CRAWFORD & CO, 10-Q filed on 5/3/2023
Quarterly Report
v3.23.1
Document and Entity Information - shares
 3 Months Ended
Mar. 31, 2023
Apr. 26, 2023
Document Information [Line Items]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Mar. 31, 2023  
Document Fiscal Year Focus 2023  
Document Fiscal Period Focus Q1  
Entity Registrant Name CRAWFORD & CO  
Entity Central Index Key 0000025475  
Current Fiscal Year End Date --12-31  
Entity Filer Category Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Shell Company false  
Entity File Number 1-10356  
Entity Incorporation, State or Country Code GA  
Entity Address, Address Line One 5335 Triangle Parkway  
Entity Address, City or Town Peachtree Corners  
Entity Address, State or Province GA  
Entity Address, Postal Zip Code 30092  
Entity Tax Identification Number 58-0506554  
City Area Code 404  
Local Phone Number 300-1000  
Document Quarterly Report true  
Document Transition Report false  
Class A Non-Voting    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   28,947,419
Title of 12(b) Security Class A Common Stock — $1.00 Par Value  
Trading Symbol CRD-A  
Security Exchange Name NYSE  
Class B Voting    
Document Information [Line Items]    
Entity Common Stock, Shares Outstanding   19,848,490
Title of 12(b) Security Class B Common Stock — $1.00 Par Value  
Trading Symbol CRD-B  
Security Exchange Name NYSE  
v3.23.1
Condensed Consolidated Statements of Operations Unaudited - USD ($)
shares in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Revenues:    
Revenues $ 324,596,000 $ 287,789,000
Costs and Expenses:    
Reimbursements 238,682,000 214,345,000
Selling, general, and administrative expenses 63,369,000 64,841,000
Corporate interest expense, net of interest income 4,399,000 1,519,000
Total Costs and Expenses 306,450,000 280,705,000
Other (Loss) Income, net (2,145,000) 498,000
Income before income taxes 16,001,000 7,582,000
Provision for Income Taxes 5,271,000 2,426,000
Net (Loss) Income 10,730,000 5,156,000
Net Loss Attributable to Noncontrolling Interests (49,000) (60,000)
Net (Loss) Income Attributable to Shareholders of Crawford & Company $ 10,681,000 $ 5,096,000
Class A Non-Voting    
(Loss) Earnings Per Share - Basic:    
Earnings per share - basic $ 0.22 $ 0.10
(Loss) Earnings Per Share - Diluted:    
(Loss) earnings per share - diluted $ 0.22 $ 0.10
Weighted-Average Shares Used to Compute Basic Earnings Per Share:    
Weighted-average common shares outstanding, basic 28,841 30,908
Weighted-Average Shares Used to Compute Diluted Earnings Per Share:    
Weighted-average common shares outstanding, diluted 29,141 31,168
Class B Voting    
(Loss) Earnings Per Share - Basic:    
Earnings per share - basic $ 0.22 $ 0.10
(Loss) Earnings Per Share - Diluted:    
(Loss) earnings per share - diluted $ 0.22 $ 0.10
Weighted-Average Shares Used to Compute Basic Earnings Per Share:    
Weighted-average common shares outstanding, basic 19,848 20,780
Weighted-Average Shares Used to Compute Diluted Earnings Per Share:    
Weighted-average common shares outstanding, diluted 19,848 20,780
Service    
Revenues:    
Revenues $ 312,992,000 $ 279,025,000
Costs and Expenses:    
Reimbursements 227,078,000 205,581,000
Reimbursements    
Revenues:    
Revenues 11,604,000 8,764,000
Costs and Expenses:    
Reimbursements $ 11,604,000 $ 8,764,000
v3.23.1
Condensed Consolidated Statements of Operations Unaudited (Parenthetical) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Income Statement [Abstract]    
Interest income $ 276 $ 19
v3.23.1
Condensed Consolidated Statements of Comprehensive Income (Loss) Unaudited - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Statement of Comprehensive Income [Abstract]    
Net income $ 10,730 $ 5,156
Other Comprehensive Income (Loss)    
Net foreign currency translation gain (loss), net of tax of $0 and $0, respectively 7,690 (4,952)
Amortization of actuarial losses for retirement plans included in net periodic pension cost, net of tax of $731 and $582, respectively 2,086 1,676
Other Comprehensive Income (Loss) 9,776 (3,276)
Comprehensive (Loss) Income 20,506 1,880
Comprehensive income attributable to noncontrolling interests (7) (74)
Comprehensive Income Attributable to Shareholders of Crawford & Company $ 20,499 $ 1,806
v3.23.1
Condensed Consolidated Statements of Comprehensive Income (Loss) Unaudited (Parenthetical) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Statement of Comprehensive Income [Abstract]    
OCI, Tax on foreign currency translation (losses) $ 0 $ 0
OCI, Tax on amortization of actuarial losses on retirement plans included in net periodic pension cost $ 731 $ 582
v3.23.1
Condensed Consolidated Balance Sheets Unaudited - USD ($)
$ in Thousands
Mar. 31, 2023
Dec. 31, 2022
 [1]
Current Assets:    
Cash and cash equivalents $ 43,304 $ 46,007
Accounts receivable, less allowance for expected credit losses of $9,146 and $9,322, respectively 145,348 141,106
Unbilled revenues, at estimated billable amounts 137,410 126,274
Income taxes receivable 9,098 9,098
Prepaid expenses and other current assets 33,335 28,782
Total Current Assets 368,495 351,267
Net Property and Equipment 27,053 27,809
Other Assets:    
Operating lease right-of-use assets, net 95,224 93,334
Goodwill 76,626 76,622
Intangible assets arising from business acquisitions, net 88,511 88,039
Capitalized software costs, net 86,255 82,975
Deferred income tax assets 19,335 19,573
Other noncurrent assets 54,526 51,888
Total Other Assets 420,477 412,431
TOTAL ASSETS 816,025 791,507
Current Liabilities:    
Short-term borrowings 39,053 27,048
Accounts payable 46,776 50,847
Accrued compensation and related costs 61,438 79,285
Self-insured risks 13,703 12,614
Income taxes payable 4,621 1,208
Operating lease liability 24,367 22,910
Other accrued liabilities 63,812 56,293
Deferred revenues 32,517 29,282
Total Current Liabilities 286,287 279,487
Noncurrent Liabilities:    
Long-term debt and finance leases, less current installments 210,342 211,810
Operating lease liability 84,994 84,628
Deferred revenues 25,029 24,737
Accrued pension liabilities 25,653 25,914
Other noncurrent liabilities 41,893 41,553
Total Noncurrent Liabilities 387,911 388,642
Shareholders' Investment:    
Additional paid-in capital 79,094 78,158
Retained earnings 220,850 213,094
Accumulated other comprehensive loss (205,503) (215,321)
Shareholders' Investment Attributable to Shareholders of Crawford & Company 143,214 124,543
Noncontrolling interests (1,387) (1,165)
Total Shareholders' Investment 141,827 123,378
TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT 816,025 791,507
Class A Non-Voting    
Shareholders' Investment:    
common stock, Class A and Class B 28,925 28,764
Class B Voting    
Shareholders' Investment:    
common stock, Class A and Class B $ 19,848 $ 19,848
[1] Derived from the audited Consolidated Balance Sheet
v3.23.1
Condensed Consolidated Balance Sheets Unaudited (Parenthetical) - USD ($)
shares in Thousands, $ in Thousands
Mar. 31, 2023
Dec. 31, 2022
Current Assets:    
Allowance for doubtful accounts $ 9,146 $ 9,322
Class A Non-Voting    
Shareholders' Investment:    
Par or stated value per share (USD per share) $ 1.00 $ 1.00
Shares authorized (shares) 50,000 50,000
Shares outstanding (shares) 28,925 28,764
Class B Voting    
Shareholders' Investment:    
Par or stated value per share (USD per share) $ 1.00 $ 1.00
Shares authorized (shares) 50,000 50,000
Shares issued (shares)   19,848
Shares outstanding (shares) 19,848  
v3.23.1
Condensed Consolidated Statements of Cash Flows Unaudited - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Cash Flows From Operating Activities:    
Net income $ 10,730 $ 5,156
Reconciliation of net (loss) income to net cash (used in) provided by operating activities:    
Depreciation and amortization 9,050 9,099
Stock-based compensation 1,023 1,660
Loss (gain) on sale of property and equipment 20 (1,747)
Contingent earnout adjustments 248 2,056
Changes in operating assets and liabilities:    
Accounts receivable, net (17) 6,542
Unbilled revenues, net (6,333) (13,022)
Accrued or prepaid income taxes 3,895 266
Accounts payable and accrued liabilities (15,818) (14,902)
Deferred revenues 2,841 402
Accrued retirement costs (2,887) (4,738)
Prepaid expenses and other operating activities (3,197) (6,025)
Net cash used in operating activities (445) (15,253)
Cash Flows From Investing Activities:    
Acquisitions of property and equipment (1,031) (1,340)
Capitalization of computer software costs (7,610) (6,275)
Payments for business acquisitions, net of cash acquired 0 (21,273)
Cash proceeds from sale of property and equipment 0 3,032
Net cash used in investing activities (8,641) (25,856)
Cash Flows From Financing Activities:    
Cash dividends paid (2,925) (3,114)
Repurchases of common stock 0 (16,089)
Increases in revolving credit facility borrowings 19,394 61,816
Payments on revolving credit facility borrowings (10,265) (3,989)
Payments of contingent consideration on acquisitions (848) (746)
Other financing activities (169) (270)
Net cash provided by financing activities 5,187 37,608
Effects of exchange rate changes on cash and cash equivalents 1,195 (321)
Decrease in Cash, Cash Equivalents, and Restricted Cash (2,704) (3,822)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Year 46,645 53,689
Cash, Cash Equivalents, and Restricted Cash at End of Period $ 43,941 $ 49,867
v3.23.1
Condensed Consolidated Statements of Shareholders' Investment Unaudited - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Increase (Decrease) in Stockholders' Equity [Roll Forward]    
Beginning balance $ 123,378 [1] $ 211,397
Net income (loss) 10,730 5,156
Other comprehensive income (loss) 9,776 (3,276)
Cash dividends paid (2,925) (3,114)
Stock-based compensation 1,023 1,660
Repurchases of common stock   (16,089)
Shares issued in connection with stock-based compensation plans, net 74  
Dividends paid to noncontrolling interests (229) (258)
Ending balance 141,827 195,476
Common Stock | Class A Non-Voting    
Increase (Decrease) in Stockholders' Equity [Roll Forward]    
Beginning balance 28,764 30,996
Repurchases of common stock   (1,498)
Shares issued in connection with stock-based compensation plans, net 161 89
Ending balance 28,925 29,587
Common Stock | Class B Voting    
Increase (Decrease) in Stockholders' Equity [Roll Forward]    
Beginning balance 19,848 20,812
Repurchases of common stock   (720)
Ending balance 19,848 20,092
Additional Paid-In Capital    
Increase (Decrease) in Stockholders' Equity [Roll Forward]    
Beginning balance 78,158 74,229
Stock-based compensation 1,023 1,660
Shares issued in connection with stock-based compensation plans, net (87) (89)
Ending balance 79,094 75,800
Retained Earnings    
Increase (Decrease) in Stockholders' Equity [Roll Forward]    
Beginning balance 213,094 266,369
Net income (loss) 10,681 5,096
Cash dividends paid (2,925) (3,114)
Repurchases of common stock   (13,871)
Ending balance 220,850 254,480
AOCL attributable to shareholders of Crawford & Company    
Increase (Decrease) in Stockholders' Equity [Roll Forward]    
Beginning balance (215,321) (180,441)
Other comprehensive income (loss) 9,818 (3,290)
Ending balance (205,503) (183,731)
Shareholders' Investment Attributable to Shareholders of Crawford & Company    
Increase (Decrease) in Stockholders' Equity [Roll Forward]    
Beginning balance 124,543 211,965
Net income (loss) 10,681 5,096
Other comprehensive income (loss) 9,818 (3,290)
Cash dividends paid (2,925) (3,114)
Stock-based compensation 1,023 1,660
Repurchases of common stock   (16,089)
Shares issued in connection with stock-based compensation plans, net 74  
Ending balance 143,214 196,228
Noncontrolling Interests    
Increase (Decrease) in Stockholders' Equity [Roll Forward]    
Beginning balance (1,165) (568)
Net income (loss) 49 60
Other comprehensive income (loss) (42) (14)
Dividends paid to noncontrolling interests (229) (258)
Ending balance $ (1,387) $ (752)
[1] Derived from the audited Consolidated Balance Sheet
v3.23.1
Condensed Consolidated Statements of Shareholders' Investment Unaudited (Parenthetical) - $ / shares
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Class A Non-Voting    
Class of Stock [Line Items]    
Cash dividends paid (in dollars per share) $ 0.06 $ 0.06
Class B Voting    
Class of Stock [Line Items]    
Cash dividends paid (in dollars per share) $ 0.06 $ 0.06
v3.23.1
Basis of Presentation
 3 Months Ended
Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the "SEC"). Accordingly, these unaudited condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. Due to the impact of weather activity and other macroeconomic uncertainties, the Company's operating results for the three months ended March 31, 2023 and financial position as of March 31, 2023 are not necessarily indicative of the results or financial position that may be expected for the year ending December 31, 2023 or for other future periods. The financial results from the Company's operations outside of the U.S., Canada, the Caribbean, and certain subsidiaries in the Philippines, are reported and consolidated on a two-month delayed basis (fiscal year-end of October 31) as permitted by GAAP in order to provide sufficient time for accumulation of their results.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments (consisting only of normal recurring accruals and adjustments) considered necessary for a fair presentation have been included. There have been no material changes to our significant accounting policies and estimates from those disclosed in the Company's financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2022 other than as disclosed herein.

