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Note 11- Stockholders' Equity
 9 Months Ended
Sep. 30, 2023
Notes to Financial Statements  
Equity [Text Block]

11. Stockholders’ Equity:

 

We have 2,000,000,000 shares of authorized common stock as of  September 30, 2023 and December 31, 2022. Our common shares have rights to any dividend declared by the board of directors (the "Board"), subject to any preferential or other rights of any outstanding preferred stock, and voting rights to elect all current members of the Board. At September 30, 2023 and December 31, 2022, the adjusted closing price of our common stock was $236.24 and $176.42 per share, respectively. 

 

We have 80,000,000 shares of authorized preferred stock, par value $0.001 per share. The preferred shares have preferential rights over the common shares with respect to dividends and net distribution upon liquidation. We did not issue any preferred shares as of September 30, 2023 and December 31, 2022. 

 

On February 14, 2023,  April 25, 2023, and July 26, 2023, our Board approved a cash dividend of $0.34 and per share of common stock issued and outstanding to the holders of record as of March 15, 2023, June 15, 2023, and September 15, 2023, respectively. Cash dividends of $147.9 million and $147.2 million were paid during the nine months ended September 30, 2023 and 2022, respectively, and recorded as a reduction to retained earnings.

 

Share Repurchase Program

 

In  December 2022 and  March 2023, we entered into Accelerated Share Repurchase ("ASR") agreements (the "December 2022 ASR Agreement" and "March 2023 ASR Agreement," respectively) to repurchase shares of our common stock for an aggregate purchase price of $250.0 million and $2.5 billion, respectively, with Bank of America USA, N.A., with respect to the December 2022 ASR agreement and Citibank, N.A., and Goldman Sachs & Co. LLC with respect to the March 2023 ASR agreements. Each ASR agreement is accounted for as a treasury stock transaction and forward stock purchase agreement indexed to our common stock. The forward stock purchase agreement is classified as an equity instrument under ASC 815-40, Contracts in Entity's Own Equity ("ASC 815-40") and deemed to have a fair value of zero at the respective effective date. Upon payment of the aggregate purchase price on  December 14, 2022 and  March 7, 2023, we received an aggregate delivery of 1,168,224 and 10,655,301 shares of our common stock, respectively. Upon the final settlement of the December 2022 ASR agreement in February 2023, we received an additional 247,487 shares as determined based on the volume weighted average share price of our common stock of $176.68 during the term of the ASR agreement, minus an agreed upon discount. We expect the March 2023 ASR agreements to settle in the fourth quarter of 2023, at which point we may be entitled to receive additional shares of our common stock or, under certain limited circumstances, be required to deliver shares to the counterparties. The aggregate purchase price was recorded as a reduction to stockholders' equity in our condensed consolidated statements of changes in stockholders' equity for the nine months ended September 30, 2023. These repurchases for the nine months ended September 30, 2023 resulted in a reduction of outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share ("EPS").

 

In the third quarter, we also repurchased an additional 208,422 shares of common stock at an average price of $239.20 per share.

 

During the nine months ended September 30, 2023, we repurchased 11,111,210 shares of common stock with an aggregate value of $2,106.6 million as part of the Repurchase Program, inclusive of the ASR transactions, at a weighted average price of $189.59 per share. We utilized cash received from the sale of our Energy business. As of September 30, 2023, we had $891.5 million available to repurchase shares through our Repurchase Program, inclusive of the $3.0 billion authorization, which became effective as of the closing of the sale of our Energy business on February 1, 2023.

 

The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. Through the third quarter of 2023, we recorded total excise tax of $18.3 million, which has been included within treasury stock, as part of the cost basis of the stock repurchased, and other current liabilities in our condensed consolidated balance sheet as of September 30, 2023.

 

Treasury Stock

 

As of September 30, 2023, our treasury stock consisted of 399,037,784 shares of common stock, carried at cost. During the nine months ended September 30, 2023, we transferred 1,375,328 shares of common stock from the treasury shares at a weighted average treasury stock price of $19.39 per share.

 

Earnings Per Share

 

Basic EPS is computed by dividing net income attributable to Verisk by the weighted average number of common shares outstanding during the period. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding, using the treasury stock method, if the dilutive potential common shares, including vested and nonvested stock options, nonvested restricted stock awards, nonvested restricted stock units, nonvested performance awards consisting of performance share units ("PSU"), and nonvested deferred stock units, had been issued.

