Verisk Reports Fourth-Quarter 2020 Financial Results
Verisk (Nasdaq:VRSK) reported fourth-quarter 2020 revenues of $713 million, a 5.4% increase compared to Q4 2019. Net income rose by 33.3% to $176 million. Adjusted EBITDA, a non-GAAP measure, increased 7.9% to $344 million. The company generated $248.9 million in operating cash flow, up 41.1%, and $176.5 million in free cash flow, reflecting a 57.0% increase. A cash dividend of 29 cents per share was approved for March 31, 2021, representing a 7.4% increase from the prior dividend.
- Net income increased by 33.3% to $176 million in Q4 2020.
- Adjusted EBITDA rose 7.9% to $344 million, showcasing strong operational efficiency.
- Free cash flow reached $176.5 million, up 57.0%, indicating robust cash management.
- Approved 7.4% cash dividend increase to 29 cents per share reflecting confidence in long-term growth.
- Financial Services segment revenue decreased by 19.6% in Q4 2020, indicating potential weakness in this area.
- Claims revenue growth was sluggish compared to prior periods, reflecting ongoing pandemic-related challenges.
- Consolidated revenues were
$713 million for the fourth quarter of 2020, up5.4% , and up3.5% on an organic constant currency (OCC) basis.
- Net income was
$176 million for the fourth quarter of 2020, up33.3% . Adjusted EBITDA, a non-GAAP measure, was$344 million , up7.9% , and up4.9% on an OCC basis.
- Diluted GAAP earnings per share (GAAP EPS) were
$1.07 for the fourth quarter of 2020. Diluted adjusted earnings per share (adjusted EPS), a non-GAAP measure, were$1.27 .
- Net cash provided by operating activities was
$248.9 million for the fourth quarter of 2020, up41.1% . Free cash flow, a non-GAAP measure, was$176.5 million , up57.0% .
- We paid a cash dividend of 27 cents per share on December 31, 2020. Our Board of Directors has approved an increase in our cash dividend to 29 cents per share payable on March 31, 2021.
- We repurchased
$50 million of our shares in the fourth quarter of 2020.
JERSEY CITY, N.J., Feb. 23, 2021 (GLOBE NEWSWIRE) -- Verisk (Nasdaq:VRSK), a leading data analytics provider, today announced results for the fourth quarter and fiscal year ended December 31, 2020.
Scott Stephenson, chairman, president, and CEO, said, “Despite the broader economic challenges the pandemic continues to present, Verisk delivered another year of strong organic constant currency revenue and adjusted EBITDA growth in 2020. These results demonstrate the resiliency and stability of our business model, the valuable impact of our technology and insights to customers, and the commitment of our more than 9,000 Verisk teammates to support our customers through an unprecedented period of digital transformation. We continue to have strong conviction in our long-term growth strategy and our plans to create durable shareholder value.”
Lee Shavel, CFO and group president, said, “Verisk delivered organic constant currency revenue growth of
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 December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||||
| 2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||||||||||
| Revenues | $ | 713.3 | $ | 676.8 | 5.4 | % | $ | 2,784.6 | $ | 2,607.1 | 6.8 | % | ||||||||||||
| Net income | $ | 176.2 | $ | 132.2 | 33.3 | % | $ | 712.7 | $ | 449.9 | 58.4 | % | ||||||||||||
| Adjusted EBITDA | $ | 344.0 | $ | 318.8 | 7.9 | % | $ | 1,376.5 | $ | 1,224.1 | 12.4 | % | ||||||||||||
| Diluted GAAP EPS | $ | 1.07 | $ | 0.80 | 33.8 | % | $ | 4.31 | $ | 2.70 | 59.6 | % | ||||||||||||
| Diluted adjusted EPS | $ | 1.27 | $ | 1.13 | 12.4 | % | $ | 5.04 | $ | 4.38 | 15.1 | % | ||||||||||||
| Net cash provided by operating activities | $ | 248.9 | $ | 176.4 | 41.1 | % | $ | 1,068.2 | $ | 956.3 | 11.7 | % | ||||||||||||
| Free cash flow | $ | 176.5 | $ | 112.4 | 57.0 | % | $ | 821.4 | $ | 739.5 | 11.1 | % | ||||||||||||
Revenues
Consolidated revenues increased
We have analyzed our solutions and services to assess the impact of COVID-19 on our revenue streams. We have not identified any material impact stemming from COVID-19 on approximately
