Verisk Analytics, Inc., Reports Fourth-Quarter 2014 Financial Results

JERSEY CITY, N.J., February 24, 2015 — Verisk Analytics, Inc. (Nasdaq:VRSK), a leading source of information about risk, today announced results for the fiscal quarter and year ended December 31, 2014:

Financial Highlights
  • Total revenue from continuing operations increased 11.6% in the fourth quarter and 9.5% for fiscal year 2014. Excluding the impact of recent acquisitions, revenue from continuing operations grew 11.4% for fourth-quarter 2014 and 9.4% for fiscal year 2014. Revenue growth from continuing operations in the fourth quarter was driven by a 15.2% increase in Decision Analytics and 5.5% growth in Risk Assessment.
  • EBITDA from continuing operations increased 13.4% to $214.6 million for fourth-quarter 2014, with EBITDA margin, from continuing operations, of 46.2%. For fiscal year 2014, EBITDA from continuing operations increased 7.8% to $803.0 million, with EBITDA margin, from continuing operations, of 46.0%. Excluding professional services fees associated with the regulatory review of the EVT transaction and fourth-quarter Risk Assessment reorganization costs, EBITDA margin, from continuing operations, was 46.6% for fiscal year 2014.
  • Diluted GAAP earnings per share (diluted GAAP EPS) were $0.58 for fourth-quarter 2014. Diluted adjusted EPS from continuing operations were $0.65 for fourth-quarter 2014 versus $0.55 in fourth-quarter 2013, representing growth of 18.2%. For the fiscal year ended December 31, 2014, diluted GAAP EPS were $2.37 and diluted adjusted EPS from continuing operations were $2.40. Diluted adjusted EPS growth for fiscal year 2014 was 8.6%
  • Free cash flow for fiscal year 2014, adjusted for the sale of our mortgage services business, increased 3.4% to $329.5 million.
  • In fourth-quarter 2014, the company repurchased a total of $90.5 million under its ongoing repurchase program and also entered into an Accelerated Share Repurchase (ASR) of $500.0 million. For fiscal year 2014, in addition to the ASR, total open market repurchases were $275.4 million, and as of December 31, 2014, the company had $189.8 million remaining under its share repurchase authorization.

Scott Stephenson, president and chief executive officer, said, “Our fourth-quarter results were excellent, reflecting solid execution across our businesses. For the full year, all our major verticals delivered very strong growth, in line with our expectations. Our profitability in 2014 was good, even as we continued to invest in new and existing solutions and improved operational processes at Verisk Health.”

“We were very pleased to have returned capital to our shareholders in 2014 through share repurchases, including through the special accelerated share repurchase in December. We made several small acquisitions in 2014 related to our insurance, financial and emerging supply chain businesses and have ample capacity and interest in continuing our disciplined M&A agenda in addition to our organic growth opportunities,” concluded Stephenson.

Table 1: Summary of Results for 2014
(in thousands, except per share amounts)

 

Three Months Ended

 

 

 

 

Twelve Months Ended

 

 

 

 

December 31,

 

 

 

 

December 31,

 

 

 

 

2014

 

2013

 

Change

 

2014

 

2013

 

Change

Revenues from continuing operations

$

464,864

 

 

$

416,723

 

 

11.6

%

 

$

1,746,726

 

 

$

1,595,703

 

 

9.5

%

EBITDA from continuing operations

$

214,582

 

 

$

189,294

 

 

13.4

%

 

$

802,980

 

 

$

744,807

 

 

7.8

%

Net income

$

97,370

 

 

$

87,223

 

 

11.6

%

 

$

400,042

 

 

$

348,380

 

 

14.8

%

Adjusted net income from continuing operations

$

108,145

 

 

$

95,284

 

 

13.5

%

 

$

406,124

 

 

$

381,833

 

 

6.4

%

Diluted GAAP EPS

$

0.58

 

 

$

0.51

 

 

13.7

%

 

$

2.37

 

 

$

2.02

 

 

17.3

%

Diluted adjusted EPS from continuing operations

$

0.65

 

 

$

0.55

 

 

18.2

%

 

$

2.40

 

 

$

2.21

 

 

8.6

%

 

Revenue
Revenue from continuing operations grew 11.6% for the quarter ended December 31, 2014 and 9.5% for fiscal year 2014. Excluding the effect of recent acquisitions, revenue from continuing operations grew 11.4% and 9.4% for fourth-quarter and fiscal year 2014, respectively. For fourth-quarter 2014, Decision Analytics revenue from continuing operations represented approximately 65% of total revenue from continuing operations and 63% for fiscal year 2014.


