8-K
CRAWFORD & CO (CRD-A)
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): November 8, 2021
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:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ 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 ☐
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. ☐
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 November 8, 2021, Crawford & Company (the "Company") issued a press release containing information about the Company's financial results for the third quarter 2021. 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 https://ir.crawco.com a presentation designed to enhance the information presented at its quarterly earnings conference call on Tuesday, November 9, 2021 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 | Press Release dated November 8, 2021 |
| 99.2 | Slide Presentation |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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.
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: November 8, 2021 |
EX-99.1
Exhibit 99.1
Crawford & Company®
5335 Triangle Parkway
Peachtree Corners, GA 30092
FOR IMMEDIATE RELEASE
CRAWFORD & COMPANY REPORTS 2021 THIRD QUARTER RESULTS
DOUBLE DIGIT REVENUE GROWTH IN QUARTER
ATLANTA, (November 8, 2021) -- Crawford & Company® (NYSE: CRD-A and CRD-B), the world’s largest publicly listed independent provider of claims management and outsourcing solutions to carriers, brokers and corporations, today announced its financial results for the third quarter ended September 30, 2021.
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
Third Quarter 2021
Revenues before reimbursements of $288.5 million, up 14% over $253.1 million for the 2020 third quarter
Net income attributable to shareholders of $11.2 million, compared to $24.4 million in the same period last year
Diluted earnings per share of $0.20 for CRD-A and $0.21 for CRD-B, compared with $0.46 for both CRD-A for CRD-B in the prior year third quarter
Non-GAAP Consolidated Results
Third Quarter 2021
Non-GAAP consolidated results for 2021 exclude the non-cash after-tax amortization of intangible assets of $2.2 million. Non-GAAP consolidated results for 2020 exclude a similar adjustment for amortization of intangible assets of $2.7 million, a net gain on disposition of businesses of $11.1 million, and the income tax impact of the first quarter 2020 goodwill impairment of $1.9 million, as explained further on page 3.
Foreign currency exchange rates increased revenues before reimbursements by $9.4 million or 3.7%. Presented on a constant dollar basis to the prior year, revenues before reimbursements totaled $279.1 million, increasing 10.3% over $253.1 million for the 2020 third quarter
Net income attributable to shareholders, on a non-GAAP basis, totaled $13.4 million in the 2021 third quarter, compared with $18.0 million in the same period last year
Diluted earnings per share, on a non-GAAP basis, totaled $0.24 for CRD-A and $0.25 for CRD-B in the 2021 third quarter, compared with $0.34 for both CRD-A and CRD-B in the prior year third quarter
Consolidated adjusted operating earnings, on a non-GAAP basis, were $20.8 million, or 7.2% of revenues before reimbursements in the 2021 third quarter, compared with $28.1 million, or 11.1% of revenues, in the 2020 third quarter
Consolidated adjusted EBITDA, a non-GAAP financial measure, was $29.5 million, or 10.2% of revenues before reimbursements in the 2021 third quarter, compared with $35.1 million, or 13.8% of revenues, in the 2020 third quarter
Management Comments
“Crawford delivered an outstanding third quarter revenue growth of 14% year-over-year despite ongoing headwinds presented by an uneven COVID-19 recovery. Importantly, we are continuing to enjoy success from our strategic initiatives across our Loss Adjusting and TPA segments, both of which showed strong revenue growth in the U.S. despite facing pressures internationally. In addition, our Platforms Solutions segment continued its double-digit growth as we benefitted from a deeper penetration with top 5 carriers,” commented Mr. Rohit Verma, chief executive officer of Crawford & Company.
Mr. Verma continued, “We also continue to execute on our inorganic growth strategy by deepening our presence within the property claim ecosystem and building expertise through digital solutions and differentiated capabilities. We are partnering with like-minded, visionary management teams by reinforcing the perception of Crawford as an ideal long-term home for their businesses. To that end, we would like to welcome BosBoon, edjuster and Praxis employees into the Crawford family.
As we enter the fourth quarter, we continue to face an uneven global recovery, nevertheless we remain confident in our ability to capitalize on the vast opportunities ahead of us as well as deliver value for shareholders, and we look forward to continuing our pursuit of restoring and enhancing lives, businesses and communities.”
Segment Results for the Third Quarter
Crawford Loss Adjusting
Crawford Loss Adjusting revenues before reimbursements were $124.0 million in the third quarter of 2021, increasing 11.8% from $110.9 million in the third quarter of 2020. Absent foreign currency rate benefits of $6.6 million, third quarter 2021 revenues would have been $117.3 million.
The segment had operating earnings of $7.1 million in the 2021 third quarter decreasing from $14.1 million in the third quarter of 2020. The operating margin was 5.7% in the 2021 quarter and 12.7% in the 2020 quarter.
Crawford Platform Solutions
Crawford Platform Solution revenues before reimbursements were $64.3 million in the third quarter of 2021, up 20.7% from $53.3 million in the same period of 2020. Absent foreign exchange rate benefits of $0.6 million, revenues would have been $63.7 million for the 2021 third quarter.
Operating earnings were $11.0 million in the 2021 third quarter, increasing from $10.7 million in the 2020 period. The segment’s operating margin for the 2021 quarter was 17.1% as compared with 20.0% in the 2020 quarter.
Crawford TPA Solutions
Crawford TPA Solutions segment revenues before reimbursements were $100.2 million in the 2021 third quarter, increasing 12.7% from $88.9 million in the 2020 third quarter. Absent foreign currency rate benefits of $2.1 million, third quarter 2021 revenues would have been $98.1 million.
Crawford TPA Solutions recorded operating earnings of $5.0 million in the third quarter of 2021, representing an operating margin of 5.0%, increasing from $4.3 million, or 4.8% of revenues, in the 2020 third quarter.
Unallocated Corporate and Shared Costs and Credits, Net
Unallocated corporate costs were $2.3 million in the third quarter of 2021, compared with $1.0 million in the same period of 2020. The increase for the three months ended September 30, 2021 was primarily due to an increase in professional fees and a reduction of the Canada Emergency Wage Subsidy ("CEWS") benefit, compared to 2020.
CEWS
During the 2021 third quarter, the Company recognized a pretax benefit from CEWS totaling $1.8 million as compared to a benefit of $4.7 million in the 2020 third quarter. Of the 2021 benefit, $0.7 million is reflected in the segment operating results with the remainder in unallocated and shared costs.
Income Tax Impact of First Quarter 2020 Goodwill Impairment
The Company recognized a non-cash goodwill impairment in the 2020 first quarter, totaling $17.7 million. Due to the non-discrete income tax treatment of the goodwill impairment, the initial income tax benefit related to the impairment normalized during the year, resulting in a lower full year income tax benefit. During the 2020 third quarter, the impact of this treatment decreased the income tax benefit by $1.9 million, or $0.04 per share. There was no goodwill impairment in 2021.
Business Acquisitions and Dispositions
On August 23, 2021, the Company acquired 100% of edjuster Inc. in Canada and its U.S. subsidiary (collectively "edjuster"). edjuster is a technology-enabled, end-to-end contents services provider and platform. This acquisition will enable the Company to expand its capability in the North American claims contents services market. The purchase price included an initial cash payment of $21.0 million, net of working capital adjustment, and a maximum $14.0 million payable in cash over the next two years based on achieving certain EBITDA performance goals.
On June 12, 2020, the Company sold its 51% interest in Lloyd Warwick International (“LWI”) for cash proceeds of $19.6 million and payment of $3.6 million to settle intercompany indebtedness. In the third quarter, the Company recognized an additional $0.7 million related to net working capital adjustments under the terms of the acquisition agreement which increased the purchase price to $20.3 million. Due to the Company’s two-month reporting lag for reporting its international results, this transaction was recorded in the quarter ended September 30, 2020. The Company recognized a gain of $14.7 million ($11.7 million net of tax) on the disposition. The Company recognized an additional loss on the disposal of Crawford Compliance Inc. of $0.6 million in the third quarter. Both of these disposals were in our then Crawford Specialty Solutions segment and resulted in a net gain of $0.21 per diluted share.
