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Verra Mobility Announces Fourth Quarter and Full Year 2019 Financial Results

Full year 2019 revenue of $448.7 million

Net income of $33.3 million , Adjusted EBITDA of $241.4 million

Generated cash flows from operations of $133.8 million

MESA, Ariz. , March 2, 2020 /PRNewswire/ -- Verra Mobility (NASDAQ: VRRM), a leading provider of smart mobility technology solutions, announced today financial results for the quarter and full year ended December 31, 2019 .

Verra Mobility (PRNewsfoto/Verra Mobility)

"We are pleased with our execution throughout the year and ended 2019 on a strong note with a solid quarter. We were able to exceed expectations across our key metrics and showed investors that our diversified product portfolio can support an attractive combination of growth and profitability at scale," said David Roberts , Chief Executive Officer, Verra Mobility . "The strength of our core business and our longer-term smart city initiatives give us confidence in our ability to maintain momentum throughout 2020 and support our vision to be the global leader in smart transportation."

Fourth Quarter 2019 Financial Highlights

  • Revenue : Total revenue for the fourth quarter of 2019 was $112.5 million , up 18.2% compared to $95.1 million for the fourth quarter of 2018. Within total revenue, service revenue was $104.8 million and product revenue contributed $7.6 million .
  • Net income (loss): Net income for the fourth quarter of 2019 was $9.2 million , or $0.06 per share, based on 163.9 million diluted weighted average shares outstanding. Net loss for the comparable 2018 period was $38.0 million , or $0.27 loss per share, based on 140.7 million diluted weighted average shares outstanding.
  • Adjusted EBITDA : Adjusted EBITDA was $59.6 million for the fourth quarter of 2019, up 26.0% compared to $47.3 million in the fourth quarter of 2018.

Full Year 2019 Financial Highlights

  • Revenue : Total revenue for the 2019 year was $448.7 million , up 21.2% compared to $370.1 million for 2018. The pro forma revenue growth year over year was 15.4% for the HTA and EPC acquisitions in early 2018. Within total revenue, service revenue was $416.7 million and product revenue was $32.0 million .
  • Net income (loss): Net income for 2019 was $33.3 million , or $0.21 per share, based on 161.5 million diluted weighted average shares outstanding. For the 2018 year, we had a net loss of $58.4 million , or $0.67 per share, based on 87.3 million weighted average shares outstanding.
  • Adjusted EBITDA : Adjusted EBITDA was $241.4 million for full year 2019, up 22.2% compared to $197.6 million for full year 2018. The pro forma adjusted EBITDA growth year over year was 15.2% for the HTA and EPC acquisitions in early 2018.

The Company reports its results of operations based on two operating segments:

Commercial Services  delivers market-leading automated toll and violations management and title and registration solutions to rental car companies, fleet management companies and other large fleet owners.

Government Solutions  delivers market-leading automated safety solutions to municipalities and school districts, including services and technology that enable photo enforcement related to red-light, speed, school bus, and city bus lanes.  

Fourth Quarter 2019 Segment Detail

  • Commercial Services segment generated total revenue of $68.2 million growing 16.7% over the same period in 2018. Segment profit was $42.0 million , a 27% increase from $33.2 million in the prior year. Segment profit margins continue to be strong at 61.6% for 2019 and 56.8% for the 2018 period.
  • Government Solutions segment generated total revenue of $44.3 million growing 20.7% over the same period in 2018. The growth in this segment is driven by product sales in the current period which totaled $7.6 million . Segment profit was $17.5 million , a 34% increase from $13.1 million in the prior year. Segment margin was 39.6% in 2019 compared to 35.7% for the prior year period.

Quarterly Conference Call

Verra Mobility will host a conference call and a live webcast to discuss financial results for investors and analysts at 3:00 p.m. Mountain Time ( 5:00 p.m. Eastern Time ) on March 2, 2020 . To access the conference call, dial (877) 407-0784 for the United States or Canada and (201) 689-8560 for international callers. The webcast will be available live in the "Investor Relations" section of the Company's website at http://ir.verramobility.com . An audio replay of the call will also be available until 9:59 p.m. Mountain Time ( 11:59 p.m. Eastern Time ) on March 16, 2020 , by dialing (844) 512-2921 for the United States or Canada and (412) 317-6671 for international callers, and entering passcode #13698123. In addition, an archived webcast will be available in the "News & Events" section of the Investor Relations page of the Company's website at http://ir.verramobility.com .

