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): March 14, 2022
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 March 14, 2022, Crawford & Company (the "Company") issued a press release containing information about the Company's financial results for the fourth 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 Friday, March 15, 2022 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 March 14, 2022 |
| 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: March 14, 2022 |
EX-99.1
Exhibit 99.1
Crawford & Company®
5335 Triangle Parkway
Peachtree Corners, GA 30092
FOR IMMEDIATE RELEASE
CRAWFORD & COMPANY REPORTS 2021 FOURTH QUARTER AND FULL YEAR RESULTS
DOUBLE DIGIT REVENUE GROWTH IN QUARTER AND YEAR
ATLANTA, (March 14, 2022) -- 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 fourth quarter ended December 31, 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
Fourth Quarter 2021
• Revenues before reimbursements of $292.9 million, up 14% over $257.4 million for the 2020 fourth quarter
• Net income attributable to shareholders of $1.7 million, compared with $9.4 million in the same period last year
• Diluted earnings per share of $0.03 for both CRD-A and CRD-B, compared with $0.18 for both CRD-A for CRD-B in the prior year fourth quarter
Non-GAAP Consolidated Results
Fourth Quarter 2021
Foreign currency exchange rates increased revenues before reimbursements by $3.0 million or 1%. Presented on a constant dollar basis to the prior year, revenues before reimbursements totaled $289.9 million, increasing 13% over $257.4 million for the 2020 fourth quarter.
Non-GAAP consolidated results for 2021 exclude the non-cash after-tax amortization of intangible assets of $2.0 million. Non-GAAP consolidated results for 2020 exclude a similar adjustment for amortization of intangible assets of $1.9 million, restructuring and other costs of $1.7 million, and the income tax impact of the first quarter 2020 goodwill impairment of $0.9 million, as explained further on page 4.
• Net income attributable to shareholders, on a non-GAAP basis, totaled $3.6 million in the 2021 fourth quarter, compared with $13.9 million in the same period last year
• Diluted earnings per share, on a non-GAAP basis, totaled $0.07 for both CRD-A and CRD-B in the 2021 fourth quarter, compared with $0.27 for both CRD-A and CRD-B in the prior year fourth quarter
• Consolidated adjusted operating earnings, on a non-GAAP basis, were $9.1 million, or 3.1% of revenues before reimbursements in the 2021 fourth quarter, compared with $18.5 million, or 7.2% of revenues, in the 2020 fourth quarter
• Consolidated adjusted EBITDA, a non-GAAP financial measure, was $17.6 million, or 6.0% of revenues before reimbursements in the 2021 fourth quarter, compared with $27.5 million, or 10.7% of revenues, in the 2020 fourth quarter
GAAP Consolidated Results
Full Year 2021
• Revenues before reimbursements of $1.102 billion in 2021, up 12% over $982.5 million for 2020
• Net income attributable to shareholders of $30.7 million, compared to $28.3 million in 2020
• Diluted earnings per share of $0.57 for both CRD-A and CRD-B, compared with $0.54 for CRD-A and $0.52 for CRD-B in 2020
Non-GAAP Consolidated Results
Full Year 2021
Foreign currency exchange rates increased revenues before reimbursements by $29.9 million or 3%. Presented on a constant dollar basis to the prior year, revenues before reimbursements totaled $1.072 billion, increasing 9% over $982.5 million for 2020.
Non-GAAP consolidated results for 2021 exclude the non-cash after-tax amortization of intangible assets of $8.3 million. Non-GAAP consolidated results for 2020 exclude a similar adjustment for amortization of intangible assets of $8.7 million, restructuring and other costs of $4.9 million, goodwill impairment of $14.2 million, and gain on disposition of businesses of $10.8 million.
• Net income attributable to shareholders, on a non-GAAP basis, totaled $39.0 million in 2021, compared with $45.4 million in 2020
• Diluted earnings per share, on a non-GAAP basis, totaled $0.72 for both CRD-A and CRD-B in 2021, compared with $0.86 for CRD-A and $0.84 for CRD-B in the prior year
• Consolidated adjusted operating earnings, on a non-GAAP basis, were $62.5 million, or 5.7% of revenues before reimbursements in 2021, compared with $71.8 million, or 7.3% of revenues, in 2020
• Consolidated adjusted EBITDA, a non-GAAP financial measure, was $98.3 million, or 8.9% of revenues before reimbursements in 2021, compared with $104.8 million, or 10.7% of revenues, in 2020
Management Comments
“Crawford delivered record revenue in 2021, excluding our previously held GCG business, driven by U.S.-led strength across the business. In Platform Solutions, our focused efforts to scale our offerings resulted in deeper relationships with top-5 carriers, while our Loss Adjusting and TPA segments benefitted from recovering economic activity in the U.S. In contrast, outside of the U.S. we experienced continued headwinds, namely a benign claims environment and fewer wage subsidies in Canada, delayed travel and hospitality recovery in Europe, increased competition for talent in Asia and pressure in one of our U.K. businesses. We believe our margin headwinds are temporary and our exceptional top-line results underscore the efficacy of our growth strategy, the strength of our global service lines, and most importantly, the relentless dedication and commitment of our employees,” commented Mr. Rohit Verma, chief executive officer of Crawford & Company.
“Throughout the year, we continued to execute our disciplined capital deployment strategy, which included the completion of three acquisitions, opportunistically repurchasing shares, and re-investment in the core business, while at the same time maintaining our strong balance sheet. Carrying forward this positive momentum, we remain keenly focused on our pursuit of restoring and enhancing lives, businesses and communities, and are confident our growth trajectory will deliver value creation for our shareholders,” concluded Mr. Verma.
Segment Results for the Fourth Quarter and Full Year
Crawford Loss Adjusting
Crawford Loss Adjusting revenues before reimbursements were $123.1 million in the fourth quarter of 2021, increasing 10.5% from $111.4 million in the fourth quarter of 2020. Absent foreign currency rate benefits of $2.1 million, fourth quarter 2021 revenues would have been $121.0 million.
The segment had operating earnings of $4.9 million in the 2021 fourth quarter decreasing from $16.3 million in the fourth quarter of 2020. The operating margin was 4.0% in the 2021 quarter and 14.6% in the 2020 quarter.
Crawford Loss Adjusting revenues before reimbursements were $475.6 million in 2021, increasing 8.5% from $438.5 million in 2020. Absent foreign currency rate benefits of $21.1 million, 2021 revenues would have been $454.5 million.
The segment had operating earnings of $23.0 million in 2021 decreasing from $41.1 million in 2020. The operating margin was 4.8% in 2021 and 9.4% in 2020.
Crawford Platform Solutions
Crawford Platform Solution revenues before reimbursements were $70.6 million in the fourth quarter of 2021, up 40.7% from $50.2 million in the same period of 2020. Absent foreign exchange rate benefits of $0.3 million, revenues would have been $70.4 million for the 2021 fourth quarter.
Operating earnings were $10.4 million in the 2021 fourth quarter, increasing from $6.7 million in the 2020 period. The segment’s operating margin for the 2021 quarter was 14.7% as compared with 13.4% in the 2020 quarter.
Crawford Platform Solution revenues before reimbursements were $228.5 million in 2021, up 32.4% from $172.6 million in 2020. Absent foreign exchange rate benefits of $1.9 million, revenues would have been $226.6 million for 2021.
Operating earnings were $36.3 million in 2021, increasing from $27.7 million in the 2020 period. The segment’s operating margin for 2021 was 15.9% as compared with 16.0% in 2020.
Crawford TPA Solutions
Crawford TPA Solutions segment revenues before reimbursements were $99.1 million in the 2021 fourth quarter, increasing 3.5% from $95.8 million in the 2020 fourth quarter. Absent foreign currency rate benefits of $0.6 million, fourth quarter 2021 revenues would have been $98.6 million.
Crawford TPA Solutions recorded operating earnings of $3.1 million in the fourth quarter of 2021, representing an operating margin of 3.1%, decreasing from $6.8 million, or 7.1% of revenues, in the 2020 fourth quarter.
