Good afternoon. My name is Jason, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Crawford & Company First Quarter 2017 Earnings Release Conference Call. In conjunction with this call, a supplementary financial presentation is available on our website at www.crawfordandcompany.com under the Investor Relations section. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Instructions will follow at this time. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded today, Monday, May 8, 2017. 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 include, but are not limited to statements regarding the funded status of our defined benefit pension plans, our expectations related to future revenues and expenses, our expectations regarding the timing, costs and synergies related to our Global Business Services Center, as well as other restructuring activities, any acquisitions, our long-term liquidity requirements and our ability to pay dividends in the future. The Company's actual results achieved in future quarters could differ materially from results that maybe 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 events or circumstances occurring after the date of the call or to reflect the occurrence of unanticipated events. In addition, you are reminded that 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-Q for the quarter-ended March 31, 2017 filed with the Securities and Exchange Commission, particularly the information under the headings, Business, Risk Factors, Legal Proceedings and Management’s Discussion and Analysis of Financial Conditions 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 now like to introduce Mr. Harsha Agadi, President and Chief Executive Officer of Crawford & Company. Harsha, you may begin your conference.

Thank you. Good afternoon and welcome to our first quarter 2017 earnings call. Joining me today are Bruce Swain, our CFO and Eric Powers, our Corporate Secretary. After our prepared remarks, we will open the call for your questions. When I assumed the role of Chief Executive Officer, I was motivated by the incredible opportunities that I saw ahead for Crawford. This Company has unparalleled global reach, strong client relationships and a product suite that our customers rely upon. I also saw that Crawford’s success was being restrained by a burdensome cost structure, which combined with the reliance on severe weather events created volatility in our results. With that in mind over the last 18 months, we have executed a strategy to reduce expenses while making targeted investments to return Crawford to topline growth. While we have achieved a number of successes, this transformation is a journey as can be seen in our first quarter results, which were below our expectations. The primary driver to our results were softer market trends in our Garden City Group segment, which lead to their segment loss in the quarter. A strong dollar also proved to be a headwind to revenues in our international segment and our U.S. Services operating earnings were impacted by $2.4 million in advertising investments made to test the consumer sector market. That said, we remain confident in our business and where we're heading this year. As a result our guidance remains unchanged. Turning to our first quarter results in more detail, revenues before reimbursements declined by 3.6% with the largest factor being the impact of the stronger U.S. dollar. On a constant currency basis, our revenues would have declined by 1.4%. We delivered GAAP net income to shareholders of Crawford & Company of $7.7 million, compared to $8.6 million…

Thank you Harsha. Company wide revenues before reimbursements in the 2017 first quarter were $267.3 million down as compared with $277.2 million in the prior year’s first quarter. However after adjusting for $6 million in FX changes revenues on a constant currency basis were $273.3 million in the 2017 quarter. The Company’s selling general and administrative expenses totaled $60 million up from $56.8 million in the prior quarter. The increase in these cost is primarily due to advertising expenses in our Contractor Connection business and higher compensation and benefit costs in the 2017 period. During the 2017, first quarter the Company recorded restructuring and special charges of 600,000 or $0.01 per share compared to $2.4 million or $0.03 per share in the 2016 quarter. These charges were associated with the ongoing implementation of the Global Business Services Center and other restructuring activities. Our net income attributable to shareholders of Crawford & Company totaled $7.7 million in the 2017 first quarter compared to $8.6 million in the 2016 period. First quarter 2017 diluted earnings per share were $0.14 for CRD-A and $0.12 for CRD-B compared to $0.16 for CRD-A and $0.14 for CRD-B in the 2016 period. On a non-GAAP basis before restructuring costs and special charges in both the 2017 and 2016 period, first quarter 2017 diluted earnings per share was $0.15 for CRD-A and $0.13 for CRD-B compared to non-GAAP diluted earnings per share of $0.19 for CRD-A and $0.17 for CRD-B in 2016 period. I will now review the first quarter performance of each of our business units starting with the U.S. Services segment. Revenues from the U.S. Services segment totaled $60.4 million up from the $58.5 point reported in last year's quarter primarily as a result of acquired revenues from WeGoLook. Operating earnings in our U.S. Services…

Thank you Bruce. While our first quarter results are below our expectations, we have taken decisive action to further reduce our cost structure as well as optimize our operations to improve our customer service offering. Importantly our cost reduction plan will position Crawford to deliver the financial guidance that we laid out at the start of the year and which we have reiterated today. That said, reducing costs alone is not sufficient to maximize value for our shareholders. We must deliver top line growth and will reinvest a portion of the savings into our sales organization to successfully achieve this goal. I remain confident that we will eventually deliver revenue growth but I'm also cognizant that it will take time. However, I firmly believe that we will see earnings growth this year as indicated in our guidance that we reaffirmed today. In conclusion, I want to thank each and every one of the 8,500 Crawford employees who are extremely engaged at this time in driving the top and the bottom line of Crawford's in a very positive spirit. Operator, please open the call for questions.

[Operator Instructions] And your first question comes from Mark Hughes from SunTrust.

Thank you good afternoon.

