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These accumulated other comprehensive loss components, before tax, are included under "Cost of revenues" and "Selling, general and administrative" in our accompanying condensed consolidated statements of operations. These components are also included in the computation of net periodic (benefit) cost (see Note 13. Pension and Postretirement Benefits for additional details).
See Note 6. Acquisitions for more information.
Includes estimated performance achievement
See Note 7. Dispositions for more information.
Included in "Depreciation and amortization of fixed assets" in our accompanying condensed consolidated statements of operations
Included in "Interest expense" in our accompanying condensed consolidated statements of operations
Refer to Note 5. Leases
Refer to Note 11. Stockholders' Equity for discussion related to quarterly cash dividends declared per share
Included in "Cost of revenues" and "Selling, general and administrative" expenses in our accompanying condensed consolidated statements of operations
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2022
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-34480
VERISK ANALYTICS, INC.
(Exact name of registrant as specified in its charter)
Delaware | 26-2994223 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| |
545 Washington Boulevard | |
Jersey City | |
NJ | 07310-1686 |
(Address of principal executive offices) | (Zip Code) |
(201) 469-3000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange where registered |
Common Stock $.001 par value | VRSK | NASDAQ Global Select Market |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer | | ☒ | | Accelerated filer | | ☐ |
| | | | | | |
Non-accelerated filer | | ☐ | | Smaller reporting company | | ☐ |
| | | | | | |
| | | | Emerging growth company | | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of July 29, 2022, there were 156,959,955 shares outstanding of the registrant's Common Stock, par value $.001.
Verisk Analytics, Inc.
Index to Form 10-Q
Table of Contents
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| | June 30, 2022 | | | December 31, 2021 | |
| | (in millions, except for share and per share data) | |
ASSETS | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 480.7 | | | $ | 280.3 | |
Accounts receivable, net of allowance for doubtful accounts of $18.3 and $21.3, respectively | | | 488.9 | | | | 446.3 | |
Prepaid expenses | | | 108.2 | | | | 102.6 | |
Income taxes receivable | | | 64.7 | | | | 36.7 | |
Other current assets | | | 44.1 | | | | 36.7 | |
Total current assets | | | 1,186.6 | | | | 902.6 | |
Noncurrent assets: | | | | | | | | |
Fixed assets, net | | | 646.9 | | | | 658.2 | |
Operating lease right-of-use assets, net | | | 226.2 | | | | 253.1 | |
Intangible assets, net | | | 1,183.4 | | | | 1,225.9 | |
Goodwill | | | 3,820.4 | | | | 4,331.2 | |
Deferred income tax assets | | | 4.5 | | | | 6.6 | |
Other noncurrent assets | | | 440.9 | | | | 430.5 | |
Total assets | | $ | 7,508.9 | | | $ | 7,808.1 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
