Part I. Financial Information This section presents the company's core financial statements, management's analysis, market risk disclosures, and controls Item 1. Financial Statements Presents unaudited condensed consolidated financial statements for Q3 and nine months ended September 30, 2023 and 2022, with detailed notes Condensed Consolidated Statements of Operations The company shifted from a net loss to net income in Q3 and nine months 2023, driven by revenue growth and no goodwill impairment Q3 2023 vs Q3 2022 Statement of Operations (in thousands) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $337,660 | $306,417 | 10.2% | | Total Costs and Expenses | $316,511 | $335,420 | (5.6%) | | Goodwill Impairment | $0 | $36,808 | N/A | | Income (Loss) Before Income Taxes | $18,955 | $(28,538) | N/A | | Net Income (Loss) | $12,174 | $(15,252) | N/A | | EPS - Diluted (Class A) | $0.25 | $(0.31) | N/A | Nine Months 2023 vs 2022 Statement of Operations (in thousands) | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $995,994 | $897,858 | 10.9% | | Total Costs and Expenses | $940,956 | $911,743 | 3.2% | | Goodwill Impairment | $0 | $36,808 | N/A | | Income (Loss) Before Income Taxes | $48,507 | $(12,351) | N/A | | Net Income (Loss) | $31,249 | $(4,259) | N/A | | EPS - Diluted (Class A) | $0.63 | $(0.08) | N/A | Condensed Consolidated Balance Sheets Total assets and shareholders' investment increased as of September 30, 2023, driven by receivables, software costs, and net income Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $379,991 | $351,267 | | Total Assets | $827,191 | $791,507 | | Total Current Liabilities | $290,681 | $279,487 | | Total Noncurrent Liabilities | $373,540 | $388,642 | | Total Liabilities | $664,221 | $668,129 | | Total Shareholders' Investment | $162,970 | $123,378 | Condensed Consolidated Statements of Cash Flows Operating cash flow significantly improved to positive in nine months 2023, driven by higher net income and working capital changes Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $68,077 | $(16,195) | | Net cash used in investing activities | $(27,683) | $(48,193) | | Net cash (used in) provided by financing activities | $(38,070) | $46,931 | | Increase (Decrease) in Cash | $3,637 | $(19,808) | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, segment performance, income tax, and acquisitions, covering four reportable segments - The company operates four reportable segments: North America Loss Adjusting, International Operations, Broadspire, and Platform Solutions; operating earnings is the primary measure for segment performance10582 Segment Revenues Before Reimbursements (in thousands) | Segment | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | North America Loss Adjusting | $79,390 | $66,822 | $232,344 | $197,035 | | International Operations | $98,066 | $86,066 | $285,241 | $269,048 | | Broadspire | $88,299 | $78,381 | $253,369 | $234,949 | | Platform Solutions | $59,839 | $63,655 | $188,297 | $166,262 | | Total | $325,594 | $294,924 | $959,251 | $867,294 | Segment Operating Earnings (Loss) (in thousands) | Segment | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | North America Loss Adjusting | $10,468 | $3,750 | $22,433 | $10,533 | | International Operations | $2,197 | $(3,922) | $8,974 | $(7,648) | | Broadspire | $13,532 | $6,198 | $29,607 | $20,299 | | Platform Solutions | $8,523 | $10,080 | $26,595 | $22,714 | | Total | $34,720 | $16,106 | $87,609 | $45,898 | - In Q3 2022, the company recognized a pretax goodwill impairment of $36.8 million related to International Operations, North America Loss Adjusting, and Platform Solutions; no impairment was recorded in 202380 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses financial results, highlighting revenue growth across key segments, detailed segment performance, liquidity, capital resources, and pension plans - Consolidated revenues before reimbursements increased 10.4% in Q3 2023 and 10.6% in the first nine months of 2023; excluding foreign currency, nine-month growth was 12.5%150124 - Total cases received decreased 1.6% in Q3 2023 and 5.1% year-to-date, attributed to a reduction of approximately 65,000 high-frequency, low-severity cases from 2022, indicating an improved revenue mix124125 Segment Performance Analysis Segment performance showed broad strength, with North America Loss Adjusting, International Operations, and Broadspire achieving significant operating earnings growth - North America Loss Adjusting: Q3 operating earnings surged to $10.5 million from $3.8 million YoY, with operating margin expanding from 5.6% to 13.2%, driven by strong U.S. revenue growth and improved staff utilization180 - International Operations: Achieved a significant turnaround, posting Q3 operating earnings of $2.2 million compared to a loss of $(3.9) million YoY, driven by increased revenues and cost-cutting measures190 - Broadspire: Q3 operating earnings more than doubled to $13.5 million from $6.2 million YoY, with operating margin increasing from 7.9% to 15.3%, attributed to new client programs and pricing improvements211 - Platform Solutions: Q3 operating earnings decreased to $8.5 million from $10.1 million YoY due to Networks service line revenue reduction, but year-to-date operating earnings grew 17.1% to $26.6 million239 Liquidity, Capital Resources, and Financial Condition The company maintains a strong liquidity position with $281.2 million total liquidity and significantly improved operating cash flow - Total liquidity as of September 30, 2023, was $281.2 million, comprising $49.2 million in cash and $232.0 million in available borrowing capacity262 - Cash provided by operating activities for the first nine months of 2023 was $68.1 million, a significant improvement from $16.2 million used in the same period of 2022, driven by higher earnings and better working capital management283 - Total borrowings decreased by $20.5 million to $218.4 million at September 30, 2023, from $238.9 million at December 31, 2022262 Quantitative and Qualitative Disclosures About Market Risk The company reports that its exposures to market risk have not materially changed since the disclosures made in its Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes in the Company's market risk exposures since December 31, 2022292 Controls and Procedures Disclosure controls and procedures were deemed ineffective due to a material weakness in IT general controls within U.K. operations, with a remediation plan in progress - Disclosure controls and procedures were deemed not effective as of September 30, 2023, due to a material weakness in internal control over financial reporting266 - The material weakness relates to ineffective IT general controls in change management and logical access over certain IT systems in U.K. operations266 - Management is implementing a remediation plan, including improved documentation, enhanced training, and automated tools, expected to be completed during fiscal year 2023267294 Part II. Other Information This section provides other required disclosures, including risk factors, equity sales, and exhibit listings Risk Factors The company refers investors to the risk factors detailed in its Annual Report on Form 10-K for the year ended December 31, 2022, noting that those factors could materially affect its business, financial condition, or results of operations - There are no new risk factors presented in this report; the company directs stakeholders to those discussed in its 2022 Annual Report on Form 10-K269297 Unregistered Sales of Equity Securities and Use of Proceeds This section provides details on the company's stock repurchase activities during the third quarter of 2023. The company repurchased a total of 63,103 shares of its Class B Common Stock (CRD-B) under its publicly announced repurchase program Share Repurchases in Q3 2023 | Period | Class | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | :--- | | July 2023 | CRD-B | 0 | N/A | | August 2023 | CRD-B | 9,637 | $9.14 | | September 2023 | CRD-B | 53,466 | $9.25 | | Total Q3 2023 | CRD-B | 63,103 | $9.23 (approx.) | - As of September 30, 2023, the company had 1,730,268 shares remaining for repurchase under its authorized program, extending through December 31, 2024298270 Exhibits This section lists all the exhibits filed with the Form 10-Q, which include officer certifications as required by the Sarbanes-Oxley Act and various Interactive Data Files (XBRL) - The exhibits filed include certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, as well as Inline XBRL documents271299306
Crawford(CRD_A) - 2023 Q3 - Quarterly Report