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Verisk (VRSK) Q3 Earnings Miss Estimates, Revenues Beat
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Verisk Analytics (VRSK - Free Report) reported mixed third-quarter 2019 results, wherein the company’s earnings lagged the Zacks Consensus Estimate but revenues surpassed the same.
Adjusted earnings per share of $1.12 missed the consensus mark by a penny but improved 3.7% on a year-over-year basis. The company’s bottom line benefited from organic growth, contributions from acquisitions, decline in interest expense and lower average share count, which were partially offset by the rise in depreciation and amortization expense and a higher effective tax rate.
Revenues of $652.7 million beat the consensus estimate by $1.9 million and improved 9% year over year on a reported basis and 7.6% on an organic constant-currency (cc) basis. The uptick came on the back of continued strength in the company’s Insurance segment and solid improvement in Energy and Specialized Markets.
So far this year, shares of Verisk have gained 37.7%, outperforming 37.5% rise of the industry it belongs to and 20.1% increase of the Zacks S&P 500 composite.
Let’s check out the numbers in detail.
Segmental Performance
Insurance segment revenues totaled $466.8 million, up 9.2% year over year on a reported basis and 7.7% in organic cc.
Within the segment, underwriting and rating revenues of $310.3 million rose 8.8% on a reported basis and 7.9% in organic cc. The improvement was primarily driven by increase in industry-standard insurance programs, property-specific underwriting and catastrophe modeling solutions revenues. Claims revenues amounted to $156.5 million, which improved 9.8% on a reported basis and 7.4% in organic cc. The uptick can be attributed to revenues from repair cost estimating and claims analytics solutions.
Energy and Specialized Markets segment revenues amounted to $142.5 million and improved 11.6% year over year on a reported basis and 8.7% in organic cc. The improvement can be attributed to revenues from market and cost intelligence solutions and core research and consulting.
Financial Services segment revenues of $43.4 million improved 0.1% year over year on a reported basis and 2.7% in organic cc. The segment benefited from increase in enterprise data management, and fraud and credit risk management solutions, which partially offset the decrease in portfolio management from nonrecurring consulting revenues.
Adjusted EBITDA of $309.3 million increased 9% on a reported basis and 7.7% in organic cc. Adjusted EBITDA margin of 47.4% was flat in the prior-year quarter.
Operating income in the third quarter was $75.7 million compared with $211.1 million in the prior-year quarter. Operating margin was 11.6% compared with 35.3% in the year-ago quarter.
Verisk Analytics, Inc. Price, Consensus and EPS Surprise
Verisk exited third-quarter 2019 with cash and cash equivalents of $311.8 million compared with $153.3 million at the end of the prior quarter. Long-term debt came in at $2.67 billion compared with $2.45 billion at the end of the previous quarter.
The company generated $213.6 million of cash from operating activities and capex was $61 million. Free cash flow was $152.9 million.
Share Repurchases & Dividend Payout
During the third quarter of 2019, through an accelerated share repurchase (ASR) agreement, Verisk repurchased roughly 491,000 shares at an average price of $152.84 for a total cost of $75 million. The company also entered into an additional $50 million ASR agreement. The associated shares will be delivered and settled in the fourth quarter of 2019. As of Sep 30, 2019, the company had $228 million under its share repurchase authorization.
The company paid out a cash dividend of 25 cents per share on Sep 30. On Oct 23, the company's board of directors approved a cash dividend of 25 cents per share to be paid out on Dec 31 to shareholders of record as of Dec 13.
Investors interested in the broader Zacks Business Services sector are awaiting third-quarter 2019 earnings of key players like Fiserv , ICF International (ICFI - Free Report) and FLEETCOR Technologies , each scheduled to release results on Nov 6.
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This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
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Verisk (VRSK) Q3 Earnings Miss Estimates, Revenues Beat
Verisk Analytics (VRSK - Free Report) reported mixed third-quarter 2019 results, wherein the company’s earnings lagged the Zacks Consensus Estimate but revenues surpassed the same.