Revenues and Revenue Growth by Segment
(in millions)
| Revenue Growth | ||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||
| December 31, | December 31, 2020 | |||||||||||||||
| 2020 | 2019 | Reported | OCC | |||||||||||||
| Underwriting & rating | $ | 355.1 | $ | 321.2 | 10.6 | % | 6.8 | % | ||||||||
| Claims | 156.8 | 150.4 | 4.2 | % | 8.8 | % | ||||||||||
| Insurance | 511.9 | 471.6 | 8.5 | % | 7.4 | % | ||||||||||
| Energy and Specialized Markets | 163.3 | 157.8 | 3.5 | % | (3.9 | )% | ||||||||||
| Financial Services | 38.1 | 47.4 | (19.6 | )% | (13.0 | )% | ||||||||||
| Revenues | $ | 713.3 | $ | 676.8 | 5.4 | % | 3.5 | % | ||||||||
| Revenue Growth | ||||||||||||||||
| Twelve Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, 2020 | |||||||||||||||
| 2020 | 2019 | Reported | OCC | |||||||||||||
| Underwriting & rating | $ | 1,390.6 | $ | 1,254.3 | 10.9 | % | 6.7 | % | ||||||||
| Claims | 595.7 | 610.9 | (2.5 | )% | 2.1 | % | ||||||||||
| Insurance | 1,986.3 | 1,865.2 | 6.5 | % | 5.3 | % | ||||||||||
| Energy and Specialized Markets | 641.6 | 563.9 | 13.8 | % | (1.3 | )% | ||||||||||
| Financial Services | 156.7 | 178.0 | (12.0 | )% | (3.0 | )% | ||||||||||
| Revenues | $ | 2,784.6 | $ | 2,607.1 | 6.8 | % | 3.3 | % | ||||||||
Insurance segment revenues grew
- Underwriting & rating revenues increased
10.6% in the quarter and6.8% 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 contributed to the growth. These increases were partially offset by a decrease in certain transactional revenues.
- Claims revenue grew
4.2% in the quarter and increased8.8% on an OCC basis. Growth was primarily driven by repair cost estimating solutions revenue, claims analytics revenue, and workers compensation claims resolution services.
Energy and Specialized Markets segment revenue increased
Financial Services segment revenue decreased
Net Income and Adjusted EBITDA
During fourth-quarter 2020, net income increased
EBITDA and Adjusted EBITDA by Segment
(in millions)
Note: Consolidated EBITDA and adjusted EBITDA are non-GAAP measures. Margin is calculated as a percentage of revenues.
| Three months ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| EBITDA | EBITDA Margin | Adjusted EBITDA | Adjusted EBITDA Growth | Adjusted EBITDA Margin | ||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 Reported | 2020 OCC | 2020 | 2019 | |||||||||||||||||||||||||||||||
| Insurance | $ | 283.1 | $ | 238.2 | 55.3 | % | 50.5 | % | $ | 282.6 | $ | 247.7 | 14.1 | % | 12.2 | % | 55.2 | % | 52.5 | % | ||||||||||||||||||||
| Energy and Specialized Markets | 51.3 | 33.5 | 31.4 | 21.3 | 51.3 | 52.0 | (1.4 | ) | (19.5 | ) | 31.4 | 32.9 | ||||||||||||||||||||||||||||
| Financial Services | 10.1 | 19.1 | 26.6 | 40.3 | 10.1 | 19.1 | (47.0 | ) | (28.1 | ) | 26.6 | 40.3 | ||||||||||||||||||||||||||||
| Consolidated | $ | 344.5 | $ | 290.8 | 48.3 | 43.0 | $ | 344.0 | $ | 318.8 | 7.9 | 4.9 | 48.2 | 47.1 | ||||||||||||||||||||||||||
| Twelve months ended December 31, | ||||||||||||||||||||||||||||||||||||||||
| EBITDA | EBITDA Margin | Adjusted EBITDA | Adjusted EBITDA Growth | Adjusted EBITDA Margin | ||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 Reported | 2020 OCC | 2020 | 2019 | |||||||||||||||||||||||||||||||
| Insurance | $ | 1,129.3 | $ | 823.3 | 56.9 | % | 44.1 | % | $ | 1,115.5 | $ | 980.4 | 13.8 | % | 12.5 | % | 56.2 | % | 52.6 | % | ||||||||||||||||||||
| Energy and Specialized Markets | 216.8 | 141.2 | 33.8 | 25.0 | 216.8 | 183.1 | 18.5 | (0.9 | ) | 33.8 | 32.5 | |||||||||||||||||||||||||||||
| Financial Services | 47.7 | 54.4 | 30.4 | 30.6 | 44.2 | 60.6 | (27.2 | ) | (3.7 | ) | 28.2 | 34.1 | ||||||||||||||||||||||||||||
| Consolidated | $ | 1,393.8 | $ | 1,018.9 | 50.1 | 39.1 | $ | 1,376.5 | $ | 1,224.1 | 12.4 | 9.8 | 49.4 | 47.0 | ||||||||||||||||||||||||||
Earnings Per Share
Diluted EPS increased
Diluted adjusted EPS grew
Cash Flow
Net cash provided by operating activities was
Free cash flow represented
Dividend
On December 31, 2020, we paid a cash dividend of 27 cents per share of common stock issued and outstanding to the holders of record as of December 15, 2020.
