Verisk Analytics, Inc., Reports Second-Quarter 2016 Financial Results

  • Revenue from continuing operations grew 16.3%; organic revenue growth from continuing operations was 5.4%.
  • Income from continuing operations decreased 32.8% to $107 million; adjusted EBITDA from continuing operations increased 12.4% to $245 million.
  • Diluted GAAP earnings per share from continuing operations (GAAP EPS) decreased 34.7% to $0.62; diluted adjusted earnings per share from continuing operations (Adjusted EPS) increased 1.4% to $0.73.
  • Net cash provided by operating activities from continuing operations less capital expenditures from continuing operations was $305 million year to date, an increase of 21.1%.

JERSEY CITY, N.J., August 2, 2016 — Verisk Analytics, Inc. (Nasdaq:VRSK), a leading data analytics provider, today announced results for the quarter ended June 30, 2016.

Scott Stephenson, chairman, president, and CEO, said, "Our second-quarter results were solid with continued revenue growth and strong margins. We feel very good about our business and continue to position ourselves to deliver outstanding data analytics solutions for our customers across our key verticals of insurance, natural resources, and financial services. Our strong cash generation enables us to meet our deleveraging objectives and to put capital to work on behalf of our shareholders."

 

Table 1: Summary of Results

(in millions, except per share amounts)

 

For the Three Months Ended

     

For the Six Months Ended

   
 

June 30,

     

June 30,

   
 

2016

 

2015

 

Change

 

2016

 

2015

 

Change

Revenues from continuing operations

$

498.3

   

$

428.6

   

16.3

%

 

$

991.0

   

$

812.9

   

21.9

%

Income from continuing operations

$

106.8

   

$

158.9

   

(32.8

)%

 

$

216.5

   

$

255.3

   

(15.2

)%

Adjusted EBITDA from continuing operations

$

245.2

   

$

217.9

   

12.4

%

 

$

493.6

   

$

418.2

   

18.0

%

Adjusted net income from continuing operations

$

124.3

   

$

120.0

   

3.7

%

 

$

251.7

   

$

221.0

   

13.9

%

Diluted GAAP EPS from continuing operations

$

0.62

   

$

0.95

   

(34.7

)%

 

$

1.26

   

$

1.55

   

(18.7

)%

Diluted adjusted EPS from continuing operations

$

0.73

   

$

0.72

   

1.4

%

 

$

1.47

   

$

1.34

   

9.7

%

 

Revenue

Total revenue from continuing operations increased 16.3% in second-quarter 2016 compared with second-quarter 2015. Organic revenue growth from continuing operations was 5.4%, excluding recent acquisitions in the second quarters for both years. Financial services led the organic revenue growth in the quarter.

Decision Analytics segment revenue from continuing operations grew 23.5% in the second quarter of 2016 and represented approximately 63.7% of total revenue. Decision Analytics organic revenue growth from continuing operations was 5.5%.

  • Insurance category revenue increased 6.2%, led by strong growth in loss quantification and claims analytics solutions. Underwriting solutions also grew in the quarter. Catastrophe modeling solutions saw a modest decline versus the prior year.
  • Financial services category revenue increased 15.9% in the quarter, with solid demand for both core and newer solutions.
  • Energy and specialized markets category revenue grew 70.4%. Organic revenue, excluding the recently acquired Wood Mackenzie (which will be treated as organic starting with the third quarter), PCI, and Infield businesses, declined 9.6% as a result of softer demand for certain environmental health and safety solutions.

 

Table 2: Decision Analytics Revenues by Category

(in millions)

 

For the Three Months Ended

     

For the Six Months Ended

   
 

June 30,

     

June 30,

   
 

2016

 

2015

 

Change

 

2016

 

2015

 

Change

Insurance

$

175.5

   

$

165.3

   

6.2

%

 

$

347.0

   

$

319.0

   

8.8

%

Financial services

 

30.6

     

26.4

   

15.9

%

   

59.1

     

61.6

   

(4.0

)%

Energy and specialized markets

 

111.1

     

65.2

   

70.4

%

   

224.0

     

89.7

   

149.9

%

Total Decision Analytics

$

317.2

   

$

256.9

   

23.5

%

 

$

630.1

   

$

470.3

   

34.0

%

 

Risk Assessment segment revenue grew 5.5% in the quarter and 5.3% excluding the recent acquisition of Risk Intelligence Ireland.