Subsequent Events
On October 1, 2021, the Company acquired 100% of Praxis Consulting Inc. ("Praxis"), an established subrogation claims service provider in the U.S. This acquisition allows the Company to expand its footprint in the U.S. subrogation claims market. The purchase price includes an initial cash consideration of $25.5 million, net of working capital adjustment, a deferred payment of $20.0 million in January 2022, and a maximum $10.0 million payable over the next two years based on achieving certain revenue performance goals.
On October 4, 2021, the Company acquired BosBoon Expertise Group B.V. ("BosBoon"), a Netherlands-based specialist loss adjusting company. The acquisition supports Crawford’s strategic aim of strengthening its expertise in all key territories in which it operates. BosBoon offers a specialist range of loss adjusting services which will be added to the existing Crawford Global Technical Services proposition in The Netherlands and internationally.
On November 5, 2021, the Company, along with certain of our subsidiaries as co-borrowers, entered into a Credit Agreement with Bank of America, N.A. as Administrative Agent and lender, among other lenders party thereto. The Credit Agreement replaces our Amended and Restated Credit Agreement dated October 11, 2017. Proceeds from borrowings under the Credit Agreement were used to repay all amounts outstanding under the Prior Credit Agreement.
Under the Credit Agreement, the lenders have agreed, subject to certain terms and conditions, to (i) provide to the Company a $450 million multicurrency revolving credit facility maturing in November 2026, (ii) permit additional incremental borrowing capacity, subject to conditions stated therein, (iii) replace the existing fixed charge coverage ratio with an interest coverage ratio with a minimum of 2.50 to 1.00, and (iv) replace the existing leverage ratios with a single leverage ratio test of 4.50 to 1.00.
On November 4, 2021, the Company's Board of Directors, authorized the repurchase up to 2,000,000 shares of CRD-A or CRD-B (or a combination of the two) through December 31, 2023. Under the new repurchase program, repurchases may be made in the open market or privately negotiated transactions at such times and for such prices as management deems appropriate, subject to applicable regulatory guidelines. The new authorization does not obligate Crawford to acquire any stock, and purchases may be commenced or suspended at any time based on market conditions and other factors that the Company deems appropriate.
COVID-19
The Company has experienced continued recovery from the negative economic impact of COVID-19 in recent months, particularly in the U.S., compared to the significant reductions experienced in the prior year. Due to continued negative impacts in multiple regions, it is uncertain whether such recovery can be sustained and continue. The economic impact from COVID-19 could have a material impact to our results of operations, financial condition, and cash flows in one or more future quarters. In addition, it is possible that changes in economic conditions and steps taken by international, federal, state and/or local governments in response to COVID-19 could have negative impacts, including labor shortages which could increase compensation costs and other expenses, unless mitigated by government assistance programs to corporations.
Balance Sheet and Cash Flow
The Company’s consolidated cash and cash equivalents position as of September 30, 2021, totaled $36.9 million, compared with $44.7 million at December 31, 2020. The Company’s total debt outstanding as of September 30, 2021, totaled $140.6 million, compared with $113.6 million at December 31, 2020.
The Company’s operations provided $20.0 million of cash during 2021, compared with $57.3 million in 2020. The decrease in cash provided by operating activities was primarily due to a $21.0 million increase in receivables as a result of Hurricane Ida, $6.0 million higher pension contributions and an $11.2 million impact from the CARES Act and CEWS.
The Company made $9.0 million in contributions to its U.S. defined benefit pension plan and $0.5 million to its U.K. plans for 2021, compared with $3.0 million in contributions to the U.S. plan and $0.5 million to the U.K. plans in 2020.
During 2021, the Company repurchased 530,598 shares of CRD-A and 111,499 shares of CRD-B at an average per share cost of $9.63 and $8.68, respectively. The total cost of share repurchases during 2021 was $6.1 million.
Conference Call
As previously announced, Crawford & Company will host a conference call on November 9, 2021, at 8:30 a.m. Eastern Time to discuss its third quarter 2021 results. The conference call can be accessed live by dialing 1-833-900-2283 and using Conference ID 5484757. A presentation for tomorrow’s call can also be found on the investor relations portion of the Company’s website, https://ir.crawco.com. The call will be recorded and available for replay through December 9, 2021. You may dial 1-800-585-8367 to listen to the replay.
Non-GAAP Presentation
In the normal course of business, our operating segments incur certain out-of-pocket expenses that are thereafter reimbursed by our clients. Under U.S. generally accepted accounting principles (“GAAP”), these out-of-pocket expenses and associated reimbursements are required to be included when reporting expenses and revenues, respectively, in our consolidated results of operations. In the foregoing discussion and analysis of segment results of operations, we do not include a gross up of segment expenses and revenues for these pass-through reimbursed expenses. The amounts of reimbursed expenses and related revenues offset each other in our results of operations with no impact to our net income or operating earnings. A reconciliation of revenues before reimbursements to consolidated revenues determined in accordance with GAAP is self-evident from the face of the accompanying unaudited condensed consolidated statements of operations.
Operating earnings is the primary financial performance measure used by our senior management and chief operating decision maker (“CODM”) to evaluate the financial performance of our Company and operating segments, and make resource allocation and certain compensation decisions. Unlike net income, segment operating earnings is not a standard performance measure found in GAAP. We believe this measure is useful to others in that it allows them to evaluate segment and consolidated operating performance using the same criteria used by our senior management and CODM. Consolidated operating earnings represent segment earnings including certain unallocated corporate and shared costs, but before net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, goodwill impairment, restructuring costs, gain on disposition of businesses, income taxes and net income or loss attributable to noncontrolling interests and redeemable noncontrolling interests.
Adjusted EBITDA is not a term defined by GAAP and as a result our measure of adjusted EBITDA might not be comparable to similarly titled measures used by other companies. However, adjusted EBITDA is used by management to evaluate, assess and benchmark our operational results. The Company believes that adjusted EBITDA is relevant and useful information widely used by analysts, investors and other interested parties. Adjusted EBITDA is defined as net income attributable to shareholders of the Company with recurring adjustments for depreciation and amortization, net corporate interest expense, income taxes and stock-based compensation expense. Additionally, adjustments for non-recurring expenses for goodwill impairment, restructuring costs and gain on disposition of business 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 to better assess the results of each segment's operating activities on a consistent basis.
A significant portion of our operations are international. These international operations subject us to foreign exchange fluctuations. The following table illustrates revenue as a percentage of total revenue for the major currencies of the geographic areas that Crawford does business:
| Nine Months Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | September 30,2020 | September 30,2021 | September 30,2020 | |||||||||||||
| Geographic Area | Currency | % of total | equivalent | % of total | equivalent | % of total | equivalent | % of total | ||||||||
| U.S. | 60.9 | % | 60.3 | % | 58.9 | % | 57.8 | % | ||||||||
| U.K. | 12.4 | % | 11.9 | % | 12.6 | % | 13.1 | % | ||||||||
| Canada | CAD | 7.3 | % | 8.8 | % | 7.7 | % | 9.4 | % | |||||||
| Australia | AUD | 9.6 | % | 8.4 | % | 9.8 | % | 8.1 | % | |||||||
| Europe | 4.9 | % | 5.0 | % | 5.1 | % | 5.5 | % | ||||||||
| Rest of World | Various | 4.9 | % | 5.6 | % | 5.9 | % | 6.1 | % | |||||||
| Total Revenues, before reimbursements | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
All values are in British Pounds.