On February 17, 2021, our Board of Directors approved a
Share Repurchases
We repurchased approximately 260 thousand shares through an accelerated share repurchase (ASR) program at an average price of
Conference Call
Our management team will host a live audio webcast on Wednesday, February 24, 2021, at 8:30 a.m. EST (5:30 a.m. PST, 1:30 p.m. GMT) to discuss the financial results and business highlights. All interested parties are invited to listen to the live event via webcast on our 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 1-512-961-6560 for international participants.
A replay of the webcast will be available for 30 days on our investor website and also through the conference call number 1-855-859-2056 for U.S./Canada participants or 1-404-537-3406 for international participants using conference ID #5731667.
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 http://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
Verisk
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.
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), nonrecurring gain/loss, and interest income on the subordinated promissory note. Adjusted EBITDA expenses represent adjusted EBITDA net of revenues. We believe these measures are useful and meaningful because they 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; (iv) nonrecurring gain/loss, net of tax; and (v) interest income on the subordinated promissory note, 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 Constant Currency (OCC): 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 define “organic” 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. 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. A disposition’s results are removed from all prior periods presented to allow for comparability. 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-K filing for the complete financial statements and related notes.
VERISK ANALYTICS, INC.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2020 and 2019
| 2020 | 2019 | |||||||
| (in millions, except for share and per share data) | ||||||||
| ASSETS: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 218.8 | $ | 184.6 | ||||
| Accounts receivable, net | 432.4 | 441.6 | ||||||
| Prepaid expenses | 81.2 | 60.9 | ||||||
| Income taxes receivable | 25.4 | 25.9 | ||||||
| Other current assets | 36.4 | 17.8 | ||||||
| Current assets held for sale | — | 14.1 | ||||||
| Total current assets | 794.2 | 744.9 | ||||||
| Noncurrent assets: | ||||||||
| Fixed assets, net | 632.3 | 548.1 | ||||||
| Operating lease right-of-use assets, net | 267.6 | 218.6 | ||||||
| Intangible assets, net | 1,384.8 | 1,398.9 | ||||||
| Goodwill | 4,108.1 | 3,864.3 | ||||||
| Deferred income tax assets | 9.1 | 9.8 | ||||||
| Other noncurrent assets | 365.7 | 159.8 | ||||||
| Noncurrent assets held for sale | — | 110.8 | ||||||
| Total assets | $ | 7,561.8 | $ | 7,055.2 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 406.7 | $ | 375.0 | ||||
| Acquisition-related liabilities | 0.6 | 111.2 | ||||||
| Short-term debt and current portion of long-term debt | 514.3 | 499.4 | ||||||
| Deferred revenues | 466.7 | 440.1 | ||||||
| Operating lease liabilities | 38.7 | 40.6 | ||||||
| Income taxes payable | 3.8 | 6.8 | ||||||
| Current liabilities held for sale | — | 18.7 | ||||||
| Total current liabilities | 1,430.8 | 1,491.8 | ||||||
| Noncurrent liabilities: | ||||||||
| Long-term debt | 2,699.6 | 2,651.6 | ||||||
| Deferred income tax liabilities | 396.9 | 356.0 | ||||||
| Operating lease liabilities | 271.6 | 208.1 | ||||||