The Company has four reportable segments consisting of North America Loss Adjusting, International Operations, Broadspire, and Platform Solutions. Significant intercompany transactions have been eliminated in consolidation.

The Condensed Consolidated Balance Sheet information presented herein as of December 31, 2022 has been derived from the audited consolidated financial statements as of that date. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

The Company consolidates the liabilities of its deferred compensation plan and the related assets, which are held in a rabbi trust and also considered a variable interest entity ("VIE") of the Company. The rabbi trust was created to fund the liabilities of the Company's deferred compensation plan. The Company is considered the primary beneficiary of the rabbi trust because the Company directs the activities of the trust and can use the assets of the trust to satisfy the liabilities of the Company's deferred compensation plan. At March 31, 2023 and December 31, 2022, the liabilities of the deferred compensation plan were $5,945,000 and $6,395,000, respectively, which represented obligations of the Company rather than of the rabbi trust, and the values of the assets held in the related rabbi trust were $10,126,000 and $10,083,000, respectively. These liabilities and assets are included in "Other noncurrent liabilities" and "Other noncurrent assets," respectively, on the Company's unaudited Condensed Consolidated Balance Sheets.

Noncontrolling interests represent the minority shareholders' share of the net income or loss and shareholders' investment in consolidated subsidiaries. Noncontrolling interests are presented as a component of shareholders' investment in the unaudited Condensed Consolidated Balance Sheets and reflect the initial fair value of these investments by noncontrolling shareholders, along with their proportionate share of the income or loss of the subsidiaries, less any dividends or distributions.

v3.23.1
Recently Issued Accounting Standards
 3 Months Ended
Mar. 31, 2023
Accounting Changes and Error Corrections [Abstract]  
Recently Issued Accounting Standards

2. Recently Issued Accounting Standards

Adoption of New Accounting Standards

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification Topic 606. ASU 2021-08 was effective for fiscal years beginning after December 15, 2022, with early adoption permitted and should be applied prospectively to acquisitions occurring on or after the effective date. The adoption of this guidance did not have a material effect on the Company's results of operations, financial condition, or cash flows.
v3.23.1
Revenue Recognition
 3 Months Ended
Mar. 31, 2023
Revenue from Contract with Customer [Abstract]  
Revenue Recognition

3. Revenue Recognition

Revenue from Contracts with Customers

Revenues are recognized when control of the promised services is transferred to the Company's customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Revenues are recognized net of any sales, use or value added taxes collected from customers, which are subsequently remitted to governmental authorities. As the Company completes its performance obligations which are identified below, it has an unconditional right to consideration as outlined in the Company's contracts. Generally, the Company's accounts receivable are expected to be collected in less than two months.

The Company's North America Loss Adjusting and International Operations segments generate revenue for adjusting services provided to insurance companies and self-insured entities related to property and casualty losses caused by physical damage to commercial and residential real property and certain types of personal property. These segments also generate revenues for claims management services provided to insurance companies and self-insured entities related to large, complex losses with technical adjusting and industry experts servicing a broad range of industries. The Company charges on a fee-per-claim basis for each optional purchase of the claims management services exercised by its customer. The Company also performs Legal Services within its International Operations segment. Revenue is recognized over time as the performance obligations are satisfied through the effort expended to research, investigate, evaluate, document and report the claim and control of these services is transferred to the customer. Revenue is recognized based on the claim type for fixed fee claims applied utilizing a portfolio approach based on time elapsed for these claims. For claims billed on a time and expense incurred basis, which are considered variable consideration, the Company recognizes revenue at the amount in which it has the right to invoice for services performed. These methods of revenue recognition are the most accurate depiction of the transfer of the claims management services to the customer. Task assignment services are single optional purchase performance obligations which are generally satisfied at a point in time when the control of the service is transferred to the customer. Therefore, revenue is recognized when the customer receives the service requested.

The following table presents North America Loss Adjusting revenues before reimbursements disaggregated by geography for the three months ended March 31, 2023 and 2022:

 

 

 

Three Months Ended

 

(in thousands)

 

March 31,
2023

 

 

March 31,
2022

 

U.S.

 

$

52,766

 

 

$

40,178

 

Canada

 

 

24,361

 

 

 

24,260

 

Total North America Loss Adjusting Revenues before Reimbursements

 

$

77,127

 

 

$

64,438

 

 

The following table presents International Operations revenues before reimbursements disaggregated by geography and service line for the three months ended March 31, 2023 and 2022:

 

 

 

Three Months Ended

 

(in thousands)

 

March 31,
2023

 

 

March 31,
2022

 

U.K.

 

$

30,732

 

 

$

30,909

 

Europe

 

 

22,764

 

 

 

23,667

 

Australia

 

 

20,636

 

 

 

17,131

 

Asia

 

 

5,627

 

 

 

5,659

 

Latin America

 

 

6,235

 

 

 

5,661

 

International Loss Adjusting

 

$

85,994

 

 

$

83,027

 

 

 

 

 

 

 

 

Crawford Legal Services

 

$

5,869

 

 

$

6,245

 

Total International Operations Revenues before Reimbursements

 

$

91,863

 

 

$

89,272

 

 

 

The Company’s Broadspire segment is a third party administrator that generates revenue through its Claims Management and Medical Management service lines.

The Claims Management service line includes Workers' Compensation, Liability, Property and Disability Claims Management. This service line also performs additional services such as Accident & Health claims programs, including Affinity type claims, and Disability and Leave Management services. Each claim referred by the customer is considered an additional optional purchase of claims management services under the agreement with the customer. The transaction price is specified in the contract and is fixed for each service. Revenue is recognized over time as services are provided as the performance obligations are satisfied through the effort expended to research, investigate, evaluate, document, and report the claim and control of these services is transferred to the customer. Revenue is recognized based on historical claim closure rates and claim type applied utilizing a portfolio approach based on time elapsed for these claims as the Company believes this is the most accurate depiction of the transfer of the claims management services to its customer. Broadspire also provides claims management services on a monthly basis for which revenue is recognized over time monthly based on claims received and staff required to complete our claim handling obligations. Broadspire also provides Risk Management Information Services and Account Administration services. For non-claim services provided in our Claims Management service line, revenue is recognized over time as services are provided and control of these services is transferred to the customer. Revenue is recognized as time elapses as this is the most accurate depiction of the transfer of the service to the customer.

The Company's obligation to manage claims under the Claims Management service line can range from less than one year, on a one- or two-year basis or for the lifetime of the claim. Under certain claims management agreements, the Company receives consideration from a customer at contract inception prior to transferring services to the customer, however, it would begin performing services immediately. The period between a customer’s payment of consideration and the completion of the promised services could be greater than one year. There is no difference between the amount of promised consideration and the cash selling price of the promised services. The fee is billed upfront by the Company in order to provide customers with simplified and predictable ways of purchasing its services and it is customary to invoice service fees when the claim is assigned. The Company considered whether a significant financing component exists and determined that there is not a significant financing component at the contract level.

The Medical Management service line offers case managers who provide administration services by proactively managing medical treatment plans for claimants while facilitating an understanding of and participation in their rehabilitation process. Revenue for Medical Management services is recognized over time as the performance obligations are satisfied through the effort expended to manage the medical treatment for claimants and control of these services is transferred to the customer. Medical Management services are generally billed based on time incurred, are considered variable consideration, and revenue is recognized at the amount in which the Company has the right to invoice for services performed. This method of revenue recognition is the most accurate depiction of the transfer of the Medical Management service to the customer. The Company also performs medical bill review services. Medical bill review services provide an analysis of medical charges for clients’ claims to identify opportunities for savings. Medical bill review services revenues are recognized over time as control of the service is transferred to the customer. Revenue is recognized based upon the transfer of the results of the medical bill review service to the customer as this is the most accurate depiction of the transfer of the service to the customer.

The following table presents Broadspire revenues before reimbursements disaggregated by service line for the three months ended March 31, 2023 and 2022:

 

 

 

Three Months Ended

 

(in thousands)

 

March 31,
2023

 

 

March 31,
2022

 

Claims Management

 

$

40,236

 

 

$

39,551

 

Medical Management

 

 

40,946

 

 

 

36,903

 

Total Broadspire Revenues before Reimbursements

 

$

81,182

 

 

$

76,454

 

 

The Company's Crawford Platform Solutions segment principally generates revenues through its Contractor Connection, Networks and Subrogation service lines.

The Contractor Connection service line generates revenue through its independently managed contractor network. Contractor Connection primarily generates revenue by receiving a fee for each project that is sold by its network of contractors. Revenue is recognized at a point in time once the consumer accepts the contractor's proposal as Contractor Connection’s performance obligation of referring projects to its contractors has been completed and the Company is entitled to consideration at that time. The contractor takes control of the service upon the consumer’s acceptance of the contractor’s proposal.

