Crawford & Company (NYSE:CRD.B)
Q4 2013 Results Earnings Conference Call
February 26, 2014 03:00 PM ET
Allen Nelson - General Counsel and Chief Administrative Officer
Jeffrey Bowman - President and CEO
Bruce Swain - Chief Financial Officer
Mark Hughes - SunTrust
Good afternoon. My name is [Genetia] and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Crawford & Company Fourth Quarter 2013 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 period. Instructions will follow at that time. (Operator Instructions).
As a reminder, ladies and gentlemen, this conference is being recorded today, Wednesday, February 26, 2014. Now I would like to introduce, Allen W. Nelson, Crawford & Company's General Counsel and Chief Administrative Officer.
Thank you, Genetia. Some of the matters to be discussed in this conference call and 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 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 an anticipated event. In addition, you are reminded that operating results for any historical period are not necessarily indicative of results to be expected for any future periods.
For a complete discussion regarding factors that could affect the company's financial performance, please refer to the company's Form 10-K for the year ended December 31, 2013 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 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 now like to introduce Mr. Jeffrey Bowman, President and Chief Executive Officer of Crawford & Company. Jeff, you may begin our conference now.
Thank you Allen. A warm welcome to our investors, clients, and employees this afternoon. I am Jeffrey Bowman, President and CEO of Crawford & Company. Joining me from the global executive management team this afternoon are Bruce Swain, our CFO and Allen Nelson, our General Counsel and Chief Administrative Officer.
I thought I would take a few minutes to explain where we are in our strategic journey. Crawford's 2013 results mark a five year period of growth and improved profitability for the company. Since the recession of several years ago, Crawford’s revenue before reimbursements have grown as a compound annual rate of 3.7% from 2009 through to the present and consolidated operating earnings have grown by 79%. At the same time, we have diversified our revenue stream and put in place a significantly improved technology infrastructure that drives our business today.
Well result in our core businesses of claimed processing are subject to weather and catastrophe related events. Today more than half of our revenue derives from business process outsourcing and consulting services within connections, Legal Settlement Administration on [both sides].
This is changing the way we operate globally. The way we continue to invest in our future. And the way we expect to provide future earnings. We are creating a stronger company. There is no doubt that our strong quarter results in the past several years have been driven by a number of large claim events such as the 2011 flooding in Thailand affecting our EMEA/AP operations and our Legal Settlement Administration responsibilities and the Deepwater Horizon class action settlement.
These projects also contributed throughout 2013 results. Over the past year however we have seen a better balance to our earnings. Volumes have improved at our Broadspire TPA business with corresponding profitability growing. Our Americas businesses demonstrated the resilient performance this year in a benign weather environment against the comparison with super storm Sandy in 2012.
Over the same five year period, we have substantially improved Crawford’s balance sheet strength by reducing our debt levels and our pension funding obligations. In 2011 Crawford restored the dividend which we have subsequently increased each year.
Importantly we have also invested in returning cash to shareholders, repurchasing approximately 1.2 million shares since the inception of the repurchase program. Significant progress has been made towards achieving our strategic objectives. We continue to innovate our technology and evolve our planned offering both of which move our company forward.
Over the next few minutes I will comment on our fourth quarter and full year 2013 results. Bruce will then review the financials in more detail which will be followed by our review of our business performance and conclude with our 2014 guidance and comments on our 2014-16 strategic initiatives.
Overall we were pleased with the financial performance of the year just ended. Reporting the growth in net income and diluted earnings per share on a relatively fair revenue performance. Despite a global absence of major weather events over the past year we generated $95 million in consolidated operating earnings and had more balance among our segment operating results, reflecting an improvement in the Americas and significant profit growth in Broadspire.
We have indicated since early in 2013 that we anticipated the activity level in each of the two large special projects reported through our EMEA/AP and Legal Settlement Administration operations would wind down as the year progress and that is exactly what we have [said].
We do expect the continued decline in Legal Settlement Administration as we move through 2014. Although we anticipate that this segment will continue to benefit from Deepwater Horizon activity throughout the year. Our expectation is that the decline in Legal Settlement Administration will be substantially offset by improvement in two of our other segments, the Americas operations and especially our TPA service Broadspire which is a dynamic growing business.
In addition, we have made important guidance in our financial strength by reducing our net debt, improving our pension funding status and delivering $78 million in operating cash flow on the year. As a result, core finances 2014 well prepared, which I will discuss in more details in a moment.
