Verra Mobility Announces First Quarter 2019 Financial Results

May 6, 2019 at 4:05 PM EDT
Total revenue of $98.5 million
Generated cash flow from operations of $37.4 million
Net income of $2.8 million, Adjusted EBITDA of $51.3 million

MESA, Ariz., May 6, 2019 /PRNewswire/ -- Verra Mobility (NASDAQ: VRRM), a leading provider of smart mobility technology solutions, today announced financial results for the quarter ended March 31, 2019.

Verra Mobility_2018 (PRNewsfoto/Verra Mobility)

"The first quarter was an outstanding start to 2019, primarily driven by robust activity within our Commercial Services segment," stated David Roberts, Chief Executive Officer of Verra Mobility. "The first quarter's strong results provide great momentum for 2019. We were pleased with our ability to execute our growth strategy, maintain operational efficiency and generate $37 million in cash from operations. We believe that Verra Mobility is well positioned to deliver against our long-term goals given our differentiated portfolio of products and is uniquely positioned to capitalize on a growing pipeline of global opportunities."

First Quarter 2019 Financial Highlights

  • Revenue: Total revenue for the first quarter of 2019 was $98.5 million, up 42% compared to $69.2 million for the first quarter of 2018 on a reported basis. On a pro forma basis, revenue was up 12% from $88.0 million. Pro forma financial information represents the actual results of Highway Toll Administration, Canada Highway Toll Administration (collectively, "HTA"), Euro Parking Collection plc ("EPC") and Verra Mobility on a combined basis as if all three acquired companies had been owned during the historical periods presented. Within total revenue, service revenue was $98.1 million and product revenue contributed $0.4 million.
  • Net income (loss): Net income for the first quarter of 2019 was $2.8 million, or $0.02 per share, based on 156.5 million weighted average diluted shares outstanding. During the first quarter of 2018, we had a net loss of $22.2 million, or $0.35 per share, based on 62.5 million weighted average shares outstanding. The loss in the first quarter of 2018 resulted from $28.3 million of transaction fees and loss on extinguishment of debt associated with the purchase of HTA.
  • Adjusted EBITDA: Adjusted EBITDA was $51.3 million for the first quarter of 2019, compared to $33.8 million in the first quarter of 2018. On a pro forma basis, Adjusted EBITDA was up 12% from $45.6 million. As a percentage of revenue our Adjusted EBITDA margin for the quarter was 52%.
  • Adjusted net income (loss): Adjusted net income for the first quarter of 2019 was $28.1 million, or $0.18 per share, based on 156.5 million weighted average diluted shares outstanding. During the first quarter of 2018, adjusted net loss was $9.8 million, or $0.16 per share, based on 62.5 million weighted average shares outstanding for the first quarter of 2018.

The Company reports its results of operations based on two operating segments: Commercial Services and Government Solutions. 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.  

First Quarter 2019 Segment Detail

  • Commercial Services segment generated total revenue of $62.6 million and segment profit of $38.0 million.
  • Government Solutions segment generated total revenue of $35.9 million and segment profit of $13.2 million.

Quarterly Conference Call

Verra Mobility will host a conference call and live webcast to discuss financial results for investors and analysts at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) on May 6, 2019. To access the conference call, dial (877) 407-0784 for the U.S. or Canada or (201) 689-8560 with conference ID #13689490. 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 7:59 p.m. Pacific Time (10:59 p.m. Eastern Time) on May 20, 2019, by dialing (844) 512-2921 for the U.S. or Canada or (412) 317-6671 for international callers, and entering passcode #13689490. 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 the most 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," or "will" and 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 they 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 (loss) 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 reconciliation.

