Delaware | 001-34480 | 26-2994223 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
545 Washington Boulevard, Jersey City, NJ | 07310 | |
(Address of principal executive offices) | (Zip Code) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Description | |
Press Release dated July 31, 2018 |
VERISK ANALYTICS, INC. | ||||
Date: July 31, 2018 | By: | /s/ Kenneth E. Thompson | ||
Name: | Kenneth E. Thompson | |||
Title: | Executive Vice President, General Counsel and Corporate Secretary |
• | Revenue grew 14.9% to $601 million; organic constant currency revenue growth was 7.4%. |
• | Net income was $154 million; adjusted EBITDA, a non-GAAP measure, was $291 million. |
• | Net income grew 26.9%; organic constant currency adjusted EBITDA growth was 8.9%. |
• | Diluted GAAP earnings per share (GAAP EPS) were $0.91; diluted adjusted earnings per share (adjusted EPS), a non-GAAP measure, were $1.06. |
• | Net cash provided by operating activities was $534 million year-to-date. Free cash flow, a non-GAAP measure, was $435 million year-to-date. |
• | The company repurchased $141 million of its shares for the quarter ended June 30, 2018. |
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||
Revenues | $ | 601.3 | $ | 523.2 | 14.9 | % | $ | 1,182.5 | $ | 1,025.8 | 15.3 | % | |||||||||
Adjusted EBITDA | $ | 290.8 | $ | 254.1 | 14.4 | % | $ | 563.3 | $ | 499.8 | 12.7 | % | |||||||||
Net income | $ | 153.5 | $ | 121.0 | 26.9 | % | $ | 286.5 | $ | 229.8 | 24.7 | % | |||||||||
Adjusted net income | $ | 179.0 | $ | 138.6 | 29.1 | % | $ | 340.7 | $ | 264.0 | 29.1 | % | |||||||||
Diluted GAAP EPS | $ | 0.91 | $ | 0.72 | 26.4 | % | $ | 1.70 | $ | 1.36 | 25.0 | % | |||||||||
Diluted adjusted EPS | $ | 1.06 | $ | 0.82 | 29.3 | % | $ | 2.02 | $ | 1.56 | 29.5 | % |
Revenue Growth | ||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||
June 30, | June 30, 2018 | |||||||||||||||
2018 | 2017 | Reported | Organic | Organic Constant Currency | ||||||||||||
Underwriting & rating | $ | 288.9 | $ | 262.0 | 10.3 | % | 6.2 | % | 6.2 | % | ||||||
Claims | 140.5 | 120.4 | 16.7 | % | 13.3 | % | 13.2 | % | ||||||||
Insurance | 429.4 | 382.4 | 12.3 | % | 8.4 | % | 8.4 | % | ||||||||
Energy and Specialized Markets | 129.9 | 110.3 | 17.7 | % | 8.7 | % | 5.0 | % | ||||||||
Financial Services | 42.0 | 30.5 | 37.7 | % | 4.4 | % | 4.4 | % | ||||||||
Revenues | $ | 601.3 | $ | 523.2 | 14.9 | % | 8.3 | % | 7.4 | % |
Revenue Growth | ||||||||||||||||
Six Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, 2018 | |||||||||||||||
2018 | 2017 | Reported | Organic | Organic Constant Currency | ||||||||||||
Underwriting & rating | $ | 569.6 | $ | 515.2 | 10.6 | % | 6.6 | % | 6.5 | % | ||||||
Claims | 272.5 | 234.1 | 16.4 | % | 13.1 | % | 12.9 | % | ||||||||
Insurance | 842.1 | 749.3 | 12.4 | % | 8.6 | % | 8.5 | % | ||||||||
Energy and Specialized Markets | 255.4 | 216.6 | 17.9 | % | 8.6 | % | 4.0 | % | ||||||||
Financial Services | 85.0 | 59.9 | 41.9 | % | 3.2 | % | 3.0 | % | ||||||||
Revenues | $ | 1,182.5 | $ | 1,025.8 | 15.3 | % | 8.3 | % | 7.2 | % |
• | Underwriting & rating revenue increased 10.3% in the quarter and 6.2% on an organic constant currency basis, resulting primarily from increases within our underwriting and catastrophe modeling solutions revenue. |
