Crawford & Company Reports 2016 Second Quarter Results, Reaffirms 2016 Guidance
(Thomson Reuters ONE) -
Press Release
CRAWFORD & COMPANY 1001 SUMMIT BOULEVARD ATLANTA, GEORGIA 30319 (404) 300-1000
FOR IMMEDIATE RELEASE
Crawford & Company Reports 2016 Second Quarter Results
Reaffirms 2016 Guidance
ATLANTA, GA. (August 8, 2016) -- Crawford & Company (www.crawfordandcompany.com)
(NYSE: CRDA and CRDB), one of the world's largest independent providers of
claims management solutions to insurance companies and self-insured entities,
today announced its financial results for the second quarter ended June 30,
2016.
The Company's two classes of stock are substantially identical, except with
respect to voting rights and the Company's ability to pay greater cash dividends
on the non-voting Class A Common Stock (CRDA) than on the voting Class B Common
Stock (CRDB), subject to certain limitations. In addition, with respect to
mergers or similar transactions, holders of CRDA must receive the same type and
amount of consideration as holders of CRDB, unless different consideration is
approved by the holders of 75% of CRDA, voting as a class.
Second Quarter 2016 Summary
* Revenues before reimbursements of $282.3 million, down from $304.4 million
for the second quarter of 2015
* Net income attributable to shareholders of $8.6 million, more than doubling
net income of $4.1 million in the same period last year
* Restructuring and special charges of $3.5 million pretax
* Diluted earnings per share of $0.16 for CRDA and $0.14 for CRDB, compared
with $0.08 for CRDA and $0.06 for CRDB in the prior year quarter
* Diluted earnings per share of $0.20 for CRDA and $0.19 for CRDB on a non-
GAAP basis in the 2016 period, before restructuring and special charges,
compared to $0.14 for CRDA and $0.12 for CRDB in the prior year quarter
* Consolidated operating earnings, a non-GAAP financial measure, were $23.9
million in the 2016 second quarter, compared with $17.7 million in the 2015
period
* Consolidated adjusted EBITDA, a non-GAAP financial measure, was $32.3
million in the 2016 second quarter, compared with $26.5 million in the 2015
period.
Mr. Harsha V. Agadi, chief executive officer of Crawford & Company, stated, "I
am pleased with our second quarter results as we delivered strong operating
earnings growth despite a challenging market environment where revenues
contracted due to the continued expected declines in our Garden City Group
combined with foreign exchange headwinds from a stronger U.S. dollar. The cost
reduction plan that we initiated through last year has positioned Crawford to
drive margin expansion and more predictable results even in more difficult
markets like what we experienced through the second quarter. In fact, operating
earnings increased 35% as our consolidated operating margin expanded 260 basis
points year over year to 8.5% from the 2015 second quarter's level."
"Looking at our second quarter results in more detail, our International segment
showed the most improved performance as we are nearly complete with the
integration of the GAB Robins acquisition. Broadspire delivered another strong
quarter with growing operating margins and steady, consistent operating
performance. The U.S. Services segment saw revenue declines related to the large
outsourced services project and a lack of weather events, partially offset by
continued growth in our U.S. Contractor Connection service line. Lastly, GCG
improved over 2016 first quarter results and continues to manage the runoff of
two major projects very well."
Mr. Agadi concluded, "Our second quarter results clearly demonstrate that we are
on the road to significant improvement given the great progress that we have
made streamlining our operations as we prepare Crawford for both the
opportunities and challenges that lie ahead. We plan on building upon this
momentum as we focus our team on delivering top line growth while remaining
vigilant on cost containment. The management team and I remain focused on
driving a culture of growth within the Company and are excited by the
opportunities in front of us and optimistic about where Crawford is heading.
Looking forward, we are positioning our Company to create further long-term
shareholder value by focusing on profitable growth and leveraging the Company's
numerous global resources."
Segment Results for the Second Quarter
U.S. Services
U.S. Services revenues before reimbursements were $58.8 million in the second
quarter of 2016, decreasing 12% from $66.9 million in the second quarter of
2015. The revenue decrease was primarily due to a reduction in U.S. Catastrophe
Services and a reduction of weather-related case volumes in U.S. Claims Field
Operations partially offset by an increase in U.S. Contractor Connection
revenues. Operating earnings were $9.6 million in the 2016 second quarter,
compared with $9.8 million in the second quarter of 2015, representing operating
margins of 16% and 15% in the 2016 and 2015 periods, respectively.
