• Crawford & Company Reports 2018 Third Quarter Results

    Source: Nasdaq GlobeNewswire / 05 Nov 2018 21:15:31   Europe/London

    Company Reaffirms 2018 Guidance

    ATLANTA, Nov. 05, 2018 (GLOBE NEWSWIRE) -- Crawford & Company (www.crawfordandcompany.com) (NYSE:  CRD-A  and CRD-B), the world’s largest publicly listed independent provider of claims management solutions to insurance companies and self-insured entities, today announced its financial results for the third quarter ended September 30, 2018.

    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.

    Consolidated Results
    Third Quarter 2018 Summary

    • Revenues before reimbursements of $255.0 million, compared with $270.6 million for the 2017 third quarter
       
    • Net income attributable to shareholders of $7.9 million, compared to $11.8 million in the same period last year
       
    • Diluted earnings per share of $0.15 for CRD-A and $0.13 for CRD-B, compared with $0.22 for CRD-A and $0.20 for CRD-B in the prior year third quarter

    Non-GAAP Consolidated Results
    Third Quarter 2018 Summary

    Non-GAAP consolidated results have been calculated excluding the impact of the Garden City Group business the “GCG business”, disposed of on June 15, 2018, and before restructuring and special charges in 2017, and the loss on disposition of business line in 2018.

    • Revenues before reimbursements, on a non-GAAP basis, of $255.0 million up 2%, compared with $250.5 million for the 2017 third quarter
       
    • Net income attributable to shareholders, on a non-GAAP basis, totaled $8.8 million in the 2018 third quarter, compared to $11.8 million in the same period last year
       
    • Diluted earnings per share, on a non-GAAP basis, of $0.17 for CRD-A and $0.15 for CRD-B in the 2018 third quarter compared to $0.22 for CRD-A and $0.20 for CRD-B in the prior year third quarter
       
    • Consolidated adjusted operating earnings, on a non-GAAP basis, were $16.5 million, or 6% of revenues, in the 2018 third quarter, compared with $22.6 million or 9% of revenues in the 2017 third quarter
       
    • Consolidated adjusted EBITDA, a non-GAAP financial measure, was $25.5 million or 10% of revenues in the 2018 third quarter, compared with $31.1 million or 12% of revenues in the 2017 period

    Mr. Harsha V. Agadi, president and chief executive officer of Crawford & Company, stated, “Our third quarter results demonstrate the continued progress we are achieving as we return Crawford & Company to sustained revenue growth, though we fell short of our expectations for operating earnings. For the quarter, sales increased nearly 2% after excluding the results from the disposal of the GCG business from the year ago period. On a year to date basis, after adjusting for the GCG business disposal, Crawford has delivered 4% revenue growth versus 2017 which represents a marked acceleration as our initiatives begin to take hold.

    To deliver this growth and increase the pace of growth, we have made strategic investments in four primary areas: one, in technology to become more efficient; two, in our sales people to drive market share; three, in on-going staff development and training; and four, in new product development to deliver innovative solutions designed to solve industry challenges where we see large, untapped market opportunities. Additionally, we remain committed to ensuring the success of our reorganization to Global Service Lines.

    As can be seen, our investments are clearly delivering revenue growth while positioning Crawford for future success. That said, the increased investment spend is temporarily suppressing our operating margins and earnings.  Importantly, we are carefully managing the business and watching our gross profit dollar growth and margins to ensure that we are not sacrificing long-term profitability for revenue growth. Excluding the results of the GCG business, our nearly $30 million in pro forma revenue growth so far this year has generated an impressive gross profit contribution which we have reinvested back into the business.”

    Mr. Agadi concluded, “The pace of business is accelerating at Crawford as our investments continue to deliver top line results, and our long term goal remains to deliver 5% revenue growth and 15% earnings growth, annually. While operating margins and earnings have been impacted by short-term investments needed to drive future growth, we remain confident that we can manage spending and expenses to deliver margin expansion and an acceleration to earnings growth looking to 2019 and beyond.”

