Verisk Reports First-Quarter 2019 Financial Results

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

* * *

- Consolidated revenue was $625 million, up 7.5%; organic constant currency (OCC) revenue growth, a non-GAAP measure, was 6.7%.

- Operating income was $202 million, up 4.1%. Adjusted EBITDA, a non-GAAP measure, was $292 million, up 8.2%. OCC adjusted EBITDA growth was 6.8%.

- Net income was $134 million, up 1.0%. Adjusted net income was $171 million, up 7.1%.

- Diluted GAAP earnings per share (GAAP EPS) were $0.81; diluted adjusted earnings per share (adjusted EPS), a non-GAAP measure, were $1.03.

- Net cash provided by operating activities was $366 million for the first quarter of 2019, up 12.0%. Free cash flow, a non-GAAP measure, was $321 million, up 13.1%.

- The company paid a cash dividend of 25 cents per share on March 29, 2019. The company's Board of Directors approved a cash dividend of 25 cents per share on April 29, 2019, for the second quarter of 2019.

- The company repurchased $75 million of its shares for the quarter ended March 31, 2019.

* * *

Verisk (Nasdaq:VRSK), a leading data analytics provider, today announced results for the quarter ended March 31, 2019.

Scott Stephenson, chairman, president, and CEO, said, "This year is off to a solid start for Verisk, driven by continued strength in our Insurance business and ongoing improvements in our Energy and Specialized Markets business. We continue to invest to fuel future innovation, and our pipeline of ideas for both new solutions and fresh ways to engage with our customers remains robust. We are well positioned to continue to execute on our strategies and create shareholder value over the long term."

Lee Shavel, CFO and executive vice president, said, "Verisk delivered organic constant currency revenue growth of 6.7% and organic constant currency adjusted EBITDA growth of 6.8%, resulting in margin expansion in the quarter. We continue to manage capital prudently through internal investment, strategic acquisitions, and the return of $116 million to shareholders in the form of share repurchases and dividends."

To view the table, click here: https://www.verisk.com/press-releases/2019/april/verisk-reports-first-quarter-2019-financial-results/

Revenue

Consolidated revenue increased 7.5% in first-quarter 2019 compared with first-quarter 2018. OCC revenue growth was 6.7%.

To view the table, click here: https://www.verisk.com/press-releases/2019/april/verisk-reports-first-quarter-2019-financial-results/

Insurance segment revenue grew 9.3% in the first quarter of 2019 and 7.3% on an OCC basis.

* Underwriting & rating revenue increased 8.2% in the quarter and 6.8% on an OCC basis, resulting primarily from increases in industry-standard insurance programs, property-specific underwriting, and catastrophe modeling solutions revenue.

* Claims revenue grew 11.8% in the quarter and 8.2% on an OCC basis. OCC revenue growth was driven by repair cost estimating, claims analytics, and remote imagery solutions.

Energy and Specialized Markets segment revenue increased 4.2% in the quarter and 6.7% on an OCC basis, resulting primarily from increases in market and cost intelligence solutions, environmental health and safety services, and core research revenues.

Financial Services segment revenue declined 0.1% in the quarter and increased 0.7% on an OCC basis. OCC revenue growth was primarily driven by spend-informed analytics solutions offset by weakness in enterprise data management solutions.

Operating Income and Adjusted EBITDA

Operating income was $202 million, up 4.1% in first-quarter 2019 compared with first-quarter 2018. Adjusted EBITDA increased 8.2% to $292 million in first-quarter 2019. On an OCC basis, adjusted EBITDA increased 6.8%.

Operating expenses increased 9.3% to $423 million in first-quarter 2019 primarily driven by costs related to purchase price earn-outs from acquisitions. Adjusted EBITDA expenses increased 6.9% compared with first-quarter 2018. On an OCC basis, adjusted EBITDA expenses increased 6.6%. The year-over-year OCC increase was primarily due to salaries and benefits related to innovation and business growth.

Insurance segment operating income increased 2.5% to $194 million in the first quarter of 2019. Insurance segment adjusted EBITDA and OCC adjusted EBITDA grew 8.2% and 6.5%, respectively.

Energy and Specialized Markets segment operating income increased 90.2% to $6 million in the first quarter of 2019. Energy and Specialized Markets segment adjusted EBITDA and OCC adjusted EBITDA grew 15.3% and 14.1%, respectively.

Financial Services segment operating income increased 17.2% to $3 million in the first quarter of 2019. Financial Services segment adjusted EBITDA and OCC adjusted EBITDA decreased 8.1% and 7.6%, respectively.

To view the table, click here: https://www.verisk.com/press-releases/2019/april/verisk-reports-first-quarter-2019-financial-results/

Net Income and Earnings Per Share

Net income increased 1.0% to $134 million for the three months ended March 31, 2019. Diluted GAAP EPS was $0.81 for first-quarter 2019, an increase of 2.5% compared with the same period in 2018. Diluted adjusted EPS was $1.03 for first-quarter 2019, an increase of 9.6% compared with the same period in 2018. Diluted adjusted EPS benefited from organic growth in the business, contributions from acquisitions, and lower share count. The benefits were partially offset by an increase in depreciation and amortization expense and a higher effective tax rate.

Cash Flow

Net cash provided by operating activities was $366 million for the three months ended March 31, 2019, an increase of 12.0%. Capital expenditures increased 4.6% to $45.2 million for the three months ended March 31, 2019. The increase in capital expenditures for the first quarter of 2019 compared with the first quarter of 2018 was primarily related to software development to promote growth in organic businesses and recent acquisitions. Free cash flow was $321 million for the first quarter of 2019, an increase of 13.1%.

Free cash flow represented 110.0% of adjusted EBITDA for the three months ended March 31, 2019, compared with 105.3% in the prior-year period.

Senior Notes

During the first quarter of 2019, the company completed an issuance of $400 million aggregate principal amount of 4.125% senior notes due 2029. The company used the proceeds to repay amounts outstanding under its revolving credit facility and for general corporate purposes.

Dividend

On March 29, 2019, Verisk paid a cash dividend of 25 cents per share of common stock issued and outstanding to the holders of record as of March 15, 2019.

On April 29, 2019, Verisk's Board of Directors approved a cash dividend of 25 cents per share of common stock issued and outstanding, payable on June 28, 2019, to holders of record as of June 14, 2019.

Share Repurchases

The company repurchased, through an accelerated share repurchase (ASR) agreement, 637 thousand shares at an average price of $117.82 for a total cost of $75 million in the three months ended March 31, 2019. The company also entered into an additional $50 million ASR agreement; the associated shares will be delivered and settled in the second quarter of 2019. At March 31, 2019, the company had $353 million remaining under its share repurchase authorization.