International
Second quarter 2016 revenues before reimbursements for the International segment
totaled $123.2 million, compared with $129.5 million in the 2015 second quarter.
This decrease was primarily due to changes in foreign exchange rates which
negatively impacted revenues by approximately 5%, or $6.1 million, in the second
quarter compared with the prior year period. International segment operating
earnings were $11.0 million in the 2016 second quarter, compared with $1.2
million in the 2015 second quarter. The segment's operating margin was 9% in the
2016 period as compared to 1% in the 2015 period. The increase in operating
margin for the 2016 quarter was a result of an improvement in U.K. operating
results and the benefits of cost reduction initiatives implemented in 2015.
Broadspire
Broadspire segment revenues before reimbursements were $75.1 million in the
2016 second quarter, up from $73.7 million in the 2015 second quarter. The
revenue increase was due to increased claims management revenues and higher
average case values when compared with the 2015 period. Broadspire recorded
operating earnings of $6.5 million in the second quarter of 2016, representing
an operating margin of 9%, compared with $6.0 million, or 8% of revenues, in the
2015 second quarter.
Garden City Group
Garden City Group revenues before reimbursements were $25.2 million in the
second quarter of 2016, compared with $34.3 million in the same period of 2015.
The expected decrease in revenues was primarily due to declines in volumes
associated with certain large ongoing cases. Operating earnings were $2.7
million in the 2016 second quarter as compared to $3.7 million in the 2015
period, with the related operating margin flat at 11% for both periods. At June
30, 2016 there was a backlog of projects awarded totaling approximately $94.1
million as compared to $88.0 million at June 30, 2015.
Unallocated Corporate and Shared Costs, Net
Unallocated corporate costs were $5.9 million in the second quarter of 2016,
compared with $3.0 million in the same period of 2015. The increased costs for
the three months of 2016 were due to an increase in defined benefit pension
expense and incentive compensation, partially offset by a decrease in
unallocated professional fees.
Restructuring and Special Charges
The Company recorded restructuring and special charges of $3.5 million and $4.2
million in the 2016 and 2015 second quarters, respectively. Restructuring costs
of $3.0 million in the 2016 quarter were comprised of costs associated with the
ongoing implementation of the Global Business Services Center and the Global
Technology Services Center (the "Centers"), integration costs related to the GAB
Robins acquisition, and other restructuring costs in our operating segments and
administrative areas. Special charges of $0.5 million in 2016 were for certain
legal and professional fees. There were no special charges in the 2015 second
quarter.
Balance Sheet and Cash Flow
Crawford & Company's consolidated cash and cash equivalents position as of
June 30, 2016 totaled $59.4 million compared with $76.1 million at December 31,
2015.
The Company's operations provided $11.5 million of cash during the first half of
2016, compared with $10.2 million in the 2015 period. The improvement in cash
provided by operating activities in the first half of 2016 compared with 2015
was primarily due to improved net income partially offset by an increase in
working capital.
2016 Guidance
Crawford & Company is reaffirming guidance for 2016 as follows:
* Consolidated revenues before reimbursements between $1.05 and $1.10 billion;
* After expected restructuring and special charges, net income attributable to
shareholders of Crawford & Company between $24.0 and $30.0 million, or $0.48
to $0.58 diluted earnings per CRDA share, and $0.40 to $0.50 diluted
earnings per CRDB share;
* Consolidated operating earnings between $80.0 and $90.0 million;
* Consolidated adjusted EBITDA between $120.0 and $130.0 million;
* Before expected restructuring and special charges, net income attributable
to shareholders of Crawford & Company on a non-GAAP basis between $36.0 and
$42.0 million, or $0.67 to $0.77 diluted earnings per CRDA share, and $0.59
to $0.69 diluted earnings per CRDB share.
The Company expects to incur restructuring and special charges in 2016 totaling
$15.6 million pretax. This is comprised of approximately $5.1 million related to
the Centers and $10.5 million related to previously announced restructuring
plans and other special charges. As a result of restructuring charges incurred
for the Centers in 2015 and 2016, the Company expects to achieve $10.7 million
in savings in 2016.
