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Verisk Analytics, Inc. (VRSK - Free Report) reported impressive second-quarter 2018 results, with earnings and revenues beating the Zacks Consensus Estimate.
Adjusted earnings per share (EPS) of $1.06 surpassed the Zacks Consensus Estimate of $1.01 and improved 29.3% on a year-over-year basis. Earnings were driven by strong organic growth, 2017 tax reform and contributions from acquisitions. However, these were partially offset by increased depreciation and amortization, interest expenses as well as higher share count.
Quarterly revenues of $601.3 million beat the Zacks Consensus Estimate of $586.2 million. The figure improved 14.9% year over year on a reported basis and 7.4% on an organic constant-currency (cc) basis. The growth was driven by strength across all three segments — Insurance, Energy and Specialized Markets as well as Financial.
The company has a strong cash generating ability that helps it to meet deleveraging objectives and invest on behalf of shareholders.
The company’s shares rose 2.1% in after-hours trading, post the better-than-expected quarterly results. Shares have gained 26.9% over the past year compared with the industry’s rise of 17.8%.
Let’s check the numbers.
Segmental Performance
Insurance segment revenues came in at $429.4 million, up 12.3% year over year on a reported basis and 8.4% at organic cc.
In the segment, underwriting and rating revenues of $288.9 million was up 10.3% on a reported basis and 6.2% at organic cc. The improvement was primarily driven by strength in the company’s catastrophe modeling services and underwriting solutions. Claims revenues of $140.5 million improved 16.7% on a reported basis and 13.2% at organic cc. The uptick can be attributed to revenues from repair cost estimating solutions, claims analytics and aerial imagery solutions.
As energy business’ end market continues to improve, Energy andSpecialized Markets segment revenues of $129.9 million were up 17.7% on a reported basis and 5% at organic cc. The improvement can also be attributed to revenues from environmental health and safety services as well as favorable impact of currency fluctuations.
Financial Services segment revenues of $42 million increased 37.7% on a reported basis and 4.4% at organic cc. Growth in revenues from enterprise data management and portfolio management solutions led to the improvement.
Verisk Analytics, Inc. Price, Consensus and EPS Surprise
Adjusted EBITDA of $290.8 million increased 14.4% on a reported basis and 8.9% at organic cc. Organic adjusted EBITDA margin was 49.6% compared with 48.9% in the prior-year quarter.
Adjusted EBITDA expenses (cost of revenues; selling, general and administrative expenses; investment income and others) increased 15.4% on a reported basis and 5.9% at organic cc. The upside was primarily driven by increased salaries and benefits associated with innovation and business growth.
Operating income for second-quarter was $212.3 million compared with $195 million. Operating margin was 35.3% compared with 37.3% in the year-ago quarter.
Balance Sheet and Cash Flow
Verisk Analytics exited second-quarter 2018 with cash and cash equivalents balance of $132 million compared with $149.8 million in the last reported quarter. Long-term debt at the end of the quarter was $2.04 billion, flat sequentially.
The company generated $207.2 million of cash from operating activities compared with $327 million in the last reported quarter. Adjusted free cash flow was $151.1 million compared with $283.8 million at the end of the last reported quarter.
The company repurchased 1.3 million shares for $141 million. During the quarter, it also entered into an accelerated share repurchase (ASR) agreement worth $50 million, wherein shares repurchased will be delivered in the third quarter of 2018. As of Jun 30, 2018, the company had $686 million remaining under its share repurchase authorization.
Investors interested in the broader Business Services Sector are keenly awaiting second-quarter earnings reports from WEX Inc (WEX - Free Report) , ICF International, Inc (ICFI - Free Report) and GreenSky, Inc.. While WEX and ICF International will release second-quarter results on Aug 2, GreenSky will announce the same on Aug 7.
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Verisk Analytics (VRSK) Tops Q2 Earnings & Revenue Estimates
Verisk Analytics, Inc. (VRSK - Free Report) reported impressive second-quarter 2018 results, with earnings and revenues beating the Zacks Consensus Estimate.