    Segment Results for the Third Quarter

    Crawford Claims Solutions

    Crawford Claims Solutions revenues before reimbursements were $85.3 million in the third quarter of 2018, decreasing 1% from $86.3 million in the third quarter of 2017. On a constant dollar basis, third quarter 2018 revenues were $84.4 million. Operating loss was $(0.7) million in the 2018 third quarter, compared with operating income of $2.0 million in the third quarter of 2017, representing an operating margin of (1)% in 2018 and 2% in the 2017 quarter.

    Crawford TPA Solutions: Broadspire

    Crawford TPA Solutions: Broadspire segment revenues before reimbursements were $100.3 million in the 2018 third quarter, increasing 3% from $97.2 million in the 2017 third quarter. On a constant dollar basis, a non-GAAP measure, third quarter 2018 revenues were $100.0 million. Crawford TPA Solutions: Broadspire recorded operating earnings of $8.1 million in the third quarter of 2018, representing an operating margin of 8%, compared with $9.9 million, or 10% of revenues in the 2017 third quarter.

    Crawford Specialty Solutions

    Crawford Specialty Solutions revenues before reimbursements were $69.4 million in the third quarter of 2018, down 20% from $87.0 million in the same period of 2017. On a constant dollar basis, third quarter 2018 revenues were $68.8 million. Excluding GCG revenues of $20.0 million in the third quarter of 2017, revenues increased 4% for the quarter as compared to the third quarter of 2017. Operating earnings were $14.9 million in the 2018 third quarter compared with $16.4 million in the 2017 period. The segment’s operating margin for the 2018 quarter was 21%, as compared to 19% in the 2017 quarter.

    Unallocated Corporate and Shared Costs and Credits, Net

    Unallocated corporate costs, net were $5.8 million in the third quarter of 2018, compared with $4.3 million in the same period of 2017. The increase for the three months ended September 30, 2018 was due to increases in self-insured expenses and in our allowance for doubtful accounts receivable.

    Restructuring and Special Charges

    The Company recorded no restructuring and special charges in the 2018 third quarter and restructuring charges of $1.4 million in the 2017 third quarter. Restructuring costs for the 2017 third quarter were comprised of costs related to the establishment and phase in of the Company's global business and technology service centers, restructuring and integration costs and other restructuring charges for asset impairments and lease termination costs.

    Loss on Disposition of Business Line

    On June 15, 2018, the Company completed the sale of all of the issued and outstanding equity interests in its Garden City Group business to EPIQ Class Action & Claims Solutions, Inc. The sale resulted in the recognition of a pretax loss on the sale for the nine months ended September 30, 2018, of $19.0 million after including transaction costs of $2.2 million related to the sale. Adjustments to the loss of $1.2 million pretax were recognized during the third quarter ended September 30, 2018. The loss on sale of the GCG business is presented in the Condensed Consolidated Statements of Operations as a separate charge "Loss on Disposition of Business Line".

    Balance Sheet and Cash Flow

    The Company’s consolidated cash and cash equivalents position as of September 30, 2018, totaled $53.3 million, compared with $54.0 million at December 31, 2017. The Company’s total debt outstanding as of September 30, 2018, totaled $212.9 million, compared with $225.7 million at December 31, 2017.

    During the three months ended September 30, 2018, the Company repurchased 43,190 shares of CRD-A and 10,867 of CRD-B at an average cost of $8.86 and $8.87, respectively. During the nine months ended September 30, 2018, the Company repurchased 1,055,148 shares of CRD-A and 64,755 shares of CRD-B at an average cost of $8.30 and $8.95, respectively.

    The Company’s operations provided $16.0 million of cash during the 2018 period, compared with $13.9 million in the 2017 period. The increase in cash provided by operating activities was primarily due to a decrease in accounts receivable partially offset by increased voluntary pension contributions in 2018, compared to 2017.

