Verisk Analytics Inc (VRSK) 2015 Q4 法說會逐字稿

Good day everyone. Welcome to the Verisk Analytics fourth-quarter 2015 earnings results conference call. This call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Verisk's SVP and Treasurer, Ms. Eva Houston. Please go ahead.

Good morning to everyone. We appreciate you joining us today for a discussion of our fourth-quarter 2015 and full-year 2015 financial results. With me on the call this morning are Scott Stephenson, President and Chief Executive Officer, and Mark Anquillare, Chief Financial Officer. Following comments by Scott and Mark highlighting some key points about our strategic priorities and financial performance, we will open up the call for your questions.

The earnings release referenced on the call, as well as the associated 10-K, can be found in the investor sections of our website, at verisk.com. The earnings release has also been attached to an 8-K that we have furnished to the SEC. A replay of this call will be available for 30 days until March 24, 2016, on our website and by dial-in.

Finally, as set forth in more detail in today's earnings release, I will remind everyone that today's call may include forward-looking statements about Verisk's future performance. Actual performance could differ materially from what is suggested by our comments today. Information about the factors that could affect future performance is contained in our recent SEC filings.

And now, I will turn the call over to Scott Stephenson.

Thanks, Eva. Good morning, everyone. We reported another year of industry leading, high single digit organic revenue growth with margin expansion and excellent pre-cash flow generation.

Fourth-quarter results were in line with our expectations with total revenue growth of about 21% and an increase in diluted adjusted EPS of 23%. Full-year revenue grew 18% and diluted adjusted EPS increased about 29%. We grew the top line, excluding the healthcare analytics business and recent acquisitions, over 5% of the quarter and 7% for the full year.

Profitability was strong as adjusted EBITDA, excluding acquisitions, grew about 7% in the quarter and 14% for the full year. Our adjusted EBITDA margins were 47% in the quarter and 48% in the full year.

We continue to work on our comprehensive reviews, strategic alternatives for the healthcare analytics business. There is a range of alternatives and not solely limited to a sale of the business. As responsible stewards of shareholder capital, we are being methodical and thoughtful in our approach.

The volatility of the equity and leverage markets in the quarter of 2015 and beginning of 2016 has contributed to the timing of our efforts. We expect to be able to provide you with an update by the time we report first-quarter earnings.

We are always looking to our innovate to drive growth. For example, in our insurance business one of the solutions which has been contributing to growth in risk assessment is the ISO Electronic Rating Content Suite. We rolled out new features including an automated maintenance fee that allows insurers to import the most recent changes to ISO loss costs and rating algorithms directly into the rating systems. This is innovation which helps our customers to implement rate changes more quickly and more efficiently.

In other recent news, WoodMac announced a commercial alliance with Thomson Reuters. This alliance gives customers at the icon platform a direct link to WoodMac's oil field data and research.

The information and analysis we're providing includes crude oil production, oil product balances and stocks, oil product prices, crack spreads and refining margins. This is an important new channel for WoodMac extending our reach of customers we were largely not already serving.

Looking at capital deployment, we are on track to meet our deleveraging commitment even as we have made a number of tuck-in acquisitions and returned capital to our shareholders through repurchases. We made a couple of acquisitions in the fourth quarter for about $50 million. We acquired Infield Systems, including its proprietary database of offshore asset prices. We also acquired PCI Group which has proprietary data assets and deep chemical industry domain expertise. These two acquisition complement and enhance our data and capabilities at WoodMac very nicely.

During the quarter we return capital to shareholders through the repurchase of over $20 million of stock. Our remaining authorization at the end of 2015 was $469 million after a $300 million increase in December. And we remain buyers of our stock at current levels.

We are committed to a prudent mix of M&A and share repurchases over time to complement and enhance our core businesses. This combination positions us very well to deliver the kinds of shareholder returns over the next several years that we expect of ourselves and you expect of us.

