Q3 2023 Crawford & Co Earnings Call
Third quarter 2023 earnings release conference call in conjunction with this call a supplementary financial presentation is available on our website at www Dot Crocco Dot com under the Investor Relations section note that all lines have been placed on mute to prevent any background noise.
Speaker 1: I had on the TV the web launch playing and I was quite nervous. I had my pillows ready in case I needed to hide. Everything went perfectly. It was an incredible launch. It was a pleasure to watch.
Speaker 2: It was a lovely Christmas present, it really was.
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. Please press Star then zero and an operator will assist you as a reminder, ladies and gentlemen. This conference is being recorded to date Tuesday November 7th 2000 and <unk>.
Speaker 2: over 1.5 million kilometers away from Earth to its new home. Gradually turning on the instrument.
Speaker 1: So then it was getting really exciting because we've been from Christmas Day.
Speaker 3: all the way through until the late spring when Mary finally gets turned on. Every instrument has been turned on. It's both exciting and it's nerve-wracking because you know that there could be things wrong. After decades of work, the James Webb Space Telescope was finally operational and it wasn't long before the images started coming in. The James Webb Space Telescope was finally operational and it was finally operational and it was not long before the images started coming in.
'twenty three.
Now I would like to introduce Pamela Stephenson Crawford <unk> company's general counsel.
Thank you building some of the matters to be discussed in this conference call and in the supplementary financial presentation.
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 country 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 liquid.
Speaker 4: I knew when Webb was going to take it to this image, it was going to be spectacular.
Speaker 4: What had not prepared me was just how spectacular they were going to be. The first images were just incredible, just so beautiful.
Speaker 1: It was amazing. And then when the first images came back, I was just absolutely astounded at how good everything performed. And I'll be smiling ever since.
City 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 maybe implied by such forward looking statements.
Speaker 2: The images are spectacular. And the only thing more spectacular than the images are the discoveries that lie within.
The company undertakes no obligation to publicly release revisions to any forward looking statements made in this conference call to reflect events or circumstances occurring after the due to the call or to reflect the occurrence of unanticipated events.
Speaker 4: So one of the things I think that's really exciting about the early images is the way they show how Mary really adds information. I can see details in there that I knew existed.
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.
Speaker 4: but I never thought I'd be able to see with a scientific instrument. Some of the first web images released were of the Southern Vignabula. This is a planetary nebula, which is a star at the very end of its life. In the mirror image, we see actually a second star. So we can see a red star and a white star. So these are actually a binary system, and that's the very first time we've seen this binary companion in the Southern Vignabula.
For a complete discussion regarding factors, which could affect the company's financial performance. Please refer to the companys.
<unk> 10-Q for the quarter ended September 32023 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.
Speaker 4: This is an image of Stefan's quintet, five galaxies that are interacting with each other. And what you can see in this galaxy up here is actually material falling into a black hole in an active galactic nuclei. So you can see the material in the galaxy is actually orbiting and falling into the galaxy itself.
This presentation also includes certain non-GAAP financial measures as defined under the SEC rules as required a reconciliation is provided for those measures to the most directly comparable GAAP measures I would now like to introduce Mr. Rohit Verma, Chief Executive Officer of property company.
Speaker 5: This is 13 times further than what we've been able to see before in the infrared. I mean, JWST has already found the furthest galaxies we've ever seen. The highest red shifts, one of the closest, and that's only in the first few weeks.
Thank you Tammy good morning, and welcome to our third quarter 2023 earnings call. Joining me today is Bruce Swain, Our Chief Financial Officer, Tommy as Stephen said, our General Counsel and Joseph Blanco, Our president after our prepared remarks, we will open the call for your questions.
Speaker 5: of operation and that's really exciting and I think it's an indication that there's going to be a lot more discoveries to come.
Before I review, our results I would like to take a minute to acknowledge the heightened conflict currently ongoing in the middle East.
Speaker 5: With where we've designed it to answer many of the questions we already know about the universe. But as we'd all need telescope, there's a realm of you discovery. The mysteries that will arise, I think they're really exciting, new questions to answer. The questions we don't know how to ask.
