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Verisk Reports Second-Quarter 2022 Financial Results

  • Consolidated revenues were $746.3 million, down 0.2%, and up 5.3% on an organic constant currency (OCC) basis for the second quarter of 2022. The decline in our consolidated revenue was primarily due to the sale of our environmental health and safety business (3E) and Verisk Financial Services segment.
  • Net income attributable to Verisk was $197.7 million, up 28.4% for the second quarter of 2022. Adjusted EBITDA, a non-GAAP measure, was $380.8 million, up 2.7%, and up 4.4% on an OCC basis.
  • Diluted GAAP earnings per share (diluted EPS) attributable to Verisk were $1.24 for the second quarter of 2022, up 31.9%. Diluted adjusted earnings per share (diluted adjusted EPS), a non-GAAP measure, were $1.53, up 30.8%. 
  • Consolidated and OCC Revenue and Adjusted EBITDA growth were negatively impacted by the suspension of all commercial operations in Russia in the second quarter of 2022.
  • Net cash provided by operating activities was $130.2 million, down 44.2% and free cash flow, a non-GAAP measure, was $61.0 million, down 64.3% for the second quarter of 2022. Both cash flow measures were negatively affected by a $122.0 million increase in tax payments primarily related to the gain on disposition.
  • We paid a cash dividend of 31 cents per share on June 30, 2022. Our Board of Directors approved a cash dividend of 31 cents per share payable on September 30, 2022.
  • We repurchased $325.0 million of our shares during the second quarter of 2022.

JERSEY CITY, N.J., August 2, 2022 — Verisk (Nasdaq:VRSK), a leading global data analytics provider, today announced results for the second quarter ended June 30, 2022.

Lee Shavel, CEO, said, "I am pleased to share that Verisk delivered solid financial results, marked by OCC subscription revenue growth of 6.9% when normalized for the Russian impact, and continued to make progress on the business portfolio mix and EBITDA margin objectives during the second quarter. I am more energized than ever about the opportunity that Verisk has to advance our position as the trusted technology partner for the industries we serve and create long-term value for our shareholders, customers and employees."

David Grover, interim CFO said, "Verisk delivered organic constant currency revenue growth of 5.9% and organic constant currency adjusted EBITDA growth of 5.7%, adjusting for the impact of the suspension of Russian operations. We also delivered margin expansion through cost discipline while continuing to invest in our technological transformation and our people."

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,

 

 

 

 

 

 

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Revenues

 

$

746.3

 

$

747.5

 

(0.2)%

 

$

1,521.8

 

$

1,473.6

 

3.3%

Net income attributable to Verisk

 

197.7

 

154.0

 

28.4

 

703.4

 

322.6

 

118.1

Adjusted EBITDA

 

380.8

 

370.8

 

2.7

 

740.1

 

716.3

 

3.3

Diluted EPS attributable to Verisk

 

1.24

 

0.94

 

31.9

 

4.39

 

1.97

 

122.8

Diluted adjusted EPS

 

1.53

 

1.17

 

30.8

 

2.88

 

2.41

 

19.5

Net cash provided by operating activities

 

130.2

 

233.2

 

(44.2)

 

529.8

 

681.9

 

(22.3)

Free cash flow

 

61.0

 

170.7

 

(64.3)

 

400.6

 

560.2

 

(28.5)

Revenues

Consolidated revenues decreased 0.2% and increased 5.3% on an OCC basis for the second quarter of 2022. The decline in our consolidated revenue was primarily due to the sale of our environmental health and safety business (3E) and Verisk Financial Services, partially offset by acquisitions. In addition, the suspension of all commercial operations in Russia negatively impacted revenue by $3.5 million in the second quarter of 2022. Normalizing for this, OCC revenue would have grown 5.9%.

Revenues and Revenue Growth by Segment

(in millions)

Note: OCC revenue growth is a non-GAAP measure.