Our fourth quarter results met our expectations against the difficult comparison with last year and reflect profitable results in all segments. In the Americas segment the 2012 fourth quarter reflected superstorm Sandy claims in the North Eastern USA, while the 2013 fourth quarter experienced relatively benign weather resulting in an expected decrease quarter-over-quarter in the segment.
In our EMEA/AP segment again as expected we showed a decline in 2013 fourth quarter as compared to 2012 period and we finalized claims arising from the 2011 flood losses in Thailand. In Broadspire, we saw a steady and significant improvement in both revenue and operating profitability. And we were pleased with the progress made in these operations during the quarter.
We continue to be excited about the strength of this dynamic business and remain focused on delivering continued operating improvement in 2014. As we have indicated in our legal settlement administration segment, activities levels associated with the Deepwater Horizon project declined during the quarter.
As we continue to focus on improving shareholder return, we also announced today the declaration of our quarterly dividend on both our non-voting A shares and our voting B shares, of $0.05 and $0.04 respectively.
That concludes my initial remarks on the fourth quarter and year-to-date results. I will discuss the business unit operations after Bruce has reviewed the financials. Bruce will go over the company’s financial overall performance for the fourth quarter.
Companywide revenues before the reimbursements in the 2013 fourth quarter were $284.9 million, down 9% from $313 million in the prior year’s fourth quarter. Our net income attributable to Crawford & Company totaled $10.8 million in the 2013 fourth quarter, down from $14.2 million in the 2012 period.
Fourth quarter 2013 diluted earnings per share were $0.20 for CRDA and $0.19 for CRDB compared to earnings per share of $0.26 for CRDA and $0.25 for CRDB in the 2012 period. Consolidated operating earnings, a non-GAAP financial measure, totaled $20.2 million for the 2013 fourth quarter, down from $38.9 million reported in the 2012 fourth quarter.
During the prior year fourth quarter, the company incurred a pre-tax special charge of $8.5 million related to a loss on a property sublease and North American severance costs. These special charges decreased earnings per share by $0.10 in the 2012 fourth quarter.
The company’s selling, general, and administrative expenses or SG&A totaled $58.2 million or 20.4% of revenues in the 2013 fourth quarter, up 7% from $54.4 million or 17.4% of revenues in the prior year quarter.
Revenues from the Americas segment totaled $79.5 million in the 2013 fourth quarter, down 15% from $93.5 million reported in last year’s quarter. The higher revenues in 2012 resulted from the handling of claims from super storm Sandy. Operating earnings in our Americas segment were $1.2 million in the 2013 fourth quarter or 1% of revenues. This is compared with operating earnings of $4.4 million or 5% of revenues in the prior year quarter.
Revenues generated by our catastrophe adjusters in the U.S. totaled $5 million in the 2013 fourth quarter, down from $19.8 million in the 2012 quarter, reflecting the impact of super storm Sandy related catastrophe cases in the 2012 period.
EMEA/AP revenues decreased 4% in the 2013 fourth quarter to $91 million from $95.2 million in the 2012 period. Revenues in 2012 were higher because of the catastrophe related special project in Thailand, which was completed during the 2013 period. EMEA/AP operating earnings decreased to $12.7 million during the current quarter, declining from last year’s fourth quarter operating earnings of $18.2 million. The operating margin in this segment was 14% in the 2013 quarter, decreasing from 19% in the 2012 fourth quarter.
Revenues from our Broadspire segment increased to $65.4 million in the 2013 fourth quarter, up 11% from $58.8 million in the prior year quarter. Operating earnings in Broadspire totaled $3.8 million or 6% of revenues in the 2013 fourth quarter, improving substantially from operating earnings at $0.6 million or 1% of revenues in the 2012 fourth quarter.
Legal settlement administration revenues totaled $49.1 million in the 2013 fourth quarter, decreasing from $65.4 million in the prior year quarter. This revenue decrease was largely associated with our work on the Deepwater Horizon class action settlement. Operating earnings totaled $8 million in the 2013 fourth quarter or 16% of revenues compared to $18.2 million or 28% of revenues in the prior year period.
Our cash and cash equivalent position at December 31, 2013 totaled $76 million as compared to $71.2 million at December 31, 2012. Our investment in unbilled and billed receivables has decreased by $23.4 million during 2013, primarily as a result of reduction in receivable balances associated with two special projects.