Following is a reconciliation of segment and consolidated operating earnings to net income attributable to shareholders of Crawford & Company on a GAAP basis:
| Three Months Ended | Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | ||||||||
| Operating earnings: | ||||||||||||
| Crawford Loss Adjusting | $ | 7,063 | $ | 14,139 | $ | 18,124 | $ | 24,854 | ||||
| Crawford Platform Solutions | 10,968 | 10,655 | 25,937 | 20,939 | ||||||||
| Crawford TPA Solutions | 5,034 | 4,288 | 14,465 | 13,708 | ||||||||
| Unallocated corporate and shared costs, net | (2,266 | ) | (1,027 | ) | (5,081 | ) | (6,189 | ) | ||||
| Consolidated operating earnings | 20,799 | 28,055 | 53,445 | 53,312 | ||||||||
| (Deduct) add: | ||||||||||||
| Net corporate interest expense | (1,648 | ) | (1,599 | ) | (4,443 | ) | (6,275 | ) | ||||
| Stock option expense | (296 | ) | (457 | ) | (700 | ) | (1,033 | ) | ||||
| Amortization expense | (2,877 | ) | (3,665 | ) | (8,426 | ) | (9,153 | ) | ||||
| Goodwill impairment | — | — | — | (17,674 | ) | |||||||
| Restructuring costs | — | — | — | (5,714 | ) | |||||||
| Gain on disposition of businesses, net | — | 14,104 | — | 13,763 | ||||||||
| Income tax provision | (4,866 | ) | (11,729 | ) | (10,927 | ) | (9,554 | ) | ||||
| Net loss (income) attributable to noncontrolling interests and redeemable noncontrolling interests | 83 | (312 | ) | 90 | 1,224 | |||||||
| Net income attributable to shareholders of Crawford & Company | $ | 11,195 | $ | 24,397 | $ | 29,039 | $ | 18,896 |
Following is a reconciliation of net income attributable to shareholders of Crawford & Company on a GAAP basis to non-GAAP adjusted EBITDA:
| Three Months Ended | Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | September 30,<br>2021 | September 30,<br>2020 | September 30,<br>2021 | September 30,<br>2020 | ||||||
| Net income attributable to shareholders of Crawford & Company | $ | 11,195 | $ | 24,397 | $ | 29,039 | $ | 18,896 | ||
| Add (Deduct): | ||||||||||
| Depreciation and amortization | 9,826 | 10,700 | 30,768 | 30,150 | ||||||
| Stock-based compensation | 2,001 | 734 | 5,564 | 2,732 | ||||||
| Net corporate interest expense | 1,648 | 1,599 | 4,443 | 6,275 | ||||||
| Goodwill impairment | — | — | — | 17,674 | ||||||
| Restructuring costs | — | — | — | 5,714 | ||||||
| Gain on disposition of businesses, net | — | (14,104 | ) | — | (13,763 | ) | ||||
| Income tax provision | 4,866 | 11,729 | 10,927 | 9,554 | ||||||
| Non-GAAP adjusted EBITDA | $ | 29,536 | $ | 35,055 | $ | 80,741 | $ | 77,232 |
Following is a reconciliation of operating cash flow to free cash flow for the nine months ended September 30, 2021 and 2020:
| Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | September 30, 2021 | September 30, 2020 | Change | ||||||
| Net Cash Provided by Operating Activities | $ | 20,043 | $ | 57,316 | $ | (37,273 | ) | ||
| Less: | |||||||||
| Property & Equipment Purchases, net | (5,251 | ) | (10,850 | ) | 5,599 | ||||
| Capitalized Software (internal and external costs) | (15,372 | ) | (12,793 | ) | (2,579 | ) | |||
| Free Cash Flow | $ | (580 | ) | $ | 33,673 | $ | (34,253 | ) |
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 2021 before amortization of intangible assets, and for 2020 exclude the amortization of intangible assets, goodwill impairment, gain on disposition of businesses and restructuring costs:
| Three Months Ended September 30, 2021 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Revenues | Non-GAAP <br>Operating earnings | Pretax earnings | Net income <br>attributable to Crawford & Company | Diluted earnings per <br>CRD-A <br>share | Diluted earnings per <br>CRD-B <br>share | ||||||||||
| GAAP | $ | 288,500 | $ | 20,799 | $ | 15,978 | $ | 11,195 | $ | 0.20 | $ | 0.21 | ||||
| Adjustments: | ||||||||||||||||
| Amortization of intangible assets | — | — | 2,877 | 2,158 | 0.04 | 0.04 | ||||||||||
| Non-GAAP Adjusted | $ | 288,500 | $ | 20,799 | $ | 18,855 | $ | 13,353 | $ | 0.24 | $ | 0.25 | ||||
| Three Months Ended September 30, 2020 | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | Revenues | Non-GAAP Operating earnings | Pretax earnings | Net income <br>attributable to Crawford & Company(2) | Diluted earnings per <br>CRD-A <br>share(2) | Diluted earnings per <br>CRD-B <br>share(2) | ||||||||||
| GAAP | $ | 253,124 | $ | 28,055 | $ | 36,438 | $ | 24,397 | $ | 0.46 | $ | 0.46 | ||||
| Adjustments: | ||||||||||||||||
| Amortization of intangible assets | — | — | 3,665 | 2,749 | 0.05 | 0.05 | ||||||||||
| Income tax impact of first quarter goodwill impairment | — | — | — | 1,935 | 0.04 | 0.04 | ||||||||||
| Gain on disposition of business | — | — | (14,104 | ) | (11,072 | ) | (0.21 | ) | (0.21 | ) | ||||||
| Non-GAAP Adjusted | $ | 253,124 | $ | 28,055 | $ | 25,999 | $ | 18,009 | $ | 0.34 | $ | 0.34 | ||||
| Nine Months Ended September 30, 2021 | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| (in thousands) | Revenues | Non-GAAP <br>Operating earnings | Pretax income | Net income attributable to Crawford & Company | Diluted earnings per <br>CRD-A <br>share | Diluted earnings per <br>CRD-B <br>share(1) | ||||||||||
| GAAP | $ | 809,138 | $ | 53,445 | $ | 39,876 | $ | 29,039 | $ | 0.53 | $ | 0.54 | ||||
| Adjustments: | ||||||||||||||||
| Amortization of intangible assets | — | — | 8,426 | 6,320 | 0.12 | 0.12 | ||||||||||
| Non-GAAP Adjusted | $ | 809,138 | $ | 53,445 | $ | 48,302 | $ | 35,359 | $ | 0.65 | $ | 0.65 | ||||
| Nine Months Ended September 30, 2020 | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | Revenues | Non-GAAP Operating earnings | Pretax earnings | Net income attributable to Crawford & Company(2) | Diluted earnings per <br>CRD-A <br>share(2) | Diluted earnings per <br>CRD-B <br>share(2) | ||||||||||
| GAAP | $ | 725,071 | $ | 53,312 | $ | 27,226 | $ | 18,896 | $ | 0.36 | $ | 0.34 | ||||
| Adjustments: | ||||||||||||||||
| Goodwill impairment | — | — | 17,674 | 13,274 | 0.25 | 0.25 | ||||||||||
| Restructuring costs | — | — | 5,714 | 3,263 | 0.06 | 0.06 | ||||||||||
| Gain on disposition of businesses, net | — | — | (13,763 | ) | (10,807 | ) | (0.20 | ) | (0.20 | ) | ||||||
| Amortization of intangible assets | — | — | 9,153 | 6,865 | 0.13 | 0.13 | ||||||||||
| Non-GAAP Adjusted | $ | 725,071 | $ | 53,312 | $ | 46,004 | $ | 31,491 | $ | 0.60 | $ | 0.58 |
(1) Sum of reconciling items may differ from total due to rounding of individual components.