Table 2A: Decision Analytics Revenues by Category
(in thousands)

 

Three Months Ended

 

 

 

 

Twelve Months Ended

 

 

 

 

December 31,

 

 

 

 

December 31,

 

 

 

 

2014

 

2013

 

Change

 

2014

 

2013

 

Change

Insurance

$

155,000

 

 

$

138,045

 

 

12.3

%

 

$

598,757

 

 

$

539,150

 

 

11.1

%

Financial services

 

28,652

 

 

 

22,888

 

 

25.2

%

 

 

96,763

 

 

 

81,113

 

 

19.3

%

Healthcare

 

94,740

 

 

 

77,790

 

 

21.8

%

 

 

315,628

 

 

 

271,538

 

 

16.2

%

Specialized markets

 

21,539

 

 

 

21,651

 

 

(0.5

)%

 

 

84,926

 

 

 

85,626

 

 

(0.8

)%

Total Decision Analytics

$

299,931

 

 

$

260,374

 

 

15.2

%

 

$

1,096,074

 

 

$

977,427

 

 

12.1

%

Within the Decision Analytics segment, revenue from continuing operations grew 15.2% for fourth-quarter 2014. Excluding the effect of recent acquisitions, Decision Analytics revenue from continuing operations grew 15.0% for fourth-quarter 2014. Revenue growth in the quarter was driven by strong performances in financial services and healthcare and very good growth in insurance.

Within the insurance category, revenue growth was 12.3% for the fourth quarter of 2014, driven by the increased adoption of existing and new solutions and annual invoice increases for certain solutions. Underwriting solutions led the growth, followed by catastrophe modeling and loss quantification solutions. Insurance fraud claims solutions also contributed to growth.

In the financial services category, revenue from continuing operations increased 25.2% in fourth-quarter 2014. The revenue increase was driven by demand for our analytics services and solutions.

In the healthcare category, revenue in the fourth quarter grew 21.8%, with growth across all divisions, led by payment accuracy solutions.

In the specialized markets category, revenue declined 0.5% in fourth-quarter 2014. Growth in commercial weather and climate analytics and environmental health and safety solutions was offset by lower activity related to government customers.

Table 2B: Risk Assessment Revenues by Category
(in thousands)

 

Three Months Ended

 

 

 

 

Twelve Months Ended

 

 

 

 

December 31,

 

 

 

 

December 31,

 

 

 

 

2014

 

2013

 

Change

 

2014

 

2013

 

Change

Industry-standard insurance programs

$

125,224

 

 

$

119,157

 

 

5.1

%

 

$

495,065

 

 

$

471,130

 

 

5.1

%

Property-specific rating and underwriting information

 

39,709

 

 

 

37,192

 

 

6.8

%

 

 

155,587

 

 

 

147,146

 

 

5.7

%

Total Risk Assessment

$

164,933

 

 

$

156,349

 

 

5.5

%

 

$

650,652

 

 

$

618,276

 

 

5.2

%

Within the Risk Assessment segment, revenue grew 5.5% for the quarter. Revenue growth of 5.1% in industry-standard insurance programs was primarily due to the continued annual effect of growth in 2014 invoices effective from January 1.

Property-specific rating and underwriting information revenue increased 6.8% in the fourth quarter. Growth was a result of new sales with higher committed volumes.

Cost of Revenue
Cost of revenue from continuing operations increased 13.8% in fourth-quarter 2014 as compared with 2013 and 13.5% excluding recent acquisitions. The year-over-year increase relates primarily to additional investments in data and people, especially in Decision Analytics to support business growth and investments to drive future growth. For fourth-quarter 2014, cost of revenue from continuing operations increased 12.2% for Risk Assessment and increased 14.4% for Decision Analytics. Excluding recent acquisitions, cost of revenue from continuing operations for Decision Analytics increased 14.0% in fourth-quarter 2014.