    The Company made contributions of $19.0 million and $4.2 million to its U.S. and U.K. defined benefit pension plans, respectively for the 2018 nine month period, compared with contributions of $9.0 million and $4.0 million, respectively, in the 2017 period. For the quarter ended September 30, 2018, in addition to its expected $3.0 million quarterly contribution, the Company made a one-time voluntary contribution of $10.0 million to its U.S. defined benefit pension plan, which generated a one time U.S. tax benefit. The Company does not expect to make any additional contributions to its U.S. and U.K. plans during the remainder of 2018.

    2018 Guidance

    Crawford & Company is reaffirming its guidance for 2018 as follows:

    • Consolidated revenues before reimbursements between $1.07 and $1.12 billion;
    • Net income attributable to shareholders of Crawford & Company between $31.0 and $36.0 million, or $0.56 to $0.66 diluted earnings per CRD-A share, and $0.49 to $0.59 diluted earnings per CRD-B share;
    • Consolidated operating earnings between $85.0 and $95.0 million;
    • Consolidated adjusted EBITDA between $127.0 and $137.0 million;
    • Non-GAAP net income attributable to shareholders of Crawford & Company, before loss on disposition of business line, between $43.0 and $48.0 million, or $0.78 to $0.88 diluted earnings per CRD-A share, and $0.71 to $0.81 diluted earnings per CRD-B share.

    To a significant extent, Crawford’s business depends on case volumes. The Company cannot predict the future trend of case volumes for a number of reasons, including the fact that the frequency and severity of weather-related claims and the occurrence of natural and man-made disasters, which are a significant source of claims and revenue for the Company, are generally not subject to accurate forecasting.

    Conference Call

    As previously announced, Crawford & Company will host a conference call on November 6, 2018 at 8:30 a.m. Eastern Time to discuss its third quarter 2018 results. The conference call can be accessed live by dialing 1-800-374-2518 and using Conference ID 9392449. A presentation for tomorrow’s call can also be found on the investor relations portion of the Company’s website, http://www.crawco.com. The call will be recorded and available for replay through December 6, 2018. You may dial 1-855-859-2056 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 and credits, but before net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, goodwill impairment charges, restructuring and special charges, loss on disposition of business line, income taxes, and net income or loss attributable to noncontrolling interests and redeemable noncontrolling interests.

    Gross profit is defined as revenues less direct costs which exclude indirect overhead costs allocated to the business.

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

    Unallocated corporate and shared costs and credits include expenses and credits related to our chief executive officer and Board of Directors, certain provisions for bad debt allowances or subsequent recoveries such as those related to bankrupt clients, 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. Restructuring and special charges and loss on disposition of business line are non-core items not directly related to our normal business operations, or our future performance.

    Income taxes, net corporate interest expense, stock option expense, and amortization of customer-relationship intangible assets are recurring components of our net income, but they are not considered part of our segment operating earnings because they are managed on a corporate-wide basis. Income taxes are calculated for the Company on a consolidated basis based on statutory rates in effect in the various jurisdictions in which we provide services, and vary significantly by jurisdiction. Net corporate interest expense results from capital structure decisions made by senior management and the Board of Directors, affecting the Company as a whole. Stock option expense represents the non-cash costs generally related to stock options and employee stock purchase plan expenses which are not allocated to our operating segments. Amortization expense is a non-cash expense for finite-lived customer-relationship and trade name intangible assets acquired in business combinations. None of these costs relate directly to the performance of our services or operating activities and, therefore, are excluded from segment operating earnings in order to better assess the results of each segment's operating activities on a consistent basis.

    Income taxes are calculated for the non-GAAP presentation of net income before restructuring and special charges and loss on disposition of business line based on statutory rates in effect in the various jurisdictions in which charges exist, and vary by jurisdiction.