Crawford TPA Solutions segment revenues before reimbursements were $398.0 million in 2021, increasing 7.2% from $371.4 million in 2020. Absent foreign currency rate benefits of $6.8 million, 2021 revenues would have been $391.1 million.
Crawford TPA Solutions recorded operating earnings of $17.6 million in 2021, representing an operating margin of 4.4%, decreasing from $20.5 million, or 5.5% of revenues, in 2020.
Unallocated Corporate and Shared Costs and Credits, Net
Unallocated corporate costs were $9.3 million in the fourth quarter of 2021, compared with $11.2 million in the same period of 2020. The decrease for the three months ended December 31, 2021 was primarily due to a $2.6 million decrease in self-insured expenses, $2.1 million lower pension expense, incentive compensation and other unallocated costs, partially offset by a $2.8 million reduction in the unallocated portion of the Canada Emergency Wage Subsidy ("CEWS") benefits, compared with 2020.
For the full year, unallocated corporate costs were $14.4 million in 2021, compared with $17.4 million in 2020. The decrease for 2021 was primarily due to a $2.3 million decrease in self-insurance and related legal costs, $5.0 million in severance and other transition costs in 2020 that were not present in 2021, and a $2.7 million decrease in pension expense, partially offset by a $3.6 million lower credit from CEWS, and a $3.4 million increase in other unallocated costs.
During the fourth quarter, the Company recognized no benefit from CEWS as compared with an overall benefit of $4.8 million in the 2020 fourth quarter. For the year, the Company recognized a $5.9 million benefit from CEWS in 2021 as compared with $13.8 million in 2020.
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, or $14.2 million after tax. 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 fourth quarter, the impact of this treatment decreased the income tax benefit by $0.9 million. There was no goodwill impairment in 2021.
Business Acquisitions and Dispositions
On October 1, 2021, the Company acquired 100% of Praxis Consulting, Inc., 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 $21.5 million, working capital adjustment payable of $0.7 million, a deferred payment of $20.0 million in February 2022, and a maximum $10.0 million payable based on achieving certain revenue performance goals in 2023 and 2024, as defined in the purchase agreement.
On October 4, 2021, the Company acquired BosBoon Expertise Group B.V. ("BosBoon"), a Netherlands-based specialist loss adjusting company. BosBoon offers a specialist range of loss adjusting services which will be added to the existing Crawford Global Technical Services proposition in the Netherlands. The purchase price includes an initial cash consideration of $2.1 million, before working capital adjustment, and a maximum of $1.9 million payable over the next two years based on achieving certain financial and nonfinancial goals, as defined in the purchase agreement.
Subsequent Events
Segment Realignment
In connection with the realignment of management responsibilities on January 1, 2022, the Company has realigned its operating segments by moving to a geographic reporting structure consisting of North America Loss Adjusting, International Operations, Broadspire, and Platform Solutions. The Company's revised reportable segments are comprised of the following:
• North America Loss Adjusting, which services the North American property and casualty market. This is comprised of the previously reported Crawford Loss Adjusting segment in the U.S. and Canada, including Global Technical Services and edjuster. The Canadian operations will include all operations within that country, including those previously reported within the Crawford TPA Solutions and Crawford Platform Solutions segments.
• International Operations, which services the global property and casualty market outside North America. This is comprised of the previously reported Crawford Loss Adjusting segment outside of North America, including Crawford Legal Services which was previously within the Crawford TPA Solutions segment. The International Operations will include all operations within the respective countries, including those previously reported within the Crawford TPA Solutions and Crawford Platform Solutions segments.
• Broadspire, which provides third party administration for workers' compensation, auto and liability, disability absence management, medical management, and accident and health to corporations, brokers and insurers in the U.S.
• Platform Solutions, which consists of Contractor Connection, Networks, and Subrogation service lines in the U.S. The Networks service line includes Catastrophe operations and WeGoLook.
The succeeding interim and annual periods will disclose the reportable segments under the new basis with prior periods restated to reflect the change.
Asset Disposal
The Company sold its Canadian head office building in Kitchener, Ontario Canada in the first quarter of 2022 for $3.1 million and expects to recognize an estimated pretax gain on disposal of $1.8 million.
Share Repurchase Authorization
On February 10, 2022, the Company's Board of Directors authorized the addition of 5,000,000 shares of CRD-A or CRD-B (or a combination of the two) to its 2021 Repurchase Authorization which had a remaining authorization to purchase 413,317 shares at December 31, 2021. Under the repurchase program, repurchases may be made through December 31, 2023 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 2021, particularly in the U.S., compared with the significant reductions experienced in the prior year, where revenues were down in the range of $45.0 to $55.0 million. Due to ongoing 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 December 31, 2021, totaled $53.2 million, compared with $44.7 million at December 31, 2020. The Company’s total debt outstanding as of December 31, 2021, totaled $175.0 million, compared with $113.6 million at December 31, 2020.
The Company’s operations provided $54.3 million of cash during 2021, compared with $93.2 million in 2020. The decrease in cash provided by operating activities was primarily due to a $16.8 million increase in change in billed and unbilled accounts receivable, a $19.5 million change in payroll tax payments under the CARES Act, and an increase in income tax payments.
The Company made $9.0 million in contributions to its U.S. defined benefit pension plan and $0.7 million to its U.K. plans for 2021, compared with $9.0 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 1,698,182 shares of CRD-B at an average per share cost of $9.63 and $8.26, respectively. The total cost of share repurchases during 2021 was $19.1 million.
Conference Call
As previously announced, Crawford & Company will host a conference call on March 15, 2022, at 8:30 a.m. Eastern Time to discuss its fourth quarter 2021 results. The conference call can be accessed live by dialing 1-833-900-2283 and using Conference ID 4285212. 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 April 15, 2022. 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:
| Year Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | December 31,2020 | December 31,2021 | December 31,2020 | |||||||||||||
| Geographic Area | Currency | % of total | equivalent | % of total | equivalent | % of total | equivalent | % of total | ||||||||
| U.S. | 62.2 | % | 59.0 | % | 59.8 | % | 58.1 | % | ||||||||
| U.K. | 11.1 | % | 13.1 | % | 12.2 | % | 13.1 | % | ||||||||
| Canada | CAD | 7.6 | % | 8.1 | % | 7.7 | % | 9.1 | % | |||||||
| Australia | AUD | 9.0 | % | 8.6 | % | 9.6 | % | 8.2 | % | |||||||
| Europe | 4.3 | % | 5.4 | % | 4.9 | % | 5.5 | % | ||||||||
