Crawford(CRD_B) - 2022 Q1 - Quarterly Report

Part I. Financial Information Financial Statements The company's Q1 2022 financial statements show increased revenues to $287.8 million, but decreased net income to $5.1 million, diluted EPS of $0.10, and negative operating cash flow Condensed Consolidated Statements of Operations Q1 2022 total revenues increased to $287.8 million, but net income attributable to shareholders declined to $5.1 million, with diluted EPS at $0.10 Consolidated Statements of Operations (Unaudited) | Indicator (In thousands, except per share) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Total Revenues | $287,789 | $262,155 | | Income Before Income Taxes | $7,582 | $8,505 | | Net Income Attributable to Shareholders | $5,096 | $6,064 | | Diluted EPS (Class A & B) | $0.10 | $0.11 | Condensed Consolidated Statements of Comprehensive Income (Loss) Q1 2022 comprehensive income attributable to shareholders significantly decreased to $1.8 million, primarily due to a ($5.0) million net foreign currency translation loss Comprehensive Income (Loss) (Unaudited) | Indicator (In thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net Income | $5,156 | $6,034 | | Other Comprehensive (Loss) Income | ($3,276) | $12,576 | | Comprehensive Income Attributable to Shareholders | $1,806 | $18,654 | Condensed Consolidated Balance Sheets As of March 31, 2022, total assets slightly decreased to $845.6 million, total liabilities increased to $650.2 million, and total shareholders' investment decreased to $195.5 million Consolidated Balance Sheet Highlights (Unaudited) | Account (In thousands) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Current Assets | $349,510 | $345,920 | | Total Assets | $845,634 | $852,639 | | Total Current Liabilities | $281,261 | $303,855 | | Total Liabilities | $650,158 | $641,242 | | Total Shareholders' Investment | $195,476 | $211,397 | Condensed Consolidated Statements of Cash Flows Q1 2022 net cash used in operating activities was ($15.3) million, investing activities used ($25.9) million, and financing activities provided $37.6 million from increased borrowings Consolidated Cash Flows (Unaudited) | Cash Flow Activity (In thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($15,253) | $1,577 | | Net cash used in investing activities | ($25,856) | ($5,704) | | Net cash provided by financing activities | $37,608 | $610 | Notes to Condensed Consolidated Financial Statements Key notes include the realignment of operating segments, details on recent acquisitions like Praxis Consulting and edjuster Inc., and an increased effective tax rate of 32.0% - In January 2022, the Company realigned its operating segments into a new geographic reporting structure: North America Loss Adjusting, International Operations, Broadspire, and Platform Solutions[25][61] - The company completed several acquisitions in 2021, including edjuster Inc. and Praxis Consulting Inc., and continued to finalize the accounting for these business combinations[70][72] - The effective income tax rate increased to 32.0% for Q1 2022 from 29.1% in Q1 2021, primarily due to losses in certain international operations[44] - On April 1, 2022, the Company acquired assets of R.P. van Dijk B.V., a bodily injury loss adjusting company in the Netherlands, for an initial cash consideration of $4.4 million[77] Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported a 10.2% increase in consolidated revenues to $279.0 million, with operating earnings rising to $15.5 million, and strong liquidity of $249.6 million Business Overview Crawford & Company, a leading claims management provider, realigned its segments into North America Loss Adjusting, International Operations, Broadspire, and Platform Solutions in January 2022 - The company is the world's largest publicly listed independent provider of claims management and outsourcing solutions, serving clients in over 70 countries[88] - In January 2022, the company realigned its operating segments to a geographic structure: North America Loss Adjusting, International Operations, Broadspire, and Platform Solutions[89] Results of Operations Q1 2022 consolidated revenues grew 10.2% to $279.0 million, with total segment operating earnings increasing to $15.5 million, despite a decline in income before taxes Q1 2022 vs Q1 2021 Revenue Before Reimbursements by Segment | Segment (in thousands) | Q1 2022 | Q1 2021 | Variance | Constant Currency Variance | | :--- | :--- | :--- | :--- | :--- | | North America Loss Adjusting | $64,438 | $56,298 | 14.5% | 14.5% | | International Operations | $89,272 | $86,467 | 3.2% | 6.5% | | Broadspire | $76,454 | $74,276 | 2.9% | 2.9% | | Platform Solutions | $48,861 | $36,140 | 35.2% | 35.2% | | Total | $279,025 | $253,181 | 10.2% | 11.3% | - Total cases received increased by 18.8% in Q1 2022 compared to Q1 2021, with recent acquisitions contributing 3.3% of the total cases[94] Q1 2022 vs Q1 2021 Segment Operating Earnings | Segment (in thousands) | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | North America Loss Adjusting | $4,135 | $4,361 | | International Operations | ($3,067) | ($673) | | Broadspire | $6,434 | $6,734 | | Platform Solutions | $8,038 | $4,018 | | Total | $15,540 | $14,440 | Liquidity, Capital Resources, and Financial Condition As of March 31, 2022, total liquidity was $249.6 million, with cash used in operations at ($15.3) million, and financing activities providing $37.6 million from increased borrowings - Total liquidity was $249.6 million at March 31, 2022, consisting of $49.2 million in cash and $200.4 million in available borrowing capacity[155] Q1 2022 vs Q1 2021 Cash Flow Summary | Cash Flow Activity (in millions) | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Cash from Operating Activities | ($15.3) | $1.6 | | Cash from Investing Activities | ($25.9) | ($5.7) | | Cash from Financing Activities | $37.6 | $0.6 | - Share repurchases totaled $16.1 million in Q1 2022, compared to $1.2 million in Q1 2021[154] Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes in its market risk exposures since December 31, 2021 - There have been no material changes in the Company's market risk exposures since December 31, 2021[162] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[164] - No material changes to the internal control over financial reporting occurred during the quarter[165] Part II. Other Information Risk Factors The company refers to its 2021 Annual Report on Form 10-K for risk factors, indicating no new material risks in this quarter - The company directs investors to the risk factors detailed in its 2021 Annual Report on Form 10-K, implying no material updates for the current quarter[167] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 2,217,958 shares in March 2022 under an increased authorization, with 3,195,359 shares remaining authorized - On February 11, 2022, the Board of Directors added 5,000,000 shares to the existing repurchase authorization[168] Share Repurchases in Q1 2022 | Period | Class | Shares Purchased | Average Price Paid | | :--- | :--- | :--- | :--- | | March 2022 | CRD-A | 1,498,084 | $7.23 | | March 2022 | CRD-B | 719,874 | $7.31 | | Total | | 2,217,958 | | - As of March 31, 2022, the company was authorized to repurchase an additional 3,195,359 shares[168][169] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Exhibits filed include certifications from the principal executive and financial officers (Sections 302 and 906 of Sarbanes-Oxley) and XBRL data files[171]