 

 

 

 

 

 

 

 

 

 

Revenue Growth

 

 

Three Months Ended

 

Three Months Ended

 

 

June 30,

 

June 30, 2022

 

 

2022

 

2021

 

Reported

 

OCC

Underwriting & rating

 

$

437.8

 

$

388.4

 

12.8%

 

7.1%

Claims

 

172.2

 

161.6

 

6.5

 

4.7

Insurance

 

610.0

 

550.0

 

10.9

 

6.4

Energy and Specialized Markets

 

133.5

 

162.3

 

(17.7)

 

0.8

Financial Services

 

2.8

 

35.2

 

(92.1)

 

-

Revenues

 

$

746.3

 

$

747.5

 

(0.2)

 

5.3

 

 

 

 

 

 

 

 

 

 

 

Revenue Growth

 

 

Six Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30, 2022

 

 

2022

 

2021

 

Reported

 

OCC

Underwriting & rating

 

$

853.8

 

$

765.5

 

11.5%

 

6.7%

Claims

 

342.6

 

320.1

 

7.0

 

5.0

Insurance

 

1,196.4

 

1,085.6

 

10.2

 

6.2

Energy and Specialized Markets

 

287.8

 

318.5

 

(9.6)

 

1.4

Financial Services

 

37.6

 

69.5

 

(45.9)

 

-

Revenues

 

$

1,521.8

 

$

1,473.6

 

3.3

 

5.3

 

Insurance segment revenues grew 10.9% in the second quarter and 6.4% on an OCC basis. 

  • Underwriting and rating revenues increased 12.8% in the quarter and 7.1% on an OCC basis, resulting primarily from annual increases in price 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, extreme event solutions and life solutions contributed to the growth.
  • Claims revenues grew 6.5% in the quarter and 4.7% on an OCC basis, resulting primarily from solid growth in our claims analytics and property estimating solutions, offset by a modest decline in our workers' compensation claims solutions.

Energy and Specialized Markets segment revenue decreased 17.7% in the quarter and increased 0.8% on an OCC basis. The decline in revenue was primarily due to the sale of the 3E business that closed on March 11, 2022 and the suspension of commercial operations in Russia. OCC growth was driven by modest growth in research revenue, offset in part by a decline in consulting revenue. Normalizing for the impact of suspended operations in Russia, Energy revenue would have grown 3.6% on an OCC basis.

Financial Services segment revenue was $2.8 million in the quarter. We closed the sale of Verisk Financial Services on April 8, 2022.

Net Income Attributable to Verisk and Adjusted EBITDA

During second-quarter 2022, net income attributable to Verisk increased 28.4%. This increase was primarily due to a lower tax provision this year versus the prior year period, which included a non-cash revaluation charge related to a tax law change in the United Kingdom. Adjusted EBITDA increased 2.7%, and 4.4% on an OCC basis. During the quarter, we incurred incremental expense of $1.1 million related to the suspension of commercial operations in Russia. Adjusted for this impact, OCC adjusted EBITDA growth was 5.7%.

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. All OCC figures exclude results from recent dispositions namely, 3E and Verisk Financial Services. Segment-level adjusted EBITDA margins for 2022 reflect a higher level of corporate allocations resulting from recent dispositions and the impact of foreign currency fluctuations.

 

 

Three Months Ended June 30,

 

 

EBITDA

 

EBITDA Margin

 

Adjusted EBITDA

 

Adjusted EBITDA Growth

 

Adjusted EBITDA Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

2022

 

 

 

 

 

 

 

 

 

 

2022

 

2021

 

2022

 

2021

 

2022

 

2021

 

Reported

 

OCC

 

2022

 

2021

Insurance

 

$

333.9

 

$

310.7

 

54.7

%

 

56.5

%

 

$

333.9

 

$

310.8

 

7.5

%

 

6.1

%

 

54.7

%

 

56.5

%

Energy and Specialized Markets

 

47.1

 

57.6

 

35.3

 

35.5

 

46.3

 

57.6

 

(19.7)

 

(6.4)

 

34.6

 

35.5

Financial Services

 

(17.6)

 

2.4

 

(629.6)

 

6.9

 

0.6

 

2.4

 

(71.8)

 

-

 

24.5

 

6.9

Consolidated

 

$

363.4

 

$

370.7

 

48.7

 

49.6

 

$

380.8

 

$

370.8

 

2.7

 

4.4

 

51.0

 

49.6

 

 

 

Six Months Ended June 30,

 

 

EBITDA

 

EBITDA Margin

 

Adjusted EBITDA

 

Adjusted EBITDA Growth

 

Adjusted EBITDA Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

2022

 

 

 

 

 

 

 

 

 

 

2022

 

2021

 

2022

 

2021

 

2022

 

2021

 

Reported

 

OCC

 

2022

 

2021

Insurance

 

$

636.2

 

$

599.7

 

53.2

%

 

55.2

%

 

$

636.2

 

$

599.7

 

6.1

%

 

5.8

%

 

