Verisk Analytics, Inc. · NASDAQ:VRSK
Verisk Analytics — BMO Capital Markets' 17th Annual Back to School Conference (September 2017)
39 slides from Verisk Analytics's conference presentation, Sep 14, 2017
Slide 1: Verisk Analytics
Verisk Analytics Eva Huston, CFO September 14, 2017 Contact Investor Relations david.e.cohen@verisk.com
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 Company
Verisk is a Leading Vertical, Data Analytics Company… The world’s most effective and responsible data analytics company in pursuit of our customers’ most strategic opportunities… …providing predictive analytics and decision support solutions to customers in specific vertical markets $14 Property/Cas
Slide 4: … with horizontal capabilities across verticals
… with horizontal capabilities across verticals Predictive Analytics Visualization of Data and Analytics Large-Scale Data Integration Multitier, Multispectral Data Capture 4
Slide 5: Organic Revenue Growth
Organic Revenue Growth (1,2) 7.8% 7.8% 8.5% 8.0% 7.7% 6.9% 7.1% 5.6% 6.1% 4.6% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total addressable market of $16 billion provides a runway for future growth 1. Organic growth includes businesses owned for a full year or more at measurement. 2. All figu
Slide 6: Differentiated Financial Model
Differentiated Financial Model Strong, Stable Revenue Growth… and Leading Margins Power EPS (1,2) ($ millions),(revenue growth) (% EBITDA/Revenue),($ Earnings per Share) 1,995 50.9% 51.0% 50.4% $4.00 50.0% 28.0% 1,761 1,900 $3.50 $3.11 45.0% 1,700 23.0% 1,431 $2.87 1,500 40.0% $3.00 1,300 23.0% 18.0
Slide 7: Insurance
Insurance
Slide 8: Insurance: Industry-leading data analytics and insights
Insurance Industry-leading data analytics and insights Solutions Advantages Industry-Standard Insurance Programs 19B+ policy transactions in commercial and personal lines statistical database; coverage language in 200M+ policies 3.7M site-verified commercial buildings and details on licensing, Prope
Slide 9: 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 9
Slide 10: 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 11: Energy & Specialized Markets
Energy & Specialized Markets
Slide 12: Energy & Specialized Markets: Data analytics and commercial intelligence
Energy & Specialized Markets Data analytics and commercial intelligence Solutions Advantages Subscription Services 500+ research professionals directly accessible around the world Research Reports 14K+ reports and forecasts at the asset, company, and market level for online purchase through e-commer
Slide 13: Energy & Specialized Markets: Large Addressable Market
Energy & Specialized Markets: 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.
Slide 14: Energy & Specialized Markets: Diverse Customer Set
Energy & Specialized Markets: Diverse Customer Set Growing No. of Customers (1) End User Mix (2) >2000 E&P and Other Integrated 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, Govts Subscription
Slide 15: Financial Services
Financial Services
Slide 16: Financial Services: Information, analytics and data management solutions
Financial Services Information, analytics and data management solutions Solutions Advantages Syndicated Benchmarking Studies 1.5B account-level records for consumer credit, debit, and savings accounts covering 10+ years, with studies in 7 countries 100+ Predictive Algorithms, models of consumer beha
Slide 17: Financial Services: Broadening Solution Set
Financial Services: Broadening Solution Set Core Banking Data Decisioning Spend & Media Solutions Management Algorithms Analytics • Benchmarking studies to • Proprietary data models • Wallet-share models (e.g. • Prospect targeting and help FIs understand and and ETLs off-us spend) underwriting addre
Slide 18: Financial Services: Differentiated Data
Financial Services: Differentiated Data Argus- Credit Payment Payment Description Verisk (1) Bureaus Networks Processors Daily POS POS & online transaction detail Transactions (merchant, location, amount, date) Payment Credit card, deposits, checking, and Instruments money market account performance
Slide 19: Capital Allocation
Capital Allocation
Slide 20: Guidelines for Capital Allocation
Guidelines for Capital Allocation Future Success For M&A – first priority • Reasonable prices for good businesses − Identify businesses that fit strategy and grow cash flow − Seek sticky subscription revenue − DCF based • ROIC provides an additional measure with nearer-term horizon For Buyback – pri
Slide 21: Disciplined Capital Allocation
Disciplined Capital Allocation Acquisitions and earn-outs Share Repurchase ($ millions) (1) (2) 2012 2013 2014 2015 2016 2Q2017 Share Repurchase 163 279 778 20 327 266 Acquisitions and earn-outs 808 1 35 2,856 74 122 Cumulative Capital Allocation, $ billions (2) $3.9 B $1.8 B 68% 32% 1. 2015 acquisi