Good afternoon Mark.

Hi Mark, good afternoon.

The spending for the consumer initiative, within Contractor Connection is 2.4 million was there any spending on that in this quarter last year.

No, there was no spending last year in the same quarter. So that is a pure incremental expense and we deliberately as with our plans we deliberately spend that to test and measure the market. So we knew that we're going to take a hit on margin. But we had to do that to assess the market.

And your early thoughts on the opportunity there.

The opportunity Mark as I have stated earlier is about a $25 billion direct insurance market. Initial reads in the seven cities are positive and at the same time there's always a lag from in these kinds of I’d call it medium level losses. It takes time to gain traction, but at this time it looks promising.

The GCG backlog, how did the $0.74 million compare to year-end and were there any particular drivers there for the – if you think about the year-over-year change down…

Yeah sure, I think in terms of the backlog, we did have a client who had not only signed up and had started and had to withdraw for their own reasons and so that had some impact if you will on our numbers. The other is, we are continuing to have a decent record of winning our share of cases but the cases that have come for RFP are smaller in size but a recent cornerstone research report that came out that reaffirmed the CEO of GCG’s market sense, which is that securities class action is actually picking up. And I think we're going to see this thing start going back up. And again just to remind you there is lumpiness in this business, where a typical case will last for 18 months. So you can have one or two things that could probably slow it down temporarily. But we have enough confidence in the team, the GCG team is very focused. The Crawford team has enough confidence in GCG and we have a number of new initiatives Mark, that are rolling into new product areas. One is cyber, two is data breach, three is product recall. And they are also rolling out, if you will a common claims platform a new technology that's going to make a significant reduction in the per unit cost on claims. As well as they have a state-of-the-art call center that now we're getting into the government business as well. So we're reasonably confident this thing will move up, even though we've had a temporary slowdown here if you will.

You think it will be profitable in the second quarter.

I would say the profitability will more appear closer to the Q3, Q4 of 2017 and 2018. It should also be quite good going in. So it might take us a quarter or two to adjust. And Ken [indiscernible] and team are adjusting rapidly to that, as well as going after new areas. So I would say it might take a little longer but the good news is if you see Bruce's guidance, we are able to digest as a Company the slowdown at GCG as we move forward. And actually try to be accretive to last year's earnings.

And then in the Broadspire, you talked to about the new business pipeline looking better. You had positive top line this quarter after having been down slightly last quarter.

Yes.

But margins kind of – I guess were a little bit a little bit lower, right you're asking the 9% versus the 11%, why don’t I ask Bruce to explain on that.

Sure, so in the first quarter of 2016 Mark, we had a positive deferred revenue adjustment related to a contract that terminated. And that added about a $1.25 million to revenues that really dropped straight to the bottom line in that quarter. We didn't have that same item in 2017. Those tend to be discrete items around certain contract terminations. So that's the primary driver of that variance quarter-over-quarter.

The other piece Mark, is we have had a discussion with Danielle Lisenbey at Broadspire and she's doubling up the sales force. We are investing in it this year, so we can start growing at a faster clip at Broadspire. The business is there to have and the business is there to grab away from the competitors.

Thank you very much.

Thank you.

[Operator Instructions] And your next question comes from Katelyn Young from William Blair.

Hi, good afternoon and thank you.

Good afternoon and how are you doing Katelyn.

Going back to the U.S. Service segment and the advertising investments, understand it is a longer sales cycle. How long do you expect for that to play out as you began the investments in early January.

Right, is that he question or you have more.

That was my first question yes.

So very, very quickly the lag is typically six months, so it will take us some time to take to gain traction. Having said that I think the brand awareness of Contractor Connection has also increased because of this consumer initiative. So I think there'd be a lag but later in the year you should be able to see some impact. And we are studying it, gauging it and then only we will go forward with more spending.

Great thank you, and then also your slide on your services points out mix shifts having a negative impact on earnings. I guess how material was that if it was material and is that a trend that will continue going forward. A - Bruce Swain Katelyn this is Bruce Swain, that wasn't as material as the advertising spend but we did have higher than expected revenues from the outsourcing contract that we've been servicing over the past few years. That contract has lower margins, than our other normal field operations or catastrophe response business. So a little bit less contribution overall from the revenues but that was not a significant driver. It was just part of the story.

Okay that makes sense. And then for your larger restructuring and expense reduction plans, I know a lot of actions have been taken today already and there's more to come. As we sit here today and looking forward, I guess, which parts of the business or segments is there the most opportunity for incremental savings forward that you've seen.

