Verisk Analytics, Inc., Reports Third-Quarter 2016 Financial Results
- Revenue from continuing operations grew 5.9%; organic constant currency revenue growth from continuing operations was 6.2%.
- Income from continuing operations increased 2.7% to $128 million; adjusted EBITDA from continuing operations decreased 0.6% to $253 million; excluding the 2015 $15.6 million gain on sale of warrants, adjusted EBITDA grew 5.9%.
- Diluted GAAP earnings per share (GAAP EPS) from continuing operations increased 1.4% to $0.74; diluted adjusted earnings per share (adjusted EPS) from continuing operations increased 7.7% to $0.84.
- Net cash provided by operating activities was $464 million year-to-date. Free cash flow from continuing operations, adjusted for $75 million of taxes paid related to the sale of the healthcare business, was $429 million year-to-date, an increase of 12.8%.
- Repurchases of Verisk common stock were $73 million in third-quarter 2016. As of September 30, 2016, the company had $280 million remaining under its share repurchase authorization.
JERSEY CITY, N.J., November 1, 2016 - Verisk Analytics, Inc. (Nasdaq:VRSK), a leading data analytics provider, today announced results for the quarter ended September 30, 2016.
Scott Stephenson, chairman, president, and CEO, said, "Our third-quarter results once again included solid revenue growth and strong margins as we continue to deliver outstanding data analytics solutions for our customers across our key verticals of insurance, natural resources, and financial services. While reported revenue growth from continuing operations was 5.9%, combined insurance and financial services revenue growth of 7.7% is consistent with our historical, corporate, organic performance. In addition, we were pleased to resume returning capital to our shareholders, even as we invest in the business to drive future growth."
Table 1: Summary of Results
(in millions, except per share amounts)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||
| 2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||
| Revenues from continuing operations | $ | 498.1 | $ | 470.4 | 5.9 | % | $ | 1,489.1 | $ | 1,283.3 | 16.0 | % | |||||||||
| Income from continuing operations | $ | 127.6 | $ | 124.2 | 2.7 | % | $ | 344.0 | $ | 379.5 | (9.3 | )% | |||||||||
| Adjusted EBITDA from continuing operations | $ | 253.3 | $ | 254.8 | (0.6 | )% | $ | 746.9 | $ | 673.0 | 11.0 | % | |||||||||
| Adjusted net income from continuing operations | $ | 144.4 | $ | 133.5 | 8.1 | % | $ | 396.1 | $ | 354.5 | 11.7 | % | |||||||||
| Diluted GAAP EPS from continuing operations | $ | 0.74 | $ | 0.73 | 1.4 | % | $ | 2.01 | $ | 2.27 | (11.5 | )% | |||||||||
| Diluted adjusted EPS from continuing operations | $ | 0.84 | $ | 0.78 | 7.7 | % | $ | 2.31 | $ | 2.12 | 9.0 | % | |||||||||
Revenue
Total revenue from continuing operations increased 5.9% in third-quarter 2016 compared with third-quarter 2015. Organic constant currency revenue growth from continuing operations was 6.2%. Financial services led the organic revenue growth in the quarter.
Decision Analytics segment revenue from continuing operations grew 6.2% in the third quarter of 2016. Decision Analytics organic constant currency revenue growth from continuing operations was 6.9%.
- Insurance category revenue increased 7.4%, with solid growth in underwriting, claims analytics, and catastrophe modeling solutions. Loss quantification solutions also contributed to the growth in the quarter.
- Financial services category revenue increased 24.5% in the quarter, led by growth in analytical solutions and media effectiveness.
- Energy and specialized markets category revenue declined 0.1%. Organic revenue, excluding the PCI, Infield, Greentech Media, and Quest Offshore businesses, declined 4.9%, primarily as a result of continuing end-market and currency headwinds affecting the energy business.
Table 2: Decision Analytics Revenues by Category
(in millions)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||
| 2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||
| Insurance | $ | 174.4 | $ | 162.4 | 7.4 | % | $ | 521.4 | $ | 481.4 | 8.3 | % | |||||||||
| Financial services | 33.8 | 27.0 | 24.5 | % | 92.8 | 88.6 | 4.7 | % | |||||||||||||
| Energy and specialized markets | 109.1 | 109.2 | (0.1 | )% | 333.2 | 198.9 | 67.5 | % | |||||||||||||
| Total Decision Analytics | $ | 317.3 | $ | 298.6 | 6.2 | % | $ | 947.4 | $ | 768.9 | 23.2 | % | |||||||||
Risk Assessment segment revenue grew 5.3% in the quarter and 5.0% excluding the recent acquisition of Risk Intelligence Ireland.
