# Verisk Analytics, Inc.: Form 10-Q for the period ended Mar 31, 2024

- Company: [Verisk Analytics, Inc.](/companies/vrsk.md) (CIK 1442145)
- Form: 10-Q
- Filed: 2024-05-01
- Accepted by EDGAR: May 1, 2024, 07:18 ET
- Period: 2024-03-31
- Accession: 0001437749-24-014064
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1442145/000143774924014064/vrsk20240331_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1442145/000143774924014064/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $704.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-01-01 to 2024-03-31 | $227.8m | us-gaap:CostOfRevenue |
| Selling, general and administrative | 3 months, 2024-01-01 to 2024-03-31 | $92.9m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | $307.4m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-01-01 to 2024-03-31 | $28.9m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | $55.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | $219.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | $1.52 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | $1.53 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 143,973,534 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | $372.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-01-01 to 2024-03-31 | $55.2m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2024-01-01 to 2024-03-31 | $55.8m | us-gaap:PaymentsOfDividends |
| Share repurchases | 3 months, 2024-01-01 to 2024-03-31 | $170.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-03-31 | $352.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $1.02bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $4.50bn | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $929.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $4.21bn | us-gaap:Liabilities |
| Current portion of debt | at 2024-03-31 | $16.4m | us-gaap:DebtCurrent |
| Shareholders' equity | at 2024-03-31 | $282.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 32,177 characters.

*The following discussion should be read in conjunction with our historical financial statements and the related notes included in our annual report on Form 10-K ("2023 10-K") dated and filed with the Securities and Exchange Commission on February 21, 2024. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in or implied by any of the forward-looking statements as a result of various factors, including but not limited to those listed under "Risk Factors" and "Special Note Regarding Forward Looking Statements" in our 2023 Form 10-K and those listed under Item 1A in Part II of this quarterly report on Form 10-Q.*

We are a leading data analytics provider serving clients in the insurance markets. Using advanced technologies to collect and analyze billions of records, we draw on unique data assets and deep domain expertise to provide innovations that may be integrated into client workflows. We offer predictive analytics and decision support solutions to clients in rating, underwriting, claims, catastrophe and weather risk, global risk analytics, and many other fields. In the U.S., and around the world, we help clients protect people, property, and financial assets.

Our clients use our solutions to make better decisions about risk and opportunities with greater efficiency and discipline. We refer to these products and services as “solutions” due to the integration among our services and the flexibility that enables our clients to purchase components or the comprehensive package. These solutions take various forms, including data, statistical models, or tailored analytics, all designed to allow our clients to make more logical decisions. We believe our solutions for analyzing risk positively impact our clients’ revenues and help them better manage their costs.

On February 1, 2023, we completed the sale of our Energy business. The Energy business was classified as discontinued operations per the guidance in ASC 205-20 in the fourth quarter of 2022, as we determined 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 and assets and liabilities held for sale for all periods presented. See Note 7. Dispositions and Discontinued Operations for further discussion.

### Executive Summary

### Key Performance Metrics

*Revenue growth*. We use year-over-year revenue growth as a key performance metric. We assess revenue growth based on our ability to generate increased revenue through increased sales to existing customers, sales to new customers, sales of new or expanded solutions to existing and new customers, and strategic acquisitions of new businesses.

We use year-over-year EBITDA growth as metrics to measure our performance. EBITDA and EBITDA margin are non-GAAP financial measures. EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization of fixed and intangible assets. We calculate EBITDA margin as EBITDA divided by revenues. The respective nearest applicable GAAP financial measures are net income and net income margin. Although EBITDA is a non-GAAP financial measure, EBITDA is frequently used by securities analysts, lenders, and others in their evaluation of companies; EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for an analysis of our operating income, net income, or cash flow from operating activities reported under GAAP. Management uses EBITDA and EBITDA margin in conjunction with traditional GAAP operating performance measures as part of its overall assessment company performance. We believe these measures are useful and meaningful because they help us allocate resources, make business decisions, allow for greater transparency regarding our operating performance, and facilitate period-to-period comparisons. Some of these limitations involved in the use of EBITDA are:

- EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments.
- EBITDA does not reflect changes in, or cash requirements for, our working capital needs.
- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future and EBITDA does not reflect any cash requirements for such replacements.
- Other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

*EBITDA growth*. We use EBITDA growth as a measure of our ability to balance the size of revenue growth with cost management and investing for future growth. EBITDA growth allows for greater transparency regarding our operating performance and facilitate period-to-period comparison.