| Rest of World | Various | 5.8 | % | 5.8 | % | 5.8 | % | 6.0 | % | |||||||
| 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 | Year Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | December 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | ||||||||
| Operating earnings: | ||||||||||||
| Crawford Loss Adjusting | $ | 4,866 | $ | 16,250 | $ | 22,990 | $ | 41,104 | ||||
| Crawford Platform Solutions | 10,397 | 6,711 | 36,334 | 27,650 | ||||||||
| Crawford TPA Solutions | 3,102 | 6,799 | 17,567 | 20,507 | ||||||||
| Unallocated corporate and shared costs, net | (9,305 | ) | (11,241 | ) | (14,386 | ) | (17,431 | ) | ||||
| Consolidated operating earnings | 9,060 | 18,519 | 62,505 | 71,830 | ||||||||
| (Deduct) add: | ||||||||||||
| Net corporate interest expense | (2,116 | ) | (1,648 | ) | (6,559 | ) | (7,923 | ) | ||||
| Stock option expense | (353 | ) | (89 | ) | (1,053 | ) | (1,122 | ) | ||||
| Amortization expense | (2,603 | ) | (2,500 | ) | (11,029 | ) | (11,653 | ) | ||||
| Goodwill impairment | — | — | — | (17,674 | ) | |||||||
| Restructuring and other costs, net | — | (2,419 | ) | — | (8,133 | ) | ||||||
| Gain on disposition of businesses, net | — | — | — | 13,763 | ||||||||
| Income tax provision | (2,389 | ) | (2,459 | ) | (13,316 | ) | (12,013 | ) | ||||
| Net loss (income) attributable to noncontrolling interests and redeemable noncontrolling interests | 54 | (3 | ) | 144 | 1,221 | |||||||
| Net income attributable to shareholders of Crawford & Company | $ | 1,653 | $ | 9,401 | $ | 30,692 | $ | 28,296 |
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 | Year Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | December 31,<br>2021 | December 31,<br>2020 | December 31,<br>2021 | December 31,<br>2020 | |||||
| Net income attributable to shareholders of Crawford & Company | $ | 1,653 | $ | 9,401 | $ | 30,692 | $ | 28,296 | |
| Add (Deduct): | |||||||||
| Depreciation and amortization | 9,408 | 9,961 | 40,176 | 40,111 | |||||
| Stock-based compensation | 2,021 | 1,652 | 7,585 | 4,384 | |||||
| Net corporate interest expense | 2,116 | 1,648 | 6,559 | 7,923 | |||||
| Goodwill impairment | — | — | — | 17,674 | |||||
| Restructuring and other costs, net | — | 2,419 | — | 8,133 | |||||
| Gain on disposition of businesses, net | — | — | — | (13,763 | ) | ||||
| Income tax provision | 2,389 | 2,459 | 13,316 | 12,013 | |||||
| Non-GAAP adjusted EBITDA | $ | 17,587 | $ | 27,540 | $ | 98,328 | $ | 104,771 |
Following is a reconciliation of operating cash flow to free cash flow for the twelve months ended December 31, 2021 and 2020:
| Twelve Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | December 31, 2021 | December 31, 2020 | Change | ||||||
| Net Cash Provided by Operating Activities | $ | 54,321 | $ | 93,178 | $ | (38,857 | ) | ||
| Less: | |||||||||
| Property & Equipment Purchases, net | (9,225 | ) | (14,226 | ) | 5,001 | ||||
| Capitalized Software (internal and external costs) | (21,729 | ) | (23,154 | ) | 1,425 | ||||
| Free Cash Flow | $ | 23,367 | $ | 55,798 | $ | (32,431 | ) |
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 December 31, 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 | $ | 292,894 | $ | 9,060 | $ | 3,988 | $ | 1,653 | $ | 0.03 | $ | 0.03 | ||||
| Adjustments: | ||||||||||||||||
| Amortization of intangible assets | — | — | 2,603 | 1,952 | 0.04 | 0.04 | ||||||||||
| Non-GAAP Adjusted | $ | 292,894 | $ | 9,060 | $ | 6,591 | $ | 3,605 | $ | 0.07 | $ | 0.07 | ||||
| Three Months Ended December 31, 2020 | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| (in thousands) | Revenues | Non-GAAP Operating earnings | Pretax earnings | Net income <br>attributable to Crawford & Company(1) | Diluted earnings per <br>CRD-A <br>share(1) | Diluted earnings per <br>CRD-B <br>share(1) | ||||||||||
| GAAP | $ | 257,421 | $ | 18,519 | $ | 11,863 | $ | 9,401 | $ | 0.18 | $ | 0.18 | ||||
| Adjustments: | ||||||||||||||||
| Amortization of intangible assets | — | — | 2,500 | 1,875 | 0.04 | 0.04 | ||||||||||
| Income tax impact of first quarter goodwill impairment | — | — | — | 935 | 0.02 | 0.02 | ||||||||||
| Restructuring and other costs, net | — | — | 2,419 | 1,664 | 0.03 | 0.03 | ||||||||||
| Non-GAAP Adjusted | $ | 257,421 | $ | 18,519 | $ | 16,782 | $ | 13,875 | $ | 0.27 | $ | 0.27 | ||||
| Year Ended December 31, 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 | ||||||||||
| GAAP | $ | 1,102,032 | $ | 62,505 | $ | 43,864 | $ | 30,692 | $ | 0.57 | $ | 0.57 | ||||
| Adjustments: | ||||||||||||||||
| Amortization of intangible assets | — | — | 11,029 | 8,272 | 0.15 | 0.15 | ||||||||||
| Non-GAAP Adjusted | $ | 1,102,032 | $ | 62,505 | $ | 54,893 | $ | 38,964 | $ | 0.72 | $ | 0.72 | ||||
| Year Ended December 31, 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 | Diluted earnings per <br>CRD-B <br>share | ||||||||||
| GAAP | $ | 982,492 | $ | 71,830 | $ | 39,088 | $ | 28,296 | $ | 0.54 | $ | 0.52 | ||||
| Adjustments: | ||||||||||||||||
| Goodwill impairment | — | — | 17,674 | 14,209 | 0.27 | 0.27 | ||||||||||
| Restructuring and other costs, net | — | — | 8,133 | 4,927 | 0.09 | 0.09 | ||||||||||
| Gain on disposition of businesses, net | — | — | (13,763 | ) | (10,807 | ) | (0.20 | ) | (0.20 | ) | ||||||
| Amortization of intangible assets | — | — | 11,653 | 8,740 | 0.16 | 0.16 | ||||||||||
| Non-GAAP Adjusted | $ | 982,492 | $ | 71,830 | $ | 62,785 | $ | 45,365 | $ | 0.86 | $ | 0.84 |
(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.
Following is information regarding the weighted average shares used in the computation of basic and diluted earnings per share:
| Three Months Ended | Year Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands) | December 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | ||||
| Weighted-Average Shares Used to Compute Basic Earnings Per Share: | ||||||||
| Class A Common Stock | 30,681 | 30,692 | 30,760 | 30,605 | ||||
| Class B Common Stock | 21,640 | 22,510 | 22,237 | 22,527 | ||||
| Weighted-Average Shares Used to Compute Diluted Earnings Per Share: | ||||||||
| Class A Common Stock | 31,249 | 30,981 | 31,743 | 30,857 | ||||
| Class B Common Stock | 21,640 | 22,510 | 22,237 | 22,527 |
Further information regarding the Company’s operating results for the quarter and twelve months ended December 31, 2021, financial position as of December 31, 2021, and cash flows for the twelve months ended December 31, 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 December 31, | 2021 | 2020 | % Change | |||||
|---|---|---|---|---|---|---|---|---|
| Revenues: | ||||||||
| Revenues Before Reimbursements | $ | 292,894 | $ | 257,421 | 14 | % | ||
| Reimbursements | 10,075 | 8,184 | 23 | % | ||||
| Total Revenues | 302,969 | 265,605 | 14 | % | ||||
| Costs and Expenses: | ||||||||
| Costs of Services Provided, Before Reimbursements | 220,856 | 185,354 | 19 | % | ||||
| Reimbursements | 10,075 | 8,184 | 23 | % | ||||
| Total Costs of Services | 230,931 | 193,538 | 19 | % | ||||
| Selling, General, and Administrative Expenses | 66,730 | 55,624 | 20 | % | ||||
| Corporate Interest Expense, Net | 2,116 | 1,648 | 28 | % | ||||
| Restructuring and Other Costs, Net | - | 2,419 | nm | |||||
| Total Costs and Expenses | 299,777 | 253,229 | 18 | % | ||||
| Other Income (Expense), Net | 796 | (513 | ) | nm | ||||
| Income Before Income Taxes | 3,988 | 11,863 | (66 | )% | ||||
| Provision for Income Taxes | 2,389 | 2,459 | (3 | )% | ||||
| Net Income | 1,599 | 9,404 | (83 | )% | ||||
| Net Loss (Income) Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests | 54 | (3 | ) | nm | ||||
| Net Income Attributable to Shareholders of Crawford & Company | $ | 1,653 | $ | 9,401 | (82 | )% | ||
| Earnings Per Share - Basic: | ||||||||
| Class A Common Stock | $ | 0.03 | $ | 0.18 | (83 | )% | ||