To a significant extent, Crawford's business depends on case volumes. The
Company cannot predict the future trend of case volumes for a number of reasons,
including the fact that the frequency and severity of weather-related claims and
the occurrence of natural and man-made disasters, which are a significant source
of claims and revenue for the Company, are generally not subject to accurate
forecasting.
Conference Call
As previously announced, Crawford & Company will host a conference call today,
August 8, 2016 at 3:00 p.m. Eastern Time to discuss its second quarter 2016
results. The conference call can be accessed live by dialing 1-800-374-2518
using passcode 90682749. A presentation for today's call can also be found on
the investor relations portion of the Company's website,
http://www.crawfordandcompany.com. The call will be recorded and available for
replay through September 8, 2016. You may dial 1-855-859-2056 to listen to the
replay. The access code is 90682749.
Non-GAAP Presentation
In the normal course of business, our operating segments incur certain out-of-
pocket expenses that are thereafter reimbursed by our clients. Under GAAP, these
out-of-pocket expenses and associated reimbursements are required to be included
when reporting expenses and revenues, respectively, in our consolidated results
of operations. In the foregoing discussion and analysis of segment results of
operations, we do not include a gross up of segment expenses and revenues for
these pass-through reimbursed expenses. The amounts of reimbursed expenses and
related revenues offset each other in our results of operations with no impact
to our net income or operating earnings. A reconciliation of revenues before
reimbursements to consolidated revenues determined in accordance with GAAP is
self-evident from the face of the accompanying unaudited condensed consolidated
statements of operations.
Operating earnings is the primary financial performance measure used by our
senior management and chief operating decision maker ("CODM") to evaluate the
financial performance of our Company and operating segments, and make resource
allocation and certain compensation decisions. Unlike net income, segment
operating earnings is not a standard performance measure found in GAAP. We
believe this measure is useful to others in that it allows them to evaluate
segment and consolidated operating performance using the same criteria used by
our senior management and CODM. Consolidated operating earnings represent
segment earnings including certain unallocated corporate and shared costs, but
before net corporate interest expense, stock option expense, amortization of
customer-relationship intangible assets, restructuring and special charges,
income taxes, and net income or loss attributable to noncontrolling interests.
The reconciliation of operating earnings to net income attributable to
shareholders of Crawford & Company on a GAAP basis is presented below.
Adjusted EBITDA is not a term defined by GAAP and as a result our measure of
adjusted EBITDA might not be comparable to similarly titled measures used by
other companies. However, adjusted EBITDA is used by management to evaluate,
assess and benchmark our operational results and the Company believes that
adjusted EBITDA is relevant and useful information widely used by analysts,
investors and other interested parties. Adjusted EBITDA is defined as net income
attributable to shareholders of Crawford & Company with adjustments for
depreciation and amortization, net corporate interest expense, income taxes,
restructuring and special charges, and stock-based compensation expense.
Unallocated corporate and shared costs represent expenses related to our chief
executive officer and Board of Directors, certain provisions for bad debt
allowances or subsequent recoveries such as those related to bankrupt clients,
defined benefit pension costs or credits for our frozen U.S. pension plan,
certain self-insurance costs and recoveries, and professional fees for corporate
level projects that are not allocated to our individual operating segments but
are included in our financial performance measure of consolidated operating
earnings. Restructuring and special charges are non-core items not directly
related to our normal business or operations, or our future performance.
Income taxes, net corporate interest expense, stock option expense, and
amortization of customer-relationship intangible assets are recurring components
of our net income, but they are not considered part of our consolidated or
segment operating earnings because they are managed on a corporate-wide basis.
Income taxes are calculated for the Company on a consolidated basis based on
statutory rates in effect in the various jurisdictions in which we provide
services, and varies significantly by jurisdiction. Net corporate interest
expense results from capital structure decisions made by senior management and
the Board of Directors and affecting the Company as a whole. Stock option
expense represents the non-cash costs generally related to stock options and
employee stock purchase plan expenses which are not allocated to our operating
segments. Amortization expense is a non-cash expense for finite-lived customer-
relationship and trade name intangible assets acquired in business combinations.
None of these costs relate directly to the performance of our services or
operating activities and, therefore, are excluded from segment operating
earnings in order to better assess the results of each segment's operating
activities on a consistent basis.
