Yahoo Finance Crawford & Co (CRD.A) (Q1 2024) Earnings Call Transcript Highlights: Navigating Challenges ...
Consolidated Revenue: $301.7 million, declined year over year.
Operating Earnings: $12.1 million.
GAAP Net Income: $2.8 million.
GAAP Diluted EPS: $0.06 for both CRD-A and CRD-B.
Non-GAAP Diluted EPS: $0.13 for both CRD-A and CRD-B.
Adjusted EBITDA: $20.6 million, representing 6.8% of revenues.
Quarterly Dividend: $0.07 for CRD-A and CRD-B.
Leverage Ratio: 2.06 times EBITDA.
Cash and Cash Equivalents: $45.2 million as of March 31, 2024.
Total Debt: $230.2 million as of March 31, 2024.
Free Cash Flow: Negative $29.4 million.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Crawford & Co (NYSE:CRD.A) reported strong performance in non-weather-related business, indicating a robust diversified business model.
The company achieved record quarterly revenues in the Broadspire segment and the US GTS service line, reflecting strong client relationships and new business wins.
Crawford & Co (NYSE:CRD.A) added $24 million in new and enhanced business during the quarter, demonstrating effective expansion and deepening of customer relationships.
The company maintains a strong liquidity position, providing capacity for potential future acquisitions and strategic flexibility.
Crawford & Co (NYSE:CRD.A) continues to invest in proprietary innovative technologies, aiming to broaden capabilities for clients and drive market share growth.
Negative Points
First-quarter consolidated revenue declined year over year to $301.7 million, primarily due to reduced catastrophic weather activity affecting weather-dependent business.
GAAP net income and diluted EPS significantly decreased compared to the same period last year, reflecting lower operating earnings.
The company experienced a revenue decline of 79% in the networks business due to reduced weather-related claims.
Increased selling, general, and administrative expenses by 15.5% due to higher professional fees, IT costs, and compensation expenses.
Free cash flow was negative $29.4 million, compared to negative $9.1 million in the previous year, due to lower operating earnings and higher incentive compensation payments.
Q & A Highlights
Q: Could you talk about the performance of the US GTS in the quarter and what's driving the upside there? A: (Rohit Verma, CEO) - The US GTS has been performing well due to strategic investments in adding experts, which has enhanced our reputation and capabilities in the industry. This has led to notable losses being directed our way and a strong performance from the team.
Q: Internationally, there seems to be good momentum in the UK and Europe. What's driving that and what are the expectations for margin improvement? A: (Rohit Verma, CEO) - The momentum is driven by leadership and structural changes, diversifying our client base in Europe, and successful acquisitions in the Netherlands. Investments in technology are expected to lead to efficiency gains and margin improvements.
Q: SG&A expenses have increased this quarter. How do you see this playing out for the rest of the year? A: (Bruce Swain, CFO) - The increase in SG&A is partly due to one-time investments in professional fees and IT costs. About $3 million of the increase is not expected to recur, indicating more controlled SG&A expenses moving forward.
Q: In Broadspire, are there any notable changes in underlying claims activity? A: (Rohit Verma, CEO) - There hasn't been a secular increase in the frequency of claims or costs. The growth in claims is primarily due to new business and increased economic activity rather than an underlying increase in claims.
Q: Can you discuss the hiring pace in the GTS business and its contribution to the North American loss adjusting segment? A: (Rohit Verma, CEO and Bruce Swain, CFO) - Hiring continues actively as expertise is crucial for our business. GTS represents about a third of the North American loss adjusting segment, with ongoing recruitment to enhance capabilities.
Q: What are the prospects for acquisitions and what types of opportunities are you exploring? A: (Rohit Verma, CEO) - The company is discerning in its acquisition strategy, focusing on capabilities that enhance geographical presence or introduce new services. The pipeline includes 10 to 30 potential acquisitions, with a focus on adding new capabilities in existing markets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