Thoughts are with all of those directly impacted and we joined the world community and our desire for peace in the region.
Let's turn to our results now.
This was an excellent quarter for Crawford, where we achieved record consolidated revenue and saw continued growth and profit expansion.
Speaker 5: Just now, and I think that's really exciting to see something that nobody, not only has nobody ever seen it before, but nobody expected to see it. I feel very privileged you part of this. I'm proud to be part of JWST. It's been an amazing journey and...
We still have a lot of work to do but this is a clear indication that our operational strategy is working and we're making progress on our strategic initiatives across our business.
As a reminder, Crawford is one of the world's largest providers of claims management.
We operate globally manage over $18 billion in claims annually and have approximately 10000 employees and thousands of field resources.
Speaker 1: Fantastic privilege really to be part of it. I think it's just incredible. I helped make that instrument. And when I see these images, I am just full of smiles.
Our customer base is diversified and growing including a wide spectrum of brand names, who increasingly rely on Crawford as it claims solution provider.
Speaker 4: We last come with the spacecraft. If the spacecraft wasn't back up and running by the time we flew past Pluto, our nine-year-old would have been for nothing. There's a little bit of drama because this is true exploration. Neurorysans is flying into the unknown. When we got there, we saw something that absolutely blew our mind.
Our established partnerships are strong and getting stronger and we have made meaningful strides acquiring new clients and establishing a leadership position.
This has further reinforced my belief in the long term growth opportunity for the business.
Okay.
There are multiple reasons that we're optimistic about our long term growth prospects.
Speaker 6: When we saw these photographs of what it actually looked like, really a world in its own right, it was mind-blowing.
Globally weather related catastrophes are becoming more prevalent as floods wildfires hurricanes and other serious weather activity are increasing in both severity and frequency.
Speaker 7: There was active geology on Pluto right now. Something so far from the sun should just be a cold dead world, but it's not. It had this living breathing heart. Three, two, one. We have a mission and liftoff of NASA's legal rights.
That said some years, including multiple severe weather events and other years do not see any severe events. For example in the back half of 2022, there were several damaging weather events, including Hurricane Ian Winter Storm Elliot historic flooding in Australia, and the winter freeze in the UK.
Speaker 6: We've been using the best telescopes that we had available to observe it for years, most notably the Hubble Space Telescope. And through a lot of observations, a map was made of Pluto's brightness, but it was very fuzzy. You have some light periods and dark bits, but that's all we had. The Voyager spacecraft that explored the rest of the solar system didn't go past.
Conversely, as we move through the final few months of 2023, we have yet to see similar severe events this year.
Nonetheless, we are always at the ready to support the recovery of affected communities from all types of weather related events with the highest level of compassion and excellence.
We are focused on executing our operational strategy to grow and touch as many of these claims as possible to improve the customer experience.
Speaker 6: We had to send a dedicated spacecraft to go and have a look at Pluto because we've never seen it.
Second we expect to see a long term trend of carriers outsourcing claims as they contend with increased volumes staffing challenges and continued pressure of a complicated technology environment.
Third the independent loss adjusting market is very fragmented and we believe our growing scale is a considerable competitive advantage in the market landscape, particularly with the reliability and resiliency of service providers, becoming more and more critical.
Fourth the depth and breadth of our relationships with key clients across our segments, including carriers brokers and corporate customers continues to be a valuable attribute of our business.
I continue to spend much of my time building these strategic partnerships and we have significantly advanced our customer base over the past few years.
And finally insurance technology or insure Tech is a key element in the future of claims management.
We are at the forefront of technological innovation for our clients, whether its machine learning data visualization or other SaaS based offerings, improving the claims process and experience.
Okay now, let's get into the results for the third quarter we.
We delivered another quarter of strong results revenues grew by 10% on both a reported and constant currency basis to a new quarterly record.
And both net income and operating earnings more than doubled year over year.
