First Quarter 2024 Financial Highlights Crawford & Company's first-quarter 2024 results were significantly impacted by a lack of severe weather events, leading to a 5% decrease in revenues before reimbursements to $301.7 million compared to Q1 2023, with net income attributable to shareholders declining to $2.8 million Overview Crawford & Company's first-quarter 2024 results were significantly impacted by a lack of severe weather events, leading to a 5% decrease in revenues before reimbursements to $301.7 million compared to Q1 2023. Net income attributable to shareholders saw a steep decline to $2.8 million from $10.7 million year-over-year. Despite the overall downturn, non-weather-driven businesses, including Broadspire and the U.S. GTS service line, delivered strong results, with Broadspire achieving record revenue - The CEO attributed the Q1 results to the continued absence of significant severe weather activity, which created a difficult comparison to the prior year. However, non-weather businesses like Broadspire and U.S. GTS showed strong performance5 Q1 2024 Key Financial Metrics (GAAP vs. Non-GAAP) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | GAAP Results | | | | Revenues before reimbursements | $301.7M | $316.3M | | Net Income Attributable to Shareholders | $2.8M | $10.7M | | Diluted EPS (CRD-A & CRD-B) | $0.06 | $0.22 | | Non-GAAP Results | | | | Net Income Attributable to Shareholders | $6.5M | $13.9M | | Diluted EPS (CRD-A & CRD-B) | $0.13 | $0.28 | | Consolidated Adjusted Operating Earnings | $12.1M | $24.9M | | Consolidated Adjusted EBITDA | $20.6M | $32.8M | Segment Performance The company's segments exhibited mixed performance in Q1 2024, with strong growth in Broadspire offset by declines in Platform Solutions and reduced operating margins in North America Loss Adjusting and International Operations North America Loss Adjusting Revenues for the North America Loss Adjusting segment remained nearly flat, decreasing by 0.3% to $77.4 million in Q1 2024. However, operating earnings fell significantly to $4.5 million from $8.1 million in the prior-year period, causing the operating margin to contract from 10.4% to 5.8% North America Loss Adjusting Performance | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenues before reimbursements | $77.4M | $77.6M | | Operating Earnings | $4.5M | $8.1M | | Operating Margin | 5.8% | 10.4% | International Operations The International Operations segment reported revenue growth of 6.8% to $98.1 million in Q1 2024. Despite the revenue increase, operating earnings declined to $1.7 million from $3.0 million, with the operating margin decreasing to 1.7% from 3.3% in Q1 2023 International Operations Performance | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenues before reimbursements | $98.1M | $91.9M | | Operating Earnings | $1.7M | $3.0M | | Operating Margin | 1.7% | 3.3% | - Revenue growth was partially offset by a negative foreign exchange rate impact of $0.9 million1 Broadspire The Broadspire segment delivered a strong performance, achieving a new quarterly revenue record of $94.3 million, a 12.2% increase from the prior year. Operating earnings grew substantially to $12.8 million, and the operating margin expanded significantly to 13.6% from 9.4% Broadspire Performance | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenues before reimbursements | $94.3M | $84.1M | | Operating Earnings | $12.8M | $7.9M | | Operating Margin | 13.6% | 9.4% | Platform Solutions Platform Solutions revenues saw a steep decline of 49.2% to $31.9 million, primarily due to the absence of catastrophe-related revenues from Hurricane Ian that were present in Q1 2023. Consequently, operating earnings dropped to $1.1 million from $10.0 million, and the operating margin fell to 3.5% Platform Solutions Performance | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenues before reimbursements | $31.9M | $62.8M | | Operating Earnings | $1.1M | $10.0M | | Operating Margin | 3.5% | 15.9% | - The revenue decline was directly related to the absence of approximately $30 million in catastrophe revenues from Hurricane Ian claims which did not repeat in Q1 2024534 Unallocated Corporate and Shared Costs Unallocated corporate costs increased significantly to $8.0 million in Q1 2024, compared to $4.1 million in the same period of 2023. This rise was primarily driven by increases in professional fees, compensation-related costs, and other reserves - Unallocated corporate costs rose to $8.0 million in Q1 2024 from $4.1 million in Q1 2023, mainly due to higher professional fees, compensation costs, and other reserves9 Financial Condition and Cash Flow The company's financial condition as of March 31, 2024, showed a decrease in cash and an increase in total debt, while operating activities used significantly more cash compared to the prior year Balance Sheet The company's balance sheet showed a decrease in cash and cash equivalents to $45.2 million as of March 31, 2024, down from $58.4 million at the end of 2023. Total debt outstanding increased to $230.2 million from $209.1 million