Quiet quarter boosts Crawford profitsReprints
Crawford & Co.'s profits more than doubled in the second quarter of 2016 despite a revenue drop led by volume declines in major cases and foreign exchange headwinds.
The Atlanta-based third-party administrator's net income was $8.6 million, up 119.3% from the same period last year, according to the company's earnings report released Monday.
The company's revenue totaled $282.3 million in the second quarter, down 7.3% from the second quarter of 2015, primarily attributable to “ongoing and expected contraction” in its Garden City Group L.LC. segment, CEO Harsha Agadi said during the company's earnings conference call Monday.
The Garden City unit, which administers class-action settlements and bankruptcy matters, posted revenue before reimbursements of $25.2 million in the second quarter, down 26.7%(due to rounding) from the 2015 period, primarily because of declines in volume associated with large ongoing cases, including the winding down of the Deepwater Horizon Gulf of Mexico oil spill class-action settlement.
However, Mr. Agadi said the unit won new cases, including a large mass tort involving asbestos and the Barrick Gold Corp. securities case — a $140 million settlement between Barrick Gold and its investors over allegations that the mining company made false and misleading statements and concealed material information about its Pascua-Lama Project on the border of Argentina and Chile. He credited the unit's new management team, led by president and CEO Kenneth Cutshaw, with winning request for proposals at a higher rate than it did a year ago.
“The pipeline is strong,” Mr. Agadi said. “They are hitting at a higher batting average.”
Foreign exchange rates hurt the company's international segment, with revenue dropping 5.1%, to $123.2 million, in the second quarter, while revenue in the U.S. services unit fell about 12% due to a lack of weather events, according to the report.
Crawford's Broadspire Services Inc. unit, which handles workers compensation and liability claims, saw a slight increase in revenue before reimbursements at $75.1 million in the second quarter, up 1.9% from the second quarter of 2015, as claims and medical management revenue rose due to greater utilization and higher average case values, according to the company's earnings presentation.
Net income for the first half of 2016 totaled $17.3 million, up 145.1% from a year earlier, according to the report.