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spk_0: morning my name is michelle and i will be your conference facilitator today at this time i would like to welcome everyone to the crawford and company fourth quarter and full gear twenty twenty two earnings release conference call in conjunction with this call a supplementary financial presentation is available on our website at www dot c r a w c o dotcom under investor relations section oh length of been placed on you to prevent any background noise after the speakers remarks there will be a question and answer period instructions will follow at that time should anyone need assistance at any time during this conference police pressed start then zero and an operator will assist you as reminder ladies and gentlemen this conference has been recorded today tuesday march seventh twenty twenty three now i would like to introduce tammy stevenson crawford and companies general counsel please go ahead
spk_1: and you michelle some of the matters to be disgusted as far as fall in the supplementary financial presentation may include board little bit with involve risks and uncertainties the a statement her relate to among other things are expected future operating legal and financial condition or ability to grow our revenues and reduce our operating expenses expectations regarding are anticipating contributions to our under for the advice that is that pension plan flexibility over build and unveiled accounts receivable financial results were lisa ugly complete acquisition or continued compliance with the financial and other troubling as contained in our financing agreement or long term capital resort and wouldn't really be requirements in our ability to pay dividends in the future the company the actual results achieved and future quarters could differ materially from the results that may be employed by such forward looking statements the company undertakes no obligation probably release revisions any for the consumers name is conference call to reflect events or circumstances occurring after the date the call or report the for the that had had been anticipated a in addition you're reminded the operator goals for any historical period or not necessarily indicative of what results would be expected for any future period for complete discussion the gordon factors which would affect the company's financial performance please refer to the company's form turn pay for the year ended december thirty one twenty twenty two files with the securities and exchange commission particularly the information on the heading risk factors attachments discussion and analysis of financial condition and results of operations as well as such a big company piles of the fcc does presentation also important for certain i get financial measures are defined under as easy the rule as required a reconciliation provided for those measures to most directly comparable job and shirt oh now or to introduce mr road verbal chief executive officer of crawford only rule
spk_2: budgetary good morning and welcome to our fourth quarter and fully twenty twenty two warning school joining me today is bruce wayne or chief financial officer joseph logo or broke them and jeremy stephens stevenson or general counsel after are prepared remarks we would open the all for your question before we begin i would like to extend our thoughts to all those that have been impacted by the devastating earthquakes but it turkey and syria in early february the severity and frequency of catastrophic events continues to increase and is making a word even more meaningful in these difficult times i convey my sincere gratitude to all insurance professionals and rescue workers engaged and helping those that have been impacted turning to our results crawford delivered record revenue in the fourth quarter and the foyer highlighting the significant progress we've made our long term growth strategy or the folio revenues reach nearly one point two billion an increase of eight percent over the browser or eleven percent on a constant corsi basis this quarter marked on nine straight quarter of revenue growth since we learned our growth strategy two years ago we have consistently deliver top line expansion which highlights the stronger producers and dedication offer global team in north america loss adjusting we shared our growth bland i was centered on building or team of experts for large and complex recounts and expanding or us footprint to drive deep organization in local and regional markets we are currently well ahead on our and goals and as a result or sales momentum with large and complex claims is increasing lot of the same time we're driving markets or games with local and regional carriers we have been increasing demand for are differentiated services as claims complexity rises and carriers continue to outsource large and complex claims our strategy with them block one is to reimagine traditional claims management by bringing together not what resources and technology that transforms the current insurance claims ecosystem we focus our efforts on continued innovation and scaling the business as well as deepening relationships with a top and curious to drive growth in the segment increased activity in our networks business as well as the contributions from process continue to support our top line group importantly with her up lock one's business we are now partnered with eight of the top and bmc carriers in the us revenue in broad spar grew up with single digits than twenty twenty two driven by differentiated technology capabilities which have resulted in increase sales and international we had shared that our expectations for topline growth for the segment was low single digits however ongoing activities related to the catastrophic flooding