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ATLANTA, GA, Aug 3, 2015 - (ACN Newswire) - Crawford & Company (www.crawfordandcompany.com) (NYSE:CRDA and CRDB), the world's largest independent provider of claims management solutions to insurance companies and self-insured entities, today announced its financial results for the second quarter ended June 30, 2015.
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 2015 Summary
- Revenues before reimbursements of $304.4 million, up from $288.2 million for the second quarter of 2014
- Net income attributable to shareholders of $4.1 million, down from $10.5 million in the same period last year
- Diluted earnings per share of $0.08 for CRDA and $0.06 for CRDB, after special charges
- Diluted earnings per share of $0.14 for CRDA and $0.12 for CRDB on a non-GAAP basis, before special charges
- Americas segment achieved 10% operating margin target during second quarter 2015
- Broadspire segment delivered 10% revenue growth with operating earnings up over 100%
as compared to the 2014 period
- Incurred special charges of $4.2 million due to the ongoing implementation of the Global Business Services Center in Manila, integration costs for the GAB Robins acquisition, and restructuring activities in the EMEA/AP and Americas segments, all designed to reduce future costs
- Overall corporate results were also negatively impacted in the 2015 period by a lack of weather-related claims in the U.S. and EMEA/AP, the expected runoff of certain large projects in Legal Settlement Administration, and an increase in our effective tax rate
Mr. Jeffrey T. Bowman, chief executive officer of Crawford & Company, stated, "The market backdrop continued to be challenging through the second quarter given the persistent absence of claim volumes in the global property and casualty insurance industry, driven in part from a lack of severe weather. This environment has driven a further shift in our business to lower margin, high volume claims in the U.S., and has had a pronounced negative impact on our EMEA/AP operations. We are aggressively managing our business to drive margin expansion in this difficult operating environment, having implemented several cost reduction plans in the first quarter, as well as continuing to develop our Global Business Services Center in Manila. We are beginning to realize the benefits of these initiatives as our Americas segment achieved their operating margin target of 10% in the second quarter, and we expect our EMEA/AP operations to show margin expansion over the second half of this year."
"Our Broadspire segment continued to perform well this quarter delivering 10% revenue growth with operating earnings more than doubling year over year. We are adding new accounts in the core workers' compensation arena and are gaining traction with our recently announced disability product," added Mr. Bowman. "Our Legal Settlement Administration segment continues to work through the run off of a few large cases which remains a headwind to our results that will continue through the balance of the year. We are pleased with how this transition is being managed in terms of operating profitability and are also encouraged with the progress being made in the mass tort marketplace."
Mr. Bowman concluded, "While I am disappointed with our results for the first half of the year, the progress that we have made realigning our cost structure provides optimism about where our Company is heading. Our cost reduction plans, when complete, should enable our businesses to achieve their operating margin targets in this high volume, low value claim environment. 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."
Second Quarter 2015 Financial Results Compared to Prior Year Period
Second quarter 2015 consolidated revenues before reimbursements totaled $304.4 million, compared with $288.2 million for second quarter 2014. Second quarter 2015 net income attributable to shareholders of Crawford & Company was $4.1 million compared with net income of $10.5 million in the second quarter of 2014. Second quarter 2015 diluted earnings per share were $0.08 for CRDA and $0.06 for CRDB, compared with diluted earnings per share of $0.19 for CRDA and $0.18 for CRDB in the prior year quarter. Consolidated operating earnings, a non-GAAP financial measure, were $17.7 million in the 2015 second quarter, compared with $20.9 million in the 2014 period.
During the 2015 second quarter, the Company recorded special charges of $4.2 million, or $0.06 per share, associated with the ongoing implementation of its Global Business Services Center in Manila, Philippines, integration costs of the GAB Robins acquisition, and restructuring activities in the Americas and EMEA/AP segments. Before these special charges, second quarter 2015 diluted earnings per share on a non-GAAP basis were $0.14 for CRDA and $0.12 for CRDB.
Segment Results
Americas
Americas revenues before reimbursements were $99.2 million in the second quarter of 2015, increasing from $93.6 million in the second quarter of 2014. The increase in U.S. Claims Services revenues in the second quarter 2015 compared with the second quarter 2014 was primarily due to an increase in the U.S. Catastrophe Services service line resulting from an outsourcing project for a major U.S. insurance carrier, partially offset by a decrease in the U.S. Claims Field Operations service line due to a reduction of weather-related case volumes. Changes in foreign exchange rates reduced our Americas revenues by approximately 5% for the three months ended June 30, 2015. Operating earnings were $9.9 million in the 2015 second quarter, compared with $8.1 million in the second quarter of 2014, representing an operating margin of 10% and 9% in the 2015 and 2014 periods, respectively.
EMEA/AP
Second quarter 2015 revenues before reimbursements for the EMEA/AP segment totaled $97.2 million, compared with $87.2 million in the 2014 second quarter. This increase was due to the inclusion of $21.8 million in revenues from the acquisition of GAB Robins in the U.K. Changes in foreign exchange rates negatively impacted revenues in this segment by approximately 13% in the second quarter of 2015 compared with the prior year period. EMEA/AP operating earnings were $1.1 million in the 2015 second quarter, compared with $4.3 million in the 2014 quarter. The segment's operating margin was 1% in the 2015 period as compared to 5% in the 2014 quarter.