This quarter, we achieved revenue growth and profit expansion across three out of our four segments.
Our underlying operational strategy remains solid and our business. This quarter reflects the success of our operational execution.
In fact, these what our highest quarterly earnings since 2018 fourth quarter.
We added $24 million in new and enhanced business in the third quarter with all segments announcing new partnerships and client wins this quarter.
These new clients have driven our revenue growth, which is in turn contributed significantly improve cash generation with $68 million and year to date operating cash flow.
We will continue to strategically.
Allocate our capital by investing in innovation at Crawford and returning capital to shareholders.
And as a reflection of our commitment to returning value to shareholders. We paid a <unk> <unk> dividend in the third quarter and resumed our share repurchase program.
Lastly, I am pleased to provide an update on our NPS, which has increased three points for the last quarter to 49.
NPS or net promoter score measures customer loyalty and satisfaction and it remains a priority at Crawford to provide excellent service.
We continue to see progress on our commitment to grow organically and improve margins across our business.
While we may see anticipated quarterly fluctuation due to weather our operational strategy remains strong and continues to produce improved financial results.
In our North America loss adjusting segment, we focused on driving low to mid single digit revenue growth and improve margins through efficiency on the volume side and investments in expertise on the major and complex side.
We have added approximately 60, new expert adjusters year to date, which is increase our coverage density and market share in the U S.
The significant margin expansion achieved in the third quarter was driven by the addition of multiple new accounts and improve utilization.
I am pleased with our third quarter results, but want to reiterate that we currently have a relatively benign weather trends in the second half of 2023. Accordingly, we do not expect a similar over performance in the fourth quarter of 2023 as compared to the fourth quarter of 2022.
Our international business has significantly improved this year, we have made excellent progress on our goal to get international to a mid single digit growth target as revenues have increased 6% year to date, 11% on constant currency.
In the third quarter, we saw 14% growth at 12, 5% growth on a constant currency basis, and we delivered improved operating earnings of $2 2 million.
<unk> to an operating loss in the third quarter of last year.
We have successfully turnaround Latin America U K and Europe, although we still have work to do in order to reach our targeted margins we have demonstrated progress.
In executing our strategy to address pricing and productivity and I look forward to continuing to improve our margins as we grow our international business.
The third quarter was a record quarter for broad spire, featuring best of revenues gross profit and operating earnings.
We continue to see tremendous growth in medical management and workers compensation clients. While we also benefit from a shift in mix.
It is likely that 2023 will be our strongest ever sales year and I'm very optimistic about <unk> outlook as a high performing teams continue to capture share in alternative markets and leverage data to offer cutting edge analytics services to our clients.
Platform solutions achieved growth in our contractor connection and subrogation businesses related to changes in mix, but faced some comparative pressure related to the benign hurricane season, and the absence of other significant weather events as compared to 2022 and our networks business.
Platforms operating margin remains solid at mid double digits.
In summary, our business has had a tremendous third quarter, while we do not anticipate while we do anticipate some softness in North America loss, adjusting and platform solutions due to continued benign weather in the fourth quarter, we expect to deliver record revenues for full year 2023 Bruce.
Bruce will provide some additional detail around our outlook during this discussion of our financial performance.
Turning now to capital allocation, we continue to maintain a disciplined and prudent capital allocation strategy.
The efforts of the second quarter, we once again saw improved cash generation in the third quarter.
Our stated goal was to have our leverage ratio of between two times EBITDA by the end of 2023.
And we have surpassed that goal and are now at one four times EBITDA at the end of the third quarter.
We are pleased with our progress and early achievement of our financial goals.
Our capital allocation strategy remains focused invest in Crawford to foster technological evolution with a long term benefit of the company, while returning capital to the shareholders.
This quarter, we raised our dividend of <unk> <unk> from <unk> <unk> per share for both the RDA NCR DB and bought back more than 60000 shares of CRD B as part of our share repurchase program.
I'm proud to tell you that we have returned more than $131 million of capital to shareholders through share buybacks and dividends since 2019.
