Verra Mobility Announces Fourth Quarter and Full Year 2018 Financial Results

March 18, 2019 at 5:00 PM EDT

MESA, Ariz., March 18, 2019 /PRNewswire/ -- Verra Mobility Corporation (NASDAQ: VRRM) (the "Company" or "Verra Mobility") a leading provider of smart mobility technology solutions, today announced financial results for the fourth quarter and full year ended December 31, 2018.

Verra Mobility_2018 (PRNewsfoto/Verra Mobility)

Total revenue for the fourth quarter increased to $95.1 million compared to $63.2 million for fourth quarter of 2017. Total revenue for the full year 2018 increased to $370.1 million compared to $232.1 million for full year 2017.

"We are pleased with our execution during the fourth quarter and fiscal year 2018; this was an outstanding and transformative year for the Company. We closed two highly strategic acquisitions and became a publicly traded company through the SPAC transaction with Gores Holdings II," said David Roberts, Chief Executive Officer of Verra Mobility. "I could not be prouder of the team and the hard work that was accomplished to make this transformation seamless."

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 via road safety camera programs related to red light, speed, school bus, and city bus lanes.  

Fourth Quarter 2018 Financial Highlights

  • Revenues of $95.1 million
  • Net loss of $38.0 million
  • Adjusted EBITDA of $47.3 million, representing 49.7% of total revenue
  • Commercial Services segment generated total revenue of $58.4 million and segment profit of $33.2 million
  • Government Solutions segment generated total revenue of $36.7 million and segment profit of $13.1 million
  • Cash flow used in consolidated operations was $94,000  

The Company recorded certain out-of-period adjustments which reduced revenue in the fourth quarter of 2018, in the aggregate amount of $4.2 million pertaining to prior 2018 quarters. These adjustments, had they been recorded in the period they originated, would have decreased revenue, as a percentage of quarterly revenue, as follows: Q1: -1.4%, Q2: -0.9%, Q3: -2.2% and Q4: +4.4%. The overall impact of these adjustments are immaterial to the Company's consolidated financial statements.

Full Year 2018 Financial Highlights

  • Revenues of $370.1 million
  • Net Loss of $58.4 million
  • Adjusted EBITDA of $197.6 million, representing 53.4% of total revenue
  • Commercial Services segment generated total revenue of $222.6 million and segment profit of $121.6 million
  • Government Solutions segment generated total revenue of $147.5 million and segment profit of $56.1 million
  • Cash flow from operations was $46.0 million

Quarterly Conference Call

Verra Mobility will host a conference call and live webcast to discuss financial results for investors and analysts at 5:00 a.m. Pacific Time (8:00 a.m. Eastern Time) on March 19, 2019. To access the conference call, dial (800) 263-0877 for the U.S. or Canada or (646) 828-8143 with conference ID # 3538970. The webcast will be available live on the Investors section of the company website at www.verramobility.com. An audio replay of the call will also be available to investors by phone beginning at approximately 8:00 a.m. Pacific Time on March 19, 2019, until 8:59 p.m. Pacific Time on April 2, 2019, by dialing (844) 512-2921 for the U.S. or Canada or (412) 317-6671 for international callers, and entering passcode #3538970. In addition, an archived webcast will be available on the Investors section of the company website at 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 often 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 2018 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 Information

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 and adjusted EBITDA margin 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.

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. 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. For more information, visit www.verramobility.com.

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

 

VERRA MOBILITY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS




December 31,
2018



December 31,
2017


Assets









Current assets:









   Cash and cash equivalents


$

65,048,194



$

8,724,945


   Restricted cash



2,033,186




1,784,665


   Accounts receivable, net



87,510,691




60,180,536


   Unbilled receivables



12,955,507




4,802,074


   Prepaid expenses and other current assets



17,600,270




15,788,912


Total current assets



185,147,848




91,281,132











Installation and service parts, net



9,282,064




9,066,913


Property and equipment, net



69,242,811




65,370,696


Intangible assets, net



514,541,531




203,749,221


Goodwill



564,723,498




294,414,522


Other non-current assets



1,845,443




982,731


Total assets


$

1,344,783,195



$

664,865,215











Liabilities and stockholders' equity









Current liabilities:









   Accounts payable


$

45,188,357



$

20,158,977


   Accrued liabilities



14,443,967




10,086,622


   Current portion of long-term debt



9,103,518




3,250,000


Total current liabilities



68,735,842




33,495,599











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



860,249,164




425,439,034


Other long-term liabilities



3,368,710




2,689,145


Payable related to tax receivable agreement



69,996,334






Asset retirement obligation



6,749,822




6,373,125


Deferred tax liabilities



33,627,191




49,603,691


Total Liabilities



1,042,727,063




517,600,594











Commitments and Contingencies


















Stockholders' equity









Preferred stock, $.0001 par value, 1,000,000 shares authorized with no shares issued and outstanding as of December 31, 2018 and 2017







Common stock, $.0001 par value, 260,000,000 shares authorized with 156,056,642 and 60,483,804 shares issued and outstanding as of December 31, 2018 and 2017, respectively



15,606




6,048


Common stock contingent consideration



73,150,000





Additional paid-in capital



348,017,132




129,020,351


Retained earnings (accumulated deficit)



(113,306,294)




18,238,222


Accumulated other comprehensive loss



(5,820,312)





Total stockholders' equity



302,056,132




147,264,621


Total liabilities and stockholders' equity


$

1,344,783,195



$

664,865,215


 

VERRA MOBILITY CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)




Three months ended




December 31,



December 31,


 Unaudited


2018



2017


Service revenue


$

93,822,287



$

61,268,951


Product sales



1,283,125




1,895,085


Total revenue



95,105,412




63,164,036











Cost of service revenue



1,570,255




812,854


Cost of product sales



1,021,797




1,118,821


Operating expenses



28,582,987




21,703,161


Selling, general and administrative expenses



53,517,772




14,832,998


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



28,523,027




13,868,581


Total costs and expenses



113,215,838




52,336,415











Income from operations



(18,110,426)




10,827,621











Interest expense



17,011,457




9,022,518


Loss on extinguishment of debt



16,335,105





Other income (expense), net



(1,793,712)




(837,012)


Total other expense



31,552,850




8,185,506











Income (loss) before income taxes



(49,663,276)




2,642,115)











Income tax provision (benefit)



(11,708,873)




(26,539,460)











Net income



$         (37,954,403)




$         (29,181,575)


 

VERRA MOBILITY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)




Successor




Predecessor








Period from




Period From








Year Ended



June 1, 2017 to




January 1, 2017 to



Year Ended




December 31,



December 31,




May 31,



December 31,




2018



2017




2017



2016


Service revenue


$

365,075,935



$

135,655,277




$

92,530,939



$

212,514,712


Product sales



5,069,785




2,583,410





1,340,191




18,234,874


Total revenue



370,145,720




138,238,687





93,871,130




230,749,586




















Cost of service revenue



5,787,699




1,936,063





1,369,445




2,638,070


Cost of product sales



3,446,929




1,590,018





963,504




9,505,473


Operating expenses



108,883,622




50,471,055





35,967,664




83,762,399


Selling , general and administrative expenses



136,068,633




44,882,140





40,884,179




53,033,871


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



103,352,668




33,112,553





12,613,143




33,916,936


Total costs and expenses



357,539,551




131,991,829





91,797,935




182,856,749


Income from operations



12,606,169




6,246,858





2,073,195




47,892,837




















Interest expense



69,550,214




20,857,920





875,102




2,706,499


Loss on extinguishment of debt



26,486,179












Other income, net



(8,794,596)




(2,172,261)





(1,294,299)




(2,470,776)


Total other expense (income)



87,241,797




18,685,659





(419,197)




235,723




















(Loss) income before income tax (benefit) provision



(74,635,628)




(12,438,801)





2,492,392




47,657,114




















Income tax (benefit) provision



(16,241,112)




(30,677,023)





1,252,793




18,661,030




















Net (loss) income


$

(58,394,516)



$

18,238,222




$

1,239,599



$

28,996,084




















Other comprehensive income (loss):


















Foreign currency translation adjustment



(5,820,312)












Change in interest rate swap valuation, net of taxes













50,255


Total comprehensive (loss) income


$

(64,214,828)



$

18,238,222




$

1,239,599



$

29,046,339




















Earnings (loss) per share:


















Basic weighted average shares outstanding



87,320,072




60,483,804











Basic earnings (loss) per share


$

(0.67)



$

0.30




(1)



(1)


Diluted weighted average shares outstanding



87,320,072




60,483,804











Diluted earnings (loss) per share


$

(0.67)



$

0.30




(1)



(1)




(1)

Basis and diluted earnings (loss) per share for the Predecessor Period are not presented due to lack of comparability with the Successor Period.