Current liabilities: | | | | | | | | |
Accounts payable and accrued liabilities | | $ | 276.2 | | | $ | 320.7 | |
Short-term debt and current portion of long-term debt | | | 1,136.3 | | | | 971.3 | |
Deferred revenues | | | 659.6 | | | | 501.0 | |
Operating lease liabilities | | | 36.3 | | | | 41.2 | |
Income taxes payable | | | 4.1 | | | | 9.0 | |
Total current liabilities | | | 2,112.5 | | | | 1,843.2 | |
Noncurrent liabilities: | | | | | | | | |
Long-term debt | | | 2,342.9 | | | | 2,342.8 | |
Deferred income tax liabilities | | | 410.1 | | | | 470.5 | |
Operating lease liabilities | | | 231.0 | | | | 254.7 | |
Other noncurrent liabilities | | | 42.4 | | | | 54.4 | |
Total liabilities | | | 5,138.9 | | | | 4,965.6 | |
Commitments and contingencies (Note 16) | | | | | | | | |
Stockholders’ equity: | | | | | | | | |
Common stock, $.001 par value; 2,000,000,000 shares authorized; 544,003,038 shares issued; 158,257,098 and 161,651,639 shares outstanding, respectively | | | 0.1 | | | | 0.1 | |
Additional paid-in capital | | | 2,707.1 | | | | 2,608.7 | |
Treasury stock, at cost, 385,745,940 and 382,351,399 shares, respectively | | | (5,517.4 | ) | | | (4,638.1 | ) |
Retained earnings | | | 5,845.5 | | | | 5,240.4 | |
Accumulated other comprehensive losses | | | (683.4 | ) | | | (394.6 | ) |
Total Verisk stockholders' equity | | | 2,351.9 | | | | 2,816.5 | |
Noncontrolling interests | | | 18.1 | | | | 26.0 | |
Total stockholders’ equity | | | 2,370.0 | | | | 2,842.5 | |
Total liabilities and stockholders’ equity | | $ | 7,508.9 | | | $ | 7,808.1 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
(in millions, except for share and per share data) |
|
Revenues |
|
$ |
746.3 |
|
|
$ |
747.5 |
|
|
$ |
1,521.8 |
|
|
$ |
1,473.6 |
|
Operating expenses (income): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues (exclusive of items shown separately below) |
|
|
246.1 |
|
|
|
264.9 |
|
|
|
526.6 |
|
|
|
527.3 |
|
Selling, general and administrative |
|
|
125.9 |
|
|
|
111.4 |
|
|
|
261.2 |
|
|
|
231.2 |
|
Depreciation and amortization of fixed assets |
|
|
49.8 |
|
|
|
53.3 |
|
|
|
99.4 |
|
|
|
101.8 |
|
Amortization of intangible assets |
|
|
39.8 |
|
|
|
50.5 |
|
|
|
84.4 |
|
|
|
95.5 |
|
Other operating loss (income), net |
|
|
15.6 |
|
|
|
— |
|
|
|
(361.5 |
) |
|
|
— |
|
Total operating expenses, net |
|
|
477.2 |
|
|
|
480.1 |
|
|
|
610.1 |
|
|
|
955.8 |
|
Operating income |
|
|
269.1 |
|
|
|
267.4 |
|
|
|
911.7 |
|
|
|
517.8 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income (loss) |
|
|
4.7 |
|
|
|
(0.5 |
) |
|
|
4.3 |
|
|
|
1.2 |
|
Interest expense |
|
|
(31.8 |
) |
|
|
(31.5 |
) |
|
|
(63.1 |
) |
|
|
(66.9 |
) |
Total other expense, net |
|
|
(27.1 |
) |
|
|
(32.0 |
) |
|
|
(58.8 |
) |
|
|
(65.7 |
) |
Income before income taxes |
|
|
242.0 |
|
|
|
235.4 |
|
|
|
852.9 |
|
|
|
452.1 |
|
Provision for income taxes |
|
|
(44.2 |
) |
|
|
(83.8 |
) |
|
|
(149.3 |
) |
|
|
(132.5 |
) |
Net income |
|
|
197.8 |
|
|
|
151.6 |
|
|
|
703.6 |
|
|
|
319.6 |
|
Less: Net (income) loss attributable to noncontrolling interests |
|
|
(0.1 |
) |