Income taxes are calculated for the non-GAAP presentation of net income before
restructuring and special charges based on statutory rates in effect in the
various jurisdictions in which charges exist, and vary by jurisdiction.
Following is a reconciliation of segment and consolidated operating earnings to
net income attributable to shareholders of Crawford & Company on a GAAP basis.
The reconciliation of 2016 guidance is to the midpoint of the guidance range.
+---------------------+-------------------+-+---------------------+-+----------+
| |Three months ended | | Six months ended | |Full Year |
| +---------+---------+ +----------+----------+ +----------+
| | June | June | | June | June | | Guidance |
| (in thousands) |30, 2016 |30, 2015 | | 30, 2016 | 30, 2015 | | 2016 |
| +---------+---------+ +----------+----------+ +----------+
|Operating earnings: | | | | | | | |
| | | | | | | | |
|U.S. Services |$ 9,579 |$ 9,835 | |$ 18,633 |$ 13,996 | | |
| | | | | | | | |
|International | 10,973 | 1,167 | | 18,007 | 3,510 | | |
| | | | | | | | |
|Broadspire | 6,529 | 6,003 | | 15,234 | 9,546 | | |
| | | | | | | | |
|Garden City Group | 2,691 | 3,721 | | 4,186 | 8,672 | | |
| | | | | | | | |
|Unallocated corporate| | | | | | | |
|and shared costs, net| (5,889 )| (3,043 )| | (10,507 )| (7,345 )| | |
| +---------+---------+ +----------+----------+ +----------+
|Consolidated | | | | | | | |
|operating earnings | 23,883 | 17,683 | | 45,553 | 28,379 | |$ 85,000 |
| +---------+---------+ +----------+----------+ +----------+
|(Deduct) add: | | | | | | | |
| | | | | | | | |
|Net corporate | | | | | | | |
|interest expense | (2,523 )| (2,042 )| | (5,291 )| (3,906 )| | (10,700 )|
| | | | | | | | |
|Stock option expense | (137 )| (178 )| | (227 )| (327 )| | (500 )|
| | | | | | | | |
|Amortization expense | (2,420 )| (2,334 )| | (4,879 )| (4,432 )| | (9,200 )|
| | | | | | | | |
|Restructuring and | | | | | | | |
|special charges | (3,526 )| (4,242 )| | (5,943 )| (5,305 )| | (15,600 )|
| | | | | | | | |
|Income taxes | (6,116 )| (4,709 )| | (11,423 )| (6,950 )| | (22,700 )|
| | | | | | | | |
|Net (income) loss | | | | | | | |
|attributable to non- | | | | | | | |
|controlling interests| (534 )| (124 )| | (533 )| (419 )| | 700 |
| +---------+---------+ +----------+----------+ +----------+
|Net income | | | | | | | |
|attributable to | | | | | | | |
|shareholders of | | | | | | | |
|Crawford & Company |$ 8,627 |$ 4,054 | |$ 17,257 |$ 7,040 | |$ 27,000 |
| +---------+---------+ +----------+----------+ +----------+
| |
+------------------------------------------------------------------------------+
Following is a reconciliation of net income attributable to shareholders of
Crawford & Company on a GAAP basis to adjusted EBITDA. The reconciliation of
2016 guidance is to the midpoint of the guidance range.