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


($ in thousands except per share data)

March 31,
2019


December 31,
2018

Assets






Current assets:






Cash and cash equivalents

$

91,484


$

65,048

Restricted cash


1,704



2,033

Accounts receivable, net


94,630



87,511

Unbilled receivables


16,753



12,956

Prepaid expenses and other current assets


19,012



17,600

Total current assets


223,583



185,148

Installation and service parts, net


10,822



9,282

Property and equipment, net


71,686



69,243

Intangible assets, net


491,853



514,542

Goodwill


565,596



564,723

Other non-current assets


2,072



1,845

Total assets

$

1,365,612


$

1,344,783

Liabilities and stockholders' equity






Current liabilities:






Accounts payable

$

52,239


$

45,188

Accrued liabilities


30,448



14,444

Current portion of long-term debt


9,104



9,104

Total current liabilities


91,791



68,736

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


859,768



860,249

Other long-term liabilities


3,633



3,369

Payable related to tax receivable agreement


66,097



69,996

Asset retirement obligation


6,855



6,750

Deferred tax liabilities


32,647



33,627

Total liabilities


1,060,791



1,042,727

Commitments and Contingencies






Stockholders' equity






Preferred stock, $.0001 par value




Common stock, $.0001 par value


16



16

Common stock contingent consideration


73,150



73,150

Additional paid-in capital


346,895



348,017

Retained earnings (accumulated deficit)


(110,743)



(113,306)

Accumulated other comprehensive loss


(4,497)



(5,821)

Total stockholders' equity


304,821



302,056

Total liabilities and stockholders' equity

$

1,365,612


$

1,344,783

 

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)



Three Months Ended March 31,

(In thousands, except per share data)

2019


2018

Service revenue

$

98,070


$

69,006

Product sales


391



235

Total revenue


98,461



69,241







Cost of service revenue


1,389



831

Cost of product sales


276



172

Operating expenses


29,338



23,681

Selling, general and administrative expenses


20,551



33,276

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


28,941



18,544

Total costs and expenses


80,495



76,504

Income (loss) from operations


17,966



(7,263)







Interest expense


16,033



12,647

Loss on extinguishment of debt


-



10,151

Other income, net


(2,207)



(1,293)

Total other expense


13,826



21,505







Income (loss) before income tax (benefit)provision


4,140



(28,768)







Income tax (benefit) provision


1,320



(6,610)







Net income (loss)

$

2,820


$

(22,158)







Other comprehensive income (loss):






Foreign currency translation adjustment


1,324



Total comprehensive income (loss)

$

4,144


$

(22,158)







Earnings (loss) per share:






Basic weighted average shares outstanding


156,057



62,501

Basic earnings (loss) per share

$

0.02


$

(0.35)

Diluted weighted average shares outstanding


156,458



62,501

Diluted earnings (loss) per share

$

0.02


$

(0.35)

 

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



Three Months Ended March 31,

($ in thousands)

2019


2018

CASH FLOWS FROM OPERATING ACTIVITIES:






Net income (loss)

$

2,820


$

(22,158)

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






Depreciation and amortization


28,939



18,550

Amortization of deferred financing costs and discounts


1,833



1,644

Loss on extinguishment of debt




10,151

Accretion expense


90



97

Write-downs of installation and service parts and (gain) loss ondisposal of assets


3



(6)

Installation and service parts expense


257



125

Bad debt expense


1,270



1,140

Deferred income taxes


(1,073)



(6,805)

Stock-based compensation


2,143



Changes in operating assets and liabilities:






Accounts receivable, net


(8,372)



(3,614)

Unbilled receivables


(3,797)



(4,171)

Prepaid expense and other current assets


(1,301)



(1,138)

Other assets


(226)



(576)

Accounts payable and accrued liabilities


18,413



3,452

Other liabilities


(3,648)



113

Net cash provided by (used in) operating activities


37,351



(3,196)

CASH FLOWS FROM INVESTING ACTIVITIES:






Acquisition of business, net of cash and restricted cash acquired




(531,741)

Purchases of installation and service parts and property andequipment


(9,219)



(5,885)

Cash proceeds from the sale of assets and insurance recoveries


52



185

Net cash used in investing activities


(9,167)



(537,441)

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


(2,276)



(448,375)

Payment of debt issuance costs


(37)



(29,242)

Payment of debt extinguishment costs




(8,187)

Net cash provided by (used in) financing activities


(2,313)



547,996







Effect of exchange rate changes on cash and cash equivalents


236









Net increase in cash, cash equivalents and restricted cash


26,107



7,359

Cash, cash equivalents and restricted cash - beginning of period


67,081



10,509

Cash, cash equivalents and restricted cash - end of period

$

93,188


$

17,868

 

