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2016-05-09

Crawford & Company: Crawford & Company Reports 2016 First Quarter Results, Reaffirms and Updates 2016 Guidance

Press Release

CRAWFORD&COMPANY 1001 SUMMIT BOULEVARD ATLANTA, GEORGIA 30319 (404) 300-1000
FOR IMMEDIATE RELEASE

Crawford&Company Reports 2016 First Quarter Results

Reaffirms and Updates 2016 Guidance

ATLANTA, GA. (May 9, 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 first quarter ended March 31,
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.

First Quarter 2016 Summary

* Revenues before reimbursements of $277.2 million, down from $287.8 million
for first quarter of 2015
* Net income attributable to shareholders of $8.6 million, up from net income
of $3.0 million in the same period last year
* Restructuring and special charges of $2.4 million pretax, or $0.03 per
diluted share, after-tax
* Diluted earnings per share of $0.16 for CRDA and $0.14 for CRDB, compared
with $0.06 for CRDA and $0.04 for CRDB in the prior year quarter
* Diluted earnings per share of $0.19 for CRDA and $0.17 for CRDB on a
non-GAAP basis in the 2016 period, before restructuring and special charges

* Consolidated operating earnings, a non-GAAP financial measure, were $21.7
million in the 2016 first quarter, compared with $10.7 million in the 2015
period
* Consolidated adjusted EBITDA, a non-GAAP financial measure, was $30.1
million in the 2016 first quarter, compared with $19.4 million in the 2015
period.

Mr. Harsha V. Agadi, interim chief executive officer of Crawford&Company,
stated, "We are very pleased with our first quarter results as our expense
reduction plan drove strong margin expansion and earnings growth despite
lower revenues from the expected decline in our Garden City Group segment as
well as foreign exchange headwinds due to a stronger dollar. We remain
focused on transforming Crawford into a business with more predictable
financial results and growth regardless of the market backdrop. Our
performance this quarter is an early indication that the initiatives put in
place through the second half of 2015 have positioned Crawford to
successfully achieve our goals."

"Looking at our first quarter results in more detail, our U.S. Services,
International and Broadspire segments all showed solid improvement versus the
year ago period, with margins and operating earnings all more than doubling.
Our U.S. Services segment delivered operating margins in excess of 15% driven
by the continued growth in our Contractor Connection service line. Our
Broadspire segment also experienced robust results as operating margins
exceeded 11%. Increased utilization in our medical management service line
and higher average case values were the primary drivers of the Broadspire
segment strong results. Our International segment has shown a nice turnaround
to start the year driven by benefits from the cost reduction plan combined
with an improvement in UK claims activity."

Mr. Agadi concluded, "While our overall first quarter results show a
significant improvement, we are not yet where we need to be. The management
team and I are focused on instilling a culture of growth within the Company
and are excited with the cross selling initiatives that are beginning to take
place. This represents a significant, untapped potential and we are excited
with the opportunities in front of us as we continue to build a robust sales
funnel. Looking forward, we are positioning our Company to create long-term
shareholder value by focusing on profitable growth and leveraging the
Company's numerous global resources. Additionally, in order to provide our
investors with enhanced information on our corporate performance, we are
introducing a consolidated non-GAAP adjusted EBITDA measure in addition to
our existing performance measures and will include this within our guidance
going forward along with the required reconciliations to the nearest GAAP
based performance measure."

Segment Results for the First Quarter

U.S. Services

U.S. Services revenues before reimbursements were $58.5 million in the first
quarter of 2016, increasing 3% from $56.7 million in the first quarter of
2015. The revenue increase was primarily due to an increase in U.S.
Contractor Connection revenues, partially offset by a reduction in U.S.
Claims Services revenues. Operating earnings were $9.1 million in the 2016
first quarter, compared with $4.2 million in the first quarter of 2015,
representing operating margins of 15% and 7% in the 2016 and 2015 periods,
respectively.

International

First quarter 2016 revenues before reimbursements for the International
segment totaled $117.5 million, compared with $124.0 million in the 2015
first quarter. This decrease was due to a reduction in claim activity and
changes in foreign exchange rates which negatively impacted revenues by
approximately 9%, or $11.3 million, in the first quarter compared with the
prior year period. International segment operating earnings were $7.0 million
in the 2016 first quarter, compared with $2.3 million in the 2015 quarter.
The segment's operating margin was 6% in the 2016 period as compared to 2% in
the 2015 quarter. The increase in operating margin for the 2016 quarter was a
result of an improvement in U.K. operating results and cost reduction
initiatives implemented in 2015.

Broadspire

Broadspire segment revenues before reimbursements were $76.2 million in the
2016 first quarter, up from $69.7 million in the 2015 first quarter. The
revenue increase was due to increased medical management services referrals
and higher average case values when compared with the 2015 period. Broadspire
recorded operating earnings of $8.7 million in the first quarter of 2016,
representing an operating margin of 11%, compared with $3.5 million, or 5% of
revenues, in the 2015 first quarter.

Garden City Group

Garden City Group revenues before reimbursements were $25.0 million in the
first quarter of 2016, compared with $37.4 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
$1.5 million in the 2016 first quarter as compared to $5.0 million in the
2015 period, with the related operating margin decreasing from 13% in the
2015 period to 6% in the 2016 period. At March 31, 2016 there was a strong
backlog of projects awarded totaling approximately $103.0 million, unchanged
from March 31, 2015.

Unallocated Corporate and Shared Costs, Net

Unallocated corporate costs were $4.6 million in the first quarter of 2016,
compared with $4.3 million in the same period of 2015. The increase was
primarily due to an increase in self-insured expenses.

Restructuring and Special Charges

The Company recorded restructuring and special charges of $2.4 million and
$1.1 million in 2016 and 2015, respectively. Restructuring costs of $2.1
million in 2016 were comprised of costs associated with the ongoing
implementation of the Global Business Services Center and the Global
Technology Services Center, integration costs related to the GAB Robins
acquisition, and other restructuring costs in our operating segments and
administrative areas. Special charges of $0.3 million in 2016 were for
certain legal and professional fees.

Balance Sheet and Cash Flow

Crawford&Company's consolidated cash and cash equivalents position as of March
31, 2016 totaled $53.6 million compared with $76.1 million at December 31,
2015.

The Company's operations used $5.2 million of cash during 2016, compared with
$15.6 million in 2015. The $10.5 million improvement in cash used in
operating activities in 2016 compared with 2015 was primarily due to improved
net income and lower payments for accrued liabilities.

2016 Guidance

Crawford&Company is reaffirming and updating guidance for 2016 as follows:

* Consolidated revenues before reimbursements between $1.05 and $1.10
billion;
* Consolidated operating earnings between $80.0 and $90.0 million;
* Consolidated adjusted EBITDA between $120.0 and $130.0 million;
* Before expected restructuring 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; and
* After expected restructuring 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, or $0.40 to $0.50 diluted
earnings per CRDB share.

The Company expects to incur restructuring and special charges in 2016
totaling $15.6 million pretax, or $0.19 in diluted earnings per share after
tax. This is comprised of approximately $8.4 million related to the Global
Business Services Centers, which should be partially offset by initial
savings in 2016 of $8.0 million, and $7.2 million related to previously
announced restructuring plans and special charges.

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,
May 9, 2016 at 3:00 p.m. Eastern Time to discuss its first quarter 2016
results. The conference call can be accessed live by dialing 1-800-374-2518
using passcode 90680887. 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 June 9, 2016. You may dial 1-855-859-2056 to
listen to the replay. The access code is 90680887.

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 expense...

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