Verisk Analytics, Inc. · NASDAQ:VRSK

Verisk Analytics — J.P. Morgan 2017 Ultimate Services Investor Conference

39 slides from Verisk Analytics's conference presentation, Nov 14, 2017

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 $15 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 © 2017 Verisk Analytics, Inc. All rights reserved. 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) 1,900 1,995 28.0% 50.0% 50.9% 51.0% 50.4% $4.00 1,761 $3.50 45.0% 1,700 $3.11 23.0% 1,431 $2.87 40.0% 1,500 $3.00 1,300 23.0% 18.
Slide 8: Property/Casualty Insurance
Property/Casualty 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 Property and Business Information 3.7M site-verified
Slide 9: Insurance: Growth Opportunities
Insurance: Growth Opportunities Cross-Sell, 2013 - 2016 Average Number of Products 16.0 Across 27 Product Categories 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 © 2017 Verisk Analytics, Inc. All rights reserved. 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 & Claims Adjudication • Remote Imagery • Excess & Surplus Lines • Digital Engagement • Cybe
Slide 12: Energy & Specialized Markets
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, $5.5 Billion Addressable Market
Energy & Specialized Markets: Large, $5.5 Billion 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 Size: Market Size: Wood Oil Price Tool
Slide 14: Energy & Specialized Markets: Diverse Customer Set
Energy & Specialized Markets: Diverse Customer Set Growing No. of Customers (1) End User Mix (2) >2000 Other E&P and 20% Integrated 36% +7% 822 913 722 735 772 642 2010 2011 2012 2013 2014 2015 2016 Low Customer Concentration (1) 24% <4% Financials 27% NOCs, Govts & NGO Top 10 Client Maximum 17% Sub
Slide 16: Financial Services
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 Predictive Algorithms, Business Intelligence, and
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 help • Proprietary data models and • Wallet-share models • Prospect targeting and FIs understand and address ETLs (e.g. off-us spend) underwriti
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 (merchant, location, amount, date) Transactions Payment Credit card, deposits, checking, and money market account performance Instruments
Slide 20: Guidelines for Capital Allocation Future Success
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 (1) (2) 2012 2013 2014 2015 2016 3Q2017 Share Repurchase 163 279 778 20 327 270 Acquisitions and earn-outs 808 1 35 2,856 74 709 Cumulative Capital Allocation, $ billions (2) $4.5 B 71% $1.8 B 29% 1. 2015 acquisitions amount
Slide 22: Recent M&A Fits Business Strategy and Expands TAM
Recent M&A Fits Business Strategy and Expands TAM 2016 - 3Q 2017 2017 acquisitions fall into three groups: Energy & • Small product sets with promising characteristics in Specialized, existing verticals. Total: $94 million. $60 M – Arium, ENI, Healix, Fintellix and MAKE. Insurance, • Seven regional
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 intelligence with • Provider of risk insight, prediction, and unique, proprietary data assets & analytics management solutions for banks and creditors • Helps merchant acquirers and commercial banks
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” © 2017 Verisk Analyti
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 Solutions Competitive Advantage Primary Competitors Industry-Standard Extensive time-series data and coverage language in >200M policies Internal Insurance Programs Comprehensive database of 3.7M commercial Property Information buildings & ratings on ~
Slide 30: Innovation Opportunities
Innovation Opportunities • Discrete programs, not built materially off of existing solutions • Material incremental revenue streams • Genuinely staffed with a 24/7 champion, i.e., someone whose Price i Innovation success is directly tied to the success of the project • Appropriate incentive programs
Slide 31: Revenue Sources Remain Diverse and Highly Recurring
Revenue Sources Remain Diverse and Highly Recurring YTD 3Q 2017 Revenue Distribution YTD 3Q 2017 Subscription Base Energy & Financial Specialized Services 21% 6% Non- subscription 19% Risk Assessment Subscription / DA Insurance 37% long-term 36% contracts 81% Decision Analytics 63% Risk Assessment D
Slide 32: Debt Capital Structure
Debt Capital Structure as of 09/30/2017 (in $ millions) Investment Grade Ratings Bonds $2,300 S&P: BBB- Revolver Drawn 595 Moody’s: Baa3 Total Debt $2,895 Fitch: BBB+ 905 Debt/EBITDA (1) 2.6x Revolver due Covenant level (2) 3.5x May 2022 595 900 450 350 350 250 2015 2016 2017 2018 2019 2020 2021 202
Slide 33: 2016-2017 Acquisitions
2016-2017 Acquisitions Date Nov 2016 Nov 2016 Oct 2016 Aug 2016 Jul 2016 Apr 2016 2Q 2017 May 2017 Description Provides market Provides large- Provides Provides strategic Delivers business- Provides value- Aerial Imagery Provides intelligence data scale mapping a software market intelligence to-busi
Slide 34: 2016-2017 Acquisitions, Continued
2016-2017 Acquisitions, Continued Date Mar 2017 Feb 2017 Feb 2017 Jan 2017 Aug 2017 Aug 2017 Aug 2017 Description Provides analytics, Provides U.K. Provides automated Provides liability Provides bankruptcy Modern, powerful, Provides acquiring risk, and compliance domestic insurers with medical risk
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations Constant currency revenue growth Our operating results reported in U.S. dollars are affected by foreign currency exchange rate fluctuations because the underlying foreign currencies in which we transact change in value over time compared to the U.S. dollar; accordingly, we p
Slide 36: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted EBITDA (1) ($ millions) Sept-17 YTD 2016 2015 2014 Income from continuing operations 350.5 451.5 487.5 354.0 Interest expense 87.3 120.0 121.4 70.0 Provision for income taxes 161.3 202.2 196.6 208.5 Depreciation and amortization of fixed assets and intangible assets
Slide 37: 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 38: 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