|
|
2.4 |
|
|
|
(0.2 |
) |
|
|
3.0 |
|
Net income attributable to Verisk |
|
$ |
197.7 |
|
|
$ |
154.0 |
|
|
$ |
703.4 |
|
|
$ |
322.6 |
|
Basic net income per share attributable to Verisk |
|
$ |
1.25 |
|
|
$ |
0.95 |
|
|
$ |
4.41 |
|
|
$ |
1.99 |
|
Diluted net income per share attributable to Verisk |
|
$ |
1.24 |
|
|
$ |
0.94 |
|
|
$ |
4.39 |
|
|
$ |
1.97 |
|
Weighted-average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
157,972,755 |
|
|
|
162,007,784 |
|
|
|
159,326,855 |
|
|
|
162,324,802 |
|
Diluted |
|
|
159,123,563 |
|
|
|
163,046,538 |
|
|
|
160,381,090 |
|
|
|
163,741,628 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
(in millions) |
|
Net income |
|
$ |
197.8 |
|
|
$ |
151.6 |
|
|
$ |
703.6 |
|
|
$ |
319.6 |
|
Other comprehensive (loss) income, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
(219.7 |
) |
|
|
16.5 |
|
|
|
(291.3 |
) |
|
|
25.2 |
|
Pension and postretirement liability adjustment |
|
|
0.4 |
|
|
|
0.8 |
|
|
|
1.0 |
|
|
|
1.6 |
|
Total other comprehensive (loss) income |
|
|
(219.3 |
) |
|
|
17.3 |
|
|
|
(290.3 |
) |
|
|
26.8 |
|
Comprehensive income |
|
|
(21.5 |
) |
|
|
168.9 |
|
|
|
413.3 |
|
|
|
346.4 |
|
Less: Comprehensive loss attributable to noncontrolling interests |
|
|
0.8 |
|
|
|
2.3 |
|
|
|
1.3 |
|
|
|
3.1 |
|
Comprehensive (loss) income attributable to Verisk |
|
$ |
(20.7 |
) |
|
$ |
171.2 |
|
|
$ |
414.6 |
|
|
$ |
349.5 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
For The Three Months Ended June 30, 2022 and 2021
| | Common Stock Issued | | | Par Value | | | Additional Paid-in Capital | | | Treasury Stock | | | Retained Earnings | | | Accumulated Other Comprehensive Losses | | | Total Verisk Stockholders' Equity | | | Noncontrolling Interests | | | Total Stockholders’ Equity | |
| | (in millions, except for share data) | | | | | |
Balance, April 1, 2022 | | | 544,003,038 | | | $ | 0.1 | | | $ | 2,632.5 | | | $ | (5,205.9 | ) | | $ | 5,696.9 | | | $ | (465.0 | ) | | $ | 2,658.6 | | | $ | 17.3 | | | $ | 2,675.9 | |
Net income | | | — | | | | — | | | | — | | | | — | | | | 197.7 | | | | — | | | | 197.7 | | | | 0.1 | | | | 197.8 | |
Other comprehensive loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | (217.8 | ) | | | (217.8 | ) | | | (0.9 | ) | | | (218.7 | ) |
Investment in noncontrolling interests | | | — | | | | — | | | | (1.0 | ) | | | — | | | | — | | | | (0.6 | ) | | | (1.6 | ) | | | 1.6 | | | | — | |
Common stock dividend (1) | | | — | | | | — | | | | — | | | | — | | | | (49.1 | ) | | | — | | | | (49.1 | ) | | | — | | | | (49.1 | ) |
Treasury stock acquired (1,561,149 shares) | | | — | | | | — | | | | — | | | | (325.0 | ) | | | — | | | | — | | | | (325.0 | ) | | | — | | | | (325.0 | ) |
Stock options exercised (869,336 shares transferred from treasury stock) | | | — | | | | — | | | | 65.7 | | | | 12.3 | | | | — | | | | — | | | | 78.0 | | | | — | | | | 78.0 | |