I’ll answer that. So first of all the majority of the actions have taken place Katelyn in April and I would say that it's simple principle the closer you are to the client the more productive you are to the top line of the company. So we use that filter very, very carefully and I would say the opportunities could extend across globe. And every company needs to have the discipline and we’ve instituted that, we did this in 2015. At the end of 2015, we reviewed and took some cost-saving actions. We again started the review at the end of 2016, and we identified a number of cost-saving opportunities. And if you notice in my script the language I’m using is at least $20 million, so if anything it will be greater than that. And I think there will now be going forward, in my opinion, process related costs more than headcount and that will come quite heavily in the information technology area. As we're investing in information technology, our new Chief Information Officer, Hilton Sturisky as well as our Chief Operating Officer, Andrew Robinson are driving consistently to achieve common claims platforms. Case in point is we're going from two platforms at GCG to one, and all of this will eventually result in a reduction – in a cost reduction in duplicative processing as well as deliver to the client what I would call very simplistically, shamelessly stealing from our founder, delivering top-quality promptly. And to me I think that is where the essence of all of these processes should lean towards. So our IT processing will be one of our biggest savings, in my opinion, going forward well beyond at least the $20 million that we have discussed. A lot of that will bear fruit in 2018.

Great thank that is all I had.

Thank you Katelyn

Thank you.

And your next question comes from Carl Doirin of Raymond James.

Good afternoon, thank you taking my question.

Good afternoon Carl.

I guess my question in U.S. Service is pretty much been answered, but I guess I would ask, do you expect the same margin impact from the advertisement in 2Q? Or can we expect the margin to gradually go up throughout 2017 Or should we expect more of a step up later in the year.

Hey Carl this is Bruce Swain. We don't like to give quarterly margin guidance. But I can tell you that the first quarter is typically the weakest quarter for the Company, and then we pick up over the second and third quarters. We would certainly expect for our margins to increase as we go throughout the year. Some of that will be due to just the normal seasonality of our work where we see more profit contribution in the second, third quarter. And some of that will be from, expected lower advertising spend in U.S. Services. So we spent $2.4 million in the first quarter and our expectation is there's maybe another $2.5 million out there for this year. That can change depending upon the results that we see in the initiative but that's our current thinking right now.

And I’d say, Carl, we're not going to spend money that easily until we assess the results. Having come from the consumer industry, I am very careful because we can understand our results before we jump the next step logically.

Yes, that makes sense. And then I would add one other question in the International segment. Generally the International segment has lower margins in the first quarter. My question is the improvement this quarter is it strictly from exiting the unprofitable business? Or is there some benefit from having, I guess, different exposure in your revenue base and then your expenses base?

Well we certainly benefited from exiting some unprofitable entities quarter-over-quarter. That was a meaningful contributor. The other contributor we had was related to hurricane Matthew where we had a profit sharing arrangement with the party that we were handling claims with.

In the Caribbean

In the Caribbean that aided our margins as well and we recognized those profits in our first quarter.

And I would say that our major markets in international like Australia, Canada as well as the U.K., they're all starting to turn and start pointing north so this is very positive momentum coming through.

Yes 2017, is so far is proving to be a high cat loss year. Thank you very much, that is all I had.

Thank you.

Thanks

And your next question comes from Mark Hughes of SunTrust.

The core Contractor Connection business, what was the percentage growth rate this quarter? And you'd mentioned the new client wins. How do you think that will play up through the balance of the year?

Sure the core Contractor Connection business, Mark, was up about 3% from Q1 of a year ago to Q1 of this year. And again, generally, it's a little slower in the beginning of the year. Having said that, we have started to benefit from some of the cat activity and you'll see a lag but it will come into Q2 because by the time they sign up, by the time we do the resolution or the mitigation and by the time we bill and by the time we collect, it'll come out in the future quarters. So to me, I think Contractor Connection is hale and hearty and will actually move forward. The other piece is just to remind you, last year, Q1 had the Southern California gas leak impact that was fairly substantial in Q1 that is not repeating in Q1 of this year. So that also drove a little bit of that activity. What was the second question you had, I'm sorry, related to this?

I think it was related to the new business wins that you had described.

We have two wins in Q1. One is Citizens and the other is MAPFRE. Now what's very interesting to note and exciting for me, both Citizens and MAPFRE are not in the top 20 carriers. And so to me, we play hard and well in the top 20 carriers. We’ve started to slide into the next set of carriers where Contractor Connection is actually more critical for them as a solution systemwide for these carriers. And also the cross-selling is starting to have an impact because every dialog we're having, I'll give you just a most recent example. The RIMS conference, which is a premier conference in our industry, we had about 300 client meetings in the space of three days. And almost every conversation we had, WeGoLook came up, Contractor Connection came up, Broadspire came up and our cat services came up all at the same time. So there's a lot of movement going on and a tremendous amount of energy being spent on trying to rev up the top line. We also internally are starting to track tightly all client wins on a regular basis and is going to become part of our culture where we are becoming a sales driven organization, which is a key underpinning for the Company.

And there are currently no further questions at this time. I would now like to turn the call back over to Mr. Agadi for closing remarks

Thank you very much, everybody, for listening to the call. Again, to thank all employees, shareholders and clients for the continued support to this wonderful brand that is now going to cross the 76th year on May 27. And we hope to reconnect at the end of Q2 and discuss our results. Thank you.

Thank you for participating in today's Crawford & Company conference call. This call will be available for replay beginning at 6:00 PM. today through 11:59 PM on June 8, 2017. The conference ID number for the replay is 6372-135. The number to dial for the replay is 1855-859-2056 or 404-537-3406. Thank you. You may now disconnect.