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Verra Mobility Announces Third Quarter 2019 Financial Results

Total revenue of $128.2 million

Net income of $17.8 million, Adjusted EBITDA of $70.8 million

Generated year-to-date cash flow from operations of $95.6 million

MESA, Ariz., Nov. 5, 2019 /PRNewswire/ -- Verra Mobility (VRRM), a leading provider of smart mobility technology solutions, announced today financial results for the quarter ended September 30, 2019.

Verra Mobility (PRNewsfoto/Verra Mobility)

"We are very pleased with the company's performance in the third quarter, with financial results that exceeded expectations across the organization," said David Roberts, Chief Executive Officer, Verra Mobility. "A year ago, Verra Mobility went public, and we've had a phenomenal first year. We grew our Commercial Services segment by growth in tolling usage while continuing our focus on European expansion and the Government Solutions segment by implementing smart city innovation initiatives like New York City's school zone expansion. All these efforts are increasing the company's value proposition to its customers."

Third Quarter 2019 Financial Highlights

  • Revenue: Total revenue for the third quarter of 2019 was $128.2 million, up 19.2% compared to $107.6 million for the third quarter of 2018. Within total revenue, service revenue was $110.8 million and product revenue contributed $17.5 million.
  • Net income: Net income for the third quarter of 2019 was $17.8 million, or $0.11 per share, based on 163.7 million diluted weighted average shares outstanding. Net income for the comparable 2018 period was $6.5 million, or $0.09 per share, based on 72.9 million diluted weighted average shares outstanding.
  • Adjusted EBITDA: Adjusted EBITDA was $70.8 million for the third quarter of 2019, up 14.4% compared to $61.9 million in the third quarter of 2018.

Year-To-Date 2019 Financial Highlights

  • Revenue: Total revenue for year-to-date 2019 was $336.3 million, up 22.3% compared to $275.0 million for the year-to-date 2018 period. Within total revenue, service revenue was $311.9 million and product revenue was $24.4 million.
  • Net income (loss): Net income for year-to-date 2019 was $24.2 million, or $0.15 per share, based on 160.7 million diluted weighted average shares outstanding. During the year-to-date 2018 period, we had a net loss of $20.4 million, or $0.29 per share, based on 69.3 million weighted average shares outstanding.
  • Adjusted EBITDA: Adjusted EBITDA was $181.8 million for year-to-date 2019, up 20.9% compared to $150.3 million for year-to-date 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.  

Third Quarter 2019 Segment Detail

  • Commercial Services segment generated total revenue of $77.6 million growing 8% over the same period in 2018. Segment profit margins continue to be strong at 65.8% for 2019 and 68.7% for the 2018 period.
  • Government Solutions segment generated total revenue of $50.6 million growing 42% over the same period in 2018. The growth in this segment is driven by product sales in the current period which totaled $17.5 million. Segment profit was $19.8 million, a 58% increase from $12.5 million in the prior year. Segment margin was 39.1% in 2019 compared to 35.2% 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 6:00 a.m. Mountain Time (8:00 a.m. Eastern Time) on November 5, 2019. To access the conference call, dial (877) 407-0784 for the United States or Canada and (201) 689-8560 for international callers with conference ID #13695024. 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 November 19, 2019, by dialing (844) 512-2921 for the United States or Canada and (412) 317-6671 for international callers, and entering passcode #13695024. 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 2019 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. This non-GAAP financial information 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)

September 30,

2019


December 31,

2018

Assets






Current assets:






Cash and cash equivalents

$

135,564


$

65,048

Restricted cash


2,156



2,033

Accounts receivable, net


108,682



87,511

Unbilled receivables


15,073



12,956

Prepaid expenses and other current assets


26,623



17,600

Total current assets


288,098



185,148

Installation and service parts, net


7,936



9,282

Property and equipment, net


69,481



69,243

Intangible assets, net


444,506



514,542

Goodwill


563,452



564,723

Other non-current assets


2,386



1,845

Total assets

$

1,375,859


$

1,344,783

Liabilities and Stockholders' Equity






Current liabilities:






Accounts payable

$

57,194


$

45,188

Accrued liabilities


24,020



14,444

Current portion of long-term debt


9,104



9,104

Total current liabilities


90,318



68,736

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


858,189



860,249

Other long-term liabilities


2,872



3,369

Payable related to tax receivable agreement


66,097



69,996

Asset retirement obligation


6,740



6,750

Deferred tax liabilities


24,052



33,627

Total liabilities


1,048,268



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


369,670



348,017

Accumulated deficit


(89,400)



(113,306)

Accumulated other comprehensive loss


(7,557)



(5,821)

Total stockholders' equity


327,591



302,056

Total liabilities and stockholders' equity

$

1,375,859


$

1,344,783

 