Performance share units lapsed (1,354 shares transferred from treasury stock) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Restricted stock lapsed (68,098 shares transferred from treasury stock) | | | — | | | | — | | | | (1.0 | ) | | | 1.0 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Stock-based compensation expense | | | — | | | | — | | | | 18.4 | | | | — | | | | — | | | | — | | | | 18.4 | | | | — | | | | 18.4 | |
Net share settlement from restricted stock awards (42,394 shares withheld for tax settlement) | | | — | | | | — | | | | (8.7 | ) | | | — | | | | — | | | | — | | | | (8.7 | ) | | | — | | | | (8.7 | ) |
Other stock issuances (10,303 shares transferred from treasury stock) | | | — | | | | — | | | | 1.2 | | | | 0.2 | | | | — | | | | — | | | | 1.4 | | | | — | | | | 1.4 | |
Balance, June 30, 2022 | | | 544,003,038 | | | $ | 0.1 | | | $ | 2,707.1 | | | $ | (5,517.4 | ) | | $ | 5,845.5 | | | $ | (683.4 | ) | | $ | 2,351.9 | | | $ | 18.1 | | | $ | 2,370.0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, April 1, 2021 | | | 544,003,038 | | | $ | 0.1 | | | $ | 2,515.3 | | | $ | (4,277.0 | ) | | $ | 4,884.1 | | | $ | (366.2 | ) | | $ | 2,756.3 | | | $ | 15.2 | | | $ | 2,771.5 | |
Net income | | | — | | | | — | | | | — | | | | — | | | | 151.6 | | | | — | | | | 151.6 | | | | — | | | | 151.6 | |
Comprehensive loss attributable to noncontrolling interest | | | — | | | | — | | | | — | | | | — | | | | 2.4 | | | | — | | | | 2.4 | | | | (2.3 | ) | | | 0.1 | |
Investment in noncontrolling interest | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3.8 | | | | 3.8 | |
Other comprehensive income | | | — | | | | — | | | | — | | | | — | | | | — | | | | 17.3 | | | | 17.3 | | | | — | | | | 17.3 | |
Common stock dividend (1) | | | — | | | | — | | | | — | | | | — | | | | (47.1 | ) | | | — | | | | (47.1 | ) | | | — | | | | (47.1 | ) |
Treasury stock acquired (834,012 shares) | | | — | | | | — | | | | — | | | | (150.0 | ) | | | — | | | | — | | | | (150.0 | ) | | | — | | | | (150.0 | ) |
Stock options exercised (182,877 shares transferred from treasury stock) | | | — | | | | — | | | | 11.8 | | | | 2.1 | | | | — | | | | — | | | | 13.9 | | | | — | | | | 13.9 | |
Restricted stock and performance share units lapsed (99,321 shares transferred from treasury stock) | | | — | | | | — | | | | (1.2 | ) | | | 1.2 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Stock-based compensation expense | | | — | | | | — | | | | 10.8 | | | | — | | | | — | | | | — | | | | 10.8 | | | | — | | | | 10.8 | |
Net share settlement from restricted stock awards (18,133 shares withheld for tax settlement) | | | — | | | | — | | | | (3.2 | ) | | | — | | | | — | | | | — | | | | (3.2 | ) | | | — | | | | (3.2 | ) |
Other stock issuances (11,541 shares transferred from treasury stock) | | | — | | | | — | | | | 1.4 | | | | 0.1 | | | | — | | | | — | | | | 1.5 | | | | — | | | | 1.5 | |
Balance, June 30, 2021 | | | 544,003,038 | | | $ | 0.1 | | | $ | 2,534.9 | | | $ | (4,423.6 | ) | | $ | 4,991.0 | | | $ | (348.9 | ) | | $ | 2,753.5 | | | $ | 16.7 | | | $ | 2,770.2 | |
_______________
(1) Refer to Note 11. Stockholders' Equity for discussion related to quarterly cash dividends declared per share
The accompanying notes are an integral part of these condensed consolidated financial statements.
VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
For The Six Months Ended June 30, 2022 and 2021
| | Common Stock Issued | | | Par Value | | | Additional Paid-in Capital | | | Treasury Stock | | | Retained Earnings | | | Accumulated Other Comprehensive Losses | | | Total Verisk Stockholders' Equity | | | Noncontrolling Interests | | | Total Stockholders’ Equity | |
| | (in millions, except for share data) | |
Balance, January 1, 2022 | | | 544,003,038 | | | $ | 0.1 | | | $ | 2,608.7 | | | $ | (4,638.1 | ) | | $ | 5,240.4 | | | $ | (394.6 | ) | | $ | 2,816.5 | | | $ | 26.0 | | | $ | 2,842.5 | |
Net income | | | — | | | | — | | | | — | | | | — | | | | 703.4 | | | | — | | | | 703.4 | | | | 0.2 | | | | 703.6 | |
Other comprehensive loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | (288.2 | ) | | | (288.2 | ) | | | (1.5 | ) | | | (289.7 | ) |
Investment in noncontrolling interests | | | — | | | | — | | | | (1.0 | ) | | | — | | | | — | | | | (0.6 | ) | | | (1.6 | ) | | | (6.6 | ) | | | (8.2 | ) |
Common stock dividend (1) | | | — | | | | — | | | | — | | | | — | | | | (98.3 | ) | | | — | | | | (98.3 | ) | | | — | | | | (98.3 | ) |
Treasury stock acquired (4,613,710 shares) | | | — | | | | — | | | | — | | | | (896.3 | ) | | | — | | | | — | | | | (896.3 | ) | | | — | | | | (896.3 | ) |
Stock options exercised (1,034,078 shares transferred from treasury stock) | | | — | | | | — | | | | 80.1 | | | | 14.5 | | | | — | | | | — | | | | 94.6 | | | | — | | | | 94.6 | |
Performance share units lapsed (49,803 shares transferred from treasury stock) | | | — | | | | — | | | | (0.6 | ) | | | 0.6 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Restricted stock lapsed (115,289 shares transferred from treasury stock) | | | — | | | | — | | | | (1.6 | ) | | | 1.6 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Stock-based compensation expense | | | — | | | | — | | | | 38.9 | | | | — | | | | — | | | | — | | | | 38.9 | | | | — | | | | 38.9 | |
Net share settlement from restricted stock awards (95,574 shares withheld for tax settlement) | | | — | | | | — | | | | (20.0 | ) | | | — | | | | — | | | | — | | | | (20.0 | ) | | | — | | | | (20.0 | ) |
Other stock issuances (19,999 shares transferred from treasury stock) | | | — | | | | — | | | | 2.6 | | | | 0.3 | | | | — | | | | — | | | | 2.9 | | | | — | | | | 2.9 | |
Balance, June 30, 2022 | | | 544,003,038 | | | $ | 0.1 | | | $ | 2,707.1 | | | $ | (5,517.4 | ) | | $ | 5,845.5 | | | $ | (683.4 | ) | | $ | 2,351.9 | | | $ | 18.1 | | | $ | 2,370.0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance, January 1, 2021 | | | 544,003,038 | | | $ | 0.1 | | | $ | 2,490.9 | | | $ | (4,179.3 | ) | | $ | 4,762.2 | | | $ | (375.7 | ) | | $ | 2,698.2 | | | $ | — | | | $ | 2,698.2 | |
Net income | | | — | | | | — | | | | — | | | | — | | | | 319.6 | | | | — | | | | 319.6 | | | | — | | | | 319.6 | |
Comprehensive loss attributable to noncontrolling interest | | | — | | | | — | | | | — | | | | — | | | | 3.0 | | | | — | | | | 3.0 | | | | (3.1 | ) | | | (0.1 | ) |
Investment in noncontrolling interest | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 19.8 | | | | 19.8 | |
Other comprehensive income | | | — | | | | — | | | | — | | | | — | | | | — | | | | 26.8 | | | | 26.8 | | | | — | | | | 26.8 | |
Common stock dividend (1) | | | — | | | | — | | | | — | | | | — | | | | (93.8 | ) | | | — | | | | (93.8 | ) | | | — | | | | (93.8 | ) |
Treasury stock acquired (1,394,538 shares) | | | — | | | | — | | | | — | | | | (250.0 | ) | | | — | | | | — | | | | (250.0 | ) | | | — | | | | (250.0 | ) |
