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Regional Management Corp. Announces First Quarter 2021 Results

– Record net income of $25.5 million and diluted earnings per share of $2.31 –

– Core net finance receivables and total revenue each grew 1.7% year-over-year –

– Historically low 30+ day contractual delinquencies of 4.3% as of March 31, 2021 –

– Raises quarterly cash dividend by 25% to $0.25 per common share and announces a new $30 million stock repurchase program –

GREENVILLE, S.C.–(BUSINESS WIRE)–
Regional Management Corp. (NYSE: RM), a diversified consumer finance company, today announced results for the first quarter ended March 31, 2021.

“We had a fantastic start to 2021, as we built off of our strong performance from the prior year to generate record quarterly earnings,” said Robert W. Beck, President and Chief Executive Officer of Regional Management Corp. “Our growth initiatives helped to reduce our typical first quarter seasonal liquidation and the impact of the new stimulus payments, which in turn drove strong revenue performance. At the same time, we maintained a superior credit profile and historically low 30+ day delinquencies, allowing us to release over $10 million of our allowance for credit losses, including more than $6 million of COVID-19 reserves. In addition, we continued to prudently manage our expenses while also investing in our digital initiatives and growth strategies, positioning us well to expand our portfolio through the remainder of 2021 and beyond.”

“We have maintained our momentum going into the second quarter, having recently extended our operations to Illinois and strengthened our balance sheet by expanding our warehouse facility capacity, further enabling us to fund our long-term growth strategy and to return excess capital to shareholders,” added Mr. Beck. “To that end, we are very pleased to announce an increase of our quarterly dividend by 25% to $0.25 per share, the completion of our $30 million stock repurchase program that began in the fourth quarter, and the authorization by our Board of Directors of a new $30 million stock repurchase program. Moving ahead, we are focused on maintaining our strong credit profile and executing on our omni-channel growth strategies, which include investment in geographic expansion, digital innovation, and the development of new products and channels. We continue to be well-positioned to further expand our market share and to deliver additional long-term value to our shareholders.”

First Quarter 2021 Highlights

• Net income for the first quarter of 2021 was $25.5 million and diluted earnings per share was $2.31, compared to net loss of $6.3 million and diluted loss per share of $0.56 in the prior-year period.
• Net finance receivables as of March 31, 2021 were $1.1 billion, an increase of 0.3%, or $3.3 million, from the prior-year period.
  • Total core small and large loan net finance receivables increased $17.8 million, or 1.7%, compared to the prior-year period.
  • Large loan net finance receivables of $719.4 million increased $86.8 million, or 13.7%, from the prior-year period and represented 65.1% of the total loan portfolio. Small loan net finance receivables were $371.2 million, a decrease of 15.7% from the prior-year period.
  • Originated $231.4 million of loans in the first quarter of 2021, an increase of $2.2 million, or 0.9%, from the prior-year period.
• Total revenue for the first quarter of 2021 was $97.7 million, an increase of $1.7 million, or 1.7%, from the prior-year period.
  • Interest and fee income increased $0.3 million, or 0.3%, primarily due to improved credit performance across the portfolio, which resulted in fewer loans in non-accrual status and fewer interest accrual reversals. These benefits were partially offset by the intended product mix shift toward large loans and the portfolio composition shift toward higher credit quality customers with slightly lower interest rates due to enhanced credit standards during the pandemic.
  • Insurance income, net increased $2.0 million, or 34.2%, driven by an increase in premium revenue and a decrease in unemployment insurance expense due to COVID-19 reserves taken in the prior-year period. These benefits were offset by higher life insurance claims.
  • Other income decreased $0.7 million, or 21.1%, driven by lower late fees on low delinquency levels.
• Provision for credit losses for the first quarter of 2021 was $11.4 million, a decrease of $38.2 million, or 77.1%, from the prior-year period. The provision for credit losses for the first quarter of 2021 included releases in the allowance for credit losses of $6.6 million related to the expected economic impact of the COVID-19 pandemic and $3.8 million related to portfolio liquidation.
  • Allowance for credit losses was $139.6 million as of March 31, 2021, including a $23.8 million allowance for credit losses associated with COVID-19. The company’s macroeconomic model assumes an unemployment rate under 10% at the end of 2021.
• Annualized net credit losses as a percentage of average net finance receivables for the first quarter of 2021 were 7.7%, a 280 basis point improvement compared to 10.5% in the prior-year period.
• As of March 31, 2021, 30+ day contractual delinquencies totaled $47.7 million, or 4.3% of net finance receivables, compared to 6.6% in the prior-year period. As of April 30, 2021, 30+ day contractual delinquencies further improved to $41.0 million, or 3.7% of net finance receivables. As of March 31, 2021, approximately 70% of the company’s total portfolio had been originated since April 2020, the vast majority of which was subject to enhanced credit standards deployed following the outset of the pandemic.
• General and administrative expenses for the first quarter of 2021 were $45.8 million, an improvement of $0.4 million, or 0.9%, from the prior-year period, primarily driven by reductions in executive transition costs and operating costs related to COVID-19, partially offset by an increase in personnel expenses, marketing expenses, and investment in digital and technological capabilities to support the company’s growth initiatives.
• The operating expense ratio (annualized general and administrative expenses as a percentage of average net finance receivables) for the first quarter of 2021 was 16.3%, an improvement of 20 basis points compared to the prior-year period.
• As of March 31, 2021, the company had total unused capacity on its revolving credit facilities of $573 million, subject to the borrowing base, and available liquidity of $207 million, including unrestricted cash on hand and immediate availability to draw down cash from its revolving credit facilities.
• In the first quarter of 2021, the company repurchased 352,183 shares of its common stock at a weighted-average price of $33.57 per share under the company’s $30 million stock repurchase program. The company completed the $30 million stock repurchase program in May 2021, having repurchased 951,841 shares of its common stock at a weighted-average price of $31.52 per share.

Second Quarter 2021 Dividend and New Stock Repurchase Program

The company’s Board of Directors has declared a dividend of $0.25 per common share for the second quarter of 2021. The dividend is 25% higher than the prior quarter’s dividend and will be paid on June 15, 2021 to shareholders of record as of the close of business on May 26, 2021.

The declaration and payment of any future dividend is subject to the discretion of the Board of Directors and will depend on a variety of factors, including the company’s financial condition and results of operations.

In addition, the company’s Board of Directors has authorized a new stock repurchase program allowing for the repurchase of up to $30 million of its outstanding common stock. The authorization is effective immediately and will continue through April 29, 2023.

Share repurchases under the stock repurchase program may be made in the open market at prevailing market prices, through privately negotiated transactions, or through other structures in accordance with applicable federal securities laws, at times and in amounts as management deems appropriate. The timing and the amount of any common stock repurchases will be determined by the company’s management based on its evaluation of market conditions, the company’s liquidity needs, legal and contractual requirements and restrictions (including covenants in the company’s credit agreements), share price, and other factors. Repurchases of common stock may be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when the company might otherwise be precluded from doing so under insider trading laws. The repurchase program does not obligate the company to purchase any particular number of shares and may be suspended, modified, or discontinued at any time without prior notice.