| Class B Common Stock | $ | 0.03 | $ | 0.18 | (83 | )% | ||
| Earnings Per Share - Diluted: | ||||||||
| Class A Common Stock | $ | 0.03 | $ | 0.18 | (83 | )% | ||
| Class B Common Stock | $ | 0.03 | $ | 0.18 | (83 | )% | ||
| Cash Dividends Per Share: | ||||||||
| Class A Common Stock | $ | 0.06 | $ | 0.05 | 20 | % | ||
| Class B Common Stock | $ | 0.06 | $ | 0.05 | 20 | % |
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands, Except Per Share Amounts and Percentages)
| Year Ended December 31, | 2021 | 2020 | % Change | |||||
|---|---|---|---|---|---|---|---|---|
| Revenues: | ||||||||
| Revenues Before Reimbursements | $ | 1,102,032 | $ | 982,492 | 12 | % | ||
| Reimbursements | 37,199 | 33,703 | 10 | % | ||||
| Total Revenues | 1,139,231 | 1,016,195 | 12 | % | ||||
| Costs and Expenses: | ||||||||
| Costs of Services Provided, Before Reimbursements | 810,231 | 703,617 | 15 | % | ||||
| Reimbursements | 37,199 | 33,703 | 10 | % | ||||
| Total Costs of Services | 847,430 | 737,320 | 15 | % | ||||
| Selling, General, and Administrative Expenses | 244,850 | 218,952 | 12 | % | ||||
| Corporate Interest Expense, Net | 6,559 | 7,923 | (17 | )% | ||||
| Goodwill Impairment | - | 17,674 | nm | |||||
| Restructuring and Other Costs, Net | - | 8,133 | nm | |||||
| Gain on Disposition of Businesses, Net | - | (13,763 | ) | nm | ||||
| Total Costs and Expenses | 1,098,839 | 976,239 | 13 | % | ||||
| Other Income (Expense), Net | 3,472 | (868 | ) | nm | ||||
| Income Before Income Taxes | 43,864 | 39,088 | 12 | % | ||||
| Provision for Income Taxes | 13,316 | 12,013 | 11 | % | ||||
| Net Income | 30,548 | 27,075 | 13 | % | ||||
| Net Loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests | 144 | 1,221 | (88 | )% | ||||
| Net Income Attributable to Shareholders of Crawford & Company | $ | 30,692 | $ | 28,296 | 8 | % | ||
| Earnings Per Share - Basic: | ||||||||
| Class A Common Stock | $ | 0.58 | $ | 0.54 | 7 | % | ||
| Class B Common Stock | $ | 0.58 | $ | 0.52 | 12 | % | ||
| Earnings Per Share - Diluted: | ||||||||
| Class A Common Stock | $ | 0.57 | $ | 0.54 | 6 | % | ||
| Class B Common Stock | $ | 0.57 | $ | 0.52 | 10 | % | ||
| Cash Dividends Per Share: | ||||||||
| Class A Common Stock | $ | 0.24 | $ | 0.19 | 26 | % | ||
| Class B Common Stock | $ | 0.24 | $ | 0.17 | 41 | % |
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
As of December 31, 2021 and December 31, 2020
Unaudited
(In Thousands, Except Par Values)
| December 31, | |||||
|---|---|---|---|---|---|
| 2020 | |||||
| ASSETS | |||||
| Current Assets: | |||||
| Cash and Cash Equivalents | 53,228 | $ | 44,656 | ||
| Accounts Receivable, Net | 134,458 | 123,060 | |||
| Unbilled Revenues, at Estimated Billable Amounts | 118,722 | 103,528 | |||
| Income Taxes Receivable | 4,936 | 1,269 | |||
| Prepaid Expenses and Other Current Assets | 34,576 | 29,490 | |||
| Total Current Assets | 345,920 | 302,003 | |||
| Net Property and Equipment | 33,721 | 36,402 | |||
| Other Assets: | |||||
| Operating Lease Right-of-Use Asset, Net | 99,369 | 109,315 | |||
| Goodwill | 116,526 | 66,537 | |||
| Intangible Assets Arising from Business Acquisitions, Net | 97,571 | 71,176 | |||
| Capitalized Software Costs, Net | 75,802 | 71,021 | |||
| Deferred Income Tax Assets | 21,266 | 25,595 | |||
| Other Noncurrent Assets | 62,464 | 70,935 | |||
| Total Other Assets | 472,998 | 414,579 | |||
| Total Assets | 852,639 | $ | 752,984 | ||
| LIABILITIES AND SHAREHOLDERS’ INVESTMENT | |||||
| Current Liabilities: | |||||
| Short-Term Borrowings | 10,704 | $ | 1,837 | ||
| Accounts Payable | 48,470 | 41,544 | |||
| Accrued Compensation and Related Costs | 96,018 | 81,848 | |||
| Self-Insured Risks | 13,222 | 11,390 | |||
| Income Taxes Payable | 1,200 | 5,822 | |||
| Operating Lease Liability | 25,238 | 32,745 | |||
| Other Accrued Liabilities | 76,884 | 40,375 | |||
| Deferred Revenues | 32,119 | 27,233 | |||
| Total Current Liabilities | 303,855 | 242,794 | |||
| Noncurrent Liabilities: | |||||
| Long-Term Debt and Finance Leases, Less Current Installments | 164,315 | 111,758 | |||
| Operating Lease Liability | 88,408 | 93,228 | |||
| Deferred Revenues | 23,786 | 24,136 | |||
| Accrued Pension Liabilities | 17,892 | 53,886 | |||
| Other Noncurrent Liabilities | 42,986 | 40,254 | |||
| Total Noncurrent Liabilities | 337,387 | 323,262 | |||
| Shareholders’ Investment: | |||||
| Class A Common Stock, 1.00 Par Value | 30,996 | 30,847 | |||
| Class B Common Stock, 1.00 Par Value | 20,812 | 22,510 | |||
| Additional Paid-in Capital | 74,229 | 67,193 | |||
| Retained Earnings | 266,369 | 265,245 | |||
| Accumulated Other Comprehensive Loss | (180,441 | ) | (198,856 | ) | |
| Shareholders’ Investment Attributable to Shareholders of Crawford & Company | 211,965 | 186,939 | |||
| Noncontrolling Interests | (568 | ) | (11 | ) | |
| Total Shareholders’ Investment | 211,397 | 186,928 | |||
| Total Liabilities and Shareholders’ Investment | 852,639 | $ | 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 December 31,
| Crawford Loss Adjusting | % | Crawford Platform Solutions | % | Crawford TPA Solutions | % | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | Change | 2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||||
| Revenues Before Reimbursements | $ | 123,129 | $ | 111,397 | 10.5% | $ | 70,641 | $ | 50,206 | 40.7% | $ | 99,124 | $ | 95,818 | 3.5% | |||||||
| Direct Compensation, Fringe Benefits & Non-Employee Labor | 85,055 | 67,518 | 26.0% | 49,076 | 33,612 | 46.0% | 65,437 | 59,139 | 10.6% | |||||||||||||
| % of Revenues Before Reimbursements | 69.1 | % | 60.6 | % | 69.5 | % | 66.9 | % | 66.0 | % | 61.7 | % | ||||||||||
| Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor | 33,208 | 27,628 | 20.2% | 11,168 | 9,883 | 13.0% | 30,585 | 29,880 | 2.4% | |||||||||||||
| % of Revenues Before Reimbursements | 27.0 | % | 24.8 | % | 15.8 | % | 19.7 | % | 30.9 | % | 31.2 | % | ||||||||||
| Total Operating Expenses | 118,263 | 95,146 | 24.3% | 60,244 | 43,495 | 38.5% | 96,022 | 89,019 | 7.9% | |||||||||||||
| Operating Earnings (1) | $ | 4,866 | $ | 16,251 | (70.1)% | $ | 10,397 | $ | 6,711 | 54.9% | $ | 3,102 | $ | 6,799 | (54.4)% | |||||||
| % of Revenues Before Reimbursements | 4.0 | % | 14.6 | % | 14.7 | % | 13.4 | % | 3.1 | % | 7.1 | % |
Twelve Months Ended December 31,
| Crawford Loss Adjusting | % | Crawford Platform Solutions | % | Crawford TPA Solutions | % | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | Change | 2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||||
| Revenues Before Reimbursements | $ | 475,587 | $ | 438,491 | 8.5% | $ | 228,481 | $ | 172,609 | 32.4% | $ | 397,964 | $ | 371,392 | 7.2% | |||||||
| Direct Compensation, Fringe Benefits & Non-Employee Labor | 315,158 | 269,817 | 16.8% | 149,201 | 108,707 | 37.3% | 256,845 | 234,179 | 9.7% | |||||||||||||
| % of Revenues Before Reimbursements | 66.3 | % | 61.5 | % | 65.3 | % | 63.0 | % | 64.5 | % | 63.1 | % | ||||||||||
| Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor | 137,439 | 127,570 | 7.7% | 42,946 | 36,252 | 18.5% | 123,552 | 116,706 | 5.9% | |||||||||||||
| % of Revenues Before Reimbursements | 28.9 | % | 29.1 | % | 18.8 | % | 21.0 | % | 31.0 | % | 31.4 | % | ||||||||||
| Total Operating Expenses | 452,597 | 397,387 | 13.9% | 192,147 | 144,959 | 32.6% | 380,397 | 350,885 | 8.4% | |||||||||||||
| Operating Earnings (1) | $ | 22,990 | $ | 41,104 | (44.1)% | $ | 36,334 | $ | 27,650 | 31.4% | $ | 17,567 | $ | 20,507 | (14.3)% | |||||||
| % of Revenues Before Reimbursements | 4.8 | % | 9.4 | % | 15.9 | % | 16.0 | % | 4.4 | % | 5.5 | % |
(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 5 and 6 for additional information about segment operating earnings.