    Following is a reconciliation of segment and consolidated operating earnings to net income attributable to shareholders of Crawford & Company on a GAAP basis. The reconciliation of 2018 guidance is to the midpoint of the guidance range.

     Three months ended Nine months ended Full Year
    (in thousands)September 30, 2018September 30, 2017 September 30, 2018September 30, 2017 Guidance 2018
    Operating earnings (loss):       
    Crawford TPA Solutions: Broadspire$8,055 $9,916  $24,014 $27,594   
    Crawford Claims Solutions(651)2,017  3,816 7,778   
    Crawford Specialty Solutions14,879 16,445  35,717 38,882   
    Unallocated corporate and shared costs, net(5,798)(4,326) (7,316)(2,750)  
    Consolidated operating earnings16,485 24,052  56,231 71,504  $90,000 
    (Deduct) Add:       
    Net corporate interest expense(2,398)(2,524) (7,402)(6,674) (10,000)
    Stock option expense(393)(468) (1,355)(1,342) (1,810)
    Amortization expense(2,786)(2,737) (8,342)(8,235) (11,000)
    Restructuring and special charges (1,431)  (8,818)  
    Loss on disposition of business line(1,201)  (18,996)  (18,996)
    Income taxes(1,828)(4,922) (6,255)(16,569) (13,994)
    Net loss (income) attributable to noncontrolling interests and redeemable noncontrolling interests17 (157) 159 (188) (700)
    Net income attributable to shareholders of Crawford & Company$7,896 $11,813  $14,040 $29,678  $33,500 
            

    Following is a reconciliation of net income attributable to shareholders of Crawford & Company on a GAAP basis to adjusted EBITDA. The reconciliation of 2018 guidance is to the midpoint of the guidance range.

     Three months ended Nine months ended Full Year
    (in thousands)September 30, 2018September 30, 2017 September 30, 2018September 30, 2017 Guidance 2018
    Net income attributable to shareholders of Crawford & Company$7,896 $11,813  $14,040 $29,678  $33,500 
    Add (Deduct):       
    Depreciation and amortization10,644 10,290  33,284 30,648  48,300 
    Stock-based compensation1,483 1,568  4,838 4,973  7,210 
    Net corporate interest expense2,398 2,524  7,402 6,674  10,000 
    Restructuring and special charges 1,431   8,818   
    Loss on disposition of business line1,201   18,996   18,996 
    Income taxes1,828 4,922  6,255 16,569  13,994 
    Results of the GCG business disposal (1,456) 1,007 (1,454)  
    Adjusted EBITDA$25,450 $31,092  $85,822 $95,906  $132,000 
            

    Following are the reconciliations of GAAP Revenue, Operating Earnings, Pretax Earnings, Net Income, Earnings Per Share and EBITDA to related non-GAAP Adjusted figures, which exclude the results of the disposal of the GCG business, restructuring and special changes, and the loss of disposition of business line for the three months and nine months ended September 30, 2018 and 2017.

    Three months ended September 30, 2018
    (in thousands)RevenuesNon-
    GAAP
    Operating
    earnings
    Pretax
    earnings
    Net income
    attributable to
    Crawford & Company
    Diluted
    earnings
    per CRD-A share
    Diluted
    earnings
    per CRD-B share
    GAAP$255,029 $16,485 $9,707 $7,896 $0.15 $0.13 
    Adjustments:      
    Loss on disposition of business line, net of tax of $303  1,201 898 0.02 0.02 
    Non-GAAP Adjusted$255,029 $16,485 $10,908 $8,794 $0.17 $0.15 
           


