UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
VERISK ANALYTICS, INC.
(Exact name of registrant as specified in its charter)
| | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | |
| | |
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| (Address of principal executive offices) | (Zip Code) |
(
(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 |
| | | |
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.
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).
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.
| | ☒ | 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
As of April 26, 2024, there were
Index to Form 10-Q
Table of Contents
| Page Number |
|
| PART I — FINANCIAL INFORMATION |
|
| 1 | |
| 2 | |
| Condensed Consolidated Statements of Comprehensive Income (Loss) |
3 |
| Condensed Consolidated Statements of Changes in Stockholders’ Equity |
4 |
| 5 | |
| 6 | |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
28 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk |
37 |
| 37 | |
| PART II — OTHER INFORMATION |
|
| 38 | |
| 38 | |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
38 |
| 39 | |
| 39 | |
| 39 | |
| 39 | |
| 41 | |
| Exhibit 31.1 |
|
| Exhibit 31.2 |
|
| Exhibit 32.1 |
|
PART I — FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| March 31, 2024 | December 31, 2023 | |||||||
| (in millions, except for share and per share data) | ||||||||
| ASSETS: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $ and $, respectively | ||||||||
| Prepaid expenses | ||||||||
| Income taxes receivable | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Noncurrent assets: | ||||||||
| Fixed assets, net | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Deferred income tax assets | ||||||||
| Other noncurrent assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Short-term debt and current portion of long-term debt | ||||||||
| Deferred revenues | ||||||||
| Operating lease liabilities | ||||||||
| Income taxes payable | ||||||||
| Total current liabilities | ||||||||
| Noncurrent liabilities: | ||||||||
| Long-term debt | ||||||||
| Deferred income tax liabilities | ||||||||
| Operating lease liabilities | ||||||||
| Other noncurrent liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 16) | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, $ par value; shares authorized; shares issued; and shares outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Treasury stock, at cost, and shares, respectively | ( | ) | ( | ) | ||||
| Retained earnings | ||||||||
| Accumulated other comprehensive income | ||||||||
| Total Verisk stockholders' equity | ||||||||
| Noncontrolling interests | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| (in millions, except for share and per share data) | ||||||||
| Revenues | $ | $ | ||||||
| Operating expenses: | ||||||||
| Cost of revenues (exclusive of items shown separately below) | ||||||||
| Selling, general and administrative | ||||||||
| Depreciation and amortization of fixed assets | ||||||||
| Amortization of intangible assets | ||||||||
| Total operating expenses, net | ||||||||
| Operating income | ||||||||
| Other expense: | ||||||||
| Investment loss | ( | ) | ( | ) | ||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Total other expense, net | ( | ) | ( | ) | ||||
| Income from continuing operations before income taxes | ||||||||
| Provision for income taxes | ( | ) | ( | ) | ||||
| Income from continuing operations | ||||||||
| Loss from discontinued operations net of tax expense of $ and $, respectively (Note 7) | ( | ) | ||||||
| Net income | ||||||||
| Less: Net loss (income) attributable to noncontrolling interests | ( | ) | ||||||
| Net income attributable to Verisk | $ | $ | ||||||
| Basic net income per share attributable to Verisk: | ||||||||
| Income from continuing operations | $ | $ | ||||||
| Loss from discontinued operations | ( | ) | ||||||
| Basic net income per share attributable to Verisk: | $ | $ | ||||||
| Diluted net income per share attributable to Verisk: | ||||||||
| Income from continuing operations | $ | $ | ||||||
| Loss from discontinued operations | ( | ) | ||||||
| Diluted net income per share attributable to Verisk: | $ | $ | ||||||
| Weighted-average shares outstanding: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
| Three Months Ended March 31, |
||||||||
| 2024 |
2023 |
|||||||
| Net income |
$ | $ | ||||||
| Other comprehensive (loss) income, net of tax: |
||||||||
| Foreign currency translation adjustment |
( |
) | ||||||
| Pension and postretirement liability adjustment |
||||||||
| Total other comprehensive (loss) income |
( |
) | ||||||
| Comprehensive income |
||||||||
| Less: Comprehensive (income) loss attributable to noncontrolling interests |
( |
) | ||||||
| Comprehensive income attributable to Verisk |
$ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
For The Three Months Ended March 31, 2024 and 2023
| Common Stock Issued | Par Value | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income | Total Verisk Stockholders' Equity | Noncontrolling Interests | Total Stockholders’ Equity | ||||||||||||||||||||||||||||
| (in millions, except for share data) | ||||||||||||||||||||||||||||||||||||
| Balance, January 1, 2024 | $ | $ | $ | ( | ) | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
| Net income (loss) | — | ( | ) | |||||||||||||||||||||||||||||||||
| Other comprehensive (loss) income | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Investment in noncontrolling interests | — | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Common stock dividend (1) | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Treasury stock acquired ( shares) | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Treasury stock shares repurchased not yet settled | — | ( | ) | |||||||||||||||||||||||||||||||||