53.2

%

 

55.2

%

Energy and Specialized Markets

 

549.0

 

111.3

 

190.7

 

35.0

 

97.4

 

111.3

 

(12.5)

 

(5.7)

 

33.8

 

35.0

Financial Services

 

(85.4)

 

5.3

 

(227.0

)

 

7.6

 

6.5

 

5.3

 

24.4

 

-

 

17.4

 

7.6

Consolidated

 

$

1,099.8

 

$

716.3

 

72.3

 

48.6

 

$

740.1

 

$

716.3

 

3.3

 

4.3

 

48.6

 

48.6

 

Earnings Per Share and Diluted Adjusted Earnings Per Share

Diluted EPS attributable to Verisk increased 31.9% to $1.24 for the second quarter of 2022 due to organic growth in the business, lower provision for income taxes, lower interest expense, and a lower average share count, partially offset by the loss recorded on the sale of our Financial Services segment. 

Diluted adjusted EPS increased 30.8% to $1.53 for the second quarter of 2022 due to organic growth in the business, lower provision for income taxes, lower interest expense, and a lower average share count. 

Cash Flow and Free Cash Flow

Net cash provided by operating activities was $130.2 million for the second quarter of 2022, down 44.2% and free cash flow was $61.0 million, down 64.3%. Both cash flow measures were negatively affected by a $122.0 million increase in tax payments primarily related to the gain on disposition and the impact of the sold businesses. Free cash flow is a non-GAAP measure. See "Non-GAAP reconciliations" below for a reconciliation to the nearest GAAP measure.

Dividend

On June 30, 2022, we paid a cash dividend of 31 cents per share of common stock issued and outstanding to the holders of record as of June 15, 2022.

On July 27, 2022, our Board of Directors approved a cash dividend of 31 cents per share of common stock issued and outstanding, payable on September 30, 2022, to holders of record as of September 15, 2022.

Share Repurchases

Including the accelerated share repurchase (ASR) settled in the second quarter of 2022, we repurchased approximately 1.6 million shares at an average price of $208.18, for a total cost of $325.0 million for the second quarter of 2022. As of June 30, 2022, we had $707.5 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 3, 2022, at 8:30 a.m. EST (5:30 a.m. PT, 1:30 p.m. GMT). 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 1-888-660-6191 for U.S./Canada participants or 929-203-1913 for international participants.

A replay of the webcast will be available for 30 days on our investor website and through the conference call number 1-800-770-2030 for U.S./Canada participants or 647-362-9199 for international participants using Conference ID #4026897.

About Verisk

Verisk provides data-driven analytic insights and solutions for the insurance and energy industries. Through advanced data analytics, software, scientific research, and deep industry knowledge, Verisk empowers customers to strengthen operating efficiency, improve underwriting and claims outcomes, combat fraud, and make informed decisions about global issues, including climate change and extreme events as well as political and ESG topics. With offices in more than 30 countries, Verisk consistently earns certification by Great Place to Work® and fosters an inclusive culture where all team members feel they belong.

Verisk is traded on the Nasdaq exchange and is a part of the S&P 500 Index and the Nasdaq-100 Index.

For more information, please visit www.verisk.com.

Contact:

Investor Relations  
Stacey Brodbar
Head of Investor Relations
Verisk 
201-469-4327 
IR@verisk.com

Media
Alberto Canal
Verisk Public Relations
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.

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.

Notes Regarding the Use of Non-GAAP Financial Measures

We have provided certain non-GAAP financial information as supplemental information regarding our 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. We believe that our presentation of non-GAAP measures provides useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations. In addition, our management uses these measures for reviewing our financial results, for budgeting and planning purposes, and for evaluating the performance of senior management.

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Expenses: EBITDA represents GAAP net income adjusted for (i) depreciation and amortization of fixed assets; (ii) amortization of intangible assets; (iii) interest expense; and (iv) provision for income taxes. Adjusted EBITDA represents EBITDA adjusted for acquisition-related costs (earn-outs), gain/loss from dispositions (which includes businesses held for sale), and nonrecurring gain/loss. Adjusted EBITDA expenses represent adjusted EBITDA net of revenues. We believe these measures are useful and meaningful because they help us allocate resources, make business decisions, allow for greater transparency regarding our operating performance, and facilitate period-to-period comparison.