    Three months ended September 30, 2017
    (in thousands)RevenuesNon-
    GAAP
    Operating
    earnings
    Pretax
    earnings
    Net income
    attributable to
    Crawford & Company
    Diluted
    earnings
    per CRD-A share
    Diluted
    earnings
    per CRD-B share
    GAAP$270,551 $24,052 $16,892 $11,813 $0.22 $0.20 
    Adjustments:      
    GCG business results(20,032)(188)(152)(145)  
    Retained corporate overhead charged to GCG (1,304)(1,304)(840)(0.01)(0.02)
    Restructuring and special charges, net of tax of $468  1,431 963 0.01 0.02 
    Non-GAAP Adjusted$250,519 $22,560 $16,867 $11,791 $0.22 $0.20 
           


    Nine months ended September 30, 2018
    (in thousands)RevenuesNon-
    GAAP
    Operating
    earnings
    Pretax
    earnings
    Net income
    attributable to
    Crawford & Company
    Diluted
    earnings
    per CRD-A share
    Diluted
    earnings
    per CRD-B share
    GAAP$807,177 $56,231 $20,136 $14,040 $0.28 $0.22 
    Adjustments:      
    GCG business results(29,875)3,935 3,932 2,670 0.05 0.05 
    Retained corporate overhead charged to GCG (2,925)(2,925)(1,986)(0.04)(0.04)
    Loss on disposition of business line, net of tax of $4,796  18,996 14,200 0.25 0.25 
    Non-GAAP Adjusted$777,302 $57,241 $40,139 $28,924 $0.54 $0.48 
           


    Nine months ended September 30, 2017
    (in thousands)RevenuesNon-
    GAAP
    Operating
    earnings
    Pretax
    Earnings
    Net income
    attributable to
    Crawford & Company
    Diluted
    earnings
    per CRD-A share
    Diluted
    earnings
    per CRD-B share
    GAAP$807,065 $71,504 $46,435 $29,678 $0.55 $0.49 
    Adjustments:      
    GCG business results(59,659)2,267 2,463 1,535 0.02 0.02 
    Retained corporate overhead charged to GCG (3,917)(3,917)(2,523)(0.04)(0.04)
    Restructuring and special charges, net of tax of $2,883  8,818 5,935 0.10 0.11 
    Non-GAAP Adjusted$747,406 $69,854 $53,799 $34,625 $0.63 $0.58 
           

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

     Three months endedNine months ended
    (in thousands)September 30, 2018September 30, 2017September 30, 2018September 30, 2017
    Weighted-Average Shares Used to Compute Basic Earnings Per Share:    
    Class A Common Stock30,713 31,276 30,829 31,359 
    Class B Common Stock24,446 24,550 24,455 24,639 
    Weighted-Average Shares Used to Compute Diluted Earnings Per Share:    
    Class A Common Stock31,390 32,097 31,451 32,156 
    Class B Common Stock24,446 24,550 24,455 24,639 
         

    Further information regarding the Company’s operating results for the quarter and nine months ended September 30, 2018, and financial position as of September 30, 2018, and cash flows for the nine months ended September 30, 2018 is shown on the attached unaudited condensed consolidated financial statements.

    About Crawford & Company

    Based in Atlanta, Georgia, Crawford & Company (www.crawco.com) is the world's largest publicly listed independent provider of claims management solutions to the risk management and insurance industry, as well as to self-insured entities, with an expansive global network serving clients in more than 70 countries.

    The Company’s shares are traded on the NYSE under the symbols CRD-A and CRD-B. The Company's two classes of stock are substantially identical, except with respect to voting rights and the Company's ability to pay greater cash dividends on the non-voting Class A Common Stock than on the voting Class B Common Stock, subject to certain limitations. In addition, with respect to mergers or similar transactions, holders of Class A Common Stock must receive the same type and amount of consideration as holders of Class B Common Stock, unless different consideration is approved by the holders of 75% of the Class A Common Stock, voting as a class.

    Earnings per share may be different between CRD-A and CRD-B due to the payment of a higher per share dividend on CRD-A than CRD-B, and the impact that has on the earnings per share calculation according to generally accepted accounting principles.