| Excise tax associated with share repurchases | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Stock options exercised ( shares transferred from treasury stock) | — | |||||||||||||||||||||||||||||||||||
| Performance share units ("PSU") lapsed ( shares transferred from treasury stock) | — | ( | ) | |||||||||||||||||||||||||||||||||
| Restricted stock ("RSAs") lapsed ( shares transferred from treasury stock) | — | ( | ) | |||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | |||||||||||||||||||||||||||||||||||
| Net share settlement from RSAs ( shares withheld for tax settlement) | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Other stock issuances ( shares transferred from treasury stock) | — | |||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | ( | ) | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
| Balance, January 1, 2023 | ( | ) | ( | ) | $ | $ | ||||||||||||||||||||||||||||||
| Net income | — | |||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | ( | ) | |||||||||||||||||||||||||||||||||
| Investment in noncontrolling interests | — | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Common stock dividend (1) | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Treasury stock acquired ( shares) | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Share repurchases via accelerated share repurchase program not yet settled | — | ( | ) | |||||||||||||||||||||||||||||||||
| Stock options exercised ( shares transferred from treasury stock) | — | |||||||||||||||||||||||||||||||||||
| Performance share units ("PSU") lapsed ( shares transferred from treasury stock) | — | ( | ) | |||||||||||||||||||||||||||||||||
| RSA lapsed ( shares transferred from treasury stock) | — | ( | ) | |||||||||||||||||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||
| Net share settlement from RSAs ( shares withheld for tax settlement) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Other stock issuances ( shares transferred from treasury stock) | — | |||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | ( | ) | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
_______________
(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.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| (in millions) | ||||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization of fixed assets | ||||||||
| Amortization of intangible assets | | |||||||
| Amortization of debt issuance costs and original issue discount, net of original issue premium | ||||||||
| Provision for doubtful accounts | ||||||||
| Loss on sale of assets | ||||||||
| Impairment of cost-based investments | ||||||||
| Stock-based compensation expense | ||||||||
| Deferred income taxes | ( | ) | ( | ) | ||||
| Gain on disposal of fixed assets | ( | ) | ||||||
| Changes in assets and liabilities, net of effects from acquisitions: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Operating lease right-of-use assets, net | ||||||||
| Income taxes | ||||||||
| Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
| Deferred revenues | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Other liabilities | ||||||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities: | ||||||||
| Acquisitions and purchase of additional controlling interest, net of cash acquired of $ and $, respectively | ( | ) | ( | ) | ||||
| Proceeds from sale of assets | ||||||||
| Investments in nonpublic companies | ( | ) | ( | ) | ||||
| Capital expenditures | ( | ) | ( | ) | ||||
| Escrow funding associated with acquisitions | ||||||||
| Other investing activities, net | ( | ) | ||||||
| Net cash (used in) provided by investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of long-term debt, net of original issue discount | ||||||||
| Payment of debt issuance costs | ( | ) | ||||||
| Repayment from short-term debt | ( | ) | ||||||
| Repayment of short-term debt with original maturities greater than three months | ( | ) | ||||||
| Repurchases of common stock | ( | ) | ( | ) | ||||
| Share repurchases not yet settled | ( | ) | ( | ) | ||||
| Proceeds from stock options exercised | ||||||||
| Net share settlement of taxes from restricted stock and performance share awards | ( | ) | ( | ) | ||||
| Dividends paid | ( | ) | ( | ) | ||||
| Other financing activities, net | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Effect of exchange rate changes | ( | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental disclosures: | ||||||||
| Income taxes paid | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
| Noncash investing and financing activities: | ||||||||
| Deferred tax liability established on date of acquisition | $ | $ | ||||||
| Net assets sold as part of disposition | $ | $ | ||||||
| Finance lease additions | $ | $ | ||||||
| Operating lease additions, net | $ | $ | ||||||
| Fixed assets included in accounts payable and accrued liabilities | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Amounts in millions, except for share and per share data, unless otherwise stated)
Verisk Analytics, Inc. is a strategic data analytics and technology partner to the global insurance industry. We empower clients to strengthen operating efficiency, improve underwriting and claims outcomes, combat fraud and make informed decisions about global risks, including climate change, extreme events, ESG (environmental, social, and governance), and political issues. Through advanced data analytics, software, scientific research, and deep industry knowledge, we help build global resilience for individuals, communities, and businesses. We trade under the ticker symbol "VRSK" on the Nasdaq Global Select Market.