The Networks service line generates revenues for claims management services provided to insurance companies and self-insured entities related to property, casualty and catastrophic losses. Networks also generates revenue by providing on-demand inspection, verification and other task specific field services for businesses and consumers. Revenue is recognized over time as the performance obligations are satisfied through the effort expended to research, investigate, evaluate, document and report the claim and control of these services is transferred to the customer. Revenue is recognized based on the claim type for fixed fee claims, applied utilizing a portfolio approach based on time elapsed for these claims. For claims billed on a time and expense incurred basis, which are considered variable consideration, the Company recognizes revenue at the amount in which it has the right to invoice for services performed. These methods of revenue recognition are the most accurate depiction of the transfer of the claims management services to the customer.

The Subrogation service line provides subrogation recovery and consultative services for the property and casualty insurance industry. Revenue is recognized at a point in time when the subrogation is successful and cash consideration is received.

The following table presents Platform Solutions revenues before reimbursements disaggregated by service line for the three months ended March 31, 2023 and 2022:

 

 

 

Three Months Ended

 

(in thousands)

 

March 31,
2023

 

 

March 31,
2022

 

Contractor Connection

 

$

19,301

 

 

$

15,263

 

Networks

 

 

37,403

 

 

 

27,526

 

Subrogation

 

 

6,116

 

 

 

6,072

 

Total Platform Solutions Revenues before Reimbursements

 

$

62,820

 

 

$

48,861

 

 

In the normal course of business, the Company's segments incur certain out-of-pocket expenses that are thereafter reimbursed by its customers. The Company controls the promised good or service before it is transferred to its customer, therefore it is a principal in the transaction. These out-of-pocket expenses and associated reimbursements are reported on a gross basis within expenses and revenues, respectively, in the Company's unaudited Condensed Consolidated Statements of Operations.

Arrangements with Multiple Performance Obligations

For claims management services, the Company typically has one performance obligation; however, it also provides the customer with an option to acquire additional services. The Company sells multiple lines of claims processing and different levels of processing depending on the complexity of the claims. The Company typically provides a menu of offerings from which the customer chooses to purchase at its option. The price of each service is separate and distinct and provides a separate and distinct value to the customer. Pricing is consistent for each service irrespective of the other services or quantities requested by the customer. For example, if the Company provides claims processing for both auto and general liability, those services are priced and delivered independently. These additional services represent optional purchases of additional claims management services and do not represent arrangements with multiple performance obligations.

Performance-based fees

The Company has contracts with certain clients within its International Operations that provide for additional fee revenues or revenue reductions based on its efficiency in managing claim portfolios and on the basis of claim outcomes and the resulting average claim costs for the respective portfolios. These amounts are in addition to, or a reduction of, the fee revenues discussed above. These performance-based revenues, which represent variable consideration, are based on performance metrics set forth in the underlying contracts. These are generally under multi-year contracts but with discrete individual contract year measurement periods that remain subject to adjustment until claim closure. Each period, the Company bases its estimates of performance-based revenues on an individual contract year basis, which are subject to adjustment in future years based on changes in average claim costs. Accordingly, the amounts represent the Company's best estimate of amounts earned using historical averages and other factors. Because the expectation of the ultimate contingent revenue amounts to be earned can vary from period to period, these estimates might change significantly from quarter to quarter, and such adjustments may occur in future periods until the individual contract year measurement period is closed. Variable consideration is recognized when the Company concludes, based on all the facts and information available at the reporting date, that it is probable that a significant revenue reversal will not occur in future periods.

Contract Balances

The timing of revenue recognition, billings and cash collections result in billed accounts receivables, contract assets (reported as "Unbilled revenues at estimated billable amounts") and contract liabilities (reported as "Deferred revenues") on the Company’s unaudited Condensed Consolidated Balance Sheets. Unbilled revenues is a contract asset for revenue that has been recognized in advance of billing the customer, resulting from professional services delivered that the Company expects and is entitled to receive as consideration under certain contracts. Billing requirements vary by contract but substantially all unbilled revenues are billed within one year.

When the Company receives consideration from a customer prior to transferring services to the customer under the terms of certain claims management agreements, it records deferred revenues on the Company’s unaudited Condensed Consolidated Balance Sheets, which represents a contract liability. These fixed-fee service agreements typically result from the Broadspire segment and require the Company to handle claims on either a one- or two-year basis, or for the lifetime of the claim. In cases where it handles a claim on a non-lifetime basis, the Company typically receives an additional fee on each anniversary date that the claim remains open. For service agreements where it provides services for the life of the claim, the Company is paid one upfront fee regardless of the duration of the claim. The Company recognizes deferred revenues as revenues as it performs services and transfers control of the services to the customer and satisfies the performance obligation which it determines utilizing a portfolio approach.

The Company's deferred revenues for claims handled for one or two years are not as sensitive to changes in claim closing rates since the performance obligations are satisfied within a fixed length of time. Deferred revenues for lifetime claim handling are more sensitive to changes in claim closing rates since the Company is obligated to handle these claims to conclusion with no additional fees received for long-lived claims. For all fixed fee service agreements, revenues are recognized over the expected service periods by type of claim. Based upon its historical averages, the Company closes approximately 99% of all cases referred to it under lifetime claim service agreements within five years from the date of referral. Also, within that five-year period, the percentage of cases remaining open in any one particular year has remained relatively consistent from period to period. Each quarter the Company evaluates its historical case closing rates by type of claim utilizing a portfolio approach and makes adjustments to deferred revenues as necessary. As a portfolio approach is utilized to recognize deferred revenues, any changes in estimates will impact the timing of revenue recognition and any changes in estimates are recognized in the period in which they are determined.

The table below presents the deferred revenues balance as of March 31, 2023 and the significant activity affecting deferred revenues during the three months ended March 31, 2023:

 

(In Thousands)

 

 

 

Customer Contract Liabilities

 

Deferred
Revenue

 

Balance at January 1, 2023

 

$

54,019

 

Quarterly additions

 

 

21,252

 

Revenue recognized from the prior periods

 

 

(12,142

)

Revenue recognized from current quarter additions

 

 

(5,583

)

Balance as of March 31, 2023

 

$

57,546

 

 

Remaining Performance Obligations

As of March 31, 2023, the Company had $97,603,000 of remaining performance obligations related to claims and non-claims services in which the price is fixed. Remaining performance obligations consist of deferred revenues as well as certain unbilled receivables where the claims processing has not yet occurred. The Company expects to recognize approximately 70% of our remaining performance obligations as revenues within one year and the remaining balance thereafter.

Costs to Obtain a Contract

The Company has a sales incentive compensation program where remuneration is based on the revenues recognized in the period. The remuneration does not represent an incremental cost to the Company that provides a future benefit expected to be longer than one year and would meet the criteria to be capitalized and presented as a contract asset on the Company's unaudited Condensed Consolidated Balance Sheets.

Practical Expedients Elected

As a practical expedient, the Company does not adjust the consideration in a contract for the effects of a significant financing component, when the period between a customer’s payment of consideration and the transfer of promised services to the customer is expected to be one year or less at contract inception.

For claims management services that are billed on a time and expense incurred or per unit basis, the Company recognizes revenue at the amount to which it has the right to invoice for services performed.

The Company does not disclose the value of remaining performance obligations for (i) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed, or (ii) contracts with variable consideration allocated entirely to a single performance obligation.
v3.23.1
Credit Losses
 3 Months Ended
Mar. 31, 2023
Credit Loss [Abstract]  
Credit Losses

4. Credit Losses

The Company estimates its expected credit losses based on past experience, current conditions and reasonable and supportable forecasts affecting collectability of these assets. We evaluate the risks related to our trade receivables and contract assets by considering customer type, geography, and aging.

v3.23.1
Income Taxes
 3 Months Ended
Mar. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

5. Income Taxes

The Company's consolidated effective income tax rate may change periodically due to changes in enacted tax rates, fluctuations in the mix of income earned from the Company's various domestic and international operations, which are subject to income taxes at different rates, the Company's ability to utilize net operating loss and tax credit carryforwards, amounts related to uncertain income tax positions and goodwill impairments.

The provision for income taxes on consolidated income before income taxes totaled a provision of $5,271,000 and $2,426,000 for the three months ended March 31, 2023 and 2022, respectively. The overall effective tax rate increased to 32.9% for the three months ended March 31, 2023 compared with 32.0% for the 2022 period primarily due to losses in certain international operations.

v3.23.1
Defined Benefit Pension Plans
 3 Months Ended
Mar. 31, 2023
Retirement Benefits [Abstract]  
Defined Benefit Pension Plans

6. Defined Benefit Pension Plans

Net periodic cost (benefit) related to all of the Company's defined benefit pension plans recognized in the Company's unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022 included the following components:

 

 

 

Three Months Ended

 

(in thousands)

 

March 31,
2023

 

 

March 31,
2022

 

Service cost

 

$

357

 

 

$

345

 

Interest cost

 

 

5,939

 

 

 

3,394

 

Expected return on assets

 

 

(6,772

)

 

 

(6,419

)

Amortization of actuarial loss

 

 

2,978

 

 

 

2,527

 

Net periodic cost (benefit)

 

$

2,502

 

 

$

(153

)

 

For the three months ended March 31, 2023 and 2022, the non-service components of net periodic pension expense (benefit) of $2,145,000 and $(498,000), respectively, are included in "Other Income, net" on the unaudited Condensed Consolidated Statement of Operations. For the three months ended March 31, 2023, the Company made no contributions to the U.S. defined benefit pension plan and $502,000 to the U.K. defined benefit pension plans, as compared with no contributions to the U.S. defined benefit pension plan and $160,000 to the U.K. defined benefit pension plans during the three months ended March 31, 2022, respectively.

v3.23.1
Net Income Attributable to Shareholders of Crawford & Company per Common Share
 3 Months Ended
Mar. 31, 2023
Earnings Per Share [Abstract]  
Net Income Attributable to Shareholders of Crawford & Company per Common Share

7. Net Income Attributable to Shareholders of Crawford & Company per Common Share

The Company computes earnings per share of its non-voting Class A Common Stock ("CRD-A") and voting Class B Common Stock ("CRD-B") using the two-class method, which allocates the undistributed earnings in each period to each class on a proportionate basis. The Company's Board of Directors has the right, but not the obligation, to declare higher dividends on the CRD-A shares than on the CRD-B shares, subject to certain limitations. In periods when the dividend is the same for CRD-A and CRD-B or when no dividends are declared or paid to either class, the two-class method generally will yield the same earnings per share for CRD-A and CRD-B. During 2022 and 2023, the Board of Directors has declared the same dividend on CRD-A and CRD-B.