| Other noncurrent liabilities | 64.7 | 48.8 | ||||||
| Noncurrent liabilities held for sale | — | 38.1 | ||||||
| Total liabilities | 4,863.6 | 4,794.4 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, $.001 par value; 2,000,000,000 shares authorized; 544,003,038 shares issued; 162,817,526 and 163,161,564 shares outstanding, respectively | 0.1 | 0.1 | ||||||
| Additional paid-in capital | 2,490.9 | 2,369.1 | ||||||
| Treasury stock, at cost, 381,185,512 and 380,841,474 shares, respectively | (4,179.3 | ) | (3,849.9 | ) | ||||
| Retained earnings | 4,762.2 | 4,228.4 | ||||||
| Accumulated other comprehensive loss | (375.7 | ) | (486.9 | ) | ||||
| Total stockholders’ equity | 2,698.2 | 2,260.8 | ||||||
| Total liabilities and stockholders’ equity | $ | 7,561.8 | $ | 7,055.2 | ||||
VERISK ANALYTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Twelve Months Ended December 31, 2020 and 2019
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| (in millions, except for share and per share data) | ||||||||||||||||
| Revenues | $ | 713.3 | $ | 676.8 | $ | 2,784.6 | $ | 2,607.1 | ||||||||
| Operating expenses: | ||||||||||||||||
| Cost of revenues (exclusive of items shown separately below) | 260.5 | 259.8 | 993.9 | 976.8 | ||||||||||||
| Selling, general and administrative | 109.0 | 124.8 | 413.9 | 603.5 | ||||||||||||
| Depreciation and amortization of fixed assets | 50.8 | 47.7 | 192.2 | 185.7 | ||||||||||||
| Amortization of intangible assets | 42.3 | 37.9 | 165.9 | 138.0 | ||||||||||||
| Other operating (income) loss | — | — | (19.4 | ) | 6.2 | |||||||||||
| Total operating expenses | 462.6 | 470.2 | 1,746.5 | 1,910.2 | ||||||||||||
| Operating income | 250.7 | 206.6 | 1,038.1 | 696.9 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Investment income (loss) and others, net | 0.7 | (1.4 | ) | (2.4 | ) | (1.7 | ) | |||||||||
| Interest expense | (35.4 | ) | (33.1 | ) | (138.2 | ) | (126.8 | ) | ||||||||
| Total other expense, net | (34.7 | ) | (34.5 | ) | (140.6 | ) | (128.5 | ) | ||||||||
| Income before income taxes | 216.0 | 172.1 | 897.5 | 568.4 | ||||||||||||
| Provision for income taxes | (39.8 | ) | (39.9 | ) | (184.8 | ) | (118.5 | ) | ||||||||
| Net income | $ | 176.2 | $ | 132.2 | $ | 712.7 | $ | 449.9 | ||||||||
| Basic net income per share | $ | 1.08 | $ | 0.81 | $ | 4.38 | $ | 2.75 | ||||||||
| Diluted net income per share | $ | 1.07 | $ | 0.80 | $ | 4.31 | $ | 2.70 | ||||||||
| Weighted-average shares outstanding: | ||||||||||||||||
| Basic | 162,673,926 | 163,289,013 | 162,610,586 | 163,535,438 | ||||||||||||
| Diluted | 164,723,137 | 166,218,621 | 165,320,709 | 166,560,115 | ||||||||||||
VERISK ANALYTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2020 and 2019
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| (in millions) | ||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net income | $ | 176.2 | $ | 132.2 | $ | 712.7 | $ | 449.9 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
| Depreciation and amortization of fixed assets | 50.8 | 47.7 | 192.2 | 185.7 | ||||||||||||
| Amortization of intangible assets | 42.3 | 37.9 | 165.9 | 138.0 | ||||||||||||
| Amortization of debt issuance costs and original issue discount, net of original issue premium | 0.5 | 0.4 | 1.8 | 3.9 | ||||||||||||
| Provision for doubtful accounts | 6.3 | 2.1 | 13.1 | 7.2 | ||||||||||||
| Other operating (income) expenses | — | — | (19.4 | ) | 6.2 | |||||||||||
| Stock-based compensation expense | 8.5 | 6.3 | 47.6 | 42.7 | ||||||||||||