Slide 22: Recent M&A Fits Business Strategy and Expands TAM
Recent M&A Fits Business Strategy and Expands TAM Energy & Specialized, $60 M Insurance, $444 M Purchase Price Financial, $280 M 1. Includes pre-ownership amounts which may be approximated. 22
Slide 23: Geomni Acquisitions and Strategy
Geomni Acquisitions and Strategy • Significant aerial imagery TAM − Insurance: more than $200 million annually − PSM1: multi-billion dollar • Inherently a Verisk-like analytics business − Complexity in data collection − Data aggregation, curation and analysis • Optimize solutions at lowest total spe
Slide 24: Sequel
Sequel • Modern, powerful, and integrated suite of software • Provides full end-to-end management of insurance and reinsurance business Pricing Claims System Management Eclipse/Origin Claims Quote Policy Entry Data Enhancement and Extreme Event Pricing Request & Management Workflow Integration Portf
Slide 25: Financial Services: Acquisitions Expanding Data and Solution Sets
Financial Services: Acquisitions Expanding Data and Solution Sets • Provider of online merchant risk • Provider of risk insight, intelligence with unique, prediction, and management proprietary data assets & solutions for banks and analytics creditors • Helps merchant acquirers and • Most accurate &
Slide 26: Conclusion
Conclusion On average, outlook over time: • Organic revenue growth consistent with historical performance • Measured margin expansion • Drive free cash-flow growth to increase shareholder value • Long-term compounding of growth “It’s more on [our] racquet than on anyone else’s” 26
Slide 27: Appendix: Supplemental Slides and Non-GAAP Reconciliations
Appendix: Supplemental Slides and Non- GAAP Reconciliations
Slide 28: History of Growth and Innovation
History of Growth and Innovation 1971 1972–1979 1980–1996 1997 1998–2001 2002–2008 2009–2012 2013–2016 Today Not-for-profit Consolidation Significant For-profit Product Public Protection Verisk Analytics The Verisk Way Scalable data advisory of major state, enhancement corporation expansion, Classif
Slide 29: Insurance: Industry-Leading Analytics Solutions
Insurance: Industry-Leading Analytics Solutions Primary Solutions 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 & ratings on ~
Slide 30: 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 31: Diverse, Highly Recurring Revenue Sources
Diverse, Highly Recurring Revenue Sources 2Q2017 YTD Revenue Distribution 2Q2017 YTD Subscription Base Financial Services Energy & 6% Specialized 21% non- Subscription 18% Risk Assessment 37% Subscription and long- DA term contracts Insurance 82% 36% Decision Analytics 63% 31
Slide 32: Strong Capital Structure to Support Growth
Strong Capital Structure to Support Growth as of 06/30/2017 Investment Grade Ratings ($ millions) S&P: BBB- Bonds $2,300 Moody’s: Baa3 Revolver Drawn 120 Fitch: BBB+ Total Debt $2,420 Debt/EBITDA (1) 2.3x Revolver due Covenant level (2) 3.5x 1,380 May 2022 120 900 450 350 350 250 2015 2016 2017 2018
Slide 33: 2016 Acquisitions
2016 Acquisitions Quest Offshore Date Nov 2016 Nov 2016 Oct 2016 Aug 2016 Jul 2016 Apr 2016 Description Provides market Provides large- Provides Provides Delivers Provides value- intelligence scale mapping a software strategic market business-to- added services data and services and analytics suite
Slide 34: 2017 Acquisitions
2017 Acquisitions… Date 2Q 2017 May 2017 Mar 2017 Feb 2017 Feb 2017 Jan 2017 Description Aerial Imagery Provides Provides Provides U.K. Provides Provides liability High-tech intelligence for analytics, risk, domestic automated risk modeling remote sensing the renewable and insurers with medical risk
Slide 35: 2017 Acquisitions continued
…2017 Acquisitions continued Date Aug 2017 Aug 2017 Aug 2017 Description Provides Modern, Provides bankruptcy powerful, and acquiring data and integrated suite banks, payment consumer of software that companies, behavioral provides full and data, process end-to-end commercial automation management b
Slide 36: Non-GAAP Reconciliations
Non-GAAP Reconciliations Constant currency revenue growth Our operating results reported in U.S. dollars are affected by foreign currency exchange rate fluctuations because the underlying foreign currencies in which we transact change in value over time compared to the U.S. dollar; accordingly, we p
Slide 37: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted EBITDA (1) ($ millions) Jun-17 2016 2015 2014 YTD Income from continuing operations 229.8 451.5 487.5 354.0 Interest expense 56.9 120.0 121.4 70.0 Provision for income taxes 101.3 202.2 196.6 208.5 Depreciation and amortization of fixed assets and intangible assets
Slide 38: Non-GAAP Reconciliations
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: Nonrecurri
Slide 39: Non-GAAP Reconciliations
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