Our company’s defined benefit pension liabilities and third party debt declined significantly during 2013. On a combined basis, these two debt like financial statement components improved by $94 million. Our defined benefit pension liabilities decreased by $65.3 million during 2013 due primarily to an increase in discount rates used to determine the plan’s liabilities at year end and strong asset performance during the year. The company’s pension risk management program is driving positive results as we continue to move towards a fully funded position in these plans. Our pension liabilities at the end of 2013 were $103 million which is the lowest level since 2007 and reflects a 52% decline from the levels at the end of 2009.
Our total third part debt also decreased in 2013 by $28 million, reflecting continued strong generation by the company that was used to repay outstanding borrowings under our revolving credit facility. As previously announced, during the 2013 fourth quarter the company extended its revolving credit facility to mature in a full five years, increased the capacity to $400 million and reduced borrowing costs.
After reflecting cash on hand, the company’s net debt stood at [$51.7] million which is the lowest level since 2005. Cash provided by operations totaled $77.8 million for 2013, decreasing from $92.9 million provided by operations in the prior year period. This $15 million decline was primarily due to higher payments for accounts payable on accrued liabilities during 2013 as compared to 2012. Free cash flow decreased in 2013 by $12.8 million from the 2012 period.
During the 2013 fourth quarter, the company paid a regular quarterly dividend of $0.04 per share on its CRDB shares and $0.05 per share on its CRDA shares. For the year, the company has paid cash dividends $0.18 per share of CRDA and $0.14 per share of CRDB. Also during the 2013 fourth quarter, the company repurchased approximately 229,000 shares of CRDA under its 2 million share repurchase plan at an average cost of $7.50 per share. Since the inception of the plan, the company has repurchased nearly 1.2 million shares of CRDA at an average cost of $5.55 and 7,000 shares of CRDB at an average cost of $3.83 per share.
Back to you, Jeff.
Thanks Bruce. For the quarter, we reported operating earnings down versus 2012, but very much in line with our expectations. We are seeing the benefit of a balanced portfolio across our business segments and in addition, seeing improved performance of Broadspire. Both our EMEA/AP and legal settlement administration operations are successfully broadening their new business pipelines to help replace claims volume tied to Thailand and the Deepwater Horizon projects. And as you also remember that half of our business relies on the waiver. It is a part of the DNA of Crawford. For the quarter, we were pleased to see overall claims increased 1.9% as gains in volume and Broadspire and EMEA/AP offset claims reductions in the Americas.
So let me now turn to the performance of each of our business units, starting with the Americas segment which represented 29% of our total consolidated revenues for the quarter. Overall performance in both revenue and operating earnings reflected the impact of super storm Sandy year-over-year. As I mentioned earlier, we continue to emphasize with our clients that we have a unique cross-border capability within our Americas segment, which is a way to differentiate Crawford from our competitors and give carriers who have limited capacity the ability to service their clients.
The decline in revenues in the U.S. claim services result from the lack of major weather events which was mitigated by the increase in flood losses in Canada, but was service by U.S. claim, price claims adjusters and by an increase in that contractor connection division.
Contractor connection grew by 40% in revenue over the fourth quarter of 2012 with both current and new insurer and consumer clients being contracted. We are developing and implementing private label consumer website capabilities for consumer services. The remaining site is about this product’s future. Canada also benefits from this business line, which is a strong growth platform and an area of continued strategic focus.
The EMEA/AP operations represented 30% of our consolidated revenues for 2013. In the fourth quarter, our revenues declined in the Asia Pacific region primarily due to the completion of claims related to the Thailand flood. As this segment has finalized claims from Thailand, we expect to replace these claims with new activity throughout the segment.
UK revenues declined in part due to the benign weather and lower reported fire and crime incidents compared with the prior year. The increase in revenue in CEMEA was primarily due to an increase in high frequency, low complexity and residential claims from new and existing clients in the region.
As mentioned before, the CEMEA market is a mature competitive market and we focused our revenue efforts on TPA activities including our international Broadspire operations and our specialty markets.
Our Broadspire operation, which represented 22% of our consolidated revenues for the year, reported an increase in revenue and the third consecutive quarter of positive operating earnings. We are ahead of plan at present and we are seeing very strong client gains in our sales pipeline.