in australia draw the line percent increase in international revenues on a constant currency bases and twenty twenty two we expect the growth in international to normalize to meet single digit doubles moving forward overall we are extremely pleased that our strategy to grow the top line across all our businesses is using results and performing in line and in certain cases better than our expectations starting now to our approach on a bully margins you remain focused on ensuring our revenue growth bradley's into expanded profitability across the company for the year we delivered margin expansion in north america last adjusting as well as brought far the ongoing investments we have made including adding experts closing geographic market gaps and investing in quality are driving improve margins across the business we expect to see for their margin and profitability expansion as our new hires ram and we continue scaling the north america last adjusting business additionally or work to improve underpriced accounts is showing encouraging results operating leverage from new sales growth as well as an accelerated recovery and medical management should boost margins rosbach our profit contribution for platform solutions was strong however the operating margin was lowered compared to the prior year due to the impact of decrease weather frequency in a contract a connection business and a mix shift back from increase growth and our networks business we expect margins to get even stronger as reagan's rebounds and our pricing
spk_3: changes take effect
spk_2: martin's across international operations remain challenged in basque orders we laid out that deliberate options we are taking to improve margins in the business this includes pricing productivity improvement you systems and improve processes and aligning are construct or to current market conditions these actions continue and early indication show that they are bearing fruit we have made leadership changes addressed unfavorable contracts and pricing two years to improve underlying profitability issues lol there's more work to do we remain confident that were making the necessary changes to turn the tide and we expect to see improvement in first quarter of twenty twenty three we are continuing to execute on our capital allocation strategy which includes further strengthening our financial position we leverage on liquidity to fund working capital aids related to the strong activities in the us during the fourth quarter we expect improved as generation as we move forward which we will use to pay down debt and guide or leverage ratio to a target of well below two times he beat up by the end of twenty twenty three as we look forward we are committing to expanding margins and improving profitability across the business our hundred and twenty seven million dollars of new business when in twenty twenty two combined with our pricing focus support confidence in sustained revenue growth and profit expansion we are in a solid financial position and be feel confident in our ability to continue executing on our growth strategy was navigating and evolving macro economic
spk_4: environment
spk_2: with that i'd like to hand the gone over to joseph who will discuss our business line results for the year
spk_5: i tried it didn't whether north america last just business weeks periods double digit revenue grown and expanded operating margins both the fourth quarter and the full year wrote when we too we demonstrated ability to execute on long term strategy as we continue to deepen our relationships with both large and small to mid size us carriers who you revenues green thirty percent with a strong contribution from increased activity need to even in winter storm elliott as was recovered economic activity and kinda and the for your impact to be twenty twenty one you just requisition on the matron complex side we have nearly doubled our us revenues in the past three years driven by are targeted investments and expertise and expanded relationships with more carriers will also increasing account nominations with more t corporate clients including illegal a leading global restaurant chain a commercial real estate developer
spk_6: the automotive alien
spk_5: despite a very competitive labor market and twenty twenty two we want boarded more than one hundred specialist adjusters across our major and complex business worldwide we just under half added north america alone lake cedar twenty twenty one editions and are within reach of were previously outline three your goal of hiring two hundred specialist adjusters nearly one year early this underscores our reputation the talk to your destination for adjusting talent as we expand our focus areas to capabilities on the volume side we made progress and twenty twenty two by spending a robust sales pipeline across the us and driving do business would we saw the benefits of our strategy play on the fourth quarter as utilization improved we're able to capture increase claims volume which rapidly accelerated from hurricane the and in winter storm l i bought our business delivered increase revenue margins and twenty twenty two weeks to improve fraction from our focus efforts to expand the outsource business carriers an alternative markets as was increase dad and analytical services work revenues were up over four percent for the full year compared to the prior year with table the results across all tp a claim services we spoke further improvements within broads buyer is medical mansion equates continue to recover aided by do an existing quiet when as well as healthy pricing turning to platform solutions the segment experience double digit revenue growth and healthy margins and twenty twenty two poster by straightforward networks business and the acquisition of