Adjusted earnings per share of $1.12 missed the consensus mark by a penny but improved 3.7% on a year-over-year basis. The company’s bottom line benefited from organic growth, contributions from acquisitions, decline in interest expense and lower average share count, which were partially offset by the rise in depreciation and amortization expense and a higher effective tax rate.
Revenues of $652.7 million beat the consensus estimate by $1.9 million and improved 9% year over year on a reported basis and 7.6% on an organic constant-currency (cc) basis. The uptick came on the back of continued strength in the company’s Insurance segment and solid improvement in Energy and Specialized Markets.
So far this year, shares of Verisk have gained 37.7%, outperforming 37.5% rise of the industry it belongs to and 20.1% increase of the Zacks S&P 500 composite.
Let’s check out the numbers in detail.
Segmental Performance
Insurance segment revenues totaled $466.8 million, up 9.2% year over year on a reported basis and 7.7% in organic cc.
Within the segment, underwriting and rating revenues of $310.3 million rose 8.8% on a reported basis and 7.9% in organic cc. The improvement was primarily driven by increase in industry-standard insurance programs, property-specific underwriting and catastrophe modeling solutions revenues. Claims revenues amounted to $156.5 million, which improved 9.8% on a reported basis and 7.4% in organic cc. The uptick can be attributed to revenues from repair cost estimating and claims analytics solutions.
Energy and Specialized Markets segment revenues amounted to $142.5 million and improved 11.6% year over year on a reported basis and 8.7% in organic cc. The improvement can be attributed to revenues from market and cost intelligence solutions and core research and consulting.
Financial Services segment revenues of $43.4 million improved 0.1% year over year on a reported basis and 2.7% in organic cc. The segment benefited from increase in enterprise data management, and fraud and credit risk management solutions, which partially offset the decrease in portfolio management from nonrecurring consulting revenues.
Verisk Analytics, Inc. Revenue (TTM)
Verisk Analytics, Inc. revenue-ttm | Verisk Analytics, Inc. Quote
Operating Results
Adjusted EBITDA of $309.3 million increased 9% on a reported basis and 7.7% in organic cc. Adjusted EBITDA margin of 47.4% was flat in the prior-year quarter.
Operating income in the third quarter was $75.7 million compared with $211.1 million in the prior-year quarter. Operating margin was 11.6% compared with 35.3% in the year-ago quarter.
Verisk Analytics, Inc. Price, Consensus and EPS Surprise
Verisk Analytics, Inc. price-consensus-eps-surprise-chart | Verisk Analytics, Inc. Quote
Balance Sheet and Cash Flow
Verisk exited third-quarter 2019 with cash and cash equivalents of $311.8 million compared with $153.3 million at the end of the prior quarter. Long-term debt came in at $2.67 billion compared with $2.45 billion at the end of the previous quarter.
The company generated $213.6 million of cash from operating activities and capex was $61 million. Free cash flow was $152.9 million.
Share Repurchases & Dividend Payout
During the third quarter of 2019, through an accelerated share repurchase (ASR) agreement, Verisk repurchased roughly 491,000 shares at an average price of $152.84 for a total cost of $75 million. The company also entered into an additional $50 million ASR agreement. The associated shares will be delivered and settled in the fourth quarter of 2019. As of Sep 30, 2019, the company had $228 million under its share repurchase authorization.
The company paid out a cash dividend of 25 cents per share on Sep 30. On Oct 23, the company's board of directors approved a cash dividend of 25 cents per share to be paid out on Dec 31 to shareholders of record as of Dec 13.
Zacks Rank & Upcoming Releases
Currently, Verisk carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the broader Zacks Business Services sector are awaiting third-quarter 2019 earnings of key players like Fiserv , ICF International (ICFI - Free Report) and FLEETCOR Technologies , each scheduled to release results on Nov 6.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>