The computations of basic net income attributable to shareholders of Crawford & Company per common share were as follows:

 

 

 

Three Months Ended

 

 

 

March 31,
2023

 

 

March 31,
2022

 

(in thousands, except per share amounts)

 

CRD-A

 

 

CRD-B

 

 

CRD-A

 

 

CRD-B

 

Earnings per share - basic:

 

 

 

 

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

Allocation of undistributed earnings

 

$

4,594

 

 

$

3,161

 

 

$

1,185

 

 

$

797

 

Dividends paid

 

 

1,735

 

 

 

1,191

 

 

 

1,865

 

 

 

1,249

 

Net income attributable to common shareholders, basic

 

$

6,329

 

 

$

4,352

 

 

$

3,050

 

 

$

2,046

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic

 

 

28,841

 

 

 

19,848

 

 

 

30,908

 

 

 

20,780

 

Earnings per share - basic

 

$

0.22

 

 

$

0.22

 

 

$

0.10

 

 

$

0.10

 

 

The computations of diluted net income attributable to shareholders of Crawford & Company per common share were as follows:

 

 

 

Three Months Ended

 

 

 

March 31,
2023

 

 

March 31,
2022

 

(in thousands, except per share amounts)

 

CRD-A

 

 

CRD-B

 

 

CRD-A

 

 

CRD-B

 

Earnings per share - diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

Allocation of undistributed earnings

 

$

4,613

 

 

$

3,142

 

 

$

1,189

 

 

$

793

 

Dividends paid

 

 

1,735

 

 

 

1,191

 

 

 

1,865

 

 

 

1,249

 

Net income attributable to common shareholders, diluted

 

$

6,348

 

 

$

4,333

 

 

$

3,054

 

 

$

2,042

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic

 

 

28,841

 

 

 

19,848

 

 

 

30,908

 

 

 

20,780

 

Weighted-average effect of dilutive securities

 

 

300

 

 

 

—

 

 

 

260

 

 

 

—

 

Weighted-average common shares outstanding, diluted

 

 

29,141

 

 

 

19,848

 

 

 

31,168

 

 

 

20,780

 

Earnings per share - diluted

 

$

0.22

 

 

$

0.22

 

 

$

0.10

 

 

$

0.10

 

 

Listed below are the shares excluded from the denominator in the preceding computation of diluted earnings per share for CRD-A because their inclusion would have been antidilutive:

 

 

 

Three Months Ended

(in thousands)

 

March 31,
2023

 

March 31,
2022

Shares underlying stock options excluded

 

1,532

 

1,542

Performance stock grants excluded because performance conditions have not been met (1)

 

758

 

625

 

(1) Compensation cost is recognized for these performance stock grants based on expected achievement rates; however, no consideration is given to these performance stock grants when calculating diluted earnings per share until the performance measurements have been achieved.

The following table details shares issued during the three months ended March 31, 2023 and 2022, including restricted shares that were returned prior to vesting. These shares are included from their dates of issuance in the weighted-average common shares used to compute basic and diluted earnings per share for CRD-A in the table above. There were no shares of CRD-B issued during any of these periods.

 

 

 

Three Months Ended

 

(in thousands)

 

March 31,
2023

 

 

March 31,
2022

 

CRD-A issued under the Non-Employee Director Stock Plan

 

 

134

 

 

 

94

 

CRD-A issued under the Employee Stock Purchase Plan

 

 

27

 

 

 

(6

)

 

Effective November 4, 2021, the Company’s Board of Directors authorized the repurchase of up to 2,000,000 shares of CRD-A or CRD-B (or a combination of the two) through December 31, 2023 (the “2021 Repurchase Authorization”). On February 10, 2022, the Company's Board of Directors authorized the addition of 5,000,000 shares of CRD-A or CRD-B (or a combination of the two) to its 2021 Repurchase Authorization which had a remaining authorization to purchase 413,317 shares at December 31, 2021. Under the new repurchase program, repurchases may be made through December 31, 2023 in the open market or privately negotiated transactions at such times and for such prices as management deems appropriate, subject to applicable regulatory guidelines. The new authorization does not obligate Crawford to acquire any stock, and purchases may be commenced or suspended at any time based on market conditions and other factors that the Company deems appropriate. At March 31, 2023, there were 1,793,371 remaining shares authorized to repurchase under the 2021 Repurchase Authorization.

During the three months ended March 31, 2023, the Company did not repurchase any shares of CRD-A or CRD-B. During the three months ended March 31, 2022, the Company repurchased 1,498,084 shares of CRD-A and 719,874 shares of CRD-B at an average cost of $7.23 and $7.31, respectively.

v3.23.1
Accumulated Other Comprehensive Loss
 3 Months Ended
Mar. 31, 2023
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]  
Accumulated Other Comprehensive Loss

8. Accumulated Other Comprehensive Loss

Comprehensive (loss) income for the Company consists of the total of net income, foreign currency translation adjustments, and accrued pension and retiree medical liability adjustments. Foreign currency translation adjustments include the net realized (losses) gains from intra-entity loans that are long-term in nature of $651,000 for the three months ended March 31, 2023. The changes in components of "Accumulated other comprehensive loss" ("AOCL"), net of taxes and noncontrolling interests, included in the Company's unaudited condensed consolidated financial statements were as follows:

 

 

 

Three Months Ended March 31, 2023

 

(in thousands)

 

Foreign
currency
translation
adjustments

 

 

Retirement
liabilities (1)

 

 

AOCL
attributable
to shareholders
of Crawford &
Company

 

Beginning balance

 

$

(52,581

)

 

$

(162,740

)

 

$

(215,321

)

Other comprehensive income before reclassifications

 

 

7,732

 

 

 

—

 

 

 

7,732

 

Amounts reclassified from accumulated other comprehensive income to net income

 

 

—

 

 

 

2,086

 

 

 

2,086

 

Net current period other comprehensive income

 

 

7,732

 

 

 

2,086

 

 

 

9,818

 

Ending balance

 

$

(44,849

)

 

$

(160,654

)

 

$

(205,503

)

 

 

 

Three Months Ended March 31, 2022

 

(in thousands)

 

Foreign
currency
translation
adjustments

 

 

Retirement
liabilities (1)

 

 

AOCL
attributable
to shareholders
of Crawford &
Company

 

Beginning balance

 

$

(21,760

)

 

$

(158,681

)

 

$

(180,441

)

Other comprehensive loss before reclassifications

 

 

(4,966

)

 

 

—

 

 

 

(4,966

)

Amounts reclassified from accumulated other comprehensive income to net income

 

 

—

 

 

 

1,676

 

 

 

1,676

 

Net current period other comprehensive (loss) income

 

 

(4,966

)

 

 

1,676

 

 

 

(3,290

)

Ending balance

 

$

(26,726

)

 

$

(157,005

)

 

$

(183,731

)

 

(1) Retirement liabilities reclassified to net income are related to the amortization of actuarial losses and are included in "Other Income, net" in the Company's unaudited Condensed Consolidated Statements of Operations. See Note 6, "Defined Benefit Pension Plans" for additional details.

The other comprehensive loss amounts attributable to noncontrolling interests presented in the Company's unaudited Condensed Consolidated Statements of Shareholders' Investment are foreign currency translation adjustments.
v3.23.1
Fair Value Measurements
 3 Months Ended
Mar. 31, 2023
Fair Value Disclosures [Abstract]  
Fair Value Measurements

9. Fair Value Measurements

The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy:

 

 

 

 

 

 

Fair Value Measurements at March 31, 2023

 

 

 

 

 

 

 

 

 

Significant Other

 

 

Significant

 

 

 

 

 

 

Quoted Prices in

 

 

Observable

 

 

Unobservable

 

 

 

 

 

 

Active Markets

 

 

Inputs

 

 

Inputs

 

(in thousands)

 

Total

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (1)

 

$

10,284

 

 

$

10,284

 

 

$

—

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Contingent earnout liability (2)

 

 

11,534

 

 

 

—

 

 

 

—

 

 

 

11,534

 

(1) The fair values of the money market funds were based on recently quoted market prices and reported transactions in an active marketplace. Money market funds are included in the Company's unaudited Condensed Consolidated Balance Sheets as "Cash and cash equivalents."

(2) The contingent earnout liability relates to businesses acquired since 2020. See Note 12, "Business Acquisitions" for more information. The Level 3 fair value of the contingent earnout liability was estimated using internally-prepared revenue and EBITDA projections, and discount rates determined using a combination of observable and unobservable market data. The Company recognized a pretax contingent earnout expense totaling $248,000 in the three months ended March 31, 2023 and $2.1 million in the three months ended March 31, 2022 related to the fair value adjustment of earnout liabilities arising from recent acquisitions. The fair value adjustment is based on changes to projections of acquired entities over the respective earnout periods, which span multiple years. The fair value of the contingent earnout liability is included in "Other accrued liabilities" and "Other noncurrent liabilities" on the Company's Consolidated Balance Sheets, based upon the term of the contingent earnout agreement.

Fair Value Disclosures

There were no transfers of assets between fair value levels during the three months ended March 31, 2023. The categorization of assets and liabilities within the fair value hierarchy and the measurement techniques are reviewed quarterly. Any transfers between levels are deemed to have occurred at the end of the quarter.

The fair values of accounts receivable, unbilled revenues, accounts payable and short-term borrowings approximate their respective carrying values due to the short-term maturities of the instruments. The interest rate on the Company's variable rate long-term debt resets at least every 90 days; therefore, the recorded value approximates fair value.

Nonrecurring Fair Value Disclosures

Goodwill is an asset that represents the excess of the purchase price over the fair value of the separately identifiable net assets (tangible and intangible) acquired in certain business combinations. Indefinite-lived intangible assets consist of trade names associated with acquired businesses. Goodwill and indefinite-lived intangible assets are not amortized, but are subject to impairment testing at least annually. Other long-lived assets consist primarily of property and equipment, deferred income tax assets, capitalized software, and amortizable intangible assets related to customer relationships, technology, and trade names with finite lives. Other long-lived assets are evaluated for impairment when impairment indicators are identified.

Goodwill is tested for impairment on October 1st of each year, or between annual impairment tests, if events or circumstances have occurred which indicate potential impairment of goodwill. The Company did not identify any impairment indicators during the three months ended March 31, 2023.
v3.23.1
Segment Information
 3 Months Ended
Mar. 31, 2023
Segment Reporting [Abstract]  
Segment Information

10. Segment Information

The Company has four reportable segments consisting of North America Loss Adjusting, International Operations, Broadspire, and Platform Solutions. The Company's reportable segments are comprised of the following:

•
North America Loss Adjusting, which services the North American property and casualty market. This is comprised of Loss Adjusting operations in the U.S. and Canada, including Global Technical Services and edjuster. The Canadian operations include all operations within that country.
•
International Operations, which services the global property and casualty market outside North America. This is comprised of Loss Adjusting operations in the U.K., Europe, Australia, Asia and Latin America, and includes Crawford Legal Services. The International Operations include all operations within the respective countries.
•
Broadspire, which provides third party administration for workers' compensation, auto and liability, disability absence management, medical management, and accident and health to corporations, brokers and insurers in the U.S.
•
Platform Solutions, which consists of the Contractor Connection, Networks, and Subrogation service lines in the U.S. The Networks service line includes Catastrophe operations and WeGoLook.