CRAWFORD & COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31, 2021 and December 31, 2020
Unaudited
(In Thousands)
| 2021 | 2020 | |||||
|---|---|---|---|---|---|---|
| Cash Flows From Operating Activities: | ||||||
| Net income | $ | 30,548 | $ | 27,075 | ||
| Reconciliation of net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 40,176 | 40,111 | ||||
| Goodwill impairment | — | 17,674 | ||||
| Deferred income taxes | (2,992 | ) | (9,005 | ) | ||
| Stock-based compensation | 7,585 | 4,384 | ||||
| Gain on disposition of businesses, net | — | (13,763 | ) | |||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable, net | (5,475 | ) | 5,063 | |||
| Unbilled revenues, net | (9,979 | ) | (3,762 | ) | ||
| Accrued or prepaid income taxes | (7,232 | ) | 9,311 | |||
| Accounts payable and accrued liabilities | 13,470 | 31,775 | ||||
| Deferred revenues | 3,562 | (1,074 | ) | |||
| Accrued retirement costs | (15,478 | ) | (10,790 | ) | ||
| Prepaid expenses and other operating activities | 136 | (3,821 | ) | |||
| Net cash provided by operating activities | 54,321 | 93,178 | ||||
| Cash Flows From Investing Activities: | ||||||
| Acquisitions of property and equipment | (9,225 | ) | (14,226 | ) | ||
| Capitalization of computer software costs | (21,729 | ) | (23,154 | ) | ||
| Proceeds from settlement of life insurance policies | 6,526 | — | ||||
| Payments for business acquisitions, net of cash acquired | (46,398 | ) | (9,983 | ) | ||
| Cash proceeds from disposition of businesses, net of cash disposed | — | 19,968 | ||||
| Other investing activities | — | 358 | ||||
| Net cash used in investing activities | (70,826 | ) | (27,037 | ) | ||
| Cash Flows From Financing Activities: | ||||||
| Cash dividends paid | (12,663 | ) | (9,645 | ) | ||
| Repurchases of common stock | (19,134 | ) | (2,666 | ) | ||
| Increases in short-term and revolving credit facility borrowings | 113,312 | 108,142 | ||||
| Payments on short-term and revolving credit facility borrowings | (52,306 | ) | (169,675 | ) | ||
| Payments of contingent consideration on acquisitions | (1,544 | ) | — | |||
| Other financing activities | (3,008 | ) | (525 | ) | ||
| Net cash provided by (used in) financing activities | 24,657 | (74,369 | ) | |||
| Effects of exchange rate changes on cash and cash equivalents | 881 | 1,082 | ||||
| Increase (Decrease) in cash, cash equivalents, and restricted cash(1) | 9,033 | (7,146 | ) | |||
| Cash, cash equivalents, and restricted cash at beginning of year(1) | 44,656 | 51,802 | ||||
| Cash, cash equivalents, and restricted cash at end of period(1) | $ | 53,689 | $ | 44,656 |
(1) The 2021 amounts include beginning restricted cash of $0 at December 31, 2020, and ending restricted cash of $461,000 at December 31, 2021, which we present as part of "Prepaid expenses and other current assets" on the Balance Sheets.
Crawford & Company Fourth Quarter and Full Year 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, goodwill impairment, restructuring and other costs, 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.
(1) See appendix for non-GAAP explanation and reconciliation of non-GAAP measures Financial Highlights Full Year 2021 GAAP NON-GAAP¹ KEY METRICS¹ $1.1 BILLION Revenues before reimbursements $30.7 MILLION Net income $98.3 MILLION Adjusted EBITDA 8.9% EBITDA margin $62.5 MILLION Operating earnings $54.3 MILLION Operating cash flow $121.8 MILLION Net Debt $0.72 EPS CRD-A EPS CRD-B $0.57 EPS CRD-A EPS CRD-B
Our Long-Term Growth Strategy 1Refer to 8-K filed on 2/11/22 CRD Share repurchase authorization 8-K Corporate Strategy Acquire adjacent services to bolster presence in property claim ecosystem Bolster technical capabilities by attracting top-tier technical adjusting talent globally Drive market share within fragmented independent loss adjusting market in the US Increase presence in rapidly growing P&C insurance markets with strong outsourced claims processing tailwinds M&A Strategy Investing in long-term growth through Cap Ex and M&A Continuing buyback program Additional 5M share repurchase authorization for CRD-A and CRD-B1 Regular quarterly dividend of $0.06 per share for CRD-A and CRD-B Capital Allocation Strategy Quality that sets the industry benchmark Digital that simplifies Expertise that is deep and eminent
Corporate Strategy Overview
We have realigned our segments to create better scale and synergies and have moved to a geographic-centered reporting structure¹ Operational Reorientation North America Loss Adjusting Broadspire (US-only) International Operations Platform Solutions (US-only) Comprised of the following service lines in the U.S. and Canada2 Comprised of all reported service lines outside of North America2 Provides third party administration for workers' compensation, auto and liability, disability absence management, medical management, and accident and health to corporations, brokers and insurers in the U.S. Consists of Contractor Connection, Networks, and Subrogation service lines in the U.S. The Networks service line includes Catastrophe operations and WeGoLook US GTS US Field Ops Canada Loss Adjusting Canada TPA Canada Contractor Connection edjuster UK Europe Australia Asia Latin America Legal Services Claims Medical Management Disability RMIS Contractor Connection CAT WeGoLook Subrogation (Praxis) Effective January 1, 2022; detailed in 10-K and earnings release Includes those services previously reported within the Crawford TPA and Platform Solutions segments New structure to provide greater transparency and visibility into our key businesses
7 Impact Across Our Global Service Lines (GSLs) Full Year Performance FY Revenues $398.0M FY revenue growth of nearly 9% over prior year Onboarded 86 specialist adjusters in 2021, progressing toward our three-year goal Aided by recovering economic activity in U.S. and impact from Hurricane Ida and Winter Storm Uri FY revenue growth of 7% over prior year Benign claims environment and COVID pressures still being felt in Canada and international TPA Continued lag in medical management recovery in the U.S. FY revenue growth of 32% over prior year Improved flow through as the business continued to scale over the year Expanding margins in Networks and contribution from Praxis acquisition drove earnings improvements Loss Adjusting 43% of total FY revenues TPA: Broadspire 36% of total FY revenues Platform Solutions 21% of total FY revenues FY Revenues $475.6M FY Revenues $228.5M FY OE¹ $23.0M FY OM2 4.8% FY OE $36.3M FY OM 15.9% FY OE $17.6M FY OM 4.4% “OE” refers to Operating Earnings “OM” refers to Operating Margin
Net Promoter Score Increased overall score to 51, up three points from Q3 and six points from 2020 Referenced as part of our standard operations to further improve client service Added $103 million in new and enhanced business in 2021 New and Renewal Business Activity¹ Retained 94% of our US Broadspire business in 2021 Increasing market share with key carrier clients 8 Customer Excellence Maintained and exceeded pre-pandemic client service delivery levels (1) Estimated new and enhanced revenue won during 2021 (2) Trailing twelve months 51 NPS² 94% a Retained US Broadspire business New and enhanced business won $103M
Environmental, Social and Governance Highlights Corporate Governance Committed to maintaining the trust of our investors and other stakeholders, including our employees, clients and vendors Inclusion and Diversity Established goal to measure ourselves against baselines of diversity and inclusion, and designed a Diversity Dashboard to measure our workforce representation Introduced four new questions on our pulse survey to measure employee sentiment regarding our DEI initiatives Introduced Allyship training where employees investigated concepts of power, privilege, and personal access to opportunity. Unconscious Bias training was completed by the executive team members and mandated for our 1,340 managers globally Employee Health & Safety Continue to prioritize the health and wellness of our employees globally Providing access to physical and mental health and wellness programs, including free Headspace membership Developing an agile working environment to adjust to the post-COVID “new normal” Human Capital Development Set goal to fill 70% of open positions with internal talent Rolled out Manager Acceleration Program (MAP) for Crawford’s 1,340 (approximate) managers globally to enhance their management capability. Crawford is committed to addressing those ESG factors most material to our operations