About Verra Mobility

Verra Mobility is committed to developing and using the latest in technology and data intelligence to help make transportation safer and easier. As a global company, Verra Mobility sits at the center of the mobility ecosystem one that brings together vehicles, devices, information, and people to solve complex challenges faced by our customers and the constituencies they serve.

Verra Mobility serves the world's largest commercial fleets and rental car companies to manage tolling transactions and violations for millions of vehicles. As a leading provider of connected systems, Verra Mobility processes millions of transactions each year through connectivity with more than 50 individual tolling authorities and more than 400 issuing authorities. Verra Mobility also fosters the development of safe cities, partnering with law enforcement agencies, transportation departments and school districts across North America operating thousands of red-light, speed, bus lane and school bus stop arm safety cameras. Arizona -based Verra Mobility operates in more than 15 countries. For more information, visit www.verramobility.com .

Forward-Looking Statements

This press release contains forward-looking statements which address the Company's expected future business and financial performance, and may contain words such as "goal," "target," "future," "estimate," "expect," "anticipate," "intend," "plan," "believe," "seek," "project," "may," "should," "will" or similar expressions. Examples of forward-looking statements include, among others, statements regarding the benefits of the Company's strategic acquisitions, changes in the market for our products and services, expected operating results, such as revenue growth, expansion plans and opportunities, and earnings guidance related to 2020 financial and operational metrics. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those currently anticipated. Risks and uncertainties that may affect future results include those that are described from time to time in the Company's filings with the Securities and Exchange Commission ("SEC"), which are available on the Company's Investor Relations website, http://ir.verramobility.com , and on the SEC website, www.sec.gov . These forward-looking statements represent the judgment of the Company, as of the date of this release, and Verra Mobility disclaims any intent or obligation to update forward-looking statements. This press release should be read in conjunction with the information included in the Company's other press releases, reports and other filings with the SEC. Understanding the information contained in these filings is important in order to fully understand the Company's reported financial results and our business outlook for future periods.

Non-GAAP Financial Measures

In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company also discloses certain non-GAAP financial information in this press release. These financial measures are not recognized measures under GAAP and are not intended to be and should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Free Cash Flow, Adjusted Net Income and Adjusted EPS are non-GAAP financial measures as defined by SEC rules. These non-GAAP financial measures may be determined or calculated differently by other companies. Reconciliations of these non-GAAP measurements to the most directly comparable GAAP financial measurements have been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliations.

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


($ in thousands except per share data)


December   31,
2019



December   31,
2018


Assets









Current assets:









  Cash and cash equivalents


$

131,513



$

65,048


  Restricted cash



917




2,033


  Accounts receivable, net



93,514




87,511


  Unbilled receivables



20,003




12,956


  Prepaid expenses and other current assets



26,491




17,600


Total current assets



272,438




185,148


Installation and service parts, net



8,841




9,282


Property and equipment, net



72,266




69,243


Operating lease assets



32,177





Intangible assets, net



434,443




514,542


Goodwill



584,150




564,723


Other non-current assets



3,111




1,845


Total assets


$

1,407,426



$

1,344,783


Liabilities and Stockholders' Equity









Current liabilities:









  Accounts payable


$

50,825



$

45,188


  Accrued liabilities



25,277




14,444


  Current portion of long-term debt



28,779




9,104


Total current liabilities



104,881




68,736


Long-term debt, net of current portion and deferred financing costs



837,686




860,249


Operating lease liabilities, net of current portion



30,130





Other long-term liabilities



2,183




3,369


Payable to related party pursuant to tax receivable agreement



61,174




69,996


Asset retirement obligation



6,309




6,750


Deferred tax liabilities



25,716




33,627


Total liabilities



1,068,079




1,042,727


Commitments and contingencies









Stockholders' equity









Preferred stock, $.0001 par value







Common stock, $.0001 par value



16




16


Common stock contingent consideration



54,862




73,150


Additional paid-in capital



367,266




348,017


Accumulated deficit



(80,220)




(113,306)


Accumulated other comprehensive loss



(2,577)




(5,821)


Total stockholders' equity



339,347




302,056


Total liabilities and stockholders' equity


$

1,407,426



$

1,344,783


 

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)




Three Months Ended December 31,



Year Ended December 31,


(In thousands, except per share data)