With that I'd like to hand, the call over to Joseph who will discuss our business lines.
<unk> results for the third quarter. Thanks, Rod as most of you know we report our business in four operating segments North America loss adjusting encompasses primarily our loss adjusting business in the U S and Canada. Our international operations is comprised of all reported service lines outside of North America.
<unk>, our tpa in the U S and platform solutions includes contractor connection our networks business, including catastrophe, we go look as well as our subrogation business.
So as you can see.
Revenue contribution is fairly evenly spread across the reportable segments.
Beginning with North America loss, adjusting we achieved revenues of $79 4 million, representing 19% year over year revenue growth.
Operating earnings were $10 5 million and we expanded our operating margin by 758 basis points.
Strength in the quarter was driven by specialists adjuster additions. We've added approximately 60 adjusters year to date, which has enabled us to increase our coverage density in the U S and subsequently capture market share. Additionally.
Additionally, third quarter revenue increases are attributed to a meaningful increase in new account nominations and increased utilization of both GTS and field ops.
Our international segment achieved strong results, indicating that the business has bounced back to a stable and healthy level post pandemic.
Third quarter revenue was $98 1 million and operating earnings were $2 2 million.
Our revenue growth was a very strong 14% over the prior year third quarter and operating margins expanded by 680 basis points.
We are seeing the result of our actions to improve pricing and productivity in our international business. In addition to continued growth in our UK Tpa and major loss businesses large loss performance in Latin America and growth in high margin countries in Europe.
We have room to improve volumes and grow in Asia, which saw a weaker quarter in our Australia business faces a tough comparison to 2020 to cat activity.
Overall, a strong quarter and we remain committed to revenue and margin improvements in our international segment.
We are excited about the market opportunity ahead of us and we will not be taking our foot off the gas.
Looking at our broad spire business third quarter revenue grew by 13%.
You had mentioned this was a record quarter for broad spire in revenues gross profit and operating earnings were on track for our best ever sales year fueled by successful new business development efforts that have expanded the revenue base.
Revenues in the quarter were driven by strong performance by medical management services, which grew 16% largely related to workers' compensation.
Our innovative technology and excellent service continued to drive our ability to capture market share and we retained over 94% of our business year to date.
Platform solutions had a tough comparison due to less weather related activity in third quarter revenues decreased by 6% from the prior year quarter.
We saw some remarkable growth from our subrogation business, which grew revenues by 24%.
Contractor connection revenues grew 9% and continued to benefit from shifting mix.
Some carriers rely more heavily on their internal adjusters. During this pattern of mild weather, we anticipate a challenging fourth quarter for our networks business.
With that let me turn the call over to Bruce for a deeper look at our financial performance.
Thank you Joseph Companywide revenues before reimbursements in the 2023 third quarter were a new quarterly record of $325 6 million up 10% from $294 9 million in the prior year third quarter Foreign exchange rates increased revenues before reimbursements by 600000 or less than 1%.
GAAP net income attributable to shareholders totaled $12 3 million, increasing more than $27 million from a loss of $15 1 million in the same period of 2022.
GAAP diluted EPS in the 2023 third quarter was 25 cents for both CRD, a and CRD b compared to a loss per share of <unk> 31 for both share classes in the 2022 period.
On a non-GAAP basis diluted EPS was <unk> 35 for CRD, a and <unk> 36 cents for CRD b compared to <unk> 15 for both share classes in the prior year period.
The company's non-GAAP operating earnings totaled $29 9 million in the 2023 third quarter were nine 2% of revenues more than doubling the $13 7 million or four 6% of revenues in the prior year period.
Consolidated adjusted EBITDA was $38 6 million in the 2023 third quarter were 11, 9% of revenues compared to 21 4 million or seven 2% of revenues in the 2022 quarter.
I will now review the third quarter performance for each of our segments.
North America loss adjusting revenues totaled $79 4 million in the 2023 third quarter, increasing 18, 8% from $66 8 million reported in last year's quarter due to new account nominations and increased utilization of our expert adjustors.