Our retention rate for the quarter was an excellent at 97%. We continue to see overall case volumes increase against the previous year's quarter through new client wins in a stronger workers’ compensation environment. We believe strongly that Broadspire’s solid market position, integrated service model and quality of service offers the market a truly competitive product and we expect growth and profitability as we move through 2014.
We see the increased use of medical management services as a growing opportunity reflecting our ability to help clients manage increasing medical costs. We also see growth in Broadspire’s employers’ adjust to an improving employment market and evolving healthcare product delivery service.
During the year, we have been very pleased with the improved execution of our thousand marketing plans in this business segment. Our new sales wins have been very strong and we expect to grow our pipeline of business opportunities in 2014.
Despite the expected revenue decline associated with the Gulf related special project, we continue to be very pleased with the legal settlement administrations’ revenue and operating earnings performance. LSA represented 19% of our 2013 revenue. We were pleased that our revenue during the quarter was also generated from a number of other significant class actions and bankruptcy cases providing more balance to our results.
We continue to see solid performance from LSA for the coming year. We will have a reduced level from 2013 as claims activity declines in the Deepwater Horizon class action. Our backlog at the end of 2013 remains strong at $108 million compared to a $152 million last year.
That concludes my comments on the business segments. Let me turn to our guidance and strategic focus. Please note that our guidance is based on a typical weather year and does not include either the impact of main storm events or the effective and unusually benign weather environment.
We are offering full year 2014 guidance as follows. Consolidated revenue before reimbursements between $1.10 billion and $1.13 billion, consolidated operating earnings between $95 million and $103 million, consolidated cash provided by operating activities between $60 million and $70 million, net income attributable to shareholders of Crawford & Company between $52 million and $57 million or $0.94 to $1.04 diluted earnings per CRDA share and $0.90 to $1 diluted earnings per CRDB share.
Our outlook remains update and the balance of positive results among our segments is encouraging. Crawford & Company has become the recognized global leader in providing custom claims and associated administrative solutions, not only because we consistently deliver a broad range of value product and services, but also because we are committed to innovation and the continued thoughtful analysis of our business. Our 2014 to ‘16 strategic plan demonstrates that commitment.
We have just completed developing these strategic initiatives. And we will be sharing more about these with you as we go through the year. The plan provides a basic operational and geographic roadmap for the future. Reflects our optimism, excitement and dedication to our operational and financial success in 2014 and shows our commitment to growing Crawford’s position in the marketplace.
These initiatives also detail our intent to enhance our data management and analytics capabilities to further improve the efficiency and flexibility of our claims management services to develop new lines of business in this area and ultimately to further enhance our service to clients.
As we look to 2014 and beyond, we need to always have higher goals to strive as a company. We must keep improving and evolving. While there is much work to do, the initiatives on this slide outline how Crawford and its employees will grow the company over the next three years. With these actions, we expect to continue to offer meaningful rewards to our shareholders.
Thank you for your time and we look forward to your questions. Operator, would you please explain the process for asking questions to our audience?
(Operator Instructions). Your first question comes from the line of Mark Hughes of SunTrust.
Mark Hughes - SunTrust
Thank you very much. Good afternoon.
Mark Hughes - SunTrust
Could you talk about the level of new business that you won in Broadspire as we think about the 2014 outlook you had a very strong growth in the last 9 months of the year, double-digit this quarter, do you think new business going to allow you sustain double-digit growth in the coming year?
Let me talk about some of the operational factors that are going on that are creating the margins another one we’ve finished the significant consolidation of data systems which has enabled us to produce a better quality product in the organization. And as we’ve sort of explained over the past few months, the Broadspire sale team has been rehashed, it’s been different goals have been put in place and we’re seeing a much better retention and account management of our current accounts. So we’re looking very much for that to continue into 2014.
We’ve got very strong pipeline at this present moment and the team is working very hard to ensure that we get those cost efficiencies into the organization which will increase the margins that we currently have. We see 2014 being a significant step up from where we were for the overall year in ‘13.
Mark Hughes - SunTrust
How about in terms of the topline growth, will that be a step up as well, in terms of the growth rate?
Yes, we believe it will, but.
Mark Hughes - SunTrust
Okay. The pension expense the EPS expense, I don’t know if you get us an idea of that for Bruce, that how does it look in 2014 compared to 2013?
The pension expense?
Mark Hughes - SunTrust
Yes in terms of EPS.
Yes I think it will the expense will be down slightly, I think on a consolidated basis we’re about 3.3 million this year and for ‘14 we will be at about 1.7 million, so think about (inaudible).
