Crawford & Company

Good morning. My name is Lara, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Crawford & Company 4th Quarter and Full Year 2023 Earnings Release Conference Call. In conjunction with this call, a supplementary financial presentation is available on our website at www.croco.com under the Investor Relations section. All lines have been placed on mute to prevent any background noise. After the speaker's 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, please press star, then zero, and an operator will assist you. As a reminder, ladies and gentlemen, this conference is being recorded today, Tuesday, March 5, 2024. Now I would like to introduce Tammy Stevenson, Crawford & Company's General Counsel.

Thank you, Laura. Some of the matters to be discussed in this conference call and in the supplementary financial presentation may include forward-looking statements that involve risks and uncertainties. These statements may relate to, among other things, our expected future operating results and financial condition, our ability to grow our revenues and reduce our operating expenses, expectations regarding our anticipated contributions to our underfunded defined benefit pension plans, collectability of our billed and unbilled accounts receivable, financial results from our recently completed acquisitions, our continued compliance with the financial and other covenants contained in our financing agreements, our long-term capital resource and liquidity requirements and our ability to pay dividends in the future. The company's actual results achieved in future quarters could differ materially from the results that may be implied by such forward-looking statements. The company undertakes no obligation to publicly release revisions to any forward-looking statements made in this conference call to reflect circumstances or events occurring after the date of the call or to reflect the occurrence of unanticipated events. In addition, you are reminded that the operating results for any historical period are not necessarily indicative of results to be expected for any future period. For a complete discussion regarding factors which could affect the company's financial performance, please refer to the company's Form 10-K for the year ended December 31, 2023. filed with the Securities and Exchange Commission, particularly the information under the headings risk factors and management's discussion and analysis of financial condition and results of operations, as well as subsequent company filings with the SEC. This presentation also includes certain non-GAAP financial measures as defined under SEC rules. As required, a reconciliation is provided for those measures to the most directly comparable GAAP measures. I would like to now introduce Mr. Rohit Verma, Chief Executive Officer of Crawford and Company. Rohit?