Financial information for the three months ended March 31, 2023 and 2022 related to the Company's reportable segments, including a reconciliation from segment operating earnings to income before income taxes, the most directly comparable GAAP financial measure, is presented below:

 

 

 

Three Months Ended

 

(in thousands)

 

March 31,
2023

 

 

March 31,
2022

 

Revenues:

 

 

 

 

 

 

North America Loss Adjusting

 

$

77,127

 

 

$

64,438

 

International Operations

 

 

91,863

 

 

 

89,272

 

Broadspire

 

 

81,182

 

 

 

76,454

 

Platform Solutions

 

 

62,820

 

 

 

48,861

 

Total segment revenues before reimbursements

 

 

312,992

 

 

 

279,025

 

Reimbursements

 

 

11,604

 

 

 

8,764

 

Total revenues

 

$

324,596

 

 

$

287,789

 

 

 

 

 

 

 

Segment Operating Earnings (Loss)

 

 

 

 

 

 

North America Loss Adjusting

 

$

8,065

 

 

$

4,135

 

International Operations

 

 

3,035

 

 

 

(3,067

)

Broadspire

 

 

7,927

 

 

 

6,434

 

Platform Solutions

 

 

9,966

 

 

 

8,038

 

Total segment operating earnings

 

 

28,993

 

 

 

15,540

 

 

 

 

 

 

 

Deduct:

 

 

 

 

 

 

Unallocated corporate and shared costs, net

 

 

(4,119

)

 

 

(2,995

)

Net corporate interest expense

 

 

(4,399

)

 

 

(1,519

)

Stock option expense

 

 

(156

)

 

 

(205

)

Amortization of customer-relationship intangible assets

 

 

(1,899

)

 

 

(1,726

)

Contingent earnout adjustments

 

 

(248

)

 

 

(2,056

)

Non-service pension (costs) credits

 

 

(2,171

)

 

 

543

 

Income before income taxes

 

$

16,001

 

 

$

7,582

 

 

Operating earnings is the primary financial performance measure used by the Company's senior management and chief operating decision maker ("CODM") to evaluate the financial performance of the Company's operating segments and make resource allocation and certain compensation decisions. The Company believes this measure is useful to investors in that it allows them to evaluate segment operating performance using the same criteria used by the Company's senior management and CODM. Operating earnings will differ from net income computed in accordance with GAAP since operating earnings represents segment earnings before certain unallocated corporate and shared costs and credits, net corporate interest expense, stock option expense, amortization of customer-relationship intangible assets, contingent earnout adjustments, non-service pension costs and credits, income taxes, and net income or loss attributable to noncontrolling interests.

Segment operating earnings includes allocations of certain corporate and shared costs. If the Company changes its allocation methods or changes the types of costs that are allocated to its four operating segments, prior period amounts presented in the current period financial statements are adjusted to conform to the current allocation process.

Intersegment transactions are not material for any period presented. Certain of the Company’s reportable segments represent the aggregation of certain business units which represent separate operating segments.

Revenues before reimbursements by major service line in the International Operations, Broadspire and Platform Solutions segments are shown in the following table. The Company considers all North America Loss Adjusting revenues to be primarily derived from one service line.

 

 

 

Three Months Ended

 

(in thousands)

 

March 31,
2023

 

 

March 31,
2022

 

International Operations

 

 

 

 

 

 

International Loss Adjusting

 

$

85,994

 

 

$

83,027

 

Crawford Legal Services

 

 

5,869

 

 

 

6,245

 

Total Revenues before Reimbursements--International Operations

 

$

91,863

 

 

$

89,272

 

 

 

 

 

 

 

 

Broadspire

 

 

 

 

 

 

Claims Management

 

$

40,236

 

 

$

39,551

 

Medical Management

 

 

40,946

 

 

 

36,903

 

Total Revenues before Reimbursements--Broadspire

 

$

81,182

 

 

$

76,454

 

 

 

 

 

 

 

 

Platform Solutions

 

 

 

 

 

 

Contractor Connection

 

$

19,301

 

 

$

15,263

 

Networks

 

 

37,403

 

 

 

27,526

 

Subrogation

 

 

6,116

 

 

 

6,072

 

Total Revenues before Reimbursements--Platform Solutions

 

$

62,820

 

 

$

48,861

 
v3.23.1
Commitments and Contingencies
 3 Months Ended
Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

11. Commitments and Contingencies

As part of the Company's credit facility, the Company maintains a letter of credit to satisfy certain of its own contractual requirements. At March 31, 2023, the aggregate committed amount of letters of credit outstanding under the credit facility was $8,853,000.

In the normal course of its business, the Company is sometimes named as a defendant or responsible party in suits or other actions by insureds or claimants contesting decisions made by the Company or its clients with respect to the settlement of claims. Additionally, certain clients of the Company have in the past brought, and may, in the future bring, claims for indemnification on the basis of alleged actions by the Company, its agents, or its employees in rendering services to clients. The majority of these claims are of the type covered by insurance maintained by the Company. However, the Company is responsible for the deductibles and self-insured retentions under various insurance coverages. In the opinion of Company management, adequate provisions have been made for such known and foreseeable risks. However, given the inherent unpredictability of litigation and disputes related to these matters, it is possible an adverse outcome or settlement, if not covered by insurance, could have a material effect on the Company's results of operations, financial position, or cash flows.

The Company is subject to numerous federal, state, and foreign labor, employment, worker health and safety, antitrust and competition, environmental and consumer protection, import/export, anti-corruption, and other laws. From time to time the Company faces claims and investigations by employees, former employees, and governmental entities under such laws or employment contracts with such employees or former employees. In addition, the Company may on occasion be engaged in disputes with certain of its clients, vendors or other trading partners. Such claims, investigations, negotiations, and any litigation involving the Company could divert management's time and attention from the Company's business operations and could potentially result in substantial costs of defense, settlement or other disposition, which could have a material adverse effect on the Company's results of operations, financial position, and cash flows. In the opinion of Company management, adequate provisions have been made for any items that are probable and reasonably estimable.
v3.23.1
Business Acquisitions
 3 Months Ended
Mar. 31, 2023
Business Combinations [Abstract]  
Business Acquisitions

12. Business Acquisitions

R.P. van Dijk B.V. Acquisition

On April 1, 2022, the Company purchased assets associated with R.P. van Dijk B.V. ("Van Dijk"), a bodily injury loss adjusting company based in the Netherlands. The acquisition was funded primarily through additional borrowings under the Company’s credit facility. The purchase price includes an initial cash consideration of $4,313,000, and an earn-out potential up to $2,200,000 payable over the next two years based on the achievement of revenue performance goals and other nonfinancial milestones over two one-year periods, beginning April 2022.

This acquisition expands the Company's network in the Netherlands and strengthens its bodily injury loss adjusting service offering by adding a highly qualified team of adjusters experienced in managing complex loss events resulting in injury or death, as well as handling medical liability claims. The acquisition supports the Company's strategic aim of strengthening its expertise in all key territories in which it operates.

The acquisition accounting was based on the fair value of the acquisition consideration transferred to the sellers, assets acquired and liabilities assumed as of the acquisition date. At the acquisition date, the fair value of the contingent consideration payable was estimated to be $1,342,000. At March 31, 2023, there were no material changes in the range of expected outcomes and the fair value of the contingent consideration from the acquisition date. Significant assumptions and estimates used in the valuation of intangible assets and contingent consideration included, but were not limited to future expected cash flows, including projected revenues and expenses, estimated customer attrition rates, and the applicable discount rates. These assumptions and estimates were level 3 inputs and based on assumptions that the Company believes to be reasonable. However, actual results may differ from these estimates.

The Company is in the process of reviewing the fair value of the assets and liabilities assumed, including, but not limited to intangible assets, unbilled receivables, accrued expenses, tax liabilities and goodwill. As additional information becomes available, the Company may further revise its preliminary acquisition accounting during the remainder of the measurement period, which will not exceed 12 months from the date of acquisition. The Company may update certain assumptions and inputs to incorporate additional information obtained subsequent to the closing of the transaction related to facts and circumstances that existed as of the acquisition date.

The financial results for Van Dijk are included in the Company’s consolidated financial statements on a two-month delayed basis.
v3.23.1
Cash and Cash Equivalents
 3 Months Ended
Mar. 31, 2023
Cash and Cash Equivalents [Abstract]  
Cash and Cash Equivalents

13. Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and marketable securities with original maturities of three months or less. The fair value of cash and cash equivalents approximates carrying value due to their short-term nature. Cash balances that are legally restricted as to usage or withdrawal are separately included in "Prepaid expenses and other current assets" within the Company's unaudited Condensed Consolidated Balance Sheets. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Company's unaudited Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown within the Company's unaudited Condensed Consolidated Statement of Cash Flows:

 

 

 

March 31, 2023

 

 

December 31, 2022

 

 

March 31, 2022

 

 

December 31, 2021

 

 

 

(In thousands)

 

Cash and cash equivalents

 

$

43,304

 

 

$

46,007

 

 

$

49,156

 

 

$

53,228

 

Restricted cash within prepaid expenses and other current assets

 

 

637

 

 

 

638

 

 

 

711

 

 

 

461

 

Total cash, cash equivalents and restricted cash

 

$

43,941

 

 

$

46,645

 

 

$

49,867

 

 

$

53,689

 

 

The Company also maintains funds in various trust accounts to administer claims for certain clients. These funds are not available for our general operating activities and, as such, have not been recorded in the accompanying unaudited Condensed Consolidated Balance Sheets.

v3.23.1
Basis of Presentation (Policies)
 3 Months Ended
Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Accounting

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the "SEC"). Accordingly, these unaudited condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. Due to the impact of weather activity and other macroeconomic uncertainties, the Company's operating results for the three months ended March 31, 2023 and financial position as of March 31, 2023 are not necessarily indicative of the results or financial position that may be expected for the year ending December 31, 2023 or for other future periods. The financial results from the Company's operations outside of the U.S., Canada, the Caribbean, and certain subsidiaries in the Philippines, are reported and consolidated on a two-month delayed basis (fiscal year-end of October 31) as permitted by GAAP in order to provide sufficient time for accumulation of their results.
Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments (consisting only of normal recurring accruals and adjustments) considered necessary for a fair presentation have been included. There have been no material changes to our significant accounting policies and estimates from those disclosed in the Company's financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2022 other than as disclosed herein.
Consolidation, Variable Interest Entity, Policy The Company consolidates the liabilities of its deferred compensation plan and the related assets, which are held in a rabbi trust and also considered a variable interest entity ("VIE") of the Company. The rabbi trust was created to fund the liabilities of the Company's deferred compensation plan. The Company is considered the primary beneficiary of the rabbi trust because the Company directs the activities of the trust and can use the assets of the trust to satisfy the liabilities of the Company's deferred compensation plan.
Consolidation Noncontrolling Interests

Noncontrolling interests represent the minority shareholders' share of the net income or loss and shareholders' investment in consolidated subsidiaries. Noncontrolling interests are presented as a component of shareholders' investment in the unaudited Condensed Consolidated Balance Sheets and reflect the initial fair value of these investments by noncontrolling shareholders, along with their proportionate share of the income or loss of the subsidiaries, less any dividends or distributions.

Earnings per Share

The Company computes earnings per share of its non-voting Class A Common Stock ("CRD-A") and voting Class B Common Stock ("CRD-B") using the two-class method, which allocates the undistributed earnings in each period to each class on a proportionate basis. The Company's Board of Directors has the right, but not the obligation, to declare higher dividends on the CRD-A shares than on the CRD-B shares, subject to certain limitations. In periods when the dividend is the same for CRD-A and CRD-B or when no dividends are declared or paid to either class, the two-class method generally will yield the same earnings per share for CRD-A and CRD-B. During 2022 and 2023, the Board of Directors has declared the same dividend on CRD-A and CRD-B.

v3.23.1
Revenue Recognition (Tables)
 3 Months Ended
Mar. 31, 2023
Revenue from Contract with Customer [Abstract]  
Disaggregation of Revenue

The following table presents North America Loss Adjusting revenues before reimbursements disaggregated by geography for the three months ended March 31, 2023 and 2022:

 

 

 

Three Months Ended

 

(in thousands)

 

March 31,
2023

 

 

March 31,
2022

 

U.S.