Liquidity and Capital Resources

As of March 31, 2021, the company had net finance receivables of $1.1 billion and outstanding long-term debt of $752.2 million ($750.6 million of outstanding debt and $1.6 million of interest payable), consisting of:

• $156.5 million on its $640.0 million senior revolving credit facility,
• $36.4 million on its $125.0 million revolving warehouse credit facility, and
• $559.3 million through its asset-backed securitizations.

The company’s unused capacity on its revolving credit facilities (subject to the borrowing base) was $573 million, or 74.9%, as of March 31, 2021.

The company had a funded debt-to-equity ratio of 2.7 to 1.0 and a stockholders’ equity ratio of 25.8%, each as of March 31, 2021. On a non-GAAP basis, the company had a funded debt-to-tangible equity ratio of 2.7 to 1.0, as of March 31, 2021. Please refer to the reconciliations of non-GAAP measures to comparable GAAP measures included at the end of this press release.

Branch Network

As of March 31, 2021, the company’s branch network consisted of 365 locations, and in April 2021, the company opened its first branch in Illinois. The company continues to expect to open 15 to 20 net new branches during the full year 2021, subject to the economic environment.

Conference Call Information

Regional Management Corp. will host a conference call and webcast today at 5:00 PM ET to discuss these results.

The dial-in number for the conference call is (855) 327-6837 (toll-free) or (631) 891-4304 (direct). Please dial the number 10 minutes prior to the scheduled start time.

*** A supplemental slide presentation will be made available on Regional’s website prior to the earnings call at www.RegionalManagement.com. ***

In addition, a live webcast of the conference call will be available on Regional’s website at www.RegionalManagement.com.

A webcast replay of the call will be available at www.RegionalManagement.com for one year following the call.

About Regional Management Corp.

Regional Management Corp. (NYSE: RM) is a diversified consumer finance company that provides attractive, easy-to-understand installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders. Regional Management operates under the name “Regional Finance” in 366 branch locations across 12 states in the Southeastern, Southwestern, Mid-Atlantic, and Midwestern United States, as of April 2021. Most of its loan products are secured, and each is structured on a fixed rate, fixed term basis with fully amortizing equal monthly installment payments, repayable at any time without penalty. Regional Management sources loans through its multiple channel platform, which includes branches, centrally-managed direct mail campaigns, digital partners, retailers, and its consumer website. For more information, please visit www.RegionalManagement.com.

Forward-Looking Statements

This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact but instead represent Regional Management Corp.’s expectations or beliefs concerning future events. Forward-looking statements include, without limitation, statements concerning future plans, objectives, goals, projections, strategies, events, or performance, and underlying assumptions and other statements related thereto. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “outlook,” and similar expressions may be used to identify these forward-looking statements. Such forward-looking statements speak only as of the date on which they were made and are about matters that are inherently subject to risks and uncertainties, many of which are outside of the control of Regional Management. As a result, actual performance and results may differ materially from those contemplated by these forward-looking statements. Therefore, investors should not place undue reliance on forward-looking statements.

Factors that could cause actual results or performance to differ from the expectations expressed or implied in forward-looking statements include, but are not limited to, the following: risks related to Regional Management’s business, including the COVID-19 pandemic and its impact on Regional Management’s operations and financial condition; managing growth effectively, implementing Regional Management’s growth strategy, and opening new branches as planned; Regional Management’s convenience check strategy; Regional Management’s policies and procedures for underwriting, processing, and servicing loans; Regional Management’s ability to collect on its loan portfolio; Regional Management’s insurance operations; exposure to credit risk and repayment risk, which risks may increase in light of adverse or recessionary economic conditions; the implementation of new underwriting models and processes, including as to the effectiveness of new custom scorecards; changes in the competitive environment in which Regional Management operates or a decrease in the demand for its products; the geographic concentration of Regional Management’s loan portfolio; the failure of third-party service providers, including those providing information technology products; changes in economic conditions in the markets Regional Management serves, including levels of unemployment and bankruptcies; the ability to achieve successful acquisitions and strategic alliances; the ability to make technological improvements as quickly as competitors; security breaches, cyber-attacks, failures in information systems, or fraudulent activity; the ability to originate loans; reliance on information technology resources and providers, including the risk of prolonged system outages; changes in current revenue and expense trends, including trends affecting delinquencies and credit losses; changes in operating and administrative expenses; the departure, transition, or replacement of key personnel; the ability to timely and effectively implement, transition to, and maintain the necessary information technology systems, infrastructure, processes, and controls to support Regional Management’s operations and initiatives; changes in interest rates; existing sources of liquidity may become insufficient or access to these sources may become unexpectedly restricted; exposure to financial risk due to asset-backed securitization transactions; risks related to regulation and legal proceedings, including changes in laws or regulations or in the interpretation or enforcement of laws or regulations; changes in accounting standards, rules, and interpretations and the failure of related assumptions and estimates, including those associated with the implementation of CECL accounting; the impact of changes in tax laws, guidance, and interpretations, including the timing and amount of revenues that may be recognized; risks related to the ownership of Regional Management’s common stock, including volatility in the market price of shares of Regional Management’s common stock; the timing and amount of future cash dividend payments; and anti-takeover provisions in Regional Management’s charter documents and applicable state law. The COVID-19 pandemic may also magnify many of these risks and uncertainties.

The foregoing factors and others are discussed in greater detail in Regional Management’s filings with the Securities and Exchange Commission. Regional Management will not update or revise forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events or the non-occurrence of anticipated events, whether as a result of new information, future developments, or otherwise, except as required by law. Regional Management is not responsible for changes made to this document by wire services or Internet services.

