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Verisk Reports Second-Quarter 2021 Financial Results

  • Consolidated revenues were $747.5 million, up 10.1%, and up 6.3% on an organic constant currency (OCC) basis for the second quarter of 2021.
  • Net income attributable to Verisk was $154.0 million, down 14.0% for the second quarter of 2021. Adjusted EBITDA, a non-GAAP measure, was $370.8 million, up 6.5%, and up 4.2% on an OCC basis.
  • Diluted GAAP earnings per share (diluted EPS) attributable to Verisk were $0.94 for the second quarter of 2021, down 13.0%. Diluted adjusted earnings per share (diluted adjusted EPS), a non-GAAP measure, were $1.17, down 9.3%. Adjusting for a $0.21 per diluted share impact from a non-cash revaluation charge related to the United Kingdom ("U.K.") tax law change, diluted adjusted EPS would increase 7.0% to $1.38(1).
  • Net cash provided by operating activities was $233.2 million, down 6.5% for the second quarter of 2021. Free cash flow, a non-GAAP measure, was $170.7 million, down 11.5%.
  • We paid a cash dividend of 29 cents per share on June 30, 2021. Our Board of Directors approved a cash dividend of 29 cents per share payable on September 30, 2021.
  • We repurchased $150.0 million of our shares during the second quarter of 2021.

JERSEY CITY, N.J., August 3, 2021 — Verisk (Nasdaq:VRSK), a leading global data analytics provider, today announced results for the second quarter ended June 30, 2021.

Scott Stephenson, chairman, president, and CEO, said, “Verisk's second quarter results highlight the strength of our business model, the essential nature of our solutions and our continued focus on delivering for our customers. We remain committed to our innovation agenda and have strong confidence in our ability to successfully execute our growth strategy and plans to build shareholder value over the long term."

Lee Shavel, CFO and group president, said, “Verisk delivered organic constant currency revenue growth of 6.3% and organic constant currency adjusted EBITDA growth of 4.2% in the second quarter, demonstrating strength in subscription revenues and recovery in our transactional revenues as we anniversary the onset of the pandemic. We continue to invest our strong free cash flow back into high return on investment projects that support future growth while also returning capital to shareholders through dividends and share repurchases.”

Summary of Results (GAAP and Non-GAAP) (in millions, except per share amounts)

Note: Adjusted EBITDA, diluted adjusted EPS, and free cash flow are non-GAAP measures.

 

 

 

Three Months Ended

 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

 

June 30,

 

 

 

 

 

 

June 30,

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Change

 

 

2021

 

 

2020

 

 

Change

 

Revenues

 

$

747.5

 

 

$

678.8

 

 

 

10.1

%

 

$

1,473.6

 

 

$

1,368.6

 

 

 

7.7

%

Net income attributable to Verisk

 

 

154.0

 

 

 

179.0

 

 

 

(14.0

)

 

 

322.6

 

 

 

350.7

 

 

 

(8.0

)

Adjusted EBITDA

 

 

370.8

 

 

 

348.3

 

 

 

6.5

 

 

 

716.3

 

 

 

666.3

 

 

 

7.5

 

Diluted EPS attributable to Verisk

 

 

0.94

 

 

 

1.08

 

 

 

(13.0

)

 

 

1.97

 

 

 

2.12

 

 

 

(7.1

)

Diluted adjusted EPS

 

 

1.17

 

 

 

1.29

 

 

 

(9.3

)

 

 

2.41

 

 

 

2.46

 

 

 

(2.0

)

Net cash provided by operating activities

 

 

233.2

 

 

 

249.5

 

 

 

(6.5

)

 

 

681.9

 

 

 

612.1

 

 

 

11.4

 

Free cash flow

 

 

170.7

 

 

 

192.8

 

 

 

(11.5

)

 

 

560.2

 

 

 

502.5

 

 

 

11.5

 

(1) $1.38, a non-GAAP measure, is calculated by adding back the impact of the non-cash income tax revaluation charge to our adjusted net income and diluted adjusted EPS definitions. We believe this calculation is useful to investors and management uses it as it allows for greater transparency on assessing the impact of the U.K. tax law change on our diluted adjusted EPS for the quarter ended June 30, 2021. The non-cash revaluation charge of $34.0 million resulted in a $0.21 per diluted share impact on our diluted adjusted EPS.

Revenues

Consolidated revenues increased 10.1%, and 6.3% on an OCC basis, for second-quarter 2021. In late March 2020, we analyzed our solutions and services to assess the impact of COVID-19 on our revenue streams. We did not identify any material impact stemming from COVID-19 on approximately 85% of our revenues as much of these revenues are subscription-based and subject to long-term contracts. These revenues increased 5.5% on an OCC basis in the second quarter of 2021. Of the remaining 15%, we have identified specific solutions and services, largely transactional in nature, that have been impacted by COVID-19. These revenues increased 12.1% on an OCC basis in second-quarter 2021 as compared to COVID impacted declines from the prior-year period.