• | Claims revenue grew 16.7% in the quarter and 13.2% on an organic constant currency basis. Growth was driven by our repair cost estimating solutions, claims analytics, and aerial imagery solutions revenue. |
Adjusted EBITDA Growth | ||||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||
June 30, | June 30, 2018 | |||||||||||||||
2018 | 2017 | Reported | Organic | Organic Constant Currency | ||||||||||||
Insurance | $ | 236.3 | $ | 210.4 | 12.3 | % | 10.0 | % | 10.5 | % | ||||||
Energy and Specialized Markets | 41.5 | 34.1 | 21.6 | % | 13.2 | % | 0.9 | % | ||||||||
Financial Services | 13.0 | 9.6 | 36.3 | % | 4.5 | % | 4.5 | % | ||||||||
Adjusted EBITDA | $ | 290.8 | $ | 254.1 | 14.4 | % | 10.2 | % | 8.9 | % |
Adjusted EBITDA Growth | ||||||||||||||||
Six Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, 2018 | |||||||||||||||
2018 | 2017 | Reported | Organic | Organic Constant Currency | ||||||||||||
Insurance | $ | 460.3 | $ | 414.3 | 11.1 | % | 9.8 | % | 10.1 | % | ||||||
Energy and Specialized Markets | 75.3 | 65.8 | 14.4 | % | 6.2 | % | (2.5 | )% | ||||||||
Financial Services | 27.7 | 19.7 | 40.3 | % | 4.2 | % | 4.8 | % | ||||||||
Adjusted EBITDA | $ | 563.3 | $ | 499.8 | 12.7 | % | 9.1 | % | 8.2 | % |
Three Months Ended | ||||||||||||||||||
June 30, | ||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||
Reported | Organic | Organic Constant Currency | ||||||||||||||||
Insurance | 55.0 | % | 55.0 | % | 56.4 | % | 55.6 | % | 56.6 | % | 55.5 | % | ||||||
Energy and Specialized Markets | 31.9 | % | 30.9 | % | 31.9 | % | 30.6 | % | 30.1 | % | 31.3 | % | ||||||
Financial Services | 31.0 | % | 31.3 | % | 31.3 | % | 31.3 | % | 31.1 | % | 31.1 | % | ||||||
Adjusted EBITDA margin | 48.4 | % | 48.6 | % | 49.8 | % | 49.0 | % | 49.6 | % | 48.9 | % |
Six Months Ended | ||||||||||||||||||
June 30, | ||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |||||||||||||
Reported | Organic | Organic Constant Currency | ||||||||||||||||
Insurance | 54.7 | % | 55.3 | % | 56.4 | % | 55.7 | % | 56.5 | % | 55.6 | % | ||||||
Energy and Specialized Markets | 29.5 | % | 30.4 | % | 29.6 | % | 30.2 | % | 29.4 | % | 31.4 | % | ||||||
Financial Services | 32.6 | % | 32.9 | % | 33.7 | % | 33.4 | % | 33.6 | % | 33.0 | % | ||||||
Adjusted EBITDA margin | 47.6 | % | 48.7 | % | 49.4 | % | 49.0 | % | 49.5 | % | 49.0 | % |
• | EBITDA and adjusted EBITDA do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments. |
• | EBITDA and adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs. |
• | Although depreciation and amortization are noncash charges, the assets being depreciated and amortized often will have to be replaced in the future, and EBITDA and adjusted EBITDA do not reflect any cash requirements for such replacements. |
• | Other companies in our industry may calculate EBITDA and adjusted EBITDA differently than we do, limiting the usefulness of their calculations as comparative measures. |
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||
Cost of revenues | $ | 222.4 | $ | 193.7 | 14.8 | % | $ | 443.6 | $ | 376.6 | 17.8 | % | |||||||||
Selling, general and administrative | 93.0 | 78.8 | 18.0 | % | 184.9 | 154.7 | 19.5 | % | |||||||||||||
Investment income and others, net | (4.6 | ) | (3.4 | ) | 36.7 | % | (5.3 | ) | (5.3 | ) | (0.7 | )% | |||||||||
Acquisition-related liabilities (earn-out) | (0.3 | ) | — | N/A | (4.0 | ) | — | N/A | |||||||||||||