| Realized gain on available-for-sale securities, net | — | (0.2 | ) | — | (0.9 | ) | ||||||||||
| Deferred income taxes | 20.2 | (1.9 | ) | 31.1 | (29.3 | ) | ||||||||||
| Loss on disposal of fixed assets, net | 0.1 | 0.3 | 0.6 | 0.3 | ||||||||||||
| Changes in assets and liabilities, net of effects from acquisitions: | ||||||||||||||||
| Accounts receivable | 5.4 | (15.8 | ) | 1.8 | (70.3 | ) | ||||||||||
| Prepaid expenses and other assets | (4.4 | ) | 0.2 | (66.5 | ) | (19.7 | ) | |||||||||
| Operating lease right-of-use assets, net | 14.5 | 22.8 | 43.1 | 51.3 | ||||||||||||
| Income taxes | (3.8 | ) | 1.1 | (0.5 | ) | 15.0 | ||||||||||
| Acquisition-related liabilities | (13.6 | ) | 29.9 | (77.0 | ) | 70.4 | ||||||||||
| Accounts payable and accrued liabilities | 36.4 | (1.8 | ) | 24.3 | 150.9 | |||||||||||
| Deferred revenues | (73.1 | ) | (60.1 | ) | 21.2 | 11.4 | ||||||||||
| Operating lease liabilities | (13.0 | ) | (22.3 | ) | (29.6 | ) | (49.5 | ) | ||||||||
| Other liabilities | (4.4 | ) | (2.4 | ) | 5.8 | (6.9 | ) | |||||||||
| Net cash provided by operating activities | 248.9 | 176.4 | 1,068.2 | 956.3 | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Acquisitions, net of cash acquired of | (123.9 | ) | (589.7 | ) | (275.8 | ) | (699.2 | ) | ||||||||
| Proceeds from sale of assets | — | — | 23.1 | — | ||||||||||||
| Investments in non-public companies | (31.0 | ) | — | (94.8 | ) | — | ||||||||||
| Escrow funding associated with acquisitions | (1.3 | ) | — | (9.3 | ) | (4.5 | ) | |||||||||
| Capital expenditures | (72.4 | ) | (64.0 | ) | (246.8 | ) | (216.8 | ) | ||||||||
| Other investing activities, net | (2.5 | ) | 0.3 | 7.8 | (7.4 | ) | ||||||||||
| Net cash used in investing activities | (231.1 | ) | (653.4 | ) | (595.8 | ) | (927.9 | ) | ||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| (in millions) | ||||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Proceeds (repayment) of short-term debt, net | 50.0 | 485.0 | (445.0 | ) | 80.0 | |||||||||||
| Repayments of current portion of long-term debt | — | — | — | (250.0 | ) | |||||||||||
| Proceeds from issuance of long-term debt, inclusive of original issue premium and net of original issue discount | — | — | 494.8 | 619.7 | ||||||||||||
| Proceeds from issuance of short-term debt with original maturities greater than three months | — | — | 20.0 | — | ||||||||||||
| Repayment of short-term debt with original maturities greater than three months | — | — | (20.0 | ) | — | |||||||||||
| Payment of debt issuance costs | — | (1.0 | ) | (5.7 | ) | (6.3 | ) | |||||||||
| Repurchases of common stock | (50.0 | ) | (100.0 | ) | (348.8 | ) | (300.0 | ) | ||||||||
| Net share settlement of taxes from restricted stock awards | (0.6 | ) | (0.4 | ) | (4.1 | ) | (5.5 | ) | ||||||||
| Payment of contingent liability related to acquisition | — | — | (34.2 | ) | — | |||||||||||
| Proceeds from stock options exercised | 19.7 | 6.6 | 88.0 | 52.4 | ||||||||||||
| Dividends paid | (44.0 | ) | (40.8 | ) | (175.8 | ) | (163.5 | ) | ||||||||
| Other financing activities, net | (1.4 | ) | (3.7 | ) | (14.4 | ) | (15.9 | ) | ||||||||
| Net cash (used in) provided by financing activities | (26.3 | ) | 345.7 | (445.2 | ) | 10.9 | ||||||||||
| Effect of exchange rate changes | 5.5 | 4.4 | 6.7 | 6.1 | ||||||||||||
| Net (decrease) increase in cash and cash equivalents, including cash classified within current assets held for sale | (3.0 | ) | (126.9 | ) | 33.9 | 45.4 | ||||||||||
| Less: (Decrease) increase in cash classified within current assets held for sale | — | (0.3 | ) | 0.3 | (0.3 | ) | ||||||||||
