Verisk Analytics, Inc. · NASDAQ:VRSK
Verisk Analytics — Raymond James 38th Annual Institutional Investors Conference (March 2017)
31 slides from Verisk Analytics's conference presentation, Mar 6, 2017
Slide 1: Verisk Analytics
Verisk Analytics Eva Huston, Chief Financial Officer
Slide 2: Forward Looking Statements, Safe Harbor & Non-GAAP Financial Measures
Forward Looking Statements, Safe Harbor & Non-GAAP Financial Measures Forward-Looking Statements This release contains forward-looking statements. These statements relate to future events or to future financial performance and involve known and unknown risks, uncertainties, and other factors that ma
Slide 3: Verisk is a Leading Vertical Data Analytics Provider
Verisk is a Leading Vertical Data Analytics Provider The Verisk Way – Distinctives Verticals We Serve Natural Financial Insurance Services Resources Unique Deep Domain Data Assets Expertise Analytics Digital Insight via Global IT/Data Proprietary/ Framework Platforms Center Infrastructure Unstructur
Slide 4: Unique/Valuable Data Assets are the Foundation for Our Solutions
Unique/Valuable Data Assets are the Foundation for Our Solutions 19B+ More than 19 billion records in commercial and personal lines • More than 1,800 insurers provide data 100+ More than 100 models covering natural hazards in 100 countries • Almost 3 billion records processed each year 37 37 years o
Slide 5: The Verisk Formula
The Verisk Formula Steadily Growing Increasing Financial Newly Acquired Businesses Powered Capacity Businesses at by Innovation, with Reasonable Prices Expanding Margins with Similar and Low Capital Characteristics Intensity Stronger and Larger Company We can continue to drive leading organic growth
Slide 6: Where Speed and Focus Will Matter Most
Where Speed and Focus Will Matter Most Development and Commercialization of Breakout Solutions Capable champions, fully dedicated, incented Execution of Major Technology and Platform Projects Agile methods, careful scoping, time-bound Talent Development: Acquisition and Pruning Thinking ahead, frank
Slide 7: Diverse, Highly Recurring Revenue Sources
Diverse, Highly Recurring Revenue Sources 2016 Revenue Distribution 2016 Subscription Base Financial Energy & Services Specialized 7% 22% Transaction Revenue 16% Risk Assessment DA Insurance 36% Subscription 35% Revenue 84% 7
Slide 8: Insurance: Industry-Leading Analytics Solutions
Insurance: Industry-Leading Analytics Solutions Primary Risk Assessment Competitive Advantage Competitors Industry-Standard Extensive time-series data and coverage language Internal in >200M policies Insurance Programs Comprehensive database of 3.7M commercial Property Information buildings & rating
Slide 9: Insurance: Verisk and Property/Casualty Industry Growth
Insurance: Verisk and Property/Casualty Industry Growth $1,400 $1,200 8.4% CAGR $1,000 $800 1.9% $600 CAGR $400 $200 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Verisk Insurance Revenue ($ millions) P&C Industry DWP ($ billions) Verisk revenue: Highly recurring and predictable (~83% su
Slide 10: Insurance: Growth Opportunities (Cross-Sell)
Insurance: Growth Opportunities Cross-Sell 2013–2016 Average Number of Products Across 27 Product Categories 16.0 2013 2016 13.9 10.7 10.3 8.5 6.6 5.0 3.9 1-10 11-25 26-100 101-500 Top Customers Based on VRSK Revenue 10
Slide 11: Insurance: Building on Our Unique Heritage
Insurance: Building on Our Unique Heritage Growth Opportunities Industrywide Focus New Solutions New Customer Sets • Big Data & Predictive Analytics • Telematics / IoT • Global • Automation: Flow Underwriting • Remote Imagery • Excess & Surplus Lines & Claims Adjudication • Digital Engagement • Cybe
Slide 12: Energy: Simple Business Model Focused on Clients
Energy: Simple Business Model Focused on Clients Integrated Model Insight & information Access & feedback Research Sales & Data & expertise Research Consulting Demonstration of value Marketing Expert network Client Long-term relationships Consulting Bespoke Strategic New business solutions dialogue
Slide 13: Energy: Diverse Subscription Customer Set
Energy: Diverse Subscription Customer Set Growing No. of Customers1 End User Mix2 >2000 E&P and Integrated Other, 20% 36% +7% 822 913 722 735 772 642 2010 2011 2012 2013 2014 2015 2016 Low Customer Concentration 1 Financials, 24% <4% 27% Top 10 Client Maximum NOCs, Subscription Value Individual Govt
Slide 14: Energy: Large Addressable Market
Energy: Large Addressable Market Existing Wood Mackenzie Markets, Emerging Verticals and Adjacent Categories Sector Vertical Industrial Oil Gas Coal Utilities Chems Renewables Markets De-carb Commercial Upstream Costs Market Market Consulting2 Size: Size: Wood Oil Price Tool c.$0.3B c.$0.2B Mackenzi
Slide 15: Financial: Our Solution Groups
Financial: Our Solution Groups Benchmarking Studies Product Solutions Help Understand the External Environment Make Proprietary Data Accessible & Actionable • Customized… Ever-green subscriptions • Customized… recurring licenses • Pricing… annual with modest inflation-type cost • Pricing… installati