Adjusted EBITDA expenses | $ | 310.5 | $ | 269.1 | 15.4 | % | $ | 619.2 | $ | 526.0 | 17.7 | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||
Organic revenues: | |||||||||||||||||||||
Insurance | $ | 413.9 | $ | 381.7 | 8.4 | % | $ | 812.4 | $ | 748.0 | 8.6 | % | |||||||||
Energy and Specialized Markets | 119.3 | 109.7 | 8.7 | % | 234.5 | 216.0 | 8.6 | % | |||||||||||||
Financial Services | 31.8 | 30.5 | 4.4 | % | 61.9 | 59.9 | 3.2 | % | |||||||||||||
Total organic revenues | 565.0 | 521.9 | 8.3 | % | 1,108.8 | 1,023.9 | 8.3 | % | |||||||||||||
Revenues from acquisitions | 36.3 | 1.3 | N/A | 73.7 | 1.9 | N/A | |||||||||||||||
Revenues | $ | 601.3 | $ | 523.2 | 14.9 | % | $ | 1,182.5 | $ | 1,025.8 | 15.3 | % | |||||||||
Organic adjusted EBITDA: | |||||||||||||||||||||
Insurance | $ | 233.6 | $ | 212.3 | 10.0 | % | $ | 458.0 | $ | 416.9 | 9.8 | % | |||||||||
Energy and Specialized Markets | 38.0 | 33.6 | 13.2 | % | 69.3 | 65.3 | 6.2 | % | |||||||||||||
Financial Services | 10.0 | 9.6 | 4.5 | % | 20.8 | 20.0 | 4.2 | % | |||||||||||||
Total organic adjusted EBITDA | 281.6 | 255.5 | 10.2 | % | 548.1 | 502.2 | 9.1 | % | |||||||||||||
Adjusted EBITDA from acquisitions | 9.2 | (1.4 | ) | N/A | 15.2 | (2.4 | ) | N/A | |||||||||||||
Adjusted EBITDA | 290.8 | 254.1 | 14.4 | % | $ | 563.3 | $ | 499.8 | 12.7 | % | |||||||||||
Depreciation and amortization of fixed assets | (41.6 | ) | (31.8 | ) | 30.6 | % | (82.0 | ) | (65.6 | ) | 25.0 | % | |||||||||
Amortization of intangible assets | (32.0 | ) | (23.9 | ) | 34.1 | % | (65.2 | ) | (46.2 | ) | 41.3 | % | |||||||||
Interest expense | (31.9 | ) | (28.5 | ) | 12.1 | % | (64.8 | ) | (56.9 | ) | 13.7 | % | |||||||||
Provision for income taxes | (31.5 | ) | (48.9 | ) | (35.6 | )% | (60.8 | ) | (101.3 | ) | (40.0 | )% | |||||||||
Acquisition-related liabilities (earn-out) | (0.3 | ) | — | N/A | (4.0 | ) | — | N/A | |||||||||||||
Net income | $ | 153.5 | $ | 121.0 | 26.9 | % | $ | 286.5 | $ | 229.8 | 24.7 | % | |||||||||
Organic constant currency adjusted EBITDA margin | 49.6 | % | 48.9 | % | 49.5 | % | 49.0 | % | |||||||||||||
Organic adjusted EBITDA margin | 49.8 | % | 49.0 | % | 49.4 | % | 49.0 | % | |||||||||||||
Adjusted EBITDA margin | 48.4 | % | 48.6 | % | 47.6 | % | 48.7 | % | |||||||||||||
Net income margin | 25.5 | % | 23.1 | % | 24.2 | % | 22.4 | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||
Net income | $ | 153.5 | $ | 121.0 | 26.9 | % | $ | 286.5 | $ | 229.8 | 24.7 | % | |||||||||
plus: Amortization of intangible assets | 32.0 | 23.9 | 65.2 | 46.2 | |||||||||||||||||
less: Income tax effect on amortization of intangible assets | (6.7 | ) | (6.3 | ) | (13.7 | ) | (12.0 | ) | |||||||||||||
plus: Acquisition-related liabilities (earn-out) | 0.3 | — | 4.0 | — | |||||||||||||||||
less: Income tax effect on acquisition-related liabilities | (0.1 | ) | — | (1.3 | ) | — | |||||||||||||||
Adjusted net income | $ | 179.0 | $ | 138.6 | 29.1 | % | $ | 340.7 | $ | 264.0 | 29.1 | % | |||||||||
Basic adjusted EPS | $ | 1.08 | $ | 0.84 | 28.6 | % | $ | 2.06 | $ | 1.59 | 29.6 | % | |||||||||
Diluted adjusted EPS | $ | 1.06 | $ | 0.82 | 29.3 | % | $ | 2.02 | $ | 1.56 | 29.5 | % | |||||||||
Weighted average shares outstanding | |||||||||||||||||||||
Basic | 165.0 | 164.9 | 165.0 | 165.7 | |||||||||||||||||