For fiscal year 2014, cost of revenue from continuing operations increased 15.1%, and 15.0% excluding recent acquisitions. For fiscal year 2014, cost of revenue from continuing operations increased 7.0% for Risk Assessment and 18.8% for Decision Analytics. Excluding recent acquisitions, cost of revenue from continuing operations for Decision Analytics increased 18.7% in fiscal year 2014.

Cost of revenue in fourth-quarter 2014 and fiscal year 2014 included non-recurring $4.8 million severance charges related to reorganization in certain business units in Risk Assessment. Excluding these charges, cost of revenue growth in Risk Assessment was 4.5% in fiscal year 2014.

Selling, General, and Administrative
Selling, general, and administrative expense, or SG&A, from continuing operations decreased 1.3% in fourth-quarter 2014 and decreased 1.5% excluding recent acquisitions. The decrease in the fourth-quarter relates primarily to lower headcount in Decision Analytics. In fourth-quarter 2014, SG&A increased 0.8% for Risk Assessment. SG&A from continuing operations declined 2.3% for Decision Analytics in the fourth-quarter. Excluding recent acquisitions, SG&A from continuing operations for Decision Analytics decreased 2.5% in fourth-quarter 2014.

For fiscal year 2014, SG&A from continuing operations decreased 0.7% and 0.8% excluding recent acquisitions. SG&A from continuing operations decreased 4.6% for Risk Assessment and increased 1.3% for Decision Analytics for fiscal year 2014. Excluding recent acquisitions, SG&A from continuing operations for Decision Analytics increased 1.2% in fiscal year 2014.

SG&A in fourth-quarter and fiscal year 2014 included $1.7 million and $6.9 million, respectively, of professional services costs related to seeking regulatory clearance of the previously announced EVT transaction.

EBITDA
For fourth-quarter 2014, EBITDA from continuing operations grew 13.4% to $214.6 million, with an EBITDA margin, from continuing operations, of 46.2%. For fiscal year 2014, EBITDA from continuing operations grew 7.8% to $803.0 million, with an EBITDA margin, from continuing operations, of 46.0%.

Excluding professional services fees of $1.7 million in fourth-quarter 2014 and $6.9 million for full year 2014 as well as Risk Assessment reorganization costs of $4.8 million in fourth-quarter 2014, EBITDA margin from continuing operations was 47.6% in fourth-quarter and 46.6% for fiscal year 2014.

Table 3: Segment EBITDA from Continuing Operations
(in thousands)

 

Three Months Ended

 

 

 

 

Twelve Months Ended

 

 

 

 

December 31,

 

 

 

 

December 31,

 

 

 

 

2014

 

2013

 

Change

 

2014

 

2013

 

Change

Decision Analytics

$

123,189

 

 

$

100,188

 

 

23.0

%

 

$

434,210

 

 

$

397,876

 

 

9.1

%

EBITDA margin, from continuing operations

 

41.1

%

 

 

38.5

%

 

 

 

 

 

39.6

%

 

 

40.7

%

 

 

 

Risk Assessment

$

91,393

 

 

$

89,106

 

 

2.6

%

 

$

368,770

 

 

$

346,931

 

 

6.3

%

EBITDA margin, from continuing operations

 

55.4

%

 

 

57.0

%

 

 

 

 

 

56.7

%

 

 

56.1

%

 

 

 

Total EBITDA from continuing operations

$

214,582

 

 

$

189,294

 

 

13.4

%

 

$

802,980

 

 

$

744,807

 

 

7.8

%

Total EBITDA margin, from continuing operations

 

46.2

%

 

 

45.4

%

 

 

 

 

 

46.0

%

 

 

46.7

%

 

 

 

Decision Analytics EBITDA from continuing operations grew 23.0% in fourth-quarter 2014, and Risk Assessment EBITDA grew 2.6% versus the same period in the previous year. For fiscal year 2014, Decision Analytics EBITDA from continuing operations grew 9.1%, and Risk Assessment EBITDA grew 6.3%.

The fourth-quarter 2014 EBITDA margin, from continuing operations, for Decision Analytics increased to 41.1% from 38.5% in fourth-quarter 2013. The fiscal year 2014 EBITDA margin from continuing operations in Decision Analytics was 39.6%, versus 40.7% in fiscal year 2013.