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)



Three Months Ended September 30,


Nine Months Ended September 30,

(In thousands, except per share data)

2019


2018


2019


2018

Service revenue

$

110,757


$

105,203


$

311,884


$

271,253

Product sales


17,483



2,399



24,392



3,787

Total revenue


128,240



107,602



336,276



275,040

Cost of service revenue


1,388



1,735



4,390



4,217

Cost of product sales


7,238



1,375



10,432



2,425

Operating expenses


32,965



27,820



94,098



80,301

Selling, general and administrative expenses


21,293



21,687



62,709



82,551

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


28,697



28,790



86,488



74,830

Impairment of property and equipment






5,898



Total costs and expenses


91,581



81,407



264,015



244,324

Income from operations


36,659



26,195



72,261



30,716

Interest expense, net


14,932



20,312



46,621



52,538

Loss on extinguishment of debt








10,151

Other income, net


(2,727)



(2,942)



(8,279)



(7,001)

Total other expenses


12,205



17,370



38,342



55,688

Income (loss) before income tax provision (benefit)


24,454



8,825



33,919



(24,972)

Income tax provision (benefit)


6,702



2,312



9,756



(4,532)

Net income (loss)

$

17,752


$

6,513


$

24,163


$

(20,440)

Other comprehensive income (loss):












Foreign currency translation adjustment


(1,664)



(728)



(1,736)



(4,440)

Total comprehensive income (loss)

$

16,088


$

5,785


$

22,427


$

(24,880)

Earnings (loss) per share:












Basic weighted average shares outstanding


158,610



72,904



157,514



69,334

Basic earnings (loss) per share

$

0.11


$

0.09


$

0.15


$

(0.29)

Diluted weighted average shares outstanding


163,705



72,904



160,723



69,334

Diluted earnings (loss) per share

$

0.11


$

0.09


$

0.15


$

(0.29)

 

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



Nine Months Ended September 30,

($ in thousands)

2019


2018

Cash Flows from Operating Activities:






Net income (loss)

$

24,163


$

(20,440)

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






Depreciation and amortization


86,501



74,839

Amortization of deferred financing costs and discounts


5,066



6,933

Impairment of property and equipment


5,898



Bad debt expense


5,347



4,355

Deferred income taxes


(9,426)



(16,514)

Stock-based compensation


7,426



Loss on extinguishment of debt




10,151

Installation and service parts expense


1,055



432

Accretion expense


269



292

Write-downs of installation and service parts and (gain) on disposal of assets


(13)



(9)

Changes in operating assets and liabilities:






Accounts receivable, net


(26,353)



(10,703)

Unbilled receivables


(2,117)



(7,744)

Prepaid expenses and other current assets


(8,971)



3,751

Other assets


(541)



(1,305)

Accounts payable and accrued liabilities


12,258



1,651

Other liabilities


(4,976)



365

Net cash provided by operating activities


95,586



46,054

Cash Flows from Investing Activities:






Acquisition of businesses, net of cash and restricted cash acquired




(525,362)

Purchases of installation and service parts and property and equipment


(17,492)



(19,622)

Cash proceeds from the sale of assets


14



5

Net cash used in investing activities


(17,478)



(544,979)

Cash Flows from Financing Activities:






Borrowings on revolver




468

Repayment on revolver




(468)

Borrowings of long-term debt




1,033,800

Repayment of long-term debt


(6,827)



(452,575)

Payment of debt issuance costs


(299)



(30,352)

Payment of debt extinguishment costs




(8,187)

Net cash (used in) provided by financing activities


(7,126)



542,686

Effect of exchange rate changes on cash and cash equivalents


(343)



(594)

Net increase in cash, cash equivalents and restricted cash


70,639



43,167

Cash, cash equivalents and restricted cash - beginning of period


67,081



10,509

Cash, cash equivalents and restricted cash - end of period

$

137,720


$

53,676

 

VERRA MOBILITY CORPORATION

QUARTERLY RESULTS AND ADJUSTED EBITDA RECONCILIATION

(Unaudited)



Q3 2018



Q3 2019


($ in thousands)

As Reported



As Reported


Service revenue

$

105,203



$

110,757


Product sales


2,399




17,483


Total revenue


107,602




128,240


Cost of service revenue


1,735




1,388


Cost of product sales


1,375




7,238


Operating expenses


27,820




32,965


Selling, general and administrative expenses


21,687




21,293


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


28,790




28,697


Total costs and expenses


81,407




91,581


Income from operations


26,195




36,659


Interest expense, net


20,312




14,932


Other income, net


(2,942)




(2,727)


Total other expenses


17,370




12,205


Income before income tax provision


8,825




24,454


Income tax provision


2,312




6,702


Net income

$

6,513



$

17,752










Adjusted EBITDA Reconciliation








Net income

$

6,513



$

17,752


Interest expense, net


20,312




14,932


Income tax provision


2,312




6,702


Depreciation and amortization


28,792




28,697


EBITDA


57,929




68,083


Transaction and other related expenses (i)


1,669




287


Transformation expenses (ii)


905





Sponsor fees and expenses (iii)


1,433





Stock-based compensation (iv)





2,471


Adjusted EBITDA

$

61,936



$

70,841


Adjusted EBITDA Margin


57.6

%



55.2

%



(i)

In Q3 2018, costs incurred related to professional fees and other expenses. In Q3 2019, costs incurred related to transaction expenses.