practice we a meaningful contribution from a cat business and twenty twenty two driven by reference to scale are offerings we expanded the size and quality of our team sport larger that which resulted in a more than ten percent increase in total distinct adjusters deployed and twenty twenty two compared to twenty twenty one our investments and technology continues drive reductions in deployment time we also made good progress diversifying a revenue base with increase staff augmentation works from the top five carrier quiet giving us more carbon intimate relationships that we've built in the future success of the business contractor connection experience weaker claims frequency for the majority of twenty twenty two however activity picked up in december which drove increased volume late in the year one boarding a new top five carrier pricing action support are optimistic outlook for growth and twenty twenty three looking beyond north america israel had mentioned or international operations continue to be a major focal point throughout twenty twenty two weeks straight straight in australia as one president flooding in queensland a new south wales continued you drag increase claims activity this partially offset ongoing weakness relayed the certain distance find the uk and europe we took decisive action and permitted series of cost efficiency and to improve our margin profile and has the agility the segment and drop profitability of in the long term as result we've heard approximately four million dollars a someone's charges in the fourth quarter there's tremendous up to this and from our leaders on the chalk changes we are implementing for the international business were encouraged by the early sides we're seeing so far and twenty twenty three we expect to see meaningful improvement is the year progresses overall we are confident in a long term prospects despite short term weakness in this like parts of the business wiener twenty twenty three was good momentum and remain focus on further executing or our long term strategy we went over thirty five million new and and heads business in the fourth quarter bring our total totally business went and twenty twenty two two hundred and twenty seven billion additionally or mps or remains healthy at forty five and we're continuously looking for opportunities to improve our score we retain ninety four percent were you a sports bar business and twenty twenty two and we are increasing market share with t carrier quiet as a global leader we believe diversity equity and inclusion is a key differentiator across or operations internationally we seek to create a safe and inclusive environment where every employees unique perspective and experiences or heard valued and respected we're seeing the impact of our deion dishes that only big markets like the us another key markets such as latin america we just made strides improved the diversity of our workforce in this region today we have approximately seven hundred employees a fourfold increase compared to twenty nineteen added the end of the fourth quarter women compressed forty two percent of our latin american workforce and thirty percent of our leaders in the region additionally forty eight percent of our latin american workforce belongs to minority groups including women lgbtq plus effort descendants and employees with disabilities further we recently conducting employ pulsar a in the region which yielded favorable results eighty nine percent of employees indicated they do not face any bias due to their personal identity and eighty six percent employees feel empowered to make the decisions needed to do their job latin american employees rasul among those recognize globally for the d i efforts for example we've established the i committees in brazil chile and columbia create a partnerships with women in insurance in brazil and support group our employees and chile who were certified and labor inclusion these are just a few examples of the outstanding work being done across the region and we look forward to seeing the continued progress they're also proud the coffers being recognized for idea efforts globally and twenty twenty two he wanted church business star star diversity equity and inclusion of ward and the top prize for diversity and inclusion of the united kingdom customer service awards the lord highlight crawford unique approach to break in that industry barriers and improving social mobility to our talent acquisition bottle enhancing the safety and wellbeing of our employees in the key component of our success and a foundational pillar that bought her yes she program we believe these initiatives are fundamental to our ability to execute er broader gross and our ability to fill our protest restore large businesses in communities what bad let me turn to call it a degrees for deeper look our financial
spk_7: thank you joseph company wide revenues before reimbursements in the two thousand and twenty two fourth quarter were record three hundred and twenty two point two million up ten percent from two hundred ninety two point nine million in the prior quarter foreign exchange rate decreased revenues but fourteen point five million or five percent for the quarter on a constant dollar basis revenues total three hundred thirty six point seven million representing growth of fifteen percent gap deluded a p as in the two thousand and twenty two fourth quarter was a lot of twenty nine cents for both crt a crt be compared earnings at three cents for both share classes in the two thousand and twenty one period on an ongoing basis fourth quarter two thousand and twenty two deluded dps was twenty three cents for both crt a and crt be compared with seven cents for both share classes in the two thousand and twenty one period as we mentioned on the