The segment reported operating earnings of $10 5 million in the 2023 quarter, increasing from $3 8 million reported in last year's quarter.
Operating margin was 13, 2% in the 2023 quarter compared to five 6% in the 2022 quarter.
International operations revenues totaled $98 1 million in the 2023 third quarter of 13, 9% from $8 $86 1 million reported in last year's quarter.
On a constant dollar basis international revenues were $96 8 million growing 12, 5% over last year's quarter.
The segment reported operating earnings of $2 2 million in the third quarter, improving significantly from losses of $3 9 million reported in last year's quarter.
The operating margin was two 2% in the current quarter compared to negative four 6% in the 2022 quarter.
<unk> revenues were $88 3 million in the 2023 third quarter, increasing 12, 7% from $78 4 million in the 2022 period.
Driven primarily by new account nominations and continuation of increased medical management revenues.
<unk> operating earnings were $13 5 million in the 2023 quarter more than doubling last year's third quarter operating earnings of $6 2 million. The operating margin. In this segment was accompany leading 15, 3% in the quarter improving from seven 9% in the 2022 period.
Revenues for platform solutions were $59 8 million in the 2023 third quarter decreasing 6% from $63 7 million in the prior year quarter we.
We saw growth in our subrogation and contractor connect connection revenues, which were offset by networks due to the benign hurricane season, resulting in a difficult year over year comparison.
Operating earnings in platform solutions totaled $8 5 million or 14, 2% of revenues in the 2023 quarter compared to operating earnings of $10 1 million or 15, 8% of revenues in the prior year quarter.
Unallocated corporate costs were $4 8 million in the 2023 third quarter compared to cost of $2 4 million in the same period of 2022.
The increase was primarily due to increased incentive compensation and an increase in unallocated payroll tax and benefit costs.
During the 2023 third quarter non service pension costs were $2 2 million compared to a 500000 credit too.
2022 period.
We recognized a pre tax contingent earn out expense of $2 1 million in the 2023 third quarter compared to 900000 in the 2022 quarter. This was related to the fair value adjustment of earn out liabilities arising from certain acquisitions.
Both non service pension costs and credits and contingent earn out expenses are excluded from operating earnings and are added back for non-GAAP earnings and EPS.
During the first nine months of 2023, the company did not repurchase any shares of CRD, a and repurchased approximately 63000 shares of CRD b at an average share cost of $9 24.
As a reminder, approximately one 7 million shares are eligible to be repurchased under our 2021 share repurchase authorization.
The company's cash and cash equivalent position at September 32023 totaled $49 2 million compared to $46 million at the 2022 year end.
Our total receivables were up $15 million from the 2022 year end, primarily due to increased U S revenues.
The company's total debt outstanding at September 32023 totaled $218 4 million down from $238 9 million as of December 31, 2022.
Net debt stood at $169 2 million as of September 32023, while our leverage ratio under our credit agreement closed at one four times EBITDA. Additionally.
Additionally, our pension liability was $25 million at the end of the third quarter, reflecting our funded ratio of 91, 1%.
We made no discretionary contributions to our U S defined benefit pension plan for the quarter and we do not intend to make contributions during the remainder of the year.
Cash flow from operations for the first nine months of 2023 totaled $68 1 million with free cash flow of $40 4 million.
This compares to cash used in operating activities last year of $16 2 million and negative free cash flow of $41 1 million. This significant improvement in cash flow was driven by increased earnings and an improvement in working capital as receivables related to the 2022 weather events were collected during 2023.
I would like to provide a bit more context around the upcoming fourth quarter.
Although we are experiencing long term trends of increasing severity and frequency of weather events. These trends ebb and flow as Ruth mentioned.
We expect the North American weather dependent businesses to face continued headwinds in the fourth quarter, given the absence of the significant storm activity, which favorably impacted the fourth quarter of 2022 <unk>.