Our initiatives during the past year position as well to execute in our plans for 2016 and we are constructive on the outlook. We expect our combined insurance businesses will grow at least as fast as they did in 2015. This reflects the quality and value of the solutions we provide in the strength of our relationships.

As we discussed at Investor Day in December, we expect WoodMac to grow in constant currency even when excluding the effect of Infield and PCI. Given the end market dynamics we think this is a strong reflection of the quality of our team, the strength of our intellectual property and the depth of our customer relationships.

Our healthcare business grew 6% in 2015 with expanding margins and we anticipate a higher rate of growth and additional margin expansion in 2016. We also expect Argus to grow double digits for the full year 2016 even with the one-time project revenue we had in the first quarter 2015.

Over and above all of this, in 2016 we will strengthen our foundation. Our internal environment for handling large amounts of diverse data types is rapidly and continuously improving. Our data assets, already among the largest private data sets in the world, will expand. And our global footprint, a key to providing organic growth opportunities over the long-term, is now in place and growing.

Verisk is today one of the worlds most valuable vertically oriented data analytics companies. Our robust plans to the year 2020 will lead to new levels of distinction and performance.

With that, let me turn it over to Mark to cover the financials in more detail.

Thank you, Scott. For the first quarter, we again delivered solid revenue in EBITDA growth while also investing for the future. Revenue grew 20.6% in the fourth quarter and 18.4% for the full year. In healthcare pass-through revenue, excluding the effects of recent acquisitions, total revenue grew 3.9% in the fourth quarter and 7.4% for the full year.

Adjusted EBITDA which excludes second-quarter hedge gain and WoodMac one-time acquisition cost, grew 22.5% to $263 million in the fourth quarter. For the for full year adjusted EBITDA grew 24% to $996 million. Adjusted EBITDA margins for the full year was 47.4% excluding the $15.6 million third-quarter warrant gain. And adjusted EBITDA margins, excluding healthcare, acquisitions, and third quarter warrant gains, were over 50% for the quarter and year-to-date.

Within the Decision Analytics segment, revenue grew 29% in the fourth quarter and 5.3% excluding healthcare and acquisitions. Revenue growth in the quarter was driven by insurance. For the full year, Decision Analytics revenue grew 25.9% and 9.3%, excluding healthcare and acquisition.

Decision Analytics insurance revenue grew 7% in the fourth quarter. Performance in the quarter was led by strong growth in loss quantification solutions with good contributions from insurance anti-fraud claim solutions and underwriting solutions. Catastrophe modeling solutions also contributed to the growth. Full-year decision analytics insurance growth was a solid a 8.1%.

Financial services revenue declined 2.6% in the quarter due to project work in the prior year period which did not recur this year. For the full year, financial services revenue grew 20.5% as a result of media effectiveness, project revenue and a continued demand for analytic solutions and services in the US and notably expanding globally.

The healthcare business again performed slightly ahead of our internal forecast. Net of pass-through revenue, healthcare revenue declined 2.4% in the quarter but grew 6.2% for the full year. Population solutions lead the growth in the quarter, while payment solutions lead the growth for the full-year. All areas contributed to full-year growth and full-year margins improved versus 2014.

Energy and specialized revenue increased 410% in the fourth quarter and 264% for the full year. Organic growth in the quarter was 4.3% and for the full year 5.1%. Commercial weather and climate analytics and environmental health and safety solutions lead the growth.

WoodMac revenue, in pounds and on a comparable basis, declined 1% in the quarter and increased approximately 5% for the full year. For the period of our ownership, WoodMac contributed $211 million slightly ahead of what we discussed with you last quarter despite exchange rate headwinds.

We're pleased with WoodMac's performance and an extraordinary time for their customers. Annual contract value of signs were up in 2015. Customer retention remained strong and client-engagement is measured by [poor activity] was up 26% versus 2014.

Turning to risk assessment, revenue grew 5.4% in the quarter indicating the value to our long-standing insurance customers. The overall increase within the segment was due in part to 5.5% revenue growth of industry standard insurance programs, resulting primarily from growth in 2015 (inaudible) effective from January 1.