(ii)

One-time costs related to optimizing the expense structure and defining our growth strategy.

(iii)

Sponsor management fees paid to Platinum Equity Advisors, LLC.

(iv)

Non-cash stock based compensation.

 

VERRA MOBILITY CORPORATION

CALCULATION OF PRO FORMA INFORMATION AND ADJUSTED EBITDA RECONCILIATION

(Unaudited)



Year-to-Date










Year-to-Date



Year-to-Date



Q3 2018



Pro Forma



Q3 2018



Q3 2019


($ in thousands)

As Reported



HTA


EPC



Consolidated



As Reported


Service revenue

$

271,253



$

15,828


$

2,954



$

290,035



$

311,884


Product sales


3,787









3,787




24,392


Total revenue


275,040




15,828



2,954




293,822




336,276


Cost of service revenue


4,217






361




4,578




4,390


Cost of product sales


2,425









2,425




10,432


Operating expenses


80,301




4,362



810




85,473




94,098


Selling, general and administrative expenses


82,551




12,270



610




95,431




62,709


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


74,830




398



27




75,255




86,488


Impairment of property and equipment













5,898


Total costs and expenses


244,324




17,030



1,808




263,162




264,015


Income (loss) from operations


30,716




(1,202)



1,146




30,660




72,261


Interest expense, net


52,538




33






52,571




46,621


Loss on extinguishment of debt


10,151









10,151





Other income, net


(7,001)






(6)




(7,007)




(8,279)


Total other expenses (income)


55,688




33



(6)




55,715




38,342


(Loss) income before income tax (benefit) provision


(24,972)




(1,235)



1,152




(25,055)




33,919


Income tax (benefit) provision


(4,532)




10



238




(4,284)




9,756


Net (loss) income

$

(20,440)



$

(1,245)


$

914



$

(20,771)



$

24,163





















Adjusted EBITDA Reconciliation



















Net (loss) income

$

(20,440)



$

(1,245)


$

914



$

(20,771)



$

24,163


Interest expense, net


52,538




33






52,571




46,621


Income tax (benefit) provision


(4,532)




10



238




(4,284)




9,756


Depreciation and amortization


74,839




398



27




75,264




86,501


EBITDA


102,405




(804)



1,179




102,780




167,041


Transaction and other related expenses (i)


25,589




11,467






37,056




1,422


Transformation expenses (ii)


8,038









8,038





Impairment of property and equipment (iii)













5,898


Loss on extinguishment of debt (iv)


10,151









10,151





Sponsor fees and expenses (v)


4,133









4,133





Stock-based compensation (vi)













7,426


Adjusted EBITDA

$

150,316



$

10,663


$

1,179



$

162,158



$

181,787


Adjusted EBITDA Margin


54.7

%



67.4

%


39.9

%



55.2

%



54.1

%



(i)

For the 2018 period, these represent adjustments to add back deal fees incurred in relation to the Company's acquisition by Greenlight Acquisition Corporation in May 2017 and our acquisitions of HTA and EPC. It primarily consists of acquisition services to Platinum Equity Advisors, LLC, professional fees and other expenses. For the 2019 period, these related to secondary offering costs incurred by us for PE Greenlight Holdings, LLC and transaction expenses.

(ii)

One-time costs related to optimizing the expense structure and defining our growth strategy.

(iii)

This represents an impairment charge on fixed assets.

(iv)

Costs incurred to refinance the Company's credit facility and term loans. It includes prepayment penalties, the write-off of deferred financing costs, lender fees and third-party costs to issue the new debt.

(v)

Sponsor management fees paid to Platinum Equity Advisors, LLC.

(vi)

Non-cash stock based compensation.