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

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


    CRAWFORD & COMPANY

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

    Three Months Ended September 30,2018 2017 % Change
          
    Revenues:     
    Revenues Before Reimbursements$255,029  $270,551  (6)%
    Reimbursements9,834  16,115  (39)%
    Total Revenues264,863  286,666  (8)%
          
    Costs and Expenses:     
    Costs of Services Provided, Before Reimbursements179,238  192,147  (7)%
    Reimbursements9,834  16,115  (39)%
    Total Costs of Services189,072  208,262  (9)%
          
    Selling, General, and Administrative Expenses63,247  57,859  9%
    Corporate Interest Expense, Net2,398  2,524  (5)%
    Restructuring and Special Charges  1,431  nm
    Loss on Disposition of Business Line1,201    nm
    Total Costs and Expenses255,918  270,076  (5)%
          
    Other Income762  302  152%
          
    Income Before Income Taxes9,707  16,892  (43)%
    Provision for Income Taxes1,828  4,922  (63)%
          
    Net Income7,879  11,970  (34)%
          
    Net Loss (Income) Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests17  (157) (111)%
          
    Net Income Attributable to Shareholders of Crawford & Company$7,896  $11,813  (33)%
          
    Earnings Per Share - Basic:     
    Class A Common Stock$0.15  $0.22  (32)%
    Class B Common Stock$0.13  $0.20  (35)%
          
    Earnings Per Share - Diluted:     
    Class A Common Stock$0.15  $0.22  (32)%
    Class B Common Stock$0.13  $0.20  (35)%
          
    Cash Dividends Per Share:     
    Class A Common Stock$0.07  $0.07  %
    Class B Common Stock$0.05  $0.05  %
          

    nm = not meaningful

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

    Nine Months Ended September 30,2018 2017 % Change
          
    Revenues:     
    Revenues Before Reimbursements$807,177  $807,065  %
    Reimbursements41,282  43,103  (4)%
    Total Revenues848,459  850,168  %
          
    Costs and Expenses:     
    Costs of Services Provided, Before Reimbursements574,380  571,355  1%
    Reimbursements41,282  43,103  (4)%
    Total Costs of Services615,662  614,458  %
          
    Selling, General, and Administrative Expenses188,907  175,178  8%
    Corporate Interest Expense, Net7,402  6,674  11%
    Restructuring and Special Charges  8,818  nm
    Loss on Disposition of Business line18,996    nm
    Total Costs and Expenses830,967  805,128  3%
          
    Other Income2,644  1,395  90%
          
    Income Before Income Taxes20,136  46,435  (57)%
    Provision for Income Taxes6,255  16,569  (62)%
          
    Net Income13,881  29,866  (54)%
          
    Net Loss (Income) Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests159  (188) (185)%
          
    Net Income Attributable to Shareholders of Crawford & Company$14,040  $29,678  (53)%
          
    Earnings Per Share - Basic:     
    Class A Common Stock$0.28  $0.56  (50)%
    Class B Common Stock$0.22  $0.50  (56)%
          
    Earnings Per Share - Diluted:     
    Class A Common Stock$0.28  $0.55  (49)%
    Class B Common Stock$0.22  $0.49  (55)%
          
    Cash Dividends Per Share:     
    Class A Common Stock$0.21  $0.21  %
    Class B Common Stock$0.15  $0.15  %
          

    nm = not meaningful

    CRAWFORD & COMPANY
    CONDENSED CONSOLIDATED BALANCE SHEETS
    As of September 30, 2018 and December 31, 2017
    Unaudited
    (In Thousands, Except Par Values)

     September 30, December 31,
     2018 2017
    ASSETS   
        
    Current Assets:   
    Cash and Cash Equivalents$53,339  $54,011 
    Accounts Receivable, Net128,456  174,172 
    Unbilled Revenues, at Estimated Billable Amounts118,274  108,745 
    Income Taxes Receivable2,378  7,987 
    Prepaid Expenses and Other Current Assets28,444  25,452 
    Total Current Assets330,891  370,367 
        
