Verisk Analytics, Inc. · NASDAQ:VRSK

Verisk Analytics — 41st Nasdaq Investor Conference (December 2019)

36 slides from Verisk Analytics's conference presentation, Dec 3, 2019

  1. Slide 1: Verisk Analytics

    Verisk Analytics Lee Shavel, CFO 41st Nasdaq Investor Conference December 2019 © 2019 Verisk Analytics, Inc. All rights reserved. 1

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

    Investor Presentation Forward-Looking Statements, Safe Harbor, and 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,

  3. Slide 3: Verisk: A Leading Data Analytics Partner to Our Customers

    Investor Presentation Verisk: A Leading Data Analytics Partner to Our Customers Insurance Energy and Financial Services Specialized Markets Verisk is a leading Underwriting & Rating Portfolio Management data analytics Solutions Research, Consulting, Solutions provider serving and Data Analytics Clai

  4. Slide 4: Leveraging Distinct Assets to Drive Growth

    Investor Presentation Leveraging Distinct Assets to Drive Growth Distinctives Unique Deep Steady Stream of Deep Integration Data Domain First-to-Market into Customer Assets Expertise Innovations Workflows Growth Strategy Increase Solution Develop New Leverage Our Pursue Strategic Penetration Proprie

  5. Slide 5: Our Unique and Valuable Data Assets

    Investor Presentation Our Unique and Valuable Data Assets Some examples Solutions Advantages Property/Casualty Industry-Standard Insurance Programs 21B+ policy transactions in commercial and personal lines statistical database Insurance Claims Adjudication and Fraud Detection 1.3B+ claims in the ind

  6. Slide 6: High-Quality Recurring Revenue across a Diversified Solution Set

    Investor Presentation High-Quality Recurring Revenue across a Diversified Solution Set Revenue – Subscription vs. Non-Subscription Revenue – Segment Breakdown $2.0B $2.1B $2.4B $1.9B $2.0B $2.1B $2.4B $1.9B 7% 7% 7% 7% 16% 19% 20% 20% 22% 21% 22% 21% 84% 81% 80% 80% 71% 72% 71% 72% 2016 2017 2018 20

  7. Slide 7: Strong Track Record of Organic Revenue Growth

    Investor Presentation Strong Track Record of Organic Revenue Growth1,2,3 Total Organic Revenue Revenue $ % Growth Normalized Organic Constant Currency3 8.5% 8.0% 7.8% 7.8% 7.7% 6.9% 7.1% 7.2% 7.1% 5.8% 3,000.0 49.0% 5.6% 44.0% 4.6% 4.2% 2,500.0 39.0% 2,000.0 34.0% 29.0% 1,500.0 24.0% 1,000.0 19.0% 1

  8. Slide 8: Growth Complemented by Stability, Leading Margins, and Moderate CapEx

    Investor Presentation Growth Complemented by Stability, Leading Margins, and Moderate CapEx Adjusted EBITDA1 Adjusted EBITDA Margins1 $1,036M $1,130M 60.0% $ 1,200,000,000 $998M $905M 50.0% $ 1,000,000,000 55.0% 50.0% 48.3% 47.2% 46.9% $ 800,000,000 45.0% $ 600,000,000 40.0% $ 400,000,000 35.0% $ 20

  9. Slide 9: Moated Business Supports Strong Financial Outcomes

    Investor Presentation Moated Business Supports Strong Financial Outcomes MODEL TARGET OUTCOMES Business Vertical Expertise Creators Who Are Contributory Deeply Efficient with ORGANIC REVENUE GROWTH Data Integrated Capital 7%–8% on average, over time ORGANIC EBITDA GROWTH 1–2 pts faster than revenue

  10. Slide 10: Operating Cash Flow Growth

    Investor Presentation Value Creation Strategy Attractive Operating Cash Flow Growth + and Growing Returns on Capital = Value Creation • Organic revenue • Investment growth opportunities • Operating leverage (internal and external) • Expense discipline • Capital discipline © 2019 Verisk Analytics, In

  11. Slide 11: Capital Management Philosophy

    Investor Presentation Capital Management Philosophy Focused on value creation and improving ROIC • Understand and optimize operating capital generation • Identify internal and external investment opportunities • Compare estimated returns on invested capital relative to risk-weighted WACC • Compare o