  • Revenue growth in industry-standard insurance programs was 6.0%, and 5.7% 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 3.8% in the second quarter. Growth was led by an increase in commercial underwriting solutions subscription revenue.

 

Table 3: Risk Assessment Revenues by Category

(in millions)

 

For the Three Months Ended

     

For the Six Months Ended

   
 

June 30,

     

June 30,

   
 

2016

 

2015

 

Change

 

2016

 

2015

 

Change

Industry-standard insurance programs

$

138.6

   

$

130.7

   

6.0

%

 

$

276.0

   

$

261.3

   

5.6

%

Property-specific rating and underwriting information

 

42.5

     

41.0

   

3.8

%

   

84.9

     

81.3

   

4.4

%

Total Risk Assessment

$

181.1

   

$

171.7

   

5.5

%

 

$

360.9

   

$

342.6

   

5.3

%

 

Expenses and Income

Cost of revenues from continuing operations increased 15.4% compared with second-quarter 2015. The year-over-year increase is primarily due to acquisitions as well as salaries, benefits, and technology to support business growth.

Selling, general, and administrative expense, or SG&A, from continuing operations decreased 8.2% in the quarter because one-time acquisition costs in the prior period did not recur.

Income from continuing operations decreased 32.8% to $107 million. The prior period included a hedge gain that more than offset one-time costs related to the acquisition of Wood Mackenzie. Adjusted EBITDA from continuing operations increased 12.4% to $245 million.

  • The 20.8% increase to $141 million in Decision Analytics adjusted EBITDA from continuing operations was the result of acquisitions and profitable growth of the business.
  • Second-quarter 2016 adjusted EBITDA in Risk Assessment increased 2.9% to $105 million as a result of revenue growth and good expense management, partially offset by anticipated increases in hiring to support future growth in the business.

 

Table 4: Segment Results Summary and Adjusted EBITDA Reconciliation

(in millions)

 

Three Months Ended

 

Three Months Ended

           
 

June 30, 2016

 

June 30, 2015

 

Change

 

DA

 

RA

 

Total

 

DA

 

RA

 

Total

 

DA

 

RA

 

Total

Revenues

$

317.2

   

$

181.1

   

$

498.3

   

$

256.9

   

$

171.7

   

$

428.6

   

23.5

%

 

5.5

%

 

16.3

%

Cost of revenues

 

(123.4

)

   

(55.0

)

   

(178.4

)

   

(104.2

)

   

(50.4

)

   

(154.6

)

 

18.4

%

 

9.1

%

 

15.4

%

SG&A

 

(54.1

)

   

(21.5

)

   

(75.6

)

   

(62.5

)

   

(20.0

)

   

(82.5

)

 

(13.5

)%

 

8.3

%

 

(8.2

)%

Depreciation and amortization of fixed and intangible assets

 

(46.0

)

   

(7.1

)

   

(53.1

)

   

(39.1

)

   

(6.4

)

   

(45.5

)

 

17.9

%

 

9.5

%

 

16.7

%

Investment income and others, net

 

0.9

     

     

0.9

     

(0.4

)

   

0.2

     

(0.2

)

 

(332.2

)%

 

(128.4

)%

 

(427.3

)%

Interest expense

 

NA

   

NA

   

(31.5

)

   

NA

   

NA

   

(37.7

)

 

NA

 

NA

 

(16.5

)%

Provision for income tax

 

NA

   

NA

   

(53.8

)

   

NA

   

NA

   

(34.4

)

 

NA

 

NA

 

56.3

%

Gain on derivative

 

     

     

     

85.2

     

     

85.2

   

(100.0

)%

 

%

 

(100.0

)%

Income from continuing operations

 

NA

   

NA

   

106.8

     

NA

   

NA

   

158.9

   

NA

 

NA

 

(32.8

)%

plus: Interest expense

 

NA

   

NA

   

31.5

     

NA

   

NA

   

37.7

   

NA

 

NA

 

16.5

%

plus: Provision for income tax

 

NA

   

NA

   

53.8

     

NA

   

NA

   

34.4

   

NA

 

NA

 

56.3

%

plus: Depreciation and amortization

 

46.0

     

7.1

     

53.1

     

39.1

     

6.4

     

45.5

   

17.9

%

 

9.5

%

 