Revenues and Revenue Growth by Segment (in millions)

 

 

 

 

 

 

 

 

 

 

Revenue Growth

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

June 30,

 

 

June 30, 2021

 

 

 

2021

 

 

2020

 

 

Reported

 

 

OCC

 

Underwriting & rating

 

$

388.4

 

 

$

349.3

 

 

 

11.2

%

 

 

7.6

%

Claims

 

 

161.6

 

 

 

142.9

 

 

 

13.2

 

 

 

8.4

 

Insurance

 

 

550.0

 

 

 

492.2

 

 

 

11.8

 

 

 

7.8

 

Energy and Specialized Markets

 

 

162.3

 

 

 

148.6

 

 

 

9.2

 

 

 

5.0

 

Financial Services

 

 

35.2

 

 

 

38.0

 

 

 

(7.4

)

 

 

(8.1

)

Revenues

 

$

747.5

 

 

$

678.8

 

 

 

10.1

 

 

 

6.3

 

 

 

 

 

 

 

 

 

 

 

 

Revenue Growth

 

 

 

Six Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30, 2021

 

 

 

2021

 

 

2020

 

 

Reported

 

 

OCC

 

Underwriting & rating

 

$

765.5

 

 

$

699.3

 

 

 

9.5

%

 

 

6.5

%

Claims

 

 

320.1

 

 

 

288.2

 

 

 

11.1

 

 

 

8.1

 

Insurance

 

 

1,085.6

 

 

 

987.5

 

 

 

9.9

 

 

 

6.9

 

Energy and Specialized Markets

 

 

318.5

 

 

 

302.8

 

 

 

5.2

 

 

 

2.1

 

Financial Services

 

 

69.5

 

 

 

78.3

 

 

 

(11.3

)

 

 

(10.5

)

Revenues

 

$

1,473.6

 

 

$

1,368.6

 

 

 

7.7

 

 

 

4.9

 

 

Insurance segment revenues grew 11.8% in the second quarter and 7.8% on an OCC basis. 

 

Underwriting and rating revenues increased 11.2% in the quarter and 7.6% on an OCC basis, resulting primarily from annual increases in prices derived from continued enhancements to the content of the solutions within our industry-standard insurance programs, as well as selling expanded solutions to existing customers in commercial and personal lines. In addition, catastrophe modeling services and our international software solutions contributed to the growth.

 

Claims revenues grew 13.2% in the quarter and 8.4% on an OCC basis. Growth was primarily driven by our repair cost estimating solutions revenue and our claims analytics revenue. 

 

Energy and Specialized Markets segment revenue increased 9.2% in the quarter and 5.0% on an OCC basis. Growth was primarily driven by consulting and environmental health and safety service revenues.

Financial Services segment revenue decreased 7.4% in the quarter and 8.1% on an OCC basis, primarily due to certain contract transitions, projects that did not reoccur, and lower bankruptcy volumes. These declines more than offset solid growth in spend informed analytics revenues.

Net Income and Adjusted EBITDA

During second-quarter 2021, net income attributable to Verisk declined 14.0%. Adjusted EBITDA increased 6.5%, and 4.2% on an OCC basis. 

EBITDA and Adjusted EBITDA by Segment (in millions)

Note: Adjusted EBITDA is a non-GAAP measure. Margin is calculated as a percentage of revenues. See "Non-GAAP Reconciliations" below for a reconciliation to the nearest GAAP measure. 

 

 

Three Months Ended June 30,

 

 

 

EBITDA

 

 

EBITDA Margin

 

 

Adjusted EBITDA

 

 

Adjusted EBITDA Growth

 

 

Adjusted EBITDA Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

Reported

 

 

OCC

 

 

2021

 

 

2020

 

Insurance

 

$

310.7

 

 

$

283.0

 

 

 

56.5

%

 

 

57.5

%

 

$

310.8

 

 

$

285.4

 

 

 

8.9

%

 

 

6.6

%

 

 

56.5

%

 

 

58.0

%

Energy and Specialized Markets

 

 

57.6

 

 

 

51.6

 

 

 

35.5

 

 

 

34.7

 

 

 

57.6

 

 

 

51.6

 

 

 

11.5

 

 

 

8.4

 

 

 

35.5

 

 

 

34.7

 

Financial Services

 

 

2.4

 

 

 

11.3

 

 

 

6.9

 

 

 

29.7

 

 

 

2.4

 

 

 

11.3

 

 

 

(78.6

)

 

 

(77.4

)

 

 

6.9

 

 

 

29.7

 

Consolidated

 

$

370.7

 

 

$

345.9

 

 

 

49.6

 

 

 

51.0

 

 

$

370.8

 

 

$

348.3

 

 

 

6.5

 

 

 

4.2

 

 

 

49.6

 

 

 

51.3

 

 

 

 

Six Months Ended June 30,

 

 

 

EBITDA

 

 

EBITDA Margin

 

 

Adjusted EBITDA

 

 

Adjusted EBITDA Growth

 

 

Adjusted EBITDA Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

Reported

 

 

OCC

 

 

2021

 

 

2020

 

Insurance

 

$

599.7

 

 

$

556.2

 