Property specific rating and underwriting revenue increase 4.9% in the quarter. The growth was a result of new sales with higher committed volumes. For the full year, risk assessment revenue grew 5.8% driven by 6% growth in industry standard programs and 5.1% growth in the property specific rating underwriting category.

As I mentioned earlier, EBITDA increased 22.5% in the quarter to $263 million resulting in a EBITDA margins of 46.9%. Decisions Analytics adjusted EBITDA increased 30.8% to $161 million in the quarter as a result of acquisitions, growth in the business and lower professional service fees. Excluding the effective recent acquisitions, second-quarter WoodMac one-time items and the third-quarter warrant gain, Decision Analytics adjusted EBITDA increased 3.7% in the quarter and 13% for the full year.

EBITDA margins for the healthcare analytics business, net of pass-through revenue expenses, were 24.8% in the quarter and 25% for the full year. Fourth-quarter 2015 EBITDA in risk assessment increased 11.4% to $102 million as a result of good revenue growth, good expense management and the talent realignment cost in the prior period. Excluding the prior period talent realignment costs, EBITDA grew 5.8% in the quarter and 8.8% for the full year.

Reported interest expense was $33 million in the quarter. At December 31, 2015, total debt was about $3.2 billion, including about $870 million in revolver borrowings.

Our leverage at the end of the fourth quarter was about 2.9 times. We will remain committed to bring the lever down to about 2.5 times by the end of 2016. Since the end of the fourth quarter, we have paid an additional $165 million. Our cash and cash equivalents were about $138 million at the end of 2015.

Our reported effective tax rate was 30.3% in the quarter. For the full-year 2015, the effective tax rate was 29.3%. Adjusted net income increased 28% to $138 million in the quarter and 28.1% to $520 million for the full year. The average included share count was 172.6 million shares in the quarter. On December 31, 2015, our diluted share count was 172.2 million shares.

Adjusted EPS on a fully diluted basis was $0.80 in the quarter. An increase of 23.1%. For the full year, adjusted EPS grew 28.8% to $3.09.

For shares purchased in the quarter, the average purchase price was $73.20. At December 31, 2015, the Company had about $469 million remaining under our share repurchase authorization. Our share repurchase program has been successful to date generating annualized IRRs well above our cost of capital.

In 2015, free cash flow grew 33.5% compared with the prior year period of $458 million and representing 46% of adjusted EBITDA from continued operations in the 12 months of 2015. Growth and free cash flow was driven by improved profitability in the business and stable CapEx, partially offset by higher interest in fees related to the WoodMac acquisition.

Capital expenditures were $166 million 12 months ended December 31, 2015, an increase of $19 million over the same period in 2014. Capital expenditures were 8% of revenue for the 12 month ended December 31, 2015. We continue to manage capital intensity of the business and expect it to continue to move lower as it has over the past several years.

To think about your models for 2016, we expect CapEx to be about $175 million, fixed asset depreciation and amortization of about $140 million and amortization and intangibles of about $121 million. Based on our current debt balances we expect interest expense to be around $130 million. We expect the tax rate to be in the range of 32% to 33%.

For the intangible amortization add-back in the adjusted ending calculation, we will use 28% to reflect the tax rate applicable to our intangible assets. And finally, we expect the diluted weighted share count of about 172 million shares before incremental repurchases.

As a reminder, first quarter of 2015, still had healthcare pass-through revenue included in the reported results. You'll recall, that after adjusting for the past revenue of about $6.7 million, first quarter 2015 would have been $68.4 million. Also in the first quarter 2015, we had about $11 million of project revenue at Argus which had higher than average margins.

Overall we are pleased with the result of 2015 and excited by the plan for 2016 and the opportunities ahead. We expect to see growth from multiple verticals and we are managing the business to generate long-term shareholder returns.

With that, I will turn it back over to Eva for comment before Q&A.