 

The following is a presentation of the numerators and denominators of the basic and diluted EPS computations for the three and nine months ended September 30, 2023 and 2022:

 

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2023

  

2022

  

2023

  

2022

 

Numerator used in basic and diluted EPS:

                

Income from continuing operations

 $187.4  $165.8  $586.1  $826.4 

Less: Net income attributable to noncontrolling interests

  -   (0.1)  -   (0.3)

Income (loss) from discontinued operations, net of tax

  —   23.7   (145.5)  66.7 

Net income attributable to Verisk

 $187.4  $189.4  $440.6  $892.8 

Denominator:

                

Weighted average number of common shares used in basic EPS

  145,011,020   156,940,608   147,292,590   158,531,439 

Effect of dilutive shares:

                

Potential common shares issuable from stock options and stock awards

  731,499   1,037,998   691,396   1,048,823 

Weighted average number of common shares and dilutive potential common shares used in diluted EPS

  145,742,519   157,978,606   147,983,986   159,580,262 

 

The potential shares of common stock that were excluded from diluted EPS were 89,792 and 1,321,733 for the three months ended  September 30, 2023 and 2022, and 716,783 and 1,365,720 for the nine months ended  September 30, 2023 and 2022, respectively, because the effect of including these potential shares was anti-dilutive.

 

Accumulated Other Comprehensive Income (Loss)

 

The following is a summary of accumulated other comprehensive income (loss) as of September 30, 2023 and December 31, 2022:

 

  

2023

  

2022

 

Foreign currency translation adjustment

 $107.7  $(636.9)

Pension and postretirement adjustment, net of tax

  (91.9)  (94.3)

Accumulated other comprehensive income (loss)

 $15.8  $(731.2)

 

The before-tax and after-tax amounts of other comprehensive income (loss) income for the three and nine months ended September 30, 2023 and 2022 are summarized below:

 

  

Before Tax

  

Tax (Expense) Benefit

  

After Tax

 

For the Three Months Ended September 30, 2023

            

Foreign currency translation adjustment attributable to Verisk

 $(30.7) $—  $(30.7)

Foreign currency translation adjustment attributable to noncontrolling interests

  (1.1)  —   (1.1)

Foreign currency translation adjustment

  (31.8)  —   (31.8)

Pension and postretirement adjustment before reclassifications

  2.3   (0.5)  1.8 

Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (1)

  (1.3)  0.3   (1.0)

Pension and postretirement adjustment

  1.0   (0.2)  0.8 

Total other comprehensive loss

 $(30.8) $(0.2) $(31.0)

For the Three Months Ended September 30, 2022

            

Foreign currency translation adjustment attributable to Verisk

 $(233.0) $—  $(233.0)

Foreign currency translation adjustment attributable to noncontrolling interests

  (1.2)  —   (1.2)

Foreign currency translation adjustment

  (234.2)  —   (234.2)

Pension and postretirement adjustment before reclassifications

  1.5   (0.4)  1.1 

Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (1)

  (0.9)  0.1   (0.8)

Pension and postretirement adjustment

  0.6   (0.3)  0.3 

Total other comprehensive loss

 $(233.6) $(0.3) $(233.9)

 

  

Before Tax

  

Tax (Expense) Benefit

  

After Tax

 

For the Nine Months Ended September 30, 2023

            

Foreign currency translation adjustment attributable to Verisk

 $44.0  $—  $44.0 

Foreign currency translation adjustment attributable to noncontrolling interests

  (1.2)  —   (1.2)

Cumulative translation adjustment recognized upon deconsolidation of the Energy business

  700.6   —   700.6 

Foreign currency translation adjustment

  743.4   —   743.4 

Pension and postretirement adjustment before reclassifications

  7.2   (1.7)  5.5 

Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (1)

  (4.1)  1.0   (3.1)

Pension and postretirement adjustment

  3.1   (0.7)  2.4 

Total other comprehensive gain

 $746.5  $(0.7) $745.8 

For the Nine Months Ended September 30, 2022

            

Foreign currency translation adjustment attributable to Verisk

 $(522.8) $—  $(522.8)

Foreign currency translation adjustment attributable to noncontrolling interests

  (2.7)  —   (2.7)

Foreign currency translation adjustment

  (525.5)  -   (525.5)

Pension and postretirement adjustment before reclassifications

  4.2   (1.1)  3.1 

Amortization of net actuarial loss and prior service benefit reclassified from accumulated other comprehensive losses (1)

  (2.4)  0.6   (1.8)

Pension and postretirement adjustment

  1.8   (0.5)  1.3 

Total other comprehensive loss

 $(523.7) $(0.5) $(524.2)

 

___________

(1)

These accumulated other comprehensive loss components, before tax, are included under "Cost of revenues" and "Selling, general and administrative" in our accompanying condensed consolidated statements of operations. These components are also included in the computation of net periodic (benefit) cost (see Note 13. Pension and Postretirement Benefits for additional details).