 

$

52,766

 

 

$

40,178

 

Canada

 

 

24,361

 

 

 

24,260

 

Total North America Loss Adjusting Revenues before Reimbursements

 

$

77,127

 

 

$

64,438

 

 

The following table presents International Operations revenues before reimbursements disaggregated by geography and service line for the three months ended March 31, 2023 and 2022:

 

 

 

Three Months Ended

 

(in thousands)

 

March 31,
2023

 

 

March 31,
2022

 

U.K.

 

$

30,732

 

 

$

30,909

 

Europe

 

 

22,764

 

 

 

23,667

 

Australia

 

 

20,636

 

 

 

17,131

 

Asia

 

 

5,627

 

 

 

5,659

 

Latin America

 

 

6,235

 

 

 

5,661

 

International Loss Adjusting

 

$

85,994

 

 

$

83,027

 

 

 

 

 

 

 

 

Crawford Legal Services

 

$

5,869

 

 

$

6,245

 

Total International Operations Revenues before Reimbursements

 

$

91,863

 

 

$

89,272

 

 

The following table presents Broadspire revenues before reimbursements disaggregated by service line for the three months ended March 31, 2023 and 2022:

 

 

 

Three Months Ended

 

(in thousands)

 

March 31,
2023

 

 

March 31,
2022

 

Claims Management

 

$

40,236

 

 

$

39,551

 

Medical Management

 

 

40,946

 

 

 

36,903

 

Total Broadspire Revenues before Reimbursements

 

$

81,182

 

 

$

76,454

 

The following table presents Platform Solutions revenues before reimbursements disaggregated by service line for the three months ended March 31, 2023 and 2022:

 

 

 

Three Months Ended

 

(in thousands)

 

March 31,
2023

 

 

March 31,
2022

 

Contractor Connection

 

$

19,301

 

 

$

15,263

 

Networks

 

 

37,403

 

 

 

27,526

 

Subrogation

 

 

6,116

 

 

 

6,072

 

Total Platform Solutions Revenues before Reimbursements

 

$

62,820

 

 

$

48,861

 
Schedule of Customer Contract Liabilities

The table below presents the deferred revenues balance as of March 31, 2023 and the significant activity affecting deferred revenues during the three months ended March 31, 2023:

 

(In Thousands)

 

 

 

Customer Contract Liabilities

 

Deferred
Revenue

 

Balance at January 1, 2023

 

$

54,019

 

Quarterly additions

 

 

21,252

 

Revenue recognized from the prior periods

 

 

(12,142

)

Revenue recognized from current quarter additions

 

 

(5,583

)

Balance as of March 31, 2023

 

$

57,546

 
v3.23.1
Defined Benefit Pension Plans (Tables)
 3 Months Ended
Mar. 31, 2023
Retirement Benefits [Abstract]  
Schedule of Defined Benefit Plans Disclosures

Net periodic cost (benefit) related to all of the Company's defined benefit pension plans recognized in the Company's unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022 included the following components:

 

 

 

Three Months Ended

 

(in thousands)

 

March 31,
2023

 

 

March 31,
2022

 

Service cost

 

$

357

 

 

$

345

 

Interest cost

 

 

5,939

 

 

 

3,394

 

Expected return on assets

 

 

(6,772

)

 

 

(6,419

)

Amortization of actuarial loss

 

 

2,978

 

 

 

2,527

 

Net periodic cost (benefit)

 

$

2,502

 

 

$

(153

)
v3.23.1
Net Income Attributable to Shareholders of Crawford & Company per Common Share (Tables)
 3 Months Ended
Mar. 31, 2023
Earnings Per Share [Abstract]  
Schedule of Computations of Basic Net Income Attributable to Shareholders of Crawford & Company per Common Share

The computations of basic net income attributable to shareholders of Crawford & Company per common share were as follows:

 

 

 

Three Months Ended

 

 

 

March 31,
2023

 

 

March 31,
2022

 

(in thousands, except per share amounts)

 

CRD-A

 

 

CRD-B

 

 

CRD-A

 

 

CRD-B

 

Earnings per share - basic:

 

 

 

 

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

Allocation of undistributed earnings

 

$

4,594

 

 

$

3,161

 

 

$

1,185

 

 

$

797

 

Dividends paid

 

 

1,735

 

 

 

1,191

 

 

 

1,865

 

 

 

1,249

 

Net income attributable to common shareholders, basic

 

$

6,329

 

 

$

4,352

 

 

$

3,050

 

 

$

2,046

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic

 

 

28,841

 

 

 

19,848

 

 

 

30,908

 

 

 

20,780

 

Earnings per share - basic

 

$

0.22

 

 

$

0.22

 

 

$

0.10

 

 

$

0.10

 
Schedule of Computations of Diluted Net Income Attributable to Shareholders of Crawford & Company per Common Share

The computations of diluted net income attributable to shareholders of Crawford & Company per common share were as follows:

 

 

 

Three Months Ended

 

 

 

March 31,
2023

 

 

March 31,
2022

 

(in thousands, except per share amounts)

 

CRD-A

 

 

CRD-B

 

 

CRD-A

 

 

CRD-B

 

Earnings per share - diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

Allocation of undistributed earnings

 

$

4,613

 

 

$

3,142

 

 

$

1,189

 

 

$

793

 

Dividends paid

 

 

1,735

 

 

 

1,191

 

 

 

1,865

 

 

 

1,249

 

Net income attributable to common shareholders, diluted

 

$

6,348

 

 

$

4,333

 

 

$

3,054

 

 

$

2,042

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic

 

 

28,841

 

 

 

19,848

 

 

 

30,908

 

 

 

20,780

 

Weighted-average effect of dilutive securities

 

 

300

 

 

 

—

 

 

 

260

 

 

 

—

 

Weighted-average common shares outstanding, diluted

 

 

29,141

 

 

 

19,848

 

 

 

31,168

 

 

 

20,780

 

Earnings per share - diluted

 

$

0.22

 

 

$

0.22

 

 

$

0.10

 

 

$

0.10

 
Schedule of Antidilutive Shares Excluded from Computation of Diluted Earnings per Share

Listed below are the shares excluded from the denominator in the preceding computation of diluted earnings per share for CRD-A because their inclusion would have been antidilutive:

 

 

 

Three Months Ended

(in thousands)

 

March 31,
2023

 

March 31,
2022

Shares underlying stock options excluded

 

1,532

 

1,542

Performance stock grants excluded because performance conditions have not been met (1)

 

758

 

625

 

(1) Compensation cost is recognized for these performance stock grants based on expected achievement rates; however, no consideration is given to these performance stock grants when calculating diluted earnings per share until the performance measurements have been achieved.
Schedule of Shares Issued and Included in Weighted-average Common Shares used to Compute Basic and Diluted Earnings per Share

The following table details shares issued during the three months ended March 31, 2023 and 2022, including restricted shares that were returned prior to vesting. These shares are included from their dates of issuance in the weighted-average common shares used to compute basic and diluted earnings per share for CRD-A in the table above. There were no shares of CRD-B issued during any of these periods.

 

 

 

Three Months Ended

 

(in thousands)

 

March 31,
2023

 

 

March 31,
2022

 

CRD-A issued under the Non-Employee Director Stock Plan

 

 

134

 

 

 

94

 

CRD-A issued under the Employee Stock Purchase Plan

 

 

27

 

 

 

(6

)

 
v3.23.1
Accumulated Other Comprehensive Loss (Tables)
 3 Months Ended
Mar. 31, 2023
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]  
Schedule of Accumulated Other Comprehensive Income (Loss) The changes in components of "Accumulated other comprehensive loss" ("AOCL"), net of taxes and noncontrolling interests, included in the Company's unaudited condensed consolidated financial statements were as follows:

 

 

 

Three Months Ended March 31, 2023

 

(in thousands)

 

Foreign
currency
translation
adjustments

 

 

Retirement
liabilities (1)

 

 

AOCL
attributable
to shareholders
of Crawford &
Company

 

Beginning balance

 

$

(52,581

)

 

$

(162,740

)

 

$

(215,321

)

Other comprehensive income before reclassifications

 

 

7,732

 

 

 

—

 

 

 

7,732

 

Amounts reclassified from accumulated other comprehensive income to net income

 

 

—

 

 

 

2,086

 

 

 

2,086

 

Net current period other comprehensive income

 

 

7,732

 

 

 

2,086

 

 

 

9,818

 

Ending balance

 

$

(44,849

)

 

$

(160,654

)

 

$

(205,503

)

 

 

 

Three Months Ended March 31, 2022

 

(in thousands)

 

Foreign
currency
translation
adjustments

 

 

Retirement
liabilities (1)

 

 

AOCL
attributable
to shareholders
of Crawford &
Company

 

Beginning balance

 

$

(21,760

)

 

$

(158,681

)

 

$

(180,441

)

Other comprehensive loss before reclassifications

 

 

(4,966

)

 

 

—

 

 

 

(4,966

)

Amounts reclassified from accumulated other comprehensive income to net income

 

 

—

 

 

 

1,676

 

 

 

1,676

 

Net current period other comprehensive (loss) income

 

 

(4,966

)

 

 

1,676

 

 

 

(3,290

)

Ending balance

 

$

(26,726

)

 

$

(157,005

)

 

$

(183,731

)

 

(1) Retirement liabilities reclassified to net income are related to the amortization of actuarial losses and are included in "Other Income, net" in the Company's unaudited Condensed Consolidated Statements of Operations. See Note 6, "Defined Benefit Pension Plans" for additional details.
v3.23.1
Fair Value Measurements (Tables)
 3 Months Ended
Mar. 31, 2023
Fair Value Disclosures [Abstract]  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy:

 

 

 

 

 

 

Fair Value Measurements at March 31, 2023

 

 

 

 

 

 

 

 

 

Significant Other

 

 

Significant

 

 

 

 

 

 

Quoted Prices in

 

 

Observable

 

 

Unobservable

 

 

 

 

 

 

Active Markets

 

 

Inputs

 

 

Inputs

 

(in thousands)

 

Total

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds (1)

 

$

10,284

 

 

$

10,284

 

 

$

—

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Contingent earnout liability (2)

 

 

11,534

 

 

 

—

 

 

 

—

 

 

 

11,534

 

(1) The fair values of the money market funds were based on recently quoted market prices and reported transactions in an active marketplace. Money market funds are included in the Company's unaudited Condensed Consolidated Balance Sheets as "Cash and cash equivalents."