Verisk Analytics — J.P. Morgan 2017 Ultimate Services Investor Conference on 6ix

Verisk Analytics — J.P. Morgan 2017 Ultimate Services Investor Conference

Slide 1: Verisk Analytics

Slide 2: Forward Looking Statements, Safe Harbor & Non-GAAP Financial Measures

Slide 3: Verisk is a Leading Vertical, Data Analytics Company

Slide 4: … with horizontal capabilities across verticals

Slide 5: Organic Revenue Growth

Slide 6: Differentiated Financial Model

Slide 7: Insurance

Slide 8: Property/Casualty Insurance

Slide 9: Insurance: Growth Opportunities

Slide 10: Insurance: Building on our Unique Heritage

Slide 11: Energy & Specialized Markets

Slide 12: Energy & Specialized Markets

Slide 13: Energy & Specialized Markets: Large, $5.5 Billion Addressable Market

Slide 14: Energy & Specialized Markets: Diverse Customer Set

Slide 15: Financial Services

Slide 16: Financial Services

Slide 17: Financial Services: Broadening Solution Set

Slide 18: Financial Services: Differentiated Data

Slide 19: Capital Allocation

Slide 20: Guidelines for Capital Allocation Future Success

Slide 21: Disciplined Capital Allocation

Slide 22: Recent M&A Fits Business Strategy and Expands TAM

Slide 23: Geomni Acquisitions and Strategy

Slide 24: Sequel

Slide 25: Financial Services: Acquisitions Expanding Data and Solution Sets

Slide 26: Conclusion

Slide 27: Appendix: Supplemental Slides and Non-GAAP Reconciliations

Slide 28: History of Growth and Innovation

Slide 29: Insurance: Industry-Leading Analytics Solutions

Slide 30: Innovation Opportunities

Slide 31: Revenue Sources Remain Diverse and Highly Recurring

Slide 32: Debt Capital Structure

Slide 33: 2016-2017 Acquisitions

Slide 34: 2016-2017 Acquisitions, Continued

Slide 35: Non-GAAP Reconciliations

Slide 36: Non-GAAP Reconciliations

Slide 37: Non-GAAP Reconciliations

Slide 38: Non-GAAP Reconciliations

Slide 39: © 2017 Verisk Analytics, Inc. All rights reserved.