The fourth-quarter 2014 EBITDA margin in Risk Assessment decreased to 55.4% from 57.0% in fourth-quarter 2013, but excluding the reorganization costs, EBITDA margin in Risk Assessment was 58.3% and 57.4% in fourth-quarter 2014 and fiscal year 2014, respectively. The fiscal year 2014 EBITDA margin in Risk Assessment was 56.7% versus 56.1% in fiscal year 2013. These decreases related to the reorganization costs discussed previously.

Net Income and Adjusted Net Income
Net income increased 11.6% in fourth-quarter 2014 and grew 14.8% for fiscal year 2014. Adjusted net income from continuing operations increased 13.5% for fourth-quarter 2014 and increased 6.4% for fiscal year 2014.

Net Cash Provided by Operating Activities and Capital Expenditures
For the twelve-month period ended December 31, 2014, free cash flow, defined as cash provided by operating activities less capital expenditures, adjusted for the sale of our mortgage services business, grew 3.4% compared with the prior-year period to $329.5 million and represented 41.0% of EBITDA from continuing operations in the twelve months of 2014.

For the twelve-month period ended December 31, 2014, net cash provided by operating activities was $489.5 million, a decrease of $17.5 million, or 3.4%, compared with the same period in 2013 due to shifts in timing of tax benefits previously discussed as well other timing items. Adjusted for the sale of our mortgage services business, cash provided by operations year-to-date through December 31, 2014 grew 3.1%.

Capital expenditures were $146.8 million in the twelve months ended December 31, 2014, an increase of $0.8 million over the same period in 2013. Capital expenditures were 8.4% of revenue for the twelve months ended December 31, 2014.

Share Repurchases and Financing Activities
The company continued to balance its internal investment and acquisition initiatives with share repurchases. In fourth-quarter 2014, the company executed a $500.0 million Accelerated Share Repurchase and also repurchased an additional $90.5 million in shares prior to the announcement of the ASR.  The company repurchased a total of 7.8 million shares in the quarter, with additional shares under the ASR expected to be delivered to the company upon completion in 2015. For the shares purchased in the quarter, the average price paid was $62.54. At December 31, 2014, the company had $189.8 million remaining under its share repurchase authorization.

Conference Call
Verisk’s management team will host a live audio webcast on Wednesday, February 25, 2014, at 8:30 a.m. Eastern time (5:30 a.m. Pacific time) 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 #66765158.

About Verisk Analytics
Verisk Analytics (Nasdaq:VRSK) is a leading provider of information about risk to professionals in insurance, healthcare, financial services, government, and risk management. Using advanced technologies to collect and analyze billions of records, Verisk Analytics draws on vast industry expertise and unique proprietary data sets to provide predictive analytics and decision support solutions in fraud prevention, actuarial science, insurance coverages, fire protection, catastrophe and weather risk, data management, and many other fields. In the United States and around the world, Verisk Analytics helps customers protect people, property, and financial assets. For more information, visit www.verisk.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 EBITDA, EBITDA margin, adjusted net income, and adjusted EPS, 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.

Table 4 below sets forth a reconciliation of net income to EBITDA from continuing operations based on our historical results:

Table 4: EBITDA from Continuing Operations Reconciliation
(in thousands)

 

Three Months Ended

 

 

 

 

Twelve Months Ended

 

 

 

 

December 31,

 

 

 

 

December 31,

 

 

 

 

2014

 

2013

 

Change

 

2014

 

2013

 

Change

Net income

$

97,370

 

 

$

87,223

 

 

11.6

%

 

$

400,042

 

 

$

348,380

 

 

14.8

%

Depreciation and amortization of fixed and intangible assets

 

37,301

 

 

 

33,841

 

 

10.2

%

 

 

142,376

 

 

 

129,931

 

 

9.6

%

Interest expense

 

17,588

 

 

 

17,650

 

 

(0.4

)%

 

 

69,984

 

 

 

76,136

 

 

(8.1

)%

Provision for income taxes

 

60,383

 

 

 

51,428

 

 

17.4

%

 

 

219,755

 

 

 

196,426

 

 

11.9

%

less: Discontinued operations, net of tax

 

1,940

 

 

 

(848

)

 

(328.8

)%

 

 

(29,177

)

 

 

(6,066

)

 

381.0

%

EBITDA from continuing operations

$

214,582

 

 

$

189,294

 

 

13.4

%

 

$

802,980

 

 

$

744,807

 

 

7.8

%

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 “EBITDA” as net income before interest expense, income taxes, and depreciation and amortization of fixed and intangible assets.