Adjusted Net Income and Diluted Adjusted EPS: Adjusted net income represents GAAP net income adjusted for (i) amortization of intangible assets, net of tax; (ii) acquisition-related costs (earn-outs), net of tax; (iii) gain/loss from dispositions (which includes businesses held for sale), net of tax; and (iv) nonrecurring gain/loss, net of tax. Diluted adjusted EPS represents adjusted net income divided by weighted-average diluted shares. We believe these measures are useful and meaningful because they allow evaluation of the after-tax profitability of our results excluding the after-tax effect of acquisition-related costs and nonrecurring items.

Free Cash Flow: Free cash flow represents net cash provided by operating activities determined in accordance with GAAP minus payments for capital expenditures. We believe free cash flow is an important measure of the recurring cash generated by our operations that may be available to repay debt obligations, repurchase our stock, invest in future growth through new business development activities, or make acquisitions.

Organic: Organic is defined as operating results excluding the effect of recent acquisitions and dispositions (which include businesses held for sale) that have occurred over the past year. An acquisition is included as organic at the beginning of the calendar quarter that occurs subsequent to the one-year anniversary of the acquisition date. Once an acquisition is included in its current-period organic base, its comparable prior-year-period operating results are also included to calculate organic growth. A disposition (which includes a business held for sale) is excluded from organic at the beginning of the calendar quarter in which the disposition occurs (or when a business meets the held-for-sale criteria under U.S. GAAP). Once a disposition is excluded from its current-period organic base, its comparable prior-year-period operating results are also excluded to calculate organic growth. We believe the organic presentation enables investors to assess the growth of the business without the impact of recent acquisitions for which there is no prior-year comparison and the impact of recent dispositions, for which results are removed from all prior periods presented to allow for comparability.

Organic Constant Currency (OCC) Growth Rate: Our operating results, such as, but not limited to, revenue and adjusted EBITDA, reported in U.S. dollars are affected by foreign currency exchange rate fluctuations because the underlying foreign currencies in which we transact changes in value over time compared with the U.S. dollar; accordingly, we present certain constant currency financial information to assess how we performed excluding the impact of foreign currency exchange rate fluctuations. We calculate constant currency by translating comparable prior-year-period results at the currency exchange rates used in the current period. We believe organic constant currency is a useful and meaningful measure to enhance investors’ understanding of the continuing operating performance of our business and to facilitate the comparison of period-to-period performance because it excludes the impact of foreign exchange rate movements, acquisitions, and dispositions.

See page 10 for a reconciliation of consolidated adjusted EBITDA and a segment results summary and a reconciliation of adjusted EBITDA. See page 11 for a reconciliation of segment adjusted EBITDA margin, a reconciliation of adjusted EBITDA expenses, and a reconciliation of diluted adjusted EPS. See page 12 for a reconciliation of net cash provided by operating activities to free cash flow.

Attached Financial Statements

Please refer to the full Form 10-Q filing for the complete financial statements and related notes.

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As of June 30, 2022 and December 31, 2021

 

 

June 30, 2022

 

December 31, 2021

 

 

(in millions, except for share and per share data)

ASSETS:

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

480.7

 

$

280.3

Accounts receivable, net of allowance for doubtful accounts of $18.3 and $21.3, respectively

 

488.9

 

446.3

Prepaid expenses

 

108.2

 

102.6

Income taxes receivable

 

64.7

 

36.7

Other current assets

 

44.1

 

36.7

Total current assets

 

1,186.6

 

902.6

Noncurrent assets:

 

 

 

 

 

 

 

 

Fixed assets, net

 

646.9

 

658.2

Operating lease right-of-use assets, net

 

226.2

 

253.1

Intangible assets, net

 

1,183.4

 

1,225.9

Goodwill

 

3,820.4

 

4,331.2

Deferred income tax assets

 

4.5

 

6.6

Other noncurrent assets

 

440.9

 

430.5

Total assets

 

$

7,508.9

 

$

7,808.1

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY:

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

276.2

 

320.7

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

 

1,136.3

 

971.3

Deferred revenues

 

659.6

 

501.0

Operating lease liabilities

 

36.3

 

41.2

Income taxes payable

 

4.1

 

9.0

Total current liabilities

 

2,112.5

 

1,843.2

Noncurrent liabilities:

 

 

 

 

 

 

 

 

Long-term debt

 

2,342.9

 

2,342.8

Deferred income tax liabilities

 

410.1

 

470.5

Operating lease liabilities

 

231.0

 

254.7

Other noncurrent liabilities

 

42.4

 