Thanks, Mark. We appreciate all of the interest in Verisk. Given the large number of analysts we have covering us, we ask that you limit your question to one question and one follow-up. This will give more people an opportunity to ask their questions. With that, I will ask the operator to open the line.

(Operator Instructions)

Sara Gubins, Bank of America.

Thank you, good morning.

Thank you for the commentary about your revenue expectations. Could you talk about what gives you confidence that you will be able to grow WoodMac in constant currency in 2016, given the 1% decline in the quarter? I know you are not going to give details about subscription versus service, but any color about what you were seeing on the subscription side, particularly around renewals would be helpful.

Retention of customers remains strong, and even in the first month and a half of 2016 we are seeing strong year-over-year growth in terms of numbers of research subscription clients. We are seeing increase in use of the portal. Customer engagement is up 6% already in the year. These are the kinds of things which basically relate to where we stand with our customers and is a source of our expectations for the year.

Is the expectation on the service side that you would continue to see significant decline there, but it is less important as it becomes a smaller piece of the total?

We're not really breaking that out, as you know, Sara. Our plan is for the whole business to perform.

Okay. Great.

Separately on margins. Could you give us any color on how you're thinking about margins in 2016, particularly because there were some hiring plans and risk assessments? I'm wondering if those have started to come through? Or if you would expect to ramp that next year -- this year?

Good question. This is Mark.

Let's start with 2015: we had some one-time items, the hedge gain, WoodMac transaction, the EBT, the warrant gains. We will pull that out and we remain positive and constructive with regard to margins in 2016. I do want to highlight two things that we tried to do -- one, specifically, the talent realignment you mentioned. We would and we do expect people to be hired back to former levels. That is probably about 50 people, to give you a flavor of things. And the other thing we did try to call out is that the project revenue Argus in the first quarter 2015 was about $11 million. It had very high margins. So you have to just factor those two things and hopefully that gives you some color on where we stand.

Thank you.

Manav Patnaik, Barclays.

Good morning, gentlemen.

The first question, around WoodMac again -- I was wondering if you could help characterize your organic growth guidance with WoodMac next year in the context of what [year is youming] the energy environment is. And then, also in context, is this the Thomson Reuters announcement that you did a sign of more to come? And is that maybe a material contributed to showing that growth number for 2016?

We think there are additional channels for getting WoodMac content to market. We actually think that the number of customers that WoodMac will have in the years to come will be substantially greater than it is today. Part of that is, in fact, the new channels. We are very early in the journey on that particular front, but I would definitely expect additional channel partnerships as a way of supplementing growth at WoodMac.

And just on the assumption for the energy environment?

We are never going to be folks to predict the price of oil. The thing that is our real bedrock on this business is the depth of relationship that WoodMac has with its customers. We actually performed in the fourth quarter -- or we completed in the fourth quarter of 2015 -- our net promoter score assessment across all of Verisk, and WoodMac came in with the second highest net promoter scores across all of Verisk. Their customers love them. I was with the Deputy Chair of one of the name-brand global energy companies a couple weeks ago, and they love WoodMac and they find the content and the analysis absolutely indispensable. And that is really the foundation of the business.

Real quickly, in the comments you mentioned that you expect insurance growth to be at least as good as 2015. I was wondering if there was anything, any puts and takes to call out between the two divisions when we think about the models for the year?

Looking at you, Mark, it is broad-based. It is across most everything we do, actually. Underwriting was strong in 2015 and will be strong in 2016. I wouldn't differentiate greatly among the different parts of what it is we do.

Thanks a lot, guys.

Tim McHugh, William Blair.

Thanks.

Just on healthcare, I guess. Can you elaborate on what gives you reason to think that it will grow faster in 2016? And you also alluded to, obviously, there are more options than just selling healthcare that you are looking at? Can you -- if you're able to talk at all about what other options are front and center on the table right now?