Stock options exercised (298,161 shares transferred from treasury stock) | | | — | | | | — | | | | 17.9 | | | | 3.4 | | | | — | | | | — | | | | 21.3 | | | | — | | | | 21.3 | |
Restricted stock and performance share units lapsed (181,530 shares transferred from treasury stock) | | | — | | | | — | | | | (2.1 | ) | | | 2.1 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Stock-based compensation expense | | | — | | | | — | | | | 36.2 | | | | — | | | | — | | | | — | | | | 36.2 | | | | — | | | | 36.2 | |
Net share settlement from restricted stock awards (55,816 shares withheld for tax settlement) | | | — | | | | — | | | | (11.0 | ) | | | — | | | | — | | | | — | | | | (11.0 | ) | | | — | | | | (11.0 | ) |
Other stock issuances (23,640 shares transferred from treasury stock) | | | — | | | | — | | | | 3.0 | | | | 0.2 | | | | — | | | | — | | | | 3.2 | | | | — | | | | 3.2 | |
Balance, June 30, 2021 | | | 544,003,038 | | | $ | 0.1 | | | $ | 2,534.9 | | | $ | (4,423.6 | ) | | $ | 4,991.0 | | | $ | (348.9 | ) | | $ | 2,753.5 | | | $ | 16.7 | | | $ | 2,770.2 | |
_____________
(1) Refer to Note 11. Stockholders' Equity for discussion related to quarterly cash dividends declared per share
The accompanying notes are an integral part of these condensed consolidated financial statements.
VERISK ANALYTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | 2022 | | | 2021 | | | 2022 | | | 2021 | |
| | (in millions) | |
Cash flows from operating activities: | | | | | | | | | | | | | | | | |
Net income | | $ | 197.8 | | | $ | 151.6 | | | $ | 703.6 | | | $ | 319.6 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | | | | | |
Depreciation and amortization of fixed assets | | | 49.8 | | | | 53.3 | | | | 99.4 | | | | 101.8 | |
Amortization of intangible assets | | | 39.8 | | | | 50.5 | | | | 84.4 | | | | 95.5 | |
Amortization of debt issuance costs and original issue discount, net of original issue premium | | | 0.4 | | | | 0.3 | | | | 0.7 | | | | 0.7 | |
Provision for doubtful accounts | | | 1.2 | | | | 5.5 | | | | 2.9 | | | | 8.7 | |
Loss (gain) on sale of assets | | | 15.6 | | | | — | | | | (435.2 | ) | | | — | |
Stock-based compensation expense | | 18.4 | | | | 10.8 | | | | 38.9 | | | | 36.2 | |
Impairment of long-lived assets | | | — | | | | — | | | | 73.7 | | | | — | |
Deferred income taxes | | | (12.3 | ) | | | 33.3 | | | | (49.4 | ) | | | 32.6 | |
Loss on disposal of fixed assets | | | 0.7 | | | | — | | | | 0.7 | | | | — | |
Changes in assets and liabilities, net of effects from acquisitions: | | | | | | | | | | | | | | | | |
Accounts receivable | | | 29.8 | | | | 48.5 | | | | (103.3 | ) | | | (41.0 | ) |
Prepaid expenses and other assets | | | (18.9 | ) | | | (18.9 | ) | | | (17.5 | ) | | | (23.1 | ) |
Operating lease right-of-use assets, net | | | 8.3 | | | | 10.6 | | | | 18.7 | | | | 21.0 | |
Income taxes | | | (153.6 | ) | | | (37.8 | ) | | | (22.6 | ) | | | 0.6 | |
Accounts payable and accrued liabilities | | | 6.4 | | | | 5.9 | | | | (63.6 | ) | | | (20.0 | ) |
Deferred revenues | | | (38.4 | ) | | | (69.2 | ) | | | 227.7 | | | | 187.7 | |
Operating lease liabilities | | | (9.9 | ) | | | (10.4 | ) | | | (20.2 | ) | | | (20.5 | ) |
Other liabilities | | | (4.9 | ) | | | (0.8 | ) | | | (9.1 | ) | | | (17.9 | ) |
Net cash provided by operating activities | | | 130.2 | | | | 233.2 | | | | 529.8 | | | | 681.9 | |
Cash flows from investing activities: | | | | | | | | | | | | | | | | |
Acquisitions and purchase of additional controlling interest, net of cash acquired of $17.4 and $1.9; $17.4 and $5.7 respectively | | | (3.5 | ) | | | (17.8 | ) | | | (448.9 | ) | | | (31.5 | ) |
Proceeds from sale of assets | | | 498.3 | | | | — | | | | 1,073.3 | | | | — | |
