Verisk (VRSK) Q2 Earnings Beat Estimates, Revenues Lag

Verisk Analytics, Inc.VRSK reported mixed second-quarter 2020 results, with earnings surpassing the Zacks Consensus Estimate but revenues missing the same.

Adjusted earnings per share of $1.29 beat the consensus mark by 9.3% and rose 17.3% on a year-over-year basis. The upside can be attributed to cost discipline in the business and lower average share count.

Revenues of $678.8 million missed the consensus estimate by 0.7% but increased 4% year over year on a reported basis and 1.1% on an organic constant-currency (cc) basis.

So far this year, shares of Verisk have gained 25.7%, ahead of the 16.7% growth of the industry it belongs to and 2.2% increase of the Zacks S&P 500 composite.

 

Segmental Performance

Insurance segment revenues totaled $486.4 million, up 3.3% year over year on a reported basis and 2.5% in organic cc.

Within the segment, underwriting and rating revenues of $343.5 million rose 9.1% on a reported basis and 5.1% in organic cc. The upside was primarily driven by an annual increase in prices derived from the continued enhancements of the solutions’ contents within the industry-standard insurance programs, sale of expanded solutions to existing customers in commercial and personal lines, and contributions from catastrophe-modeling services. These increases were partially offset by a decrease in certain transactional revenues.

Claims revenues amounted to $142.9 million, declining 8.6% on a reported basis and 2.9% in organic cc. The top line was negativelyimpacted by the injunction ruling against roof-measurement solutions and decline in certain transactional revenues in connection with the COVID-19 pandemic.

Energy and Specialized Markets segment revenues of $154.4 million increased 12.4% year over year on a reported basis but declined 2.8% in organic cc. The uptick can be attributed tocontributions from Genscape acquisition, environmental health and safety-service solutions, core research, and weather-analytics solutions. These were partially offset by declines in cost-intelligence solutions' implementation projects, which did not reoccur, and consulting revenues in connection with the COVID-19 pandemic.

Financial Services segment revenues of $38 million declined 14.1% year over year on a reported basis and 2.7% in organic cc, owing to the impact of the COVID-19 pandemic and the recent dispositions.

Operating Results

Adjusted EBITDA of $348.3 million increased 14.5% on a reported basis and 12.4% in organic cc. Adjusted EBITDA margin came in at 51.3% compared with 46.6% in the prior-year quarter.

Verisk Analytics, Inc. Price, Consensus and EPS Surprise

 

Verisk Analytics, Inc. Price, Consensus and EPS Surprise

Verisk Analytics, Inc. price-consensus-eps-surprise-chart | Verisk Analytics, Inc. Quote

Balance Sheet and Cash Flow

Verisk exited second-quarter 2020 with cash and cash equivalents of $309.4 million compared with $204.4 million at the end of the prior quarter. Long-term debt was $2.69 billion compared with $2.65 billion at the end of the prior quarter.

The company generated $249.5 million of cash from operating activities and capex was $56.7 million. Free cash flow was $192.8 million.

Share Repurchases & Dividend Payout

During the reported quarter, Verisk returned $218 million to shareholders through dividend payouts and repurchases

During the second quarter, the company repurchased nearly 0.5 million shares at an average price of $152.59 for a total cost of $75 million. As of Jun 30, the company had $379 million available under its share-repurchase authorization.

The company paid out a cash dividend of 27 cents per share on Jun 30. On Jul 29, the company's board of directors approved a quarterly cash dividend of 27 cents, payable on Sep 30, to shareholders of record as of Sep 15.

Currently, Verisk carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Business Services Companies

Equifax EFX reported better-than-expected second-quarter 2020 adjusted earnings of $1.60 per share, whichbeat the Zacks Consensus Estimate by 22.1% and improved 14.3% on a year-over-year basis. The reported figure exceeded the guided range of 78-88 cents.

IQVIA Holdings IQV reported second-quarter 2020 adjusted earnings per share of $1.18, which beat the consensus mark by 12.4% but decreased 22.9% on a year-over-year basis. The reported figure exceeded the guided range of $1.00-$1.09.

Robert Half RHI reported second-quarter 2020 earnings of 41 cents per share that beat the consensus mark by 17% but were down 58% year over year.

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