third quarter call the income tax benefit from the goodwill impairment as our effective tax rate in the fourth quarter and resulted in twelve point four million in additional tax expats or twenty five cents per share in addition the company recorded an income tax reserve of eleven point eight million or twenty four cents per share on certain international tax efforts during the two thousand and twenty two fourth quarter the company's non gap operating earnings totaled twenty three point three million in two thousand and twenty two fourth quarter or seven point two percent of revenues increasing from that point one million or three point one percent of revenues and the or period consolidated adjusted ebitda was thirty point eight million and the two thousand and twenty two port quarters or not point six percent of revenues compared to seventeen point six mil seventeen point six million or six percent of revenues and the two thousand and twenty one quarter on our view the fourth quarter performance of each of our segments north america last adjusting revenues totaled seventy seven point seven million in two thousand and twenty two fourth quarter up sixteen point one percent from sixty six point nine million reported in last year's quarter foreign exchange rate impacts were insignificant in the quarter the segment reported operating earnings of eight point nine million in two thousand and twenty two fourth quarter up from three point two million reported in last year's quarter the operating margin was eleven point five percent in the two thousand and twenty two quarter compared to four point eight percent in the prior period the increase in operating margin was related to increased weather related activity during the quarter brought by revenues were seventy eight point six million in the two thousand and twenty two fourth quarter increasing four point seven percent from seventy five point one million in two thousand and twenty one period crossfire operating earnings were six point seven million during the two thousand and twenty two fourth quarter increasing from last year's fourth quarter operating earnings at four point five million the operating margin in this segment was eight point six percent and two thousand and twenty two quarter compared to six percent in two thousand and twenty one period from sales momentum and operating leverage revenues for platform solutions were seventy seven point four million in the two thousand and twenty two fourth quarter up twenty three point seven percent over the sixty two point six million in the prior quarter including one point seven million of incremental revenues from the practice acquisition operating earnings and platform solutions doubled thirteen million or sixteen point eight percent of revenues in the two thousand and twenty two fourth quarter increasing are operating earnings of nine point two million or fourteen point seven percent of revenues and the prior quarter expanding margins in our network service line and the positive contribution from the practice acquisition the road a profit improvements international operations revenues told eighty eight point four million in two thousand and twenty two fourth quarter including one point three million from the boss bone and van dyke acquisitions up slightly from eighty eight point three million reported in last year's quarter on a constant currency basis revenues were up twelve point nine me alien representing growth at fourteen point six percent the second organ and operating loss of bad point six million and the two thousand and twenty two fourth quarter compared operating earnings at one point five million reported in last year's quarter the operating margin was negative six point four percent in two thousand and twenty two quarter compared to one point seven percent in the two thousand and twenty one quarter cost associated with satellites and other realignment activities of four point one million contributed to the earnings decline in the quarter on allocated corporate credit were three hundred thousand and the two thousand and twenty two fourth quarter compared to cost of now point four million in two thousand and twenty one period this decrease was primarily due to a three point six million reduction in it's and of compensation and a six point one million reduction and professional fees and other unallocated expenses during the two thousand and twenty two fourth quarter we recognize and eleven point eight million income tax reserve primarily related to previously benefited tax losses and certain international jurisdictions these tax attributes currently do not expire and we believe we will utilize them in future years as our profitability and these jurisdictions improves as previously mentioned did that required non discreet income tax treatment of the third quarter goodwill impairment the income tax benefit of the impairment was reduced and or quarter but twelve point four million we recognize stick pretax contingent on out credit totaling three hundred thousand and two thousand and twenty two fourth quarter for the year this was a two point nine million expense this was a result of changes to projections a certain of our recently acquired enemies we did not repurchase any shares and the two thousand and twenty two fourth quarter for the four year the company repurchased approximately two point seven million shares of crt eight and nine hundred sixty three thousand shares a crt be at an average cost per share seven dollars forty one sense and seven dollars thirty two cents respectively the total cost of share repurchases during two thousand and twenty two was twenty six point seven million the company's cash and cash equivalent position as of december thirty one two thousand and twenty two totaled forty six million