(2) The income tax impact of goodwill impairment was based on the estimated annual effective income tax rate. Due to the non-discrete income tax treatment of the first quarter 2020 goodwill impairment, the income tax benefit normalized as income was earned during the remainder of the year, resulting in a lower full year income tax benefit during 2020.
Following is information regarding the weighted average shares used in the computation of basic and diluted earnings per share:
| Three Months Ended | Nine Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands) | September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | ||||
| Weighted-Average Shares Used to Compute Basic Earnings Per Share: | ||||||||
| Class A Common Stock | 30,711 | 30,643 | 30,786 | 30,575 | ||||
| Class B Common Stock | 22,407 | 22,510 | 22,438 | 22,533 | ||||
| Weighted-Average Shares Used to Compute Diluted Earnings Per Share: | ||||||||
| Class A Common Stock | 31,954 | 30,937 | 31,916 | 30,810 | ||||
| Class B Common Stock | 22,407 | 22,510 | 22,438 | 22,533 |
Further information regarding the Company’s operating results for the quarter and nine months ended September 30, 2021, financial position as of September 30, 2021, and cash flows for the nine months ended September 30, 2021 is shown on the attached unaudited condensed consolidated financial statements.
About Crawford & Company
Based in Atlanta, Crawford & Company (NYSE: CRD-A and CRD-B) is the world's largest publicly listed independent provider of claims management and outsourcing solutions to carriers, brokers and corporations 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. More information is available at www.crawco.com.
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.
TAG: Crawford-Financial, Crawford-Investor-News-and-Events
FOR FURTHER INFORMATION REGARDING THIS PRESS RELEASE, PLEASE CALL BRUCE SWAIN AT (404) 300-1051.
| This press release contains forward-looking statements, including statements about the expected future financial condition, results of operations and earnings outlook of Crawford & Company. Statements, both qualitative and quantitative, that are not historical facts may be “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from historical experience or Crawford & Company’s present expectations. Accordingly, no one should place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Crawford & Company does not undertake to update forward-looking statements to reflect the impact of circumstances or events that may arise or not arise after the date the forward-looking statements are made. For further information regarding Crawford & Company, including factors that could cause our actual financial condition, results or earnings to differ from those described in any forward-looking statements, please read Crawford & Company’s reports filed with the SEC and available at www.sec.gov and in the Investor Relations section of Crawford & Company’s website at www.crawco.com. |
|---|
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands, Except Per Share Amounts and Percentages)
| Three Months Ended September 30, | 2021 | 2020 | % Change | |||||
|---|---|---|---|---|---|---|---|---|
| Revenues: | ||||||||
| Revenues Before Reimbursements | $ | 288,500 | $ | 253,124 | 14 | % | ||
| Reimbursements | 9,062 | 8,545 | 6 | % | ||||
| Total Revenues | 297,562 | 261,669 | 14 | % | ||||
| Costs and Expenses: | ||||||||
| Costs of Services Provided, Before Reimbursements | 211,017 | 177,061 | 19 | % | ||||
| Reimbursements | 9,062 | 8,545 | 6 | % | ||||
| Total Costs of Services | 220,079 | 185,606 | 19 | % | ||||
| Selling, General, and Administrative Expenses | 60,759 | 52,065 | 17 | % | ||||
| Corporate Interest Expense, Net | 1,648 | 1,599 | 3 | % | ||||
| Gain on disposition of business | - | (14,104 | ) | nm | ||||
| Total Costs and Expenses | 282,486 | 225,166 | 25 | % | ||||
| Other Income (Expense), Net | 902 | (65 | ) | nm | ||||
| Income Before Income Taxes | 15,978 | 36,438 | (56 | )% | ||||
| Provision for Income Taxes | 4,866 | 11,729 | (59 | )% | ||||
| Net Income | 11,112 | 24,709 | (55 | )% | ||||
| Net Loss (Income) Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests | 83 | (312 | ) | (127 | )% | |||
| Net Income Attributable to Shareholders of Crawford & Company | $ | 11,195 | $ | 24,397 | (54 | )% | ||
| Earnings Per Share - Basic: | ||||||||
| Class A Common Stock | $ | 0.21 | $ | 0.46 | (54 | )% | ||
| Class B Common Stock | $ | 0.21 | $ | 0.46 | (54 | )% | ||
| Earnings Per Share - Diluted: | ||||||||
| Class A Common Stock | $ | 0.20 | $ | 0.46 | (57 | )% | ||
| Class B Common Stock | $ | 0.21 | $ | 0.46 | (54 | )% | ||
| Cash Dividends Per Share: | ||||||||
| Class A Common Stock | $ | 0.06 | $ | 0.04 | 50 | % | ||
| Class B Common Stock | $ | 0.06 | $ | 0.04 | 50 | % |
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands, Except Per Share Amounts and Percentages)
| Nine Months Ended September 30, | 2021 | 2020 | % Change | |||||
|---|---|---|---|---|---|---|---|---|
| Revenues: | ||||||||
| Revenues Before Reimbursements | $ | 809,138 | $ | 725,071 | 12 | % | ||
| Reimbursements | 27,124 | 25,519 | 6 | % | ||||
| Total Revenues | 836,262 | 750,590 | 11 | % | ||||
| Costs and Expenses: | ||||||||
| Costs of Services Provided, Before Reimbursements | 589,375 | 518,263 | 14 | % | ||||
| Reimbursements | 27,124 | 25,519 | 6 | % | ||||
| Total Costs of Services | 616,499 | 543,782 | 13 | % | ||||
| Selling, General, and Administrative Expenses | 178,120 | 163,327 | 9 | % | ||||
| Corporate Interest Expense, Net | 4,443 | 6,275 | (29 | )% | ||||
| Goodwill Impairment | - | 17,674 | nm | |||||
| Restructuring Costs | - | 5,714 | nm | |||||
| Gain on Disposition of Businesses, Net | - | (13,763 | ) | nm | ||||
| Total Costs and Expenses | 799,062 | 723,009 | 11 | % | ||||
| Other Income (Expense), Net | 2,676 | (355 | ) | nm | ||||
| Income Before Income Taxes | 39,876 | 27,226 | 46 | % | ||||
| Provision for Income Taxes | 10,927 | 9,554 | 14 | % | ||||
| Net Income | 28,949 | 17,672 | 64 | % | ||||
| Net Loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests | 90 | 1,224 | (93 | )% | ||||