Financial Overview
(1) See appendix for non-GAAP explanation and reconciliation of non-GAAP measures. 11 Fourth Quarter 2021 Financial Summary Quarter Ended December 31, December 31, ($ in millions, except per share amounts) 2021 2020 % Change Revenues $292.9 $257.4 14% Non-GAAP Revenues excluding foreign exchange fluctuations(1) $289.9 $257.4 13% Net Income Attributable to Shareholders of Crawford & Company $1.7 $9.4 (82)% Diluted Earnings per Share CRD-A $0.03 $0.18 (83)% CRD-B $0.03 $0.18 (83)% Non-GAAP Diluted Earnings per Share 1 CRD-A $0.07 $0.27 (74)% CRD-B $0.07 $0.27 (74)% Adjusted Operating Earnings 1 $9.1 $18.5 (51)% Adjusted Operating Margin 1 3.1% 7.2% (410bps) Adjusted EBITDA 1 $17.6 $27.5 (36)% Adjusted EBITDA Margin 1 6.0% 10.7% (470bps)
Crawford Loss Adjusting Q4 Highlights Revenue growth of 11% over the prior year period Onboarded 24 specialist adjusters in Q4, marking progress on our three-year goal Aided by recovering economic activity in U.S. and impact from Hurricane Ida Operating Results (4Q 2021 v. 4Q 2020) Revenues of $123.1 million versus $111.4 million Constant dollar revenues of $121.0 million Gross profit of $25.8 million versus $32.6 million Gross profit margin of 20.9% versus 29.3% Operating earnings of $4.9 million versus $16.3 million Operating margin of 4.0% versus 14.6% Three months ended (in thousands, except percentages) December 31, 2021 December 31, 2020 Variance Revenues $123,129 $111,397 10.5% Direct expenses 97,340 78,757 23.6% Gross profit 25,789 32,640 (21.0)% Indirect expenses 20,923 16,390 27.7% Operating earnings $4,866 $16,250 (70.1)% Gross profit margin 20.9% 29.3% (8.4)% Operating margin 4.0% 14.6% (10.6)% Total cases received 91,150 80,621 13.1% Full time equivalent employees 3,669 3,297 11.3%
Crawford Platform Solutions Q4 Highlights Revenue growth of 41% over the prior year period driven by US CAT Improved flow through as the volume of transactions continued to increase over the year Expanding margins in Networks and the positive contribution from Praxis acquisition drove earnings improvements Operating Results (4Q 2021 v. 4Q 2020) Revenues of $70.6 million versus $50.2 million Constant dollar revenues of $70.4 million Gross profit of $15.8 million versus $11.2 million Gross profit margin of 22.4% versus 22.2% Operating earnings of $10.4 million versus $6.7 million Operating margin of 14.7% versus 13.4% Three months ended (in thousands, except percentages) December 31, 2021 December 31, 2020 Variance Revenues $70,641 $50,206 40.7% Direct expenses 54,806 39,040 40.4% Gross profit 15,835 11,166 41.8% Indirect expenses 5,438 4,455 22.1% Operating earnings $10,397 $6,711 54.9% Gross profit margin 22.4% 22.2% 0.2% Operating margin 14.7% 13.4% 1.3% Total cases received 140,827 118,859 18.5% Full time equivalent employees 1,696 1,310 29.4%
Crawford TPA Solutions Q4 Highlights Revenue growth of 4% compared to prior year Increase in Crawford Legal Services Weakness in Canadian and European operations Operating Results (4Q 2021 v. 4Q 2020) Revenues of $99.1 million versus $95.8 million Constant dollar revenues of $98.6 million Gross profit of $17.9 million versus $21.3 million Gross profit margin of 18.1% versus 22.2% Operating earnings of $3.1 million versus $6.8 million Operating margin of 3.1% versus 7.1% Three months ended (in thousands, except percentages) December 31, 2021 December 31, 2020 Variance Revenues $99,124 $95,818 3.5% Direct expenses 81,217 74,546 8.9% Gross profit 17,907 21,272 (15.8)% Indirect expenses 14,805 14,473 2.3% Operating earnings $3,102 $6,799 (54.4)% Gross profit margin 18.1% 22.2% (4.1)% Operating margin 3.1% 7.1% (4.0)% Total cases received 184,326 188,207 (2.1)% Full time equivalent employees 3,691 3,151 17.1%
Additional Financial Matters Unallocated Corporate and Shared Costs and Credits Unallocated corporate costs of $9.3 million in Q4 compared to $11.2 million in the prior year period Decrease primarily due to a decrease in self-insured expenses, lower pension expense, incentive compensation and other unallocated costs, partially offset by a reduction in CEWS benefits Canada Emergency Wage Subsidy No benefit from CEWS in Q4, compared to $4.8 million in prior year Full year 2021 CEWS benefit was $5.9 million compared to $13.8 million in 2020 No further benefits from CEWS following 2021 Share Repurchases Repurchased 530,598 shares of CRD-A and 1,698,182 shares of CRD-B at an average cost per share of $9.63 and $8.26, respectively during 2021 Total cost of share repurchases during 2021 was $19.1 million On February 10, 2022, the Company’s Board of Directors authorized the repurchase of an additional 5.0 million shares of CRD-A and CRD-B through December 31, 2023 Segment Realignment On January 1, 2022, Crawford realigned its operating segments by moving to a geographic reporting structure The succeeding interim and annual periods will disclose the reportable segments under the new basis with prior periods restated to reflect the change
(1) See Appendix for non-GAAP explanation and reconciliation Balance Sheet Highlights Unaudited ($ in thousands) December 31, 2021 December 31, 2019 December 31, 2020 December 31, 2018 Change Change Cash and cash equivalents $ 53,228 $ 44,656 $ 8,572 Accounts receivable, net 134,458 123,060 11,398 Unbilled revenues, net 118,722 103,528 15,194 Total receivables 253,180 226,588 26,592 Goodwill 116,526 66,537 49,989 Intangible assets arising from business acquisitions, net 97,571 71,176 26,395 Deferred revenues 55,905 51,369 4,536 Pension liabilities 17,892 53,886 (35,994 ) Short-term borrowings and current portion of finance leases 10,704 1,837 8,867 Long-term debt, less current portion 164,315 111,758 52,557 Total debt 175,019 113,595 61,424 Total stockholders' equity attributable to Crawford & Company 211,965 186,939 25,026 Net debt 1 121,791 68,939 52,852
17 Net Debt and Pension Liability $121.8 million $17.9 million Net debt at $121.8 million Pension liability at $17.9 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 $ 30,692 $ 28,296 $ 2,396 Depreciation and Other Non-Cash Operating Items 47,533 44,625 34,269 10,356 Goodwill Impairment — — 17,674 (17,674 ) Gain on Disposition of Businesses, net — — (13,763 ) 13,763 Billed Receivables Change (5,475 (5,475 ) 5,063 (10,538 ) Unbilled Receivables Change (9,979 (9,979 ) (3,762 ) (6,217 ) Change in Accrued Compensation, 401K, and Other Payroll 4,473 12,743 8,295 4,448 Change in Accrued and Prepaid Income Taxes (13,333 (7,232 ) 9,311 (16,543 ) CARES Act Payroll Deferral and CEWS 1,400 24,800 (23,400 ) Other Working Capital Changes 13,348 (2,735 ) (7,550 ) 4,815 U.S. and U.K. Pension Contributions (15,647) (9,718 ) (9,455 ) (263 ) Cash Flows from Operating Activities 54,321 93,178 (38,857 ) Property & Equipment Purchases, net (9,225 ) (14,226 ) 5,001 Capitalized Software (internal and external costs) (21,729 ) (23,154 ) 1,425 Free Cash Flow1 $ 23,367 $ 55,798 $ (32,431 ) For the years ended December 31,
Appendix: Non-GAAP Financial Information 20
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, goodwill impairment, restructuring and other costs, gain on disposition of businesses, income taxes and net income or loss attributable to noncontrolling interests and redeemable 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 goodwill impairment, restructuring and other costs, and 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.
