01—Abstract
Summary
Summary of the 10-K filed February 28, 2012. Cited figures are marked; the original filing is the authoritative source.
Verisk Analytics, Inc. (NASDAQ: VRSK) reported revenues of $1,331.8 milliona and net income of $282.8 million for the year ended December 31, 2011, compared with revenues of $1,138.3 million and net income of $242.6 million in 2010.
Revenue grew 17.0% year over year, with Decision Analytics revenues rising 28.9% to $768.5 millionb (including $106.9 million from recent acquisitions) and Risk Assessment revenues rising 3.9% to $563.4 million. EBITDA reached $592.0 million, with an EBITDA margin of 44.4% versus 44.7% in 2010. Diluted EPS was $1.63 compared with $1.30 in 2010.
The company's balance sheet shows total assets of $1,541.1 millionc, total debt of $1,105.9 million, and a stockholders' deficit of $98.5 million, which reflects $380.7 million of share repurchases in 2011. Cash and cash equivalents rose to $191.6 million from $55.0 million. Operating cash flow was $375.7 million.
In 2011 the company issued $450.0 milliond of 5.800% senior notes due 2021 and $250.0 million of 4.875% senior notes due 2019, and repaid $295.0 million and $145.0 million of its revolving credit facility borrowings. The revolver had $725.0 million of capacity and no outstanding borrowings at year-end. Management highlighted a planned hard freeze of the pension plans effective February 29, 2012, and a possible voluntary pension prefunding of $70.0 million to $90.0 million in 2012.
The board also authorized an additional $300.0 million of share repurchases on January 11, 2012, raising total repurchase capacity to $900.0 million. Key risks disclosed include dependence on U.S. P&C insurers (about 52.0% of 2011 revenue), antitrust-related litigation tied to the insurer relationships, and the mortgage market's effect on the mortgage vertical (about 10.0% of revenue).
02—Key points
Key Highlights
- Revenue of $1,331.8 million in 2011, up 17.0% from $1,138.3 million in 2010; net income of $282.8 million versus $242.6 million.
- Decision Analytics segment revenue rose 28.9% to $768.5 million, including $106.9 million from recent acquisitions; Risk Assessment grew 3.9% to $563.4 million.
- EBITDA of $592.0 million with a 44.4% consolidated EBITDA margin, compared with 44.7% in 2010.
- Diluted EPS of $1.63 in 2011 versus $1.30 in 2010.
- Issued $450.0 million of 5.800% senior notes due 2021 and $250.0 million of 4.875% senior notes due 2019; the $725.0 million revolver was undrawn at year-end.
- Share repurchase authorization raised to $900.0 million after a $300.0 million addition on January 11, 2012; $380.7 million was repurchased in 2011.
- Stockholders' deficit of $98.5 million at year-end, with total debt of $1,105.9 million; operating cash flow was $375.7 million.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 28, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $1.19B$1.14B | +4.7% |
| R&D Expenses | $15.39M$14.87M | +3.5% |
| SG&A Expenses | $199.50M$166.37M | +19.9% |
| Operating Expenses | $710.23M$697.43M | +1.8% |
| Operating Income | $481.16M$440.91M | +9.1% |
| Interest Expense | $53.85M$34.66M | +55.3% |
| Net Income | $282.76M$242.55M | +16.6% |
| EPS (Basic) | $1.70$1.36 | +25.0% |
| EPS (Diluted) | $1.63$1.30 | +25.4% |
| Shares Outstanding (Basic) | 166.02M177.73M | −6.6% |
| Shares Outstanding (Diluted) | 173.33M186.39M | −7.0% |
05—Questions
Frequently Asked Questions
How did Verisk perform financially in 2011?
Revenues rose to $1,331.8 million from $1,138.3 million, and net income increased to $282.8 million from $242.6 million. Diluted EPS was $1.63, compared with $1.30 in 2010. Operating cash flow was $375.7 million.
What drove growth in the Decision Analytics segment?
Decision Analytics revenue increased $172.3 million, or 28.9%, to $768.5 million. The filing attributes $106.9 million of the increase to recent acquisitions, including Health Risk Partners and Bloodhound. Excluding acquisitions, insurance revenue rose $54.4 million on higher loss quantification volumes tied to storm activity, and healthcare revenue rose $11.5 million.
How is Verisk's debt position?
Total debt was $1,105.9 million at December 31, 2011, up from $839.5 million a year earlier. The increase reflects the two 2011 senior note issuances totaling $700.0 million. The revolving credit facility had no borrowings and $725.0 million of available capacity at year-end. The company stated it was in compliance with its debt covenants.
What is the outlook for capital returns and pensions?
The board increased the share repurchase authorization to $900.0 million on January 11, 2012. Verisk announced a hard freeze of its pension plans effective February 29, 2012, and was contemplating a voluntary pension prefunding of $70.0 million to $90.0 million, which may occur in the first half of 2012. The company stated it does not intend to pay cash dividends.
What are the main risks flagged in the filing?
The filing highlights reliance on U.S. property and casualty insurers, which accounted for about 52.0% of 2011 revenue, and dependence on third-party data sources, some of which are competitors. It also notes mortgage-market exposure, which accounted for about 10.0% of revenue, and pending litigation, including putative class actions alleging conspiracy with insurers and a Citizens Insurance complaint filed February 7, 2012.
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