01—Abstract
Summary
Summary of the 10-K filed February 25, 2014. Cited figures are marked; the original filing is the authoritative source.
Verisk Analytics, Inc. (VRSK) reported 2013 revenues of $1,595.7 milliona, up from $1,407.8 million in 2012, and net income of $348.4 million, compared with $329.1 million in 2012.
Operating income was $614.3 millionb. The company describes itself as a provider of information about risk to professionals in insurance, healthcare, financial services, government, supply chain and risk management. Approximately 73.6% of 2013 revenues came from annual subscriptions or long-term agreements, and the company reports a five-year revenue CAGR of 15.1%.
Its two segments are Risk Assessment, with revenues of $618.3 millionc, and Decision Analytics, with revenues of $977.4 million. Decision Analytics accounted for approximately 61.3% of revenues. The filing describes two pending transactions.
In January 2014 Verisk agreed to acquire Eagleview Technology Corporation for a net cash price of $650 milliond, expected to close by July 2014 and funded from operating cash and credit facility borrowings. In February 2014 it agreed to sell its mortgage services business, Interthinx, for $155.0 million, expected to close by March 31, 2014. Interthinx is reported as a discontinued operation.
Management states that the EVT acquisition would raise total debt to approximately $1,756 million and leverage from 1.60 to approximately 2.15. Cash flow from operations was $506.9 million in 2013. The company repurchased $278.9 million of stock during 2013, and $165.3 million remained available under its $1.2 billion repurchase program at year-end.
Total debt was $1,275.9 million at December 31, 2013, and stockholders' equity was $547.6 million. Several putative class actions and other suits are pending, including Fair Credit Reporting Act litigation settled for $18.6 million, all to be funded by insurance. The company states it cannot currently determine the outcome or estimate the liability for the other matters.
02—Key points
Key Highlights
- Revenues rose to $1,595.7 million in 2013 from $1,407.8 million in 2012, and net income reached $348.4 million versus $329.1 million.
- Approximately 73.6% of 2013 revenues came from annual subscriptions or long-term agreements, which are typically prepaid.
- Decision Analytics revenue was $977.4 million (about 61.3% of revenues), and Risk Assessment revenue was $618.3 million.
- The Eagleview Technology acquisition for $650 million in net cash is expected to close by July 2014 and would raise total debt to approximately $1,756 million.
- The sale of the Interthinx mortgage services business for $155.0 million is expected to close by March 31, 2014, and is reported as discontinued operations.
- Operating cash flow was $506.9 million, and the company repurchased $278.9 million of its stock during 2013.
- Several wage-and-hour and Fair Credit Reporting Act class actions are pending; the FCRA settlement provides for a payment of $18.6 million, all to be covered by insurance.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 25, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $1.60B$1.41B | +13.3% |
| R&D Expenses | $21.43M$18.39M | +16.5% |
| SG&A Expenses | $228.98M$220.07M | +4.1% |
| Operating Expenses | $981.44M$835.62M | +17.5% |
| Operating Income | $614.27M$572.23M | +7.3% |
| Interest Expense | $76.14M$72.51M | +5.0% |
| Net Income | $348.38M$329.14M | +5.8% |
| EPS (Basic) | $2.07$1.98 | +4.5% |
| EPS (Diluted) | $2.02$1.92 | +5.2% |
| Shares Outstanding (Basic) | 168.03M165.89M | +1.3% |
| Shares Outstanding (Diluted) | 172.28M171.71M | +0.3% |
05—Questions
Frequently Asked Questions
How did Verisk perform financially in 2013?
Revenues were $1,595.7 million, up from $1,407.8 million in 2012. Operating income was $614.3 million and net income was $348.4 million, compared with $329.1 million in 2012. Net cash provided by operating activities was $506.9 million.
What acquisitions and divestitures did Verisk announce?
In January 2014 Verisk agreed to acquire Eagleview Technology Corporation, the parent of Pictometry, for a net cash price of $650 million, expected to close by July 2014. In February 2014 it agreed to sell its mortgage services business, Interthinx, for $155.0 million, expected to close by March 31, 2014.
How will the Eagleview acquisition affect the company's debt?
The filing states that Verisk expects to incur approximately $475 million of indebtedness under its credit facility to finance the acquisition. Total debt would rise to approximately $1,756 million, and the leverage ratio (debt to LTM pro forma EBITDA) would increase from 1.60 to approximately 2.15.
Does Verisk pay dividends or repurchase shares?
Verisk has not paid or declared cash dividends on its Class A common stock in the two most recent fiscal years and does not currently intend to pay them. It repurchased $278.9 million of treasury stock in 2013, and $165.3 million remained available under its $1.2 billion repurchase program as of December 31, 2013.
What are the main litigation risks?
Verisk is party to several putative class actions, including Fair Credit Reporting Act suits involving Intellicorp and iiX, which were settled for $18.6 million to be covered by insurance, and wage-and-hour suits against Interthinx. The company says it cannot currently determine the ultimate resolution or estimate the liability for the other pending matters.
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