Diluted | 168.7 | 168.3 | 168.8 | 169.2 |
Six Months Ended | ||||||||||
June 30, | ||||||||||
2018 | 2017 | Change | ||||||||
Net cash provided by operating activities | $ | 534.2 | $ | 429.8 | 24.3 | % | ||||
less: Capital expenditures | (99.3 | ) | (72.5 | ) | 37.0 | % | ||||
Free cash flow | $ | 434.9 | $ | 357.3 | 21.7 | % |
2018 | 2017 | ||||||
(in millions, except for share and per share data) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 132.0 | $ | 142.3 | |||
Available-for-sale securities | 3.8 | 3.8 | |||||
Accounts receivable, net of allowance for doubtful accounts of $5.2 and $4.6, respectively | 347.8 | 345.5 | |||||
Prepaid expenses | 61.1 | 38.1 | |||||
Income taxes receivable | 22.4 | 28.8 | |||||
Other current assets | 58.0 | 39.1 | |||||
Total current assets | 625.1 | 597.6 | |||||
Noncurrent assets: | |||||||
Fixed assets, net | 501.9 | 478.3 | |||||
Intangible assets, net | 1,289.5 | 1,345.3 | |||||
Goodwill, net | 3,372.7 | 3,368.7 | |||||
Deferred income tax assets | 15.7 | 15.9 | |||||
Other assets | 234.7 | 214.5 | |||||
Total assets | $ | 6,039.6 | $ | 6,020.3 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 216.4 | $ | 225.4 | |||
Short-term debt and current portion of long-term debt | 736.9 | 724.4 | |||||
Deferred revenues | 513.0 | 384.7 | |||||
Income taxes payable | — | 3.1 | |||||
Total current liabilities | 1,466.3 | 1,337.6 | |||||
Noncurrent liabilities: | |||||||
Long-term debt | 2,044.2 | 2,284.4 | |||||
Deferred income tax liabilities | 349.6 | 337.8 | |||||
Other liabilities | 105.9 | 135.1 | |||||
Total liabilities | 3,966.0 | 4,094.9 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Common stock, $0.001 par value per share; 2,000,000,000 shares authorized; 544,003,038 shares issued and 164,724,043 and 164,878,930 shares outstanding, respectively | 0.1 | 0.1 | |||||
Additional paid-in capital | 2,235.0 | 2,180.1 | |||||
Treasury stock, at cost, 379,278,995 and 379,124,108 shares, respectively | (3,317.7 | ) | (3,150.5 | ) | |||
Retained earnings | 3,630.4 | 3,308.0 | |||||
Accumulated other comprehensive losses | (474.2 | ) | (412.3 | ) | |||
Total stockholders’ equity | 2,073.6 | 1,925.4 | |||||
Total liabilities and stockholders’ equity | $ | 6,039.6 | $ | 6,020.3 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in millions, except for share and per share data) | |||||||||||||||
Revenues | $ | 601.3 | $ | 523.2 | $ | 1,182.5 | $ | 1,025.8 | |||||||
Expenses: | |||||||||||||||
Cost of revenues (exclusive of items shown separately below) | 222.4 | 193.7 | 443.6 | 376.6 | |||||||||||
Selling, general and administrative | 93.0 | 78.8 | 184.9 | 154.7 | |||||||||||
Depreciation and amortization of fixed assets | 41.6 | 31.8 | 82.0 | 65.6 | |||||||||||
Amortization of intangible assets | 32.0 | 23.9 | 65.2 | 46.2 | |||||||||||
Total expenses | 389.0 | 328.2 | 775.7 | 643.1 | |||||||||||
Operating income | 212.3 | 195.0 | 406.8 | 382.7 | |||||||||||
Other income (expense): | |||||||||||||||
Investment income and others, net | 4.6 | 3.4 | 5.3 | 5.3 | |||||||||||
Interest expense | (31.9 | ) | (28.5 | ) | (64.8 | ) | (56.9 | ) | |||||||
Total other expense, net | (27.3 | ) | (25.1 | ) | (59.5 | ) | (51.6 | ) | |||||||
Income before income taxes | 185.0 | 169.9 | 347.3 | 331.1 | |||||||||||
Provision for income taxes | (31.5 | ) | (48.9 | ) | (60.8 | ) | (101.3 | ) | |||||||