Regional Management Corp. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
(in thousands, except per share amounts)
										Better (Worse)
		1Q 21				1Q 20				$				%
Revenue
Interest and fee income		$	87,279			$	86,997			$	282				0.3	%
Insurance income, net			7,985				5,949				2,036				34.2	%
Other income			2,467				3,128				(661	)			(21.1	)%
Total revenue			97,731				96,074				1,657				1.7	%
Expenses
Provision for credit losses			11,362				49,522				38,160				77.1	%
Personnel			28,851				29,511				660				2.2	%
Occupancy			6,020				5,227				(793	)			(15.2	)%
Marketing			2,710				1,686				(1,024	)			(60.7	)%
Other			8,262				9,819				1,557				15.9	%
Total general and administrative			45,843				46,243				400				0.9	%
Interest expense			7,135				10,159				3,024				29.8	%
Income (loss) before income taxes			33,391				(9,850	)			43,241				439.0	%
Income taxes			7,869				(3,525	)			(11,394	)			(323.2	)%
Net income (loss)		$	25,522			$	(6,325	)		$	31,847				503.5	%
Net income (loss) per common share:
Basic		$	2.42			$	(0.58	)		$	3.00				517.2	%
Diluted		$	2.31			$	(0.56	)		$	2.87				512.5	%
Weighted-average common shares outstanding:
Basic			10,543				10,897				354				3.2	%
Diluted			11,066				11,253				187				1.7	%
Return on average assets (annualized)			9.3	%			(2.3	)%
Return on average equity (annualized)			36.7	%			(9.4	)%

Regional Management Corp. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(in thousands, except par value amounts)
										Increase (Decrease)
		1Q 21				1Q 20				$				%
Assets
Cash		$	7,226			$	14,668			$	(7,442	)			(50.7	)%
Net finance receivables			1,105,603				1,102,285				3,318				0.3	%
Unearned insurance premiums			(34,751	)			(28,183	)			(6,568	)			(23.3	)%
Allowance for credit losses			(139,600	)			(142,400	)			2,800				2.0	%
Net finance receivables, less unearned insurance premiums and allowance for credit losses			931,252				931,702				(450	)			(0.0	)%
Restricted cash			79,012				54,649				24,363				44.6	%
Lease assets			27,652				26,729				923				3.5	%
Deferred tax asset			14,366				20,025				(5,659	)			(28.3	)%
Property and equipment			13,046				15,155				(2,109	)			(13.9	)%
Intangible assets			8,926				9,144				(218	)			(2.4	)%
Other assets			16,815				6,818				9,997				146.6	%
Total assets		$	1,098,295			$	1,078,890			$	19,405				1.8	%
Liabilities and Stockholders’ Equity
Liabilities:
Long-term debt		$	752,200			$	777,847			$	(25,647	)			(3.3	)%
Unamortized debt issuance costs			(8,196	)			(8,581	)			385				4.5	%
Net long-term debt			744,004				769,266				(25,262	)			(3.3	)%
Accounts payable and accrued expenses			40,943				29,459				11,484				39.0	%
Lease liabilities			29,712				28,803				909				3.2	%
Total liabilities			814,659				827,528				(12,869	)			(1.6	)%
Stockholders’ equity:
Preferred stock ($0.10 par value, 100,000 shares authorized, none issued or outstanding)			—				—				—				—
Common stock ($0.10 par value, 1,000,000 shares authorized, 14,063 shares issued and 10,792 shares outstanding at March 31, 2021 and 13,659 shares issued and 11,175 shares outstanding at March 31, 2020)			1,406				1,366				40				2.9	%
Additional paid-in-capital			105,493				103,488				2,005				1.9	%
Retained earnings			250,659				196,582				54,077				27.5	%
Treasury stock (3,271 shares at March 31, 2021 and 2,484 shares at March 31, 2020)			(73,922	)			(50,074	)			(23,848	)			(47.6	)%
Total stockholders’ equity			283,636				251,362				32,274				12.8	%
Total liabilities and stockholders’ equity		$	1,098,295			$	1,078,890			$	19,405				1.8	%

Regional Management Corp. and Subsidiaries
Selected Financial Data
(Unaudited)
(in thousands, except per share amounts)
		Net Finance Receivables by Product
		1Q 21				4Q 20				QoQ $ Inc (Dec)				QoQ % Inc (Dec)				1Q 20				YoY $ Inc (Dec)				YoY % Inc (Dec)
Small loans		$	371,188			$	403,062			$	(31,874	)			(7.9	)%		$	440,282			$	(69,094	)			(15.7	)%
Large loans			719,441				715,210				4,231				0.6	%			632,593				86,848				13.7	%
Total core loans			1,090,629				1,118,272				(27,643	)			(2.5	)%			1,072,875				17,754				1.7	%
Automobile loans			3,033				3,889				(856	)			(22.0	)%			7,532				(4,499	)			(59.7	)%
Retail loans			11,941				14,098				(2,157	)			(15.3	)%			21,878				(9,937	)			(45.4	)%
Total net finance receivables		$	1,105,603			$	1,136,259			$	(30,656	)			(2.7	)%		$	1,102,285			$	3,318				0.3	%
Number of branches at period end			365				365				—				0.0	%			368				(3	)			(0.8	)%
Average net finance receivables per branch		$	3,029			$	3,113			$	(84	)			(2.7	)%		$	2,995			$	34				1.1	%

		Averages and Yields
		1Q 21								4Q 20								1Q 20
		Average Net Finance Receivables				Average Yield (Annualized)				Average Net Finance Receivables				Average Yield (Annualized)				Average Net Finance Receivables				Average Yield (Annualized)
Small loans		$	389,138				37.5	%		$	387,688				38.4	%		$	458,132				36.7	%
Large loans			717,572				27.9	%			683,520				28.5	%			633,510				27.5	%
Automobile loans			3,480				13.0	%			4,360				14.3	%			8,618				13.5	%
Retail loans			13,170				17.8	%			14,908				18.3	%			23,056				17.8	%
Total interest and fee yield		$	1,123,360				31.1	%		$	1,090,476				31.9	%		$	1,123,316				31.0	%
Total revenue yield		$	1,123,360				34.8	%		$	1,090,476				35.7	%		$	1,123,316				34.2	%

		Components of Increase in Interest and Fee Income
		1Q 21 Compared to 1Q 20
		Increase (Decrease)
		Volume				Rate				Volume & Rate				Total
Small loans		$	(6,334	)		$	850			$	(128	)		$	(5,612	)
Large loans			5,788				641				85				6,514
Automobile loans			(173	)			(11	)			6				(178	)
Retail loans			(441	)			(2	)			1				(442	)
Product mix			1,163				(1,199	)			36				—
Total increase in interest and fee income		$	3			$	279			$	–			$	282

		Net Loans Originated (1) (2)
		1Q 21				4Q 20				QoQ $ Inc (Dec)				QoQ % Inc (Dec)				1Q 20				YoY $ Inc (Dec)				YoY % Inc (Dec)
Small loans		$	98,817			$	159,985			$	(61,168	)			(38.2	)%		$	120,024			$	(21,207	)			(17.7	)%
Large loans			130,821				196,867				(66,046	)			(33.5	)%			105,648				25,173				23.8	%
Retail loans			1,780				1,891				(111	)			(5.9	)%			3,573				(1,793	)			(50.2	)%
Total net loans originated		$	231,418			$	358,743			$	(127,325	)			(35.5	)%		$	229,245			$	2,173				0.9	%

(1) Represents the balance of loan origination and refinancing net of unearned finance charges.

(2) The company ceased originating automobile purchase loans in November 2017.