| Net Income Attributable to Shareholders of Crawford & Company | $ | 29,039 | $ | 18,896 | 54 | % | ||
| Earnings Per Share - Basic: | ||||||||
| Class A Common Stock | $ | 0.55 | $ | 0.36 | 53 | % | ||
| Class B Common Stock | $ | 0.55 | $ | 0.34 | 62 | % | ||
| Earnings Per Share - Diluted: | ||||||||
| Class A Common Stock | $ | 0.53 | $ | 0.36 | 47 | % | ||
| Class B Common Stock | $ | 0.54 | $ | 0.34 | 59 | % | ||
| Cash Dividends Per Share: | ||||||||
| Class A Common Stock | $ | 0.18 | $ | 0.14 | 29 | % | ||
| Class B Common Stock | $ | 0.18 | $ | 0.12 | 50 | % |
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2021 and December 31, 2020
Unaudited
(In Thousands, Except Par Values)
| December 31, | |||||
|---|---|---|---|---|---|
| 2020 | |||||
| ASSETS | |||||
| Current Assets: | |||||
| Cash and Cash Equivalents | 36,929 | $ | 44,656 | ||
| Accounts Receivable, Net | 136,729 | 123,060 | |||
| Unbilled Revenues, at Estimated Billable Amounts | 127,510 | 103,528 | |||
| Income Taxes Receivable | 2,311 | 1,269 | |||
| Prepaid Expenses and Other Current Assets | 37,002 | 29,490 | |||
| Total Current Assets | 340,481 | 302,003 | |||
| Net Property and Equipment | 34,015 | 36,402 | |||
| Other Assets: | |||||
| Operating Lease Right-of-Use Asset, Net | 100,895 | 109,315 | |||
| Goodwill | 85,696 | 66,537 | |||
| Intangible Assets Arising from Business Acquisitions, Net | 75,613 | 71,176 | |||
| Capitalized Software Costs, Net | 73,418 | 71,021 | |||
| Deferred Income Tax Assets | 25,003 | 25,595 | |||
| Other Noncurrent Assets | 71,375 | 70,935 | |||
| Total Other Assets | 432,000 | 414,579 | |||
| Total Assets | 806,496 | $ | 752,984 | ||
| LIABILITIES AND SHAREHOLDERS’ INVESTMENT | |||||
| Current Liabilities: | |||||
| Short-Term Borrowings | 1,582 | $ | 1,837 | ||
| Accounts Payable | 38,658 | 41,544 | |||
| Accrued Compensation and Related Costs | 93,334 | 81,848 | |||
| Self-Insured Risks | 10,514 | 11,390 | |||
| Income Taxes Payable | — | 5,822 | |||
| Operating Lease Liability | 26,029 | 32,745 | |||
| Other Accrued Liabilities | 48,617 | 40,375 | |||
| Deferred Revenues | 30,545 | 27,233 | |||
| Total Current Liabilities | 249,279 | 242,794 | |||
| Noncurrent Liabilities: | |||||
| Long-Term Debt and Finance Leases, Less Current Installments | 139,028 | 111,758 | |||
| Operating Lease Liability | 89,324 | 93,228 | |||
| Deferred Revenues | 24,035 | 24,136 | |||
| Accrued Pension Liabilities | 36,884 | 53,886 | |||
| Other Noncurrent Liabilities | 48,239 | 40,254 | |||
| Total Noncurrent Liabilities | 337,510 | 323,262 | |||
| Shareholders’ Investment: | |||||
| Class A Common Stock, 1.00 Par Value | 30,613 | 30,847 | |||
| Class B Common Stock, 1.00 Par Value | 22,399 | 22,510 | |||
| Additional Paid-in Capital | 73,768 | 67,193 | |||
| Retained Earnings | 279,273 | 265,245 | |||
| Accumulated Other Comprehensive Loss | (185,657 | ) | (198,856 | ) | |
| Shareholders’ Investment Attributable to Shareholders of Crawford & Company | 220,396 | 186,939 | |||
| Noncontrolling Interests | (689 | ) | (11 | ) | |
| Total Shareholders’ Investment | 219,707 | 186,928 | |||
| Total Liabilities and Shareholders’ Investment | 806,496 | $ | 752,984 |
All values are in US Dollars.
CRAWFORD & COMPANY
SUMMARY RESULTS BY OPERATING SEGMENT WITH DIRECT COMPENSATION AND OTHER EXPENSES
Unaudited
(In Thousands, Except Percentages)
Three Months Ended September 30,
| Crawford Loss Adjusting | % | Crawford Platform Solutions | % | Crawford TPA Solutions | % | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | Change | 2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||||
| Revenues Before Reimbursements | $ | 123,965 | $ | 110,929 | 11.8% | $ | 64,314 | $ | 53,287 | 20.7% | $ | 100,221 | $ | 88,908 | 12.7% | |||||||
| Direct Compensation, Fringe Benefits & Non-Employee Labor | 80,961 | 66,155 | 22.4% | 42,267 | 33,516 | 26.1% | 64,573 | 56,703 | 13.9% | |||||||||||||
| % of Revenues Before Reimbursements | 65.3 | % | 59.6 | % | 65.7 | % | 62.9 | % | 64.4 | % | 63.8 | % | ||||||||||
| Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor | 35,941 | 30,635 | 17.3% | 11,079 | 9,116 | 21.5% | 30,614 | 27,917 | 9.7% | |||||||||||||
| % of Revenues Before Reimbursements | 29.0 | % | 27.6 | % | 17.2 | % | 17.1 | % | 30.5 | % | 31.4 | % | ||||||||||
| Total Operating Expenses | 116,902 | 96,790 | 20.8% | 53,346 | 42,632 | 25.1% | 95,187 | 84,620 | 12.5% | |||||||||||||
| Operating Earnings (1) | $ | 7,063 | $ | 14,139 | (50.0)% | $ | 10,968 | $ | 10,655 | 2.9% | $ | 5,034 | $ | 4,288 | 17.4% | |||||||
| % of Revenues Before Reimbursements | 5.7 | % | 12.7 | % | 17.1 | % | 20.0 | % | 5.0 | % | 4.8 | % |
Nine Months Ended September 30,
| Crawford Loss Adjusting | % | Crawford Platform Solutions | % | Crawford TPA Solutions | % | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | Change | 2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||||
| Revenues Before Reimbursements | $ | 352,458 | $ | 327,095 | 7.8% | $ | 157,840 | $ | 122,403 | 29.0% | $ | 298,840 | $ | 275,573 | 8.4% | |||||||
| Direct Compensation, Fringe Benefits & Non-Employee Labor | 230,103 | 202,299 | 13.7% | 100,125 | 75,095 | 33.3% | 191,408 | 175,040 | 9.4% | |||||||||||||
| % of Revenues Before Reimbursements | 65.3 | % | 61.8 | % | 63.4 | % | 61.4 | % | 64.1 | % | 63.5 | % | ||||||||||
| Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor | 104,231 | 99,942 | 4.3% | 31,778 | 26,369 | 20.5% | 92,967 | 86,825 | 7.1% | |||||||||||||
| % of Revenues Before Reimbursements | 29.6 | % | 30.6 | % | 20.1 | % | 21.5 | % | 31.1 | % | 31.5 | % | ||||||||||
| Total Operating Expenses | 334,334 | 302,241 | 10.6% | 131,903 | 101,464 | 30.0% | 284,375 | 261,865 | 8.6% | |||||||||||||
| Operating Earnings (1) | $ | 18,124 | $ | 24,854 | (27.1)% | $ | 25,937 | $ | 20,939 | 23.9% | $ | 14,465 | $ | 13,708 | 5.5% | |||||||
| % of Revenues Before Reimbursements | 5.1 | % | 7.6 | % | 16.4 | % | 17.1 | % | 4.8 | % | 5.0 | % |
(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, goodwill impairment, restructuring costs, gain on disposition of businesses, and certain unallocated corporate and shared costs and credits. See pages 3 and 4 for additional information about segment operating earnings.
