Verisk Reports First-Quarter 2018 Financial Results

JERSEY CITY, New Jersey, May 1 -- 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 March 31, 2018.

Scott Stephenson, chairman, president, and CEO, said, "We're off to a strong start in 2018 with another solid quarter of organic constant currency revenue growth of over 7 percent, reflecting exceptional performance in our core Insurance business segment. We're also pleased to have strengthened the performance orientation of our compensation program, as detailed in our recent 2018 Proxy Statement. These changes are in direct response to the investor feedback that we've solicited and received."

Lee Shavel, CFO and executive vice president, said, "As we disclosed in our earlier press release dated April 26, we've recast the business segments due to a change in how we assess the performance of and allocate resources to the business. We believe this will provide improved transparency for investors. With attractive organic constant currency revenue growth and stable organic EBITDA margins that include significant reinvestment in several growth initiatives, Verisk continues to deliver both strong capital generation and attractive return opportunities."

Table 1: Summary of Results (GAAP and Non-GAAP)

To view the table, click here: https://www.verisk.com/press-releases/2018/may-2018/verisk-reports-first-quarter-2018-financial-results/

Revenue

Total revenue increased 15.6% in first-quarter 2018 compared with first-quarter 2017. Organic constant currency revenue growth was 7.0%. Insurance led the revenue growth in the quarter.

Table 2: Revenues and Revenue Growth by Segment

To view the table, click here: https://www.verisk.com/press-releases/2018/may-2018/verisk-reports-first-quarter-2018-financial-results/

Insurance segment revenue grew 12.5% in the first quarter of 2018 and 8.7% in organic constant currency.

* Underwriting & rating revenue increased 10.8% in the quarter and 6.9% on an organic constant currency basis, resulting primarily from increases within our catastrophe modeling services and underwriting solutions.

* Claims revenue grew 16.1% in the quarter and 12.6% on an organic constant currency basis. Growth was driven by our repair cost estimating solutions and claims analytics revenue.

Energy and Specialized Markets segment revenue increased 18.1% in the quarter and 3.1% on an organic constant currency basis, as the energy business's end market has continued to stabilize.

Financial Services segment revenue increased 46.2% in the quarter and 1.5% on an organic constant currency basis. Analytical products and media effectiveness solutions saw growth in the quarter.

Operating Income and EBITDA

Operating income increased 3.6% to $194.5 million in the quarter.

EBITDA expenses, consisting of cost of revenues; selling, general and administrative expenses; and investment income and others, net, increased 21.6% compared with first-quarter 2017. On an organic constant currency basis, EBITDA expenses increased 6.7% in the quarter. The year-over-year organic constant currency increase was primarily due to salaries and benefits related to innovation and business growth.

EBITDA increased 9.4% to $269 million in first-quarter 2018. On an organic constant currency basis, EBITDA increased 7.4% in the quarter. Organic EBITDA margin of 49.0% was down slightly from the first-quarter 2017 level of 49.1%.

Table 3: EBITDA by Segment

To view the table, click here: https://www.verisk.com/press-releases/2018/may-2018/verisk-reports-first-quarter-2018-financial-results/

Net Income and Earnings Per Share

Net income increased 22.2% to $133 million. Diluted GAAP EPS was $0.79 for first-quarter 2018, an increase of 23.4% compared with the same period in 2017. Diluted adjusted EPS was $0.94 for first-quarter 2018, an increase of 27.0% compared with the same period in 2017. Equalizing the first-quarter 2017 effective tax rate to that of first-quarter 2018, both adjusted net income and diluted adjusted EPS would have increased 6.8%. Diluted adjusted EPS benefited from organic growth in the business, contributions from acquisitions, 2017 tax reform, and lower share count. The benefits were offset by increased depreciation and amortization expense and increased interest expense.

Cash Flow

Net cash provided by operating activities was $327 million for the three months ended March 31, 2018, an increase of 2.9%. Capital expenditures increased 38.9% to $43 million and were 7.4% of revenues for the three months ended March 31, 2018. The increase in capital expenditures for the first quarter of 2018 compared with the first quarter of 2017 was primarily related to the purchase of aircraft and sensors and software development for our recent acquisitions. Free cash flow was $284 million year-to-date, a decrease of 1.0%.

Free cash flow represented 105.6% of EBITDA for the three months ended March 31, 2018, compared with 116.7% in the prior-year period.

Share Repurchases

The company repurchased 382,508 shares at an average price of $104.22, for a total cost of $40 million in the quarter. At March 31, 2018, the company had $326 million remaining under its share repurchase authorization.

Conference Call

Verisk's management team will host a live audio webcast on Wednesday, May 2, 2018, at 8:30 a.m. EDT ( 5:30 a.m. PDT, 12:30 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 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 #7319818.