		Other Key Metrics
		1Q 21				4Q 20				1Q 20
Net credit losses		$	21,762			$	18,700			$	29,422
Percentage of average net finance receivables (annualized)			7.7	%			6.9	%			10.5	%
Provision for loan losses (1)		$	11,362			$	24,700			$	49,522
Percentage of average net finance receivables (annualized)			4.0	%			9.1	%			17.6	%
Percentage of total revenue			11.6	%			25.3	%			51.5	%
General and administrative expenses (2) (3)		$	45,843			$	44,794			$	46,243
Percentage of average net finance receivables (annualized)			16.3	%			16.4	%			16.5	%
Percentage of total revenue			46.9	%			46.0	%			48.1	%
Same store results (4):
Net finance receivables at period-end		$	1,100,840			$	1,125,507			$	1,093,701
Net finance receivable growth rate			0.2	%			0.1	%			17.6	%
Number of branches in calculation			356				347				351

(1) Includes COVID-19 pandemic impacts to provision for credit losses of $(6,600), $(1,500), and $23,900 for 1Q 21, 4Q 20, and 1Q 20, respectively.

(2) Includes non-operating executive transition costs of $3,066 for 1Q 20.

(3) Includes non-operating loan management system outage costs of $720 for 1Q 20.

(4) Same store sales reflect the change in year-over-year sales for the comparable branch base. The comparable branch base includes those branches open for at least one year.

		Contractual Delinquency by Aging
		1Q 21								4Q 20								1Q 20
Allowance for credit losses (1)		$	139,600				12.6	%		$	150,000				13.2	%		$	142,400				12.9	%
Current			1,010,859				91.4	%			990,467				87.2	%			931,032				84.4	%
1 to 29 days past due			47,024				4.3	%			85,342				7.5	%			98,896				9.0	%
Delinquent accounts:
30 to 59 days			11,252				1.0	%			18,381				1.6	%			20,907				1.9	%
60 to 89 days			9,808				0.9	%			14,955				1.3	%			16,456				1.5	%
90 to 119 days			8,682				0.8	%			10,496				0.9	%			11,889				1.1	%
120 to 149 days			8,717				0.8	%			9,085				0.8	%			12,059				1.1	%
150 to 179 days			9,261				0.8	%			7,533				0.7	%			11,046				1.0	%
Total contractual delinquency		$	47,720				4.3	%		$	60,450				5.3	%		$	72,357				6.6	%
Total net finance receivables		$	1,105,603				100.0	%		$	1,136,259				100.0	%		$	1,102,285				100.0	%
1 day and over past due		$	94,744				8.6	%		$	145,792				12.8	%		$	171,253				15.6	%

		Contractual Delinquency by Product
		1Q 21								4Q 20								1Q 20
Small loans		$	22,582				6.1	%		$	27,703				6.9	%		$	37,662				8.6	%
Large loans			24,177				3.4	%			31,259				4.4	%			32,201				5.1	%
Automobile loans			227				7.5	%			296				7.6	%			508				6.7	%
Retail loans			734				6.1	%			1,192				8.5	%			1,986				9.1	%
Total contractual delinquency		$	47,720				4.3	%		$	60,450				5.3	%		$	72,357				6.6	%

(1) Includes incremental COVID-19 allowance for credit losses of $23,800, $30,400, and $23,900 in 1Q 21, 4Q 20, and 1Q 20, respectively.

		Income Statement Quarterly Trend
		1Q 20				2Q 20				3Q 20				4Q 20				1Q 21				QoQ $ B(W)				YoY $ B(W)
Revenue
Interest and fee income		$	86,997			$	80,067			$	81,306			$	86,845			$	87,279			$	434			$	282
Insurance income, net			5,949				7,650				6,861				7,889				7,985				96				2,036
Other income			3,128				2,133				2,371				2,710				2,467				(243	)			(661	)
Total revenue			96,074				89,850				90,538				97,444				97,731				287				1,657
Expenses
Provision for credit losses			49,522				27,499				22,089				24,700				11,362				13,338				38,160
Personnel			29,511				26,863				26,207				26,979				28,851				(1,872	)			660
Occupancy			5,227				5,608				5,894				5,900				6,020				(120	)			(793	)
Marketing			1,686				1,438				3,249				3,984				2,710				1,274				(1,024	)
Other			9,819				7,616				8,404				7,931				8,262				(331	)			1,557
Total general and administrative			46,243				41,525				43,754				44,794				45,843				(1,049	)			400
Interest expense			10,159				9,137				9,300				9,256				7,135				2,121				3,024
Income (loss) before income taxes			(9,850	)			11,689				15,395				18,694				33,391				14,697				43,241
Income taxes			(3,525	)			4,219				4,157				4,347				7,869				(3,522	)			(11,394	)
Net income (loss)		$	(6,325	)		$	7,470			$	11,238			$	14,347			$	25,522			$	11,175			$	31,847
Net income (loss) per common share:
Basic		$	(0.58	)		$	0.68			$	1.02			$	1.32			$	2.42			$	1.10			$	3.00
Diluted		$	(0.56	)		$	0.68			$	1.01			$	1.28			$	2.31			$	1.03			$	2.87
Weighted-average shares outstanding:
Basic			10,897				10,962				10,977				10,882				10,543				339				354
Diluted			11,253				11,013				11,092				11,228				11,066				162				187
Net interest margin		$	85,915			$	80,713			$	81,238			$	88,188			$	90,596			$	2,408			$	4,681
Net credit margin		$	36,393			$	53,214			$	59,149			$	63,489			$	79,234			$	15,745			$	42,841

		Balance Sheet Quarterly Trend
		1Q 20				2Q 20				3Q 20				4Q 20				1Q 21				QoQ $ Inc (Dec)				YoY $ Inc (Dec)
Total assets		$	1,078,890			$	1,000,225			$	1,037,559			$	1,103,856			$	1,098,295			$	(5,561	)		$	19,405
Net finance receivables		$	1,102,285			$	1,022,635			$	1,059,554			$	1,136,259			$	1,105,603			$	(30,656	)		$	3,318
Allowance for credit losses		$	142,400			$	142,000			$	144,000			$	150,000			$	139,600			$	(10,400	)		$	(2,800	)
Long-term debt		$	777,847			$	683,865			$	700,139			$	768,909			$	752,200			$	(16,709	)		$	(25,647	)

		Other Key Metrics Quarterly Trend
		1Q 20				2Q 20				3Q 20				4Q 20				1Q 21				QoQ Inc (Dec)				YoY Inc (Dec)
Interest and fee yield (annualized)			31.0	%			30.5	%			31.5	%			31.9	%			31.1	%			(0.8	)%			0.1	%
Efficiency ratio (1)			48.1	%			46.2	%			48.3	%			46.0	%			46.9	%			0.9	%			(1.2	)%
Operating expense ratio (2)			16.5	%			15.8	%			17.0	%			16.4	%			16.3	%			(0.1	)%			(0.2	)%
30+ contractual delinquency			6.6	%			4.8	%			4.7	%			5.3	%			4.3	%			(1.0	)%			(2.3	)%
Net credit loss ratio (3)			10.5	%			10.6	%			7.8	%			6.9	%			7.7	%			0.8	%			(2.8	)%
Book value per share		$	22.49			$	23.11			$	24.03			$	24.89			$	26.28			$	1.39			$	3.79

(1) General and administrative expenses as a percentage of total revenue.