VERRA MOBILITY CORPORATION

CALCULATION OF PRO FORMA INFORMATION AND ADJUSTED EBITDA RECONCILIATION

(Unaudited)



Q1 2018


Pro Forma


Q1 2018



Q1 2019


($ in thousands)

As Reported


HTA


EPC


Consolidated



As Reported



















Service revenue

$

69,006


$

15,828


$

2,954


$

87,788



$

98,070


Product sales


235







235




391


Total revenue


69,241



15,828



2,954



88,023




98,461


Cost of service revenue


831





361



1,192




1,389


Cost of product sales


172







172




276



















Operating expenses


23,681



4,362



810



28,853




29,338


Selling, general and administrative expenses


33,276



12,270



610



46,156




20,551


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


18,544



398



27



18,969




28,941


Total costs and expenses


76,504



17,030



1,808



95,342




80,495


(Loss) income from operations


(7,263)



(1,202)



1,146



(7,319)




17,966


Interest expense


12,647



33





12,680




16,033


Loss on extinguishment of debt


10,151







10,151





Other (income) expense, net


(1,293)





(6)



(1,299)




(2,207)


Total other expense


21,505



33



(6)



21,532




13,826


(Loss) income before income taxes


(28,768)



(1,235)



1,152



(28,851)




4,140


Income tax (benefit) provision


(6,610)



10



238



(6,362)




1,320


Net (loss) income

$

(22,158)


$

(1,245)


$

914


$

(22,489)



$

2,820



















Adjusted EBITDA Reconciliation

















Net income (loss)

$

(22,158)


$

(1,245)


$

914


$

(22,489)



$

2,820


Interest expense


12,647



33





12,680




16,033


Income tax provision (benefit)


(6,610)



10



238



(6,362)




1,320


Depreciation and amortization


18,550



398



27



18,975




28,939


EBITDA


2,429



(804)



1,179



2,804




49,112


Transaction and other related expenses (i)


18,103



11,467





29,570





Transformation expenses (ii)


1,740







1,740





Loss on extinguishment of debt (iii)


10,151







10,151





Sponsor fees and expenses (iv)


1,358







1,358





Stock-based compensation (v)











2,143


Adjusted EBITDA

$

33,781


$

10,663


$

1,179


$

45,623



$

51,255


Adjusted EBITDA Margin


48.8

%


67.4

%


39.9

%


51.8

%



52.1

%



(i)

Adjustments to add back deal fees incurred in relation to the Company's acquisition by Greenlight Acquisition Corporation in May 2017 and our acquisition of HTA in March 2018. It primarily consists of acquisition services to advisors, professional fees and other expenses.

(ii)

One-time costs including costs of strategy consultants, procurement optimization and IT optimization. 

(iii)

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.

(iv)

Sponsor management fees paid to an affiliate of Platinum Equity, LLC.

(v)

Non-cash stock based compensation.

 

VERRA MOBILITY CORPORATION

FREE CASH FLOW

(Unaudited)



Three Months Ended March 31,

($ in thousands)

2019


2018

Net cash provided by (used in) operating activities

$

37,351


$

(3,196)

Purchases of installation and service parts and property and equipment


(9,219)



(5,885)

Free cash flow

$

28,132


$

(9,081)

 

ADJUSTED EPS

(Unaudited)




Three Months Ended March 31,


(In thousands, except per share data)


2019


2018


Net income (loss)


$

2,820


$

(22,158)


Amortization of intangibles



23,130



12,346


Stock-based compensation



2,143




Adjusted net income (loss)


$

28,093


$

(9,812)










Weighted average shares - basic



156,057



62,501


Adjusted net income (loss) per common share - basic


$

0.18


$

(0.16)


Weighted average shares - diluted



156,458



62,501


Adjusted net income (loss) per common share - diluted


$

0.18


$

(0.16)


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), net of interest expense, income taxes, depreciation and amortization.  Adjusted EBITDA further excludes certain non-cash expenses, 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 revenues 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 (Loss)
We define "adjusted net income (loss)" as net income (loss) less amortization expense and non-cash stock compensation.

Adjusted EPS
We define "Adjusted EPS" as adjusted net income (loss) divided by the weighted average diluted shares for the period.

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

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SOURCE Verra Mobility