Mark Hughes - SunTrust
Can you talk about the -- when you look at the legal settlement the operating income in the quarter about $8 million, about 16% margins, that 16% margin seems like pretty consistent with where you are at before you picked up the deepwater horizon business. Is this a good margin, has that kind of down at 16%? And likewise that run rate of EBIT is that a good run rate or is that come down a little bit as the revenue continues to paper off in 2014?
Hey, Mark it is Bruce. I think that the store for margins and GCG ran at up routine range I think as the Deepwater Horizon project falls away or any other large significant project falls away, you'll see that the margins probably migrate down towards that level. Anytime we have a large project that comes, in we get a lot better absorption of overhead in that unit. So there are stronger incremental margins and the pull back will probably bring it into the mid teens level.
In terms of the dollars and where we see that business going in ’14. Our expectations are and what we've factored into our guidance is that we think it will come down in ‘14 versus where it was in ‘13. But our visibility into that is not that great. And we're planning on it coming down and we're expecting other parts of our business to take up the slack.
I think to that point, Mark as well Crawford remains a claims-driven business for overall. But also we have value added services that we are bringing into the group, which in the business process outsourcing area, which are substantially stable and sometimes more profitable. And we are driving those efficiencies through the Americas organization and through the Broadspire and EMEA/AP organization, which is where there is margin improvement that somebody might
Mark Hughes - SunTrust
Okay. The U.S. margin I know you had a tough comp against the [C&D] claims, the 1.5% though is pretty low in historical terms. Why so low, why do you think it will bounce back?
Okay. There are several reasons, we're confident that the Americas going to bounce back in that. Number one is both Canada, North America there was a benign period we picked up flooding claims in Canada in the second half of the year, which improved their margins, but we have gone through in both of those areas, we have had transformation projects in terms of having cost reductions, looking at the markets that were in, the services that we are providing.
We see in the U.S. continued growth in the contract to connection models. We see continued growth in the GTS which is the high value complex claims area and then we see development of specialty market and into the affinity groups playing into our hands in 2014. With that with the cost control models that we have put in place we see that margins starting to improve. And anything from a weather event which improves over 2013 is just adding benefit to us in that area.
Mark Hughes - SunTrust
Hey Bruce, I don’t know if you give an idea for CapEx for the coming year, if you could kind of walk through the what the cash flow generation are to be, how much has been good with CapEx pension contributions anything else that might be relevant?
Sure. So on an operating standpoint…..
Unidentified Company Representative
Okay. So on an operating standpoint….
Mark Hughes - SunTrust
I apologize for that.
No problem. On an operating cash flow basis, we expect between $60 million and $70 million next year that’s our guidance. And that number is net of our pension contributions. So we think we are going to put in about $18 million in the U.S. in ‘14 and in our international plans we put in between 6 and 7 each year. So that number is net of pension contributions.
On a CapEx basis, we think our CapEx will run a little bit higher this year, I think in the $36 million to $37 million range and that’s a little bit higher than where we’ve run in the past but that’s where our planning is today.
Mark Hughes - SunTrust
I wonder is that going to taper off, I mean I know it’s early for 2015 but did this, an increase that won’t be repeated, is this still possible that 2015 could up from here?
Mark, our -- most of our capital expenditure is around software development and centered around IT and where we see our industry going in really all facets of our business in a much more technology enabled place. And I think that there will always be a strong demand for increased investment or a high level of investment in technology in order for us to stay on the forefront in our markets in meeting the demands of our clients.
The technology side Mark is increasingly critical to the way we operate as an organization. How we get those margins to a higher degree is also a factor of the technology we are able to introduce to our on the [street] adjusters, how we relate with our -- okay, but the technology part of this is critical. Our clients are much more sophisticated in the way that they segment claims now, we have to be able to interface with them and we have to do that through the enabling of mobile technology, tablet technology with our adjusters and our operational staff. And we think we’re making a very good strategic increase in the capabilities that we’ve got. We’ve actually won a couple of technology awards in 2013 from mobile devices and that’s down to some of the cutting edge technology that we’ve been putting in place. So that will drive some of the margin gains that we’re going to get.
Mark Hughes - SunTrust
Okay, thank you. Very good, I appreciate it.
(Operator Instructions). Your next question comes from the line of Joe Salomon, Salomon Capital.
Hi guys. Thanks so much for taking my questions.