 

VERRA MOBILITY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS




Successor




Predecessor








Period from




Period From








Year Ended



June 1, 2017 to




January 1, 2017 to



Year Ended




December 31,



December 31,




May 31,



December 31,




2018



2017




2017



2016


CASH FLOWS FROM OPERATING ACTIVITIES:


















Net (loss) income


$

(58,394,516)



$

18,238,222




$

1,239,599



$

28,996,084


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


















Depreciation and amortization



103,346,438




33,151,063





12,574,006




33,814,562


Loss on extinguishment of debt



26,486,179












Deferred financing cost amortization



9,167,979




1,981,476





143,241




475,596


Accretion expense



396,374




153,542





106,404




185,021


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



6,230




(38,510)





39,137




102,374


Installation and service parts expense



1,238,512




565,198





177,124




1,382,686


Bad debt expense



6,024,939




3,441,004





2,181,957




7,881,872


Deferred income taxes



(24,434,693)




(31,083,621)





(3,326,978)




(3,204,635)


Stock-based compensation



2,271,874











(618,911)


Changes in operating assets and liabilities:


















Accounts receivable, net



(23,721,307)




(17,152,616)





6,107,664




(17,409,068)


Unbilled receivables



(6,123,612)




(362,336)





1,945,493




(2,655,961)


Prepaid expense and other current assets



2,959,758




4,202,237





(1,581,750)




(2,584,650)


Other assets



(845,281)




139,856





322,260




294,181


Accounts payable and accrued liabilities



7,125,305




(4,846,446)





22,413,747




(703,321)


Other Liabilities



512,648




(77,736)





(508,181)




(2,114,649)


Net cash provided by operating activities



46,016,827




8,311,333





41,833,723




43,841,181


CASH FLOWS FROM INVESTING ACTIVITIES:


















Acquisition of business, net of cash and restricted cash acquired



(536,698,777)




(537,853,861)








(21,232,989)


Purchases of installation and service parts and property and equipment



(26,576,364)




(15,873,607)





(8,952,667)




(14,825,371)


Cash proceeds from the sale of assets and insurance recoveries



418,238




191,788





166,603




1,007,478


Net cash provided by (used in) investing activities



(562,856,903)




(553,535,680)





(8,786,064)




(35,050,882)


CASH FLOWS FROM FINANCING ACTIVITIES:


















Successor borrowings on revolver



468,306




18,530,956









Successor repayment on revolver



(468,306)




(18,530,956)









Successor borrowings of long-term debt



1,103,800,000




444,250,000









Successor repayment of long-term debt



(654,850,879)




(1,625,000)









Successor payment of debt issuance costs



(31,752,670)




(15,917,442)









Payment of debt extinguishment costs



(12,186,961)












Capitalization from Merger with Gores Holdings II



803,293,629












Payment of underwriting and transaction costs



(24,023,524)












Predecessor borrowings on note payable










40,752,179




187,920,609


Predecessor repayments on note payable










(68,213,359)




(147,521,410)


Predecessor payments of debt issue costs










(30,000)




(332,500)


Capital contribution from Greenlight



169,258,843












Successor distribution to selling shareholders



(779,270,105)












Proceeds from issuance of common stock






129,026,399









Payment of cash dividend













(47,107,808)


Net cash provided by (used in) by financing activities



574,268,333




555,733,957





(27,491,180)




(7,041,109)




















Effect of exchange rate changes on cash and cash equivalents



(856,487)






























Net increase in cash, cash equivalents and restricted cash



56,571,770




10,509,610





5,556,479




1,749,190


Cash, cash equivalents and restricted cash - beginning of period



10,509,610








4,345,567




2,596,377


Cash, cash equivalents and restricted cash - end of period


$

67,081,380



$

10,509,610




$

9,902,046



$

4,345,567


 