(2) The contingent earnout liability relates to businesses acquired since 2020. See Note 12, "Business Acquisitions" for more information. The Level 3 fair value of the contingent earnout liability was estimated using internally-prepared revenue and EBITDA projections, and discount rates determined using a combination of observable and unobservable market data. The Company recognized a pretax contingent earnout expense totaling $248,000 in the three months ended March 31, 2023 and $2.1 million in the three months ended March 31, 2022 related to the fair value adjustment of earnout liabilities arising from recent acquisitions. The fair value adjustment is based on changes to projections of acquired entities over the respective earnout periods, which span multiple years. The fair value of the contingent earnout liability is included in "Other accrued liabilities" and "Other noncurrent liabilities" on the Company's Consolidated Balance Sheets, based upon the term of the contingent earnout agreement.
v3.23.1
Segment Information (Tables)
 3 Months Ended
Mar. 31, 2023
Segment Reporting [Abstract]  
Schedule of Reconciliation of Operating Profit from Segment operating earnings to income before income taxes

Financial information for the three months ended March 31, 2023 and 2022 related to the Company's reportable segments, including a reconciliation from segment operating earnings to income before income taxes, the most directly comparable GAAP financial measure, is presented below:

 

 

 

Three Months Ended

 

(in thousands)

 

March 31,
2023

 

 

March 31,
2022

 

Revenues:

 

 

 

 

 

 

North America Loss Adjusting

 

$

77,127

 

 

$

64,438

 

International Operations

 

 

91,863

 

 

 

89,272

 

Broadspire

 

 

81,182

 

 

 

76,454

 

Platform Solutions

 

 

62,820

 

 

 

48,861

 

Total segment revenues before reimbursements

 

 

312,992

 

 

 

279,025

 

Reimbursements

 

 

11,604

 

 

 

8,764

 

Total revenues

 

$

324,596

 

 

$

287,789

 

 

 

 

 

 

 

Segment Operating Earnings (Loss)

 

 

 

 

 

 

North America Loss Adjusting

 

$

8,065

 

 

$

4,135

 

International Operations

 

 

3,035

 

 

 

(3,067

)

Broadspire

 

 

7,927

 

 

 

6,434

 

Platform Solutions

 

 

9,966

 

 

 

8,038

 

Total segment operating earnings

 

 

28,993

 

 

 

15,540

 

 

 

 

 

 

 

Deduct:

 

 

 

 

 

 

Unallocated corporate and shared costs, net

 

 

(4,119

)

 

 

(2,995

)

Net corporate interest expense

 

 

(4,399

)

 

 

(1,519

)

Stock option expense

 

 

(156

)

 

 

(205

)

Amortization of customer-relationship intangible assets

 

 

(1,899

)

 

 

(1,726

)

Contingent earnout adjustments

 

 

(248

)

 

 

(2,056

)

Non-service pension (costs) credits

 

 

(2,171

)

 

 

543

 

Income before income taxes

 

$

16,001

 

 

$

7,582

 
Schedule of Revenues By Major Service Line

Revenues before reimbursements by major service line in the International Operations, Broadspire and Platform Solutions segments are shown in the following table. The Company considers all North America Loss Adjusting revenues to be primarily derived from one service line.

 

 

 

Three Months Ended

 

(in thousands)

 

March 31,
2023

 

 

March 31,
2022

 

International Operations

 

 

 

 

 

 

International Loss Adjusting

 

$

85,994

 

 

$

83,027

 

Crawford Legal Services

 

 

5,869

 

 

 

6,245

 

Total Revenues before Reimbursements--International Operations

 

$

91,863

 

 

$

89,272

 

 

 

 

 

 

 

 

Broadspire

 

 

 

 

 

 

Claims Management

 

$

40,236

 

 

$

39,551

 

Medical Management

 

 

40,946

 

 

 

36,903

 

Total Revenues before Reimbursements--Broadspire

 

$

81,182

 

 

$

76,454

 

 

 

 

 

 

 

 

Platform Solutions

 

 

 

 

 

 

Contractor Connection

 

$

19,301

 

 

$

15,263

 

Networks

 

 

37,403

 

 

 

27,526

 

Subrogation

 

 

6,116

 

 

 

6,072

 

Total Revenues before Reimbursements--Platform Solutions

 

$

62,820

 

 

$

48,861

 
v3.23.1
Cash and Cash Equivalents (Tables)
 3 Months Ended
Mar. 31, 2023
Cash and Cash Equivalents [Abstract]  
Schedule of Reconciliation of Cash, Cash Equivalents and Restricted Cash The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Company's unaudited Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown within the Company's unaudited Condensed Consolidated Statement of Cash Flows:

 

 

 

March 31, 2023

 

 

December 31, 2022

 

 

March 31, 2022

 

 

December 31, 2021

 

 

 

(In thousands)

 

Cash and cash equivalents

 

$

43,304

 

 

$

46,007

 

 

$

49,156

 

 

$

53,228

 

Restricted cash within prepaid expenses and other current assets

 

 

637

 

 

 

638

 

 

 

711

 

 

 

461

 

Total cash, cash equivalents and restricted cash

 

$

43,941

 

 

$

46,645

 

 

$

49,867

 

 

$

53,689

 
v3.23.1
Basis of Presentation - VIE - Additional Information (Details) - Primary Beneficiary - USD ($)
Mar. 31, 2023
Mar. 31, 2022
Variable Interest Entity    
Liabilities of the deferred compensation plan $ 5,945,000 $ 6,395,000
Assets held in the related rabbi trust $ 10,126,000 $ 10,083,000
v3.23.1
Revenue Recognition - Additional Information (Details)
 3 Months Ended
Mar. 31, 2023
USD ($)
Disaggregation of Revenue [Line Items]  
Accounts receivable, days sales outstanding 2 months
Billing after contract completion, years 1 year
Revenue, remaining performance obligation $ 97,603,000
Amount of performance obligation Intend to recognize within next year 70.00%
Revenue from contracts with customers, practical expedient, consideration adjustment period 1 year
Accounts payable days payable outstanding 1 year
Maximum | Broadspire  
Disaggregation of Revenue [Line Items]  
Revenue from contracts with customers, performance obligation term 2 years
Claims Management Services  
Disaggregation of Revenue [Line Items]  
Revenue remaining performance obligation expected timing of satisfaction explanation The Company's deferred revenues for claims handled for one or two years are not as sensitive to changes in claim closing rates since the performance obligations are satisfied within a fixed length of time
Revenue from contracts with customers, duration, average time to close case from time of referral 5 years
Percentage of closed cases 99.00%
Claims Management Services | Minimum  
Disaggregation of Revenue [Line Items]  
Revenue from contracts with customers, performance obligation term 1 year
Claims Management Services | Maximum  
Disaggregation of Revenue [Line Items]  
Revenue from contracts with customers, performance obligation term 2 years
v3.23.1
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Disaggregation of Revenue [Line Items]    
Revenues $ 324,596 $ 287,789
North America Loss Adjusting    
Disaggregation of Revenue [Line Items]    
Revenues 77,127 64,438
North America Loss Adjusting | U.S.    
Disaggregation of Revenue [Line Items]    
Revenues 52,766 40,178
North America Loss Adjusting | Canada    
Disaggregation of Revenue [Line Items]    
Revenues 24,361 24,260
International Loss Adjusting    
Disaggregation of Revenue [Line Items]    
Revenues 85,994 83,027
Crawford Legal Services    
Disaggregation of Revenue [Line Items]    
Revenues 5,869 6,245
International Operations    
Disaggregation of Revenue [Line Items]    
Revenues 91,863 89,272
International Operations | U.K.    
Disaggregation of Revenue [Line Items]    
Revenues 30,732 30,909
International Operations | Europe    
Disaggregation of Revenue [Line Items]    
Revenues 22,764 23,667
International Operations | Australia    
Disaggregation of Revenue [Line Items]    
Revenues 20,636 17,131
International Operations | Asia    
Disaggregation of Revenue [Line Items]    
Revenues 5,627 5,659
International Operations | Latin America    
Disaggregation of Revenue [Line Items]    
Revenues 6,235 5,661
Broadspire    
Disaggregation of Revenue [Line Items]    
Revenues 81,182 76,454
Broadspire | Claims Management    
Disaggregation of Revenue [Line Items]    
Revenues 40,236 39,551
Broadspire | Medical Management    
Disaggregation of Revenue [Line Items]    
Revenues 40,946 36,903
Platform Solutions    
Disaggregation of Revenue [Line Items]    
Revenues 62,820 48,861
Platform Solutions | Contractor Connection    
Disaggregation of Revenue [Line Items]    
Revenues 19,301 15,263
Platform Solutions | Networks    
Disaggregation of Revenue [Line Items]    
Revenues 37,403 27,526
Platform Solutions | Subrogation [Member]    
Disaggregation of Revenue [Line Items]    
Revenues $ 6,116 $ 6,072
v3.23.1
Revenue Recognition - Schedule of Customer Contract Liabilities (Details)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
USD ($)
Customer Contract Liabilities  
Beginning balance $ 54,019
Quarterly additions 21,252
Revenue recognized from the prior periods (12,142)
Revenue recognized from current quarter additions (5,583)
Ending balance $ 57,546
v3.23.1
Income Taxes - Additional Information (Details) - USD ($)
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Income Tax Disclosure [Abstract]    
(Benefit) provision for income taxes $ 5,271,000 $ 2,426,000
Effective income tax rate reconciliation, percent 32.90% 32.00%
v3.23.1
Defined Benefit Pension Plans - Schedule of Defined Benefit Plans Disclosures (Details) - Pension Plan - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Defined Benefit Plan Disclosure [Line Items]    
Service cost $ 357 $ 345
Interest cost 5,939 3,394
Expected return on assets (6,772) (6,419)
Amortization of actuarial loss 2,978 2,527
Net periodic cost (benefit) $ 2,502 $ (153)
v3.23.1
Defined Benefit Pension Plans - Additional Information (Details) - USD ($)
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Defined Benefit Plan Disclosure [Line Items]    
Net periodic benefit cost, non-service cost $ 2,145,000 $ (498,000)
Contributions by employer 0  
U.K. Plan    
Defined Benefit Plan Disclosure [Line Items]    
Contributions by employer $ 502,000 $ 160,000
v3.23.1
Net Income Attributable to Shareholders of Crawford & Company per Common Share - Schedule of Computations of Basic Net Income Attributable to Shareholders of Crawford & Company per Common Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Class A Non-Voting    
Numerator:    
Allocation of undistributed (loss) earnings $ 4,594 $ 1,185
Dividends paid 1,735 1,865
Net (loss) income attributable to common shareholders, basic $ 6,329 $ 3,050
Denominator:    
Weighted-average common shares outstanding, basic 28,841 30,908
(Loss) earnings per share - basic $ 0.22 $ 0.10
Class B Voting    
Numerator:    
Allocation of undistributed (loss) earnings $ 3,161 $ 797
Dividends paid 1,191 1,249
Net (loss) income attributable to common shareholders, basic $ 4,352 $ 2,046
Denominator:    
Weighted-average common shares outstanding, basic 19,848 20,780
(Loss) earnings per share - basic $ 0.22 $ 0.10
v3.23.1
Net Income Attributable to Shareholders of Crawford & Company per Common Share - Schedule of Computations of Diluted Net Income Attributable to Shareholders of Crawford & Company per Common Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Class A Non-Voting    
Numerator:    
Allocation of undistributed (loss) earnings $ 4,613 $ 1,189
Dividends paid 1,735 1,865
Net (loss) income attributable to common shareholders, diluted $ 6,348 $ 3,054
Weighted-Average Shares Used to Compute Diluted Earnings Per Share:    
Weighted-average common shares outstanding, basic 28,841 30,908
Weighted-average effect of dilutive securities 300 260
Weighted-average common shares outstanding, diluted 29,141 31,168
(Loss) earnings per share - diluted $ 0.22 $ 0.10
Class B Voting    
Numerator:    
Allocation of undistributed (loss) earnings $ 3,142 $ 793
Dividends paid 1,191 1,249
Net (loss) income attributable to common shareholders, diluted $ 4,333 $ 2,042
Weighted-Average Shares Used to Compute Diluted Earnings Per Share:    
Weighted-average common shares outstanding, basic 19,848 20,780
Weighted-average effect of dilutive securities 0 0
Weighted-average common shares outstanding, diluted 19,848 20,780
(Loss) earnings per share - diluted $ 0.22 $ 0.10
v3.23.1
Net Income Attributable to Shareholders of Crawford & Company per Common Share - Schedule of Antidilutive Shares Excluded from Computation of Diluted Earnings per Share (Details) - shares
shares in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Performance Stock Grants Excluded because Performance Conditions Have Not Been Met    
Antidilutive Securities Excluded from Computation of (Loss) Earnings Per Share    
Shares underlying stock options excluded [1] 758 625
Shares Underlying Stock Options Excluded    
Antidilutive Securities Excluded from Computation of (Loss) Earnings Per Share    
Shares underlying stock options excluded 1,532 1,542
[1] Compensation cost is recognized for these performance stock grants based on expected achievement rates; however, no consideration is given to these performance stock grants when calculating diluted earnings per share until the performance measurements have been achieved.
v3.23.1
Net Income Attributable to Shareholders of Crawford & Company per Common Share - Schedule of Shares Issued and Included in Weighted-average Common Shares used to Compute Basic and Diluted Earnings per Share (Details) - Class A Non-Voting - shares
shares in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
CRD-A Issued under the Non-Employee Director Stock Plan    
Share-based Compensation Arrangement    
Shares issued repurchased activity 134 94
CRD-A issued under the Employee Stock Purchase Plan    
Share-based Compensation Arrangement    
Shares issued repurchased activity 27 (6)
v3.23.1
Net Income Attributable to Shareholders of Crawford & Company per Common Share - Additional Information (Details) - $ / shares
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Feb. 10, 2022
Dec. 31, 2021
Nov. 04, 2021
Equity, Class of Treasury Stock          
Number of shares authorized to be repurchased (shares)     5,000,000    
Number of shares remaining to be repurchased (shares) 1,793,371     413,317  
Class A Non-Voting          
Equity, Class of Treasury Stock          
Shares repurchased (shares) 1,498,084        
Class B Voting          
Equity, Class of Treasury Stock          
Shares repurchased (shares)   719,874      
Average cost (USD per share) $ 7.23 $ 7.31      
Repurchase Authorization 2021 | Common Stock          
Equity, Class of Treasury Stock          
Number of shares authorized to be repurchased (shares)         2,000,000
v3.23.1
Accumulated Other Comprehensive Loss - Additional Information (Details)
 3 Months Ended
Sep. 30, 2022
USD ($)
Foreign Currency Translation Adjustments  
Accumulated Other Comprehensive Income Loss [Line Items]  
Adjustment for long-term intercompany transactions, net of tax $ 651,000
v3.23.1
Accumulated Other Comprehensive Loss (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Accumulated Other Comprehensive Income Loss [Line Items]    
Beginning balance $ 123,378 [1] $ 211,397
Ending balance 141,827 195,476
Foreign Currency Translation Adjustments    
Accumulated Other Comprehensive Income Loss [Line Items]    
Beginning balance (52,581) (21,760)
Other comprehensive income (loss) before reclassifications (7,732) (4,966)
Amounts reclassified from accumulated other comprehensive income to net income 0 0
Net current period other comprehensive (loss) income 7,732 (4,966)
Ending balance (44,849) (26,726)
Retirement Liabilities    
Accumulated Other Comprehensive Income Loss [Line Items]    
Beginning balance [2] (162,740) (158,681)
Other comprehensive income (loss) before reclassifications [2] 0 0
Amounts reclassified from accumulated other comprehensive income to net income [2] 2,086 1,676
Net current period other comprehensive (loss) income [2] 2,086 1,676
Ending balance [2] (160,654) (157,005)
AOCL attributable to shareholders of Crawford & Company    
Accumulated Other Comprehensive Income Loss [Line Items]    
Beginning balance (215,321) (180,441)
Other comprehensive income (loss) before reclassifications 7,732 (4,966)
Amounts reclassified from accumulated other comprehensive income to net income 2,086 1,676
Net current period other comprehensive (loss) income 9,818 (3,290)
Ending balance $ (205,503) $ (183,731)
[1] Derived from the audited Consolidated Balance Sheet
[2]