16.7

%

minus: Nonrecurring items related to the Wood Mackenzie acquisition, net of tax

 

     

     

     

(58.6

)

   

     

(58.6

)

 

(100.0

)%

 

%

 

(100.0

)%

Adjusted EBITDA from continuing operations

$

140.6

   

$

104.6

   

$

245.2

   

$

116.4

   

$

101.5

   

$

217.9

   

20.8

%

 

2.9

%

 

12.4

%

                                               

Income from continuing operations margin

 

NA

   

NA

   

21.4

%

   

NA

   

NA

   

37.1

%

           

Adjusted EBITDA from continuing operations margin

 

44.3

%

   

57.7

%

   

49.2

%

   

45.3

%

   

59.1

%

   

50.9

%

           

 

 

Six Months Ended

 

Six Months Ended

   
 

June 30, 2016

 

June 30, 2015

 

Change

 

DA

 

RA

 

Total

 

DA

 

RA

 

Total

 

DA

 

RA

 

Total

Revenues

$

630.1

   

$

360.9

   

$

991.0

   

$

470.3

   

$

342.6

   

$

812.9

   

34.0

%

 

5.3

%

 

21.9

%

Cost of revenues

 

(245.0

)

   

(106.7

)

   

(351.7

)

   

(187.0

)

   

(101.3

)

   

(288.3

)

 

31.0

%

 

5.3

%

 

22.0

%

SG&A

 

(106.4

)

   

(40.2

)

   

(146.6

)

   

(93.2

)

   

(39.0

)

   

(132.2

)

 

14.3

%

 

3.2

%

 

11.0

%

Depreciation and amortization of fixed and intangible assets

 

(94.8

)

   

(14.1

)

   

(108.9

)

   

(59.9

)

   

(12.5

)

   

(72.4

)

 

58.2

%

 

13.1

%

 

50.4

%

Investment income and others, net

 

1.0

     

(0.1

)

   

0.9

     

(1.0

)

   

0.2

     

(0.8

)

 

(204.7

)%

 

(154.3

)%

 

(217.1

)%

Interest expense

 

NA

   

NA

   

(63.5

)

   

NA

   

NA

   

(55.9

)

 

NA

 

NA

 

13.5

%

Provision for income tax

 

NA

   

NA

   

(104.7

)

   

NA

   

NA

   

(93.2

)

 

NA

 

NA

 

12.3

%

Gain on derivative

 

     

     

     

85.2

     

     

85.2

   

(100.0

)%

 

%

 

(100.0

)%

Income from continuing operations

 

NA

   

NA

   

216.5

     

NA

   

NA

   

255.3

   

NA

 

NA

 

(15.2

)%

plus: Interest expense

 

NA

   

NA

   

63.5

     

NA

   

NA

   

55.9

   

NA

 

NA

 

13.5

%

plus: Provision for income tax

 

NA

   

NA

   

104.7

     

NA

   

NA

   

93.2

   

NA

 

NA

 

12.3

%

plus: Depreciation and amortization

 

94.8

     

14.1

     

108.9

     

59.9

     

12.5

     

72.4

   

58.2

%

 

13.1

%

 

50.4

%

minus: Nonrecurring items related to the Wood Mackenzie acquisition, net of tax

 

     

     

     

(58.6

)

   

     

(58.6

)

 

(100.0

)%

 

%

 

(100.0

)%

Adjusted EBITDA from continuing operations

$

279.7

   

$

213.9

   

$

493.6

   

$

215.7

   

$

202.5

   

$

418.2

   

29.6

%

 

5.6

%

 

18.0

%

                                               

Income from continuing operations margin

 

NA

   

NA

   

21.8

%

   

NA

   

NA

   

31.4

%

           

Adjusted EBITDA from continuing operations margin

 

44.4

%

   

59.3

%

   

49.8

%

   

45.9

%

   

59.1

%

   

51.5

%

           

 

Earnings Per Share

Diluted GAAP EPS was $0.62 for second-quarter 2016, a decrease of 34.7%; the prior period included a hedge gain that more than offset one-time costs related to the acquisition of Wood Mackenzie. Diluted adjusted EPS was $0.73 for second-quarter 2016, an increase of 1.4% compared with the same period in 2015. Adjusted EPS from continuing operations increased because of solid operations, both organic and acquired, and lower interest expense. The increases were partially offset by higher fixed asset depreciation and amortization expense and an increase in shares outstanding related to the 2015 acquisition of Wood Mackenzie.