- Revenue growth in industry-standard insurance programs was 5.4%, and 5.1% on an organic basis, resulting primarily from the annual effect of growth in 2016 invoicing effective from January 1 and growth from new solutions.
- Property-specific rating and underwriting information revenue grew 4.8% in the third quarter. Growth was led by an increase in commercial underwriting solutions subscription revenue.
Table 3: Risk Assessment Revenues by Category
(in millions)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||
| 2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||
| Industry-standard insurance programs | $ | 138.2 | $ | 131.2 | 5.4 | % | $ | 414.2 | $ | 392.5 | 5.5 | % | |||||||||
| Property-specific rating and underwriting information | 42.6 | 40.6 | 4.8 | % | 127.5 | 121.9 | 4.5 | % | |||||||||||||
| Total Risk Assessment | $ | 180.8 | $ | 171.8 | 5.3 | % | $ | 541.7 | $ | 514.4 | 5.3 | % | |||||||||
Expenses and Income
Cost of revenues from continuing operations increased 4.2% compared with third-quarter 2015. The year-over-year increase was primarily due to salaries, benefits, and technology to support business growth.
Selling, general, and administrative expense, or SG&A, from continuing operations increased 10.2% in the quarter due to acquisition-related costs and other expenses related to supporting business growth.
Income from continuing operations increased 2.7% to $128 million. Adjusted EBITDA from continuing operations decreased 0.6% to $253 million. Excluding the third quarter 2015 $15.6 million gain on sale of warrants, included in investment income and others, net, growth was 5.9%.
- The 3.7% decrease to $147 million in Decision Analytics adjusted EBITDA from continuing operations was the result of the non-recurring gain on sale of warrants in the prior period, which was partially offset by profitable growth of the business in the current period.
- Third-quarter 2016 adjusted EBITDA in Risk Assessment increased 4.0% to $106 million as a result of revenue growth and good expense management, partially offset by recent increases in hiring related to the previously announced talent realignment.
Table 4: Segment Results Summary and Adjusted EBITDA Reconciliation
(in millions)
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||
| September 30, 2016 | September 30, 2015 | Change | ||||||||||||||||||||||
| DA | RA | Total | DA | RA | Total | DA | RA | Total | ||||||||||||||||
| Revenues | $ | 317.3 | $ | 180.8 | $ | 498.1 | $ | 298.6 | $ | 171.8 | $ | 470.4 | 6.2 | % | 5.3 | % | 5.9 | % | ||||||
| Cost of revenues | (117.6 | ) | (52.1 | ) | (169.7 | ) | (114.6 | ) | (48.3 | ) | (162.9 | ) | 2.6 | % | 7.9 | % | 4.2 | % | ||||||
| SG&A | (55.4 | ) | (22.4 | ) | (77.8 | ) | (49.3 | ) | (21.3 | ) | (70.6 | ) | 12.1 | % | 5.5 | % | 10.2 | % | ||||||
| Depre- ciation and amor- tization of fixed and intangible assets | (45.1 | ) | (7.1 | ) | (52.2 | ) | (32.9 | ) | (6.8 | ) | (39.7 | ) | 37.0 | % | 3.8 | % | 31.3 | % | ||||||
| Invest- ment income and others, net | 0.6 | 1.5 | 2.1 | 17.9 | - | 17.9 | (96.7 | )% | 100.0 | % | (88.1 | )% | ||||||||||||
| Interest expense | NA | NA | (28.1 | ) | NA | NA | (33.0 | ) | NA | NA | (14.7 | )% | ||||||||||||
| Provision for income tax | NA | NA | (44.8 | ) | NA | NA | (57.9 | ) | NA | NA | (22.5 | )% | ||||||||||||
| Income from conti- nuing opera- tions | NA | NA | 127.6 | NA | NA | 124.2 | NA | NA | 2.7 | % | ||||||||||||||
| plus: Interest expense | NA | NA | 28.1 | NA | NA | 33.0 | NA | NA | (14.7 | )% | ||||||||||||||
| plus: Provision for income tax | NA | NA | 44.8 | NA | NA | 57.9 | NA | NA | (22.5 | )% | ||||||||||||||
| plus: Depre- ciation and amor- tization | 45.1 | 7.1 | 52.2 | 32.9 | 6.8 | 39.7 | 37.0 | % | 3.8 | % | 31.3 | % | ||||||||||||