*EBITDA margin.* We use EBITDA margin as a performance measure to assess segment performance and scalability of our business. We assess EBITDA margin based on our ability to increase revenues while controlling expense growth.

### Revenues

We earn revenues through agreements for hosted subscriptions, advisory/consulting services, and for transactional solutions, recurring and non-recurring. Subscriptions for our solutions are generally paid in advance of rendering services either quarterly or in full upon commencement of the subscription period, which is usually for one year and automatically renewed each year. As a result, the timing of our cash flows generally precedes our recognition of revenues and income and our cash flow from operations tends to be higher in the first quarter as we receive subscription payments. Examples of these arrangements include subscriptions that allow our customers to access our standardized coverage language, our claims fraud database, or our actuarial services throughout the subscription period. In general, we experience minimal revenue seasonality within the business. For the three months ended March 31, 2024 and 2023, approximately 80% of our insurance revenues were derived from hosted subscriptions through agreements (generally one to five years) for our solutions.

We also provide advisory/consulting services, which help our customers get more value out of our analytics and their subscriptions. In addition, certain of our solutions are paid for by our customers on a transactional basis, recurring and non-recurring. For example, we have solutions that allow our customers to access property-specific rating and underwriting information to price a policy on a commercial building, or compare a P&C insurance or a workers' compensation claim with information in our databases, or use our repair cost estimation solutions on a case-by-case basis. For the three months ended March 31, 2024 and 2023, approximately 20% of our insurance revenues were derived from providing transactional and advisory/consulting solutions.

### Operating Costs and Expenses

Personnel expenses are the major component of both our cost of revenues and selling, general and administrative expenses. Personnel expenses, which represented approximately 58% and 62% of our total operating expenses (excluding gains/losses related to dispositions) for the three months ended March 31, 2024 and 2023, respectively, include salaries, benefits, incentive compensation, equity compensation costs, sales commissions, employment taxes, recruiting costs, and outsourced temporary agency costs.

We assign personnel expenses between two categories, cost of revenues and selling, general and administrative expense, based on the actual costs associated with each employee. We categorize employees who maintain our solutions as cost of revenues, and all other personnel, including executive managers, salespeople, marketing, business development, finance, legal, human resources, and administrative services, as selling, general and administrative expenses. A significant portion of our other operating costs, such as facilities and communications, is also either captured within cost of revenues or selling, general and administrative expenses based on the nature of the work being performed.

While we expect to grow our headcount over time to take advantage of our market opportunities, we believe that the economies of scale in our operating model will allow us to grow our personnel expenses at a lower rate than revenues. Historically, our EBITDA margin has improved because we have been able to increase revenues without a proportionate corresponding increase in expenses. However, part of our corporate strategy is to invest in new solutions and new businesses, which may offset margin expansion.

*Cost of Revenues.* Our cost of revenues consists primarily of personnel expenses. Cost of revenues also includes the expenses associated with the acquisition, disposition and verification of data, the maintenance of our existing solutions, and the development and enhancement of our next-generation solutions. Our cost of revenues excludes depreciation and amortization.

*Selling, General and Administrative Expenses.* Our selling, general and administrative expenses consist primarily of personnel costs. A portion of the other costs such as facilities, insurance, and communications are also allocated to selling, general and administrative expenses based on the nature of the work being performed by the employee. Our selling, general and administrative expenses exclude depreciation and amortization.