Your second question first. From the very beginning, we had all options on the table, taking a very thorough look at the business and how to maximize value for our shareholders and the standing of the business. There is nothing changed in that regard. When we look at the growth of the business, part of it is, we actually are having success in generating new revenue streams. I think you know that there is a lot of what we did on the revenue side that was related to Medicare Advantage. We started to do more work on the commercial side, and that's a nice supplement to what we've traditionally done in the business.

Good. On Argus -- the marketing effectiveness [tip the] project [side]. I know there is a tough comp in Q1, but when you give your outlook for 2016 in terms of double-digit growth, are you counting on any other large lumpy projects at some point during the year when you say that?

I think we've, for some time now, been trying to make it clear that there are large name-brand companies that get interested in the methods, and when they come in, they come in, in a fairly big way. There have actually been several of those in the course of 2015 and into 2016 that will be a part of the growth overall. There will continue to be these breakout moments. As we have said, the project that ripens into a sustainable subscription and that is fully what we expect.

Thank you.

Jeff Meuler, Baird.

I caught the commentary from Mark in terms of annual contracts' value growth at WoodMac for the full year. But as the year progressed, mainly as we got in the back half and into early 2016, has there been any weakening in bookings trend at WoodMac?

I'm not sure we typically talked about bookings. What I can tell you is that, from a retention perspective, what we have seen in the end of the year and into even January, February, as we've had retention rates that are consistently high with what we saw for full-year 2014 and 2015. We're comfortable -- a good part of the WoodMac business is that retention with customers. We also mentioned broadly the bookings have been up. That is the good news, I am not sure we are going to give color dating back to prior to ownership. I am not sure we have that detail with us. Sorry.

Okay. Just for thinking about healthcare quarterly modeling, with the shift and mix towards, deemphasizing on Medicare Advantage as the percentage of (inaudible) commercial, how much does that seasonality shift in healthcare relative to prior years?

The short answer is that I think we talked about this in quite a bit of detail, that the MRA business, the medical side of [NCMS] runs through sweeps from July to January, February. Typically what happens is the commercial side of this nicely fits in with, more in the first half of the year. We're not going to talk as much about the details of Verisk Health, given the strategic alternative process we are engaged in.

Thank you.

Toni Kaplan, Morgan Stanley.

Good morning.

Good morning.

Can you give us a sense of how pricing conversations have been going for WoodMac as the year has progressed? And whether margins are still sort of -- we should expect that mid-40%s number as still the right way to be thinking about it?

I think the reality is, contract renewals, given the nature of the customers and the pain our customers are feeling, is one that is a little bit more challenging. We have tried to bump up those solutions. We've tied to do things that provide value to them and also provide us upside to the extent that the CapEx spend and profitability returns to our customers. As they use more solutions, that will give us some upside. I think the combination of some of the work that we're doing to make the business -- I will call it, more industrial-strength around IT, and also to invest in the sales pipeline -- that gives us an extension to more people to sell. We've been investing from a sales perspective and more, and we have also from a technology perspective. So we can, for the most part, take some of the solutions and maybe smaller swaths and more confined view, a little bit more downstream in the sense of smaller customers. That will hopefully help us from the top line. Those investments probably have taken margins down a little bit and we would expect that in 2016 as well.

If you could give a little bit more color on the business model of the Thomson Reuters partnership? Is that going to be considered subscription or is it more like data feed? Are you providing data at a lower rate than you would in a direct subscription? And is there a similar margin profile for that? Thanks.

Let me try to take your questions. I'm not sure if I am going to do it in sequence, but let me give it my best shot. First of all, the way the relationship with Reuters would be is, it would be a subscription in access to a limited scope amount of information. If you wanted more you can buy different modules and different pieces. We have tried to take the data and cut some very big products into smaller subsets and provide it in a way that more people would be interested in it -- different groups of people and different customer sets. Once again, the nature of the information businesses that we have, we would expect it, one, to be subscription. Two, not a lot of incremental cost once you sell that. Implementation, so that not a lot of incremental cost there. I think we feel pretty good about the margins.

That is helpful. Thank you

Andrew Steinerman, JPMorgan.

