01—Abstract
Summary
Summary of the 10-K filed February 22, 2022. Cited figures are marked; the original filing is the authoritative source.
Verisk Analytics, Inc. reported 2021 revenues of $2,998.6 milliona, up from $2,784.6 million in 2020, and net income of $666.3 million, compared with $712.7 million in 2020.
Operating income was $1,000.5 millionb, and cash provided by operating activities was $1,155.7 million. Results were weighed down by a $134.0 million long-lived asset impairment in the Financial Services reporting unit, which pushed the Financial Services segment to an EBITDA loss of $111.0 million. The Insurance segment remained the largest contributor, with revenues of $2,206.9 million, up from $2,008.7 million, and EBITDA of $1,265.7 million.
Energy and Specialized Markets revenues rose to $648.9 millionc from $619.2 million. The company disclosed a series of portfolio moves after year-end. On January 21, 2022, it agreed to sell its environmental health and safety business, 3E Company, for up to $950.0 million, including $630.0 million in cash at closing.
On February 21, 2022, it agreed to sell its financial services business to TransUnion for $515.0 milliond in cash. It also completed the $223.5 million cash acquisition of Infutor Data Solutions on February 11, 2022, and its board approved an additional $1.0 billion share repurchase authorization. The balance sheet shows total debt of $3,314.1 million, with senior notes of $2,700.0 million in aggregate principal, and goodwill of $4,331.2 million representing 55.5% of total assets.
Capital returns in 2021 included $475.0 million of share repurchases and $188.2 million of dividends. Management reported that COVID-19 had not caused a material impact on approximately 85% of revenues, which are largely subscription-based.
02—Key points
Key Highlights
- Revenues grew to $2,998.6 million in 2021 from $2,784.6 million in 2020, while net income declined to $666.3 million from $712.7 million.
- A $134.0 million impairment on long-lived assets in the Financial Services reporting unit drove an EBITDA loss of $111.0 million for that segment.
- The Insurance segment generated $2,206.9 million in revenues and $1,265.7 million in EBITDA, and about 52% of total revenue came from U.S. P&C primary insurers.
- Verisk agreed to sell its 3E environmental health and safety business for up to $950.0 million and its financial services business to TransUnion for $515.0 million in cash.
- Subsequent to year-end, the company completed the $223.5 million acquisition of Infutor Data Solutions and the board approved a new $1.0 billion share repurchase authorization.
- Operating cash flow rose to $1,155.7 million, and the company repurchased $475.0 million of stock and paid $188.2 million in dividends during 2021.
- Total debt was $3,314.1 million at December 31, 2021, with a $400.0 million reduction in the credit facility balance under the subsequent repayments of $130.0 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Verisk Analytics kept $0.27.
- Revenue$2.46B100.0%
- Cost of revenue−$853.7M34.7%
- Gross profit$1.61B65.3%
- Operating costs−$697.4M28.3%
- Operating income$911.4M37.0%
- Interest, other & tax−$245.2M10.0%
- Net income$666.2M27.1%
Where FY2021 revenue went
$2.46B- Cost of revenue: $853.7M, 35% of revenue
- Net income: $666.2M, 27% of revenue
- Other operating costs: $337.1M, 14% of revenue
- SG&A: $313.2M, 13% of revenue
- R&D: $47.1M, 1.9% of revenue
- Interest, other & tax: $245.2M, 10.0% of revenue
Kept 27% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 22, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $2.46B$2.27B | +8.5% |
| Cost of Revenue | $853.70M$791.70M | +7.8% |
| Gross Profit | $1.61B$1.48B | +8.9% |
| R&D Expenses | $47.10M$44.60M | +5.6% |
| SG&A Expenses | $313.20M$308.20M | +1.6% |
| Operating Expenses | $1.55B$1.31B | +18.1% |
| Operating Income | $911.40M$956.30M | −4.7% |
| Interest Expense | $127.00M$138.30M | −8.2% |
| Net Income | $666.20M$712.70M | −6.5% |
| EPS (Basic) | $4.12$4.38 | −5.9% |
| EPS (Diluted) | $4.08$4.31 | −5.3% |
| Shares Outstanding (Basic) | 161.84M162.61M | −0.5% |
| Shares Outstanding (Diluted) | 163.34M165.32M | −1.2% |
05—Questions
Frequently Asked Questions
Why did net income decline in 2021 despite higher revenues?
The decline was primarily due to a $134.0 million long-lived asset impairment in the Financial Services reporting unit, which reflected weaker than expected operating performance. Net income fell to $666.3 million from $712.7 million even though revenues rose to $2,998.6 million from $2,784.6 million.
What divestitures has Verisk announced?
On January 21, 2022, Verisk agreed to sell 3E Company Environmental, Ecological and Engineering for up to $950.0 million, including $630.0 million of cash at closing. On February 21, 2022, it agreed to sell its financial services business to TransUnion for $515.0 million in cash. Both transactions are subject to customary closing conditions.
How is Verisk returning capital to shareholders?
In 2021 Verisk repurchased $475.0 million of common stock and paid $188.2 million in dividends. Its dividend was $0.29 per share quarterly in 2021, and on February 16, 2022, the board approved a $0.31 per share dividend and an additional $1.0 billion share repurchase authorization.
How concentrated is Verisk's revenue?
The company states that approximately 52% of its 2021 revenue came from solutions provided to U.S. P&C primary insurers. The Insurance segment generated about 73% of revenues in 2021. The top fifty customers represented approximately 32% of 2021 revenues, and no single customer accounted for more than approximately 3%.
What is the status of the Xactware patent litigation?
The matter was settled on November 5, 2021, which reversed the excess accrual. The Federal Circuit appeal was dismissed on November 9, 2021, and the District Court dissolved the permanent injunction. The release of the reserve reduced selling, general and administrative expenses in 2021.
06—Continue