over the same period Key Balance Sheet Items | Metric | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and Cash Equivalents | $45.2M | $58.4M | | Total Debt Outstanding | $230.2M | $209.1M | Cash Flow In Q1 2024, the company experienced a net cash usage of $19.8 million from operating activities, a significant increase from the $0.4 million used in Q1 2023. This was primarily driven by lower operating earnings and higher incentive compensation payments - Net cash used in operating activities was $19.8 million in Q1 2024, compared to $0.4 million used in Q1 202316 - The increased cash usage was attributed to $11.0 million lower operating earnings and $11.2 million higher incentive compensation payments compared to the prior year16 Capital Allocation During the first quarter of 2024, the company repurchased 85,632 shares of its Class B Common Stock (CRD-B) for a total cost of $0.7 million. No shares were repurchased in the corresponding period of 2023 - The company repurchased 85,632 shares of CRD-B stock at an average price of $8.56 per share, totaling $0.7 million16 Non-GAAP Financial Measures The company presents non-GAAP financial measures, such as Operating Earnings and Adjusted EBITDA, to provide additional insights into core operational performance, with detailed reconciliations to GAAP results Definition and Reconciliation The company utilizes non-GAAP financial measures, such as Operating Earnings and Adjusted EBITDA, to assess operational results. These measures exclude items like amortization of intangible assets, non-service pension costs, and contingent earnout adjustments to provide what management believes is a clearer view of core performance. The report provides detailed reconciliations of these non-GAAP figures to their closest GAAP equivalents, including Net Income and EPS - Operating earnings is a primary performance measure used by management that excludes corporate-wide costs like net interest expense, stock option expense, amortization, non-service pension costs, and income taxes to better assess segment results182 Reconciliation of GAAP to Non-GAAP Adjusted EPS | (per share) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | GAAP Diluted EPS | $0.06 | $0.22 | | Amortization of intangible assets | $0.03 | $0.03 | | Non-service related pension costs | $0.04 | $0.03 | | Contingent earnout adjustments | $0.00 | $0.00 | | Non-GAAP Adjusted Diluted EPS | $0.13 | $0.28 | Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income Attributable to Shareholders | $2,837 | $10,681 | | Depreciation and amortization | $9,299 | $9,050 | | Stock-based compensation | $1,218 | $1,023 | | Net corporate interest expense | $3,596 | $4,399 | | Non-service pension costs | $2,473 | $2,171 | | Contingent earnout adjustments | $151 | $248 | | Income tax provision | $1,047 | $5,271 | | Non-GAAP Adjusted EBITDA | $20,621 | $32,843 | Consolidated Financial Statements The consolidated financial statements for Q1 2024 reflect a significant decline in net income, a decrease in total assets, and substantial cash usage from operating activities Condensed Consolidated Statements of Operations For the first quarter of 2024, total revenues decreased by 5% to $313.1 million. A 16% increase in Selling, General, and Administrative Expenses contributed to a 76% decline in Income Before Income Taxes, which fell to $3.8 million. Consequently, Net Income Attributable to Shareholders dropped 73% to $2.8 million Q1 2024 Statement of Operations Summary (in thousands) | Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenues Before Reimbursements | $301,654 | $316,334 | (5)% | | Total Revenues | $313,073 | $327,938 | (5)% | | SG&A Expenses | $77,320 | $66,711 | 16% | | Income Before Income Taxes | $3,826 | $16,001 | (76)% | | Net Income Attributable to Shareholders | $2,837 | $10,681 | (73)% | Condensed Consolidated Balance Sheets As of March 31, 2024, the company's total assets stood at $776.3 million, a decrease from $799.2 million at the end of 2023. Total liabilities were $633.0 million, and total shareholders' investment was $143.2 million, up from $139.8 million at year-end 2023 Balance Sheet Summary (in thousands) | Metric | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $776,277 | $799,199 | | Total Liabilities | $633,039 | $659,368 | | Total Shareholders' Investment | $143,238 | $139,831 | Condensed Consolidated Statements of Cash Flows For the first quarter ended March 31, 2024, net cash used in operating activities was $19.8 million. Investing activities used $9.6 million, primarily for software capitalization. Financing activities provided $16.1 million in cash, largely from increased borrowings. This resulted in a net decrease in cash of $12.9 million for the period Cash Flow Summary (in thousands) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($19,803) | ($445) | | Net cash used in investing activities | ($9,550) | ($8,641) | | Net cash provided by financing activities | $16,073 | $5,187 | | Decrease in cash and cash equivalents | ($12,886) | ($2,704) |
Crawford(CRD_A) - 2024 Q1 - Quarterly Results