10-Q 1 crda-20220331.htm 10-Q 10-Q
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United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

for the quarterly period ended March 31, 2022

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

for the transition period from ____ to ____

Commission file number 1-10356

CRAWFORD & COMPANY

(Exact name of Registrant as specified in its charter)

 

Georgia

 

58-0506554

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

5335 Triangle Parkway

 

 

Peachtree Corners, Georgia

 

30092

(Address of principal executive offices)

 

(Zip Code)

 

(404) 300-1000

(Registrant's telephone number, including area code)

 

 

Securities Registered Pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock — $1.00 Par Value

CRD-A

New York Stock Exchange

Class B Common Stock — $1.00 Par Value

CRD-B

New York Stock Exchange

 

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes No

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No

The number of shares outstanding of each class of the Registrant's common stock, as of May 2, 2022, was as follows:

Class A Common Stock, $1.00 par value: 28,894,029

Class B Common Stock, $1.00 par value: 20,073,885

 

 


 

CRAWFORD & COMPANY

Quarterly Report on Form 10-Q

Quarter Ended March 31, 2022

 

Table of Contents

 

 

 

 

 

 

Page

Part I. Financial Information

 

 

 

 

 

 

 

 

Item 1.

 

Financial Statements:

 

3

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2022 and 2021

 

3

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three months ended March 31, 2022 and 2021

 

4

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2022 and December 31, 2021

 

5

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2022 and 2021

 

7

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Shareholders' Investment (unaudited) as of and for the three months ended March 31, 2022 and 2021

 

8

 

 

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

9

 

 

 

 

 

 

 

 

 

Report of Independent Registered Public Accounting Firm

 

24

 

 

 

 

 

 

Item 2.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

25

 

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

41

 

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

42

 

 

 

 

 

 

Part II. Other Information

 

 

 

 

 

 

 

 

Item 1A.

 

Risk Factors

 

43

 

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

43

 

 

 

 

 

 

Item 6.

 

Exhibits

 

44

 

 

 

 

 

 

Signatures

 

45

 

 

 

2


 

Part I — Financial Information

Item 1. Financial Statements

CRAWFORD & COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

 

 

 

Three Months Ended March 31,

 

(In thousands, except per share amounts)

 

2022

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues before reimbursements

 

$

279,025

 

 

$

253,181

 

Reimbursements

 

 

8,764

 

 

 

8,974

 

Total Revenues

 

 

287,789

 

 

 

262,155

 

 

 

 

 

 

 

 

Costs and Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs of services provided, before reimbursements

 

 

205,581

 

 

 

185,202

 

Reimbursements

 

 

8,764

 

 

 

8,974

 

Total costs of services

 

 

214,345

 

 

 

194,176

 

 

 

 

 

 

 

 

Selling, general, and administrative expenses

 

 

64,841

 

 

 

58,702

 

 

 

 

 

 

 

 

Corporate interest expense, net of interest income of $19 and $31, respectively

 

 

1,519

 

 

 

1,582

 

 

 

 

 

 

 

 

Total Costs and Expenses

 

 

280,705

 

 

 

254,460

 

 

 

 

 

 

 

 

Other Income, net

 

 

498

 

 

 

810

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

 

7,582

 

 

 

8,505

 

 

 

 

 

 

 

 

Provision for Income Taxes

 

 

2,426

 

 

 

2,471

 

 

 

 

 

 

 

 

Net Income

 

 

5,156

 

 

 

6,034

 

 

 

 

 

 

 

 

Net (Income) Loss Attributable to Noncontrolling Interests

 

 

(60

)

 

 

30

 

 

 

 

 

 

 

 

Net Income Attributable to Shareholders of Crawford & Company

 

$

5,096

 

 

$

6,064

 

 

 

 

 

 

 

 

Earnings Per Share - Basic:

 

 

 

 

 

 

Class A Common Stock

 

$

0.10

 

 

$

0.11

 

Class B Common Stock

 

$

0.10

 

 

$

0.11

 

 

 

 

 

 

 

 

Earnings Per Share - Diluted:

 

 

 

 

 

 

Class A Common Stock

 

$

0.10

 

 

$

0.11

 

Class B Common Stock

 

$

0.10

 

 

$

0.11

 

 

 

 

 

 

 

 

Weighted-Average Shares Used to Compute Basic Earnings Per Share:

 

 

 

 

 

 

Class A Common Stock

 

 

30,908

 

 

 

30,824

 

Class B Common Stock

 

 

20,780

 

 

 

22,464

 

 

 

 

 

 

 

 

Weighted-Average Shares Used to Compute Diluted Earnings Per Share:

 

 

 

 

 

 

Class A Common Stock

 

 

31,168

 

 

 

31,106

 

Class B Common Stock

 

 

20,780

 

 

 

22,464

 

 

(See accompanying notes to condensed consolidated financial statements)

 

 

3


 

CRAWFORD & COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Unaudited

 

 

 

Three Months Ended March 31,

 

(In thousands)