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year to Date Period Ended September 30, 2021 and September 30, 2020
Unaudited
(In Thousands)
| 2021 | 2020 | |||||
|---|---|---|---|---|---|---|
| Cash Flows From Operating Activities: | ||||||
| Net income | $ | 28,949 | $ | 17,672 | ||
| Reconciliation of net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 30,768 | 30,150 | ||||
| Goodwill impairment | — | 17,674 | ||||
| Stock-based compensation | 5,564 | 2,732 | ||||
| Gain on disposition of businesses, net | — | (13,763 | ) | |||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable, net | (7,352 | ) | 485 | |||
| Unbilled revenues, net | (18,990 | ) | (9,223 | ) | ||
| Accrued or prepaid income taxes | (8,627 | ) | 2,462 | |||
| Accounts payable and accrued liabilities | 6,798 | 16,097 | ||||
| Deferred revenues | 2,130 | (1,491 | ) | |||
| Accrued retirement costs | (13,243 | ) | (6,101 | ) | ||
| Prepaid expenses and other operating activities | (5,954 | ) | 622 | |||
| Net cash provided by operating activities | 20,043 | 57,316 | ||||
| Cash Flows From Investing Activities: | ||||||
| Acquisitions of property and equipment | (5,251 | ) | (10,850 | ) | ||
| Capitalization of computer software costs | (15,372 | ) | (12,793 | ) | ||
| Proceeds from settlement of life insurance policies | 4,937 | — | ||||
| Payments for business acquisitions, net of cash acquired | (23,141 | ) | — | |||
| Cash proceeds from disposition of businesses, net of cash disposed | — | 19,273 | ||||
| Net cash used in investing activities | (38,827 | ) | (4,370 | ) | ||
| Cash Flows From Financing Activities: | ||||||
| Cash dividends paid | (9,577 | ) | (6,986 | ) | ||
| Repurchases of common stock | (6,076 | ) | (2,666 | ) | ||
| Increases in short-term and revolving credit facility borrowings | 58,449 | 76,876 | ||||
| Payments on short-term and revolving credit facility borrowings | (31,808 | ) | (124,454 | ) | ||
| Payments of contingent consideration on acquisitions | (1,683 | ) | — | |||
| Other financing activities | 629 | (21 | ) | |||
| Net cash provided by (used in) financing activities | 9,934 | (57,251 | ) | |||
| Effects of exchange rate changes on cash and cash equivalents | 1,123 | 1,242 | ||||
| Decrease in cash and cash equivalents | (7,727 | ) | (3,063 | ) | ||
| Cash and cash equivalents at beginning of year | 44,656 | 51,802 | ||||
| Cash and cash equivalents at end of period | $ | 36,929 | $ | 48,739 |
Crawford & Company Third Quarter 2021 Earnings Conference Call CRD-A & CRD-B (NYSE)
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 portion of Crawford & Company's website at https://ir.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, gain on disposition of businesses, 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.
Demonstrated ability to execute on inorganic growth strategy Third Quarter 2021 Crawford’s strong revenue growth and disciplined M&A activity in the third quarter propelling business forward Q3 NON-GAAP METRICS¹ 14% Revenues See appendix for non-GAAP explanation and reconciliation of non-GAAP measures Based on CRD-A as of 9/30/21 $0.24 EPS2 Our strategy execution is bearing favorable results Made three strategic acquisitions, which demonstrate commitment to our strategic pillars: edjuster – contents valuation expertise Praxis Consulting – subrogation market leader BosBoon – specialist loss adjusters Strong revenue growth driven by US, UK, and Australian markets We are continuing to experience an uneven recovery in some of our international operations – primarily Canada, Asia, Latin America and Europe $103.7M Net Debt Key Highlights
Our M&A is aligned to the three pillars of our strategy M&A Strategy Digital Expertise Quality Bring digital enablement Short circuit lead times Differentiated and entrenched Improves customer experience Enhances the quality value proposition Usually in tandem with Digital or Expertise Special capability in the ecosystem People or process based Praxis edjuster Asservio HBA Legal Crawford Carvallo BosBoon Complement primary organic growth Deliver improved profitability and productivity Increase customer stickiness and deepen wallet-share
Operational Overview
In August 2021, Crawford acquired 100% of edjuster, the contents valuation leader in North America Total purchase price of $33.1 million, with an upfront payment of $21.0 million in cash and other consideration with the balance structured as an earnout over a two-year period Offers on-site contents inventory services, desktop-based and digital services that operate on a proprietary contents management platform that offers a full-featured, easy-to-use SaaS contents valuation solution Rapidly growing U.S. presence and opportunity to expand in the $500 million North American contents market benefitting from secular adoption of content-inclusive home insurance policies Supports our strategic pillar—digital that simplifies—and aligns with our purpose and envisioned future Significant opportunity to leverage Crawford’s client base and accelerate edjuster’s growth edjuster FY2020 revenues: $14.0 million edjuster Two decades of recognized experience in the industry and a blue-chip carrier client base
In October 2021, Crawford acquired the assets of Praxis Consulting, Inc. — the leading provider of outsourced subrogation claims management and recovery services in the United States Total purchase price of $55.5 million, with an upfront payment of $45.5 million in cash with the balance structured as an earnout over a two-year period Enhances presence and market share in an area of the insurance claims ecosystem where Crawford is underpenetrated Formal entry point into $1.0B subrogation recovery market by acquiring a reputable brand, execution capability and longstanding client relationships to offer proven service offering to Crawford customers Supports our strategic pillar—service expertise—and aligns with our purpose and envisioned future Significant opportunity to leverage Crawford’s client base and accelerate Praxis Consulting’s growth Praxis Consulting FY2020 revenues: $14.3 million Praxis Consulting Leader in the subrogation claims market with over 20 years of recognized experience and proven results
In October 2021, Crawford acquired 100% of BosBoon Expertise Group B.V., a reputable specialist loss adjusting company based in The Netherlands Total purchase price of $4.9 million, structured as an upfront payment of $3.0 million in cash with the balance in an earnout over a two-year period Primarily offers expert loss adjusting services for construction, engineering, liability, bodily injury, marine and property lines, and provides third party administration services Adding specialist loss adjusters takes Crawford Netherlands’ talent strength to 100+ adjusters Significant opportunity to cross-sell expertise and to utilize adjuster capacity Supports our strategic pillar—expertise that is deep and eminent—and aligns with our purpose and envisioned future Strengthens position of Crawford Global Technical Services® in the Benelux region to Top 5 by bolstering construction and liability book of business and adding scale to marine and high-growth bodily injury services BosBoon FY2020 revenues: $3.4 million BosBoon More than two decades of specialist loss adjusting experience and a blue-chip client base
9 Impact Across Our Global Service Lines (GSLs) Third Quarter Performance Revenue $100.2M Operating Earnings $5.0M Revenue growth of 12% over the prior year period Recovering economic activity in US and impact from Hurricane Ida Benign claims environment and COVID pressures in Canada along with continued headwinds in Asia put a strain on margins, offsetting strength in the US and UK businesses Revenue growth of 13% over prior year period Impact of COVID still being felt in Canada and EU Medical management is below pre-pandemic levels Revenue growth of 21% over the prior year period Continued investment to build platform capabilities Networks business core driver of growth helped by severe weather Loss Adjusting 43% of total revenues TPA: Broadspire 35% of total revenues Platform Solutions 22% of total revenues Revenue $124.0M Operating Earnings $7.1M Revenue $64.3M Operating Earnings $11.0M
Net Promoter Score Increased overall score to 49, up three points from Q2 Referenced as part of our standard operations to further improve client service Added close to $37.0 million in new and enhanced business New and Renewal Business Activity¹ Retained 94% of our US Broadspire business through September Strong market interest in Crawford Inspection Services 10 Customer Excellence Maintained and exceeded pre-pandemic client service delivery levels (1) Estimated new and enhanced revenue won during the third quarter (2) Trailing twelve month 49 NPS² $37M 94% a Retained US Broadspire business New and enhanced business won
Financial Overview