compared to fifty three point two million as of december thirty one two thousand and twenty one we made no discretionary contributions to our us defined benefit pension plan during two thousand and twenty two although the company has made these contributions in the past given the overall improvement in funding levels over the last several years we don't intend to make contributions in two thousand and twenty three the company's total debt outstanding as of december thirty one two thousand and twenty two total two hundred thirty eight point nine million compared with one hundred and seventy five million as up the two thousand and twenty one year round reflecting borrowings to find capital expenditures acquisitions dividends and share repurchases net debt stood at a hundred and ninety two point nine million as of december thirty one two thousand and twenty two while our leverage ratio under our credit agreement closed at two point one six times he didn't additionally or pension liability was twenty five point nine million at the end of twenty two thousand and twenty two with our us ancient funding level and ninety two percent cash provided operations total twenty seven point six million during two thousand and twenty two as compared with fifty four point three million provided in two thousand and twenty one the decrease in cash provided by operating activities was primarily due to a nineteen point seven million increase in the change in the old and unbuilt accounts receivable as a result of the recent surge and weather related activity in the us and australia and a twelve point three million increase in it's and of compensation in a accrued compensation payments we expect are working capital to improve in two thousand and twenty three we received seven point nine million and cues payments in two thousand and twenty one that were not present in two thousand and twenty two which was largely offset by nine million dollar cash benefit in two thousand and twenty two from a reduction in defined benefit pension contributions free cash flow was negative seven million in two thousand and twenty two compared with a positive twenty three point four million in the prior year with that i would like to turn the call back to with for concluding remarks
spk_2: thank you bruce twenty twenty two march another year of strength and resilience a for crawford as we delivered on our purpose our results highlight are effective growth strategy which draw our record revenue for the year and we remain committed to ensuring this growth translate into expanded profitability across the company we enter twenty twenty three with positive momentum and for their strength of resolved to return to profitability and international overall we believe we are in a solid financial position and we are confident in our ability to deliver and has growth and profitability as well as return value to our shareholders thank you for your time today michelle please open the call for questions
spk_8: thank you
spk_0: at this time he would like to ask a question please press star than the number one on your telephone keypad to withdraw your question press the start than the number two if you're using a speaker phone please pick up your handset before asking your question will posed for just a moment to compile the q in a row foster the first question comes from kevin stinky of
spk_9: barrington research please go ahead
spk_10: the morning and the congratulations on strong result
spk_11: becky have a your cabin our you
spk_9: agree how you both good good
spk_12: thought yeah well
spk_9: in terms of a theater said the sure other income statements
spk_2: we're actually you know
spk_7: lately down because with a down year over year and did that help you achieve some small operating leverage or there's some cost initiative they're hoping that liner was very big had a one side that benefited that
spk_9: this way india what would how would you think about that as a as you they lied for and and going forward yeah kevin there are three or four factors some of them are one time others are more structure but i'll let bruce going to the detail of that jerk yep so a cabinets bruce we had we had some cost and the two thousand twenty one fourth quarter that up that took our our profits down and last year school
spk_7: or that one continuing and and twenty two so that's a that's a piece of it we we also had lower in sound compensation this year compared to twenty one which the weight which is also showing up in that line as as well last year we had higher purpose national phase for for a number of things we were more acquisitive and and twenty one than we were and twenty two and a and the absence of those cost is also have helping the last year and a line
spk_13: okay
spk_9: your perspective we going forward yeah i'm guessing this you feel like he did grow the top line faster than the this year the expenses that read that's the goal we think that are administrative costs bases in it is lever double and that which be able to put material matters of revenue on the top long without a corresponding increase in in as she and i mean they'll will be certain areas that we invest and as we as we as we go forward but canada the core back office functions are very labradoodle for the company
spk_5: okay cool
spk_2: would i figured you mentioned earlier
spk_9: a retarded north american law suggesting margin mean obviously expanded and twenty twenty two i believe he said you feel like you continue to to continue to expand
spk_5: margins going for sure we had a point where