You spoke a little fast in the prepared remarks on WoodMac. Like-for-like growth in the fourth quarter? And does that include the couple of small WoodMac acquisitions? And if so, what would be the organic fourth quarter number, like-for-like?

Like-to-like is a negative 1%. So we said that it was, in the quarter, negative 1%, comparable basis, and that was in GBP; and we said 5% full year. That excludes the acquisitions.

That excludes. Thank you.

Bill Warmington, Wells Fargo.

Good morning, everyone.

Hello, Bill.

I wanted to ask about -- if you look at the normalized organic constant currency growth rate for 2016, I think it would be helpful if you could frame for us the basis for the drag that you're getting from WoodMac. I understand that WoodMac is still growing positively on a constant currency basis for 2016, but I'm trying to get at this normalized organic constant currency growth of 2016.

Bill, we're not going give specific guidance. I think we said it is going to grow next year, and I think we feel good about the business. You've heard that. I'm not sure I can directly answer your question without giving you a specific point target for WoodMac, which we're not going to do here today.

Then second question: there is been speculation in the media that you guys have been looking at Argus. I don't think any of us would expect you to comment on that speculation, though. My question is, whether you are considering doubling down in energy. By that, I mean making a sizable acquisition in the energy space.

We're always thinking about where do we sit and where do we want to go with respect to our customers. I will say that having a good sense of where the price of the commodity is going is a part of a lot of the modeling that is already built into what it is that WoodMac does today. At a general level, I would say that understanding the entire supply and demand picture is a useful thing to do. If you subscribe to WoodMac product, you know that there are views of forward prices as well as the supply side volume, as well as dollar value. That will all continue to be a part of what we do. Our thought process is entirely around what is it that we can do to bring more value to our customers. When we put A and B together, do we unlock even more value for customers? We are constantly thinking about everything that we can do to increase value. I'm not going to comment on that specific situation. But generally, we are very active in thinking about where we are and where we ought to be.

Thank you very much.

Andrew Jeffrey, SunTrust.

Thank you for taking the question.

Sure.

One of the conversations that I heard you had with investors over the last 12 to 18 months with regard to healthcare is the value of the data in your healthcare business compared to the data across your other businesses. I assume that the relative value in healthcare data is one of the things that led to this exploration of alternatives. We recently saw IBM buy Truven for a pretty big price tag. How does that influence your overall view of the value of the healthcare data in your business? Is it distinct from Truven's data? Just a little compare and contrast, and whether or not directionally that influences the range of outcomes possibly for that business of Verisk.

First of all, our business -- there are, I would say, small overlaps with Truven. In fact, there are bilateral commercial agreements between us and Truven. In general, their business is by degrees different than our business. I wouldn't really use it as a particularly meaningful marker. We are very focused on the business that we've got -- what are the future opportunities? How can they be maximized? And how do we maximize shareholder value for our shareholders? Yes, of course we reference things that are going on, like that transaction. But in reality, I think that our situation is relatively custom.

To the point about data, the basic point I would make to you is that obviously data is very important in the data analytic work that we do, and others do, and all of the third-party vendors do. But the distinction that we are trying to draw is, when you look at the vast majority of the data that we've got inside of the insurance vertical; the financial services, retail banking vertical; and the oil and gas, metals and mining vertical -- a lot of what we've got is very unique.

The nature of regulation and industry structure in the healthcare world in the United States makes it relatively harder to have distinct data assets. That's the point that we've been trying to stress. It is not that we don't have data -- we actually have a lot of data. We very much want Verisk to be a highly distinctive, very differentiated partner to our customers. One of the things that provides distinction is unique data assets. They are just harder to achieve in the healthcare space.

Okay. That's helpful. Thank you.

You're welcome.

Arash Soleimani, KBW.

Good morning.

On the talent realignment where you said you will be doing about 50 new hires, is that pretty steady throughout the year in 2016? And could that have a favorable revenue impact looking forward to 2017?

