Part I. Financial Information Financial Statements Crawford & Company reported increased revenues and net income for Q2 and H1 2023, with improved operating cash flow and asset growth Condensed Consolidated Statements of Operations Q2 2023 vs Q2 2022 Financial Performance (in thousands, except EPS) | Metric | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | Total Revenues | $333,738 | $303,651 | | Income Before Income Taxes | $13,551 | $8,605 | | Net Income Attributable to Shareholders | $8,427 | $5,830 | | Diluted EPS (Class A & B) | $0.17 | $0.12 | Six Months Ended June 30, 2023 vs 2022 Financial Performance (in thousands, except EPS) | Metric | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Total Revenues | $658,334 | $591,440 | | Income Before Income Taxes | $29,552 | $16,187 | | Net Income Attributable to Shareholders | $19,108 | $10,926 | | Diluted EPS (Class A & B) | $0.39 | $0.22 | Condensed Consolidated Balance Sheets Balance Sheet Summary (in thousands) | Account | June 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $375,129 | $351,267 | | Total Assets | $821,774 | $791,507 | | Total Current Liabilities | $289,343 | $279,487 | | Long-term debt and finance leases | $212,217 | $211,810 | | Total Liabilities | $671,879 | $668,129 | | Total Shareholders' Investment | $149,895 | $123,378 | Condensed Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Category | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $27,169 | $(12,752) | | Net cash used in investing activities | $(17,945) | $(38,593) | | Net cash (used in) provided by financing activities | $(8,478) | $46,132 | | Increase (Decrease) in Cash | $1,808 | $(6,613) | Notes to Condensed Consolidated Financial Statements The notes detail accounting policies, segment revenue recognition, and an increased effective tax rate due to international losses - The company operates through four reportable segments: North America Loss Adjusting, International Operations, Broadspire, and Platform Solutions3077 Q2 2023 Segment Revenues before Reimbursements (in thousands) | Segment | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | North America Loss Adjusting | $75,827 | $65,775 | | International Operations | $95,312 | $93,710 | | Broadspire | $83,888 | $80,114 | | Platform Solutions | $65,638 | $53,746 | Q2 2023 Segment Operating Earnings (in thousands) | Segment | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | North America Loss Adjusting | $3,900 | $2,649 | | International Operations | $3,742 | $(661) | | Broadspire | $8,148 | $7,667 | | Platform Solutions | $8,106 | $4,596 | - The effective tax rate for Q2 2023 was 38.4%, up from 32.2% in Q2 2022, primarily due to losses in certain international operations. For the six-month period, the rate was 35.5% in 2023 compared to 32.1% in 20225960 Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported strong Q2 2023 revenue growth across all segments, improved operating earnings, and robust liquidity, while addressing an IT control material weakness Business Overview - Crawford & Company is a global provider of claims management and outsourcing solutions to insurance companies and self-insured entities, serving clients in over 70 countries100 - The company's business is structured into four reportable segments: North America Loss Adjusting, International Operations, Broadspire, and Platform Solutions101104 Results of Operations Consolidated revenues grew 9.3% in Q2 2023, with all segments contributing to increased operating earnings, notably International Operations' recovery Q2 2023 Revenue Growth Before Reimbursements | Segment | Revenue Growth (Actual) | Revenue Growth (Constant Currency) | | :--- | :--- | :--- | | North America Loss Adjusting | 15.3% | 17.2% | | International Operations | 1.7% | 8.3% | | Broadspire | 4.7% | 4.7% | | Platform Solutions | 22.1% | 22.1% | | Total | 9.3% | 11.9% | - Overall cases received decreased by 6.9% in Q2 2023, primarily due to a reduction of approximately 32,000 high-frequency, low-severity cases that generated minimal revenue in Q2 2022108109 - Selling, general, and administrative (SG&A) expenses increased by 1.8% in Q2 2023, mainly due to higher compensation expense, including incentive compensation110 Liquidity, Capital Resources, and Financial Condition The company maintained strong liquidity of $245.8 million as of June 30, 2023, with operating cash flow significantly improving to $27.2 million in H1 2023 - Total liquidity at June 30, 2023, was $245.8 million, comprising $47.5 million in cash and $198.3 million in additional borrowing capacity under the Credit Facility190 - Cash provided by operating activities improved to $27.2 million in H1 2023 from a use of $12.8 million in H1 2022, mainly due to increased net income and improved working capital186 - The company made no share repurchases in H1 2023, compared to $26.7 million in H1 2022. Dividend payments were $5.9 million in H1 2023188194 Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes to its market risk exposures since December 31, 2022 - There have been no material changes in the Company's market risk exposures since December 31, 2022201 Controls and Procedures Disclosure controls were deemed ineffective due to a material weakness in U.K. IT general controls, with remediation efforts underway for completion in fiscal 2023 - Disclosure controls and procedures were deemed not effective as of June 30, 2023, due to a material weakness in internal control over financial reporting203 - The material weakness stems from ineffective IT general controls (ITGCs) in the U.K. operations related to change management and logical access over certain IT systems204 - A remediation plan is in progress, focusing on improving documentation, enhancing training, and implementing automated tools. The company expects to complete the remediation during fiscal year 2023207208 Part II. Other Information Risk Factors No new or materially changed risk factors are reported, referring to those disclosed in the prior Annual Report on Form 10-K - There are no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022211 Unregistered Sales of Equity Securities and Use of Proceeds The company made no share repurchases in Q2 2023, retaining authorization to repurchase 1,793,371 additional shares through December 31, 2023 - The company did not purchase any of its own shares during the three months ended June 30, 2023213 - As of June 30, 2023, the company was authorized to repurchase up to 1,793,371 additional shares under its 2021 Repurchase Authorization, which is effective through December 31, 2023212213 Exhibits This section lists exhibits filed with the Form 10-Q, including Credit Agreement amendments, auditor letters, and SOX certifications - Key exhibits filed include the First Amendment to the Credit Agreement, Sarbanes-Oxley Act certifications by the CEO and CFO, and various Inline XBRL data files214
Crawford(CRD_A) - 2023 Q2 - Quarterly Report