(1) See appendix for non-GAAP explanation and reconciliation of non-GAAP measures. 12 Third Quarter 2021 Financial Summary Quarter Ended September 30, September 30, ($ in millions, except per share amounts) 2021 2020 % Change Revenues $288.5 $253.1 14% Non-GAAP Revenues excluding foreign exchange fluctuations(1) $279.1 $253.1 10% Net Income Attributable to Shareholders of Crawford & Company $11.2 $24.4 (54)% Diluted Earnings per Share CRD-A $0.20 $0.46 (57)% CRD-B $0.21 $0.46 (54)% Non-GAAP Diluted Earnings per Share 1 CRD-A $0.24 $0.34 (29)% CRD-B $0.25 $0.34 (26)% Adjusted Operating Earnings 1 $20.8 $28.1 (26)% Adjusted Operating Margin 1 7.2% 11.1% (390bps) Adjusted EBITDA 1 $29.5 $35.1 (16)% Adjusted EBITDA Margin 1 10.2% 13.8% (360bps)
Highlights Revenue growth of 12% over the prior year period Recovering economic activity in US and impact from Hurricane Ida Benign claims environment and COVID pressures in Canada along with continued headwinds in Asia put a strain on margins, offsetting strength in the US and UK businesses Operating Results (3Q 2021 v. 3Q 2020) Revenues of $124.0 million versus $110.9 million Constant dollar revenues of $117.3 million Gross profit of $28.2 million versus $33.2 million Gross profit margin of 22.7% versus 29.9% Operating earnings of $7.1 million versus $14.1 million Operating margin of 5.7% versus 12.7% Crawford Loss Adjusting Three months ended (in thousands, except percentages) September 30, 2021 September 30, 2020 Variance Revenues $123,965 $110,929 11.8% Direct expenses 95,782 77,758 23.2% Gross profit 28,183 33,171 (15.0)% Indirect expenses 21,120 19,032 11.0% Operating earnings $7,063 $14,139 (50.0)% Gross profit margin 22.7% 29.9% (7.2)% Operating margin 5.7% 12.7% (7.0)% Total cases received 97,719 89,558 9.1% Full time equivalent employees 3,492 3,262 7.1%
Crawford Platform Solutions Highlights Revenue growth of 21% over the prior year period Continued investment to build platform capabilities Networks business core driver of growth helped by severe weather Operating Results (3Q 2021 v. 3Q 2020) Revenues of $64.3 million versus $53.3 million Constant dollar revenues of $63.7 million Gross profit of $16.4 million versus $14.4 million Gross profit margin of 25.6% versus 27.0% Operating earnings of $11.0 million versus $10.7 million Operating margin of 17.1% versus 20.0% Three months ended (in thousands, except percentages) September 30, 2021 September 30, 2020 Variance Revenues $64,314 $53,287 20.7% Direct expenses 47,879 38,886 23.1% Gross profit 16,435 14,401 14.1% Indirect expenses 5,467 3,746 45.9% Operating earnings $10,968 $10,655 2.9% Gross profit margin 25.6% 27.0% (1.4)% Operating margin 17.1% 20.0% (2.9)% Total cases received 139,917 131,958 6.0% Full time equivalent employees 1,363 1,099 24.1%
Crawford TPA Solutions Highlights Revenue growth of 13% over prior year period Impact of COVID still being felt in Canada and EU Medical management is below pre-pandemic levels Operating Results (3Q 2021 v. 3Q 2020) Revenues of $100.2 million versus $88.9 million Constant dollar revenues of $98.1 million Gross profit of $19.8 million versus $17.9 million Gross profit margin of 19.7% versus 20.1% Operating earnings of $5.0 million versus $4.3 million Operating margin of 5.0% versus 4.8% Three months ended (in thousands, except percentages) September 30, 2021 September 30, 2020 Variance Revenues $100,221 $88,908 12.7% Direct expenses 80,439 71,048 13.2% Gross profit 19,782 17,860 10.8% Indirect expenses 14,748 13,572 8.7% Operating earnings $5,034 $4,288 17.4% Gross profit margin 19.7% 20.1% (0.4)% Operating margin 5.0% 4.8% 0.2% Total cases received 193,112 196,385 (1.7)% Full time equivalent employees 3,608 3,030 19.1%
Additional Financial Matters Unallocated Corporate and Shared Costs and Credits Unallocated corporate costs of $2.3 million compared to $1.0 million in the prior year period Increase primarily due to an increase in professional fees compared to 2020 and a reduction in CEWS benefits Canada Emergency Wage Subsidy Realized a $1.8 million pretax benefit versus $4.7 million benefit in Q3 2020 Don’t expect to recognize any further benefits following October 2021 Share Repurchases On a year-to-date basis, repurchased approximately 531,000 shares of CRD-A and 111,000 shares of CRD-B at an average per share cost of $9.63 and $8.68, respectively Total cost of share repurchases during 2021 was $6.1 million On November 4, the Company’s Board of Directors authorized the repurchase of up to 2.0 million shares of CRD-A and CRD-B through December 31, 2023 Revolving Credit Agreement Subsequent to quarter end, we negotiated a five-year agreement, which provides better terms, improved pricing, and enhanced financial flexibility to support our strategic objectives
(1) See Appendix for non-GAAP explanation and reconciliation Balance Sheet Highlights Unaudited ($ in thousands) September 30, 2021 December 31, 2019 December 31, 2020 December 31, 2018 Change Change Cash and cash equivalents $ 36,929 $ 44,656 $ (7,727 ) Accounts receivable, net 136,729 123,060 13,669 Unbilled revenues, net 127,510 103,528 23,982 Total receivables 264,239 226,588 37,651 Goodwill 85,696 66,537 19,159 Intangible assets arising from business acquisitions, net 75,613 71,176 4,437 Deferred revenues 54,580 51,369 3,211 Pension liabilities 36,884 53,886 (17,002 ) Short-term borrowings and current portion of finance leases 1,582 1,837 (255 ) Long-term debt, less current portion 139,028 111,758 27,270 Total debt 140,610 113,595 27,015 Total stockholders' equity attributable to Crawford & Company 220,396 186,939 33,457 Net debt 1 103,681 68,939 34,742
18 Net Debt and Pension Liability $103.7 million $36.9 million Net debt at $103.7 million Pension liability at $36.9 million $171.2 million $121.7 million
(1) See Appendix for non-GAAP explanation and reconciliation Operating And Free Cash Flow Unaudited ($ in thousands) 2021 2019 2020 2018 Change Change Net Income Attributable to Shareholders of Crawford & Company $ 29,039 $ 18,896 $ 10,143 Depreciation and Other Non-Cash Operating Items 36,242 31,658 4,584 Goodwill Impairment — 17,674 (17,674 ) Gain on Disposition of Businesses, net — (13,763 ) 13,763 Billed Receivables Change (7,352 ) 485 (7,837 ) Unbilled Receivables Change (18,990 ) (9,223 ) (9,767 ) Change in Accrued Compensation, 401K, and Other Payroll 8,612 5,130 3,482 Change in Accrued and Prepaid Income Taxes (8,627 ) 2,462 (11,089 ) Other Working Capital Changes (9,355 ) 7,452 (16,807 ) U.S. and U.K. Pension Contributions (9,526 ) (3,455 ) (6,071 ) Cash Flows from Operating Activities 20,043 57,316 (37,273 ) Property & Equipment Purchases, net (5,251 ) (10,850 ) 5,599 Capitalized Software (internal and external costs) (15,372 ) (12,793 ) (2,579 ) Free Cash Flow1 $ (580 ) $ 33,673 $ (34,253 ) For the year to date periods ended September 30,
Strategy Overview
Evolving Crawford's Strategy for Long-Term Growth Benchmark in quality and experience Digitally enabled for productivity Broadest global reach Major and Complex: Grow by investing in expertise High Volume Claims: Improve margin through efficiency Most comprehensive alternatives to traditional loss adjusting New end market capabilities enabled by tech, built on years of claims experience Scaling our offerings with compelling transactional economics Industry leading data and analytics for improved claims outcomes Leveraging digital and technology capabilities to improve adjuster and customer experience Margin enhancement through scaling LOSS ADJUSTING TPA PLATFORM SOLUTIONS Expertise that is deep and eminent Quality that sets the industry benchmark Digital that simplifies OUR STRATEGIC PILLARS Our enhanced operating structure creates a better focus for management to leverage customer synergies and simplify our capital allocation framework
Advancing Crawford’s Strategy Hired 62 specialist adjusters year to date, marking solid progress on three-year goal Benefiting from digital investments we have made in Australia and the UK Q3 2021 continued to deliver high number of transactions Top-five US carriers within the Platform Solutions Segment continued as major drivers of growth in the quarter Gaining traction in North America in Managing General Agent, Captive and carrier outsource market leveraging technology and data insights Internationally, differentiating through digital product offering Crawford Legal Services driving market share gains Strategic evolution to reimagine claims ecosystem We are building upon our already solid foundation as we aim to further position the business for future growth and cash generation LOSS ADJUSTING TPA PLATFORMS
Appendix: Non-GAAP Financial Information 24
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, gain on on disposition of businesses, income taxes and net income or loss attributable to noncontrolling interests.