Crawford Loss Adjusting 2021 Highlights Revenue growth of 8.5% over the prior year period Onboarded 86 specialist adjusters in 2021, marking progress on our three-year goal Aided by recovering economic activity in U.S. and impact from Hurricane Ida and Winter Storm Uri Operating Results (FY 2021 v. FY 2020) Revenues of $475.6 million versus $438.5 million Constant dollar revenues of $454.5 million Gross profit of $106.7 million versus $118.9 million Gross profit margin of 22.4% versus 27.1% Operating earnings of $23.0 million versus $41.1 million Operating margin of 4.8% versus 9.4% Year ended (in thousands, except percentages) December 31, 2021 December 31, 2020 Variance Revenues $475,587 $438,491 8.5% Direct expenses 368,932 319,637 15.4% Gross profit 106,655 118,854 (10.3)% Indirect expenses 83,665 77,750 7.6% Operating earnings $22,990 $41,104 (44.1)% Gross profit margin 22.4% 27.1% (4.7)% Operating margin 4.8% 9.4% (4.6)% Total cases received 361,528 337,981 7.0% Full time equivalent employees 3,491 3,327 4.9%
Crawford Platform Solutions 2021 Highlights Revenue growth of 32.4% over the prior year period driven by US CAT Improved flow through as the business continued to scale over the year Expanding margins in Networks and the positive contribution from Praxis acquisition drove earnings improvements Operating Results (FY 2021 v. FY 2020) Revenues of $228.5 million versus $172.6 million Constant dollar revenues of $226.6 million Gross profit of $57.5 million versus $43.6 million Gross profit margin of 25.1% versus 25.3% Operating earnings of $36.3 million versus $27.7 million Operating margin of 15.9% versus 16.0% Year ended (in thousands, except percentages) December 31, 2021 December 31, 2020 Variance Revenues $228,481 $172,609 32.4% Direct expenses 171,020 128,990 32.6% Gross profit 57,461 43,619 31.7% Indirect expenses 21,127 15,969 32.3% Operating earnings $36,334 $27,650 31.4% Gross profit margin 25.1% 25.3% (0.2%) Operating margin 15.9% 16.0% (0.1%) Total cases received 528,685 444,651 18.9% Full time equivalent employees 1,337 1,086 23.1%
Crawford TPA Solutions 2021 Highlights Revenue growth of 7.2% over prior year period M&A contributed $18.9 million, or 5.1% of growth Benign claims environment and COVID pressures still being felt in Canada and international TPA Continued lag in medical management recovery in the U.S. Operating Results (FY 2021 v. FY 2020) Revenues of $398.0 million versus $371.4 million Constant dollar revenues of $391.1 million Gross profit of $75.9 million versus $76.7 million Gross profit margin of 19.1% versus 20.6% Operating earnings of $17.6 million versus $20.5 million Operating margin of 4.4% versus 5.5% Year ended (in thousands, except percentages) December 31, 2021 December 31, 2020 Variance Revenues $397,964 $371,392 7.2% Direct expenses 322,036 294,727 9.3% Gross profit 75,928 76,665 (1.0)% Indirect expenses 58,361 56,158 3.9% Operating earnings $17,567 $20,507 (14.3)% Gross profit margin 19.1% 20.6% (1.5)% Operating margin 4.4% 5.5% (1.1)% Total cases received 762,837 779,123 (2.1)% Full time equivalent employees 3,579 3,128 14.4%
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) December 31, 2021 December 31, 2020 Geographic Area Currency USD equivalent % of total USD equivalent % of total U.S. USD $ 182,115 62.2% $ 151,765 59.0% U.K. GBP 32,396 11.1% 33,665 13.1% Canada CAD 22,336 7.6% 20,823 8.1% Australia AUD 26,221 9.0% 22,179 8.6% Europe EUR 12,721 4.3% 13,985 5.4% Rest of World Various 17,105 5.8% 15,004 5.8% Total Revenues, before reimbursements $ 292,894 100.0% $ 257,421 100.0% Year Ended (in thousands) December 31, 2021 December 31, 2020 Geographic Area Currency USD equivalent % of total USD equivalent % of total U.S. USD $ 658,785 59.8% $ 570,820 58.1% U.K. GBP 134,663 12.2% 128,674 13.1% Canada CAD 84,945 7.7% 89,162 9.1% Australia AUD 105,633 9.6% 80,589 8.2% Europe EUR 54,136 4.9% 54,122 5.5% Rest of World Various 63,870 5.8% 59,125 6.0% Total Revenues, before reimbursements $ 1,102,032 100.0% $ 982,492 100.0%
Reconciliation of Non-GAAP Items Revenues, Costs of Services Provided, and Operating Earnings Quarter Ended Quarter Ended Quarter Ended Quarter Ended December 31, December 31, December 31, December 31, Unaudited ($ in thousands) 2021 2019 2020 2018 Revenues Before Reimbursements Total Revenues $ 302,969 $ 265,605 Reimbursements (10,075 ) (8,184 ) Revenues Before Reimbursements 292,894 257,421 Costs of Services Provided, Before Reimbursements Total Costs of Services 230,931 193,538 Reimbursements (10,075 ) (8,184 ) Costs of Services Provided, Before Reimbursements $ 220,856 $ 185,354 Quarter Ended Quarter Ended Quarter Ended Quarter Ended December 31, December 31, December 31, December 31, Unaudited ($ in thousands) 2021 2019 2020 2018 Operating Earnings: Crawford Loss Adjusting $ 4,866 $ 16,250 Crawford Platform Solutions 10,397 6,711 Crawford TPA Solutions 3,102 6,799 Unallocated corporate and shared costs and credits, net (9,305 ) (11,241 ) Consolidated Operating Earnings 9,060 18,519 (Deduct) Add: Net corporate interest expense (2,116 ) (1,648 ) Stock option expense (353 ) (89 ) Amortization expense (2,603 ) (2,500 ) Restructuring and other costs, net — (2,419 ) Income tax provision (2,389 ) (2,459 ) Net loss (income) attributable to noncontrolling interests and redeemable noncontrolling interests 54 (3 ) Net Income Attributable to Shareholders of Crawford & Company $ 1,653 $ 9,401
Reconciliation of Non-GAAP Items Revenues, Costs of Services Provided, and Operating Earnings Year Ended Quarter Ended Year Ended Quarter Ended December 31, December 31, December 31, December 31, Unaudited ($ in thousands) 2021 2019 2020 2018 Revenues Before Reimbursements Total Revenues $ 1,139,231 $ 1,016,195 Reimbursements (37,199 ) (33,703 ) Revenues Before Reimbursements 1,102,032 982,492 Costs of Services Provided, Before Reimbursements Total Costs of Services 847,430 737,320 Reimbursements (37,199 ) (33,703 ) Costs of Services Provided, Before Reimbursements $ 810,231 $ 703,617 ) Year Ended Quarter Ended Year Ended Quarter Ended December 31, December 31, December 31, December 31, Unaudited ($ in thousands) 2021 2019 2020 2018 Operating Earnings: Crawford Loss Adjusting $ 22,990 $ 41,104 Crawford Platform Solutions 36,334 27,650 Crawford TPA Solutions 17,567 20,507 Unallocated corporate and shared costs and credits, net (14,386 ) (17,431 ) Consolidated Operating Earnings 62,505 71,830 (Deduct) Add: Net corporate interest expense (6,559 ) (7,923 ) Stock option expense (1,053 ) (1,122 ) Amortization expense (11,029 ) (11,653 ) Goodwill impairment — (17,674 ) Restructuring and other costs, net — (8,133 ) Gain on disposition of businesses, net — 13,763 Income tax provision (13,316 ) (12,013 ) Net loss attributable to noncontrolling interests and redeemable noncontrolling interests 144 1,221 Net Income Attributable to Shareholders of Crawford & Company $ 30,692 $ 28,296
