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Actionable news in VRSK: Verisk Analytics, Inc.,

Verisk Analytics, Inc., Reports Third-Quarter Financial Results

The following excerpt is from the company's SEC filing.

Total revenue grew

; organic revenue growth was

, excluding recent acquisitions and pass-through healthcare revenue.

Income from continuing operations grew

$131.8 million

; Adjusted EBITDA from continuing operations grew

$278.8

million.

Diluted GAAP earnings per share (diluted GAAP EPS) grew

; diluted adjusted EPS increased

Net cash provided by operating activities less capital expenditures was

$414.3 million

, an increase of

year to date and 46.8% excluding recent acquisitions.

JERSEY CITY, N.J.,

Oc tober 27, 2015

— Verisk Analytics, Inc. (Nasdaq:VRSK), a leading data analytics provider, today announced results for the fiscal quarter ended

September 30, 2015

Scott Stephenson, president and chief executive officer, said, "Our third-quarter results were solid, with mid-single-digit organic revenue growth adjusted for pass-through healthcare revenue and faster Adjusted EBITDA growth as margins expanded. WoodMac saw good subscription growth, highlighting the team's strong ability to execute in a challenging environment for our customers. We are positioned to execute on our strategies to drive profitable growth and create value for our shareholders over the long term."

Table 1: Summary of Results

(in millions, except per share amounts)

Note: Continuing operations reflect the 2014 sale of the mortgage services business. Adjusted net income and adjusted EPS exclude second-quarter nonrecurring items related to the Wood Mackenzie acquisition.

Three Months Ended

Nine Months Ended

September 30,

Change

Revenues from continuing operations

1,507.4

1,281.9

Adjusted net income from continuing operations

Diluted GAAP EPS from continuing operations

Diluted adjusted EPS from continuing operations

Total revenue increased

compared with

. Organic revenue growth was 7.3%, excluding the healthcare analytics business and recent acquisitions in both periods. Insurance solutions led the organic revenue growth in the quarter.

Decision Analytics

segment revenue grew

quarter of

and represented approximately

of total revenue. Decision Analytics organic revenue growth was 8.1%, excluding the healthcare analytics business and recent acquisitions.

Insurance category revenue increased

, led by strong growth in loss quantification solutions, insurance fraud revenue, and catastrophe modeling services in the quarter.

Financial services category revenue increased

in the quarter, driven by continued underlying demand for our core solutions and services.

Healthcare revenue, net of pass-through revenue in the current and prior-year quarters, declined 2.0%.

Energy and specialized markets category organic revenue grew 5.6%. Including the recently acquired Wood Mackenzie and Maplecroft businesses, growth was

431.2%

. Wood Mackenzie revenue growth in pounds for the nine months ended September 30 was approximately 7%.

Table 2: Decision Analytics Revenues by Category

(in millions)

Total Decision Analytics

Risk Assessment

Revenue growth in industry-standard insurance programs was

, resulting primarily from the annual effect of growth in

invoices effective from January 1 and growth from new solutions.

Property-specific rating and underwriting information revenue grew

in the third quarter. Growth was led by new sales.

Table 3: Risk Assessment Revenues by Category

Industry-standard insurance programs

Total Risk Assessment

Expenses and Adjusted EBITDA

Cost of revenues increased

. The year-over-year increase is primarily due to contributions from acquisitions as well as salaries, benefits, and rent to support business growth

Selling, general, and administrative expense, or SG&A, increased

in the quarter, which is primarily due to acquisitions.

Income from continuing operations increased

. Adjusted EBITDA increased

. Excluding acquisitions and a $15.6 million gain on sale of third-party warrants, Adjusted EBITDA increased

The 49.0% increase in Decision Analytics Adjusted EBITDA to $176.6 million

was the result of acquisitions, growth in the business, and improved operations. Decision Analytics Adjusted EBITDA in the quarter, excluding recent acquisitions and the gain on sale of warrants, grew 4.9%.

2015 Adjusted EBITDA in Risk Assessment increased

$102.2 million

as a result of revenue growth and good expense management, including the impact of lower costs resulting from the fourth-quarter 2014 talent realignment.

Table 4: Segment Results Summary

Note: Continuing operations reflect the 2014 sale of the mortgage services business. Excludes second-quarter nonrecurring items related to the Wood Mackenzie acquisition.

September 30, 2014

(161.9

(210.2

(129.9

(180.8

Investment income and other

6,391.2

Adjusted EBITDA margin from continuing operations

September 30, 2014

(434.0

(149.6

(583.6

(369.8

(153.2

(523.0

(148.0

(208.2

(115.3

(170.4

22,667.0

Adjusted EPS

GAAP diluted net income per share was

. Diluted adjusted earnings per share (adjusted EPS) were

for third-quarter

compared with the same period in

. Adjusted EPS increased because of solid operations, both organic and acquired. The increases were partially offset by higher fixed asset depreciation and amortization expense and higher interest costs related to new debt issuance.

Free Cash Flow

Free cash flow, defined as cash provided by operating activities less capital expenditures, increased

-month period ended

, including the contribution from acquisitions. This represented 56.5% of Adjusted EBITDA from continuing operations. Capital expenditures increased 2.7% to

$105.7 million

. Capital expenditures were 7.0% of revenue for the

As part of its commitment to delevering, the company repaid $120 million of debt in the quarter.

Conference Call

Verisk’s management team will host a live audio webcast on Wednesday, October 28, 2015, 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...


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