Let me remind you about the goal for the talent realignment. We did try to take what would be our more traditional ISO solutions business inside of risk assessment and focus this on a shared services model -- Trying to take groups and become more efficient and more effective. And I congratulate the team on the work that was done there. We then took those resources and we said, we are going to invest in new products and new segments. Our hope is that, that type of investment would lead us toward sustainable growth in the future. And it is probably a little bit of a longer-term march than a short-term march, but we are optimistic, like we described earlier, in those initiatives. With regard to timing, I think we've seen quite a few people hired in the latter part of 2015 and into the first quarter of 2016. Although I think you're right; it will extend throughout the year. I think there's little bit more of a push or emphasis here in the first half.

I'll just add, I'm very excited by the quality of the people we are attracting into the business. These are world-class people, global perspective. They are definitely going to help raise our analytics sights and the quality in-depth of what it is we do. It is very encouraging, the people that we can attract to Verisk.

Lastly, on the tax on amortization -- I think the guidance there was 26% before, and now it is up to 28%. I'm just curious, what drove the increase?

We took of best guess back at the time. Remember, the world of purchase accounting and developing, how much amortization runs through your books, is something that will be finalized until mid-2016. We gave your our best guess. We have a more refined estimate as to how much amortization is coming through. And the amount, as it relates to WoodMac, is down a little bit from the original estimates -- meaning that the UK rate is a little less pronounced or weighted in the calculation.

Perfect. Thank you for the answers.

James Friedman, Susquehanna.

I appreciated your dimensions you shared on growth prospects for 2016. I wanted to ask you about your comment about your insurance assets. Would you anticipate that both RA and insurance in DoE will accelerate next year?

Yes.

Okay. If you could comment -- I know that pricing is working through the system now on the ISO database and risk assessment. Could you update us as to how much of that is still on the look-back of prior period premiums? And what some of the inputs are for pricing on RA overall?

I think we've shared with you in the past that the mix of the revenue sources in that part of the business has changed. Where it used to be that most every customer was being priced according to a two-year look-back on premiums, we are now at a point where more than 50% of what we do in RA is on multi-year agreements, not related at all to what was happening in the premiums two years prior.

With respect to the rest of our customer base, where we still do reference premiums from two years before, just want remind you that there are three terms in the pricing algorithm, and premium is only one of the three; and we have complete freedom with respect to the other two, which is the mill rate and the flat fees. The actual literal effect of what is going on in the premium environment is actually very muted at this point. It is really value-based pricing -- the work that we do every year to try to enhance and bring current what it is that we are providing to our customers. Our customers understand the value of that kind of work and it is on that basis that we set the prices.

Helpful. Thanks a lot.

Jeff Silber, BMO Capital Markets.

You had mentioned on the adjusted EBITDA margin where we take out the [guaranteed] sale of third-party warrants -- I think it was 47.4% for 2015. And then you said you were constructive on margins going forward. Does that view expect margins to go up in 2016 from that base?

What I tried to say was that I would caveat that positive, just with the two adjustments I described. One, I mentioned the talent realignment; I pointed to about 50 people, which would be some expense in risk assessment. We have talked about that over time. And the other thing I was trying to call out was, in the first quarter 2015, Argus had that revenue that was very high margins, about $11 million in project work. I was trying to call out those two items in the context of what is a fundamentally sound and positive margin picture going forward.

That is helpful.

Going back to Argus, you mentioned what the project revenue was in 1Q 2015. Can you give us that number in 4Q 2014, so we can see how the quarter you just reported compared?

I'm not sure we provided that in the past. It is not notable as first quarter. I don't think we've given that out in the past, I'm sorry.

Okay, no worries. Thanks so much.

Joseph Foresi, Cantor Fitzgerald.

This is Mike Reid on for Joe. Thanks for taking the call.

Quick question -- maybe a little more insight on Infield and PCI Group and specialized markets, and the impact? How much that could possibly move the needle in 2016?

We haven't really put out the absolute size of those. I would encourage you to think of both of those as modest tuck-ins.