54.4

Total liabilities

 

5,138.9

 

4,965.6

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $.001 par value; 2,000,000,000 shares authorized; 544,003,038 shares issued; 158,257,098 and 161,651,639 shares outstanding, respectively

 

0.1

 

0.1

Additional paid-in capital

 

2,707.1

 

2,608.7

Treasury stock, at cost, 385,745,940 and 382,351,399 shares, respectively

 

(5,517.4)

 

(4,638.1)

Retained earnings

 

5,845.5

 

5,240.4

Accumulated other comprehensive losses

 

(683.4)

 

(394.6)

Total Verisk stockholders' equity

 

2,351.9

 

2,816.5

Noncontrolling interests

 

18.1

 

26.0

Total stockholders’ equity

 

2,370.0

 

2,842.5

Total liabilities and stockholders’ equity

 

$

7,508.9

 

$

7,808.1

 

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

For the Three and Six Months Ended June 30, 2022 and 2021

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

(in millions, except for share and per share data)

Revenues

 

$

746.3

 

$

747.5

 

$

1,521.8

 

$

1,473.6

Operating expenses (income):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues (exclusive of items shown separately below)

 

246.1

 

264.9

 

526.6

 

527.3

Selling, general and administrative

 

125.9

 

111.4

 

261.2

 

231.2

Depreciation and amortization of fixed assets

 

49.8

 

53.3

 

99.4

 

101.8

Amortization of intangible assets

 

39.8

 

50.5

 

84.4

 

95.5

Other operating loss (income), net

 

15.6

 

 

(361.5)

 

Total operating expenses, net

 

477.2

 

480.1

 

610.1

 

955.8

Operating income

 

269.1

 

267.4

 

911.7

 

517.8

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment income (loss)

 

4.7

 

(0.5)

 

4.3

 

1.2

Interest expense

 

(31.8)

 

(31.5)

 

(63.1)

 

(66.9)

Total other expense, net

 

(27.1)

 

(32.0)

 

(58.8)

 

(65.7)

Income before income taxes

 

242.0

 

235.4

 

852.9

 

452.1

Provision for income taxes

 

(44.2)

 

(83.8)

 

(149.3)

 

(132.5)

Net income

 

197.8

 

151.6

 

703.6

 

319.6

Less: Net (income) loss attributable to noncontrolling interests

 

(0.1)

 

2.4

 

(0.2)

 

3.0

Net income attributable to Verisk

 

$

197.7

 

$

154.0

 

$

703.4

 

$

322.6

Basic net income per share attributable to Verisk

 

$

1.25

 

$

0.95

 

$

4.41

 

$

1.99

Diluted net income per share attributable to Verisk

 

$

1.24

 

$

0.94

 

$

4.39

 

$

1.97

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

157,972,755

 

162,007,784

 

159,326,855

 

162,324,802

Diluted

 

159,123,563

 

163,046,538

 

160,381,090

 

163,741,628

 

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Three and Six Months Ended June 30, 2022 and 2021

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

(in millions)

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

197.8

 

$

151.6

 

$

703.6

 

$

319.6

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization of fixed assets

 

49.8

 

53.3

 

99.4

 

101.8

Amortization of intangible assets

 

39.8

 

50.5

 

84.4

 

95.5

Amortization of debt issuance costs and original issue discount, net of original issue premium

 

0.4

 

0.3

 

0.7

 

0.7

Provision for doubtful accounts

 

1.2

 

5.5

 

2.9

 

8.7

Loss (gain) on sale of assets

 

15.6

 

 

(435.2)

 

Stock-based compensation expense

 

18.4

 

10.8

 

38.9

 

36.2

Impairment of long-lived assets

 

 

 

73.7

 

Deferred income taxes

 

(12.3)

 

33.3

 

(49.4)

 

32.6

Loss on disposal of fixed assets

 

0.7

 

 

0.7

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

29.8

 

48.5

 

(103.3)

 

(41.0)

Prepaid expenses and other assets

 

(18.9)

 

(18.9)

 

(17.5)

 

(23.1)

Operating lease right-of-use assets, net

 

8.3

 

10.6

 

18.7

 

21.0

Income taxes

 

(153.6)

 

(37.8)

 

(22.6)

 

0.6

Accounts payable and accrued liabilities

 

6.4

 

5.9

 

(63.6)

 

(20.0)

Deferred revenues

 

(38.4)

 

(69.2)

 

227.7

 