Last year, we saw extreme weather activity in the fourth quarter, including Hurricane Ian Winter Storm Elliot Historic floods in Australia, and a winter freeze in the U K. This resulted in a $40 million to $50 million and weather related revenues and $10 million to $15 million and operating earnings contribution that we do not expect to see repeated in the fourth quarter of <unk>.
2023.
Said, we are on pace to report a very strong full year across our business with record revenues margin improvement strong earnings and cash flow, reflecting the strength and growth in the underlying fundamentals across our segments. We remain confident in our long term growth outlook with that I'll turn the call back to <unk> for concluding remarks.
Thank you Bruce this quarter has demonstrated that our operational strategy is clearly working Crawford has exhibited unwavering resilience and adaptability fostering a culture of innovation and efficiency, which has continued to drive our sustainable growth and reinforce our position as a leader in the industry, our strong financial results and <unk>.
Quiddity provides us with the flexibility to grow our market share as we continue to invest in our industry leading capabilities. Our remarkable new account wins have resulted in a record quarter for our U S businesses and our international business has demonstrated a strong turnaround we will continue to leverage these new and existing customer relationships.
In order to create deeper and more durable partnerships.
Our robust financial results underscore our commitment to strategic execution and operational excellence as we remain steadfast in our dedication to delivering exceptional value to our clients and shareholders.
For your time today Sylvie please open the call for questions.
Thank you Sir at this time, if you would like to ask a question. Please press Star then the number one on your telephone keypad and to withdraw. Your question. Please press Star then number two and if you are using a speaker phone. Please lift up your handset before asking your question, we will pause for just a moment, while we compile the Q&A roster.
And your first question will be from Mark Hughes of <unk>. Please go ahead.
Yes, thank you very much.
Good morning, the Bronx buyer segment.
The standout.
<unk> this quarter with gross profit with an.
On an equal mix of business or the kind.
Kind of.
Little bit of double digit.
The ability of that that's sustainable.
We believe it's sustainable I mean as broad as far as you know is one of our more resilient businesses from a from a weather perspective, obviously, there is almost no dependence on weather.
And then as you know we've been investing significantly in technology, we're starting to see those results I'll also we're starting to see a return of of our medical management business, which is.
Is almost at the same level this year back to where it used to be pre pandemic, we still believe that theres more room to gain on the medical Bill review side, but the overall medical management business is roughly on par with what it used to be in 2019. So so we believe that.
This is this is a pretty durable profitability number obviously there is some help from the interest rate environment.
And that and we expect that to continue in the near term, but overall, we feel a good trajectory and trend on a broad spot business.
Likewise the north.
In North America, the loss adjusting margin look as good as we've seen in quite some time.
Anything unusual about that.
To your point about hiring more.
Thanks Nicole.
Adjusters.
The higher utilization.
Likewise this is something thats sustainable.
Yeah, and Mark you will recall that when we add when we discussed our strategy back in 2020, we had talked about specifically focused on our North America loss adjusting business growing the a bench of experts on the on the complex side and then deploying technology on the volume side as well as other efficiency gains on the <unk>.
Some side all of those things are starting to take effect as you know obviously this business gets impacted significantly by weather, but.
We're seeing that on our large and complex business that'd be called GTS that we've got.
Got pretty good strength in that business and sustainability in that business.
The volume business will fluctuate a little bit with weather events.
And then Brian any comments on the frequency or severity around workers' comp, but I think youre certainly being helped by new business.
But it would be a medical case management as it being <unk>.
Driven by our Pic.
I guess either.
Frequency of severity with your existing client.
I don't know if I can comment on the frequency and severity I think its hard its hard for me to do that but we're definitely seeing that.
The slowdown in the medical case management.
That happened during Covid that has certainly gotten better and we're seeing a lot more people now going back and going back into the medical offices than they used to and then we've also been leveraging quite a lot of our technology to make sure that we are identifying cases, where an early medical.
<unk> can actually help the help the case move faster and better through the process. Bruce I don't know if you want to add anything no I think thats I think that covers it.
Yes.
And then.
On the pension any thought of.
Being any kind of risk transfer.
Yeah.
Fully funded as of yet but $25 million.