Although EBITDA is frequently used by securities analysts, lenders, and others 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 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:

  • EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments.
  • EBITDA does not reflect changes in, or cash requirement 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 does not reflect any cash requirements for such replacements.
  • Other companies in our industry may calculate EBITDA differently than we do, limiting the usefulness of their calculations as comparative measures.

Table 5, below, sets forth a reconciliation of net income from continuing operations to adjusted net income from continuing operations and adjusted EPS from continuing operations:

Table 5: Net Income and Adjusted Net Income from Continuing Operations
(in thousands, except per share amounts)

 

Three Months Ended

 

 

 

 

Twelve Months Ended

 

 

 

 

December 31,

 

 

 

 

December 31,

 

 

 

 

2014

 

2013

 

Change

 

2014

 

2013

 

Change

Net Income

$

97,370

 

 

$

87,223

 

 

11.6

%

 

$

400,042

 

 

$

348,380

 

 

14.8

%

plus:  Amortization of intangibles

 

14,250

 

 

 

14,370

 

 

 

 

 

 

56,870

 

 

 

63,741

 

 

 

 

less:  Income tax effect on amortization of intangibles

 

(5,415

)

 

 

(5,461

)

 

 

 

 

 

(21,611

)

 

 

(24,222

)

 

 

 

less:  Discontinued operations, net of tax

 

1,940

 

 

 

(848

)

 

 

 

 

 

(29,177

)

 

 

(6,066

)

 

 

 

Adjusted net income from continuing operations

$

108,145

 

 

$

95,284

 

 

13.5

%

 

$

406,124

 

 

$

381,833

 

 

6.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic adjusted EPS from continuing operations

$

0.66

 

 

$

0.57

 

 

15.8

%

 

$

2.45

 

 

$

2.27

 

 

7.9

%

Diluted adjusted EPS from continuing operations

$

0.65

 

 

$

0.55

 

 

18.2

%

 

$

2.40

 

 

$

2.21

 

 

8.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding (in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

163.8

 

 

 

167.9

 

 

 

 

 

 

165.8

 

 

 

168.0

 

 

 

 

Diluted

 

167.1

 

 

 

171.7

 

 

 

 

 

 

169.1

 

 

 

172.3

 

 

 

 

 

Attached Financial Statements
Please refer to the full Form 10-K filing for the complete financial statements and related notes.

 

 

VERISK ANALYTICS, INC.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2014 and 2013

 

2014

 

2013

 

(In thousands, except for
share and per share data)

ASSETS

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

39,359

 

 

$

165,801

 

Available-for-sale securities

 

3,801

 

 

 

3,911

 

Accounts receivable, net

 

220,668

 

 

 

158,547

 

Prepaid expenses

 

31,496

 

 

 

25,657

 

Deferred income taxes, net

 

4,772

 

 

 

5,077

 

Income taxes receivable

 

65,512

 

 

 

67,346

 

Other current assets

 

18,875

 

 

 

34,681

 

Current assets held-for-sale

 

 

 

 

13,825

 

Total current assets

 

384,483

 

 

 

474,845

 

Noncurrent assets:

 

 

 

 

 

 

 

Fixed assets, net

 

302,273

 

 

 

233,373

 

Intangible assets, net

 

406,476

 

 

 

447,618

 

Goodwill

 

1,207,146

 

 

 

1,181,681

 

Pension assets

 

18,589

 

 

 

60,955

 

Other assets

 

26,363

 

 

 

20,034

 

Noncurrent assets held-for-sale

 

 

 

 

85,945

 

Total assets

$

2,345,330

 

 

$

2,504,451

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

$

180,726

 

 

$

188,264

 

Short-term debt and current portion of long-term debt

 

336,058

 

 

 

4,448

 

Pension and postretirement benefits, current

 

1,894

 

 

 

2,437

 

Fees received in advance

 

252,592

 

 

 

226,581

 

Current liabilities held-for-sale

 

 

 

 

9,449

 

Total current liabilities

 

771,270

 

 

 

431,179

 

Noncurrent liabilities:

 

 

 

 

 

 

 

Long-term debt

 

1,100,874

 

 

 

1,271,439

 

Pension benefits

 

13,805

 

 

 

13,007

 

Postretirement benefits

 

2,410

 

 

 

2,061

 