(2) Annualized general and administrative expenses as a percentage of average net finance receivables.

(3) Annualized net credit losses as a percentage of average net finance receivables.

Non-GAAP Financial Measures

In addition to financial measures presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures. The company’s management utilizes non-GAAP measures as additional metrics to aid in, and enhance, its understanding of the company’s financial results. Tangible equity and funded debt-to-tangible equity ratio are non-GAAP measures that adjust GAAP measures to exclude intangible assets. Management uses these equity measures to evaluate and manage the company’s capital and leverage position. The company also believes that these equity measures are commonly used in the financial services industry and provide useful information to users of the company’s financial statements in the evaluation of its capital and leverage position.

This non-GAAP financial information should be considered in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. In addition, the company’s non-GAAP measures may not be comparable to similarly titled non-GAAP measures of other companies. The following tables provide a reconciliation of GAAP measures to non-GAAP measures.

		1Q 21
Long-term debt		$	752,200
Total stockholders’ equity			283,636
Less: Intangible assets			8,926
Tangible equity (non-GAAP)		$	274,710
Funded debt-to-equity ratio			2.7	x
Funded debt-to-tangible equity ratio (non-GAAP)			2.7	x

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210504006197/en/

Investor Relations

Garrett Edson, (203) 682-8331

[email protected]

KEYWORDS: South Carolina United States North America

INDUSTRY KEYWORDS: Professional Services Finance

MEDIA:

Posted on May 4, 2021 4:29 pm

Verisk Reports First-Quarter 2021 Financial Results

• Consolidated revenues were $726.1 million, up 5.3%, and up 3.4% on an organic constant currency (OCC) basis for the first quarter of 2021.

• Net income attributable to Verisk was $168.6 million, down 1.8% for the first quarter of 2021. Adjusted EBITDA, a non-GAAP measure, was $345.5 million, up 8.7%, and up 5.2% on an OCC basis.

• Diluted GAAP earnings per share attributable to Verisk (diluted EPS) were $1.03 for the first quarter of 2021, down 1.0%. Diluted adjusted earnings per share (diluted adjusted EPS), a non-GAAP measure, were $1.23, up 5.1%.

• Net cash provided by operating activities was $448.7 million, up 23.7% for the first quarter of 2021. Free cash flow, a non-GAAP measure, was $389.5 million, up 25.8%.

• We paid a cash dividend of 29 cents per share on March 31, 2021. Our Board of Directors approved a cash dividend of 29 cents per share payable on June 30, 2021.

• We repurchased $100.0 million of our shares during the first quarter of 2021.

JERSEY CITY, N.J., May 04, 2021 (GLOBE NEWSWIRE) — Verisk (Nasdaq:VRSK), a leading global data analytics provider, today announced results for the first quarter ended March 31, 2021.

Scott Stephenson, chairman, president, and CEO, said, “I am very pleased with our start to 2021. Our first quarter results demonstrate solid financial performance and continued operating excellence despite the ongoing challenges from the pandemic. As we mark our 50th anniversary, our mission remains the same as it was at the start – to serve as a trusted partner to our customers by transforming data into insights and operational efficiencies and to solve their most complex problems. We have strong conviction in our long-term growth strategy and our plans to create durable shareholder value.” 

Lee Shavel, CFO and group president, said, “Verisk delivered organic constant currency revenue growth of 3.4% and organic constant currency adjusted EBITDA growth of 5.2% in the first quarter, led by continued strength in our insurance business. We generated solid free cash flow to invest in future growth opportunities while also returning capital to shareholders. We remain focused on maximizing value creation for all our stakeholders.”

Summary of Results (GAAP and Non-GAAP)

(in millions, except per share amounts)
Note: Adjusted EBITDA, diluted adjusted EPS attributable to Verisk, and free cash flow are non-GAAP measures.

		Three Months Ended
		March 31,
		2021				2020				Change
Revenues		$	726.1			$	689.8				5.3	%
Net income attributable to Verisk			168.6				171.7				(1.8	)
Adjusted EBITDA			345.5				318.0				8.7
Diluted GAAP EPS attributable to Verisk			1.03				1.04				(1.0	)
Diluted adjusted EPS			1.23				1.17				5.1
Net cash provided by operating activities			448.7				362.6				23.7
Free cash flow			389.5				309.7				25.8

Revenues


Consolidated revenues increased 5.3%, and 3.4% on an OCC basis, for first-quarter 2021. In late March 2020, we analyzed our solutions and services to assess the impact of COVID-19 on our revenue streams. We did not identify any material impact stemming from COVID-19 on approximately 85% of our revenues as much of these revenues are subscription-based and subject to long-term contracts. These revenues increased 4.9% on an OCC basis in the first quarter of 2021. Of the remaining 15%, we have identified specific solutions and services, largely transactional in nature, that are being negatively impacted by COVID-19. These revenues declined approximately 5.9% on an OCC basis in first-quarter 2021 compared to the prior-year period.

Revenues and Revenue Growth by Segment

(in millions)

										Revenue Growth
		Three Months Ended								Three Months Ended
		March 31,								March 31, 2021
		2021				2020				Reported				OCC
Underwriting & rating		$	377.1			$	350.0				7.7	%			5.3	%
Claims			158.5				145.3				9.0				7.9
Insurance			535.6				495.3				8.1				6.0
Energy and Specialized Markets			156.2				154.2				1.3				(0.6	)
Financial Services			34.3				40.3				(15.0	)			(12.8	)
Revenues		$	726.1			$	689.8				5.3				3.4

Insurance segment revenues grew 8.1% in the first quarter and 6.0% on an OCC basis. 

•

Underwriting and rating revenues increased 7.7% in the quarter and 5.3% on an OCC basis, resulting primarily from annual increases in prices derived from continued enhancements to the content of the solutions within our industry-standard insurance programs, as well as selling expanded solutions to existing customers in commercial and personal lines. In addition, catastrophe modeling services and our international software solutions contributed to the growth. These increases were partially offset by a decrease in certain transactional revenues.

•

Claims revenues grew 9.0% in the quarter and 7.9% on an OCC basis. Growth was primarily driven by our repair cost estimating solutions revenue.

Energy and Specialized Markets segment revenue increased 1.3% in the quarter and declined 0.6% on an OCC basis. Growth in core research and environmental health and safety service revenues was offset by declines in transactional and consulting revenues.

Financial Services segment revenue decreased 15.0% in the quarter and 12.8% on an OCC basis, primarily due to certain contract transitions, projects that did not reoccur and lower levels of consulting spending from our bank customers stemming from the COVID-19 pandemic. 