Net income | $ | 153.5 | $ | 121.0 | $ | 286.5 | $ | 229.8 | |||||||
Basic net income per share | $ | 0.93 | $ | 0.73 | $ | 1.74 | $ | 1.39 | |||||||
Diluted net income per share | $ | 0.91 | $ | 0.72 | $ | 1.70 | $ | 1.36 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 165,015,642 | 164,922,237 | 165,029,345 | 165,682,614 | |||||||||||
Diluted | 168,651,202 | 168,314,296 | 168,821,869 | 169,232,579 |
2018 | 2017 | ||||||
(in millions) | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | 286.5 | $ | 229.8 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization of fixed assets | 82.0 | 65.6 | |||||
Amortization of intangible assets | 65.2 | 46.2 | |||||
Amortization of debt issuance costs and original issue discount | 2.1 | 2.1 | |||||
Provision for doubtful accounts | 2.8 | 0.8 | |||||
Stock-based compensation | 19.8 | 15.4 | |||||
Realized gain on available-for-sale securities, net | (0.1 | ) | — | ||||
Deferred income taxes | (1.1 | ) | (0.1 | ) | |||
Loss on disposal of fixed assets, net | 0.1 | — | |||||
Changes in assets and liabilities, net of effects from acquisitions: | |||||||
Accounts receivable | (2.8 | ) | 6.3 | ||||
Prepaid expenses and other assets | (20.0 | ) | (18.2 | ) | |||
Income taxes | 3.2 | (3.3 | ) | ||||
Accounts payable and accrued liabilities | 1.8 | (16.6 | ) | ||||
Deferred revenues | 123.8 | 111.0 | |||||
Other liabilities | (29.1 | ) | (9.2 | ) | |||
Net cash provided by operating activities | 534.2 | 429.8 | |||||
Cash flows from investing activities: | |||||||
Acquisitions, net of cash acquired of $3.1 and $4.0, respectively | (61.4 | ) | (109.8 | ) | |||
Escrow funding associated with acquisitions | (6.3 | ) | (12.5 | ) | |||
Capital expenditures | (99.3 | ) | (72.5 | ) | |||
Purchases of available-for-sale securities | (0.1 | ) | (0.2 | ) | |||
Proceeds from sales and maturities of available-for-sale securities | 0.2 | 0.3 | |||||
Other investing activities, net | (3.1 | ) | — | ||||
Net cash used in investing activities | (170.0 | ) | (194.7 | ) | |||
Cash flows from financing activities: | |||||||
(Repayments) proceeds of short-term debt, net | (235.0 | ) | 20.0 | ||||
Payment of debt issuance costs | — | (0.5 | ) | ||||
Repurchases of common stock | (179.4 | ) | (266.1 | ) | |||
Proceeds from stock options exercised | 47.0 | 22.4 | |||||
Net share settlement from restricted stock awards | (3.5 | ) | (2.9 | ) | |||
Other financing activities, net | (6.2 | ) | (5.7 | ) | |||
Net cash used in financing activities | (377.1 | ) | (232.8 | ) | |||
Effect of exchange rate changes | 2.6 | 3.3 | |||||
(Decrease) increase in cash and cash equivalents | (10.3 | ) | 5.6 | ||||
Cash and cash equivalents, beginning of period | 142.3 | 135.1 | |||||
Cash and cash equivalents, end of period | $ | 132.0 | $ | 140.7 | |||
Supplemental disclosures: | |||||||
Income taxes paid | $ | 58.0 | $ | 105.7 | |||
Interest paid | $ | 63.9 | $ | 54.7 | |||
Non-cash investing and financing activities: | |||||||
Repurchases of common stock included in accounts payable and accrued liabilities | $ | 1.0 | $ | — | |||
Deferred tax liability established on date of acquisition | $ | 5.1 | $ | 8.0 | |||
Capital lease obligations | $ | 11.4 | $ | 0.5 | |||
Fixed assets included in accounts payable and accrued liabilities | $ | 0.9 | $ | 2.3 |