### Condensed Consolidated Results of Operations

*(in millions, except for share and per share data)*

| Statement of income data: Revenues: | Three Months Ended March 31, 2024 | 2023 | Percentage Change |
| --- | ---: | ---: | ---: |
| Revenues | $704.0 | $651.6 | 8.0% |
| Operating expenses: |  |  |  |
| Cost of revenues (exclusive of items shown separately below) | 227.8 | 216.2 | 5.4% |
| Selling, general and administrative | 92.9 | 79.0 | 17.6% |
| Depreciation and amortization of fixed assets | 57.4 | 44.6 | 28.7% |
| Amortization of intangible assets | 18.5 | 17.7 | 4.5% |
| Total operating expenses, net | 396.6 | 357.5 | 10.9% |
| Operating income | 307.4 | 294.1 | 4.5% |
| Other expense: |  |  |  |
| Investment loss | (3.3) | (1.1) | 200.0% |
| Interest expense, net | (28.9) | (26.4) | 9.5% |
| Total other expense, net | (32.2) | (27.5) | 17.1% |
| Income from continuing operations before income taxes | 275.2 | 266.6 | 3.2% |
| Provision for income taxes | (55.8) | (72.2) | (22.7)% |
| Income from continuing operations | 219.4 | 194.4 | 12.9% |
| Loss from discontinued operations net of tax expense of $0.0 and $1.1, respectively (Note 7) | — | (138.0) | (100.0)% |
| Net income | 219.4 | 56.4 | 289.0% |
| Less: Net loss (income) attributable to noncontrolling interests | 0.2 | (0.1) | (300.0)% |
| Net income attributable to Verisk | $219.6 | $56.3 | 290.1% |
| **Basic net income per share attributable to Verisk:** |  |  |  |
| Income from continuing operations | $1.53 | $1.28 | 19.5% |
| Loss from discontinued operations | — | (0.91) | (100.0)% |
| Basic net income per share attributable to Verisk: | $1.53 | $0.37 | 313.5% |
| **Diluted net income per share attributable to Verisk:** |  |  |  |
| Income from continuing operations | $1.52 | $1.27 | 19.7% |
| Loss income from discontinued operations | - | (0.90) | (100.0)% |
| Diluted net income per share attributable to Verisk: | $1.52 | $0.37 | 310.8% |
| Cash dividends declared per share (1): | $0.39 | $0.34 | 14.7% |
| Weighted average shares outstanding: |  |  |  |
| Basic | 143,298,163 | 152,032,255 | (5.7)% |
| Diluted | 143,973,534 | 152,709,319 | (5.7)% |
| **The financial operating data below sets forth the information we believe is useful for investors in evaluating our overall financial performance:** |  |  |  |
| **Other data:** |  |  |  |
| EBITDA(2) | $380.0 | $355.3 | 7.0% |
| **The following is a reconciliation of net income to EBITDA:** |  |  |  |
| Net income | $219.4 | $56.4 | 289.0% |
| Loss from discontinued operations net of tax expense of $0.0 and $1.1, respectively (Note 7) | — | (138.0) | (100.0)% |
| Income from continuing operations | 219.4 | 194.4 | 12.9% |
| Depreciation and amortization of fixed assets and intangible assets | 75.9 | 62.3 | 21.8% |
| Interest expense | 28.9 | 26.4 | 9.5% |
| Provision for income taxes | 55.8 | 72.2 | (22.7)% |
| EBITDA | $380.0 | $355.3 | 7.0% |

31

(1) Cash dividends declared per share is calculated by the aggregate cash dividends declared in a fiscal quarter divided by the shares issued and outstanding. See Note 11. of our condensed consolidated financial statements included in this interim report on Form 10-Q.