2019



2018



2019



2018


Service revenue


$

104,839



$

93,823



$

416,723



$

365,076


Product sales



7,622




1,283




32,014




5,070


Total revenue



112,461




95,106




448,737




370,146


Cost of service revenue



1,171




1,571




5,561




5,788


Cost of product sales



3,487




1,022




13,919




3,447


Operating expenses



31,542




28,582




125,640




108,883


Selling, general and administrative expenses



22,784




53,518




85,493




136,069


Depreciation, amortization and (gain) loss on disposal of assets, net



29,283




28,523




115,771




103,353


Impairment of property and equipment









5,898





Total costs and expenses



88,267




113,216




352,282




357,540


Income (loss) from operations



24,194




(18,110)




96,455




12,606


Interest expense, net



14,108




17,012




60,729




69,550


Loss on extinguishment of debt






16,335







26,486


Other income, net



(2,919)




(1,794)




(11,198)




(8,795)


Total other expenses



11,189




31,553




49,531




87,241


Income (loss) before income tax provision (benefit)



13,005




(49,663)




46,924




(74,635)


Income tax provision (benefit)



3,825




(11,709)




13,581




(16,241)


Net income (loss)


$

9,180



$

(37,954)



$

33,343



$

(58,394)


Other comprehensive income (loss):

















Change in foreign currency translation adjustment



4,980




(1,381)




3,244




(5,821)


Total comprehensive income (loss)


$

14,160



$

(39,335)



$

36,587



$

(64,215)


Net income (loss) per share:

















Basic


$

0.06



$

(0.27)



$

0.21



$

(0.67)


Diluted


$

0.06



$

(0.27)



$

0.21



$

(0.67)


Weighted average shares used in per share calculation:

















Basic outstanding



159,009




140,691




157,890




87,320


Diluted outstanding



163,910




140,691




161,522




87,320


 

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)




Year Ended December 31,


($ in thousands)


2019



2018


Cash Flows from Operating Activities:









Net income (loss)


$

33,343



$

(58,394)


Adjustments to reconcile net income (loss) to net cash provided by operating activities:









Depreciation and amortization



115,566




103,346


Amortization of deferred financing costs and discounts



6,641




9,168


Impairment of property and equipment



5,898





Bad debt expense



8,100




6,025


Deferred income taxes



(10,894)




(24,435)


Stock-based compensation



10,012




2,272


Loss on extinguishment of debt






26,486


Installation and service parts expense



1,166




1,238


Accretion expense



350




396


Write-downs of installation and service parts and loss on disposal of assets



205




7


Changes in operating assets and liabilities:









Accounts receivable, net



(12,662)




(23,721)


Unbilled receivables



(6,428)




(6,124)


Prepaid expenses and other current assets



(7,150)




2,115


Accounts payable and accrued liabilities



(8,194)




7,125


Other liabilities



(2,151)




513


Net cash provided by operating activities



133,802




46,017


Cash Flows from Investing Activities:









Acquisition of businesses, net of cash and restricted cash acquired



(25,519)




(536,699)


Purchases of installation and service parts and property and equipment



(29,685)




(26,576)


Cash proceeds from the sale of assets



231




418


Net cash used in investing activities



(54,973)




(562,857)


Cash Flows from Financing Activities:









Borrowings on revolver






468


Repayment on revolver






(468)


Borrowings of long-term debt






1,103,800


Repayment of long-term debt



(9,104)




(654,851)


Payment of debt issuance costs



(426)




(31,753)


Payment of debt extinguishment costs






(12,187)


Payment of employee tax withholding related to RSU vesting



(4,990)





Capitalization from merger with Gores Holdings






803,294


Payment of underwriting and transaction costs






(24,024)


Capital contribution from Greenlight






169,259


Distribution to selling shareholders






(779,270)


Net cash (used in) provided by financing activities



(14,520)




574,268


Effect of exchange rate changes on cash and cash equivalents



1,040




(856)


Net increase in cash, cash equivalents and restricted cash



65,349




56,572


Cash, cash equivalents and restricted cash - beginning of period



67,081




10,509


Cash, cash equivalents and restricted cash - end of period


$

132,430



$

67,081


 

VERRA MOBILITY CORPORATION

QUARTERLY RESULTS AND ADJUSTED EBITDA RECONCILIATION

(Unaudited)




Q4 2019



Q4 2018


($ in thousands)


As Reported



As Reported


Service revenue


$

104,839



$

93,823


Product sales



7,622




1,283


Total revenue



112,461




95,106


Cost of service revenue



1,171




1,571


Cost of product sales



3,487




...