Hey Joe. How are you?
Great. How are you guys doing today?
So just one, I wanted to follow-up on Mark’s question on the pension contribution and I guess this year was around $18 million you’re saying, I think if I heard you right for 2013 it was $18 million and you’re expecting to be similar. So given the fact that the pension liabilities come down so much, at what point, is it 2015 or 2016 should we expect that contribution to come down fairly dramatically because at this rate I guess it’s gone very quickly in 5 years or so?
Yeah. It comes down in ‘15 for sure and then declines from there. We put a table in the 10-K that we filed today that today that indicates where our contributions are going. And actually in ‘15 based upon interest rates as they exist today, or end of 2013, and our investment returns, we think that ‘15 will be comparable to ‘14 and then it drops to $13 million in ‘16, $10 million in ‘17 and about $8 million in ‘18. And that’s all in our 10-K. These numbers will change. We know that because they are all based upon interest rates that exist today and an investment return assumption of 6.75%.
So there is -- I think that we’re not done with the pension plan, but we have substantially de-risked this plan. And I think we’re looking at the horizon and seeing the finish line (inaudible). We’re certainly happy about that.
Great, that’s really (inaudible). And then just also follow-up on Mark’s question on the Americas on the margin there. I guess over time, if you look out over and say five year period, when do you think we can get to kind of close to that double-digit operating margin assuming normal weathers, contractor connections, margins are substantially higher than that as the mix changes. Do you have a thought as to over what time period, is it few years, is that kind of a target that you guys are hoping to get to?
Okay. We’re pushing the margin side of this very hard with our operations at the moment. We said earlier, we do see continued growth in contractor connection, we see growth in GTS and actually we see growth coming out through the deployment of better technology in the field operations as well. One of the areas that we've been investing is synergy programs; we’re in the early stages of that, we’ve won quite a few accounts.
So we're able to offer the clients and this is really as our clients change as well. They want to be able to three arch those claims. And once you three arch the claims, you have to have several models in place to be able to do that. And we've set out and stole out to be able to do that. And we see significant improvement in 2014 without remember, we're placing ‘13 on a very benign whether event.
As we give you an idea, someone said this morning that the storms in the U.S. are storms of inconvenience not of damage. We're seeing an increase in our claims, very significant proportions over last year coming back to more than normalized basis. And that's going to help us get this model moving much more quickly.
And that's good to hear. And then just couple of more questions, one on Broadspire, which is really great surprise at least according to us that operating margin is much, much higher than we would have expected at this point and we were thinking kind of 10% by the end of 2015. Would you move up that goal now too earlier or are you still targeting at 10% by the end of 2015?
We're still targeting 10% by the end of 2015, but what will drive this is new client wins. The technology is becoming much more of an enabler for us as an organization, now we’ve got all of the data in one database. We are able to leverage from that, we’ve got some cost efficiencies that we’re still pushing to the system. And we’ll see where it goes for sort of first half of this year and then we’ll come back to that particular statement. I mean our target is still on the plan that we have had laid out for the past few years is to get to the 10% margin around by the end of ‘15. I think ‘14 will be a significant step up.
Yes. And then finally I guess, you guys saw the deal as 13 times embedded value to EBITDA and just kind of sometimes new and we see your stock trading almost 50% discount to that, any thoughts on that huge asperity?
We won’t, (inaudible) is a very good company, I mean there is obviously a very big competitor of ours with very much concentrating on getting our business right, getting our margins, getting our reputation at quality and all of that business areas correcting those areas that are not performing to our requirements at the moment. And hopefully our shareholders will realize that and see the growth that we have made in the corporation. And one of the five year history just to really sort of outline how far we have come in those five years. If we can see that grows up our valuation will start to increase significantly as well.
Great. Well, keep up the good work and thanks for the answers.
Okay. Thanks Joe.
I will now turn the call back over to Mr. Bowman for closing remarks.
Thank you. I would like to thank everyone for their time and questions this afternoon and for joining us on our 2013 year-end call and look forward to speaking out with everyone after the first quarter of 2014. Thank you very much. And have a great day.
Thank you for participating in today’s Crawford & Company conference call. This call will be available for replay beginning at 6 p.m. today through 11:59 p.m. on March 26, 2014. The conference ID number for the replay is 61179190. The number to dial for the replay is 1-855-859-2056 or 404-537-3406. Thank you. You may now disconnect.
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