| (Decrease) increase in cash and cash equivalents | (3.0 | ) | (127.2 | ) | 34.2 | 45.1 | ||||||||||
| Cash and cash equivalents, beginning of period | 221.8 | 311.8 | 184.6 | 139.5 | ||||||||||||
| Cash and cash equivalents, end of period | $ | 218.8 | $ | 184.6 | $ | 218.8 | $ | 184.6 | ||||||||
| Supplemental disclosures: | ||||||||||||||||
| Income taxes paid | $ | 23.7 | $ | 40.9 | $ | 156.5 | $ | 139.8 | ||||||||
| Interest paid | $ | 51.4 | $ | 42.7 | $ | 134.3 | $ | 119.9 | ||||||||
| Noncash investing and financing activities: | ||||||||||||||||
| Debt issuance costs included in accounts payable and accrued liabilities | $ | — | $ | 1.3 | $ | — | $ | — | ||||||||
| Deferred tax liability established on date of acquisitions | $ | 11.2 | $ | 40.6 | $ | 13.0 | $ | 43.4 | ||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | — | $ | — | $ | — | $ | 247.6 | ||||||||
| Finance lease additions | $ | 5.5 | $ | 1.0 | $ | 30.9 | $ | 20.2 | ||||||||
| Operating lease additions, net of terminations | $ | 40.3 | $ | 10.4 | $ | 87.8 | $ | 13.7 | ||||||||
| Tenant improvement included in operating lease right-of-use assets, net | $ | 0.1 | $ | 0.1 | $ | — | $ | 1.7 | ||||||||
| Gain on sale of assets included in other current and long term assets | $ | — | $ | — | $ | 3.5 | $ | — | ||||||||
| Fixed assets included in accounts payable and accrued liabilities | $ | 0.3 | $ | 1.6 | $ | 0.8 | $ | 1.6 | ||||||||
| Non-cash contribution of assets for a non-public company | $ | — | $ | — | $ | 65.9 | $ | — | ||||||||
| Dividend payable included in other liabilities | $ | 0.2 | $ | 0.6 | $ | 0.7 | $ | 0.6 | ||||||||
Non-GAAP Reconciliations
Consolidated Adjusted EBITDA Reconciliation
(in millions)
Note: Adjusted EBITDA is a non-GAAP measure. Margin is calculated as a percentage of consolidated revenues.
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||
| Total | Margin | Total | Margin | Total | Margin | Total | Margin | |||||||||||||||||||||||||
| Net income | $ | 176.2 | 24.7 | % | $ | 132.2 | 19.6 | % | $ | 712.7 | 25.6 | % | $ | 449.9 | 17.3 | % | ||||||||||||||||
| Depreciation and amortization of fixed assets | 50.8 | 7.1 | 47.7 | 7.0 | 192.2 | 6.9 | 185.7 | 7.1 | ||||||||||||||||||||||||
| Amortization of intangible assets | 42.3 | 5.9 | 37.9 | 5.6 | 165.9 | 6.0 | 138.0 | 5.3 | ||||||||||||||||||||||||
| Interest expense | 35.4 | 5.0 | 33.1 | 4.9 | 138.2 | 5.0 | 126.8 | 4.9 | ||||||||||||||||||||||||
| Provision for income taxes | 39.8 | 5.6 | 39.9 | 5.9 | 184.8 | 6.6 | 118.5 | 4.5 | ||||||||||||||||||||||||
| EBITDA | 344.5 | 48.3 | 290.8 | 43.0 | 1,393.8 | 50.1 | 1,018.9 | 39.1 | ||||||||||||||||||||||||
| Litigation reserve | — | — | — | — | — | — | 125.0 | 4.8 | ||||||||||||||||||||||||
| Acquisition-related costs (earn-outs) | (0.5 | ) | (0.1 | ) | 28.0 | 4.1 | 2.1 | 0.1 | 74.0 | 2.9 | ||||||||||||||||||||||
| (Gain) loss from dispositions | — | — | — | — | (19.4 | ) | (0.8 | ) | 6.2 | 0.2 | ||||||||||||||||||||||
| Adjusted EBITDA | 344.0 | 48.2 | 318.8 | 47.1 | 1,376.5 | 49.4 | 1,224.1 | 47.0 | ||||||||||||||||||||||||
| Adjusted EBITDA from acquisitions and dispositions | (11.9 | ) | 1.5 | (6.1 | ) | 1.6 | (44.3 | ) | 1.6 | (14.5 | ) | 0.8 | ||||||||||||||||||||
| Organic adjusted EBITDA | 332.1 | 49.7 | $ | 312.7 | 48.7 | 1,332.2 | 51.0 | $ | 1,209.6 | 47.8 | ||||||||||||||||||||||
Segment Results Summary and Adjusted EBITDA Reconciliation
(in millions)
Note: Organic revenues and adjusted EBITDA are non-GAAP measures.
