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

  • Revenue from continuing operations grew 6.0% in the fourth quarter and 13.3% for fiscal year 2016; organic constant currency revenue growth was 6.2% in the fourth quarter and 5.8% for fiscal year 2016.

  • Income from continuing operations decreased 0.5% to $108 million and 7.4% to $452 million for fourth- quarter and fiscal year 2016, respectively. Adjusted EBITDA from continuing operations increased 7.0% to

    $258 million in the fourth quarter and 9.9% to $1,005 million for fiscal year 2016; excluding the 2015

    $15.6 million gain on sale of warrants, adjusted EBITDA for fiscal year 2016 grew 11.9%.

  • Diluted GAAP earnings per share (GAAP EPS) from continuing operations of $0.63 were unchanged in the fourth quarter and decreased 8.7% to $2.64 for fiscal year 2016; diluted adjusted earnings per share (adjusted EPS) from continuing operations increased 8.1% to $0.80 in the quarter and 8.4% to $3.11 for the full year.

  • Net cash provided by operating activities was $546 million for the 12 months ended December 31, 2016. Free cash flow from continuing operations, excluding $100 million of taxes paid related to the sale of the healthcare business, was $479 million year-to-date, an increase of 16.2%.

  • Repurchases of Verisk common stock were $144 million in the fourth quarter and $333 million for the full year. As of December 31, 2016, the company had $636 million remaining under its share repurchase authorization.

JERSEY CITY, N.J., February 21, 2017 - Verisk Analytics, Inc. (Nasdaq:VRSK), a leading data analytics provider, today announced results for the fourth quarter and fiscal year ended December 31, 2016. Scott Stephenson, chairman, president and CEO, said, "We delivered another quarter of revenue growth, leading margins, and strong cash generation despite currency and energy end-market headwinds. The resilience of our financial performance reflects the distinctiveness of our businesses and the outstanding dedication of our people. Our initiatives during the year position us well to execute on our plans for 2017."

Table 1: Summary of Results

(in millions, except per share amounts)

Note: Continuing operations reflect the 2016 sale of the healthcare services business. Adjusted net income, adjusted EBITDA, and adjusted EPS exclude second- quarter 2015 nonrecurring items related to the Wood Mackenzie acquisition. Fourth-quarter 2016 adjusted EBITDA excludes $19 million related to an ESOP payment.

Three Months Ended December 31,

2016 2015

Change

Twelve Months Ended December 31,

2016 2015

Change

Revenues from continuing operations

$ 506.1

$ 477.4

6.0 %

$ 1,995.2

$ 1,760.7

13.3 %

Income from continuing operations

$ 107.5

$ 108.0

(0.5 )%

$ 451.5

$ 487.5

(7.4 )%

Adjusted EBITDA from continuing operations

$ 257.8

$ 240.9

7.0 %

$ 1,004.7

$ 913.9

9.9 %

Adjusted net income from continuing operations

$ 135.4

$ 128.3

5.5 %

$ 531.5

$ 482.8

10.1 %

Diluted GAAP EPS from continuing operations

$ 0.63

$ 0.63

-

$ 2.64

$ 2.89

(8.7 )%

Diluted adjusted EPS from continuing operations

$ 0.80

$ 0.74

8.1 %

$ 3.11

$ 2.87

8.4 %

Rev enu e

Total revenue from continuing operations increased 6.0% and 6.2% on an organic constant currency basis in the fourth quarter. For the full year, total revenue from continuing operations grew 13.3%, and 5.8% on an organic constant currency basis. Financial services led organic revenue growth for the quarter and the full year.

Decision Analytics segment revenue from continuing operations grew 6.5% in the fourth quarter and 18.5% for the full year. Decision Analytics organic constant currency revenue growth was 7.3% in the quarter and 6.3% for the full year.

  • Insurance category revenue increased 7.5% in the quarter and 8.1% for the full year. Organic growth, excluding the recently acquired Analyze Re, was 7.3% in the quarter and 8.1% for the full year. Performance in the quarter was led by strong growth in underwriting solutions, with good contributions from claims analytics and repair cost estimating solutions; catastrophe modeling solutions also contributed to growth.

  • Energy and specialized markets category revenue declined 0.3% in the quarter but increased 43.4% for the full year. Organic revenue, excluding the recent acquisitions of Greentech Media, Infield, The PCI Group, and the data and subscriptions business of Quest Offshore, declined 5.5% in the quarter and for the full year, primarily as a result of continuing end-market and currency headwinds affecting the energy business.

  • Financial services category revenue increased 27.3% in the quarter and 10.1% for the full year. The growth was driven by analytical and media effectiveness solutions.

Table 2: Decision Analytics Revenues by Category

(in millions)

2016

2015

Change

2016

2015

Change

Insurance

$ 178.3

$ 165.8

7.5 %

$ 699.8

$ 647.2

8.1%

Energy and specialized markets

109.7

109.9

(0.3 )%

442.8

308.8

43.4%

Financial services

35.5

27.9

27.3 %

128.3

116.5

10.1%

Total Decision Analytics

$ 323.5

$ 303.6

6.5 %

$ 1,270.9

$ 1,072.5

18.5%

Three Months Ended Twelve Months Ended December 31, December 31, Risk Assessment segment revenue grew 5.1% in the quarter and 5.2% for the full year.

