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 fourth 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.crawco.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 period, and 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 Tami Stevenson, Crawford & Company’s General Counsel.

Thank you Lara. 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 under-funded 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 & Company. Rohit?

Thank you Tami. 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 Tami 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…

Thank you Rohit. Looking at the fourth quarter of 2023, company-wide revenues before reimbursements were $296.1 million, down 8% from $322.2 million in the prior year fourth quarter. Foreign exchange rates increased revenues before reimbursements by $3.4 million or 1.2%. GAAP net loss attributable to shareholders totaled $800,000, compared to a loss of $14.1 million in the same period of 2022. GAAP diluted EPS in the 2023 fourth quarter was a loss per share of $0.02 for both CRDA and CRDB, compared to a loss per share of $0.29 for both share classes in the 2022 period. On a non-GAAP basis, diluted EPS was $0.06 for CRDA and $0.07 for CRDB, compared to $0.23 for both share classes in the prior year period. The company’s non-GAAP operating earnings totaled $7.8 million in the 2023 fourth quarter for 2.6% of revenues, compared to $23.4 million for 7.3% of revenues in the prior year period. Consolidated adjusted EBITDA was $15.7 million in the 2023 fourth quarter for 5.3% of revenues, compared to $30.8 million for 9.6% of revenues in the 2022 quarter. I’ll now review the fourth quarter performance for each of our segments. North America loss adjusting revenues totaled $69.7 million in the 2023 fourth quarter, decreasing 10.3% from $77.7 million reported in last year’s quarter due to milder weather activity. The segment reported operating earnings of $800,000 in the 2023 quarter, decreasing from $8.6 million reported in last year’s quarter. The operating margin was 1.1% in the 2023 quarter compared to 11% in the 2022 quarter, as a result of the revenue weakness. International operations revenues totaled $97.2 million in the 2023 fourth quarter, up 9.9% from the $88.4 million reported in last year’s quarter. On a constant dollar basis, international revenues totaled $93.7 million. The segment reported operating earnings…

Thank you Bruce. 2023 showcased the effectiveness of our operational strategy. Crawford has demonstrated remarkable resilience and adaptability, fostering a culture of innovation and efficiency that continues to propel our sustainable growth and solidify our position as an industry leader. Our robust financial results and strong liquidity provide us with the flexibility to expand our market share while investing in cutting edge capabilities that set us apart. The strong performance of our U.S. businesses, marked by record new account wins coupled with the significant progress in our international operations underscores the success of our customer-centric approach. We remain committed to leveraging these achievements to cultivate deeper and more enduring partnerships with our clients and provide value to our shareholders. Thank you for your time today. Lara, please open the call for questions.

Thank you sir. Ladies and gentlemen, we will now begin the question and answer session. [Operator instructions] Our first question comes from the line of Maxwell Fritscher from Truist. Please go ahead.

Hi, good morning. I’m calling in today for Mark Hughes. Another strong quarter in the international segment. Just wanted to know if you could provide a little more color on what is driving that growth. I’m assuming it’s not as weather dependent as North America.

Hi Max, this is Rohit. Hope you’re doing well. Max, we continue to see improvements in our international business. We had talked about making sure that we were addressing some structural changes that we had to make. We’ve also talked about making sure that we were driving pricing where we needed to. All those things have been put in place, so I would say that was sort of low-hanging fruit that we got to. There is obviously more work to do in our international business, but what we’re seeing is we’re seeing traction in our key markets, like Europe, U.K., Latin America, and then Australia has always been strong but Australia was slightly lower, mainly because of a tougher comparison due to unprecedented floods that we saw in Australia in 2022.

Got it, thank you. On Broadspire, do you have any detail on if the uptick in medical case management is being driven more by frequency or severity? Any insight you have on the workers’ comp line?

Yes, what we’re seeing is a return of medical management to pre-pandemic levels. In fact, I would say that this was the first quarter that we exceeded by a decent number what we had seen in 2019, our Q4 of 2019 which I would call the last pre-pandemic quarter. Then what we’re also seeing is that the ratio of medical management to workers’ comp claim activity is much more in line with what we saw pre-pandemic than what we saw over the last three years. We believe that this is coming back, but we need to keep a watch for it. We’re not seeing any major changes in frequency or severity which is driving this as of now.

Great, thank you, and then any expectations on share repurchases in 2024?

Hey Max, this is Bruce. We still have a million and a half shares eligible to be repurchased through the end of 2024, so as we look at capital allocation, the first priority is to invest back in the business, and we’ll continue to do that as we go through 2024. We’re committed to paying a strong dividend - we increased the dividend last year, and we want to provide a meaningful yield to our shareholders. We’ll look at M&A as well. We look at a number of deals kind of on a continuous basis. We don’t execute on very many, but we’re also always looking for adjacencies and capabilities that we can add into our claims platform, and so we’ll continue to look at that. As far as repurchasing shares, we’re not a buyer at any price, and so we like to buy at a deep discount to intrinsic value and be disciplined in that regard. To the extent our shares trade at a level that we see as a deep discount to intrinsic value, I think you’d see us in the marketplace.

That’s very helpful. That’s all for me. Thank you all.

Thanks Max.

Thank you Max.

Ladies and gentlemen, just a reminder, should you have a question, please press star followed by the number one on your touchtone phone. Our next question comes from the line of Kevin Steinke from Barrington Research. Please go ahead.