187.7

Operating lease liabilities

 

(9.9)

 

(10.4)

 

(20.2)

 

(20.5)

Other liabilities

 

(4.9)

 

(0.8)

 

(9.1)

 

(17.9)

Net cash provided by operating activities

 

130.2

 

233.2

 

529.8

 

681.9

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions and purchase of additional controlling interest, net of cash acquired of $17.4 and $1.9; $17.4 and $5.7 respectively

 

(3.5)

 

(17.8)

 

(448.9)

 

(31.5)

Proceeds from sale of assets

 

498.3

 

 

1,073.3

 

Investments in nonpublic companies

 

(0.8)

 

(15.1)

 

(41.8)

 

(15.1)

Capital expenditures

 

(69.2)

 

(62.5)

 

(129.2)

 

(121.7)

Escrow funding associated with acquisitions

 

 

(4.8)

 

(2.3)

 

(4.8)

Payment of contingent liability related to acquisition

 

 

 

 

(1.2)

Other investing activities, net

 

 

0.4

 

 

0.8

Net cash provided by (used in) investing activities

 

424.8

 

(99.8)

 

451.1

 

(173.5)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

(in millions)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Repayments of) proceeds from short-term debt

 

(160.0)

 

390.0

 

40.0

 

340.0

Repayment of current portion of long-term-debt

 

 

(450.0)

 

 

(450.0)

Proceeds from issuance of short-term debt with original maturities less than three months

 

 

 

125.0

 

Repurchases of common stock

 

(325.0)

 

(150.0)

 

(896.3)

 

(250.0)

Proceeds from stock options exercised

 

77.2

 

13.4

 

93.0

 

21.0

Net share settlement of taxes from restricted stock and performance share awards

 

(8.7)

 

(3.2)

 

(20.0)

 

(11.0)

Dividends paid

 

(49.2)

 

(47.1)

 

(98.6)

 

(94.2)

Other financing activities, net

 

(1.7)

 

(1.8)

 

(4.1)

 

(3.7)

Net cash used in financing activities

 

(467.4)

 

(248.7)

 

(761.0)

 

(447.9)

Effect of exchange rate changes

 

(12.9)

 

0.7

 

(19.5)

 

(3.0)

Net increase (decrease) in cash and cash equivalents

 

74.7

 

(114.6)

 

200.4

 

57.5

Cash and cash equivalents, beginning of period

 

406.0

 

390.9

 

280.3

 

218.8

Cash and cash equivalents, end of period

 

$

480.7

 

$

276.3

 

$

480.7

 

$

276.3

Supplemental disclosures:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes paid

 

$

210.1

 

$

88.1

 

$

221.8

 

$

98.9

Interest paid

 

$

39.5

 

$

50.2

 

$

60.6

 

$

69.7

Noncash investing and financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred tax liability established on date of acquisition

 

$

0.4

 

$

2.2

 

$

16.5

 

$

4.4

Net assets sold as part of the disposition

 

$

495.9

 

$

 

$

607.4

 

$

Finance lease additions

 

$

1.4

 

$

0.6

 

$

3.5

 

$

2.6

Operating lease additions, net

 

$

6.6

 

$

2.7

 

$

8.3

 

$

9.4

Fixed assets included in accounts payable and accrued liabilities

 

$

 

$

1.4

 

$

 

$

1.4

 

Non-GAAP Reconciliations

Consolidated Adjusted EBITDA Reconciliation

(in millions)

Note: EBITDA, adjusted EBITDA, and organic adjusted EBITDA are non-GAAP measures. Margin is calculated as a percentage of revenues.

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

Total

 

Margin

 

Total

 

Margin

 

Total

 

Margin

 

Total

 

Margin

Net income

 

$

197.8

 

26.5%

 

$

151.6

 

20.3%

 

$

703.6

 

46.2%

 

$

319.6

 

21.7%

Depreciation and amortization of fixed assets

 

49.8

 

6.7

 

53.3

 

7.1

 

99.4

 

6.5

 

101.8

 

6.9

Amortization of intangible assets

 

39.8

 

5.3

 

50.5

 

6.8

 

84.4

 

5.6

 

95.5

 

6.5

Interest expense

 

31.8

 

4.3

 

31.5

 

4.2

 

63.1

 

4.2

 

66.9

 

4.5

Provision for income taxes

 

44.2

 

5.9

 

83.8

 

11.2

 

149.3

 

9.8

 

132.5

 