Reconciliation of Non-GAAP Items (cont.) Adjusted EBITDA ) Quarter Ended Quarter Ended December 31, December 31, December 31, December 31, Unaudited ($ in thousands) 2021 2019 2020 2018 Net income attributable to shareholders of Crawford & Company $ 1,653 $ 9,401 Add: Depreciation and amortization 9,408 9,961 Stock-based compensation 2,021 1,652 Net corporate interest expense 2,116 1,648 Restructuring and other costs, net — 2,419 Income tax provision 2,389 2,459 Adjusted EBITDA $ 17,587 $ 27,540 ) Year Ended Quarter Ended December 31, December 31, December 31, December 31, Unaudited ($ in thousands) 2021 2019 2020 2018 Net income attributable to shareholders of Crawford & Company $ 30,692 $ 28,296 Add: Depreciation and amortization 40,176 40,111 Stock-based compensation 7,585 4,384 Net corporate interest expense 6,559 7,923 Goodwill impairment — 17,674 Restructuring and other costs, net — 8,133 Gain on disposition of businesses, net — (13,763 ) Income tax provision 13,316 12,013 Adjusted EBITDA $ 98,328 $ 104,771
Reconciliation of Non-GAAP Items (cont.) Net Debt December 31, December 31, December 31, December 31, Unaudited ($ in thousands) 2021 2019 2020 2018 Net Debt Short-term borrowings $ 10,616 $ 1,570 Current installments of finance leases and other obligations 88 267 Long-term debt and finance leases, less current installments 164,315 111,758 Total debt 175,019 113,595 Less: Cash and cash equivalents 53,228 44,656 Net debt $ 121,791 $ 68,939
Reconciliation of Non-GAAP Items (cont.) Segment Gross Profit Three months ended Three months ended ($ in thousands) December 31, 2021 December 31, 2019 December 31, 2020 December 31, 2018 Segment gross profit: Crawford Loss Adjusting $ 25,789 $ 32,640 Crawford Platform Solutions 15,835 11,166 Crawford TPA Solutions 17,907 21,272 Segment gross profit 59,531 65,078 Segment indirect costs: Crawford Loss Adjusting (20,923 ) (16,390 ) Crawford Platform Solutions (5,438 ) (4,455 ) Crawford TPA Solutions (14,805 ) (14,473 ) Unallocated corporate and shared costs, net (9,305 ) (11,241 ) Consolidated operating earnings 9,060 18,519 Net corporate interest expense (2,116 ) (1,648 ) Stock option expense (353 ) (89 ) Amortization expense (2,603 ) (2,500 ) Restructuring and other costs, net — (2,419 ) Income tax provision (2,389 ) (2,459 ) Net loss (income) attributable to noncontrolling interests and redeemable noncontrolling interests 54 (3 ) Net income attributable to shareholders of Crawford & Company $ 1,653 $ 9,401
Reconciliation of Non-GAAP Items (cont.) Segment Gross Profit Year ended Three months ended ($ in thousands) December 31, 2021 December 31, 2019 December 31, 2020 December 31, 2018 Segment gross profit: Crawford Loss Adjusting $ 106,655 $ 118,854 Crawford Platform Solutions 57,461 43,619 Crawford TPA Solutions 75,928 76,665 Segment gross profit 240,044 239,138 Segment indirect costs: Crawford Loss Adjusting (83,665 ) (77,750 ) Crawford Platform Solutions (21,127 ) (15,959 ) Crawford TPA Solutions (58,361 ) (56,158 ) Unallocated corporate and shared costs, net (14,386 ) (17,431 ) Consolidated operating earnings 62,505 71,830 Net corporate interest expense (6,559 ) (7,923 ) Stock option expense (1,053 ) (1,122 ) Amortization expense (11,029 ) (11,653 ) Goodwill impairment — (17,674 ) Restructuring and other costs, net — (8,133 ) Gain on disposition of businesses, net — 13,763 13,763 Income tax provision (13,316 ) (12,013 ) Net loss attributable to noncontrolling interests and redeemable noncontrolling interests 144 1,221 Net income attributable to shareholders of Crawford & Company $ 30,692 $ 28,296
Reconciliation of Fourth Quarter Non-GAAP Results Three Months Ended December 31, 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 $ 292,894 $ 9,060 $ 3,988 $ 1,653 $ 0.03 $ 0.03 Adjustments: Amortization of intangible assets — — 2,603 1,952 0.04 0.04 Non-GAAP Adjusted $ 292,894 $ 9,060 $ 6,591 $ 3,605 $ 0.07 $ 0.07 Three Months Ended December 31, 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 $ 257,421 $ 18,519 $ 11,863 $ 9,401 $ 0.18 $ 0.18 Adjustments: Amortization of intangible assets — — 2,500 1,875 0.04 0.04 Income tax impact of first quarter goodwill impairment — — — 935 0.02 0.02 Restructuring and other costs, net — — 2,419 1,664 0.03 0.03 Non-GAAP Adjusted $ 257,421 $ 18,519 $ 16,782 $ 13,875 $ 0.27 $ 0.27 (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.
Reconciliation of Full-Year Non-GAAP Results Year Ended December 31, 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 $ 1,102,032 $ 62,505 $ 43,864 $ 30,692 $ 0.57 $ 0.57 Adjustments: Amortization of intangible assets — — 11,029 8,272 0.15 0.15 Non-GAAP Adjusted $ 1,102,032 $ 62,505 $ 54,893 $ 38,964 $ 0.72 $ 0.72 Year Ended December 31, 2020 Unaudited ($ in thousands) Revenues Revenues Non-GAAP Operating Earnings Non-GAAP Operating Earnings Pretax Earnings Pretax Earnings Net Income Attributable to Crawford & Company Net Income Attributable to Crawford & Company Diluted Earnings per CRD-A Share Diluted Earnings per CRD-A Share Diluted Earnings per CRD-B Share Diluted Earnings per CRD-B Share GAAP $ 982,492 $ 71,830 $ 39,088 $ 28,296 $ 0.54 $ 0.52 Adjustments: Goodwill impairment — — 17,674 14,209 0.27 0.27 Restructuring and other costs, net — — 8,133 4,927 0.09 0.09 Gain on disposition of businesses, net — — (13,763 ) (10,807 ) (0.20 ) (0.20 ) Amortization of intangible assets — — 11,653 8,740 0.16 0.16 Non-GAAP Adjusted $ 982,492 $ 71,830 $ 62,785 $ 45,365 $ 0.86 $ 0.84