    Net Property and Equipment35,127  41,664 
        
    Other Assets:   
    Goodwill97,579  96,916 
    Intangible Assets Arising from Business Acquisitions, Net89,713  97,147 
    Capitalized Software Costs, Net74,354  89,824 
    Deferred Income Tax Assets25,552  24,359 
    Other Noncurrent Assets78,272  67,659 
    Total Other Assets365,470  375,905 
        
    Total Assets$731,488  $787,936 
        
    LIABILITIES AND SHAREHOLDERS’ INVESTMENT   
        
    Current Liabilities:   
    Short-Term Borrowings$32,096  $24,641 
    Accounts Payable33,878  49,303 
    Accrued Compensation and Related Costs71,051  75,892 
    Self-Insured Risks16,345  13,407 
    Income Taxes Payable1,236  2,703 
    Deferred Rent14,163  15,717 
    Other Accrued Liabilities38,666  36,563 
    Deferred Revenues33,025  37,794 
    Current Installments of Capital Leases167  571 
    Total Current Liabilities240,627  256,591 
        
    Noncurrent Liabilities:   
    Long-Term Debt and Capital Leases, Less Current Installments180,683  200,460 
    Deferred Revenues22,727  22,515 
    Accrued Pension Liabilities61,400  87,035 
    Other Noncurrent Liabilities29,513  27,596 
    Total Noncurrent Liabilities294,323  337,606 
        
    Redeemable Noncontrolling Interests5,818  6,775 
        
    Shareholders’ Investment:   
    Class A Common Stock, $1.00 Par Value30,710  31,439 
    Class B Common Stock, $1.00 Par Value24,437  24,502 
    Additional Paid-in Capital58,765  53,170 
    Retained Earnings265,990  269,686 
    Accumulated Other Comprehensive Loss(194,020) (196,477)
    Shareholders’ Investment Attributable to Shareholders of Crawford & Company185,882  182,320 
    Noncontrolling Interests4,838  4,644 
    Total Shareholders’ Investment190,720  186,964 
        
    Total Liabilities and Shareholders’ Investment$731,488  $787,936 
            


    CRAWFORD & COMPANY
    SUMMARY RESULTS BY OPERATING SEGMENT
    Unaudited
    (In Thousands, Except Percentages)

    Three Months Ended September 30,

     Crawford TPA Solutions:
    Broadspire
    %Crawford Claims Solutions%Crawford Specialty Solutions%
     20182017Change20182017Change20182017Change
              
    Revenues Before Reimbursements$100,271 $97,240 3.1%$85,345 $86,277 (1.1)%$69,413 $87,034 (20.2)%
              
    Direct Compensation, Fringe Benefits & Non-Employee Labor59,146 54,387 8.8%56,583 58,675 (3.6)%34,481 42,234 (18.4)%
    % of Revenues Before Reimbursements59.0%55.9% 66.3%68.0% 49.7%48.5% 
              
    Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor33,070 32,937 0.4%29,413 25,585 15.0%20,053 28,355 (29.3)%
    % of Revenues Before Reimbursements33.0%33.9% 34.5%29.7% 28.9%32.6% 
              
    Total Operating Expenses92,216 87,324 5.6%85,996 84,260 2.1%54,534 70,589 (22.7)%
              
    Operating Earnings (1)$8,055 $9,916 (18.8)%$(651)$2,017 (132.3)%$14,879 $16,445 (9.5)%
    % of Revenues Before Reimbursements8.0%10.2% (0.8)%2.3% 21.4%18.9% 

                                                                                                                   
    Nine Months Ended September 30,

     Crawford TPA Solutions:
    Broadspire
    %Crawford Claims Solutions%Crawford Specialty Solutions%
     20182017Change20182017Change20182017Change
              
    Revenues Before Reimbursements$303,152 $290,603 4.3%$268,975 $250,565 7.3%$235,050 $265,897 (11.6)%
              