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 March 31, 2024 and for the three months ended March 31, 2024 and 2023, 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 months ended March 31, 2024 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 months ended March 31, 2024 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, 2023. 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.
On February 1, 2023, we completed the sale of our Energy business. We determined that the sale of our Energy business met the “discontinued operations” criteria in accordance with Financial Accounting Standard Boards (“FASB”) Accounting Standards Codification (“ASC”) 205-20, Discontinued Operations (“ASC 205-20”) due to its relative size and strategic rationale. The consolidated balance sheets, consolidated statements of operations, and the notes to the consolidated financial statements were recast for all periods presented to reflect the discontinuation of the Energy business, in accordance with ASC 205-20. The discussion in the notes to these consolidated financial statements, unless otherwise noted, relate solely to our continuing operations.
Recent Accounting Pronouncements
| Accounting Standard | Description | Effective Date | Effect on Consolidated Financial Statements or Other Significant Matters |
| Segment Reporting (Topic 280) In November 2023, the FASB issued Accounting Standards Update "ASU" No. 2023-07, Improvements to Reportable Segment Disclosures ("ASU No. 2023-07") | This update changes the reportable segment disclosure requirements requiring enhanced disclosures about significant segment expenses. Public entities are required to disclose significant segment expenses that are regularly provided to the chief operating decision maker and to disclose how reported measures of segment profit or loss are used in assessing segment performance and allocating resources. | ASU No. 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. | The adoption of this guidance is not expected to have a material impact on our consolidated financial statements. |
| Income Taxes (Topic 740) In December 2023, the FASB issued Accounting Standards Update "ASU" No. 2023-09, Improvements to Income Tax Disclosures (ASU No. 2023-09) | The amendments within ASU No. 2023-09 address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This Update also includes certain other amendments to improve the effectiveness of income tax disclosures | The ASU’s amendments are effective for public business entities for fiscal years beginning after December 15, 2024. Early adoption is permitted | The adoption of this guidance is not expected to have a material impact on our consolidated financial statements. |
Disaggregated revenues by type of service and by country are provided below for the three months ended March 31, 2024 and 2023. No individual customer or country outside of the U.S. accounted for 10.0% or more of our consolidated revenues for the three months ended March 31, 2024 or 2023.