Net Income and Adjusted EBITDA


During first-quarter 2021, net income attributable to Verisk declined 1.8%. Adjusted EBITDA increased 8.7%, and 5.2% on an OCC basis. 

EBITDA and Adjusted EBITDA by Segment

(in millions)
Note: Consolidated EBITDA and adjusted EBITDA are non-GAAP measures. Margin is calculated as a percentage of revenues. See “Non-GAAP Reconciliations” below for a reconciliation to the nearest GAAP measure. 

		Three Months Ended March 31,
		EBITDA								EBITDA Margin								Adjusted EBITDA								Adjusted EBITDA Growth								Adjusted EBITDA Margin
																										2021				2021
		2021				2020				2021				2020				2021				2020				Reported				OCC				2021				2020
Insurance		$	289.0			$	273.2				54.0	%			55.2	%		$	288.9			$	257.4				12.2	%			8.3	%			53.9	%			52.0	%
Energy and Specialized Markets			53.7				49.4				34.4				32.0				53.7				49.4				8.8				6.6				34.4				32.0
Financial Services			2.9				14.7				8.3				36.4				2.9				11.2				(74.4	)			(73.8	)			8.3				27.6
Consolidated		$	345.6			$	337.3				47.6				48.9			$	345.5			$	318.0				8.7				5.2				47.6				46.1

Earnings Per Share


Diluted EPS attributable to Verisk decreased 1.0% to $1.03 for the first quarter of 2021 primarily due to a higher effective tax rate.

Diluted adjusted EPS increased 5.1% to $1.23 for the first quarter of 2021, reflecting cost discipline in the business, a reduction in travel expenses as a result of COVID-19, and a lower average share count.

Cash Flow


Net cash provided by operating activities was $448.7 million for the first quarter of 2021, up 23.7%. Capital expenditures were $59.2 million for the first quarter, up 11.9%. Free cash flow was $389.5 million, up 25.8%, primarily due to an increase in cash collections from customers and a reduction in travel payments as a result of COVID-19.

Free cash flow represented 112.7% of adjusted EBITDA for the first quarter, compared with 97.4% in the prior-year period.

Dividend


On March 31, 2021, we paid a cash dividend of 29 cents per share of common stock issued and outstanding to the holders of record as of March 15, 2021. 

On April 28, 2021, our Board of Directors approved a cash dividend of 29 cents per share of common stock issued and outstanding, payable on June 30, 2021, to holders of record as of June 15, 2021. 

Share Repurchases


Including the accelerated share repurchase (ASR) settled in the first quarter of 2021, we repurchased approximately 561 thousand shares at an average price of $178.40, for a total cost of $100.0 million for the first quarter of 2021. On March 31, 2021, we had $478.8 million remaining under our share repurchase authorization.
  

Conference Call


Our management team will host a live audio webcast to discuss the financial results and business highlights on Wednesday, May 5, 2021, at 8:30 a.m. EDT (5:30 a.m. PDT, 1:30 p.m. BST). All interested parties are invited to listen to the live event via webcast on our investor website at http://investor.verisk.com. The discussion will also be available through dial-in number 1-877-755-3792 for U.S./Canada participants or 512-961-6560 for international participants.

A replay of the webcast will be available for 30 days on our investor website and through the conference call number 1-855-859-2056 for U.S./Canada participants or 404-537-3406 for international participants using Conference ID #7598329.

About Verisk


We (Nasdaq:VRSK) provide predictive analytics and decision support solutions to customers in the insurance, energy and specialized markets, and financial services industries. More than 70 percent of the FORTUNE 100 uses our advanced technologies to manage risks, make better decisions and improve operating efficiency. Our analytic solutions address insurance underwriting and claims, fraud, regulatory compliance, natural resources, catastrophes, economic forecasting, geopolitical risks, as well as environmental, social, and governance (ESG) matters. Celebrating our 50th anniversary, we continue to make the world better, safer, and stronger, and foster an inclusive and diverse culture where all team members feel they belong. With more than 100 offices in nearly 35 countries, we consistently earn certification by Great Place to Work®. For more, please visit our website at www.verisk.com or follow our social media profiles on LinkedIn, Twitter, Facebook, and YouTube.

Contact:

Investor Relations  
Stacey Brodbar
Head of Investor Relations
Verisk 
201-469-4327 
[email protected]

Media

Alberto Canal
Head of External Communications
201-469-2618
[email protected]

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, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. This includes, but is not limited to, our expectation and ability to pay a cash dividend on our common stock in the future, subject to the determination by our Board of Directors and based on an evaluation of our earnings, financial condition and requirements, business conditions, capital allocation determinations, and other factors, risks, and uncertainties. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “target,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other comparable terminology. You should not place undue reliance on forward-looking statements, because they involve known and unknown risks, uncertainties, and other factors that are, in some cases, beyond our control and that could materially affect actual results, levels of activity, performance, or achievements.

Other factors that could materially affect actual results, levels of activity, performance, or achievements can be found in our quarterly reports on Form 10-Q, annual reports on Form 10-K, and current reports on Form 8-K filed with the Securities and Exchange Commission. If any of these risks or uncertainties materialize or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we projected. Any forward-looking statement in this release reflects our current views with respect to future events and is subject to these and other risks, uncertainties, and assumptions relating to our operations, results of operations, growth strategy, and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise.

Notes Regarding the Use of Non-GAAP Financial Measures


We have provided certain non-GAAP financial information as supplemental information regarding our operating results. These measures are not in accordance with, or an alternative for, U.S. GAAP and may be different from non-GAAP measures reported by other companies. We believe that our presentation of non-GAAP measures provides useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations. In addition, our management uses these measures for reviewing our financial results, for budgeting and planning purposes, and for evaluating the performance of senior management.

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Expenses: EBITDA represents GAAP net income adjusted for (i) depreciation and amortization of fixed assets; (ii) amortization of intangible assets; (iii) interest expense; and (iv) provision for income taxes. Adjusted EBITDA represents EBITDA adjusted for acquisition-related costs (earn-outs), gain/loss from dispositions (which includes businesses held for sale), and nonrecurring gain/loss. Adjusted EBITDA expenses represent adjusted EBITDA net of revenues. We believe these measures are useful and meaningful because they allow for greater transparency regarding our operating performance and facilitate period-to-period comparison.

Adjusted Net Income and Diluted Adjusted EPS: Adjusted net income represents GAAP net income adjusted for (i) amortization of intangible assets, net of tax; (ii) acquisition-related costs (earn-outs), net of tax; (iii) gain/loss from dispositions (which includes businesses held for sale), net of tax; and (iv) nonrecurring gain/loss, net of tax. Diluted adjusted EPS represents adjusted net income divided by weighted-average diluted shares. We believe these measures are useful and meaningful because they allow evaluation of the after-tax profitability of our results excluding the after-tax effect of acquisition-related costs and nonrecurring items.