| Three Months Ended December 31, 2020 | Three Months Ended December 31, 2019 | |||||||||||||||||||||||
| Insurance | Energy and Specialized Markets | Financial Services | Insurance | Energy and Specialized Markets | Financial Services | |||||||||||||||||||
| Revenues | $ | 511.9 | $ | 163.3 | $ | 38.1 | $ | 471.6 | $ | 157.8 | $ | 47.4 | ||||||||||||
| Revenues from acquisitions and dispositions | (20.4 | ) | (23.6 | ) | (0.7 | ) | (14.9 | ) | (14.8 | ) | (4.5 | ) | ||||||||||||
| Organic revenues | $ | 491.5 | $ | 139.7 | $ | 37.4 | $ | 456.7 | $ | 143.0 | $ | 42.9 | ||||||||||||
| EBITDA | $ | 283.1 | $ | 51.3 | $ | 10.1 | $ | 238.2 | $ | 33.5 | $ | 19.1 | ||||||||||||
| Acquisition-related costs (earn-outs) | (0.5 | ) | — | — | 9.5 | 18.5 | — | |||||||||||||||||
| Adjusted EBITDA | 282.6 | 51.3 | 10.1 | 247.7 | 52.0 | 19.1 | ||||||||||||||||||
| Adjusted EBITDA from acquisitions and dispositions | (4.8 | ) | (8.6 | ) | 1.5 | 0.2 | (2.8 | ) | (3.5 | ) | ||||||||||||||
| Organic adjusted EBITDA | $ | 277.8 | $ | 42.7 | $ | 11.6 | $ | 247.9 | $ | 49.2 | $ | 15.6 | ||||||||||||
| Twelve Months Ended December 31, 2020 | Twelve Months Ended December 31, 2019 | |||||||||||||||||||||||
| Insurance | Energy and Specialized Markets | Financial Services | Insurance | Energy and Specialized Markets | Financial Services | |||||||||||||||||||
| Revenues | $ | 1,986.3 | $ | 641.6 | $ | 156.7 | $ | 1,865.2 | $ | 563.9 | $ | 178.0 | ||||||||||||
| Revenues from acquisitions and dispositions | (68.5 | ) | (98.3 | ) | (3.1 | ) | (44.0 | ) | (14.8 | ) | (19.2 | ) | ||||||||||||
| Organic revenues | $ | 1,917.8 | $ | 543.3 | $ | 153.6 | $ | 1,821.2 | $ | 549.1 | $ | 158.8 | ||||||||||||
| EBITDA | $ | 1,129.3 | $ | 216.8 | $ | 47.7 | $ | 823.3 | $ | 141.2 | $ | 54.4 | ||||||||||||
| Litigation reserve | — | — | — | 125.0 | — | — | ||||||||||||||||||
| Acquisition-related costs (earn-outs) | 2.1 | — | — | 32.1 | 41.9 | — | ||||||||||||||||||
| (Gain) loss from dispositions | (15.9 | ) | — | (3.5 | ) | — | — | 6.2 | ||||||||||||||||
| Adjusted EBITDA | 1,115.5 | 216.8 | 44.2 | 980.4 | 183.1 | 60.6 | ||||||||||||||||||
| Adjusted EBITDA from acquisitions and dispositions | (12.8 | ) | (33.8 | ) | 2.3 | (0.4 | ) | (1.5 | ) | (12.6 | ) | |||||||||||||
| Organic adjusted EBITDA | $ | 1,102.7 | $ | 183.0 | $ | 46.5 | $ | 980.0 | $ | 181.6 | $ | 48.0 | ||||||||||||
Segment Adjusted EBITDA Margin Reconciliation
Note: Segment adjusted EBITDA margin is calculated as a percentage of respective segment revenues.
| Three Months Ended December 31, 2020 | Three Months Ended December 31, 2019 | |||||||||||||||||||||||
| Insurance | Energy and Specialized Markets | Financial Services | Insurance | Energy and Specialized Markets | Financial Services | |||||||||||||||||||
| EBITDA margin | 55.3 | % | 31.4 | % | 26.6 | % | 50.5 | % | 21.3 | % | 40.3 | % | ||||||||||||
| Acquisition-related costs (earn-outs) | (0.1 | ) | — | — | 2.0 | 11.6 | — | |||||||||||||||||
| Adjusted EBITDA margin | 55.2 | 31.4 | 26.6 | 52.5 | 32.9 | 40.3 | ||||||||||||||||||
| Twelve Months Ended December 31, 2020 | Twelve Months Ended December 31, 2019 | |||||||||||||||||||||||
| Insurance | Energy and Specialized Markets | Financial Services | Insurance | Energy and Specialized Markets | Financial Services | |||||||||||||||||||
| EBITDA margin | 56.9 | % | 33.8 | % | 30.4 | % | 44.1 | % | 25.0 | % | 30.6 | % | ||||||||||||
| Litigation reserve | — | — | — | 6.7 | — | — | ||||||||||||||||||
| Acquisition-related costs (earn-outs) | 0.1 | — | — | 1.8 | 7.5 | — | ||||||||||||||||||
| (Gain) loss from dispositions | (0.8 | ) | — | (2.2 | ) | — | — | 3.5 | ||||||||||||||||
| Adjusted EBITDA margin | 56.2 | 33.8 | 28.2 | 52.6 | 32.5 | 34.1 | ||||||||||||||||||
Consolidated Adjusted EBITDA Expense Reconciliation
(in millions)
Note: Adjusted EBITDA expenses are a non-GAAP measure.