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Insurance: | ||||||||
| Underwriting | $ | $ | ||||||
| Claims | ||||||||
| Total revenues | $ | $ | ||||||
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenues: | ||||||||
| United States | $ | $ | ||||||
| United Kingdom | ||||||||
| Other countries | ||||||||
| Total revenues | $ | $ | ||||||
Contract assets are defined as an entity's right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time. As of March 31, 2024 and December 31, 2023, we had
The following is a summary of the change in contract liabilities from December 31, 2023 through March 31, 2024:
| Contract liabilities at December 31, 2023 | $ | |||
| Revenue | ( | ) | ||
| Foreign currency translation adjustment | ||||
| Billings | ||||
| Contract liabilities at March 31, 2024 | $ |
Our most significant remaining performance obligations relate to providing customers with the right to use and update the online content over the remaining contract term. Our disclosure of the timing for satisfying the performance obligation is based on the requirements of contracts with customers. However, from time to time, these contracts may be subject to modifications, impacting the timing of satisfying the performance obligations. These performance obligations, which are expected to be satisfied within one year, comprised approximately
We recognize an asset for incremental costs of obtaining a contract with a customer if we expect the benefits of those costs to be longer than one year. As of March 31, 2024 and December 31, 2023, we had deferred commissions of $
4. Investments and Fair Value Measurements:
We have certain assets and liabilities that are reported at fair value in our accompanying condensed consolidated balance sheets. To increase consistency and comparability of assets and liabilities recorded at fair value, ASC 820-10, Fair Value Measurements, established a three-level fair value hierarchy to prioritize the inputs to valuation techniques used to measure fair value. ASC 820-10 requires disclosures detailing the extent to which companies measure assets and liabilities at fair value, the methods and assumptions used to measure fair value, and the effect of fair value measurements on earnings. In accordance with ASC 820-10, we applied the following fair value hierarchy:
| Level 1 - |
Assets or liabilities for which the identical item is traded on an active exchange, such as publicly-traded instruments. |
| Level 2 - |
Assets or liabilities valued based on observable market data for similar instruments. |
| Level 3 - |
Assets or liabilities for which significant valuation assumptions are not readily observable in the market; instruments valued based on the best available data, some of which are internally-developed, and considers risk premiums that market participants would require. |
The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and short-term debt approximate their carrying amounts, because of the short-term nature of these instruments. Our investments in registered investment companies, which are Level 1 assets measured at fair value on a recurring basis, were $
We elected not to carry our long-term debt at fair value. The carrying value of the long-term debt represents amortized cost, inclusive of unamortized premium, and net of unamortized discount and debt issuance costs. We assess the fair value of these financial instruments based on an estimate of interest rates available to us for financial instruments with similar features, our current credit rating, and spreads applicable to us. The following table summarizes the carrying value and estimated fair value of these financial instruments as of March 31, 2024 and December 31, 2023, respectively:
| March 31, 2024 |
December 31, 2023 |
||||||||||||||||
| Fair Value |
Carrying |
Estimated |
Carrying |
Estimated |
|||||||||||||
| Hierarchy |
Value |
Fair Value |
Value |
Fair Value |
|||||||||||||
| Financial instruments not carried at fair value: |
|||||||||||||||||
| Senior notes (Note 10) |
Level 2 |
$ | $ | $ | $ | ||||||||||||
As of March 31, 2024 and December 31, 2023, we had securities without readily determinable market values of $
We have operating and finance leases for corporate offices, data centers, and certain equipment that are accounted for under ASC 842, Leases ("ASC 842").
The following table presents the consolidated lease cost and cash paid for amounts included in the measurement of lease liabilities for finance and operating leases for the three months ended March 31, 2024 and 2023, respectively:
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Lease cost: | ||||||||
| Operating lease cost (1) | $ | $ | ||||||
| Sublease income | ( | ) | ( | ) | ||||
| Finance lease costs: | ||||||||
| Depreciation of finance lease assets (2) | ||||||||
| Interest on finance lease liabilities (3) | ||||||||
| Total lease cost | $ | $ | ||||||
| Other information: | ||||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||
| Operating cash outflows from operating leases | $ | ( | ) | $ | ( | ) | ||
| Operating cash outflows from finance leases | $ | ( | ) | $ | ( | ) | ||
| Financing cash outflows from finance leases | $ | ( | ) | $ | ( | ) | ||
_______________
(1) Included in "Cost of revenues" and "Selling, general and administrative" expenses in our accompanying condensed consolidated statements of operations