Free Cash Flow: Free cash flow represents net cash provided by operating activities determined in accordance with GAAP minus payments for capital expenditures. We believe free cash flow is an important measure of the recurring cash generated by our operations that may be available to repay debt obligations, repurchase our stock, invest in future growth through new business development activities, or make acquisitions.

Organic Constant Currency (OCC): Our operating results, such as, but not limited to, revenue and adjusted EBITDA, reported in U.S. dollars are affected by foreign currency exchange rate fluctuations because the underlying foreign currencies in which we transact changes in value over time compared with the U.S. dollar; accordingly, we present certain constant currency financial information to assess how we performed excluding the impact of foreign currency exchange rate fluctuations. We calculate constant currency by translating comparable prior-year-period results at the currency exchange rates used in the current period. We define “organic” as operating results excluding the effect of recent acquisitions and dispositions (which include businesses held for sale) that have occurred over the past year. An acquisition is included as organic at the beginning of the calendar quarter that occurs subsequent to the one-year anniversary of the acquisition date. Once an acquisition is included in its current-period organic base, its comparable prior-year-period operating results are also included to calculate organic growth. A disposition (which includes a business held for sale) is excluded from organic at the beginning of the calendar quarter in which the disposition occurs (or when a business meets the held-for-sale criteria under U.S. GAAP). Once a disposition is excluded from its current-period organic base, its comparable prior-year-period operating results are also excluded to calculate organic growth. The organic presentation enables investors to assess the growth of the business without the impact of recent acquisitions for which there is no prior-year comparison. A disposition’s results are removed from all prior periods presented to allow for comparability. We believe organic constant currency is a useful and meaningful measure to enhance investors’ understanding of the continuing operating performance of our business and to facilitate the comparison of period-to-period performance because it excludes the impact of foreign exchange rate movements, acquisitions, and dispositions.

See page 10 for a reconciliation of consolidated adjusted EBITDA and a segment results summary and a reconciliation of adjusted EBITDA. See page 11 for a reconciliation of segment adjusted EBITDA margin, a reconciliation of adjusted EBITDA expenses, and a reconciliation of diluted adjusted EPS. See page 12 for a reconciliation of net cash provided by operating activities to free cash flow.

Attached Financial Statements


Please refer to the full Form 10-Q filing for the complete financial statements and related notes.

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As of March 31, 2021 and December 31, 2020

		2021				2020
		(in millions, except for share and per share data)
ASSETS:
Current assets:
Cash and cash equivalents		$	390.9			$	218.8
Accounts receivable, net of allowance for doubtful accounts of $19.3 and $17.7, respectively			519.5				432.4
Prepaid expenses			82.9				81.2
Income taxes receivable			—				25.4
Other current assets			48.3				36.4
Total current assets			1,041.6				794.2
Noncurrent assets:
Fixed assets, net			646.6				632.3
Operating lease right-of-use assets, net			264.0				267.6
Intangible assets, net			1,355.7				1,384.8
Goodwill			4,135.6				4,108.1
Deferred income tax assets			9.0				9.1
Other noncurrent assets			358.0				365.7
Total assets		$	7,810.5			$	7,561.8
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable and accrued liabilities			380.2				407.3
Short-term debt and current portion of long-term debt			464.8				514.3
Deferred revenues			723.9				466.7
Operating lease liabilities			37.5				38.7
Income taxes payable			16.5				3.8
Total current liabilities			1,622.9				1,430.8
Noncurrent liabilities:
Long-term debt			2,699.6				2,699.6
Deferred income tax liabilities			399.6				396.9
Operating lease liabilities			269.6				271.6
Other noncurrent liabilities			47.3				64.7
Total liabilities			5,039.0				4,863.6
Commitments and contingencies
Stockholders’ equity:
Common stock, $.001 par value; 2,000,000,000 shares authorized; 544,003,038 shares issued; 162,466,592 and 162,817,526 shares outstanding, respectively			0.1				0.1
Additional paid-in capital			2,515.3				2,490.9
Treasury stock, at cost, 381,536,446 and 381,185,512 shares, respectively			(4,277.0	)			(4,179.3	)
Retained earnings			4,884.1				4,762.2
Accumulated other comprehensive losses			(366.2	)			(375.7	)
Total Verisk stockholders’ equity			2,756.3				2,698.2
Noncontrolling interest			15.2				—
Total stockholders’ equity			2,771.5				2,698.2
Total liabilities and stockholders’ equity		$	7,810.5			$	7,561.8

  

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

For the Three Months Ended March 31, 2021 and 2020

		Three Months Ended March 31,
		2021				2020
		(in millions, except for share and per share data)
Revenues		$	726.1			$	689.8
Operating expenses:
Cost of revenues (exclusive of items shown separately below)			262.4				257.7
Selling, general and administrative			119.8				112.1
Depreciation and amortization of fixed assets			48.5				46.1
Amortization of intangible assets			45.0				41.0
Other operating income			—				(19.4	)
Total operating expenses			475.7				437.5
Operating income			250.4				252.3
Other income (expense):
Investment income (loss) and others, net			1.7				(2.1	)
Interest expense			(35.4	)			(33.5	)
Total other expense, net			(33.7	)			(35.6	)
Income before income taxes			216.7				216.7
Provision for income taxes			(48.7	)			(45.0	)
Net income			168.0				171.7
Less: Net loss attributable to noncontrolling interest			(0.6	)			—
Net income attributable to Verisk		$	168.6			$	171.7
Basic net income per share attributable to Verisk		$	1.04			$	1.05
Diluted net income per share attributable to Verisk		$	1.03			$	1.04
Weighted-average shares outstanding:
Basic			162,641,819				162,894,306
Diluted			164,436,717				165,724,120

  

VERISK ANALYTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Three Months Ended
March 31, 2021
and 2020

		Three Months Ended March 31,
		2021				2020
		(in millions)
Cash flows from operating activities:
Net income		$	168.0			$	171.7
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of fixed assets			48.5				46.1
Amortization of intangible assets			45.0				41.0
Amortization of debt issuance costs and original issue discount, net of original issue premium			0.4				0.3
Provision for doubtful accounts			3.2				1.5
Gain on sale of assets			—				(19.4	)
Stock-based compensation expense			25.4				19.6
Realized loss on available-for-sale securities, net			—				0.5
Deferred income taxes			(0.7	)			(0.1	)
Loss on disposal of fixed assets, net			—				0.3
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable			(89.5	)			(96.5	)
Prepaid expenses and other assets			(4.2	)			(18.5	)
Operating lease right-of-use assets, net			10.4				9.3
Income taxes			38.4				41.0
Accounts payable and accrued liabilities			(25.9	)			(61.8	)
Deferred revenues			256.9				237.6
Operating lease liabilities			(10.1	)			(10.5	)
Other liabilities			(17.1	)			0.5
Net cash provided by operating activities			448.7				362.6
Cash flows from investing activities:
Acquisitions and purchase of controlling interest, net of cash acquired of $3.8 and $0.0, respectively			(13.7	)			—
Proceeds from sale of assets			—				23.1
Investments in nonpublic companies			—				(63.8	)
Capital expenditures			(59.2	)			(52.9	)
Payment of contingent liability related to acquisition			(1.2	)			—
Other investing activities, net			0.4				6.1
Net cash used in investing activities			(73.7	)			(87.5	)