(1) Retirement liabilities reclassified to net income are related to the amortization of actuarial losses and are included in "Other Income, net" in the Company's unaudited Condensed Consolidated Statements of Operations. See Note 6, "Defined Benefit Pension Plans" for additional details.
v3.23.1
Fair Value Measurements - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details)
$ in Thousands
Mar. 31, 2023
USD ($)
Liabilities:  
Contingent earnout liability $ 11,534
Money Market Funds  
ASSETS  
Money market funds 10,284
Quoted Prices in Active Markets (Level 1)  
Liabilities:  
Contingent earnout liability 0
Quoted Prices in Active Markets (Level 1) | Money Market Funds  
ASSETS  
Money market funds 10,284
Significant Other Observable Inputs (Level 2)  
Liabilities:  
Contingent earnout liability 0
Significant Other Observable Inputs (Level 2) | Money Market Funds  
ASSETS  
Money market funds 0
Significant Unobservable Inputs (Level 3)  
Liabilities:  
Contingent earnout liability 11,534
Significant Unobservable Inputs (Level 3) | Money Market Funds  
ASSETS  
Money market funds $ 0
v3.23.1
Fair Value Measurements - Additional Information (Details) - USD ($)
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Liabilities:    
Transfers of assets measured on a recurring basis into Level 3 $ 0  
Transfers of assets measured on a recurring basis out Level 3 0  
Transfers of assets measured on a recurring basis out of Level 1 into Level 2 0  
Transfers of assets measured on a recurring basis out of Level 2 into Level 1 $ 0  
Debt instrument, variable interest rate duration between resets 90 days  
Pretax Contingent Earnout Expense $ 248,000 $ 2,100,000
v3.23.1
Segment Information - Reconciliation of Operating Profit from Segments to Consolidated (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Revenues $ 324,596 $ 287,789
Net corporate interest expense (4,399) (1,519)
Contingent earnout adjustments (248) (2,056)
Income before income taxes 16,001 7,582
Operating Segments    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Total segment operating earnings 28,993 15,540
Segment Reconciling Items    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Unallocated corporate and shared costs, net (4,119) (2,995)
Net corporate interest expense (4,399) (1,519)
Stock option expense (156) (205)
Amortization of customer-relationship intangible assets (1,899) (1,726)
Contingent earnout adjustments (248) (2,056)
Non-service pension (costs) credits (2,171) (543)
Income before income taxes 16,001 7,582
North America Loss Adjusting    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Revenues 77,127 64,438
North America Loss Adjusting | Operating Segments    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Total segment operating earnings 8,065 4,135
International Operations    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Revenues 91,863 89,272
International Operations | Operating Segments    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Total segment operating earnings 3,035 3,067
Broadspire    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Revenues 81,182 76,454
Broadspire | Operating Segments    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Total segment operating earnings 7,927 6,434
Platform Solutions    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Revenues 62,820 48,861
Platform Solutions | Operating Segments    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Total segment operating earnings 9,966 8,038
Service    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Revenues 312,992 279,025
Service | North America Loss Adjusting | Operating Segments    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Revenues 77,127 64,438
Service | International Operations    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Revenues 91,863 89,272
Service | International Operations | Operating Segments    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Revenues 91,863 89,272
Service | Broadspire    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Revenues 81,182 76,454
Service | Broadspire | Operating Segments    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Revenues 81,182 76,454
Service | Platform Solutions    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Revenues 62,820 48,861
Service | Platform Solutions | Operating Segments    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Revenues 62,820 48,861
Reimbursements    
Segment Reporting, Reconciling Item for Operating Profit from Segment to Consolidated    
Revenues $ 11,604 $ 8,764
v3.23.1
Segment Information - Schedule of Revenues By Major Service Line (Details) - USD ($)
$ in Thousands
 3 Months Ended
Mar. 31, 2023
Mar. 31, 2022
Revenue from External Customer    
Revenues $ 324,596 $ 287,789
International Operations    
Revenue from External Customer    
Revenues 91,863 89,272
Broadspire    
Revenue from External Customer    
Revenues 81,182 76,454
Platform Solutions    
Revenue from External Customer    
Revenues 62,820 48,861
International Loss Adjusting | International Operations    
Revenue from External Customer    
Revenues 85,994 83,027
Crawford Legal Services | International Operations    
Revenue from External Customer    
Revenues 5,869 6,245
Claims Management | Broadspire    
Revenue from External Customer    
Revenues 40,236 39,551
Medical Management | Broadspire    
Revenue from External Customer    
Revenues 40,946 36,903
Service    
Revenue from External Customer    
Revenues 312,992 279,025
Service | International Operations    
Revenue from External Customer    
Revenues 91,863 89,272
Service | Broadspire    
Revenue from External Customer    
Revenues 81,182 76,454
Service | Platform Solutions    
Revenue from External Customer    
Revenues 62,820 48,861
Contractor Connection | Platform Solutions    
Revenue from External Customer    
Revenues 19,301 15,263
Networks | Platform Solutions    
Revenue from External Customer    
Revenues 37,403 27,526
Subrogation | Platform Solutions    
Revenue from External Customer    
Revenues $ 6,116 $ 6,072
v3.23.1
Commitments and Contingencies - Additional Information (Details)
Mar. 31, 2023
USD ($)
Letter of credit subcommitment  
Loss Contingencies [Line Items]  
Letters of credit outstanding amount $ 8,853,000
v3.23.1
Business Acquisitions - Additional Information (Details) - Van Dijk
Apr. 01, 2022
USD ($)
Business Acquisition [Line Items]  
Initial lump-sum payment of purchase price $ 4,313,000
Business combinations, total consideration 1,342,000
earnout potential amount $ 2,200,000
v3.23.1
Cash and Cash Equivalents - Schedule of Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($)
$ in Thousands
Mar. 31, 2023
Dec. 31, 2022
Mar. 31, 2022
Dec. 31, 2021
Cash and Cash Equivalents [Line Items]        
Cash and cash equivalents $ 43,304 $ 46,007 [1] $ 49,156 $ 53,228
Restricted Cash and Cash Equivalents, Statement of Financial Position [Extensible Enumeration] Prepaid Expense and Other Assets, Current Prepaid Expense and Other Assets, Current Prepaid Expense and Other Assets, Current Prepaid Expense and Other Assets, Current
Restricted Cash and Cash Equivalents $ 637 $ 638 $ 711 $ 461
Total cash, cash equivalents and restricted cash $ 43,941 $ 46,645 $ 49,867 $ 53,689
[1] Derived from the audited Consolidated Balance Sheet