(2) Included in "Depreciation and amortization of fixed assets" in our accompanying condensed consolidated statements of operations
(3) Included in "Interest expense" in our accompanying condensed consolidated statements of operations
The following table presents weighted-average remaining lease terms and weighted-average discount rates for the consolidated finance and operating leases as of March 31, 2024 and 2023, respectively:
| March 31, | ||||||||
| 2024 | 2023 | |||||||
| Weighted-average remaining lease term - operating leases (in years) | ||||||||
| Weighted-average remaining lease term - finance leases (in years) | ||||||||
| Weighted-average discount rate - operating leases | % | % | ||||||
| Weighted-average discount rate - finance leases | % | % | ||||||
Our ROU assets and lease liabilities for finance leases were $
Maturities of lease liabilities for the remainder of 2024 and the years through 2029 and thereafter are as follows:
| March 31, 2024 | ||||||||
| Years Ending | Operating Leases | Finance Leases | ||||||
| 2024 | $ | $ | ||||||
| 2025 | ||||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 and thereafter | ||||||||
| Total lease payments | ||||||||
| Less: Amount representing interest | ( | ) | ( | ) | ||||
| Present value of total lease payments | $ | $ | ||||||
2024 Acquisitions
On January 8, 2024, we completed the acquisition of
For the three months ended March 31, 2024 and 2023, we incurred transaction costs of $
Acquisition Escrows and Related Liabilities
Pursuant to the related acquisition agreements, we have funded various escrow accounts to satisfy pre-acquisition indemnity and tax claims arising subsequent to the applicable acquisition dates. At March 31, 2024 and December 31, 2023, the current portion of the escrows amounted to $
As of March 31, 2024, the acquisitions of Rocket Enterprise Solutions GmbH, LLC, Krug Sachverständigen GmbH, Mavera Holding AB, and Morning Data Limited included acquisition-related contingent payments, for which the sellers of these acquisitions could receive additional payments by achieving the specific predetermined revenue, EBITDA, and/or EBITDA margin earn-out targets for exceptional performance. We believe that the liabilities recorded as of March 31, 2024 and December 31, 2023 reflect the best estimate of acquisition-related contingent payments. The associated current portion of the contingent payments were $
7. Dispositions and Discontinued Operations:
On February 1, 2023, we completed the sale of our Energy business to Planet Jersey Buyer Ltd, an entity that was formed on behalf of, and is controlled by, The Veritas Capital Fund VIII, L.P. and its affiliated funds and entities (“Veritas Capital”), for a net cash sale price of $
The Energy business, which was part of our Energy and Specialized Markets segment, was classified as discontinued operations per ASC 205-20 as we determined, qualitatively and quantitatively, that this transaction represented a strategic shift that had a major effect on our operations and financial results. Accordingly, all results of the Energy business have been removed from continuing operations and presented as discontinued operations in our consolidated statements of operations for all periods presented. Additionally, all assets and liabilities of the Energy business were classified as assets and liabilities held for sale within our consolidated balance sheet as of December 31, 2022. In connection with the held for sale classification, we recognized an impairment of $
The following table presents the financial results from discontinued operations, net of income taxes in our consolidated statement of income for the periods indicated:
| For the Three Months Ended March 31, |
||||
| 2023 |
||||
| Revenues |
$ | |||
| Operating expenses: |
||||
| Cost of revenues (exclusive of items shown separately below) |
||||
| Selling, general and administrative |
||||
| Depreciation and amortization of fixed assets |
||||
| Amortization of intangible assets |
||||
| Other operating loss, net |
||||
| Total operating expenses |
||||
| Operating loss |
( |
) | ||
| Other income (expense): |
||||
| Investment loss and others, net |
( |
) | ||
| Loss from discontinued operations before income taxes |
( |
) | ||
| Income tax expense |
( |
) | ||
| Loss from discontinued operations, net of income taxes |
$ | ( |
) | |
The consolidated statements of cash flows have not been adjusted to separately disclose cash flows related to discontinued operations. The following table presents selected cash flow information associated with our discontinued operations:
| For the Three Months Ended March 31, |
||||
| 2023 |
||||
| Significant non-cash operating activities: |
||||
| Depreciation and amortization of fixed assets |
$ | |||
| Amortization of intangible assets |
||||
| Operating lease right-of-use assets, net |
||||
| Investing activities: |
||||
| Capital expenditures |
( |
) | ||
| Supplemental disclosures: |
||||
| Fixed assets included in accounts payable and accrued liabilities |
||||
8. Goodwill and Intangible Assets:
The following is a summary of the change in goodwill from December 31, 2023 through March 31, 2024, for our Insurance operating segment:
| Insurance | ||||
| Goodwill at December 31, 2023 | $ | |||
| Acquisitions(1) | ||||
| Purchase accounting reclassifications | ||||
| Foreign currency translation adjustment | ( | ) | ||
| Goodwill at March 31, 2024 | $ | |||
_______________
(1) See Note 6. Acquisitions for more information.