Investments in nonpublic companies | | | (0.8 | ) | | | (15.1 | ) | | | (41.8 | ) | | | (15.1 | ) |
Capital expenditures | | | (69.2 | ) | | | (62.5 | ) | | | (129.2 | ) | | | (121.7 | ) |
Escrow funding associated with acquisitions | | | — | | | | (4.8 | ) | | | (2.3 | ) | | | (4.8 | ) |
Payment of contingent liability related to acquisition | | | — | | | | — | | | | — | | | | (1.2 | ) |
Other investing activities, net | | | — | | | | 0.4 | | | | — | | | | 0.8 | |
Net cash provided by (used in) investing activities | | | 424.8 | | | | (99.8 | ) | | | 451.1 | | | | (173.5 | ) |
Cash flows from financing activities: | | | | | | | | | | | | | | | | |
(Repayments of) proceeds from short-term debt | | | (160.0 | ) | | | 390.0 | | | | 40.0 | | | | 340.0 | |
Repayment of current portion of long-term-debt | | | — | | | | (450.0 | ) | | | — | | | | (450.0 | ) |
Proceeds from issuance of short-term debt with original maturities less than three months | | | — | | | | — | | | | 125.0 | | | | — | |
Repurchases of common stock | | | (325.0 | ) | | | (150.0 | ) | | | (896.3 | ) | | | (250.0 | ) |
Proceeds from stock options exercised | | | 77.2 | | | | 13.4 | | | | 93.0 | | | | 21.0 | |
Net share settlement of taxes from restricted stock and performance share awards | | | (8.7 | ) | | | (3.2 | ) | | | (20.0 | ) | | | (11.0 | ) |
Dividends paid | | | (49.2 | ) | | | (47.1 | ) | | | (98.6 | ) | | | (94.2 | ) |
Other financing activities, net | | | (1.7 | ) | | | (1.8 | ) | | | (4.1 | ) | | | (3.7 | ) |
Net cash used in financing activities | | | (467.4 | ) | | | (248.7 | ) | | | (761.0 | ) | | | (447.9 | ) |
Effect of exchange rate changes | | | (12.9 | ) | | | 0.7 | | | | (19.5 | ) | | | (3.0 | ) |
Net increase (decrease) in cash and cash equivalents | | | 74.7 | | | | (114.6 | ) | | | 200.4 | | | | 57.5 | |
Cash and cash equivalents, beginning of period | | | 406.0 | | | | 390.9 | | | | 280.3 | | | | 218.8 | |
Cash and cash equivalents, end of period | | $ | 480.7 | | | $ | 276.3 | | | $ | 480.7 | | | $ | 276.3 | |
Supplemental disclosures: | | | | | | | | | | | | | | | | |
Income taxes paid | | $ | 210.1 | | | $ | 88.1 | | | $ | 221.8 | | | $ | 98.9 | |
Interest paid | | $ | 39.5 | | | $ | 50.2 | | | $ | 60.6 | | | $ | 69.7 | |
Noncash investing and financing activities: | | | | | | | | | | | | | | | | |
Deferred tax liability established on date of acquisition | | $ | 0.4 | | | $ | 2.2 | | | $ | 16.5 | | | $ | 4.4 | |
Net assets sold as part of the disposition | | $ | 495.9 | | | $ | — | | | $ | 607.4 | | | $ | — | |
Finance lease additions | | $ | 1.4 | | | $ | 0.6 | | | $ | 3.5 | | | $ | 2.6 | |
Operating lease additions, net | | $ | 6.6 | | | $ | 2.7 | | | $ | 8.3 | | | $ | 9.4 | |
Fixed assets included in accounts payable and accrued liabilities | | $ | — | | | $ | 1.4 | | | $ | — | | | $ | 1.4 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
VERISK ANALYTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Amounts in millions, except for share and per share data, unless otherwise stated)
1. Organization:
Verisk Analytics, Inc. is a data analytics provider serving customers in insurance and energy. Using various technologies to collect and analyze billions of records, we draw on numerous data assets and domain expertise to provide first-to-market innovations that are integrated into customer workflows. We offer predictive analytics and decision support solutions to customers in rating, underwriting, claims, catastrophe and weather risk, global risk analytics, natural resources intelligence, economic forecasting, and many other fields. Around the world, we help customers protect people, property, and financial assets.