VERRA MOBILITY CORPORATION AND SUBSIDIARIES

ADJUSTED EBITDA RECONCILIATION



Successor




Successor




Successor




Successor




Predecessor



For the Three
Months
Ended
December 31,




For the Three
Months
Ended
December 31,




For the Year
Ended
December 31,




Period from
June 1, 2017 to
December 31,




Period from
January 1, 2017
to May 31,



For the Year
Ended
December 31,


($ in thousands)

2018




2017




2018




2017




2017



2016


Net income (loss)

$

(37,954)




$

29,182




$

(58,395)




$

18,238




$

1,240



$

28,996


Interest expense


17,011





9,023





69,550





20,858





875




2,706


Income tax provision expense (benefit)


(11,709)





(26,539)





(16,241)





(30,677)





1,253




18,661


Depreciation and amortization


28,508





13,895





103,346





33,151





12,574




33,815


EBITDA


(4,144)





25,559





98,260





41,570





15,942




84,178


Transaction and other related expenses (i)


30,855





135





56,443





10,190





21,772




1,154


Transformation expenses (ii)


727





1,451





8,766





3,913









Loss on extinguishment of debt (iii)


16,335









26,486













Sponsor Fees and expenses (iv)


1,250





1,804





5,383





4,228









Non-cash amortization of contract inducement (v)


















277




1,784


Stock-based compensation (vi)


2,272









2,272













Adjusted EBITDA

$

47,295




$

28,950




$

197,610




$

59,901




$

37,991



$

87,116




(i)

Adjustments to add back deal fees incurred in relation to the ATS Merger (as defined below), Verra Mobility's acquisition of Highway Toll Administration, LLC and Euro Parking Collection plc in March and April 2018, respectively and the Business Combination with Gores Holdings II, Inc. in October 2018. Consists primarily 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.  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 Platinum Equity.

(v)

Adjustments for amortization of a tolling contract with a major RAC.

(vi)

Non-cash stock based compensation.

Basis of Presentation

On May 31, 2017, the Company was acquired by Greenlight Acquisition Corporation ("Acquirer") pursuant to the Agreement and Plan of Merger, dated April 15, 2017 by and among the Company, Greenlight Merger Corporation, a wholly-owned subsidiary of Acquirer ("Merger Sub"), and Acquirer whereby the Company merged with and into Merger Sub with the former surviving (the "ATS Merger"). Acquirer is ultimately owned by certain private equity investment vehicles sponsored by Platinum Equity, LLC.

Pursuant to the ATS Merger, a new basis of accounting at fair value was established in accordance with U.S. GAAP under Accounting Standards Codification ("ASC") Topic 805, Business Combinations.  The new stepped-up basis was pushed down by Acquirer to the Company.   The consolidated financial statements and footnotes contained herein are presented in distinct periods to indicate the application of two different bases of accounting between the periods presented. The period from January 1, 2017 to May 31, 2017 has been labeled "Predecessor" and has been prepared using the historical basis of accounting of the Predecessor. The periods from June 1, 2017 to September 30, 2017 and from January 1, 2018 to September 30, 2018 have been labeled "Successor." The accompanying condensed consolidated statements of operations, cash flows and certain footnotes include a black line division separating the Predecessor Period from the Successor Period. As a result of purchase accounting, the pre-ATS Merger and post-ATS Merger condensed consolidated statements of operations and cash flows are not comparable.

Segment profit (loss) is based on revenues and income (loss) from operations before depreciation, amortization, impairment and gain (loss) on disposal of assets and after other income, net. Depreciation, amortization, impairment and gain (loss) on disposal of assets, interest expense, loss on extinguishment of debt and income taxes are not indicative of operating performance, and, as a result are not included in the operating and reportable segments. Other income, net consists primarily of credit card rebates earned on the prepayment of tolls and therefore included in Segment profit (loss). There are no significant non-cash items reported in Segment profit (loss).

EBITDA and adjusted EBITDA

EBITDA is defined as net income, 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 present EBITDA and adjusted EBITDA because we believe they provide useful information regarding our ability to meet our future debt payment requirements, capital expenditures and working capital requirements and an overall evaluation of our financial condition. 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.

 

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SOURCE Verra Mobility Corporation