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Operating expenses | $ | 462.6 | $ | 470.2 | $ | 1,746.5 | $ | 1,910.2 | ||||||||
| Depreciation and amortization of fixed assets | (50.8 | ) | (47.7 | ) | (192.2 | ) | (185.7 | ) | ||||||||
| Amortization of intangible assets | (42.3 | ) | (37.9 | ) | (165.9 | ) | (138.0 | ) | ||||||||
| Investment (income) loss and others, net | (0.7 | ) | 1.4 | 2.4 | 1.7 | |||||||||||
| Litigation reserve | — | — | — | (125.0 | ) | |||||||||||
| Acquisition-related costs (earn-outs) | 0.5 | (28.0 | ) | (2.1 | ) | (74.0 | ) | |||||||||
| Gain (loss) from dispositions | — | — | 19.4 | (6.2 | ) | |||||||||||
| Adjusted EBITDA expenses | $ | 369.3 | $ | 358.0 | $ | 1,408.1 | $ | 1,383.0 | ||||||||
Diluted Adjusted EPS Reconciliation
(in millions, except per share amounts)
Note: Diluted adjusted EPS is a non-GAAP measure.
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net income | $ | 176.2 | $ | 132.2 | $ | 712.7 | $ | 449.9 | ||||||||
| plus: Amortization of intangibles | 42.3 | 37.9 | 165.9 | 138.0 | ||||||||||||
| less: Income tax effect on amortization of intangibles | (9.3 | ) | (8.0 | ) | (36.5 | ) | (29.0 | ) | ||||||||
| plus: Litigation reserve | — | — | — | 125.0 | ||||||||||||
| less: Income tax effect on litigation reserve | — | — | — | (29.9 | ) | |||||||||||
| plus: Acquisition-related costs and interest expense (earn-outs) | (0.5 | ) | 28.2 | 2.1 | 75.1 | |||||||||||
| less: Income tax effect on acquisition-related costs and interest expense (earn-outs) | 0.1 | (1.9 | ) | (0.5 | ) | (4.7 | ) | |||||||||
| less: (Gain) loss from dispositions | — | — | (19.4 | ) | 6.2 | |||||||||||
| plus: Income tax on effect on (gain) loss from dispositions | — | — | 9.6 | (1.5 | ) | |||||||||||
| Adjusted net income | $ | 208.8 | $ | 188.4 | $ | 833.9 | $ | 729.1 | ||||||||
| Diluted EPS | $ | 1.07 | $ | 0.80 | $ | 4.31 | $ | 2.70 | ||||||||
| Diluted adjusted EPS | $ | 1.27 | $ | 1.13 | $ | 5.04 | $ | 4.38 | ||||||||
| Weighted-average diluted shares outstanding | 164.7 | 166.2 | 165.3 | 166.6 | ||||||||||||
Free Cash Flow Reconciliation
(in millions)
Note: Free cash flow is a non-GAAP measure.
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||
| 2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||||||||||
| Net cash provided by operating activities | $ | 248.9 | $ | 176.4 | 41.1 | % | $ | 1,068.2 | $ | 956.3 | 11.7 | % | ||||||||||||
| Capital expenditures | (72.4 | ) | (64.0 | ) | 13.1 | (246.8 | ) | (216.8 | ) | 13.8 | ||||||||||||||
| Free cash flow | $ | 176.5 | $ | 112.4 | 57.0 | $ | 821.4 | $ | 739.5 | 11.1 | ||||||||||||||
FAQ
What were Verisk's financial results for Q4 2020?
How did Verisk's free cash flow perform in Q4 2020?
What dividend increase did Verisk announce for March 2021?
What challenges did Verisk face in the Financial Services segment?