Cash Flow

Cash provided by operating activities from continuing operations less capital expenditures from continuing operations increased 21.1% to $305 million for the six-month period ended June 30, 2016, including the contribution from acquisitions. Cash provided by operating activities from continuing operations less capital expenditures from continuing operations represented 141.1% of income from continuing operations and 61.9% of adjusted EBITDA from continuing operations for the six-months ended June 30, 2016. Capital expenditures from continuing operations increased 4.6% to $52 million and were 5.2% of revenues for the six months ended June 30, 2016.

Share Repurchases and Financing Activities

At June 30, 2016, the company had $353 million remaining under its share repurchase authorization. As part of its commitment to deleveraging, the company repaid $705 million of debt in the quarter.

Conference Call

Verisk’s management team will host a live audio webcast on Wednesday, August 3, 2016, at 8:30 a.m. EDT (5:30 a.m. PDT, 13:30 p.m. BST) 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 #48020422.

About Verisk Analytics

Verisk Analytics (Nasdaq:VRSK) is a leading data analytics provider serving customers in insurance, natural resources, financial services, government, and risk management. 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. In the United States and 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 2015, Forbes magazine named Verisk Analytics to its World’s Most Innovative Companies list and, in 2016, to its America’s Best Large Employers list. Verisk is one of only 15 companies in the United States 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 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.

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, income taxes, and depreciation and amortization of fixed and intangible assets and excluding second-quarter 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 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.

 

Table 5: Adjusted Net Income from Continuing Operations Reconciliation

(in millions, except per share amounts)

 

For the Three Months Ended

     

For the Six Months Ended

   
 

June 30,

     

June 30,

   
 

2016

 

2015

 

Change

 

2016

 

2015

 

Change

Income from continuing operations

$

106.8

   

$

158.9

   

(32.8

)%

 

$

216.5

   

$

255.3

   

(15.2

)%

plus: Amortization of intangible assets

 

23.8

     

22.8

         

47.7

     

30.3

     

less: Income tax effect on amortization of intangible assets

 

(6.3

)

   

(5.8

)

       

(12.5

)

   

(8.7

)

   

less: Nonrecurring items related to the Wood Mackenzie acquisition

 

     

(45.2

)

       

     

(45.2

)

   

less: Income tax effect on one-time items related to the Wood Mackenzie acquisition

 

     

(10.7

)

       

     

(10.7

)

   

Adjusted net income from continuing operations

$

124.3

   

$

120.0

   

3.7

%

 

$

251.7

   

$

221.0

   

13.9

%

                               

Basic adjusted EPS from continuing operations

$

0.74

   

$

0.73

   

1.4

%

 

$

1.50

   

$

1.37

   

9.5

%

Diluted adjusted EPS from continuing operations

$

0.73

   

$

0.72

   

1.4

%

 

$

1.47

   

$

1.34

   

9.7

%

                               

Weighted average shares outstanding (in millions)

                             

Basic

 

168.3

     

164.1

         

168.4

     

161.1

     

Diluted

 

171.2

     

167.6

         

171.3

     

164.5

     

 

Table 6: Free Cash Flow Reconciliation

(in millions)

 

Six Months Ended

   
 

June 30,

   
 

2016

 

2015

 

Change

Operating cash flow from continuing operations

$

357.0

   

$

301.5

   

18.4

%

less: Capital expenditures from continuing operations

 

(51.5

)

   

(49.3

)

 

4.6

%

Free cash flow from continuing operations

$

305.5

   

$

252.2

   

21.1

%

 

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 June 30, 2016, and December 31, 2015

 

2016

 

2015

           
 

(In thousands, except for

share and per share data)

ASSETS

Current assets:

         

Cash and cash equivalents

$

196,402

   

$

138,348

 

Available-for-sale securities

 

3,372

     

3,576

 

Accounts receivable, net of allowance for doubtful accounts of $3,137 and $2,642,
respectively

 

241,326

     

250,947

 

Prepaid expenses

 

30,870

     

34,126

 

Income taxes receivable

 

5,748

     

48,596

 

Other current assets

 

19,199

     

52,913

 

Current assets held-for-sale

 

     

76,063

 

Total current assets

 