Appendix: Non-GAAP Financial Information (cont.) 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 attributable to shareholders of the Company with recurring adjustments for depreciation and amortization, net corporate interest expense, income taxes and stock-based compensation expense. Additionally, adjustments for non-recurring expenses for gain on disposition of businesses have been included in the calculation of adjusted EBITDA. 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 Included in non-GAAP adjusted measurements as an add back or subtraction to GAAP measurements, are impacts of amortization of customer-relationship intangible assets, the goodwill impairment and loss on disposition of business, 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.
Total Revenues Before Reimbursements by Major Currency The following table illustrates revenue as a percentage of total revenue in the major currencies of the geographic areas in which Crawford does business: Three Months Ended (in thousands) September 30, 2021 September 30, 2020 Geographic Area Currency USD equivalent % of total USD equivalent % of total U.S. USD $ 175,554 60.9% $ 152,720 60.3% U.K. GBP 35,764 12.4% 30,067 11.9% Canada CAD 21,038 7.3% 22,266 8.8% Australia AUD 27,705 9.6% 21,197 8.4% Europe EUR 14,007 4.9% 12,730 5.0% Rest of World Various 14,432 4.9% 14,144 5.6% Total Revenues, before reimbursements $ 288,500 100.0% $ 253,124 100.0%
Reconciliation of Non-GAAP Items Revenues, Costs of Services Provided, and Operating Earnings Quarter Ended Quarter Ended Quarter Ended Quarter Ended September 30, December 31, September 30, December 31, Unaudited ($ in thousands) 2021 2019 2020 2018 Revenues Before Reimbursements Total Revenues $ 297,562 $ 261,669 Reimbursements (9,062 ) (8,545 ) Revenues Before Reimbursements 288,500 253,124 Costs of Services Provided, Before Reimbursements Total Costs of Services 220,079 185,606 Reimbursements (9,062 ) (8,545 ) Costs of Services Provided, Before Reimbursements $ 211,017 $ 177,061 Quarter Ended Quarter Ended Quarter Ended Quarter Ended September 30, December 31, September 30, December 31, Unaudited ($ in thousands) 2021 2019 2020 2018 Operating Earnings: Crawford Loss Adjusting $ 7,063 $ 14,139 Crawford Platform Solutions 10,968 10,655 Crawford TPA Solutions 5,034 4,288 Unallocated corporate and shared costs and credits, net (2,266 ) (1,027 ) Consolidated Operating Earnings 20,799 28,055 (Deduct) Add: Net corporate interest expense (1,648 ) (1,599 ) Stock option expense (296 ) (457 ) Amortization expense (2,877 ) (3,665 ) Gain on disposition of business, net — 14,104 Income tax provision (4,866 ) (11,729 ) Net loss (income) attributable to noncontrolling interests and redeemable noncontrolling interests 83 (312 ) Net Income Attributable to Shareholders of Crawford & Company $ 11,195 $ 24,397
Reconciliation of Non-GAAP Items (cont.) Adjusted EBITDA ) Quarter Ended Quarter Ended September 30, December 31, September 30, December 31, Unaudited ($ in thousands) 2021 2019 2020 2018 Net income attributable to shareholders of Crawford & Company $ 11,195 $ 24,397 Add: Depreciation and amortization 9,826 10,700 Stock-based compensation 2,001 734 Net corporate interest expense 1,648 1,599 Gain on disposition of business, net — (14,104 ) Income tax provision 4,866 11,729 Adjusted EBITDA $ 29,536 $ 35,055
Reconciliation of Non-GAAP Items (cont.) Net Debt September 30, December 31, December 31, December 31, Unaudited ($ in thousands) 2021 2019 2020 2018 Net Debt Short-term borrowings $ 1,500 $ 1,570 Current installments of finance leases and other obligations 82 267 Long-term debt and finance leases, less current installments 139,028 111,758 Total debt 140,610 113,595 Less: Cash and cash equivalents 36,929 44,656 Net debt $ 103,681 $ 68,939
Reconciliation of Non-GAAP Items (cont.) Segment Gross Profit Three months ended Three months ended ($ in thousands) September 30, 2021 December 31, 2019 September 30, 2020 December 31, 2018 Segment gross profit: Crawford Loss Adjusting $ 28,183 $ 33,171 Crawford Platform Solutions 16,435 14,401 Crawford TPA Solutions 19,782 17,860 Segment gross profit 64,400 65,432 Segment indirect costs: Crawford Loss Adjusting (21,120 ) (19,033 ) Crawford Platform Solutions (5,467 ) (3,745 ) Crawford TPA Solutions (14,748 ) (13,572 ) Unallocated corporate and shared costs, net (2,266 ) (1,027 ) Consolidated operating earnings 20,799 28,055 Net corporate interest expense (1,648 ) (1,599 ) Stock option expense (296 ) (457 ) Amortization expense (2,877 ) (3,665 ) Gain on disposition of business, net — 14,104 Income tax provision (4,866 ) (11,729 ) Net loss (income) attributable to noncontrolling interests and redeemable noncontrolling interests 83 (312 ) Net income attributable to shareholders of Crawford & Company $ 11,195 $ 24,397
Reconciliation of Third Quarter Non-GAAP Results Three Months Ended September 30, 2021 Unaudited ($ in thousands) Revenues Revenues Non-GAAP Operating Earnings Non-GAAP Operating Earnings Pretax Earnings Pretax (Loss) Earnings Net Income Attributable to Crawford & Company Net (Loss) Income Attributable to Crawford & Company Diluted Earnings per CRD-A Share Diluted (Loss) Earnings per CRD-A Share Diluted Earnings per CRD-B Share Diluted (Loss) Earnings per CRD-B Share GAAP $ 288,500 $ 20,799 $ 15,978 $ 11,195 $ 0.20 $ 0.21 Adjustments: Amortization of intangible assets — — 2,877 2,158 0.04 0.04 Non-GAAP Adjusted $ 288,500 $ 20,799 $ 18,855 $ 13,353 $ 0.24 $ 0.25 Three Months Ended September 30, 2020 Unaudited ($ in thousands) Revenues Revenues Non-GAAP Operating Earnings Non-GAAP Operating Earnings Pretax Earnings Pretax Earnings Net Income Attributable to Crawford & Company(1) Net Income Attributable to Crawford & Company Diluted Earnings per CRD-A Share(1) Diluted Earnings per CRD-A Share Diluted Earnings per CRD-B Share(1) Diluted Earnings per CRD-B Share GAAP $ 253,124 $ 28,055 $ 36,438 $ 24,397 $ 0.46 $ 0.46 Adjustments: Amortization of intangible assets — — 3,665 2,749 0.05 0.05 Income tax impact of first quarter goodwill impairment — — — 1,935 0.04 0.04 Gain on disposition of business — — (14,104 ) (11,072 ) (0.21 ) (0.21 ) Non-GAAP Adjusted $ 253,124 $ 28,055 $ 25,999 $ 18,009 $ 0.34 $ 0.34 (1) The income tax impact of goodwill impairment was based on the estimated annual effective income tax rate. Due to the non-discrete income tax treatment of the first quarter 2020 goodwill impairment, the income tax benefit normalized as income was earned during the remainder of the year, resulting in a lower full year income tax benefit during 2020.