 

 

55.2

%

 

 

56.3

%

 

$

599.7

 

 

$

542.9

 

 

 

10.5

%

 

 

7.4

%

 

 

55.2

%

 

 

55.0

%

Energy and Specialized Markets

 

 

111.3

 

 

 

101.0

 

 

 

35.0

 

 

 

33.4

 

 

 

111.3

 

 

 

101.0

 

 

 

10.2

 

 

 

7.5

 

 

 

35.0

 

 

 

33.4

 

Financial Services

 

 

5.3

 

 

 

25.9

 

 

 

7.6

 

 

 

33.1

 

 

 

5.3

 

 

 

22.4

 

 

 

(76.5

)

 

 

(75.6

)

 

 

7.6

 

 

 

28.7

 

Consolidated

 

$

716.3

 

 

$

683.1

 

 

 

48.6

 

 

 

49.9

 

 

$

716.3

 

 

$

666.3

 

 

 

7.5

 

 

 

4.7

 

 

 

48.6

 

 

 

48.7

 

 

Taxes

During the second quarter of 2021, our effective tax rate was 35.6% as compared to 20.4% in the year prior. This increase was the result of an earlier than expected enactment of the U.K. tax law change that caused a non-cash revaluation charge. We now expect our tax rate to approximate 20-22% for the second half of 2021. 

Earnings Per Share and Diluted Adjusted Earnings Per Share

Diluted EPS attributable to Verisk decreased 13.0% to $0.94 for the second quarter of 2021 primarily due to a higher effective tax rate.

Diluted adjusted EPS decreased 9.3% to $1.17 for the second quarter of 2021 primarily due to a higher effective tax rate. Adjusting for a $0.21 per share impact from adding back a non-cash revaluation charge related to the U.K. tax law change, diluted adjusted EPS would increase 7.0% to $1.38. These growth rates reflect organic growth in the business, contributions from acquisitions, and lower average share count.

Cash Flow and Free Cash Flow

Net cash provided by operating activities was $233.2 million for the second quarter of 2021, down 6.5%. Capital expenditures were $62.5 million for the second quarter, up 10.2%. Free cash flow was $170.7 million, down 11.5% primarily due to the prior year deferral of federal income taxes and certain employer payroll taxes resulting from the CARES Act that were partially offset by earnout payments made in the second quarter of 2020. Free cash flow is a non-GAAP measure. See "Non-GAAP reconciliations" below for a reconciliation to the nearest GAAP measure.

Free cash flow represented 46.0% of adjusted EBITDA for the second quarter, compared with 55.4% in the prior-year period.

Dividend

On June 30, 2021, we paid a cash dividend of 29 cents per share of common stock issued and outstanding to the holders of record as of June 15, 2021. 

On July 28, 2021, our Board of Directors approved a cash dividend of 29 cents per share of common stock issued and outstanding, payable on September 30, 2021, to holders of record as of September 15, 2021. 

Share Repurchases

Including the accelerated share repurchase (ASR) settled in the second quarter of 2021, we repurchased approximately 834 thousand shares at an average price of $179.85, for a total cost of $150.0 million for the second quarter of 2021. On June 30, 2021, we had $328.8 million remaining under our share repurchase authorization.

Conference Call

Our management team will host a live audio webcast to discuss the financial results and business highlights on Wednesday, August 4, 2021, at 8:30 a.m. EDT (5:30 a.m. PDT, 1:30 p.m. BST). All interested parties are invited to listen to the live event via webcast on our investor website at http://investor.verisk.com. The discussion will also be 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 our investor website and through the conference call number 1-855-859-2056 for U.S./Canada participants or 404-537-3406 for international participants using Conference ID #3793328.

About Verisk

We (Nasdaq:VRSK) provide predictive analytics and decision support solutions to customers in the insurance, energy and specialized markets, and financial services industries. More than 70 percent of the FORTUNE 100 uses our advanced technologies to manage risks, make better decisions and improve operating efficiency. Our analytic solutions address insurance underwriting and claims, fraud, regulatory compliance, natural resources, catastrophes, economic forecasting, geopolitical risks, as well as environmental, social, and governance (ESG) matters. Celebrating our 50th anniversary, we continue to make the world better, safer, and stronger, and foster an inclusive and diverse culture where all team members feel they belong. With more than 100 offices in nearly 35 countries, we consistently earn certification by Great Place to Work®. For more, please visit our website at www.verisk.com or follow our social media profiles on LinkedIn, Twitter, Facebook, and YouTube.

Contact:

Investor Relations  

Stacey Brodbar

Head of Investor Relations

Verisk 

201-469-4327 

IR@verisk.com

Media

Alberto Canal

Head of External Communications

201-469-2618

Alberto.Canal@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. This includes, but is not limited to, our expectation and ability to pay a cash dividend on our common stock in the future, subject to the determination by our Board of Directors and based on an evaluation of our earnings, financial condition and requirements, business conditions, capital allocation determinations, and other factors, risks, and uncertainties. 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 our 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.

View the full Verisk Q2 2021 Financial Results