Thank you, Tammy. Good morning and welcome to our fourth quarter and full year 2023 earnings call. Joining me today is Bruce Swain, our Chief Financial Officer, and Tammy Stevenson, our General Counsel. After our prepared remarks, we will open the call for your questions. 2023 has been a year of significant accomplishments and continued growth, demonstrating the strength of our client relationships and the dedication of our team in capitalizing on opportunities and delivering excellence. My comments today will focus on our achievements for the full year, and Bruce will then take a deeper dive into our fourth quarter performance. As the largest listed provider of claims management, our scale continues to be a powerful differentiator for us. We manage more than $18 billion in claims annually across 70 countries, employing approximately 10,000 talented individuals and thousands of field resources. We continue to be a partner of choice to top carriers and remain committed to strengthening those relationships. We are a leader in the insurance industry, our brand recognition is growing, and during 2023, we made some notable additions to our valuable list of clients. There are several factors that position us well for sustained long-term growth. First, although the last several months have demonstrated relatively calm weather patterns, Extreme weather events are occurring more frequently and with more severity across the globe. Our weather dependent businesses provide high quality services to partners and communities in the wake of serious weather activity, capturing expanded revenues during years with increased events. We mentioned in our third quarter call that we were experiencing a period of benign weather. and this pattern continued through the fourth quarter, where we saw far fewer catastrophic weather events than in 2022. As a reminder, in the back half of 2022, we saw strong revenues from Hurricane Ian, Winter Storm Elliot, historic floods in Australia, and a severe winter freeze in the UK. The revenues derived from these events continued into the first half of 2023, but were not reflected in the latter half. Nevertheless, weather remains a powerful driver for our business. There will no doubt be variations from quarter to quarter, but we expect an overall tailwind from secular growth in frequency and severity of weather events over the long term. Second, carriers are continuing to outsource claims amidst rising claim volume and staffing challenges. Put simply, we believe we have the capacity, expertise, and the scale to manage the claims better than anyone else in the industry. Our people strategy and our commitment to technology integration are competitive advantages for outsourcing work, and we continue to expand our offering to handle more claims effectively. Third, the fragmentation of the independent loss adjusting market provides us with the opportunity to capture market share through our strong brand recognition. Our scale is a competitive advantage over smaller adjusters, and carriers are partnering with us more frequently and for longer periods to deliver dependable service. Fourth, we are continuing our extensive and robust relationships with key clients across various segments, including carriers, brokers, and corporate customers. We dedicate considerable amount of time to expanding and nurturing these relationships. And I'm pleased to note the significant progress we've made in strengthening our customer base in recent years. And finally, our investment in innovation has set us apart as a leader in the insurance industry. Our clients want to simplify the claims process, and we are seeing increased demand for our suite of tools designed to improve claims management for our clients. Now for an overview of the year. In 2023, Crawford achieved record-setting consolidated revenue of $1.27 billion for our third consecutive year of growth. This was also our third year of adding more than $100 million in new and enhanced business, a testament to the strength of our client relationships and the differentiation of our offerings across all segments of our business. Our operating earnings increased 38%, and three of our four segments showed margin expansion and increased profitability this year. Cash generation was exceptionally strong for the year, totaling more than $100 million. Another key financial achievement of the year was our debt repayment. We reduced our leverage from 2.1 times EBITDA in 2022 to 1.6 times in 2023. Our robust balance sheet is a competitive advantage, giving us ample financial strength and flexibility in any kind of economic outlook. In the third quarter of 2023, we increased our dividend to 7 cents for CRDA and CRDB shares. For the year, total dividends paid were 26 cents for both CRDA and CRDB compared to 24 cents for each share class in 2022. Finally, our Net Promoter Score, a measure of customer loyalty and satisfaction, increased by 8 points in 2023 and is now at 52. I am extremely pleased with this achievement, which reflects the hard work of our dedicated employees. We delivered improved margins across three of four segments in 2023, underscoring the strength of our operational strategy. In our North America loss adjusting segment, we focused on driving low to mid single digit revenue growth, and we've exceeded that benchmark in 2023. Additionally, we achieved improved margin through efficiencies on the volume side and investments in the expertise on the major and complex loss side. While we set record revenues in the U.S., we did see some impact from seasonal weather fluctuations in the back half of the year and expect this to continue in the first quarter of 2024. Our international business showed continued resilience in 2023 as a result of our strategic initiatives to address pricing and productivity. Margins expanded by 655 basis points and revenues increased by 7% for the year, which we will dig into more detail later. Overall, we are pleased to report our efforts demonstrated success in Latin America, the UK, and Europe. In 2024, we will continue to execute our strategy and progress on our medium-term goal of continued margin enhancement. In 2023, BroadSpire achieved record-breaking results. marked by impressive margin improvements of 316 basis points. Our strategic focus on increased use of technology has proven effective, resulting in notable market gains, particularly in medical management. Our investment in innovation and diverse service offerings position us for continued growth and success. Platform solution also saw the impact of benign weather in the back half of 2023. Platforms margin remains stable at low double digit and our execution strategy remains strong. We achieved growth in our contractor connection and subrogation businesses, but saw some softness from the absence of major weather events in our network business, which we expect to continue in the first quarter of 2024. Our capital allocation strategy remains thoughtful and disciplined with a focus on innovation. We saw significantly improved cash generation in 2023, truly demonstrating our financial strength. We surpassed our stated goal to move our leverage ratio below two times EBITDA by the end of 2023. We continue to invest in our industry-leading InsureTech capabilities to drive our growing market share and seek out compelling acquisition targets to broaden our capabilities for clients. Our business is comprised of four segments. North America loss adjusting encompasses primarily our loss adjusting business in the U.S. and Canada and reported 24% of our 2023 revenues. Our international business is comprised of all reported service lines outside of North America and contributed 30%, the largest proportion of our revenues for the year. Broad Spire is our third party administrator in the U.S. and accounts for 28% of our annual revenues. And Platform Solutions, which includes contractor connection and our networks and subrogation businesses contributed 18%. Now, we'll dig into the segment operations. Beginning with North America loss adjusting. For the full year 2023, we achieved revenues of $303.6 million, representing 11% year-over-year growth. Operating earnings were $23.2 million, with operating margins expanding by 68 basis points. Our revenue increase this year was driven by strong performance by GTS and field operations, achieving significant new account wins, including two leading carriers in the U.S., a leading provider of real estate services, and several notable property self-insured entities. In 2023, we continued to add adjusters to our team, increasing our expertise coverage and resulting in increased market share. International operations revenue for 2023 was $382.4 million and operating earnings were $11.2 million. Our revenue grew 7% over 2022 or 10% when measured in constant currency and operating margins expanded by 655 basis points. Operating earnings increased by 186% as a result of pricing and productivity improvements in nearly all of our operations. High margin countries in Europe saw strong growth in the year, while Australia showed a slight revenue decrease. The decrease in Australia was primarily due to high catastrophe activity in 2022. We had a successful 2023, and I look forward to executing our strategy to drive further progress in international in 2024. Broad Spire achieved record revenues, record operating earnings, and record margin expansion in 2023. Our results were largely driven by significant client wins throughout the year. In fact, 2023 was a record year for new business at Broad Spire. Additionally, medical management services showed strong growth of 13% in the year. We also benefited from increased claims activity as the economy continued to rebound. We are very pleased with Broad Spire's performance this year and so are our customers. We retained almost 95% of our business year to date. platform solutions full-year revenues decreased by 7.5% compared with 2022. In our network business, the benign weather activity in the back half of 2023 resulted in reduced claims at our carrier customers, so they had less need to outsource to us. Nevertheless, our underlying business remains strong, and we closed out the year with 13% revenue increase from contractor connection and a 27% revenue increase from our subrogation business. Rowe, Weather events have remained relatively scarce so far this year, and so we would expect reduced weather related revenue in the first quarter of 2024 as compared to the first quarter of 2023 with that, let me turn the call over to Bruce for a deeper look at our financial performance.