9.0

EBITDA

 

363.4

 

48.7

 

370.7

 

49.6

 

1,099.8

 

72.3

 

716.3

 

48.6

Impairment loss

 

 

 

 

 

73.7

 

4.8

 

 

Acquisition-related costs (earn-outs)

 

 

 

0.1

 

 

 

 

 

Loss (gain) from dispositions

 

15.6

 

2.1

 

 

 

(435.2)

 

(28.6)

 

 

Severance expense

 

1.8

 

0.2

 

 

 

1.8

 

0.1

 

 

Adjusted EBITDA

 

380.8

 

51.0

 

370.8

 

49.6

 

740.1

 

48.6

 

716.3

 

48.6

Adjusted EBITDA from acquisitions and dispositions

 

(7.3)

 

(1.0)

 

(18.3)

 

(2.4)

 

(26.5)

 

(1.7)

 

(35.5)

 

(2.4)

Organic adjusted EBITDA

 

$

373.5

 

50.0

 

$

352.5

 

47.2

 

$

713.6

 

46.9

 

$

680.8

 

46.2

 

Segment Results Summary and Adjusted EBITDA Reconciliation

(in millions)

Note: Organic revenues, EBITDA, adjusted EBITDA, and organic adjusted EBITDA are non-GAAP measures.

 

 

Three Months Ended June 30, 2022

 

Three Months Ended June 30, 2021

 

 

Insurance

 

Energy and Specialized Markets

 

Financial Services

 

Insurance

 

Energy and Specialized Markets

 

Financial Services

Revenues

 

$

610.0

 

$

133.5

 

$

2.8

 

$

550.0

 

$

162.3

 

$

35.2

Revenues from acquisitions and dispositions

 

(28.4)

 

(2.0)

 

(2.8)

 

 

(28.4)

 

(35.2)

Organic revenues

 

$

581.6

 

$

131.5

 

$

 

$

550.0

 

$

133.9

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

$

333.9

 

$

47.1

 

$

(17.6)

 

$

310.7

 

$

57.6

 

$

2.4

Acquisition-related costs (earn-outs)

 

 

 

 

0.1

 

 

(Gain) loss from dispositions

 

 

(2.6)

 

18.2

 

 

 

Severance expense

 

 

1.8

 

 

 

 

Adjusted EBITDA

 

333.9

 

46.3

 

0.6

 

310.8

 

57.6

 

2.4

Adjusted EBITDA from acquisitions and dispositions

 

(6.8)

 

0.1

 

(0.6)

 

(5.6)

 

(10.3)

 

(2.4)

Organic adjusted EBITDA

 

$

327.1

 

$

46.4

 

$

 

$

305.2

 

$

47.3

 

$

 

 

 

Six Months Ended June 30, 2022

 

Six Months Ended June 30, 2021

 

 

Insurance

 

Energy and Specialized Markets

 

Financial Services

 

Insurance

 

Energy and Specialized Markets

 

Financial Services

Revenues

 

$

1,196.4

 

$

287.8

 

$

37.6

 

$

1,085.6

 

$

318.5

 

$

69.5

Revenues from acquisitions and dispositions

 

(48.2)

 

(26.5)

 

(37.6)

 

(0.6)

 

(55.7)

 

(69.5)

Organic revenues

 

$

1,148.2

 

$

261.3

 

$

 

$

1,085.0

 

$

262.8

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

$

636.2

 

$

549.0

 

$

(85.4)

 

$

599.7

 

$

111.3

 

$

5.3

Impairment loss

 

 

 

73.7

 

 

 

(Gain) loss from dispositions

 

 

(453.4)

 

18.2

 

 

 

Severance expense

 

 

1.8

 

 

 

 

Adjusted EBITDA

 

636.2

 

97.4

 

6.5

 

599.7

 

111.3

 

5.3

Adjusted EBITDA from acquisitions and dispositions

 

(10.0)

 

(10.0)

 

(6.5)

 

(10.2)

 

(20.0)

 

(5.3)

Organic adjusted EBITDA

 

$

626.2

 

$

87.4

 

$

 

$

589.5

 

$

91.3

 

$

 

Segment Adjusted EBITDA Margin Reconciliation

Note: Segment adjusted EBITDA margin is calculated as a percentage of respective segment revenues.