| plus: Nonre- curring severance charges | 2.1 | - | 2.1 | - | - | - | 100.0 | % | - | % | 100.0 | % | ||||||||||||
| minus: Gain on sale of equity invest- ments | - | (1.5 | ) | (1.5 | ) | - | - | - | - | % | (100.0 | )% | (100.0 | )% | ||||||||||
| Adjusted EBITDA from conti- nuing opera- tions | $ | 147.0 | $ | 106.3 | $ | 253.3 | $ | 152.6 | $ | 102.2 | $ | 254.8 | (3.7 | )% | 4.0 | % | (0.6 | )% | ||||||
| Income from conti- nuing opera- tions margin | NA | NA | 25.6 | % | NA | NA | 26.4 | % | ||||||||||||||||
| Adjusted EBITDA from conti- nuing opera- tions margin | 46.3 | % | 58.8 | % | 50.9 | % | 51.1 | % | 59.5 | % | 54.2 | % | ||||||||||||
| Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||
| September 30, 2016 | September 30, 2015 | Change | ||||||||||||||||||||||
| DA | RA | Total | DA | RA | Total | DA | RA | Total | ||||||||||||||||
| Revenues | $ | 947.4 | $ | 541.7 | $ | 1,489.1 | $ | 768.9 | $ | 514.4 | $ | 1,283.3 | 23.2 | % | 5.3 | % | 16.0 | % | ||||||
| Cost of revenues | (362.6 | ) | (158.8 | ) | (521.4 | ) | (301.7 | ) | (149.6 | ) | (451.3 | ) | 20.2 | % | 6.1 | % | 15.5 | % | ||||||
| SG&A | (161.8 | ) | (62.6 | ) | (224.4 | ) | (142.5 | ) | (60.2 | ) | (202.7 | ) | 13.5 | % | 4.0 | % | 10.7 | % | ||||||
| Depre- ciation and amor- tization of fixed and intan- gible assets | (139.9 | ) | (21.2 | ) | (161.1 | ) | (92.8 | ) | (19.3 | ) | (112.1 | ) | 50.7 | % | 9.8 | % | 43.7 | % | ||||||
| Invest- ment income and others, net | 1.6 | 1.4 | 3.0 | 17.0 | 0.1 | 17.1 | (90.7 | )% | 735.4 | % | (82.4 | )% | ||||||||||||
| Interest expense | NA | NA | (91.7 | ) | NA | NA | (88.9 | ) | NA | NA | 3.0 | % | ||||||||||||
| Provision for income tax | NA | NA | (149.5 | ) | NA | NA | (151.1 | ) | NA | NA | (1.0 | )% | ||||||||||||
| Gain on derivative | - | - | - | 85.2 | - | 85.2 | (100.0 | )% | - | % | (100.0 | )% | ||||||||||||
| Income from conti- nuing opera- tions | NA | NA | 344.0 | NA | NA | 379.5 | NA | NA | (9.3 | )% | ||||||||||||||
| plus: Interest expense | NA | NA | 91.7 | NA | NA | 88.9 | NA | NA | 3.0 | % | ||||||||||||||
| plus: Provision for income tax | NA | NA | 149.5 | NA | NA | 151.1 | NA | NA | (1.0 | )% | ||||||||||||||
| plus: Depre- ciation and amor- tization | 139.9 | 21.2 | 161.1 | 92.8 | 19.3 | 112.1 | 50.7 | % | 9.8 | % | 43.7 | % | ||||||||||||
| plus: Nonre- curring severance charges | 2.1 | - | 2.1 | - | - | - | 100.0 | % | - | % | 100.0 | % | ||||||||||||
| minus: Gain on sale of equity invest- ments | - | (1.5 | ) | (1.5 | ) | - | - | - | - | % | (100.0 | )% | (100.0 | )% | ||||||||||
| minus: Nonre- curring items related to the Wood Mackenzie acquisition | - | - | - | (58.6 | ) | - | (58.6 | ) | (100.0 | )% | - | % | (100.0 | )% | ||||||||||
| Adjusted EBITDA from conti- nuing opera- tions | $ | 426.7 | $ | 320.2 | $ | 746.9 | $ | 368.3 | $ | 304.7 | $ | 673.0 | 15.8 | % | 5.1 | % | 11.0 | % | ||||||
| Income from conti- nuing opera- tions margin | NA | NA | 23.1 | % | NA | NA | 29.6 | % | ||||||||||||||||
| Adjusted EBITDA from conti- nuing opera- tions margin | 45.0 | % | 59.1 | % | 50.2 | % | 47.9 | % | 59.2 | % | 52.4 | % | ||||||||||||
Earnings Per Share
Diluted GAAP EPS from continuing operations was $0.74 for third-quarter 2016, an increase of 1.4%; the prior period included a $15.6 million gain on sale of warrants. Diluted adjusted EPS was $0.84 for third-quarter 2016, an increase of 7.7% compared with the same period in 2015. Adjusted EPS from continuing operations increased because of solid operations, lower interest expense, and a lower tax rate. The increases were partially offset by depreciation and amortization expense and the prior period gain on sale of warrants that did not recur in 2016.