Goodwill and intangible assets with indefinite lives are subject to impairment testing annually as of June 30, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. When evaluating goodwill for impairment, we may decide to first perform a qualitative assessment, or “Step Zero” impairment test, to determine whether it is more likely than not that impairment has occurred. The qualitative assessment includes a review of macroeconomic conditions, industry and market considerations, internal cost factors, and our own overall financial and share price performance, among other factors. If we do not perform a qualitative assessment, or if we determine that it is more likely than not that the carrying amounts of our reporting units exceeds their fair value, we perform a quantitative assessment and calculate the estimated fair value of the respective reporting unit. If the carrying amount of a reporting unit’s goodwill exceeds the fair value of that goodwill, an impairment loss is recognized. As of June 30, 2023, we completed our Step Zero impairment test at the reporting unit level and determined it was not more likely than not that the carrying values of our reporting units exceeded their fair values. We did not recognize any additional impairment charges related to our goodwill and indefinite-lived intangible assets. Subsequent to performing our annual impairment test, we continued to monitor for events that would trigger an interim impairment test; we did not identify any such events.
There were
Our intangible assets and related accumulated amortization consisted of the following:
| Weighted Average Useful Life (in years) | Cost | Accumulated Amortization | Net | |||||||||||||
| March 31, 2024 | ||||||||||||||||
| Technology-based | $ | $ | ( | ) | $ | |||||||||||
| Marketing-related | ( | ) | ||||||||||||||
| Contract-based | ( | ) | ||||||||||||||
| Customer-related | ( | ) | ||||||||||||||
| Database-based | ( | ) | ||||||||||||||
| Total intangible assets | $ | $ | ( | ) | $ | |||||||||||
| December 31, 2023 | ||||||||||||||||
| Technology-based | $ | $ | ( | ) | $ | |||||||||||
| Marketing-related | ( | ) | ||||||||||||||
| Contract-based | ( | ) | ||||||||||||||
| Customer-related | ( | ) | ||||||||||||||
| Database-based | ( | ) | ||||||||||||||
| Total intangible assets | $ | $ | ( | ) | $ | |||||||||||
Amortization expense related to intangible assets for the three months ended March 31, 2024 and 2023 was $
| Years Ending | Amount | |||
| 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 and thereafter | ||||
| Total | $ | |||
Our effective tax rate for the three months ended March 31, 2024 was
A number of jurisdictions have begun to enact legislation to implement the Organization for Economic Co-operation and Development’s 15% global minimum tax regime with effect from January 1, 2024. We do not expect these changes to have a material impact on our consolidated financial statements.