(2) EBITDA is a financial measure that management uses to evaluate the performance of our segments. "EBITDA" is defined as net income before interest expense, provision for income taxes, and depreciation and amortization of fixed and intangible assets. See Note 14. of our condensed consolidated financial statements included in this quarterly report on Form 10-Q. Although EBITDA is a non-GAAP financial measure, EBITDA is frequently used by securities analysts, lenders, and others in their evaluation of companies. EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for an analysis of our operating income, net income, or cash flows from operating activities reported under GAAP. Management uses EBITDA in conjunction with GAAP operating performance measures as part of its overall assessment of company performance. Some of these limitations are:

- EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;
- EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
- Although depreciation and amortization are noncash charges, the assets being depreciated and amortized often will have to be replaced in the future and EBITDA does not reflect any cash requirements for such replacements; and
- Other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

### Consolidated Results of Continuing Operations

### Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

#### Revenues

Revenues for our Insurance segment were $704.0 million for the three months ended March 31, 2024 , compared to $651.6 million for the three months ended March 31, 2023 , a n increase o f $52.4 million or 8.0% . Our underwriting revenue increased $37.9 million or 8.2% . Our claims revenue increased $14.5 million or 7.6% .

Our revenue by category for the periods presented is set forth below:

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 | Percentage change | Percentage change excluding recent acquisitions |
| --- | ---: | ---: | ---: | ---: |
| Underwriting | $498.4 | $460.5 | 8.2% | 8.1% |
| Claims | 205.6 | 191.1 | 7.6% | 4.9% |
| Total Insurance | $704.0 | $651.6 | 8.0% | 7.2% |

Our recent acquisitions (Morning Data within the underwriting category of our Insurance segment; Mavera, Krug and Rocket within the claims category of the Insurance segment) contributed net revenues of $5.8 million, while the remaining Insurance revenues increased$46.6 million or 7.2%. Our underwriting revenue increased $37.3 million or 8.1%, primarily due to an annual increase in prices derived from continued enhancements to the models and content of the solutions within our forms, rules and loss cost services, as well as selling expanded solutions to new and existing customers within underwriting data solutions and extreme event solutions. In addition, life insurance and specialty business solutions contributed to the growth, and were partially offset by continued weakness within our Verisk Marketing Solutions. Our claims revenue increased $9.3 million or 4.9%, primarily due to solid growth in anti-fraud solutions and international revenues, partially offset by lower transactional activity in property estimating solutions and casualty solutions.

#### Cost of Revenues

Cost of revenues was $227.8 million for the three months ended March 31, 2024 compared to $216.2 million for the three months ended March 31, 2023, an increase of $11.6 million or 5.4%. Our recent acquisitions accounted for an increase of $5.0 million in cost of revenues. The remaining increase related to Insurance of $6.6 million or 3.1% was primarily due to increase in salaries and employee benefits of $4.9 million, professional consulting fees of $2.0 million, bad debt expense of $1.3 million, and information technology expenses of $0.7 million, partially offset by a reduction in travel expenses of $1.0 million, data costs of $0.5 million, and other operating costs of $0.8 million.

#### Selling, General and Administrative Expenses

Selling, general and administrative expenses were $92.9 million for the three months ended March 31, 2024 compared to $79.0 million for the three months ended March 31, 2023, an increase of $13.9 million or 17.6%. Our recent acquisitions, inclusive of our acquisition-related costs (earn-outs) accounted for an increase of $14.5 million in selling, general, and administrative expenses. This increase was primarily due to our earn-out credit of $15.0 million in the prior year and $0.0 in the current period. The remaining decrease of $0.6 million or 0.6% was primarily due to decreases in professional fees of $1.8 million, and other operating costs of $1.4 million, partially offset by increases in salaries and employee benefits of $2.4 million, and travel expenses of $0.2 million.

#### Depreciation and Amortization of Fixed Assets

Depreciation and amortization of fixed assets were $57.4 million for the three months ended March 31, 2024 compared to $44.6 millionfor the three months ended March 31, 2023, an increase of $12.8 million or 28.7%. The increase was primarily driven by assets being placed into service to support revenue growth and data capacity expansion. The increase in assets placed into service primarily resulted from the timing of certain large internally developed software projects that were completed and placed into service during 2023.

