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Verisk (VRSK) Q1 Earnings Miss Estimates, Revenues Beat

Zacks Equity Research

Verisk Analytics, Inc.’s VRSK first-quarter 2019 earnings missed the Zacks Consensus Estimate, while revenues beat the same.

Adjusted EPS of $1.03 missed the consensus estimate by a penny and declined 9.6% on a year-over-year basis. Quarterly revenues of $625 million beat the consensus mark by $4 million and improved 7.5% year over year on a reported basis. The figure improved 6.7% year over year on an organic constant-currency (cc) basis.

The stock gained 29.4% year to date, outperforming the industry’s rally of 24.9%.


Let’s check the numbers.

Segmental Performance

Insurance segment revenues totaled $451.2 million, up 9.3% year over year on a reported basis and 7.3% at organic cc.

Within the segment, underwriting and rating revenues of $303.5 million rose 8.2% on a reported basis and 6.8% at organic cc. The improvement was primarily driven by increases in industry-standard insurance programs, property-specific underwriting, and catastrophe modeling solutions revenues. Claims revenues amounted to $147.7 million, which improved 11.8% on a reported basis and 8.2% at organic cc. The uptick can be attributed to revenues from repair cost estimating, claims analytics and remote imagery solutions.

Energy and Specialized Markets segment revenues amounted to $130.8 million and improved 4.2% on a reported basis and 6.7% at organic cc. The improvement can also be attributed to revenues from environmental health and safety services, market and cost intelligence solutions and core research.

Financial Services segment revenues totaled $43 million, which slipped 0.1% on a reported basis but increased 0.7% at organic cc. Strength in spend-informed analytics solutions was offset by weakness in enterprise data management solutions.

Operating Results

Adjusted EBITDA of $291.8 million increased 8.2% on a reported basis and 6.8% at organic cc. Adjusted EBITDA margin was 46.7% compared with 46.4% in the prior-year quarter.

Adjusted EBITDA expenses (cost of revenues; selling, general and administrative expenses; investment income and others) increased 6.9% on a reported basis and 6.6% at organic cc. The upside was due to increased salaries and benefits associated with innovation and business growth.

Operating income in the first quarter was $202.4 million compared with $194.5 million in the prior-year quarter. Operating margin was 32.4% compared with 33.5% in the year-ago quarter.

Verisk Analytics, Inc. Price, Consensus and EPS Surprise


Verisk Analytics, Inc. Price, Consensus and EPS Surprise | Verisk Analytics, Inc. Quote

Balance Sheet and Cash Flow

Verisk exited first-quarter 2019 with cash and cash equivalents of $179.5 million compared with $139.5 million in the prior quarter. Long-term debt at the end of the quarter was $2.4 billion compared with $2.1 billion at the end of the previous quarter.

The company generated $366.1 million of cash from operating activities and spent $45.2 million on capex. Free cash flow was $320.9 million.

During the quarter, the company repurchased 0.6 million shares for $75 million through an accelerated share repurchase (ASR) agreement. It entered into an additional $50 million ASR agreement. Shares repurchased will be delivered in the second quarter of 2019. As of Mar 31, 2019, the company had $353 million under its share repurchase authorization. Verisk paid dividend of $40.9 million in the quarter.

Zacks Rank & Upcoming Releases

Currently, Verisk carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Zacks Business Services sector are awaiting first-quarter 2019 earnings reports of key players like Aptiv APTV, S&P Global SPGI and CRA International CRAI. All of them are slated to report on May 2, before market open.

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