)
10
52
17
-
17
December 31, 2010
26
52
52
26
30
56
March 31, 2011
(50)
(24)
26
-
30
30
June 30, 2011
(33)
(30)
26
23
30
53
September 30, 2011
(18)
(25)
26
33
30
63
Crawford & Company
Non-GAAP Cash Flow from Operations
Reconciliation of Trailing Twelve Months
in $millions |