 

 

Three Months Ended June 30, 2022

 

Three Months Ended June 30, 2021

 

 

Insurance

 

Energy and Specialized Markets

 

Financial Services

 

Insurance

 

Energy and Specialized Markets

 

Financial Services

EBITDA margin

 

54.7%

 

35.3%

 

(629.6)%

 

56.5%

 

35.5%

 

6.9%

(Gain) loss from dispositions

 

 

(2.0)

 

654.1

 

 

 

Severance expense

 

 

1.3

 

 

 

 

Adjusted EBITDA margin

 

54.7

 

34.6

 

24.5

 

56.5

 

35.5

 

6.9

 

 

 

Six Months Ended June 30, 2022

 

Six Months Ended June 30, 2021

 

 

Insurance

 

Energy and Specialized Markets

 

Financial Services

 

Insurance

 

Energy and Specialized Markets

 

Financial Services

EBITDA margin

 

53.2%

 

190.7%

 

(227.0)%

 

55.2%

 

35.0%

 

7.6%

Impairment loss

 

 

 

196.1

 

 

 

(Gain) loss from dispositions

 

 

(157.5)

 

48.3

 

 

 

Severance expense

 

 

0.6

 

 

 

 

Adjusted EBITDA margin

 

53.2

 

33.8

 

17.4

 

55.2

 

35.0

 

7.6

 

Consolidated Adjusted EBITDA Expense Reconciliation

(in millions)

Note: Adjusted EBITDA expenses are a non-GAAP measure.

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2022

 

2021

 

2022

 

2021

Operating expenses

 

$

477.2

 

$

480.1

 

$

610.1

 

$

955.8

Depreciation and amortization of fixed assets

 

(49.8)

 

(53.3)

 

(99.4)

 

(101.8)

Amortization of intangible assets

 

(39.8)

 

(50.5)

 

(84.4)

 

(95.5)

Investment (income) loss

 

(4.7)

 

0.5

 

(4.3)

 

(1.2)

Acquisition-related costs (earn-outs)

 

 

(0.1)

 

 

Impairment loss

 

 

 

(73.7)

 

(Loss) gain from dispositions

 

(15.6)

 

 

435.2

 

Severance expense

 

(1.8)

 

 

(1.8)

 

Adjusted EBITDA expenses

 

$

365.5

 

$

376.7

 

$

781.7

 

$

757.3

 

Diluted Adjusted EPS Reconciliation

(in millions, except per share amounts)

Note: Diluted adjusted EPS is a non-GAAP measure.

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2022

 

2021

 

2022

 

2021

Net income

 

$

197.8

 

$

151.6

 

$

703.6

 

$

319.6

plus: Amortization of intangibles

 

39.8

 

50.5

 

84.4

 

95.5

less: Income tax effect on amortization of intangibles

 

(8.8)

 

(11.1)

 

(18.6)

 

(21.0)

plus: Acquisition-related costs and interest expense (earn-outs)

 

 

0.1

 

 

less: Income tax effect on acquisition-related costs and interest expense (earn-outs)

 

 

(0.1)

 

 

plus: Impairment loss

 

 

 

73.7

 

less: Income tax effect on impairment loss

 

 

 

(16.8)

 

plus: Loss (gain) from dispositions

 

15.6

 

 

(435.2)

 

less: Income tax effect on (loss) gain from dispositions

 

(1.8)

 

 

68.6

 

plus: Severance expense

 

1.8

 

 

1.8

 

less: Income tax effect on severance expense

 

(0.4)

 

 

(0.4)

 

Adjusted net income

 

$

244.0

 

$

191.0

 

$

461.1

 

$

394.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS attributable to Verisk

 

$

1.24

 

$

0.94

 

$

4.39

 

$

1.97

Diluted adjusted EPS

 

$

1.53

 

$

1.17

 

$

2.88

 

$

2.41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average diluted shares outstanding

 

159.1

 

163.0

 

160.4

 

163.7

 

Free Cash Flow Reconciliation

(in millions)

Note: Free cash flow is a non-GAAP measure.

 

 

Three Months Ended

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

June 30,

 

 

 

 

 

June 30,

 

 

 

 

 

 

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Net cash provided by operating activities

 

$

130.2

 

$

233.2

 

(44.2)%

 

$

529.8

 

$

681.9

 

(22.3)%

Capital expenditures

 

(69.2)

 

(62.5)

 

10.7

 

(129.2)

 

(121.7)

 

6.2

Free cash flow

 

$

61.0

 

$

170.7

 

(64.3)

 

$

400.6

 

$

560.2

 

(28.5)

 


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