Cash Flow
Net cash provided by operating activities was $464 million for the nine months ended September 30, 2016. Capital expenditures from continuing operations increased 0.8% to $88 million and were 5.9% of revenues for the nine months ended September 30, 2016. Free cash flow from continuing operations, excluding $75 million of taxes paid related to the sale of the healthcare business, was $429 million year-to-date, an increase of 12.8%.
Free cash flow from continuing operations represented 103.0% of income from continuing operations and 47.4% of adjusted EBITDA from continuing operations for the nine months ended September 30, 2016.
Share Repurchases and Financing Activities
The company repurchased 0.9 million shares for a total cost of $73 million in the quarter. At September 30, 2016, the company had $280 million remaining under its share repurchase authorization.
Conference Call
Verisk's management team will host a live audio webcast on Wednesday, November 2, 2016, at 8:30 a.m. EDT (5:30 a.m. PDT, 12:30 p.m. GMT) to discuss the financial results and business highlights. All interested parties are invited to listen to the live event via webcast on the Verisk investor website at http://investor.verisk.com. The discussion is also available through dial-in number 1-877-755-3792 for U.S./Canada participants or 512-961-6560 for international participants.
A replay of the webcast will be available for 30 days on the Verisk investor website and also through the conference call number 1-855-859-2056 for U.S./Canada participants or 404-537-3406 for international participants using conference ID #1363417.
About Verisk Analytics
Verisk Analytics (Nasdaq:VRSK) is a leading data analytics provider serving customers in insurance, natural resources, and financial services. Using advanced technologies to collect and analyze billions of records, Verisk Analytics draws on unique data assets and deep domain expertise to provide first-to-market innovations that are integrated into customer workflows. Verisk offers predictive analytics and decision support solutions to customers in rating, underwriting, claims, catastrophe and weather risk, global risk analytics, natural resources intelligence, economic forecasting, and many other fields. Around the world, Verisk Analytics helps customers protect people, property, and financial assets.
Headquartered in Jersey City, N.J., Verisk Analytics operates in 23 countries and is a member of Standard & Poor's S&P 500® Index. In 2016, Forbes magazine named Verisk Analytics to its World's Most Innovative Companies list and to its America's Best Large Employers list. Verisk is one of only 14 companies to appear on both lists. For more information, please visit www.verisk.com.
Contact:
Investor Relations
David Cohen
Director, Investor Relations and Strategic Finance
Verisk Analytics, Inc.
201-469-2174
david.e.cohen@verisk.com
Media
Rich Tauberman
MWW Group (for Verisk Analytics)
202-600-4546
rtauberman@mww.com
Forward-Looking Statements
This release contains forward-looking statements. These statements relate to future events or to future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as "may," "could," "expect," "intend," "plan," "target," "seek," "anticipate," "believe," "estimate," "predict," "potential," or "continue" or the negative of these terms or other comparable terminology. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors that are, in some cases, beyond our control and that could materially affect actual results, levels of activity, performance, or achievements.
