Crawford & Company — FY2021 Form 10-K Summary
Business context and reporting period. Crawford provides claims management and outsourcing services through Loss Adjusting, TPA Solutions and Platform Solutions, serving clients in more than 70 countries. This filing covers the fiscal year ended December 31, 2021; the supplied filing text provides annual results, not a standalone fourth-quarter financial summary. Certain international subsidiaries report on a two-month lag, with year-end positions and results generally through October 31.
Key financial results
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue before reimbursements | $1,102.0 million | $982.5 million | +12.2% |
| Total revenue, including reimbursements | $1,139.2 million | $1,016.2 million | +12.1% |
| Net income attributable to Crawford shareholders | $30.7 million | $28.3 million | +8.5% |
| Diluted EPS, Class A and Class B | $0.57 each | $0.54 and $0.52 | Higher for both classes |
| Cash from operating activities | $54.3 million | $93.2 million | Down $38.9 million |
| Cash and cash equivalents | $53.2 million | $44.7 million | Up $8.6 million |
| Working capital | $42.1 million | $59.2 million | Down $17.1 million |
| Debt and finance leases | $175.0 million | $113.6 million | Up $61.4 million |
Profitability and segments. Combined segment operating earnings, the company’s segment performance measure, were $76.9 million versus $89.3 million. Loss Adjusting earnings fell to $23.0 million from $41.1 million, with operating margin declining to 4.8% from 9.4%, primarily due to losses in some international operations and higher compensation costs. TPA Solutions earnings decreased to $17.6 million from $20.5 million, and margin to 4.4% from 5.5%, amid continuing COVID-related weakness in Canada and Europe. Platform Solutions earnings rose to $36.3 million from $27.7 million; margin was 15.9% versus 16.0%. Consolidated income before taxes was $43.9 million, and the effective tax rate was 30.4%.
Material changes versus FY2020
- Revenue growth reflected Hurricane Ida-related activity, new client growth and acquisitions. Foreign exchange added $29.9 million, or 3.1%, to revenue before reimbursements; growth at constant exchange rates was 9.1%.
- Cases received increased 5.8% overall: Loss Adjusting +7.0%, TPA Solutions -2.1%, and Platform Solutions +18.9%. Platform Solutions growth included higher WeGoLook case volumes and new client work.
- Costs of services before reimbursements rose 15.2%; SG&A increased 11.8%. Compensation and other costs increased alongside revenue, acquisitions and incentive compensation.
- Operating cash flow declined, reflecting working-capital movements, higher income tax payments, payroll taxes previously deferred under the CARES Act, and lower Canadian wage subsidies than in the prior year.
- Investing cash outflow was $70.8 million, including $46.4 million net cash paid for acquisitions. Financing provided $24.7 million, including net borrowing; the company paid $12.7 million in dividends and repurchased $19.1 million of shares.
Outlook, risks and unusual items
- No overall revenue or earnings guidance is provided in the supplied filing text. Management expects a 2022 effective tax rate of 29%–31% before discrete items and forecasts 2022 property, equipment and capitalized software additions of approximately $30–$35 million.
- Management said existing financial resources, operating cash flow and borrowing capacity should support operations for the next 12 months, and expected covenant compliance through 2022. The company reported $313.5 million of total liquidity at year-end, including $53.2 million cash and $260.2 million available borrowing capacity.
- A new $450 million revolving credit facility was entered into in November 2021, maturing November 2026. Year-end funded debt was approximately $175.0 million; leverage ratio was 1.66 against a maximum of 4.50, and interest coverage was 15.01 against a minimum of 2.50. Borrowings are variable-rate and secured; covenant failure could make debt immediately due.
- The company completed acquisitions of edjuster, Praxis and BosBoon in 2021 and acquired HBA in 2020. The Praxis transaction included a $20.0 million deferred payment due in February 2022 and possible earn-outs; contingent consideration and purchase accounting estimates remain relevant.
- There were no 2021 goodwill impairment, restructuring, or business-disposal gain charges. By contrast, FY2020 included a $17.7 million goodwill impairment, $8.1 million restructuring and other costs, and a $13.8 million net gain on business dispositions. Canadian Emergency Wage Subsidy benefits were $5.9 million in 2021 versus $13.8 million in 2020; no future benefit was expected.
- COVID-19, unpredictable claim volumes and catastrophe activity, wage and talent pressures, client concentration within Platform Solutions, cybersecurity and privacy exposure, international operations and foreign exchange, and pension funding are material risks. The U.S. qualified defined-benefit plan was underfunded by $15.2 million; the company did not expect discretionary U.S. plan contributions in 2022.
- Subsequent events include a 2022 realignment to four reporting segments, sale of the Kitchener office building for $3.1 million with an estimated $1.8 million pretax gain, and a February 2022 expansion of the share repurchase authorization by 5 million shares.
Most important facts for investors to verify
- Whether revenue and case-volume gains—particularly catastrophe-driven and new-client activity—are sustainable, and whether weaker TPA markets recover.
- Whether segment margins improve as compensation and other costs rise, especially in Loss Adjusting and TPA Solutions.
- Why operating cash flow fell despite higher earnings, and whether receivables, unbilled revenue and working capital convert to cash as expected.
- Debt, acquisition-related payments and earn-outs, variable interest exposure, and continued compliance with credit-facility covenants.
- Progress and funding needs for the underfunded pension plan, alongside the assumptions underlying lifetime-claim revenue recognition and acquisition valuations.