Deferred income taxes, net

 

202,540

 

 

 

198,604

 

Other liabilities

 

43,388

 

 

 

36,043

 

Noncurrent liabilities held-for-sale

 

 

 

 

4,529

 

Total liabilities

 

2,134,287

 

 

 

1,956,862

 

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Verisk Class A common stock, $.001 par value; 1,200,000,000 shares authorized; 544,003,038 shares issued and 157,913,227 and 167,457,927 shares outstanding, respectively

 

137

 

 

 

137

 

Unearned KSOP contributions

 

(161

)

 

 

(306

)

Additional paid-in capital

 

1,171,196

 

 

 

1,202,106

 

Treasury stock, at cost, 386,089,811 and 376,545,111 shares, respectively

 

(2,533,764

)

 

 

(1,864,967

)

Retained earnings

 

1,654,149

 

 

 

1,254,107

 

Accumulated other comprehensive losses

 

(80,514

)

 

 

(43,488

)

Total stockholders’ equity

 

211,043

 

 

 

547,589

 

Total liabilities and stockholders’ equity

$

2,345,330

 

 

$

2,504,451

 

 

 

VERISK ANALYTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Twelve Months Ended December 31, 2014 and 2013

(In thousands, except for share and per share data)

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

464,864

 

 

$

416,723

 

 

$

1,746,726

 

 

$

1,595,703

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues (exclusive of items shown separately below)

 

193,582

 

 

 

170,156

 

 

 

716,598

 

 

 

622,523

 

Selling, general and administrative

 

56,934

 

 

 

57,679

 

 

 

227,306

 

 

 

228,982

 

Depreciation and amortization of fixed assets

 

23,051

 

 

 

19,471

 

 

 

85,506

 

 

 

66,190

 

Amortization of intangible assets

 

14,250

 

 

 

14,370

 

 

 

56,870

 

 

 

63,741

 

Total expenses

 

287,817

 

 

 

261,676

 

 

 

1,086,280

 

 

 

981,436

 

Operating income

 

177,047

 

 

 

155,047

 

 

 

660,446

 

 

 

614,267

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment income and others

 

234

 

 

 

406

 

 

 

158

 

 

 

609

 

Interest expense

 

(17,588

)

 

 

(17,650

)

 

 

(69,984

)

 

 

(76,136

)

Total other expense, net

 

(17,354

)

 

 

(17,244

)

 

 

(69,826

)

 

 

(75,527

)

Income before income taxes

 

159,693

 

 

 

137,803

 

 

 

590,620

 

 

 

538,740

 

Provision for income taxes

 

(60,383

)

 

 

(51,428

)

 

 

(219,755

)

 

 

(196,426

)

Income from continuing operations

 

99,310

 

 

 

86,375

 

 

 

370,865

 

 

 

342,314

 

(Loss) income from discontinued operations, net of tax of $1,940 and $665, and $25,305 and $4,753 respectively

 

(1,940

)

 

 

848

 

 

 

29,177

 

 

 

6,066

 

Net income

$

97,370

 

 

$

87,223

 

 

$

400,042

 

 

$

348,380

 

Basic net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

$

0.60

 

 

$

0.51

 

 

$

2.24

 

 

$

2.04

 

Income from discontinued operations

 

(0.01

)

 

 

0.01

 

 

 

0.17

 

 

 

0.03

 

Basic net income per share

$

0.59

 

 

$

0.52

 

 

$

2.41

 

 

$

2.07

 

Diluted net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

$

0.59

 

 

$

0.50

 

 

$

2.20

 

 

$

1.99

 

Income from discontinued operations

 

(0.01

)

 

 

0.01

 

 

 

0.17

 

 

 

0.03

 

Diluted net income per share

$

0.58

 

 

$

0.51

 

 

$

2.37

 

 

$

2.02

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

163,782,061

 

 

 

167,855,888

 

 

 

165,823,803

 

 

 

168,031,412

 

Diluted

 

167,082,091

 

 

 

171,722,557

 

 

 

169,132,423

 

 

 

172,276,360

 

 

 

VERISK ANALYTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2014 and 2013

 

 

2014

 

 

 

2013

 

 

 

 

(In thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

$

400,042

 

 

$

348,380

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization of fixed assets

 

86,501

 

 

 

70,279

 

 

Amortization of intangible assets

 