It could be.
Manageable.
Did you even consider that.
Happy to.
Thank you Evan.
Yes, it certainly something thats.
That we've considered what we have done over the past several years as a new attack certain portions of the pension plan. So we've kind of systematically Ben.
And cutting the tail off of the off of the plan and transferring liabilities to <unk>.
Insurance companies, along the way so I think.
We'll continue to do that as we as we go forward.
To reduce the amount of the.
The benefit obligation.
And reduce some of the volatility associated with the plan, although having said that I mean, the plan is is fairly well immunized from interest rate.
Changes, we feel we feel good about.
The position of the plan relative to market risk.
Great. Thank you very much.
Thanks, Mark arguably don't speak with you a very happy holidays.
Yes, Thank you and do you.
Once again, ladies and gentlemen, if you would like to ask a question. Please press star followed by one and your next question will be from Kevin Spanky Barrington. Please go ahead.
Good morning.
I wanted to.
Yes, I wanted to follow up on.
North America loss adjusting business.
The strength there you mentioned new client wins.
New account nominations.
I'm wondering how we should think about that in terms of.
How broad base those wins, where are we talking about addition.
Large clients.
Seeing some some new business activity in the small.
Paul and mid size market.
Yes, Kevin this is Rob.
No.
Yes, the particularly in our large and complex segment, which we call our GTS business.
The account nominations have been very very strong it's something that we focused on and adding the experts gives us the bench to go. After these account nomination. So we feel that that businesses is strong and we see trajectory of that business to grow on our field operations business as well, we believe that there is significant opportunity for us we are still in the low.
<unk> do mid single digits and market share.
And we have a very pronounced a strategy there to continue to penetrate what we call the.
The the regional Company America. So we believe that we will continue to see growth in that business and as I've stated before that businesses quite susceptible to changes in weather.
Element in that businesses, Canada, and Canada has been going through a very low frequency environment. We did see some cat activity there, but really did not result in too many claims and we believe that there is opportunity in Canada as well for us to continue our strategic position there and overall.
If you go back to our strategy that we shared in 2020, we had talked about.
Margin expansion as well as mid single digit growth so far we've exceeded on both fronts.
And we expect that over the cycle, we'll get there we'll get there somewhat.
Okay. Thanks.
Mentioned there.
You asked about the longer term.
Yes.
Mid low to mid single digit growth for North America loss, adjusting that clearly <unk> been exceeding that growing more like mid to high teens.
Outside of the upcoming fourth quarter here.
We have some.
Just weather related comps.
You think.
There is some legs to sustaining.
Growth above the low to mid single digit target.
Over the next few quarters or the next year.
I believe so I mean, notwithstanding the tough comparisons because of weather I believe that there is still quite a lot of gas left in the engine for us to for us to sort of let up.
Okay.
Okay great.
Great.
Also following up on broad spire.
Certainly strong performance there.
And you mentioned new business development efforts.
Driving that growth.
What stood out to me was the strong sequential.
Growth in both revenue and.
Operating earnings.
Margin.
For for that segment, so was there some sort of.
New business wins larger contracts ramping up in the quarter that led to that strong sequential increase.
Yeah, I would attribute that to three things one we have had some initiatives to improve profitability by the use of technology that certainly is starting to gain some critical critical mass or youre starting to see it in the numbers.
Second we have had a.
A strong set of new business several quarters of strong new business wins, which is what is leading to a full year of our largest almost.
Just a new business win linear and then third is that we've also been working on right pricing some accounts that needed the pricing shift and we've been we've been successful in doing that so we believe the profitability is coming back in line with where we expect the profitability for this business to be and then obviously the fourth which is not something.
We control, but as the interest rate environment that is that has helped us.
Okay.
How meaningful is it.
The interest rate piece.
Thinking about the profitability.
Broad spire.
It's a contributor but the majority of the increase in profitability is coming from the caller underlying business.
Okay great.
Yes, that's certainly another nice.
Profitability improvement year over year for the international operations.
Yes.
