Crawford(CRD_B) - 2025 Q1 - Quarterly Results

Financial Performance Overview Crawford & Company demonstrated robust financial performance in Q1 2025, marked by significant revenue and earnings growth across both GAAP and non-GAAP measures First Quarter 2025 Financial Highlights Crawford & Company reported strong Q1 2025 financial results, with revenues before reimbursements increasing 3% to $312.0 million and net income surging 139% to $6.7 million | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | GAAP Results (Millions USD) | | | | | Revenues before reimbursements | $312.0 | $301.7 | 3% | | Net income attributable to shareholders | $6.7 | $2.8 | 139% | | Diluted EPS (CRD-A & CRD-B) (USD) | $0.13 | $0.06 | 117% | | Non-GAAP Results (Millions USD) | | | | | Revenues (constant dollar) | $316.5 | $301.7 | 5% | | Consolidated adjusted operating earnings | $17.8 | $12.1 | 47% | | Consolidated adjusted EBITDA | $26.8 | $20.6 | 30% | | Non-GAAP diluted EPS (CRD-A & CRD-B) (USD) | $0.21 | $0.13 | 62% | Management Commentary CEO Rohit Verma highlighted strong Q1 2025 momentum, attributing significant revenue and operating earnings growth to the company's diversified model and disciplined execution - The CEO emphasized continued growth and profitability momentum, with a 3.4% revenue increase and a 47% rise in consolidated operating earnings[3] - Margin improvement was driven by the company's diversified model and disciplined execution across three of its business segments[3] - Future strategy involves investing in the business, enhancing liquidity, and strengthening the balance sheet[4] Segment Performance Analysis This section provides a detailed analysis of the financial performance across Crawford & Company's four key business segments, highlighting revenue and operating margin trends North America Loss Adjusting The North America Loss Adjusting segment reported a 3.1% revenue increase to $79.7 million, with operating earnings growing to $5.5 million and margin improving to 6.9% | Metric | Q1 2025 (Millions USD) | Q1 2024 (Millions USD) | Change | | :--- | :--- | :--- | :--- | | Revenues before reimbursements | $79.7 | $77.4 | 3.1% | | Operating Earnings | $5.5 | $4.5 | 22.3% | | Operating Margin (%) | 6.9 | 5.8 | +1.1 p.p. | - Revenue growth was primarily driven by strength in U.S. Global Technical Services[5] International Operations International Operations achieved strong results with a 6.4% revenue increase to $104.4 million, and operating earnings more than doubled to $3.5 million, expanding the margin to 3.3% | Metric | Q1 2025 (Millions USD) | Q1 2024 (Millions USD) | Change | | :--- | :--- | :--- | :--- | | Revenues before reimbursements | $104.4 | $98.1 | 6.4% | | Operating Earnings | $3.5 | $1.7 | 105% | | Operating Margin (%) | 3.3 | 1.7 | +1.6 p.p. | - Growth was driven by operations in the U.K. and Europe[7] Broadspire The Broadspire segment saw a 2.2% revenue increase to $96.4 million, though operating earnings slightly decreased to $12.2 million, leading to a margin contraction to 12.7% | Metric | Q1 2025 (Millions USD) | Q1 2024 (Millions USD) | Change | | :--- | :--- | :--- | :--- | | Revenues before reimbursements | $96.4 | $94.3 | 2.2% | | Operating Earnings | $12.2 | $12.8 | (4.7)% | | Operating Margin (%) | 12.7 | 13.6 | (0.9) p.p. | - The operating margin was negatively impacted by an increase in centralized indirect support costs[10] Platform Solutions Platform Solutions experienced a slight revenue decrease to $31.5 million, yet profitability dramatically improved with operating earnings rising to $2.9 million and margin expanding to 9.3% | Metric | Q1 2025 (Millions USD) | Q1 2024 (Millions USD) | Change | | :--- | :--- | :--- | :--- | | Revenues before reimbursements | $31.5 | $31.9 | (1.2)% | | Operating Earnings | $2.9 | $1.1 | 162.5% | | Operating Margin (%) | 9.3 | 3.5 | +5.8 p.p. | - Profitability improvement was driven by higher staff augmentation revenues, cost reductions in Networks, and increased rates in Contractor Connection[12] Corporate and Other Financial Items This section covers unallocated corporate costs, SG&A expenses, and other financial matters, including a significant subsequent event related to foreign tax guidance Unallocated Corporate Costs and SG&A Unallocated corporate costs decreased to $6.2 million in Q1 2025, while total Selling, General, and Administrative (SG&A) expenses also fell by $2.7 million - Unallocated corporate costs decreased to $6.2 million in Q1 2025 from $8.0 million in Q1 2024[13] - Selling, general, and administrative expenses (SG&A) decreased by $2.7 million, or 3.5%, year-over-year[14] Other Matters and Subsequent Event The company recognized a $0.4 million pretax contingent earnout expense and $2.3 million in non-service pension costs, with a subsequent foreign tax guidance potentially impacting future financial results by $5.0 million - Recognized a pretax contingent earnout expense of $0.4 million and non-service pension costs of $2.3 million in Q1 2025[15][16] - A