    Direct Compensation, Fringe Benefits & Non-Employee Labor177,706 164,531 8.0%177,635 166,125 6.9%119,964 126,088 (4.9)%
    % of Revenues Before Reimbursements58.6%56.6% 66.0%66.3% 51.0%47.4% 
              
    Expenses Other than Reimbursements, Direct Compensation, Fringe Benefits & Non-Employee Labor101,432 98,478 3.0%87,524 76,662 14.2%79,369 100,927 (21.4)%
    % of Revenues Before Reimbursements33.5%33.9% 32.5%30.6% 33.8%38.0% 
              
    Total Operating Expenses279,138 263,009 6.1%265,159 242,787 9.2%199,333 227,015 (12.2)%
              
    Operating Earnings (1)$24,014 $27,594 (13.0)%$3,816 $7,778 (50.9)%$35,717 $38,882 (8.1)%
    % of Revenues Before Reimbursements7.9%9.5% 1.4%3.1% 15.2%14.6% 

    (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, restructuring and special charges, loss on disposition of business line, and certain unallocated corporate and shared costs and credits. See pages 4-5 for additional information about segment operating earnings.

    CRAWFORD & COMPANY
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    Nine Months Ended September 30, 2018 and September 30, 2017
    Unaudited
    (In Thousands)

      2018 2017
    Cash Flows From Operating Activities:    
    Net Income $13,881  $29,866 
    Reconciliation of Net Income to Net Cash Provided by Operating Activities:    
    Depreciation and Amortization 33,284  30,648 
    Deferred Income Taxes (525)  
    Stock-Based Compensation Costs 4,838  4,973 
    Loss on Disposition of Business Line 18,996   
    Changes in Operating Assets and Liabilities, Net of Effects of Acquisitions and Dispositions:    
    Accounts Receivable, Net 12,811  (6,181)
    Unbilled Revenues, Net (26,156) (16,996)
    Accrued or Prepaid Income Taxes 1,313  5,202 
    Accounts Payable and Accrued Liabilities (10,665) (16,233)
    Deferred Revenues (2,068) (2,352)
    Accrued Retirement Costs (26,486) (13,360)
    Prepaid Expenses and Other Operating Activities (3,196) (1,683)
    Net Cash Provided by Operating Activities 16,027  13,884 
         
    Cash Flows From Investing Activities:    
    Acquisitions of Property and Equipment (12,406) (10,465)
    Cash proceeds from disposition of business line 40,275   
    Capitalization of Computer Software Costs (13,098) (19,906)
    Payments for Business Acquisitions, Net of Cash Acquired (2,500) (36,029)
    Other Investing Activities (218) (2,148)
    Net Cash Provided by (Used in) Investing Activities 12,053  (68,548)
         
    Cash Flows From Financing Activities:    
    Cash Dividends Paid (10,159) (10,288)
    Payments Related to Shares Received for Withholding Taxes Under Stock-Based Compensation Plans (107) (547)
    Proceeds from Shares Purchased Under Employee Stock-Based Compensation Plans 1,408  1,048 
    Repurchases of Common Stock (7,715) (6,066)
    Increases in Short-Term and Revolving Credit Facility Borrowings 89,554  82,905 
    Payments on Short-Term and Revolving Credit Facility Borrowings (100,895) (22,697)
    Payments on Capital Lease Obligations (361) (964)
    Dividends paid to noncontrolling interests (349) (291)
    Net Cash (Used In) Provided by Financing Activities (28,624) 43,100 
         
    Effects of Exchange Rate Changes on Cash and Cash Equivalents (128) 3,284 
    Decrease in Cash and Cash Equivalents (672) (8,280)
    Cash and Cash Equivalents at Beginning of Year 54,011  81,569 
    Cash and Cash Equivalents at End of Period $53,339  $73,289 

     

    Crawford_2013_287C.jpg

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