496,917

     

604,569

 

Noncurrent assets:

         

Fixed assets, net

 

334,631

     

350,311

 

Intangible assets, net

 

1,104,262

     

1,245,083

 

Goodwill

 

2,629,941

     

2,753,026

 

Pension assets

 

39,534

     

32,922

 

Other assets

 

119,778

     

25,845

 

Noncurrent assets held-for-sale

 

     

581,896

 

Total assets

$

4,725,063

   

$

5,593,652

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

         

Accounts payable and accrued liabilities

$

163,413

   

$

222,112

 

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

 

2,256

     

874,811

 

Pension and postretirement benefits, current

 

1,831

     

1,831

 

Deferred revenues

 

431,171

     

340,833

 

Income tax payable

 

16,495

     

 

Current liabilities held-for-sale

 

     

39,670

 

Total current liabilities

 

615,166

     

1,479,257

 

Noncurrent liabilities:

         

Long-term debt

 

2,273,032

     

2,270,904

 

Pension benefits

 

12,698

     

12,971

 

Postretirement benefits

 

1,868

     

1,981

 

Deferred income taxes, net

 

314,705

     

329,175

 

Other liabilities

 

57,730

     

58,360

 

Noncurrent liabilities held-for-sale

 

     

68,993

 

Total liabilities

 

3,275,199

     

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 168,719,149 and 169,424,981 shares outstanding, respectively

 

137

     

137

 

Additional paid-in capital

 

2,071,497

     

2,023,390

 

Treasury stock, at cost, 375,283,889 and 374,578,057 shares, respectively

 

(2,680,728

)

   

(2,571,190

)

Retained earnings

 

2,516,101

     

2,161,726

 

Accumulated other comprehensive losses

 

(457,143

)

   

(242,052

)

Total stockholders’ equity

 

1,449,864

     

1,372,011

 

Total liabilities and stockholders’ equity

$

4,725,063

   

$

5,593,652

 

 

VERISK ANALYTICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

For the Three and Six Months Ended June 30, 2016 and 2015

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2016

 

2015

 

2016

 

2015

   
 

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

Revenues

$

498,296

   

$

428,599

   

$

990,997

   

$

812,892

 

Expenses:

                     

Cost of revenues (exclusive of items shown
separately below)

 

178,466

     

154,639

     

351,743

     

288,423

 

Selling, general and administrative

 

75,557

     

82,336

     

146,594

     

132,050

 

Depreciation and amortization of fixed assets

 

29,388

     

22,677

     

61,275

     

42,065

 

Amortization of intangible assets

 

23,806

     

22,904

     

47,677

     

30,359

 

Total expenses

 

307,217

     

282,556

     

607,289

     

492,897

 

Operating income

 

191,079

     

146,043

     

383,708

     

319,995

 

Other income (expense):

                     

Investment income (loss) and others, net

 

846

     

(259

)

   

890

     

(761

)

Gain on derivative instruments

 

     

85,187

     

     

85,187

 

Interest expense

 

(31,435

)

   

(37,662

)

   

(63,467

)

   

(55,924

)

Total other income (expense), net

 

(30,589

)

   

47,266

     

(62,577

)

   

28,502

 

Income from continuing operations before income
taxes

 

160,490

     

193,309

     

321,131

     

348,497

 

Provision for income taxes

 

(53,754

)

   

(34,392

)

   

(104,665

)

   

(93,207

)

Income from continuing operations

 

106,736

     

158,917

     

216,466

     

255,290

 

Discontinued operations

                     

Income from discontinued operations

 

254,745

     

7,717

     

256,525

     

12,021

 

Provision for income taxes from discontinued
operations

 

(99,745

)

   

(3,314

)

   

(118,616

)

   

(5,305

)

Income from discontinued operations

 

155,000

     

4,403

     

137,909

     

6,716

 

Net income

$

261,736

   

$

163,320

   

$

354,375

   

$

262,006

 

Basic net income per share:

                     

Income from continuing operations

$

0.64

   

$

0.97

   

$

1.29

   

$

1.59

 

Income from discontinued operations

 

0.92

     

0.02

     

0.81

     

0.04

 

Basic net income per share

$

1.56

   

$

0.99

   

$

2.10

   

$

1.63

 

Diluted net income per share:

                     

Income from continuing operations

$

0.62

   

$

0.95

   