Other factors that could materially affect actual results, levels of activity, performance, or achievements can be found in Verisk's quarterly reports on Form 10-Q, annual reports on Form 10-K, and current reports on Form 8-K filed with the Securities and Exchange Commission. If any of these risks or uncertainties materialize or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we projected. Any forward-looking statement in this release reflects our current views with respect to future events and is subject to these and other risks, uncertainties, and assumptions relating to our operations, results of operations, growth strategy, and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise.
Notes Regarding the Use of Non-GAAP Financial Measures
The company has provided certain non-GAAP financial information as supplemental information regarding its operating results. These measures are not in accordance with, or an alternative for, U.S. GAAP and may be different from non-GAAP measures reported by other companies. The company believes that its presentation of non-GAAP measures, such as organic constant currency revenue, adjusted EBITDA, adjusted EBITDA margin, adjusted net income from continuing operations, adjusted EPS, and free cash flow, provides useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. In addition, the company's management uses these measures for reviewing the financial results of the company and for budgeting and planning purposes.
Our operating results reported in U.S. dollars are affected by foreign currency exchange rate fluctuations because the underlying foreign currencies in which we transact change in value over time compared to the U.S. dollar; accordingly, we present certain constant currency financial information to provide a framework to assess how our businesses performed excluding the impact of foreign currency exchange rate fluctuations. We use the term "constant currency" to present results that have been adjusted to exclude foreign currency impact. Foreign currency impact represents the difference in results that are attributable to fluctuations in the currency exchange rates used to convert the results for businesses where the functional currency is not the U.S. dollar. This impact is calculated by translating comparable prior period year results at the currency exchange rates used in the current period, rather than the exchange rates in effect during the prior period.
Adjusted EBITDA is a financial measure that management uses to evaluate the performance of our segments. In all periods shown here and going forward, the company defines "adjusted EBITDA" as net income from continuing operations before interest expense, provision for income taxes, and depreciation and amortization expense, non-recurring severance charges, gain on sale of equity investments, and excluding second-quarter 2015 nonrecurring items related to the Wood Mackenzie acquisition.
Although securities analysts, lenders, and others frequently use EBITDA in their evaluation of companies, EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our statement of cash flow reported under U.S. GAAP. Management uses adjusted EBITDA in conjunction with traditional U.S. GAAP operating performance measures as part of its overall assessment of company performance. Some of these limitations are as follows:
- Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments.
- Adjusted EBITDA does 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 adjusted EBITDA does not reflect any cash requirements for such replacements.
- Other companies in our industry may calculate adjusted EBITDA differently than we do, limiting the usefulness of their calculations as comparative measures.
See Table 4, above, for a reconciliation of adjusted EBITDA to income from continuing operations, Table 5 for a reconciliation of adjusted net income to income from continuing operations, and Table 6 for a reconciliation of free cash flow from continuing operations to net cash provided by operating activities.
Table 5: Adjusted Net Income from Continuing Operations Reconciliation
(in millions, except per share amounts)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||
| 2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||
| Income from continuing operations | $ | 127.6 | $ | 124.2 | 2.7 | % | $ | 344.0 | $ | 379.5 | (9.3 | )% | |||||||||
| plus: Amortization of intangible assets | 22.7 | 12.6 | 70.4 | 43.0 | |||||||||||||||||
| less: Income tax effect on amortization of intangible assets | (5.9 | ) | (3.3 | ) | (18.3 | ) | (12.1 | ) | |||||||||||||
| less: Nonrecurring items related to the Wood Mackenzie acquisition | - | - | - | (45.2 | ) | ||||||||||||||||
| less: Income tax effect on one-time items related to the Wood Mackenzie acquisition | - | - | - | (10.7 | ) | ||||||||||||||||
| Adjusted net income from continuing operations | $ | 144.4 | $ | 133.5 | 8.1 | % | $ | 396.1 | $ | 354.5 | 11.7 | % | |||||||||
| Basic adjusted EPS from continuing operations | $ | 0.85 | $ | 0.79 | 7.6 | % | $ | 2.35 | $ | 2.17 | 8.3 | % | |||||||||
| Diluted adjusted EPS from continuing operations | $ | 0.84 | $ | 0.78 | 7.7 | % | $ | 2.31 | $ | 2.12 | 9.0 | % | |||||||||
| Weighted average shares outstanding (in millions) | |||||||||||||||||||||
| Basic | 168.9 | 168.7 | 168.5 | 163.7 | |||||||||||||||||
| Diluted | 171.8 | 172.2 | 171.5 | 167.1 | |||||||||||||||||
Table 6: Free Cash Flow Reconciliation
(in millions)
| Nine Months Ended | ||||||||||||||||||
| September 30, | ||||||||||||||||||
| 2016 | 2015 | Change | ||||||||||||||||
| Net cash provided by operating activities | $ | 463.7 | $ | 520.0 | (10.8 | )% | ||||||||||||
| less: Net cash provided by operating activities from discontinued operations | (21.4 | ) | (52.5 | ) | (59.2 | )% | ||||||||||||
| Capital expenditures | $ | (98.6 | ) | $ | (105.7 | ) | (6.8 | )% | ||||||||||
| less: Capital expenditures from discontinued operations | 10.6 | 18.5 | (42.5 | )% | ||||||||||||||
| less: Capital expenditures from continuing operations | (88.0 | ) | (87.2 | ) | 0.8 | % | ||||||||||||
| Free cash flow from continuing operations | $ | 354.3 | $ | 380.3 | (6.8 | )% | ||||||||||||
Attached Financial Statements
Please refer to the full Form 10-Q filing for the complete financial statements and related notes.