Okay. Obviously, Argus is still doing well. Are you hearing anything else in the financial services vertical on demand in regards to macro? Or does that seem stable?

Actually, some of the fundamentals in the business are actually quite exciting. One that I would point to is the success we are having in getting consortia of banks in markets other than the United States to come into our method. It is really very exciting. Because when that happens, we are essentially platformed in the market, and now we can bring the whole range of solutions that we've got. We have several very exciting developments right now along those lines. But with respect to the macro environment, we reference it. I would encourage you to understand -- it is not really material as it relates to the prospects for the business going forward. It is kind of steady as she goes.

Great. Thanks guys.

Thank you.

Anj Singh, Credit Suisse.

This is Zach Bacall for Anj. Thanks for taking my questions.

I wanted to first ask again about the Argus segment. And I think for the full-year your commentary has been pretty consistent that you expected high teens growth, and we had a little better than that. Just wondering if that was stronger than you expected, and if that is driven by the consortia of banks or something else?

I would tell you that Argus is a wonderful business. I always like to mention that again. It has an incredible data asset that creates a real barrier there. What the team there has been able to do is two things: one, provide great service and new products to those customers. And then we have the project revenue that is a little more related to the marketing and advertising effectiveness. We are trying to transition that to more subscription; and I think we're been successful. What we tried to call out from an outlook perspective, is that we continue to see very strong double-digit growth, and that is growth even assuming the grow-over debt is going to happen in the first quarter. I felt we were pretty transparent on that, and hopefully that just clarifies the comments we made earlier.

I think we all appreciate that. Secondly, on the Telematics Data Exchange, we have been reading that it is getting prepared for June launch. We have not heard any additional partnerships aside from the one you have already mentioned with OnStar and GM. Have you been able to build any additional partnerships? And will the program require any further partnerships to launch in June?

In reverse order, we can start serving insurance companies even without additional OEMs in the partnership. One of the things you have to reference, by the way, is how advanced or not each OEM is with respect to the connected car movement. Some have gotten on with it more; others less. GM has actually been a leader. That is one of the reasons why we were so excited about striking the partnership with them. We can and will and are selling the data and the analytics into the insurance vertical, beginning with the rollout of the platform. As we add additional OEMs, the value simply goes up, but we don't have to wait for that. As you would imagine, the team is out and having a lot of conversations with a lot of OEMs, domestically and globally, to promote the method. This is something we talk about very frequently inside of the management team. We have great hopes for this and a lot of focus on this.

Thank you for taking my questions.

Andre Benjamin, Goldman Sachs.

Good morning.

Both my questions have been answered, but I have one piece I was hoping to push a little more, back on the WoodMac color. I know you're not giving specific guidance, but I think the other businesses you have given at least directional color on how you're thinking about growth in 2016 versus 2015, so versus the 5%. Is there any color that you can provide, whether up or down from there, knowing there is a wide range for positive?

I'm going to say it again: I said that it is going to grow, and I think we've been trying to be a little more transparent with regards to outlook. I think that is as far as we are going to go at this point, and I hope you respect that.

Okay. I think aerial imagery is an area you talked a lot about in the past and you continue to innovate a lot of parts of your business that don't necessarily do get as much air time. I was wondering if there was any updates on what you are up to there? And the effect that we can expect that to have on the insurance growth?

You may have noticed last year that we actually put out a press release that we were sourcing images again, and that's based on our own effort. But we are also working with others who source imagery. What makes it really special is the analysis that converts it into solutions that can be used by insurance companies and players in other industry verticals. We are very happy with our methods and we expect to see increasing commercial results in 2016 for what it is that we're doing. It is an abiding part of what we are doing.

Thank you.

You're welcome.

There are no further questions at this time. I will turn it back over to you for closing remarks.

Okay. Well thank you, everybody, for joining us today. We appreciate your interest. We are looking forward to being together with you again in about a quarter's time. We will certainly have interesting updates for you at that point. So, thanks very much, and enjoy your day.

Ladies and gentlemen that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.