 

2022

 

 

2021

 

Net Income

 

$

5,156

 

 

$

6,034

 

 

 

 

 

 

 

 

Other Comprehensive (Loss) Income:

 

 

 

 

 

 

Net foreign currency translation (loss) gain, net of tax of $0 and $0, respectively

 

 

(4,952

)

 

 

10,624

 

 

 

 

 

 

 

 

Amortization of actuarial losses for retirement plans included in net periodic pension cost, net of tax of $582 and $686, respectively

 

 

1,676

 

 

 

1,952

 

 

 

 

 

 

 

 

Other Comprehensive (Loss) Income

 

 

(3,276

)

 

 

12,576

 

 

 

 

 

 

 

 

Comprehensive Income

 

 

1,880

 

 

 

18,610

 

 

 

 

 

 

 

 

Comprehensive (income) loss attributable to noncontrolling interests

 

 

(74

)

 

 

44

 

 

 

 

 

 

 

 

Comprehensive Income Attributable to Shareholders of Crawford & Company

 

$

1,806

 

 

$

18,654

 

 

(See accompanying notes to condensed consolidated financial statements)

 

 

4


 

CRAWFORD & COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

 

 

 

 

 

 

*

 

(In thousands)

 

March 31,
2022

 

 

December 31,
2021

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

49,156

 

 

$

53,228

 

Accounts receivable, less allowance for expected credit losses of $9,441 and $8,768, respectively

 

 

126,388

 

 

 

134,458

 

Unbilled revenues, at estimated billable amounts

 

 

130,417

 

 

 

118,722

 

Income taxes receivable

 

 

4,936

 

 

 

4,936

 

Prepaid expenses and other current assets

 

 

38,613

 

 

 

34,576

 

Total Current Assets

 

 

349,510

 

 

 

345,920

 

Net Property and Equipment

 

 

32,120

 

 

 

33,721

 

Other Assets:

 

 

 

 

 

 

Operating lease right-of-use assets, net

 

 

95,894

 

 

 

99,369

 

Goodwill

 

 

114,710

 

 

 

116,526

 

Intangible assets arising from business acquisitions, net

 

 

95,187

 

 

 

97,571

 

Capitalized software costs, net

 

 

75,958

 

 

 

75,802

 

Deferred income tax assets

 

 

20,790

 

 

 

21,266

 

Other noncurrent assets

 

 

61,465

 

 

 

62,464

 

Total Other Assets

 

 

464,004

 

 

 

472,998

 

TOTAL ASSETS

 

$

845,634

 

 

$

852,639

 

 

* Derived from the audited Consolidated Balance Sheet

(See accompanying notes to condensed consolidated financial statements)

 

 

5


 

CRAWFORD & COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS — CONTINUED

Unaudited

 

 

 

 

 

 

*

 

(In thousands, except par value amounts)

 

March 31,
2022

 

 

December 31,
2021

 

LIABILITIES AND SHAREHOLDERS' INVESTMENT

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Short-term borrowings

 

$

32,261

 

 

$

10,704

 

Accounts payable

 

 

43,141

 

 

 

48,470

 

Accrued compensation and related costs

 

 

80,304

 

 

 

96,018

 

Self-insured risks

 

 

14,145

 

 

 

13,222

 

Income taxes payable

 

 

1,173

 

 

 

1,200

 

Operating lease liability

 

 

23,593

 

 

 

25,238

 

Other accrued liabilities

 

 

54,772

 

 

 

76,884

 

Deferred revenues

 

 

31,872

 

 

 

32,119

 

Total Current Liabilities

 

 

281,261

 

 

 

303,855

 

Noncurrent Liabilities:

 

 

 

 

 

 

Long-term debt and finance leases, less current installments

 

 

200,304

 

 

 

164,315

 

Operating lease liability

 

 

86,662

 

 

 

88,408

 

Deferred revenues

 

 

24,187

 

 

 

23,786

 

Accrued pension liabilities

 

 

15,359

 

 

 

17,892

 

Other noncurrent liabilities

 

 

42,385

 

 

 

42,986

 

Total Noncurrent Liabilities

 

 

368,897

 

 

 

337,387

 

Shareholders' Investment:

 

 

 

 

 

 

Class A common stock, $1.00 par value; 50,000 shares authorized; 29,587 and 30,996 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

 

 

29,587

 

 

 

30,996

 

Class B common stock, $1.00 par value; 50,000 shares authorized; 20,092 and 20,812 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

 

 

20,092

 

 

 

20,812

 

Additional paid-in capital

 

 

75,800

 

 

 

74,229

 

Retained earnings

 

 

254,480

 

 

 

266,369

 

Accumulated other comprehensive loss

 

 

(183,731

)

 

 

(180,441

)

Shareholders' Investment Attributable to Shareholders of Crawford & Company

 

 

196,228

 

 

 

211,965

 

Noncontrolling interests

 

 

(752

)

 

 

(568

)

Total Shareholders' Investment

 

 

195,476

 