VERISK ANALYTICS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
As of September 30, 2016, and December 31, 2015
| 2016 | 2015 | ||||||
| (In thousands, except for share and per share data) | |||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 164,787 | $ | 138,348 | |||
| Available-for-sale securities | 3,457 | 3,576 | |||||
| Accounts receivable, net of allowance for doubtful accounts of $3,119 and $2,642, respectively | 229,939 | 250,947 | |||||
| Prepaid expenses | 28,616 | 34,126 | |||||
| Income taxes receivable | 11,236 | 48,596 | |||||
| Other current assets | 26,266 | 52,913 | |||||
| Current assets held-for-sale | - | 76,063 | |||||
| Total current assets | 464,301 | 604,569 | |||||
| Noncurrent assets: | |||||||
| Fixed assets, net | 355,867 | 350,311 | |||||
| Intangible assets, net | 1,069,089 | 1,245,083 | |||||
| Goodwill | 2,632,178 | 2,753,026 | |||||
| Pension assets | 42,524 | 32,922 | |||||
| Other assets | 121,092 | 25,845 | |||||
| Noncurrent assets held-for-sale | - | 581,896 | |||||
| Total assets | $ | 4,685,051 | $ | 5,593,652 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable and accrued liabilities | $ | 192,301 | $ | 222,112 | |||
| Short-term debt and current portion of long-term debt | 6,899 | 874,811 | |||||
| Pension and postretirement benefits, current | 1,831 | 1,831 | |||||
| Deferred revenues | 355,459 | 340,833 | |||||
| Current liabilities held-for-sale | - | 39,670 | |||||
| Total current liabilities | 556,490 | 1,479,257 | |||||
| Noncurrent liabilities: | |||||||
| Long-term debt | 2,279,443 | 2,270,904 | |||||
| Pension benefits | 12,526 | 12,971 | |||||
| Postretirement benefits | 1,407 | 1,981 | |||||
| Deferred income taxes, net | 305,694 | 329,175 | |||||
| Other liabilities | 54,061 | 58,360 | |||||
| Noncurrent liabilities held-for-sale | - | 68,993 | |||||
| Total liabilities | 3,209,621 | 4,221,641 | |||||
| Commitments and contingencies | |||||||
| Stockholders' equity: | |||||||
| Common stock, $.001 par value; 2,000,000,000 shares authorized; 544,003,038 shares issued and 168,340,643 and 169,424,981 shares outstanding, respectively | 137 | 137 | |||||
| Additional paid-in capital | 2,100,989 | 2,023,390 | |||||
| Treasury stock, at cost, 375,662,395 and 374,578,057 shares, respectively | (2,750,440 | ) | (2,571,190 | ) | |||
| Retained earnings | 2,643,678 | 2,161,726 | |||||
| Accumulated other comprehensive losses | (518,934 | ) | (242,052 | ) | |||
| Total stockholders' equity | 1,475,430 | 1,372,011 | |||||
| Total liabilities and stockholders' equity | $ | 4,685,051 | $ | 5,593,652 | |||
VERISK ANALYTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three and Nine Months Ended September 30, 2016 and 2015
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||
| (In thousands, except for share and per share data) | |||||||||||||||
| Revenues | $ | 498,081 | $ | 470,408 | $ | 1,489,077 | $ | 1,283,300 | |||||||
| Expenses: | |||||||||||||||
| Cost of revenues (exclusive of items shown separately below) | 169,665 | 162,874 | 521,408 | 451,298 | |||||||||||
| Selling, general and administrative | 77,814 | 70,642 | 224,408 | 202,692 | |||||||||||
| Depreciation and amortization of fixed assets | 29,501 | 27,105 | 90,776 | 69,169 | |||||||||||
| Amortization of intangible assets | 22,679 | 12,639 | 70,355 | 42,998 | |||||||||||
| Total expenses | 299,659 | 273,260 | 906,947 | 766,157 | |||||||||||