56,982

 

 

 

64,299

 

 

Amortization of debt issuance costs and original issue discount

 

2,638

 

 

 

2,713

 

 

Allowance for doubtful accounts

 

1,814

 

 

 

2,482

 

 

KSOP compensation expense

 

15,351

 

 

 

14,930

 

 

Stock based compensation

 

20,253

 

 

 

21,087

 

 

Gain on sale of subsidiary

 

(65,410

)

 

 

 

 

Realized (gain) loss on securities, net

 

(257

)

 

 

92

 

 

Deferred income taxes

 

24,491

 

 

 

44,140

 

 

Loss on disposal of fixed assets

 

1,048

 

 

 

628

 

 

Excess tax benefits from exercised stock options

 

(22,566

)

 

 

(109,946

)

 

Other operating activities, net

 

 

 

 

448

 

 

Changes in assets and liabilities, net of effects from acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable

 

(54,515

)

 

 

2,106

 

 

Prepaid expenses and other assets

 

(9,625

)

 

 

(2,386

)

 

Income taxes

 

13,760

 

 

 

39,661

 

 

Accounts payable and accrued liabilities

 

12,675

 

 

 

34,022

 

 

Fees received in advance

 

22,114

 

 

 

26,970

 

 

Pension and postretirement benefits

 

(14,802

)

 

 

(11,392

)

 

Other liabilities

 

(1,042

)

 

 

(41,593

)

 

Net cash provided by operating activities

 

489,452

 

 

 

506,920

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Acquisitions, net of cash acquired of $304 and $0, respectively

 

(35,192

)

 

 

(983

)

 

Purchase of non-controlling interest in non-public companies

 

(5,000

)

 

 

 

 

Proceeds from sale of subsidiary

 

151,170

 

 

 

 

 

Proceeds from release of acquisition related escrows

 

 

 

 

280

 

 

Capital expenditures

 

(146,818

)

 

 

(145,976

)

 

Purchases of available-for-sale securities

 

(203

)

 

 

(5,870

)

 

Proceeds from sales and maturities of available-for-sale securities

 

513

 

 

 

7,484

 

 

Other investing activities, net

 

 

 

 

(561

)

 

Net cash used in investing activities

 

(35,530

)

 

 

(145,626

)

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Repayments of current portion of long-term debt

 

 

 

 

(180,000

)

 

Proceeds (repayments) from short-term debt, net

 

160,000

 

 

 

(10,000

)

 

Payment of debt issuance costs

 

(465

)

 

 

(605

)

 

Repurchases of Class A common stock

 

(778,484

)

 

 

(277,411

)

 

Net share settlement of taxes from restricted stock awards

 

(1,625

)

 

 

 

 

Excess tax benefits from exercised stock options

 

22,566

 

 

 

109,946

 

 

Proceeds from stock options exercised

 

24,648

 

 

 

80,368

 

 

Other financing activities, net

 

(5,718

)

 

 

(6,770

)

 

Net cash (used in) provided by financing activities

 

(579,078

)

 

 

(284,472

)

 

Effect of exchange rate changes

 

(1,286

)

 

 

(840

)

 

(Decrease) increase in cash and cash equivalents

 

(126,442

)

 

 

75,982

 

 

Cash and cash equivalents, beginning of period

 

165,801

 

 

 

89,819

 

 

Cash and cash equivalents, end of period

$

39,359

 

 

$

165,801

 

 

Supplemental disclosures:

 

 

 

 

 

 

 

 

Taxes paid

$

205,498

 

 

$

126,846

 

 

Interest paid

$

67,231

 

 

$

75,084

 

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Repurchases of Class A common stock included in accounts payable and accrued liabilities

$

 

 

$

3,038

 

 

Deferred tax liability established on the date of acquisitions

$

2,654

 

 

$

1,187

 

 

Tenant improvement allowance

$

9,134

 

 

$

 

 

Capital lease obligations

$

6,044

 

 

$

10,512

 

 

Capital expenditures included in accounts payable and accrued liabilities

$

76

 

 

$

5,960

 

 

Contact:

Investor Relations
Eva Huston
Senior Vice President, Treasurer, and Chief Knowledge Officer
Verisk Analytics, Inc.
201-469-2142
eva.huston@verisk.com

David Cohen
Director, Investor Relations and Business Analytics
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

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