#### Amortization of Intangible Assets

Amortization of intangible assets was $18.5 million for the three months ended March 31, 2024 compared to $17.7 million for the three months ended March 31, 2023, an increase of $0.8 million or 4.5%. The increase was primarily due to the amortization of intangible assets related to our recent acquisitions.

#### Investment Loss

Investment loss was $3.3 million for the three months ended March 31, 2024 compared to a loss of $1.1 million for the three months ended March 31, 2023, an increase of $2.2 million. The increase was primarily due to impact of foreign currencies.

#### Interest Expense, net

Interest expense, net was $28.9 million for the three months ended March 31, 2024 compared to $26.4 million for the three months ended March 31, 2023, an increase of $2.5 million or 9.5%. The increase in net interest expense was primarily due to lower interest income for the three months ended March 31, 2024.

#### Provision for Income Taxes

The provision for income taxes was $55.8 million for the three months ended March 31, 2024, compared to $72.2 million for the three months ended March 31, 2023, a decrease of $16.4 million or 22.7%. The effective tax rate was 20.3% for the three months ended March 31, 2024 compared to 27.1% for the three months ended March 31, 2023. The effective tax rate for the three months ended March 31, 2024 was lower than the effective tax rate for the three months ended March 31, 2023 primarily due to tax charges incurred in structuring the sale of our Energy business in the prior year. The difference between statutory tax rates and our effective tax rate is primarily due to state and local taxes, partially offset by tax benefits attributable to equity compensation.

#### Net Income Margin

The net income margin from continuing operations was 31.2% for the three months ended March 31, 2024 compared to 8.7% for the three months ended March 31, 2023. The net income margin for March 31, 2023 included a loss from discontinued operations of $138.0 million, which negatively impacted our net income margin by 21.1%. Excluding discontinued operations, the increase in net income margin was primarily driven by revenue growth and cost discipline as well as a decrease in our effective tax rate discussed above.

#### EBITDA Margin \[1\]

EBITDA was $380.0 million for the three months ended March 31, 2024 compared to $355.3 million for the three months ended March 31, 2023. The EBITDA margin for our consolidated results was 54.0% for the three months ended March 31, 2024 compared to 54.5% for the three months ended March 31, 2023.

*\[1\] Note: Consolidated EBITDA margin, a non-GAAP measure, is calculated as a percentage of consolidated revenue. A reconciliation from net income to EBITDA is presented in the table below.*

|  | Three Months Ended March 31, 2024 Total | 2023 Total |
| --- | ---: | ---: |
| Net income | $219.4 | $56.4 |
| Less: Loss from discontinued operations | — | 138.0 |
| Income from continuing operations | 219.4 | 194.4 |
| Depreciation and amortization of fixed assets | 57.4 | 44.6 |
| Amortization of intangible assets | 18.5 | 17.7 |
| Interest expense | 28.9 | 26.4 |
| Provision for income taxes | 55.8 | 72.2 |
| EBITDA | $380.0 | $355.3 |
| Revenue | $704.0 | $651.6 |
| EBITDA Margin | 54.0% | 54.5% |

### Energy and Specialized Markets

The Energy business within the "Energy and Specialized Markets" segment was classified as discontinued operations per the guidance in ASC 205-20. 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. On February 1, 2023, we completed the sale of our Energy business.

As a result of these sale transactions, we have excluded the Energy and Specialized Markets from our management's discussion and analysis of the results of operations by segment.

### Liquidity and Capital Resources

As of March 31, 2024 and December 31, 2023, we had cash and cash equivalents and available-for-sale securities totaling $353.5 million and $303.9 million, respectively. We maintain our cash and cash equivalents in higher credit quality financial institutions in order to limit the amount of credit exposure. As of March 31, 2024 and December 31, 2023, a vast majority of our domestic cash and cash equivalents is with TD Bank, N.A., and JPMorgan Chase N.A. Subscriptions for our solutions are billed and generally paid in advance of rendering services either quarterly or in full upon commencement of the subscription period, which is usually for one year. Subscriptions are automatically renewed at the beginning of each calendar year. We have historically generated significant cash flows from operations. As a result of this factor, as well as the availability of funds under our Credit Facility, we expect that we will have sufficient cash to meet our working capital and capital expenditure needs and to fuel our future growth plans.