Adjusted earnings per share (EPS) of $1.06 surpassed the Zacks Consensus Estimate of $1.01 and improved 29.3% on a year-over-year basis. Earnings were driven by strong organic growth, 2017 tax reform and contributions from acquisitions. However, these were partially offset by increased depreciation and amortization, interest expenses as well as higher share count.
Quarterly revenues of $601.3 million beat the Zacks Consensus Estimate of $586.2 million. The figure improved 14.9% year over year on a reported basis and 7.4% on an organic constant-currency (cc) basis. The growth was driven by strength across all three segments — Insurance, Energy and Specialized Markets as well as Financial.
The company has a strong cash generating ability that helps it to meet deleveraging objectives and invest on behalf of shareholders.
The company’s shares rose 2.1% in after-hours trading, post the better-than-expected quarterly results. Shares have gained 26.9% over the past year compared with the industry’s rise of 17.8%.
Let’s check the numbers.
Segmental Performance
Insurance segment revenues came in at $429.4 million, up 12.3% year over year on a reported basis and 8.4% at organic cc.
In the segment, underwriting and rating revenues of $288.9 million was up 10.3% on a reported basis and 6.2% at organic cc. The improvement was primarily driven by strength in the company’s catastrophe modeling services and underwriting solutions. Claims revenues of $140.5 million improved 16.7% on a reported basis and 13.2% at organic cc. The uptick can be attributed to revenues from repair cost estimating solutions, claims analytics and aerial imagery solutions.
As energy business’ end market continues to improve, Energy and Specialized Markets segment revenues of $129.9 million were up 17.7% on a reported basis and 5% at organic cc. The improvement can also be attributed to revenues from environmental health and safety services as well as favorable impact of currency fluctuations.
Financial Services segment revenues of $42 million increased 37.7% on a reported basis and 4.4% at organic cc. Growth in revenues from enterprise data management and portfolio management solutions led to the improvement.
Verisk Analytics, Inc. Price, Consensus and EPS Surprise
Verisk Analytics, Inc. Price, Consensus and EPS Surprise | Verisk Analytics, Inc. Quote
Operating Results
Adjusted EBITDA of $290.8 million increased 14.4% on a reported basis and 8.9% at organic cc. Organic adjusted EBITDA margin was 49.6% compared with 48.9% in the prior-year quarter.
Adjusted EBITDA expenses (cost of revenues; selling, general and administrative expenses; investment income and others) increased 15.4% on a reported basis and 5.9% at organic cc. The upside was primarily driven by increased salaries and benefits associated with innovation and business growth.
Operating income for second-quarter was $212.3 million compared with $195 million. Operating margin was 35.3% compared with 37.3% in the year-ago quarter.
Balance Sheet and Cash Flow
Verisk Analytics exited second-quarter 2018 with cash and cash equivalents balance of $132 million compared with $149.8 million in the last reported quarter. Long-term debt at the end of the quarter was $2.04 billion, flat sequentially.
The company generated $207.2 million of cash from operating activities compared with $327 million in the last reported quarter. Adjusted free cash flow was $151.1 million compared with $283.8 million at the end of the last reported quarter.
The company repurchased 1.3 million shares for $141 million. During the quarter, it also entered into an accelerated share repurchase (ASR) agreement worth $50 million, wherein shares repurchased will be delivered in the third quarter of 2018. As of Jun 30, 2018, the company had $686 million remaining under its share repurchase authorization.
Zacks Rank & Upcoming Releases
Verisk Analytics currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the broader Business Services Sector are keenly awaiting second-quarter earnings reports from WEX Inc (WEX - Free Report) , ICF International, Inc (ICFI - Free Report) and GreenSky, Inc.. While WEX and ICF International will release second-quarter results on Aug 2, GreenSky will announce the same on Aug 7.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>