spk_9: yeah you're beginning to leverage those investments and specialist adjusters and the revenue associated with those investments is is going to start helping the drive that that leverage emerge expansion that's that's correct cabin and are we believe that there is still a significant headroom for us to grow in that space so we're not slowing down or investment but we certainly believe that the investment that be made so far are demonstrating the results and encouraging us to continue their investment or profile and that business
spk_2: okay great it sounds like you're you're making good progress of and or be really there are some suburbs expenses in the quarter that impacted the operating rooms were in a little but you know that as soon they'll have tried some the improvement to a twenty three can you to talk about maybe a good outlet the factors that you spoke to the drive international improve as we we grew throughout this year for sure you know if you just looked at if you netted the the severance expense out and you looked at que four vs que three or margin already shows an improvement albeit it's still below where we expected to be and i think when you when we look at que one and the way we are seeing the woman to continue we believe the margins will continue to grow up they certainly are behind the timeline that we would have wanted our
spk_9: ideally we should have seen a margins to our desired levels by queue for but as the as i've shared with you before that making some changes international has taken longer than know what we anticipated so we believe that we are on were on a solid trajectory in terms of the changes and as i've i've outlined in the script we've made that changes to our pricing where we believe we needed to be realigned our management structure to align more with the i'm with our markets that we serve and we have taken some very specific contracts which were not written in our favor and and basically put them to up i have exited those contracts or at least terminated that's those specific parts of the contract and all those things we believe are helping and we've also had a renewed focus on changing on mix of business particularly in places like europe as i've mentioned before to not be so heavily invested in your travel an entered entertainment based business but dabbed focus more on things like construction and other aspects of industry of articles or
spk_2: we believe are more resilient to a to and economic cycle so that's what's giving us the confidence for international as i outlined is clearly more work to be done but we are extremely encouraged by the results that we're seeing already okay good mood
spk_9: kobo the improvement medical which was he uses touch her that you didn't use necessary to see the recovery who has been into the delay from for quite awhile yeah we are seeing some recovery i mean i think if we look at twenty twenty one that was roughly about eighteen percent below rebound damage levels i think we're now close to summer will be in top ten and twelve percent below the free ben domenech levels so ah so we believe that we are we are making their recovery that that we need to make it's been against lower than what we would expect it to be are we still haven't come across a true secular trend of law use of medical management but it's we just believe that because more people are working from home to travel patterns of changed
spk_14: those things are impacting medical management because we certainly see that claims request he coming back up or we haven't seen that medical frequency come back up
spk_9: okay
spk_2: the list yeah between and lot of a
spk_9: discussion about their go economic uncertainty in the
spk_0: just wondering if you you're seeing
spk_15: he he he knew business that would indicate the macroeconomic uncertain username pacquiao valuable and the other
spk_9: indicator that weren't even allowed
spk_15: a kevin that's a great question and and we have been honest be looking for patterns but we have not spotted any powder in terms of our be activity in terms of engagement with customers claims activity our clients am taking on new ventures we have not seen any of that at least in our climate that would indicate our slowdown of any kind from an economic activity standpoint so are we aren't we are looking for that pattern as well but have not spotted anything
spk_2: okay thanks to the inside our to little things and i haven't thanksgiving thank you the next question comes from maxwell trickster of to a securities please go ahead a good morning i'm calling i'm in for mark
spk_16: the old post on most of mine
spk_17: questions i had but i had one quick one
spk_18: a few quarters ago your mention that many of your competitors are only from your competitors were operating me six to seven time you better leverage range and with you're sitting at two point one a
spk_0: wondering if
spk_19: don't any direct benefits from from that knowing this higher for longer right environment
spk_2: why hard to say that we're seeing what we can we can specifically points out the benefits that i can attribute to a certain competitor at what i can tell you is that as we are out in the marketplace an engaging with clients we certainly believe that our capital structure and of our deposition position allows us to make much
spk_0: investments on a much more longer term or create partnerships that span of over a much longer period of time as we are not constrained by by any kind of vibe leveraged leverage max out so at those are the benefit that we talk about it gives us the ability to rob from a complex pence perspective it gives us tremendous next ability to make apple and and candidly be prepared for any kind of macro environment that comes our way or and he got a competitive environment that comes our way so that i would say it's helping us and specifically because we don't we don't really discuss but in the marketplace okay thank you thank you thank you
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