We have historically managed the business with a working capital deficit due to the fact that, as described above, we offer our solutions and services primarily through annual subscriptions or long-term contracts, which are generally prepaid quarterly or annually in advance of the services being rendered. When cash is received for prepayment of invoices, we record an asset (cash and cash equivalents) on our balance sheet with the offset recorded as a current liability (deferred revenues). This current liability is deferred revenue that does not require a direct cash outflow since our customers have prepaid and are obligated to purchase the services. In most businesses, growth in revenue typically leads to an increase in the accounts receivable balance causing a use of cash as a company grows. Unlike these businesses, our cash position is favorably affected by revenue growth, which results in a source of cash due to our customers prepaying for most of our services.

We have also historically used a portion of our cash for repurchases of our common stock from our stockholders. During the three months ended March 31, 2024 and 2023, we repurchased $200.0 million (inclusive of $30.0 million in treasury stock not yet settled) and $2,500.0 million (inclusive of $500.0 million in treasury stock not yet settled), respectively, of our common stock. The repurchase of our common stock in the first quarter of 2024 was funded using cash from operations. For the three months ended March 31, 2024 and 2023, we also paid dividends of $55.8 million and $49.2 million, respectively.

### Financing and Financing Capacity

We had total debt, excluding finance lease liabilities, unamortized discounts and premium, and debt issuance costs of $2,850.0 million at March 31, 2024 and December 31, 2023, and we were in compliance with our financial and other covenants. The debt at March 31, 2024 primarily consists of senior notes issued in 2023, 2020, 2019, and 2015. Interest on the senior notes is payable semi-annually each year. The unamortized discount and debt issuance costs were recorded as "Long-term debt" in the accompanying consolidated balance sheets, and will be amortized to "Interest expense" in the accompanying consolidated statements of operations within this Form 10-Q over the life of the respective senior note. The indenture governing the senior notes restricts our ability to, among other things, create certain liens, enter into sale/leaseback transactions, and consolidate with, sell, lease, convey, or otherwise transfer all or substantially all of our assets, or merge with or into, any other person or entity. We have made, and may from time to time in the future make, optional repayments on our debt obligations, which may include repurchases or exchanges of our outstanding notes, depending on various factors, such as market conditions. Any such repurchases may be effected through privately negotiated transactions, market transactions, tender offers, redemptions or otherwise. See Note 10. for additional information on our financing activities.

We have a $1,000 million Syndicated Revolving Credit Facility with Bank of America N.A., HSBC Bank USA, N.A., JP Morgan Chase Bank, N.A., Wells Fargo Bank, National Association, Citibank, N.A., Morgan Stanley Bank, N.A., TD Bank, N.A., Goldman Sachs Bank USA, and the Northern Trust Company with a maturity date of April 5, 2028. Borrowing under the facility is payable at an interest rate of SOFR plus 100.0 to 162.5 basis points, depending on the public debt rating. The financial covenants require that, at the end of any fiscal quarter, we have a consolidated funded debt leverage ratio of less than 3.75 to 1.0. At our election, the maximum consolidated funded debt leverage ratio could be permitted to increase to 4.50 to 1.0 (no more than once) and to 4.25 to 1.0 (no more than once) in connection with the closing of a permitted acquisition. The Syndicated Credit Facility may be used for general corporate purposes, including working capital needs and capital expenditures, acquisitions, dividend payments, and the Repurchase Program. As of March 31, 2023, we were in compliance with all financial and other debt covenants under the Syndicated Credit Facility. As of March 31, 2024 and December 31, 2023, the available capacity under the Syndicated Revolving Credit Facility was $995.4 million, which takes into account outstanding letters of credit of $4.6 million.