Broadspire
Broadspire segment revenues before reimbursements were $73.7 million in the 2015 second quarter, up from $66.7 million in the 2014 second quarter. Broadspire recorded operating earnings of $6.0 million in the second quarter of 2015, representing an operating margin of 8%, compared with $2.7 million, or 4% of revenues, in the 2014 second quarter. The overall increase in 2015 revenues was primarily due to organic growth, new clients, higher client retention, the transfer of accident and health cases from our U.S. Claims Services service line in the Americas segment, and increased medical management services referrals.
Legal Settlement Administration
Legal Settlement Administration revenues before reimbursements were $34.3 million in the second quarter of 2015, compared with $40.7 million in the same period of 2014. The decrease in revenues was primarily due to anticipated declines in volumes associated with several large cases. Operating earnings were $3.7 million in the 2015 second quarter as compared to $5.7 million in the 2014 period, with the related operating margin decreasing from 14% in the 2014 period to 11% in the 2015 period.
Balance Sheet and Cash Flow
Crawford & Company's consolidated cash and cash equivalents position as of June 30, 2015 totaled $62.5 million compared with $52.5 million at December 31, 2014.
The Company provided $10.2 million of cash from operations during the first six months of 2015, compared with $59.6 million used during the first six months of 2014. The $69.8 million improvement in cash provided by operating activities in the first six months of 2015 compared with the 2014 period, was primarily due to improved collections of accounts receivable and lower payments for accrued liabilities, including incentive compensation.
The Company's effective tax rate increased during the second quarter and first six months of 2015, as compared to the 2014 periods, due primarily to our inability to recognize tax benefits for certain international net operating losses, fluctuations in the mix of income earned, and changes in enacted tax rates.
2015 Guidance
Crawford & Company is revising its guidance for 2015 as follows:
- Consolidated revenues before reimbursements between $1.16 and $1.18 billion;
- Consolidated operating earnings between $70.0 and $80.0 million;
- Consolidated cash provided by operating activities between $30.0 and $40.0 million;
- After special charges, net income attributable to shareholders of Crawford & Company between $20.0 and $25.0 million, or $0.37 to $0.47 diluted earnings per CRDA share, or $0.30 to $0.40 diluted earnings per CRDB share;
- Before special charges, net income attributable to shareholders of Crawford & Company between $34.5 and $39.5 million, or $0.63 to $0.73 diluted earnings per CRDA share, or $0.56 to $0.66 diluted earnings per CRDB share.
The Company expects to incur pretax special charges in 2015, currently estimated at approximately $7.0 million for the integration of GAB Robins and $9.0 million related to the establishment of a Global Business Services Center in Manila, Philippines. In addition, the Company expects to incur an additional special charge in 2015, currently estimated at $4.0 million, related to restructuring activities in the EMEA/AP and Americas segments.
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.
In recent periods the Company has derived a material portion of its revenues and operating earnings from a limited number of client engagements and special projects within its Legal Settlement Administration segment, specifically its work on the gulf-related class action settlement. Although the Company continued to earn revenues from the Legal Settlement Administration projects in the second quarter 2015, these revenues, and related operating earnings, were at a reduced rate as compared to 2014. The projects continue to wind down, and the Company expects these revenues, and related operating earnings, to be at a reduced rate in all future periods, as compared to 2014. No assurances of timing of the project end dates and, therefore, continued revenues or operating earnings, can be provided. In the event the Company is unable to replace revenues and related operating earnings from these projects as they wind down, or upon the termination or other expiration thereof, with revenues and operating earnings from new projects and customers within this or other segments, there could be a material adverse effect on the Company's results of operations.
Conference Call
Crawford & Company's management will host a conference call with investors on Monday, August 3, 2015 at 3:00 p.m. Eastern Time to discuss second quarter 2015 results. The call will be recorded and available for replay through September 3, 2015. You may dial 1-800-374-2518 to listen to the replay. The access code is 23943884. Alternatively, please visit our web site at www.crawfordandcompany.com for a live audio web cast and related financial presentation.
About Crawford & Company
Based in Atlanta, Georgia, Crawford & Company (www.crawfordandcompany.com) is the world's largest (based on annual revenues) independent provider 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(SM) 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 CRDA than on the voting 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.
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 +1-404-300-1051.
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.
Crawford 2Q 2015 Earnings Release http://hugin.info/155880/R/1943091/703331.xlsx
2015-8-3-CrawfordPresReExhibit99.1FINAL http://hugin.info/155880/R/1943091/703330.docx
2015-8-3-CrawfordPresReExhibit99.1FINAL http://hugin.info/155880/R/1943091/703329.pdf
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The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Crawford & Company via Globenewswire
Topic: Press release summary
Source: Crawford & Company
https://www.acnnewswire.com
From the Asia Corporate News Network
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