Net Income (Loss) Attributable to Shareholders of Crawford & Company per Common Share

6 Months Ended

Jun. 30, 2020

Net Income (Loss) Attributable to Shareholders of Crawford & Company per Common Share

7. Net Income (Loss) Attributable to Shareholders of Crawford & Company per Common Share

The Company computes earnings per share of its non-voting Class A Common Stock ("CRD-A") and voting Class B Common Stock ("CRD-B") using the two-class method, which allocates the undistributed earnings (loss) in each period to each class on a proportionate basis. The Company's Board of Directors has the right, but not the obligation, to declare higher dividends on the CRD-A shares than on the CRD-B shares, subject to certain limitations. In periods when the dividend is the same for CRD-A and CRD-B or when no dividends are declared or paid to either class, the two-class method generally will yield the same earnings (loss) per share for CRD-A and CRD-B. During the second quarter of 2020, the Board of Directors declared the same dividend on CRD-A and CRD-B, while during the first quarter of 2020, and the first two quarters of 2019, the Board of Directors declared a higher dividend on CRD-A than on CRD-B.

The computations of basic net income (loss) attributable to shareholders of Crawford & Company per common share were as follows:

	Three Months Ended										Six Months Ended
	June 30, 2020				June 30, 2019						June 30, 2020						June 30, 2019
(in thousands, except per share amounts)	CRD-A		CRD-B		CRD-A			CRD-B			CRD-A			CRD-B			CRD-A		CRD-B
Earnings (loss) per share - basic:
Numerator:
Allocation of undistributed earnings (loss)	$	2,479	$	1,828	$	(384	)	$	(287	)	$	(5,960	)	$	(4,400	)	$	1,229	$	927
Dividends paid		916		675		2,161			1,152			3,055			1,804			4,291		2,304
Net income (loss) attributable to common shareholders, basic	$	3,395	$	2,503	$	1,777		$	865		$	(2,905	)	$	(2,596	)	$	5,520	$	3,231

Denominator:
Weighted-average common shares outstanding, basic		30,521		22,510		30,799			23,021			30,541			22,544			30,729		23,193
Earnings (loss) per share - basic		0.11		0.11		0.06			0.04			(0.10	)		(0.12	)		0.18		0.14

The computations of diluted net income (loss) attributable to shareholders of Crawford & Company per common share were as follows:

	Three Months Ended										Six Months Ended
	June 30, 2020				June 30, 2019						June 30, 2020						June 30, 2019
(in thousands, except per share amounts)	CRD-A		CRD-B		CRD-A			CRD-B			CRD-A			CRD-B			CRD-A		CRD-B
Earnings (loss) per share - diluted:
Numerator:
Allocation of undistributed earnings (loss)	$	2,479	$	1,828	$	(385	)	$	(286	)	$	(5,960	)	$	(4,400	)	$	1,235	$	921
Dividends paid		916		675		2,161			1,152			3,055			1,804			4,291		2,304
Net income (loss) attributable to common shareholders, diluted	$	3,395	$	2,503	$	1,776		$	866		$	(2,905	)	$	(2,596	)	$	5,526	$	3,225

Denominator:
Weighted-average common shares outstanding, basic		30,521		22,510		30,799			23,021			30,541			22,544			30,729		23,193
Weighted-average effect of dilutive securities		169		—		314			—			—			—			381		—
Weighted-average common shares outstanding, diluted		30,690		22,510		31,113			23,021			30,541			22,544			31,110		23,193
Earnings (loss) per share - diluted		0.11		0.11		0.06			0.04			(0.10	)		(0.12	)		0.18		0.14

Listed below are the shares excluded from the denominator in the preceding computation of diluted earnings (loss) per share for CRD-A because their inclusion would have been antidilutive:

	Three Months Ended				Six Months Ended
(in thousands)	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Shares underlying stock options excluded		2,011		1,585		1,962		1,439
Performance stock grants excluded because performance conditions have not been met ⁽¹⁾		1,289		1,111		1,125		1,018

⁽¹⁾	Compensation cost is recognized for these performance stock grants based on expected achievement rates; however, no consideration is given to these performance stock grants when calculating diluted earnings per share until the performance measurements have been achieved.

The following table details shares issued during the three and six months ended June 30, 2020 and 2019. These shares are included from their dates of issuance in the weighted-average common shares used to compute basic and diluted earnings (loss) per share for CRD-A in the table above. There were no shares of CRD-B issued during any of these periods.

	Three Months Ended				Six Months Ended
(in thousands)	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
CRD-A issued under Non-Employee Director Stock Plan		4		9		67		85
CRD-A issued under the U.K. ShareSave Scheme		—		257		1		266
CRD-A issued under Executive Stock Bonus Plan		—		—		—		30
CRD-A issued under 2016 Omnibus Stock and Incentive Plan		—		59		—		59

The Company's share repurchase authorization, approved in July 2017 (the "2017 Repurchase Authorization"), provided the Company with the ability to repurchase up to 2,000,000 shares of CRD-A or CRD-B (or both). The 2017 Repurchase Authorization was terminated on May 8, 2019.

Effective May 9, 2019, the Company's Board of Directors authorized the repurchase of up to 2,000,000 shares of CRD-A or CRD-B (or a combination of the two) through December 31, 2020 (the "2019 Repurchase Authorization"). Under the 2019 Repurchase Authorization, repurchases may be made for cash, in the open market or privately negotiated transactions at such times and for such prices as management deems appropriate, subject to applicable contractual and regulatory restrictions. At June 30, 2020, the Company had remaining authorization to repurchase 642,097 shares under the 2019 Repurchase Authorization.

During the three months ended June 30, 2020, the Company did not repurchase shares of CRD-A or CRD-B. During the three months ended June 30, 2019, the Company repurchased 280,079 shares of CRD-A and 72,351 shares of CRD-B at an average cost of $9.07 and $8.81 respectively.

During the six months ended June 30, 2020, the Company repurchased 155,351 shares of CRD-A and 161,459 shares of CRD-B at an average cost of $8.42 for each share. During the six months ended June 30, 2019, the Company repurchased 701,506 shares of CRD-A and 1,449,240 shares of CRD-B at an average cost of $9.11 for each share, of which 421,427 shares of CRD-A and 1,376,889 shares of CRD-B were purchased pursuant to a stock purchase agreement authorized by the Board of Directors separate from the 2017 Repurchase Authorization and the 2019 Repurchase Authorization.