| Operating income | 198,422 | 197,148 | 582,130 | 517,143 | |||||||||||
| Other income (expense): | |||||||||||||||
| Investment income and others, net | 2,124 | 17,894 | 3,014 | 17,134 | |||||||||||
| Gain on derivative instruments | - | - | - | 85,187 | |||||||||||
| Interest expense | (28,150 | ) | (33,003 | ) | (91,617 | ) | (88,927 | ) | |||||||
| Total other income (expense), net | (26,026 | ) | (15,109 | ) | (88,603 | ) | 13,394 | ||||||||
| Income from continuing operations before income taxes | 172,396 | 182,039 | 493,527 | 530,537 | |||||||||||
| Provision for income taxes | (44,819 | ) | (57,858 | ) | (149,484 | ) | (151,066 | ) | |||||||
| Income from continuing operations | 127,577 | 124,181 | 344,043 | 379,471 | |||||||||||
| Discontinued operations | |||||||||||||||
| Income from discontinued operations | - | 11,750 | 256,525 | 23,770 | |||||||||||
| Provision for income taxes from discontinued operations | - | (4,117 | ) | (118,616 | ) | (9,421 | ) | ||||||||
| Income from discontinued operations | - | 7,633 | 137,909 | 14,349 | |||||||||||
| Net income | $ | 127,577 | $ | 131,814 | $ | 481,952 | $ | 393,820 | |||||||
| Basic net income per share: | |||||||||||||||
| Income from continuing operations | $ | 0.76 | $ | 0.74 | $ | 2.04 | $ | 2.32 | |||||||
| Income from discontinued operations | - | 0.04 | 0.82 | 0.09 | |||||||||||
| Basic net income per share | $ | 0.76 | $ | 0.78 | $ | 2.86 | $ | 2.41 | |||||||
| Diluted net income per share: | |||||||||||||||
| Income from continuing operations | $ | 0.74 | $ | 0.73 | $ | 2.01 | $ | 2.27 | |||||||
| Income from discontinued operations | - | 0.04 | 0.80 | 0.09 | |||||||||||
| Diluted net income per share | $ | 0.74 | $ | 0.77 | $ | 2.81 | $ | 2.36 | |||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 168,874,129 | 168,739,437 | 168,541,399 | 163,656,387 | |||||||||||
| Diluted | 171,785,900 | 172,171,337 | 171,495,189 | 167,079,550 | |||||||||||
VERISK ANALYTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Nine Months Ended September 30, 2016 and 2015
| 2016 | 2015 | ||||||
| (In thousands) | |||||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 481,952 | $ | 393,820 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization of fixed assets | 97,832 | 86,571 | |||||
| Amortization of intangible assets | 76,259 | 61,496 | |||||
| Amortization of debt issuance costs and original issue discount | 3,999 | 11,770 | |||||
| Allowance for doubtful accounts | 1,483 | 1,151 | |||||
| KSOP compensation expense | 11,386 | 10,575 | |||||
| Stock based compensation | 23,822 | 25,471 | |||||
| Gain on derivative instruments | - | (85,187 | ) | ||||
| Gain on sale of discontinued operations | (269,385 | ) | - | ||||
| Realized loss on available-for-sale securities, net | 311 | 19 | |||||
| Gain on exercise of common stock warrants | (1,464 | ) | (15,602 | ) | |||
| Deferred income taxes | (1,733 | ) | 1,498 | ||||
| Loss (gain) on disposal of fixed assets, net | 851 | (2 | ) | ||||
| Excess tax benefits from exercised stock options and restricted stock awards | (20,763 | ) | (18,214 | ) | |||
| Changes in assets and liabilities, net of effects from acquisitions: | |||||||
| Accounts receivable | 32,608 | 39,651 | |||||
| Prepaid expenses and other assets | (15,053 | ) | 2,662 | ||||
| Income taxes | 45,258 | 44,716 | |||||
| Accounts payable and accrued liabilities | (7,205 | ) | (1,175 | ) | |||