Hey, good morning. You mentioned in your comments that you expect continued momentum in your non-weather related businesses in 2024. Can you just speak to what you’re seeing in those businesses that gives you confidence in that momentum? I’m thinking specifically of Broadspire and, I guess, the complex--large and complex loss adjusting within North America loss adjusting, or any others you’d want to highlight.

Hi Kevin, this is Rohit. Hope you’re well. Kevin, there are a few things that give us confidence in that regard. First and foremost, I think you’ve seen three consecutive years of $100 million, plus the new business that we’ve put in. You’ve also seen us in the Broadspire space to have continuous retention of business well over 90% over the last three years. We believe that those factors will continue. We will continue to see new business activity. The investments that we specifically made in technology are really helping us to get into what we call the alternative market segments for Broadspire, which are MGAs, captives, program administrators, and even some carriers, and that gives us a lot of confidence moving forward. We’ve been investing also in training and people development, which is enabling us to deliver claims that are much higher quality than what we believe we see in the marketplace. On the large and complex side, we continue to hire experts and be a place where experts want to be, which is giving us a lot of credibility with corporations, brokers, as well as carriers to recommend us to be the major and complex loss adjuster of choice. We are building a culture where we believe people feel that they can bring their authentic selves, that they can be who they are, that they can have a truly entrepreneurial spirit, and all of those things, I believe are leading to us driving growth in these two segments.

Okay, great. Thank you. I also wanted to ask about your efforts with factoring and penetrating strategic key accounts. Any update on the state of that effort, and any momentum that you’re seeing on that front, perhaps?

We feel very good about our efforts there. We continue to drive deeper into some of our largest accounts and gain share of segments that we may not have been participating in, in the past. Obviously that segment, as you can imagine, is highly dependent on weather, so while we may see some benign activity in Q4, continuing into Q1, we believe that the underlying business is extremely strong, the underlying relationships are extremely strong, and as weather activity comes back or returns to what I would call normal levels, we should see momentum in those parts of our business with the large carriers in the marketplace.

Okay, thank you. You also mentioned in your prepared comments that continued staffing shortages among your carrier clients is driving increased outsourcing of claims. Is that--I guess since you mentioned it, it’s still an issue, but is that something that’s eased a bit, or what’s kind of the state of staffing, or the ability to find staffing across the industry as you think about your client base?

Kevin, at a macro level, insurance continues to be a place where there’s an aging workforce higher than some of the other industry groups that we see. It also remains a place where structurally you don’t see as many college graduates jumping to join, as compared to, say, other traditional industries like banking, consulting, technology or manufacturing, or consumer goods. When you add to that during the 2008 to 2011 time, there was a real pullback on training programs that a number of corporations, a number of insurance corporations pulled back on, and we saw something similar happen in 2020, so we believe that structurally there is a dearth of qualified adjusters or qualified insurance professionals, and this is particularly pronounced on the claims side, which has--you know, even within the stacking of insurance, which we see less number of people joining from schools and colleges. We believe that because of us continuing our training programs in Broadspire, in loss adjusting, in countries like Canada and the U.K. and even to some extent in Australia, we believe that we have been continuing to invest in that and have built a workforce which makes us an attractive destination for outsourcing for our clients. I believe our clients are recognizing this as well, and they will also continue to invest from their end, but again at a macro level, we still see a big gap in the industry in terms of what’s needed and what exists from a resource standpoint.

Okay, that’s helpful. Thank you. Just wanted to ask a couple more here. I recall that you discussed in the past looking to continue to diversify your international operations and maybe reduce dependence on the travel and entertainment sector. Is that something you’re continuing to work on, and any thoughts on progress there?

Yes, we continue to do that, and I would just maybe slightly modify it - we didn’t say we wanted to reduce our dependence, we said we wanted to grow other sectors so that travel and entertainment doesn’t form the major part of our business. We are seeing that--I think we shared with you that we had made some management changes overall at international, we believe that those are yielding results. We continue to do more of that as we head into this year, and we’ve had a renewed focus on new business activity, and that’s why you saw continued growth in the international business, so that’s moving well but there’s more work to do there.

Okay, thank you. Then lastly, just following up on capital allocation, now that you’ve gotten the leverage below two times, what are your thoughts on debt reduction as you think about where to allocate your dollars?

Yes Kevin, this is Bruce. As I was talking to Max and our capital allocation framework, in the absence of the investments in M&A or share repurchases, once we invest back in the business through capex, if we have excess cash, it kind of automatically goes to reduce our revolver borrowings. Without a more compelling investment opportunity, we’ll reduce leverage. Even though we’re at 1.6 and kind of hit our target, if there’s not a compelling M&A opportunity or if a share repurchase wouldn’t be at a deep discount to intrinsic value, you’ll see us reducing leverage, building further financial strength and flexibility to allow us to transact and act when the factors in the marketplace look favorable to us, whether that’s a repurchase or M&A.

Okay, thank you. That’s helpful. Thanks for taking the questions.

Thank you.

Thank you Kevin.

There are no further questions at this time. I’d now like to turn the call back over to Mr. Verma for final closing comments.

Thank you Lara, and thank you to all our employees, clients and shareholders for your continued commitment to Crawford & Company. I am excited by our prospects for 2024, where we will leverage our expertise and seize emerging opportunities to drive sustained success and foster growth in the future. Thank you for your time today and God bless.

Thank you for participating in today’s Crawford & Company conference call. This call will be available for replay beginning at 11:30 am EST today through 11:59 pm EST on April 5, 2024. The conference ID number for the replay is 186255#. The number to dial for the replay is 877-674-7070, or 416-764-8692. Thank you, you may now disconnect.