### Cash Flow

The following table summarizes our cash flow data:

*(in millions)*

|  | Three Months Ended March 31, 2024 | 2023 | Percentage change |
| --- | ---: | ---: | ---: |
| Net cash provided by operating activities | $372.2 | $365.3 | 1.9% |
| Net cash (used in) provided by investing activities | $(79.9) | $2,967.1 | (102.7)% |
| Net cash used in financing activities | $(242.5) | $(3,405.0) | 92.9% |

#### Operating Activities

Net cash provided by operating activities was$372.2 million for the three months ended March 31, 2024, compared to $365.3 for the three months ended March 31, 2023, an increase of $6.9 million or 1.9%. The increase in operating cash flow was due to an increase in operating profit, partially offset by a $37.0 million payment to settle the inquiry by the DOJ.

#### Investing Activities

Net cash used in investing activities of $79.9 million for the three months ended March 31, 2024 was primarily related to capital expenditures of $55.2 million, acquisitions and a purchase of an additional controlling interest of $25.9 million, and investments in nonpublic companies of $1.3 million. Net cash provided by investing activities of $2,967.1 million for the three months ended March 31, 2023was primarily related to proceeds from the sale of our Energy business of $3,066.4 million, partially offset by capital expenditures of $61.2 million,acquisitions and a purchase of an additional controlling interest of $37.2 million, and investments in nonpublic companies of $0.8 million.

#### Financing Activities

Net cash used in financing activities of $242.5 million for the three months ended March 31, 2024 was primarily driven by the funding of a $200.0 million accelerated share repurchase program, and dividends paid of $55.8 million, partially offset by proceeds from stock options exercised of $28.2 million. Net cash used in financing activities of $3,405.0 million for the three months ended March 31, 2023 was primarily driven by the funding of a $2,500.0 million accelerated share repurchase program, repayments of debt under our revolving credit and bilateral credit facilities of $1,390.0 million, and dividend payments of $49.2 million, partially offset by the proceeds from the issuance of our 2033 Senior Notes of $495.2 million, and proceeds from stock options exercised of $58.4 million.

### Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

### Contractual Obligations

There have been no material changes to our contractual obligations outside the ordinary course of our business from those reported in our annual report on Form 10-K and filed with the Securities and Exchange Commission on February 21, 2024.

### Critical Accounting Estimates

Our management’s discussion and analysis of financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements require management to make estimates and judgments that affect reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the dates of the financial statements and revenue and expenses during the reporting periods. These estimates are based on historical experience and on other assumptions that are believed to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates, including those related to acquisition purchase price allocations, revenue recognition, goodwill and intangible assets, pension and other postretirement benefits, stock-based compensation, income taxes, and allowance for doubtful accounts. Actual results may differ from these assumptions or conditions. Some of the judgments that management makes in applying its accounting estimates in these areas are discussed under the heading "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our annual report on Form 10-K dated and filed with the Securities and Exchange Commission on February 21, 2024. Since the date of our annual report on Form 10-K, there have been no material changes to our critical accounting policies and estimates other than the items noted below.

## Market risk

As filed, 209 characters.

Market risks at March 31, 2024 have not materially changed from those discussed under Item 7A in our annual report on Form 10-K dated and filed with the Securities and Exchange Commission on February 21, 2024.

## Controls and procedures

As filed, 1,712 characters.

### Disclosure Controls and Procedures

We are required to maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives at the reasonable assurance level.

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterly report on Form 10-Q. Based upon the foregoing assessments, our Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2024, our disclosure controls and procedures were effective at the reasonable assurance level.

### Changes in Internal Control over Financial Reporting

During the three months ended March 31, 2024, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 342 characters.

There has been no material change in the information provided under the heading “Risk Factors” in our annual report on Form 10-K dated and filed with the Securities and Exchange Commission on February 21, 2024, as supplemented by the information provided under the heading "Risk Factors" in our Form 10-Q for the quarter ended March 31, 2024.

Filed May 1, 2024.
Source: SEC EDGAR, the filing index for accession 0001437749-24-014064. Last ingested by Listed: Nov 2, 2026, 19:01 ET. No prices; not investment advice.