 

VERRA MOBILITY CORPORATION


FREE CASH FLOW

(Unaudited)



Nine Months Ended September 30,

($ in thousands)

2019


2018

Net cash provided by operating activities

$

95,586


$

46,054

Purchases of installation and service parts and property and equipment


(17,492)



(19,622)

Free cash flow

$

78,094


$

26,432

 

ADJUSTED EPS - QUARTERLY

(Unaudited)


(In thousands, except per share data)

Q1 2018


Q2 2018


Q3 2018


Q4 2018



Q1 2019


Q2 2019


Q3 2019

Net (loss) income

$

(22,158)


$

(4,795)


$

6,513


$

(37,955)



$

2,820


$

3,591


$

17,752

Amortization of intangibles


12,346



22,188



23,133



23,131




23,131



23,131



23,131

Transaction and other related expenses


18,103



5,816



1,669



30,855






1,135



287

Transformation expenses


1,740



5,393



905



728








Impairment of property and equipment













5,898



Loss on extinguishment of debt


10,151







16,335








Sponsor fees and expenses


1,358



1,343



1,433



1,249








Stock-based compensation








2,272




2,143



2,812



2,471

Total adjustments


43,698



34,740



27,140



74,570




25,274



32,976



25,889

Income tax effect on adjustments


(10,040)



(1,616)



(7,110)



(17,581)




(8,058)



(10,738)



(7,095)

Total adjustments after income tax effect


33,658



33,124



20,030



56,989




17,216



22,238



18,794

Adjusted Net Income

$

11,500


$

28,329


$

26,543


$

19,034



$

20,036


$

25,829


$

36,546













































Weighted average shares - basic


62,501



72,484



72,904



140,691




156,057



157,846



158,610

Adjusted net income per common share - basic

$

0.18


$

0.39


$

0.36


$

0.14



$

0.13


$

0.16


$

0.23

Weighted average shares - diluted


62,501



72,484



72,904



140,691




156,458



161,977



163,705

Adjusted net income per common share - diluted

$

0.18


$

0.39


$

0.36


$

0.14



$

0.13


$

0.16


$

0.22

 

VERRA MOBILITY CORPORATION


ADJUSTED EPS

(Unaudited)




Year-to-Date


Year-to-Date


(In thousands, except per share data)


Q3 2018


Q3 2019


Net (loss) income


$

(20,440)


$

24,163


Amortization of intangibles



57,668



69,393


Transaction and other related expenses



25,589



1,422


Transformation expenses



8,038




Impairment of property and equipment





5,898


Loss on extinguishment of debt



10,151




Sponsor fees and expenses



4,133




Stock-based compensation





7,426


Total adjustments



105,579



84,139


Income tax effect on adjustments



(19,161)



(24,201)


Total adjustments after income tax effect



86,418



59,938


Adjusted Net Income


$

65,978


$

84,101


















Weighted average shares - basic



69,334



157,514


Adjusted net income per common share - basic


$

0.95


$

0.53


Weighted average shares - diluted



69,334



160,723


Adjusted net income per common share - diluted


$

0.95


$

0.52


Basis of Presentation

We acquired HTA on March 1, 2018 and EPC on April 6, 2018.

On October 18, 2018, Verra Mobility completed a business combination with Gores Holdings II, Inc., a special purpose acquisition company.

EBITDA and Adjusted EBITDA.

We define EBITDA as net income (loss) adjusted to exclude interest expense, net, income taxes, depreciation and amortization. Adjusted EBITDA further excludes certain non-cash expenses, including loss on extinguishment of debt and other transactions that management believes are not indicative of our business. Because EBITDA and Adjusted EBITDA, as defined, exclude some but not all items that affect our cash flow from operating activities, they may not be comparable to similarly titled performance measures presented by other companies. EBITDA and Adjusted EBITDA margins are calculated as EBITDA and Adjusted EBITDA, respectively, divided by total revenue expressed as a percentage.

We use these metrics to measure our performance from period to period both at the consolidated level as well as within our operating segments, to evaluate and fund incentive compensation programs and to compare our results to those of our competitors. In addition to Adjusted EBITDA being a significant measure of performance for management purposes, we also believe that this presentation provides useful information to investors regarding financial and business trends related to our results of operations and that when non-GAAP financial information is viewed with GAAP financial information, investors are provided with a more meaningful understanding of our ongoing operating performance. EBITDA and Adjusted EBITDA have certain limitations as analytical tools and should not be used as substitutes for net income, cash flows from operations, or other consolidated income or cash flow data prepared in accordance with GAAP.

Free Cash Flow
We define "Free Cash Flow" as cash flow from operations less capital expenditures.

Adjusted Net Income
We define "Adjusted Net Income" as net (loss) income adjusted to exclude amortization of intangibles and certain non-cash or non-recurring expenses. We revised the presentation of this metric during the Q3 2019 period and as such provided quarterly information for the comparative 2018 and 2019 periods.

Adjusted EPS
We define "Adjusted EPS" as Adjusted Net Income divided by the diluted weighted average shares for the period.

Investor Relations Contact
Marc P. Griffin
ICR, Inc., for Verra Mobility
646-277-1290
IR@verramobility.com

Cision

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