The following table presents short-term and long-term debt by issuance as of March 31, 2024 and December 31, 2023:
| Issuance Date | Maturity Date | 2024 | 2023 | ||||||||
| Short-term debt and current portion of long-term debt: | |||||||||||
| Credit Facilities: | |||||||||||
| Syndicated revolving credit facility | Various | Various | $ | $ | |||||||
| Finance lease liabilities (1) | Various | Various | |||||||||
| Short-term debt and current portion of long-term debt | |||||||||||
| Long-term debt: | |||||||||||
| Senior notes: | |||||||||||
| % senior notes, less unamortized discount and debt issuance costs of $() and $(), respectively | 5/13/2020 | 5/15/2050 | |||||||||
| % senior notes, inclusive of unamortized premium, net of unamortized discount and debt issuance costs, of $ and $, respectively | 3/6/2019 | 3/15/2029 | |||||||||
| % senior notes, less unamortized discount and debt issuance costs of $() and $(), respectively | 5/15/2015 | 6/15/2025 | |||||||||
| % senior notes, less unamortized discount and debt issuance costs of $() and $(), respectively | 5/15/2015 | 6/15/2045 | |||||||||
| senior notes, less unamortized discount and debt issuance costs of $() and $(), respectively | 3/3/2023 | 4/1/2033 | |||||||||
| Finance lease liabilities (1) | Various | Various | |||||||||
| Syndicated revolving credit facility debt issuance costs | Various | Various | ( | ) | ( | ) | |||||
| Long-term debt | |||||||||||
| Total debt | $ | $ | |||||||||
_______________
(1) Refer to Note 5. Leases
Senior Notes
As of March 31, 2024 and December 31, 2023, we had senior notes with an aggregate principal amount of $
Credit Facilities
We have a syndicated revolving credit facility ("Syndicated Revolving Credit Facility") with a borrowing capacity of $
We have
We have
On February 14, 2024, our Board approved a cash dividend of $
Share Repurchase Program
In December 2023, we entered into an Accelerated Share Repurchase ("ASR") agreement (the "December 2023 ASR Agreement") to repurchase shares of our common stock for an aggregate purchase price of $
In March 2024, we entered into an additional ASR agreement (the "March 2024 ASR Agreement") to repurchase shares of our common stock for an aggregate purchase price of $
We utilized cash received from operations for these repurchases. As of March 31, 2024, we had $
The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. Through the first quarter of 2024, we recorded total excise tax of $
Treasury Stock
As of March 31, 2024, our treasury stock consisted of
Earnings Per Share
Basic EPS is computed by dividing net income attributable to Verisk by the weighted average number of common shares outstanding during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding, using the treasury stock method, if the dilutive potential common shares, including vested and nonvested stock options, nonvested restricted stock awards, nonvested restricted stock units, nonvested performance share units ("PSU"), and nonvested deferred stock units, had been issued.
The following is a presentation of the numerators and denominators of the basic and diluted EPS computations for the three months ended March 31, 2024 and 2023:
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Numerator used in basic and diluted EPS: | ||||||||
| Income from continuing operations | $ | $ | ||||||
| Less: Net loss (income) attributable to noncontrolling interests | ( | ) | ||||||
| Loss from discontinued operations, net of tax | ( | ) | ||||||
| Net income attributable to Verisk | $ | $ | ||||||
| Denominator: | ||||||||
| Weighted average number of common shares used in basic EPS | ||||||||
| Effect of dilutive shares: | ||||||||
| Potential common shares issuable from stock options and stock awards | ||||||||
| Weighted average number of common shares and dilutive potential common shares used in diluted EPS | ||||||||
The potential shares of common stock that were excluded from diluted EPS were
Accumulated Other Comprehensive Income (Loss)
The following is a summary of accumulated other comprehensive income (loss) as of March 31, 2024 and December 31, 2023:
| 2024 | 2023 | |||||||
| Foreign currency translation adjustment | $ | $ | ||||||
| Pension and postretirement adjustment, net of tax | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | $ | $ | ||||||
The before-tax and after-tax amounts of other comprehensive income (loss) income for the three months ended March 31, 2024 and 2023 are summarized below:
| Before Tax | Tax (Expense) Benefit | After Tax | ||||||||||
| For the Three Months Ended March 31, 2024 | ||||||||||||
| Foreign currency translation adjustment attributable to Verisk | $ | ( | ) | $ | $ | ( | ) | |||||
| Foreign currency translation adjustment attributable to noncontrolling interests | ||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||||||
| Pension and postretirement adjustment before reclassifications | ( | ) | ||||||||||
| Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (1) | ( | ) | ( | ) | ||||||||
| Pension and postretirement adjustment | ( | ) | ||||||||||
| Total other comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| For the Three Months Ended March 31, 2023 | ||||||||||||
| Foreign currency translation adjustment attributable to Verisk | $ | $ | $ | |||||||||
| Foreign currency translation adjustment attributable to noncontrolling interests | ( | ) | ( | ) | ||||||||
| Cumulative translation adjustment recognized upon deconsolidation of the Energy business | ||||||||||||
| Foreign currency translation adjustment | ||||||||||||
| Pension and postretirement adjustment before reclassifications | ||||||||||||