  12. Slide 12: Core Verisk Commitments

    Investor Presentation Core Verisk Commitments Commitments to our stakeholders—customers, employees, shareholders, and society Verisk Analytics is committed to the UN Global Compact corporate responsibility initiative and its principles in the areas of human rights, labor, the environment, and anti-c

  13. Slide 13: Corporate Social Responsibility

    Investor Presentation Corporate Social Responsibility Environmental Statement on Zero Carbon Energy-Saving Climate Change Footprint Initiatives Reaffirms our support for the scientific Balanced 100 percent of our carbon Installed LED lighting at Verisk, AIR, community and commits us to address emiss

  14. Slide 14: A Differentiated Business Model

    Investor Presentation A Differentiated Business Model • Exceptional businesses with unique and defensible data sets • Substantial growth opportunities for all segments • Stable subscription revenue base with established organic growth record • Scaled business model with leading margins and operating

  15. Slide 15: Appendix: Supplemental Slides and Non-GAAP Reconciliations

    Appendix: Supplemental Slides and Non-GAAP Reconciliations © 2019 Verisk Analytics, Inc. All rights reserved. 15

  16. Slide 16: Supplemental Slides

    Supplemental Slides © 2019 Verisk Analytics, Inc. All rights reserved. 16

  17. Slide 17: Verisk Insurance Solutions: Voice of the Customer

    Investor Presentation Verisk Insurance Solutions: Voice of the Customer Growth Opportunities: Cross-Sell 2013–2018 Average Number of Products Across 26 Product Categories 18.3 2013 2016 2018 16.0 16.2 13.9 11.6 10.7 10.3 8.5 6.6 5.7 5.0 3.9 1-10 11-25 26-100 101-500 Top Customers Based on Verisk Rev

  18. Slide 18: Competitive Scoreboard for 2018

    Investor Presentation Competitive Scoreboard for 2018 Entrenched Incumbent Verisk Incumbent No Prior Vended Solution Wins Losses Wins Losses Wins Losses Underwriting 30 27 7 1 23 7 & Rating Total Claims Total 13 4 5 2 8 4 InsurTech Start-Ups: Engaged with 67 start-ups on 182 opportunities • Won 79 i

  19. Slide 19: Organic Constant Currency Growth and Adjusted EBITDA Margins

    Investor Presentation Organic Constant Currency Growth and Adjusted EBITDA Margins OCC Revenue OCC Adjusted EBITDA Total Adjusted EBITDA Margin 7.1% 7.7% 6.8% 7.2% 7.6% 6.1% 6.5% 6.7% 5.4% 5.2% 5.4% 4.7% 47.2% 47.4% 47.4% 4.2% 46.9% 47.1% 46.7% 46.6% 1.6% FY18 YTD19 3Q18 4Q18 1Q19 2Q19 3Q19 FY18 YTD

  20. Slide 20: Insurance

    Investor Presentation Insurance Industry-leading data analytics and insights Underwriting & Rating Solutions Claims Solutions Industry-standard insurance programs, Integrated analytics solutions for improving property-specific underwriting & rating info, claim outcomes and fighting fraud at every an

  21. Slide 21: Insurance Quarterly Performance

    Investor Presentation Insurance Quarterly Performance Financials Business Highlights % change • UW & rating growth was broad-based with strong results in personal and commercial lines and in our international businesses 3Q19 3Q18 Reported OCC – Industry-standard programs and catastrophe modeling sol

  22. Slide 22: Energy and Specialized Markets

    Investor Presentation Energy and Specialized Markets Unique insight on the world’s energy resources and intelligent compliance solutions Energy Specialized Markets Energy and natural resources solutions across Research & Analytics and Advisory Services Supports compliance with global environmental h

  23. Slide 23: Energy and Specialized Markets Quarterly Performance

    Investor Presentation Energy and Specialized Markets Quarterly Performance Financials Business Highlights % change • OCC revenue growth of 8.7%, driven by market and cost intelligence solutions and core research and consulting revenues 3Q19 3Q18 Reported OCC – Solid growth in breakouts, including su

  24. Slide 24: Financial Services

    Investor Presentation Financial Services Big data, predictive analytics, and insights Portfolio Analytics, Regulatory Data Management, and Marketing Credit Risk Management, Fraud, and Abuse Solutions for financial institutions, including competitive benchmarking, decisioning Risk management tools as