subsequent event involving new foreign tax guidance could result in an estimated negative financial impact of approximately $5.0 million[17] Financial Position and Cash Flow This section provides an analysis of Crawford & Company's financial position, detailing balance sheet items, cash flow activities, and capital allocation decisions Balance Sheet Analysis As of March 31, 2025, Crawford & Company reported cash and cash equivalents of $57.4 million and total debt outstanding of $246.6 million | Balance Sheet Item | March 31, 2025 (Millions USD) | December 31, 2024 (Millions USD) | | :--- | :--- | :--- | | Cash and Cash Equivalents | $57.4 | $55.4 | | Total Debt Outstanding | $246.6 | $218.1 | Cash Flow and Capital Allocation The company's operations used $13.9 million in cash during Q1 2025, an improvement from the prior year, with no share repurchases and $0.8 million contributed to U.K. pension plans - Cash used in operations improved to $13.9 million in Q1 2025, compared to $19.8 million used in Q1 2024[19] - The company made no share repurchases of CRD-A or CRD-B stock during the first three months of 2025[20] - Contributions to U.K. pension plans totaled $0.8 million for the first three months of 2025[19] Non-GAAP Financial Measures and Reconciliations This section explains the company's use of non-GAAP financial measures and provides detailed reconciliations to their GAAP equivalents Explanation of Non-GAAP Measures The company employs non-GAAP measures like 'Operating earnings' and 'Adjusted EBITDA' to provide clearer insights into core operational performance and facilitate segment evaluation - Operating earnings is the primary financial performance measure used by senior management to evaluate segment performance and make resource allocation decisions[23] - Adjusted EBITDA is used by management to evaluate, assess, and benchmark operational results and is defined as net income adjusted for items like depreciation, amortization, interest, taxes, and stock-based compensation[24] - Expenses such as income taxes, net corporate interest, stock option expense, amortization, and non-service pension costs are excluded from segment operating earnings to better assess the results of each segment's operating activities[26] GAAP to Non-GAAP Reconciliations Detailed reconciliations are provided, adjusting GAAP net income of $6.7 million for Q1 2025 to a non-GAAP adjusted net income of $10.3 million, alongside similar adjustments for operating earnings and adjusted EBITDA | Metric (Thousands USD) | Pretax earnings | Net income | Diluted EPS (CRD-A & B) (USD) | | :--- | :--- | :--- | :--- | | Q1 2025 GAAP | $9,220 | $6,684 | $0.13 | | Amortization of intangible assets | $1,800 | $1,489 | $0.03 | | Non-service related pension costs | $2,333 | $1,803 | $0.04 | | Contingent earnout adjustments | $363 | $363 | $0.01 | | Q1 2025 Non-GAAP Adjusted | $13,716 | $10,339 | $0.21 | - Consolidated operating earnings of $17.8 million for Q1 2025 are reconciled to GAAP net income of $6.7 million[28] - GAAP net income of $6.7 million is reconciled to Non-GAAP adjusted EBITDA of $26.8 million for Q1 2025[28] Consolidated Financial Statements This section presents Crawford & Company's condensed consolidated statements, including operations, balance sheets, and cash flows for the reported periods Condensed Consolidated Statements of Operations For the first quarter of 2025, total revenues increased by 3% to $323.3 million, contributing to a 141% rise in income before income taxes to $9.2 million and a 136% increase in net income to $6.7 million | Metric (Thousands USD) | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues Before Reimbursements | $312,032 | $301,654 | 3% | | Total Revenues | $323,339 | $313,073 | 3% | | Income Before Income Taxes | $9,220 | $3,826 | 141% | | Net Income Attributable to Shareholders | $6,684 | $2,837 | 136% | | Diluted EPS (Class A & B) (USD) | $0.13 | $0.06 | 117% | Condensed Consolidated Balance Sheets As of March 31, 2025, total assets were $792.3 million, with total liabilities at $633.2 million, and total shareholders' investment increasing to $159.0 million | Metric (Thousands USD) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and Cash Equivalents | $57,367 | $55,412 | | Total Current Assets | $372,837 | $374,227 | | Total Assets | $792,259 | $803,755 | | Total Current Liabilities | $286,201 | $299,727 | | Long-Term Debt and Finance Leases | $205,274 | $200,315 | | Total Shareholders' Investment | $159,023 | $155,551 | Condensed Consolidated Statements of Cash Flows For Q1 2025, net cash used in operating activities was $13.9 million, with net cash provided by financing activities at $25.0 million, resulting in a net cash increase of $1.7 million | Metric (Thousands USD) | Three Months Ended March 31, 2025 | | :--- | :--- | | Net cash used in operating activities | $(13,923) | | Net cash used in investing activities | $(9,113) | | Net cash provided by financing activities | $25,017 | | Increase in cash, cash equivalents | $1,692 |