Sequential basis there was.
Bit of a step down in the operating earnings Antelope that there is anything to call out there.
Or.
What what.
The pad or it might be like.
Going forward.
Should we expect some quarterly ups and downs with the continue.
Continued up into the right over the long term.
That's how I would look at it I think over the long term it would continue to be on an upward trajectory you.
You might see some quarterly ups and downs as an example.
We had a pretty large.
Event in Australia that we worked through all through the year and and.
And that event has largely been tailing off so you will see some impact of that we also had some events early in the year or late last year and early this year in the UK, which which we're also starting to starting to tail off so I think it's more that than anything.
We still believe that there is more room for us to improve international and that's what we're going to continue to work on and that's what gives us confidence that we'll continue to move it in the as you said the upper right quadrant.
Okay. Thank you.
Just just on the comments around the.
Yes.
Fourth quarter, we're in here.
Difficult weather related comps.
Thank you said.
$40 million to $50 million.
Of revenue $10 million to $15 million of operating earnings in the year ago fourth quarter that won't recur if I look at it.
More.
Weather sensitive.
Vince North America loss, adjusting had an $11 million sequential revenue increase in the year ago fourth quarter and then the networks line was about.
I think $15 million sequential increase.
So should we think about those.
Two particular.
Business lines stinks.
<unk> declines in this fourth quarter of 2023 or.
I assume that's kind of where the.
Wade.
Absence of revenue is going to fall yes.
Yes.
The $40 million to $50 million in the $10 million to $15 million and operating earnings is related to the North America loss adjusting business and their networks component within platform. So it's not it's in all of our international business Thats certainly not the broad spire business. So.
Alright.
That's how you should think about that.
Okay.
Lastly, I wanted to ask about.
You had a favorable.
Adjustments to <unk>.
Contingent consideration, which.
Is indicative.
The prior acquisitions that you made are performing well or better than expectation. So I don't know if theres.
Are there any particular businesses to call out there that have been performing well.
What if there's anything in particular you'd want to highlight there.
I mean, I think the one to one to call out that's been.
A strong performer for us and was a strong performer in the third quarter as the subrogation business.
We have purchased a few years ago.
They've had.
They've been performing very well, but a number of our acquisitions have done well on that that that adjustment that we made in the quarter just wasn't related to the to.
To the Subrogation acquisition. It was it included other businesses that we've purchased as well.
Okay. That's good.
I might as well as just about.
Your view on acquisitions in the acquisition pipeline I guess.
Yeah, a little bit of time since you've.
On the deal.
What youre seeing out there.
It might be attractive.
And on the acquisition pipeline.
I wouldn't say, it's as robust.
Right now as it used to be say two years ago, and thats, mainly reflective of the deal flow in the market than a change in our posture.
We continue to look for for acquisitions, which will add a specific capability to us that we can scale across our platform.
And the valuation is attractive from our standpoint. So we'll continue to be have a we'll continue to have a very discerning attitude towards acquisitions as we've had and.
We've got plenty of capital capacity to make the acquisition, if we need to but it needs to be the right acquisition. So that's the discipline that we'll continue to maintain.
Okay. Thanks for taking the questions and for all the insight I'll turn it back over.
Thank you Kevin Thanks, Kevin.
At this time, we have no other questions registered so I would like to turn the call back over to Mr. Fair amount.
Thank you Sylvie, let me first thank all our employees our clients and shareholders for your continued commitment to Crawford <unk> company.
Looking ahead, we are resolute in our efforts to navigate the dynamic landscape of the industry, leveraging our expertise and harnessing emerging opportunities for continued success and sustainable growth in the quarters to come Thank you and God bless.
Thank you.
Yeah.
Thank you for participating in today's Crawford <unk> Company Conference call note that this call will be available for replay beginning at 11 30, a M. Eastern today through 11 59 PM Eastern on December seven 2023.
The conference I'd number for the replay is seven.
66677 pound the number to dial for the replay.
776747070, or 41676486 92.
Thank you again, you may now disconnect.