Slide 16: Unique Data Enabling Valuable & Differentiated Solutions
Unique Data Enabling Valuable & Differentiated Solutions Argus- Credit Payment Payment Description Verisk* Bureaus Networks Processors Daily POS POS & online transaction detail Transactions (merchant, location, amount, date) Payment Credit card, deposits, checking, and Instruments money market accou
Slide 17: Differentiated Financial Model
Differentiated Financial Model Strong, Stable Revenue Growth… and Leading Margins Power EPS (1,2) ($ millions),(organic revenue growth) (% EBITDA/Revenue),($ Earnings per Share) 50.9% 51.0% 50.4% 1,995 50.0% 2,100 $3.80 19.0% 1,761 1,900 45.0% 17.0% 1,700 1,431 $3.11 15.0% $3.30 40.0% 1,500 $2.87 13
Slide 18: Disciplined Capital Allocation
Disciplined Capital Allocation Acquisitions and earn-outs Share Repurchase ($ millions) 2012 2013 2014 2015 (1) 2016 Share Repurchase 163 279 778 20 327 Acquisitions and earn-outs 808 1 35 2,856 74 Cumulative Capital Allocation, $ billions (2) $1.6B, $3.8B, 29% 71% 1. 2015 acquisition amount is net
Slide 19: 2016 Acquisitions
2016 Acquisitions Quest Offshore Date Nov 2016 Nov 2016 Oct 2016 Aug 2016 Jul 2016 Apr 2016 Description Provides Provides large- Provides Provides Delivers Provides value- market scale a software strategic market business-to- added services intelligence mapping analytics suite intelligence to busine
Slide 20: Multiple Paths to Growth
Multiple Paths to Growth • Strong track record of increasing organic revenue • M&A important contributor − Driven by strategy; valuation discipline crucial − Cash generation focused: ~19% overall unlevered IRR (1) − Exceeded WACC for all deals of size through growth and margin expansion • Large and
Slide 21: Guidelines for Capital Allocation Future Success
Guidelines for Capital Allocation Future Success For M&A • Reasonable prices for good businesses – Identify businesses that fit strategy and grow cash flow – Seek sticky subscription revenue • ROIC provides an additional measure with nearer-term horizon For Buyback • Remain disciplined – Volume/pric
Slide 22: Verisk Addressable Market: $16 Billion
Verisk Addressable Market: $16 Billion Financial P&C Energy & Specialized 22
Slide 23: Innovation Opportunities: Price Innovation
Innovation Opportunities Price i Innovation “Small i” innovation may be bundled into existing offerings • Discrete programs, not built materially off of existing solutions • Material incremental revenue streams • Genuinely staffed with a 24/7 champion, i.e., someone whose success is directly tied to
Slide 24: Conclusion
Conclusion On average, outlook over time: • Organic revenue growth consistent with long-term historical performance • Measured margin expansion • Drive free cash-flow growth to increase enterprise and shareholder value • Long-term compounding of growth “It’s more on our racquet than on anyone else’s
Slide 25: Appendix
Appendix 060216 © 2016 Verisk Analytics, Inc. All rights reserved.
Slide 26: Non-GAAP reconciliations
Non-GAAP reconciliations Constant currency revenue growth Our operating results reported in U.S. dollars are affected by foreign currency exchange rate fluctuations because the underlying foreign currencies in which we transact change in value over time compared to the U.S. dollar; accordingly, we p
Slide 27: Non-GAAP reconciliations: Adjusted EBITDA
Non-GAAP reconciliations Adjusted EBITDA (1) ($ millions) 2016 2015 2014 Net Income 451.5 487.5 354.0 Depreciation and amortization of fixed assets and intangible assets 211.6 167.0 95.5 Interest expense 120.0 121.4 70.0 Provision for income taxes 202.2 196.6 208.5 Less: Nonrecurring items related t
Slide 28: Non-GAAP reconciliations: Adjusted EPS
Non-GAAP reconciliations Adjusted EPS (1) ($ millions, except shares and per share amounts) 2016 2015 2014 Income from continuing operations 451.5 487.5 354.0 Plus: Amortization of intangibles 92.5 70.4 30.1 Less: Income tax effect on amortization of intangibles -24.1 -19.2 -11.4 Plus: Nonrecurring
Slide 29: Non-GAAP reconciliations: Free Cash Flow
Non-GAAP reconciliations Free Cash Flow (1) ($ millions) 2016 2015 2014 Net cash provided by operating activities 546.1 623.7 489.4 less: Net cash provided by operating activities from discontinued operations (21.4) (73.2) -- Capital expenditures (156.5) (166.1) (146.8) less: Capital expenditures fr
Slide 30: Non-GAAP reconciliations: Adjusted EBITDA 4Q
Non-GAAP reconciliations Adjusted EBITDA (1) ($ millions) 4Q2016 4Q2015 Net Income 107.5 108.0 Depreciation and amortization of fixed assets and intangible assets 50.4 54.9 Interest expense 28.4 32.5 Provision for income taxes 52.7 45.5 Plus: Nonrecurring ESOP charges 18.8 0.0 Adjusted EBITDA from c
Slide 31: Non-GAAP reconciliations: Adjusted EPS 4Q
Non-GAAP reconciliations Adjusted EPS (1) ($ millions, except shares and per share amounts) 4Q2016 4Q2015 Income from continuing operations 107.5 108 Plus: Amortization of intangibles 22.1 27.5 Less: Income tax effect on amortization of intangibles -5.8 -7.2 Plus: Nonrecurring ESOP charge 18.8 0.0 L
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