| Deferred revenues | 14,655 | (30,772 | ) | ||||
| Pension and postretirement benefits | (7,972 | ) | (10,552 | ) | |||
| Other liabilities | (3,170 | ) | 2,148 | ||||
| Net cash provided by operating activities | 463,671 | 520,044 | |||||
| Cash flows from investing activities: | |||||||
| Acquisitions, net of cash acquired of $1,034 and $35,398, respectively | (45,161 | ) | (2,811,759 | ) | |||
| Purchase of non-controlling interest in non-public companies | - | (101 | ) | ||||
| Sale of non-controlling equity investments in non-public companies | 8,464 | 101 | |||||
| Proceeds from sale of discontinued operations | 719,374 | - | |||||
| Escrow funding associated with acquisition | (4,444 | ) | (78,694 | ) | |||
| Proceeds from the settlement of derivative instruments | - | 85,187 | |||||
| Capital expenditures | (98,570 | ) | (105,765 | ) | |||
| Purchases of available-for-sale securities | (158 | ) | (54 | ) | |||
| Proceeds from sales and maturities of available-for-sale securities | 441 | 281 | |||||
| Other investing activities, net | (620 | ) | - | ||||
| Cash received from exercise of common stock warrants | - | 15,602 | |||||
| Net cash provided by (used in) investing activities | 579,326 | (2,895,202 | ) | ||||
| Cash flows from financing activities: | |||||||
| Proceeds from issuance of long-term debt, net of original issue discount | - | 1,243,966 | |||||
| Repayment of short-term debt, net | (870,000 | ) | (90,000 | ) | |||
| Proceeds from issuance of short-term debt with original maturities greater than three months | - | 830,000 | |||||
| Repayment of current portion of long-term debt | - | (170,000 | ) | ||||
| Repayment of long-term debt | - | (50,000 | ) | ||||
| Payment of debt issuance costs | (475 | ) | (23,942 | ) | |||
| Repurchases of common stock | (182,533 | ) | - | ||||
| Excess tax benefits from exercised stock options and restricted stock awards | 20,763 | 18,214 | |||||
| Proceeds from stock options exercised | 32,591 | 31,283 | |||||
| Proceeds from issuance of stock as part of a public offering | - | 720,848 | |||||
| Net share settlement of restricted stock awards | (3,065 | ) | (2,350 | ) | |||
| Other financing activities, net | (4,399 | ) | (4,784 | ) | |||
| Net cash (used in) provided by financing activities | (1,007,118 | ) | 2,503,235 | ||||
| Effect of exchange rate changes | (9,440 | ) | 1,389 | ||||
| Increase in cash and cash equivalents | 26,439 | 129,466 | |||||
| Cash and cash equivalents, beginning of period | 138,348 | 39,359 | |||||
| Cash and cash equivalents, end of period | $ | 164,787 | $ | 168,825 | |||
| Supplemental disclosures: | |||||||
| Taxes paid | $ | 221,419 | $ | 111,867 | |||
| Interest paid | $ | 75,845 | $ | 56,583 | |||
| Noncash investing and financing activities: | |||||||
| Repurchases of common stock included in accounts payable and accrued liabilities | $ | 7,274 | $ | - | |||
| Promissory note received for sale of discontinued operations | $ | 82,900 | $ | - | |||
| Equity interest received for sale of discontinued operations | $ | 8,400 | $ | - | |||
| Deferred tax liability established on date of acquisition | $ | 3,765 | $ | 258,976 | |||
| Tenant improvement included in other liabilities | $ | 74 | $ | 1,168 | |||
| Capital lease obligations | $ | 11,502 | $ | 1,158 | |||
| Capital expenditures included in accounts payable and accrued liabilities | $ | 2,336 | $ | 605 | |||