+------------------+---------------------+-+---------------------+-+-----------+
| | Three months ended | | Six months ended | | Full Year |
| +----------+----------+ +----------+----------+ +-----------+
| | June | June | | June | June | | Guidance |
| (in thousands) | 30, 2016 | 30, 2015 | | 30, 2016 | 30, 2015 | | 2016 |
| +----------+----------+ +----------+----------+ +-----------+
|Net income | | | | | | | |
|attributable to | | | | | | | |
|shareholders of | | | | | | | |
|Crawford & Company|$ 8,627 |$ 4,054 | |$ 17,257 |$ 7,040 | |$ 27,000 |
| | | | | | | | |
|Add: | | | | | | | |
| | | | | | | | |
|Depreciation and | | | | | | | |
|amortization | 10,264 | 10,592 | | 20,558 | 21,407 | | 45,000 |
| | | | | | | | |
|Stock-based | | | | | | | |
|compensation | 1,228 | 876 | | 1,957 | 1,280 | | 4,000 |
| | | | | | | | |
|Net corporate | | | | | | | |
|interest expense | 2,523 | 2,042 | | 5,291 | 3,906 | | 10,700 |
| | | | | | | | |
|Restructuring and | | | | | | | |
|special charges | 3,526 | 4,242 | | 5,943 | 5,305 | | 15,600 |
| | | | | | | | |
|Income taxes | 6,116 | 4,709 | | 11,423 | 6,950 | | 22,700 |
| +----------+----------+ +----------+----------+ +-----------+
|Adjusted EBITDA |$ 32,284 |$ 26,515 | |$ 62,429 |$ 45,888 | |$ 125,000 |
| +----------+----------+ +----------+----------+ +-----------+
| |
+------------------------------------------------------------------------------+
Further information regarding the Company's operating results for the three
months and six months ended June 30, 2016, financial position as of June 30,
2016, and cash flows for the six months ended June 30, 2016 is shown on the
attached unaudited condensed consolidated financial statements.
About Crawford & Company
Based in Atlanta, Georgia, Crawford & Company (www.crawfordandcompany.com) is
one of the world's largest independent providers of claims management solutions
to the risk management and insurance industry, as well as to self-insured
entities, with an expansive global network serving clients in more than 70
countries. The Crawford Solution(TM) offers comprehensive, integrated claims
services, business process outsourcing and consulting services for major product
lines including property and casualty claims management, workers' compensation
claims and medical management, and legal settlement administration.
The Company's shares are traded on the NYSE under the symbols CRDA and CRDB. The
Company's two classes of stock are substantially identical, except with respect
to voting rights and the Company's ability to pay greater cash dividends on the
non-voting Class A Common Stock than on the voting Class B Common Stock, subject
to certain limitations. In addition, with respect to mergers or similar
transactions, holders of Class A Common Stock must receive the same type and
amount of consideration as holders of Class B Common Stock, unless different
consideration is approved by the holders of 75% of the Class A Common Stock,
voting as a class.
Earnings per share may be different between CRDA and CRDB due to the payment of
a higher per share dividend on CRDA than CRDB, and the impact that has on the
earnings per share calculation according to generally accepted accounting
principles.
FOR FURTHER INFORMATION REGARDING THIS PRESS RELEASE, PLEASE CALL BRUCE SWAIN AT
(404) 300-1051.
+------------------------------------------------------------------------------+
|This press release contains forward-looking statements, including statements|
|about the expected future financial condition, results of operations and|
|earnings outlook of Crawford & Company. Statements, both qualitative and|
|quantitative, that are not historical facts may be "forward-looking|
|statements" as defined in the Private Securities Litigation Reform Act of|
|1995 and other federal securities laws. Forward-looking statements involve a|
|number of risks and uncertainties that could cause actual results to differ|
|materially from historical experience or Crawford & Company's present|
|expectations. Accordingly, no one should place undue reliance on forward-|
|looking statements, which speak only as of the date on which they are made. |
|Crawford & Company does not undertake to update forward-looking statements to|
|reflect the impact of circumstances or events that may arise or not arise|
|after the date the forward-looking statements are made. For further|
|information regarding Crawford & Company, including factors that could cause|
|our actual financial condition, results or earnings to differ from those|
|described in any forward-looking statements, please read Crawford & Company's|
|reports filed with the SEC and available at www.sec.gov or in the Investor|
|Relations section of Crawford & Company's website at|
|www.crawfordandcompany.com. |
+------------------------------------------------------------------------------+
press-release-Crawco-US-2Q2016Excel-earnings-08-08-2016:
http://hugin.info/155880/R/2033609/757245.xlsx
press-release-Crawco-US-2Q2016-earnings-08-08-2016:
http://hugin.info/155880/R/2033609/757244.pdf
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Crawford & Company via GlobeNewswire
[HUG#2033609]
Unternehmensinformation / Kurzprofil:
Datum: 08.08.2016 - 12:45 Uhr
Sprache: Deutsch
News-ID 487784
Anzahl Zeichen: 29885
contact information:
Town:
ATLANTA
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 217 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Crawford & Company Reports 2016 Second Quarter Results, Reaffirms 2016 Guidance"
steht unter der journalistisch-redaktionellen Verantwortung von
Crawford & Company (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
