Verisk Issues Financials for Second Quarter of 2019

JERSEY CITY, New Jersey, July 30 -- Verisk, a data analytics provider, issued the following news release:

Verisk (Nasdaq:VRSK), a leading data analytics provider, today announced results for the quarter ended June 30, 2019.

Scott Stephenson, chairman, president, and CEO, said, "I'm pleased to report another quarter of solid growth for Verisk, driven by strength in our Insurance segment and improvement in Financial Services. We're well positioned to continue to execute on our strategies to drive long-term growth, as engagement with our customers and among our employees continues to be at a very high level."

Lee Shavel, CFO and executive vice president, said, "Verisk delivered organic constant currency revenue growth of 7.2% and organic constant currency adjusted EBITDA growth of 7.3% when normalizing for the timing shift related to the expensing of stock-based compensation. We continue to focus on prudent capital management and are balancing internal investment, strategic acquisitions, and the return of capital to shareholders through dividends and share repurchases."

Insurance segment revenue grew 9.1% in the second quarter of 2019 and 7.8% on an OCC basis.

* Underwriting & rating revenue increased 8.1% in the quarter and 7.1% on an OCC basis, resulting primarily from increases in our industry-standard insurance programs, property-specific underwriting solutions and catastrophe modeling solutions.

* Claims revenue grew 11.2% in the quarter and 9.0% on an OCC basis, resulting primarily from growth in claims analytics revenue, repair cost estimating solutions revenue, and remote imagery solutions revenue.

Energy and Specialized Markets segment revenue increased 7.6% in the quarter and 5.5% on an OCC basis, resulting primarily from increases in market and cost intelligence solutions and core research revenues.

Financial Services segment revenue increased 5.5% in the quarter and increased 6.1% on an OCC basis, resulting primarily from increases in portfolio management and spend-informed analytics.

See table here (https://www.verisk.com/press-releases/2019/july/verisk-reports-second-quarter-2019-financial-results/)

Net Income and Adjusted EBITDA

Net income decreased 2.0% for the second quarter of 2019, negatively impacted by the acceleration of $6.0 million in stock-based compensation and a higher effective tax rate. Adjusted EBITDA increased 5.7%; and on an OCC basis, adjusted EBITDA increased 5.2% for the second quarter of 2019. Both were negatively impacted by the acceleration in stock-based compensation.

Earnings Per Share

Diluted EPS decreased 1.1% to $0.90 for the second quarter of 2019, owing to a year-over-year increase in acquisition-related earn-out expenses as well as a tough comparison to the second quarter of 2018, which benefited from interest income on the subordinated promissory note receivable. Diluted adjusted EPS grew 4.8% to $1.10 for the second quarter of 2019, reflecting organic growth in the business, contributions from acquisitions, a decrease in interest expense, and lower average share count. These increases were offset in part by the timing of the incremental stock-based compensation, increases in depreciation and amortization expense, and a higher effective tax rate.

Cash Flow

Net cash provided by operating activities was $200 million for the second quarter of 2019, down 3.4%. Capital expenditures were $47 million for the second quarter of 2019, down 16.4%. Free cash flow was $153 million for the second quarter of 2019, up 1.5%.

Free cash flow represented 50.4% of adjusted EBITDA for the second quarter of 2019, compared with 52.5% in the prior-year period.

Dividend

On June 28, 2019, Verisk paid a cash dividend of 25 cents per share of common stock issued and outstanding to the holders of record as of June 14, 2019.

On July 24, 2019, Verisk's Board of Directors approved a cash dividend of 25 cents per share of common stock issued and outstanding, payable on September 30, 2019, to holders of record as of September 13, 2019.

Share Repurchases

The company repurchased, through an accelerated share repurchase (ASR) agreement, approximately 361 thousand shares at an average price of $138.32 for a total cost of $50.0 million for the second quarter of 2019. The company also entered into an additional $75.0 million ASR agreement; the associated shares will be delivered and settled in the third quarter of 2019. At June 30, 2019, the company had $303 million remaining under its share repurchase authorization.

Conference Call

Verisk's management team will host a live audio webcast on Wednesday, July 31, 2019, at 8:30 a.m. EDT (5:30 a.m. PDT, 1:30 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 1-512-961-6560 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 1-404-537-3406 for international participants using conference ID #2651769.

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About Verisk

Verisk (Nasdaq:VRSK) is a leading data analytics provider serving customers in insurance, energy and specialized markets, and financial services. Using advanced technologies to collect and analyze billions of records, Verisk 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. Around the world, Verisk helps customers protect people, property, and financial assets.

Headquartered in Jersey City, N.J., Verisk operates in 30 countries and is a member of Standard & Poor's S&P 500(R) Index. In 2018, Forbes magazine named Verisk to its World's Best Employers list. For more information, please visit www.verisk.com.

* Consolidated revenue was $653 million for the second quarter of 2019, up 8.5%, and up 7.2% on an organic constant currency (OCC) basis.

* Net income was $150 million for the second quarter of 2019, down 2.0%. Adjusted EBITDA, a non-GAAP measure, was $304 million, up 5.7%, and up 5.2% on an OCC basis.

* Diluted earnings per share (diluted EPS) were $0.90 for the second quarter of 2019; diluted adjusted earnings per share (adjusted EPS), a non-GAAP measure, were $1.10.

* Net cash provided by operating activities was $200 million for the second quarter of 2019, down 3.4%. Free cash flow, a non-GAAP measure, was $153 million, up 1.5%.

* The company paid a cash dividend of 25 cents per share on June 28, 2019. The company's Board of Directors approved a cash dividend of 25 cents per share on July 24, 2019, for the third quarter of 2019.

* The company repurchased $50 million of its shares for the quarter ended June 30, 2019.