$

1.26

   

$

1.55

 

Income from discontinued operations

 

0.91

     

0.02

     

0.81

     

0.04

 

Diluted net income per share

$

1.53

   

$

0.97

   

$

2.07

   

$

1.59

 

Weighted average shares outstanding:

                     

Basic

 

168,296,318

     

164,141,804

     

168,375,034

     

161,114,861

 

Diluted

 

171,218,782

     

167,586,100

     

171,349,833

     

164,533,656

 

 

VERISK ANALYTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Six Months Ended June 30, 2016 and 2015

 

 

2016

 

2015

   
 

(In thousands)

Cash flows from operating activities:

         

Net income

$

354,375

   

$

262,006

 

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

         

Depreciation and amortization of fixed assets

 

68,331

     

53,070

 

Amortization of intangible assets

 

53,581

     

42,953

 

Amortization of debt issuance costs and original issue discount

 

2,472

     

10,634

 

Allowance for doubtful accounts

 

1,327

     

456

 

KSOP compensation expense

 

8,214

     

7,969

 

Stock based compensation

 

16,468

     

19,047

 

Gain on derivative instruments

 

     

(85,187

)

Gain on sale of discontinued operations

 

(269,385

)

   

 

Realized loss (gain) on available-for-sale securities, net

 

274

     

(14

)

Deferred income taxes

 

6,123

     

(7,390

)

Loss (gain) on disposal of fixed assets, net

 

811

     

(3

)

Excess tax benefits from exercised stock options and restricted stock awards

 

(6,570

)

   

(8,419

)

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

         

Accounts receivable

 

21,179

     

37,981

 

Prepaid expenses and other assets

 

(1,503

)

   

9,747

 

Income taxes

 

61,707

     

11,858

 

Accounts payable and accrued liabilities

 

(26,399

)

   

(27,393

)

Deferred revenues

 

92,581

     

38,305

 

Pension and postretirement benefits

 

(5,232

)

   

(7,129

)

Other liabilities

 

131

     

(2,990

)

Net cash provided by operating activities

 

378,485

     

355,501

 

Cash flows from investing activities:

         

Acquisitions, net of cash acquired of $1,034 and $35,398, respectively

 

(6,200

)

   

(2,811,759

)

Purchase of non-controlling interest in non-public companies

 

     

(101

)

Proceeds from sale of discontinued operations

 

719,374

     

 

Escrow funding associated with acquisition

 

     

(78,694

)

Proceeds from the settlement of derivative instruments

 

     

85,187

 

Capital expenditures

 

(62,231

)

   

(60,092

)

Purchases of available-for-sale securities

 

(25

)

   

(29

)

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

 

283

     

230

 

Other investing activities, net

 

(620

)

   

 

Net cash provided by (used in) investing activities

 

650,581

     

(2,865,258

)

Cash flows from financing activities:

         

Proceeds from issuance of long-term debt, net of original issue discount

 

     

1,243,966

 

(Repayment) proceeds of short-term debt, net

 

(870,000

)

   

30,000

 

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

 

     

(23,053

)

Repurchases of common stock

 

(116,363

)

   

 

Excess tax benefits from exercised stock options and restricted stock awards

 

6,570

     

8,419

 

Proceeds from stock options exercised

 

16,326

     

18,103

 

Proceeds from issuance of stock as part of a public offering

 

     

720,848

 

Net share settlement of restricted stock awards

 

(2,930

)

   

(2,350

)

Other financing activities, net

 

(3,536

)

   

(2,569

)

Net cash (used in) provided by financing activities

 

(969,933

)

   

2,603,364

 

Effect of exchange rate changes

 

(1,079

)

   

12,525

 

Increase in cash and cash equivalents

 

58,054

     

106,132

 

Cash and cash equivalents, beginning of period

 

138,348

     

39,359

 

Cash and cash equivalents, end of period

$

196,402

   

$

145,491

 

Supplemental disclosures:

         

Taxes paid

$

149,597

   

$

87,914

 

Interest paid

$

62,902

   

$

37,977

 

Noncash investing and financing activities:

         

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

$

293

   

$

258,976

 

Tenant improvement included in other liabilities

$

34

   

$

448

 

Capital lease obligations

$

637

   

$

905

 

Capital expenditures included in accounts payable and accrued liabilities

$

1,629

   

$

4,658