  • Revenue growth in industry-standard insurance programs was 5.9% in the fourth quarter and 5.6% for the full year, resulting primarily from the annual effect of growth in 2016 invoices effective from January 1 and growth from new solutions. On an organic basis, excluding the recent acquisition Risk Intelligence Ireland, growth in the fourth quarter was 5.4% and for the full year was 5.3%.

  • Property-specific rating and underwriting information revenue grew 2.6% in the fourth quarter and 4.0% for the full year. Growth was led by an increase in underwriting solutions subscription revenue. Organic revenue growth, excluding the recent acquisitions of the GeoInformation Group and MarketStance, was 1.4% for the quarter and 3.7% for the full year.

Table 3: Risk Assessment Revenues by Category

(in millions)

Three Months Ended December 31,

2016 2015

Change

Twelve Months Ended December 31,

2016 2015

Change

Industry-standard insurance programs

$ 139.9 $ 132.1

5.9%

$ 554.1 $ 524.6

5.6%

Property-specific rating and underwriting information

42.7 41.7

2.6%

170.2 163.6

4.0%

Total Risk Assessment

$ 182.6 $ 173.8

5.1%

$ 724.3 $ 688.2

5.2%

Expen s es, Inco me, and E BIT D A

Cost of revenues from continuing operations increased 20.1% in the fourth quarter and 16.7% for the full year compared with the respective prior-year periods. Excluding the $14.5 million ESOP payment, the increases were 11.1% and 14.4%, respectively. The year-over-year increase, excluding the ESOP payment, is primarily due to contributions from acquisitions, salaries and benefits, and information technology costs.

Selling, general, and administrative expense from continuing operations, or SG&A, increased 2.0% in the quarter and 8.3% for the full year, primarily due to acquisition-related costs and other expense related to supporting business growth. Excluding the $4.3 million ESOP payment, SG&A decreased 3.7% in the quarter and increased 6.8% for the full year.

Income from continuing operations decreased 0.5% to $108 million in the fourth quarter and 7.4% to $452 million for the full year.

Adjusted EBITDA from continuing operations increased 7.0% in the quarter and 9.9% for the full year. Excluding the third-quarter 2015 $15.6 million gain on sale of warrants, adjusted EBITDA increased 11.9% for the full year.

The 10.2% increase in Decision Analytics adjusted EBITDA from continuing operations to $153 million in the quarter was the result of acquisitions, growth in the business, and good cost management. Decision Analytics adjusted EBITDA grew 14.3% for the full year.

The 2.7% increase in Risk Assessment adjusted EBITDA to $105 million in the quarter was the result of revenue growth. Risk Assessment adjusted EBITDA grew 4.5% for the full year.

Earn ing s P er Sh a re

Diluted GAAP EPS from continuing operations was $0.63 in the fourth quarter and $2.64 for the full year.

Diluted adjusted EPS from continuing operations was $0.80 in the fourth quarter, an increase of 8.1% compared with the same period in 2015. Diluted adjusted EPS from continuing operations was $3.11 for the full year, an increase of 8.4% compared with 2015. Diluted adjusted EPS from continuing operations for the full year increased because of organic growth in the business, acquisitions, and lower interest expense. The increases were partially offset by higher fixed asset depreciation expense, higher taxes, and a higher share count.

Cash Flow

Net cash provided by operating activities was $546 million for the 12 months ended December 31, 2016. Capital expenditures from continuing operations increased 5.2% to $146 million and were 7.3% of revenues for the year ended December 31, 2016. Free cash flow from continuing operations, excluding $100 million of taxes paid related to the sale of the healthcare business, was $479 million for the full year, an increase of 16.2%. This represented 47.6% of adjusted EBITDA from continuing operations for the 12 months ended December 31, 2016.

Sh ar e Rep u rcha ses and F inan cing Activ it ies

The company repurchased 1.8 million shares in the quarter for a total return of capital to shareholders of $144 million. At December 31, 2016, the company had $636 million remaining under its share repurchase authorization.

The company repaid $70.0 million of debt subsequent to the end of the fourth quarter as part of its standard debt management efforts.

Co n f erence Call

Verisk's management team will host a live audio webcast on Wednesday, February 22, 2017, 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 the Verisk investor website at http : //in ves to r.v eris k .c om . The discussion will also be 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 using Conference ID #7319793 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.

About Verisk Analytics

Verisk Analytics (Nasdaq:VRSK) is a leading data analytics provider serving customers in insurance, natural resources, and financial services. 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. Around the world, Verisk Analytics helps customers protect people, property, and financial assets.

Headquartered in Jersey City, N.J., Verisk Analytics operates in 27 countries and is a member of Standard & Poor's S&P 500® Index. In 2016, Forbes magazine named Verisk Analytics to its World's Most Innovative Companies list and to its America's Best Large Employers list. Verisk is one of only 14 companies to appear on

both lists. For more information, please visit www. veris k .c om .

Contact: Investor Relations

David Cohen

Director, Investor Relations and Strategic Finance Verisk Analytics, Inc.

201-469-2174

dav id. e.c oh en @v eris k .c om

Media

Rich Tauberman

MWW Group (for Verisk Analytics) 202-600-4546

r tauber m an@m ww.c om

Verisk Analytics Inc. published this content on 21 February 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 21 March 2017 16:01:09 UTC.

Original documenthttp://s21.q4cdn.com/228342955/files/doc_news/4q16-VRSK-earnings-release.pdf

Public permalinkhttp://www.publicnow.com/view/69E60AA6353639E6B871C74CC283B58E0ECE78CF