Verisk Analytics, Inc. · NASDAQ:VRSK
Verisk Analytics — Baird's 2017 Global Consumer, Technology & Services Conference
35 slides from Verisk Analytics's conference presentation, Jun 7, 2017
Slide 1: Verisk Analytics
Verisk Analytics Eva Huston, CFO Baird’s 2017 Global Consumer, Technology & Services Conference 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: Who We Are
2 Who We Are 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/Casualty Natural Financial Insurance Resourc
Slide 4: 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 5: Financial Highlights
5 Financial Highlights Track record of strong growth and cash flow generation 80%+ subscription revenue in 2016 Investment-grade • Moody’s: Baa3 • S&P: BBB- • Fitch: BBB+ debt ratings Revenues2 Adjusted EBITDA2,3 $ Millions $ Millions 2016 1,995 2016 1,005 2015 1,761 2015 914 2014 1,431 2014 728 201
Slide 6: Disciplined Capital Allocation
Disciplined Capital Allocation Acquisitions and earn-outs Share Repurchase ($ millions) (1) 2012 2013 2014 2015 2016 1Q2017 Share Repurchase 163 279 778 20 327 104 Acquisitions and earn-outs 808 1 35 2,856 74 76 Cumulative Capital Allocation, $ billions (2) $1.7B, 30% $3.9B, 70% 1. 2015 acquisition
Slide 7: Conclusion
Conclusion On average, outlook over time: • Organic revenue growth consistent with historical performance • Measured margin expansion • Drive free cash-flow growth to increase shareholder value • Long-term compounding of growth “It’s more on [our] racquet than on anyone else’s” 7
Slide 8: Additional Information
Additional Information
Slide 9: History of Growth and Innovation
History of Growth and Innovation 1971 1972–1979 1980–1996 1997 1998–2001 2002–2008 2009–2012 2013–2016 Today Not-for-profit Consolidation Significant For-profit Product Public Protection Verisk Analytics The Verisk Way Scalable data advisory of major state, enhancement corporation expansion, Classif
Slide 10: Differentiated Financial Model
Differentiated Financial Model Strong, Stable Revenue Growth… and Leading Margins Power EPS (1,2) ($ 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 11: Verisk Addressable Market: $16 billion
Verisk Addressable Market: $16 billion Financial P&C Energy & Specialized 11
Slide 12: 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 13: Our People
7 Our People Specialists in: Predictive Data Actuarial Chemistry GIS Economics Engineering Meteorology Analytics Science Science and Physics Mapping High performers characterized by: Respect for Confidence/ Integrity Excellence Passion Teamwork Persistence the Individual Humility 6,500+ employees ho
Slide 14: Core Capabilities
Core Capabilities Predictive Analytics Visualization of Data and Analytics Large-Scale Data Integration Multitier, Multispectral Data Capture 14
Slide 15: 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 16: Insurance: Growth Opportunities
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 16
Slide 17: 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 18: 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 19: 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 20: Energy: Diverse Subscription Customer Set
Energy: Diverse Subscription Customer Set Growing No. of Customers (1) End User Mix (2) >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 Individ
Slide 21: 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 22: Financial: Unique Data Enabling Valuable & Differentiated Solutions
Financial: Unique Data Enabling Valuable & Differentiated Solutions 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 mone
Slide 23: 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 24: Appendix: Supplemental Slides and Non-GAAP Reconciliations
Appendix Supplemental Slides and Non-GAAP Reconciliations
Slide 25: Diverse, Highly Recurring Revenue Sources
Diverse, Highly Recurring Revenue Sources 1Q2017 Revenue Distribution 1Q2017 Subscription Base Financial Services Energy & 6% Specialized 21% Transaction Revenue 17% Risk Assessment DA 38% Insurance Subscription 35% Revenue 83% Decision Analytics 62% 25
Slide 26: Strong Capital Structure to Support Growth
Strong Capital Structure to Support Growth as of 3/31/2017 Investment Grade Ratings ($ millions) S&P: BBB- Bonds $2,300 Moody’s: Baa3 Revolver Drawn 0, 0 Fitch: BBB+ Total Debt $2,300 Debt / EBITDA (1) 2.2x Covenant level 3.5x 1,500 Revolver May 2022 due 900 450 350 350 250 2015 2016 2017 2018 2019
Slide 27: Property/Casualty Insurance
Property/Casualty Insurance Industry-leading data analytics and insights Solutions Advantages Industry-Standard Insurance Programs 5PB time-series data and coverage language in 200M+ policies 3.9M+ commercial buildings and details on licensing, violations, Property and Business sales volume, and emp
Slide 28: Natural Resources
Natural Resources Data analytics and commercial intelligence Solutions Advantages Subscription Services 500+research professionals directly accessible around the world 14,000+ reports and forecasts at the asset, company, and Research Reports market level for online purchase through e-commerce servic
Slide 29: Financial Services
Financial Services Information, analytics, and data management 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 behavior acro
Slide 30: 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 31: 2017 Acquisitions
2017 Acquisitions Date May 2017 Mar 2017 Feb 2017 Feb 2017 Jan 2017 Description Provides Provides Provides U.K. Provides Provides intelligence for analytics, risk, domestic automated liability risk the renewable and insurers with medical risk modeling and energy compliance technological assessment f
Slide 32: 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 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted EBITDA (1) ($ millions) 2016 2015 2014 2013 2012 Income from continuing operations 451.5 487.5 354.0 318.9 288.7 Interest expense 120.0 121.4 70.0 76.1 72.5 Provision for income taxes 202.2 196.6 208.5 184.8 162.7 Depreciation and amortization of fixed assets and in
Slide 34: 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 35: 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
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