		Three Months Ended March 31,
		2021				2020
		(in millions)
Cash flows from financing activities:
Repayments of short-term debt, net			(50.0	)			(75.0	)
Proceeds from issuance of short-term debt with original maturities greater than three months			—				20.0
Repurchases of common stock			(100.0	)			(173.8	)
Proceeds from stock options exercised			7.6				19.2
Net share settlement of taxes from restricted stock and performance share awards			(7.8	)			—
Dividends paid			(47.1	)			(43.9	)
Other financing activities, net			(1.9	)			(1.9	)
Net cash used in financing activities			(199.2	)			(255.4	)
Effect of exchange rate changes			(3.7	)			(0.2	)
Net increase in cash and cash equivalents			172.1				19.5
Cash and cash equivalents classified within current assets held for sale, beginning of period			—				0.3
Cash and cash equivalents, beginning of period			218.8				184.6
Cash and cash equivalents, end of period		$	390.9			$	204.4
Supplemental disclosures:
Income taxes paid		$	10.8			$	4.1
Interest paid		$	19.5			$	22.6
Noncash investing and financing activities:
Deferred tax liability established on date of acquisition		$	2.2			$	—
Finance lease additions		$	2.0			$	1.5
Operating lease additions, net of terminations		$	6.7			$	1.6
Fixed assets included in accounts payable and accrued liabilities		$	0.9			$	0.7
Dividends included in accrued liabilities and other liabilities		$	0.4			$	1.0
Gain on sale of assets included in other current and long-term assets		$	—			$	3.5
Held for sale assets contributed to a nonpublic company		$	—			$	65.9

  

Non-GAAP Reconciliations

Consolidated Adjusted EBITDA Reconciliation

(in millions)
Note: Adjusted EBITDA is a non-GAAP measure. Margin is calculated as a percentage of consolidated revenues.

		Three Months Ended March 31,
		2021								2020
		Total				Margin				Total				Margin
Net income		$	168.0				23.1	%		$	171.7				24.9	%
Depreciation and amortization of fixed assets			48.5				6.7				46.1				6.7
Amortization of intangible assets			45.0				6.2				41.0				6.0
Interest expense			35.4				4.9				33.5				4.8
Provision for income taxes			48.7				6.7				45.0				6.5
EBITDA			345.6				47.6				337.3				48.9
Acquisition-related costs (earn-outs)			(0.1	)			—				0.1				—
Gain from dispositions			—				—				(19.4	)			(2.8	)
Adjusted EBITDA			345.5				47.6				318.0				46.1
Adjusted EBITDA from acquisitions and dispositions			(3.2	)			(0.5	)			3.1				0.5
Organic adjusted EBITDA		$	342.3				47.1			$	321.1				46.6

Segment Results Summary and Adjusted EBITDA Reconciliation

(in millions)
Note: Organic revenues and adjusted EBITDA are non-GAAP measures.

		Three Months Ended March 31, 2021												Three Months Ended March 31, 2020
		Insurance				Energy and Specialized Markets				Financial Services				Insurance				Energy and Specialized Markets				Financial Services
Revenues		$	535.6			$	156.2			$	34.3			$	495.3			$	154.2			$	40.3
Revenues from acquisitions and dispositions			(12.5	)			—				—				(4.0	)			—				(1.4	)
Organic revenues		$	523.1			$	156.2			$	34.3			$	491.3			$	154.2			$	38.9
EBITDA		$	289.0			$	53.7			$	2.9			$	273.2			$	49.4			$	14.7
Acquisition-related costs (earn-outs)			(0.1	)			—				—				0.1				—				—
Gain from dispositions			—				—				—				(15.9	)			—				(3.5	)
Adjusted EBITDA			288.9				53.7				2.9				257.4				49.4				11.2
Adjusted EBITDA from acquisitions and dispositions			(3.2	)			—				—				3.9				—				(0.8	)
Organic adjusted EBITDA		$	285.7			$	53.7			$	2.9			$	261.3			$	49.4			$	10.4

  

Segment Adjusted EBITDA Margin Reconciliation

Note: Segment adjusted EBITDA margin is calculated as a percentage of respective segment revenues.

		Three Months Ended March 31, 2021												Three Months Ended March 31, 2020
		Insurance				Energy and Specialized Markets				Financial Services				Insurance				Energy and Specialized Markets				Financial Services
EBITDA margin			54.0	%			34.4	%			8.3	%			55.2	%			32.0	%			36.4	%
Acquisition-related costs (earn-outs)			(0.1	)			—				—				—				—				—
Gain from dispositions			—				—				—				(3.2	)			—				(8.8	)
Adjusted EBITDA margin			53.9				34.4				8.3				52.0				32.0				27.6

Consolidated Adjusted EBITDA Expense Reconciliation

(in millions)
Note: Adjusted EBITDA expenses are a non-GAAP measure.

		Three Months Ended
		March 31,
		2021				2020
Operating expenses		$	475.7			$	437.5
Depreciation and amortization of fixed assets			(48.5	)			(46.1	)
Amortization of intangible assets			(45.0	)			(41.0	)
Investment (income) loss and others, net			(1.7	)			2.1
Acquisition-related costs (earn-outs)			0.1				(0.1	)
Gain from dispositions			—				19.4
Adjusted EBITDA expenses		$	380.6			$	371.8

Diluted Adjusted EPS Reconciliation

(in millions, except per share amounts)
Note: Diluted adjusted EPS is a non-GAAP measure.

		Three Months Ended
		March 31,
		2021				2020
Net income		$	168.0			$	171.7
plus: Amortization of intangibles			45.0				41.0
less: Income tax effect on amortization of intangibles			(9.9	)			(9.0	)
plus: Acquisition-related costs and interest expense (earn-outs)			(0.1	)			0.1
less: Gain from dispositions			—				(19.4	)
plus: Income tax effect on gain from dispositions			—				9.6
Adjusted net income		$	203.0			$	194.0
Diluted EPS attributable to Verisk		$	1.03			$	1.04
Diluted adjusted EPS		$	1.23			$	1.17
Weighted-average diluted shares outstanding			164.4				165.7

  

Free Cash Flow Reconciliation

(in millions)
Note: Free cash flow is a non-GAAP measure.

		Three Months Ended
		March 31,
		2021				2020				Change
Net cash provided by operating activities		$	448.7			$	362.6				23.7	%
Capital expenditures			(59.2	)			(52.9	)			11.9
Free cash flow		$	389.5			$	309.7				25.8