01—Abstract
Summary
Summary of the 10-K filed February 24, 2015. Cited figures are marked; the original filing is the authoritative source.
Verisk Analytics, Inc. reported 2014 revenues of $1,746.7 milliona, up from $1,595.7 million in 2013, and net income of $400.0 million, compared with $348.4 million in 2013.
Revenues grew 9.5% year over year, with Decision Analytics revenue rising 12.1% to $1,096.1 millionb and Risk Assessment revenue rising 5.2% to $650.7 million. Annual subscriptions and long-term agreements, typically prepaid, represented approximately 72.3% of 2014 revenues. Diluted EPS was $2.37 versus $2.02 in 2013.
EBITDA reached $858.6 millionc, and the consolidated EBITDA margin was 48.8%, versus 44.6% in 2013. The company sold its mortgage services business, Interthinx, on March 11, 2014 for $151.2 million, and that sale is reported as a discontinued operation. Capital allocation was a major focus in 2014.
Verisk repurchased $675.4 milliond of treasury stock during the year, and an additional $500.0 million accelerated share repurchase (ASR) was announced in December 2014, with about $400.0 million paid and delivered at settlement. Total stockholders' equity fell to $211.0 million at year-end 2014 from $547.6 million, reflecting repurchases and a higher accumulated pension-related comprehensive loss. Total debt, including capital leases, rose to $1,436.9 million, and the company drew $160.0 million on its revolving credit facility.
The company also ended its pursuit of Eagleview Technology Corporation (EVT) in December 2014 after the FTC voted to challenge the transaction. The filing identifies several risks: dependence on U.S. P&C primary insurers, which accounted for approximately 49.1% of 2014 revenue; reliance on data from external suppliers and customers; and pending litigation, including Mariah Re, MediConnect, ISO pension and Snyder antitrust matters, for which the company states it cannot determine the outcome or estimate liability. The Shaw, Dehdashtian and Nagl wage matters were settled for $6.0 million, mostly covered by insurance.
02—Key points
Key Highlights
- Revenues rose 9.5% to $1,746.7 million in 2014, with Decision Analytics up 12.1% to $1,096.1 million and Risk Assessment up 5.2% to $650.7 million.
- Net income was $400.0 million ($2.37 diluted EPS) versus $348.4 million ($2.02) in 2013; EBITDA was $858.6 million with a 48.8% EBITDA margin.
- Approximately 72.3% of 2014 revenues came from annual subscriptions and long-term agreements, typically prepaid.
- Repurchased $675.4 million of treasury stock in 2014 and announced a $500.0 million ASR program in December 2014, with about $189.8 million remaining under the repurchase program excluding the ASR.
- Sold the Interthinx mortgage services business on March 11, 2014 for $151.2 million; results are reported as discontinued operations.
- Total debt rose to $1,436.9 million, and stockholders' equity declined to $211.0 million from $547.6 million.
- U.S. P&C primary insurers accounted for approximately 49.1% of 2014 revenue, a concentration the filing identifies as a key risk.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 24, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $1.43B$1.60B | −10.3% |
| R&D Expenses | $25.60M$21.43M | +19.5% |
| SG&A Expenses | $187.30M$228.98M | −18.2% |
| Operating Expenses | $798.80M$981.44M | −18.6% |
| Operating Income | $632.30M$614.27M | +2.9% |
| Interest Expense | $70.00M$76.14M | −8.1% |
| Net Income | $400.00M$348.38M | +14.8% |
| EPS (Basic) | $2.41$2.07 | +16.4% |
| EPS (Diluted) | $2.37$2.02 | +17.3% |
| Shares Outstanding (Basic) | 165.82M168.03M | −1.3% |
| Shares Outstanding (Diluted) | 169.13M172.28M | −1.8% |
05—Questions
Frequently Asked Questions
How did Verisk perform financially in 2014?
Revenues were $1,746.7 million, up 9.5% from $1,595.7 million in 2013. Net income was $400.0 million, compared with $348.4 million, and diluted EPS was $2.37 versus $2.02.
What drove the growth in revenue by segment?
Decision Analytics revenue increased 12.1% to $1,096.1 million, led by insurance (up 11.1%), healthcare (up 16.2%) and financial services (up 19.3%). Risk Assessment revenue increased 5.2% to $650.7 million, driven by industry-standard insurance programs and property-specific rating information.
What did the company do with its cash in 2014?
Verisk repurchased $675.4 million of treasury stock and announced a $500.0 million accelerated share repurchase in December 2014. It also paid for the Maplecroft acquisition ($30.1 million net cash) and received $151.2 million from the sale of Interthinx.
What are the main risks identified in the filing?
Key risks include dependence on U.S. P&C primary insurers (about 49.1% of 2014 revenue), reliance on external data sources whose suppliers may withdraw or raise prices, consolidation among customers, intellectual property claims, regulatory developments affecting personal data use, and several pending lawsuits. The company states it cannot determine the ultimate outcome or estimate liability for several of these matters.
What happened with the Eagleview acquisition?
Verisk agreed in January 2014 to acquire Eagleview Technology Corporation for a net cash price of $650 million. On December 16, 2014, the company ended its efforts after the Federal Trade Commission voted to challenge the transaction. The filing notes $6.9 million of related professional fees within Decision Analytics SG&A in 2014.
06—Continue