 

 

211,397

 

TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT

 

$

845,634

 

 

$

852,639

 

 

* Derived from the audited Consolidated Balance Sheet

(See accompanying notes to condensed consolidated financial statements)

 

 

6


 

CRAWFORD & COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

 

 

 

Three Months Ended March 31,

 

(In thousands)

 

2022

 

 

2021

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

Net income

 

$

5,156

 

 

$

6,034

 

Reconciliation of net income to net cash (used in) provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

9,099

 

 

 

10,478

 

Stock-based compensation

 

 

1,660

 

 

 

1,609

 

Gain on sale of property and equipment

 

 

(1,747

)

 

 

(17

)

Contingent earnout adjustments

 

 

2,056

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

6,542

 

 

 

888

 

Unbilled revenues, net

 

 

(13,022

)

 

 

(6,632

)

Accrued or prepaid income taxes

 

 

266

 

 

 

511

 

Accounts payable and accrued liabilities

 

 

(14,902

)

 

 

(8,032

)

Deferred revenues

 

 

402

 

 

 

1,783

 

Accrued retirement costs

 

 

(4,738

)

 

 

(5,457

)

Prepaid expenses and other operating activities

 

 

(6,025

)

 

 

412

 

Net cash (used in) provided by operating activities

 

 

(15,253

)

 

 

1,577

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

Acquisitions of property and equipment

 

 

(1,340

)

 

 

(618

)

Capitalization of computer software costs

 

 

(6,275

)

 

 

(4,354

)

Proceeds from settlement of life insurance policies

 

 

 

 

 

3,054

 

Payments for business acquisitions, net of cash acquired

 

 

(21,273

)

 

 

(3,786

)

Cash proceeds from sale of property and equipment

 

 

3,032

 

 

 

 

Net cash used in investing activities

 

 

(25,856

)

 

 

(5,704

)

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

Cash dividends paid

 

 

(3,114

)

 

 

(3,198

)

Repurchases of common stock

 

 

(16,089

)

 

 

(1,190

)

Increases in revolving credit facility borrowings

 

 

61,816

 

 

 

17,126

 

Payments on revolving credit facility borrowings

 

 

(3,989

)

 

 

(11,729

)

Payments of contingent consideration on acquisitions

 

 

(746

)

 

 

 

Other financing activities

 

 

(270

)

 

 

(399

)

Net cash provided by financing activities

 

 

37,608

 

 

 

610

 

Effects of exchange rate changes on cash and cash equivalents

 

 

(321

)

 

 

1,584

 

Decrease in Cash, Cash Equivalents, and Restricted Cash

 

 

(3,822

)

 

 

(1,933

)

Cash, Cash Equivalents, and Restricted Cash at Beginning of Year

 

 

53,689

 

 

 

44,656

 

Cash, Cash Equivalents, and Restricted Cash at End of Period

 

$

49,867

 

 

$

42,723

 

 

(See accompanying notes to condensed consolidated financial statements)

 

 

7


 

CRAWFORD & COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT

Unaudited

(In thousands, except per share amounts)

 

 

Common Stock

 

 

 

 

 

 

 

 

Accumulated

 

 

Shareholders'
Investment
Attributable to

 

 

 

 

 

 

 

2022

 

Class A
Non-Voting

 

 

Class B
Voting

 

 

Additional
Paid-In
Capital

 

 

Retained
Earnings

 

 

Other
Comprehensive
Loss

 

 

Shareholders
of Crawford
& Company

 

 

Noncontrolling
Interests

 

 

Total
Shareholders'
Investment

 

Balance at January 1, 2022

 

$

30,996

 

 

$

20,812

 

 

$

74,229

 

 

$

266,369

 

 

$

(180,441

)

 

$

211,965

 

 

$

(568

)

 

$

211,397

 

Net income

 

 

 

 

 

 

 

 

 

 

 

5,096

 

 

 

 

 

 

5,096

 

 

 

60

 

 

 

5,156

 

Other comprehensive (loss) income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,290

)

 

 

(3,290

)

 

 

14

 

 

 

(3,276

)

Cash dividends paid (Class A - $0.06 per share, Class B - $0.06 per share)

 

 

 

 

 

 

 

 

 

 

 

(3,114

)

 

 

 

 

 

(3,114

)

 

 

 

 

 

(3,114

)

Stock-based compensation

 

 

 

 

 

 

 

 

1,660

 

 

 

 

 

 

 

 

 

1,660

 

 

 

 

 

 

1,660

 

Repurchases of common stock

 

 

(1,498

)

 

 

(720

)

 

 

 

 

 

(13,871

)

 

 

 

 

 

(16,089

)

 

 

 

 

 

(16,089

)

Shares issued in connection with stock-based compensation plans, net

 

 

89

 

 

 

 

 

 

(89

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends paid to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(258

)

 

 

(258

)

Balance at March 31, 2022

 

$

29,587

 

 

$

20,092

 

 

$

75,800

 

 

$

254,480