  25. Slide 25: Financial Services Quarterly Performance

    Investor Presentation Financial Services Quarterly Performance Financials Business Highlights % change • OCC revenue grew 2.7%, resulting primarily from increases in enterprise data management and fraud and credit risk management 3Q19 3Q18 Reported OCC • Delivered higher subscription growth in the q

  26. Slide 26: Segment Trends

    Investor Presentation Segment Trends Insurance Energy Financial Organic Constant Currency Revenue Growth Organic Constant Currency Adjusted EBITDA Growth 8.7% 9.5% 7.6% 10.9% 9.0% 15.0% 7.0% 7.2% 6.3% 7.7% 10.0% 7.2% 9.1% 5.0% 6.9% 5.0% 6.5% 7.9% 4.9% 5.5% 2.7% 1.9% 2.5% 3.1% -0.3% 3.0% 0.0% 1.0% -5

  27. Slide 27: Capital Expenditures

    Investor Presentation Capital Expenditures $231M CapEx as a % of revenue to come down 183 to mid-single-digit level over time 146 138 115 Internally Developed Software 105 53 43 Hardware/Third-Party Software 26 28 $23M Non-IT 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 CapEx as a % of rev

  28. Slide 28: Cash Flow Utilization

    Investor Presentation Cash Flow Utilization (in $ millions) 2017 2018 YTD19 3Q18 3Q19 Net cash provided by operating activities $744M $934M $780M $227M $214M Capital expenditures (184)M (231)M (153)M (55)M (61)M Free cash flow (FCF) 560M 703M 627M 172M 153M Acquisitions, net of cash acquired (915)M

  29. Slide 29: Capital Structure

    Investor Presentation Capital Structure as of 9/30/2019 Revolver due (in $ millions) August 2024 Bonds $2,650 Revolver drawn 010 Total debt $2,660 Debt/EBITDA1 2.4x Covenant level2 3.5x Investment grade ratings S&P: BBB (Jan-2019: ↑ from BBB-) 990 Moody’s: Baa2 (May-2018: ↑ from Baa3) 900 Fitch: BBB

  30. Slide 30: Non-GAAP Reconciliations

    Non-GAAP Reconciliations © 2019 Verisk Analytics, Inc. All rights reserved. 30

  31. Slide 31: Non-GAAP Reconciliations

    Investor Presentation Non-GAAP Reconciliations Specified Metrics The company has provided certain non-GAAP financial information as supplemental information regarding its operating results. These measures are not in accordance with, or an alternative for, U.S. GAAP and may be different from non-GAAP

  32. Slide 32: Segment Results and EBITDA

    Investor Presentation Non-GAAP Reconciliations Segment Results and EBITDA | Current and Prior-Year Period 3Q19 3Q18 Segment Results Summary and Adjusted EBITDA Reconciliation Insurance E&SM FS Insurance E&SM FS Revenues $466.8M $142.5M $43.4M $427.7M $127.7M $43.3M Revenues from acquisitions and dis

  33. Slide 33: Segment Results and EBITDA

    Investor Presentation Non-GAAP Reconciliations Segment Results and EBITDA | Current and Prior-Year Period YTD19 YTD18 Segment Results Summary and Adjusted EBITDA Reconciliation Insurance E&SM FS Insurance E&SM FS Revenues $1,386.5M $413.1M $130.7M $1,269.7M $383.1M $128.4M Revenues from acquisitions

  34. Slide 34: Adjusted Net Income/EPS and Free Cash Flow

    Investor Presentation Non-GAAP Reconciliations Adjusted Net Income/EPS and Free Cash Flow | Current and Prior-Year Period Adjusted Net Income and EPS YTD19 YTD18 3Q19 3Q18 Net income $317.7M $452.5M $32.9M $166.0M plus: Amortization of intangible assets 100.1M 98.5M 33.3M 33.2M less: Tax effect on a

  35. Slide 35: Adjusted EBITDA

    Investor Presentation Non-GAAP Reconciliations Adjusted EBITDA | Historical Full-Year Periods Segment Adjusted EBITDA Reconciliation 2018 2017 2016 Insurance Segment – EBITDA $932.2M $855.8M $779.2M Insurance Segment – Acquisition-related costs (earn-out) 0.8M 0.2M —M Insurance Segment – Gain and in

  36. Slide 36: © 2019 Verisk Analytics, Inc. All rights reserved.

    © 2019 Verisk Analytics, Inc. All rights reserved. 36

Verisk Analytics — 41st Nasdaq Investor Conference (December 2019) on 6ix