2. Basis of Presentation and Summary of Significant Accounting Policies:
Our accompanying unaudited condensed consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the U.S. ("U.S. GAAP"). The preparation of financial statements in conformity with these accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates include acquisition purchase price allocations, the fair value of goodwill and intangibles, the realization of deferred tax assets and liabilities, acquisition-related liabilities, fair value of stock-based compensation for stock options and performance share units granted, and assets and liabilities for pension and postretirement benefits. Actual results may ultimately differ from those estimates.
Our condensed consolidated financial statements as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021, in the opinion of management, include all adjustments, consisting of normal recurring items, to present fairly our financial position, results of operations, and cash flows. Our operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year. Our condensed consolidated financial statements and related notes as of and for the three and six months ended June 30, 2022 have been prepared on the same basis as and should be read in conjunction with our annual report on Form 10-K for the year ended December 31, 2021. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules of the SEC. We believe the disclosures made are adequate to keep the information presented from being misleading.
Our operating segments have historically been Insurance, Energy and Specialized Markets, and Financial Services. On March 11, 2022 and April 8, 2022, we sold our environmental health and safety business, which represented the “specialized markets” in our Energy and Specialized Markets segment and our Financial Services segment, respectively. See Note 7. Dispositions for further discussion. For the remainder of 2022, we will continue to show only the historical results of these dispositions in their respective previous operating segments.
Recent Accounting Pronouncements
Accounting Standard | Description | Effective Date | Effect on Consolidated Financial Statements or Other Significant Matters |
Business Combinations (Topic 805) In October 2021, the FASB issued ASU No. 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers" ("ASU No. 2021-08") | This amendment requires an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. An acquirer should assess how the acquiree applied Topic 606 to determine what to record for the acquired revenue contracts. If the acquiree prepared financial statements in accordance with GAAP, this should result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements. In circumstances in which the acquirer is unable to assess or rely on how the acquiree applied Topic 606, the acquirer should consider the terms of the acquired contracts, such as timing of payment, identify each performance obligation in the contracts, and allocate the total transaction price to each identified performance obligation on a relative standalone selling price basis as of the date the acquiree entered into the contracts to determine what should be recorded at the acquisition date. | Fiscal years beginning after December 15, 2022 with early adoption permitted. | We elected to early adopt ASU No. 2021-08 on January 1, 2022 on a prospective basis to all business combinations that occurred on or after the date of adoption. The adoption of ASU No. 2021-08 did not have a material impact on our Condensed Consolidated Financial Statements. |
3. Revenues:
Disaggregated revenues by type of service and by country are provided below for the three and six months ended June 30, 2022 and 2021. No individual customer or country outside of the U.S. accounted for 10.0% or more of our consolidated revenues for the three and six months ended June 30, 2022 or 2021.
| | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | 2022 | | | 2021 | | | 2022 | | | 2021 | |
| | | | | | | | | | | | | | | | |
Insurance: | | | | | | | | | | | | | | | | |
Underwriting & rating | | $ | 437.8 | |