Verra Mobility Announces Third Quarter 2018 Financial Results
Total revenue for the third quarter increased to
"During the third quarter we executed on our strategy of growing the core business, while integrating two strategic acquisitions and investing in new product offerings," said
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.
Third Quarter 2018 Financial Highlights
- Generated Net Income of
$6.5 million - Adjusted EBITDA of
$61.9 million is 57.6% of total revenue - Commercial Services segment generated revenue of
$72.0 million and segment profit of$49.4 million - Government Solutions segment generated revenue of
$35.6 million and segment profit of$12.5 million - Operating expenses as a percentage of total revenue were 25.9% compared to 38.6% in the prior year
- Cash flow from operations was
$46.1 million
Quarterly Conference Call
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 ("
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
Investor Contact
ICR, Inc., for
646-277-1290
IR@verramobility.com
VERRA MOBILITY CORPORATION AND SUBSIDIARIES |
||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
||||
September 30, |
December 31, |
|||
2018 |
2017 |
|||
Assets |
||||
Current assets: |
||||
Cash and cash equivalents |
$ 51,948,613 |
$ 8,724,945 |
||
Restricted cash |
1,727,645 |
1,784,665 |
||
Accounts receivable, net |
76,215,796 |
60,180,536 |
||
Unbilled receivables |
12,546,409 |
4,802,074 |
||
Prepaid expenses and other current assets |
17,750,138 |
15,788,912 |
||
Total current assets |
160,188,601 |
91,281,132 |
||
Installation and service parts, net |
11,368,887 |
9,066,913 |
||
Property and equipment, net |
67,196,125 |
65,370,696 |
||
Intangible assets, net |
538,103,690 |
203,749,221 |
||
Goodwill |
564,394,454 |
294,414,522 |
||
Other non-current assets |
2,305,216 |
982,731 |
||
Total assets |
$ 1,343,556,973 |
$ 664,865,215 |
||
Liabilities and stockholders' equity |
||||
Current liabilities: |
||||
Accounts payable |
$ 47,697,160 |
$ 20,158,977 |
||
Accrued liabilities |
15,763,074 |
10,086,622 |
||
Current portion of long-term debt |
8,400,000 |
3,250,000 |
||
Total current liabilities |
71,860,234 |
33,495,599 |
||
Long term debt, net of current portion and deferred financing costs |
980,058,924 |
425,439,034 |
||
Other long-term liabilities |
3,176,764 |
2,689,145 |
||
Asset retirement obligations |
6,730,721 |
6,373,125 |
||
Deferred income taxes, net |
41,790,046 |
49,603,691 |
||
Total Liabilities |
1,103,616,689 |
517,600,594 |
||
Stockholders' equity: |
||||
Common stock, $.01 par value, 1,000 shares authorized with 100 shares issued and outstanding at September 30, 2018 and December 31, 2017 |
1 |
1 |
||
Additional paid-in capital |
246,582,030 |
129,026,398 |
||
Retained earnings (accumulated deficit) |
(2,201,891) |
18,238,222 |
||
Accumulated other comprehensive loss |
(4,439,856) |
- |
||
Total stockholders' equity |
239,940,284 |
147,264,621 |
||
Total liabilities and stockholders' equity |
$ 1,343,556,973 |
$ 664,865,215 |
VERRA MOBILITY CORPORATION AND SUBSIDIARIES |
||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||
AND COMPREHENSIVE INCOME (LOSS) |
||
Successor |
||
Three months |
Three months |
|
ended |
ended |
|
September 30, 2018 |
September 30, 2017 |
|
Service revenue |
$ 105,203,673 |
$ 55,608,693 |
Product sales |
2,398,807 |
480,699 |
Total revenue |
107,602,480 |
56,089,392 |
Cost of service revenue |
1,735,420 |
838,211 |
Cost of product sales |
1,375,105 |
284,258 |
Operating expenses |
27,819,681 |
21,703,331 |
Selling, general and administrative expenses |
21,687,265 |
15,830,550 |
Depreciation, amortization and (gain) loss on disposal of assets, net |
28,789,672 |
14,221,542 |
Total costs and expenses |
81,407,143 |
52,877,892 |
Income from operations |
26,195,337 |
3,211,500 |
Interest expense |
20,312,956 |
8,947,089 |
Other income, net |
(2,942,255) |
(1,073,966) |
Total other expense |
17,370,701 |
7,873,123 |
Net income (loss) before income tax provision (benefit) |
8,824,636 |
(4,661,623) |
Income tax provision (benefit) |
2,311,923 |
(1,314,474) |
Net income (loss) |
6,512,713 |
(3,347,149) |
Other comprehensive loss: |
||
Foreign currency translation adjustment |
(727,998) |
- |
Total comprehensive income (loss) |
$ 5,784,715 |
$ (3,347,149) |
VERRA MOBILITY CORPORATION AND SUBSIDIARIES |
|||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||
AND COMPREHENSIVE INCOME (LOSS) |
|||
Successor |
Predecessor |
||
Nine months |
Four months |
Five months |
|
ended |
ended |
ended |
|
September 30, 2018 |
September 30, 2017 |
May 31, 2017 |
|
Service revenue |
$ 271,253,648 |
$ 74,386,326 |
$ 92,530,939 |
Product sales |
3,786,660 |
688,325 |
1,340,191 |
Total revenue |
275,040,308 |
75,074,651 |
93,871,130 |
Cost of service revenue |
4,217,444 |
1,123,209 |
1,369,445 |
Cost of product sales |
2,425,132 |
471,197 |
963,504 |
Operating expenses |
80,300,635 |
28,767,893 |
35,967,664 |
Selling, general and administrative expenses |
82,550,861 |
30,049,143 |
40,884,179 |
Depreciation, amortization and (gain) loss on disposal of assets, net |
74,829,641 |
19,243,972 |
12,613,143 |
Total costs and expenses |
244,323,713 |
79,655,414 |
91,797,935 |
Income (loss) from operations |
30,716,595 |
(4,580,763) |
2,073,195 |
Interest expense |
52,538,757 |
11,835,402 |
875,102 |
Loss on extinguishment of debt |
10,151,074 |
- |
- |
Other income, net |
(7,000,884) |
(1,335,249) |
(1,294,299) |
Total other expense (income) |
55,688,947 |
10,500,153 |
(419,197) |
Net (loss) income before income tax (benefit) provision |
(24,972,352) |
(15,080,916) |
2,492,392 |
Income tax (benefit) provision |
(4,532,239) |
(4,137,563) |
1,252,793 |
Net (loss) income |
(20,440,113) |
(10,943,353) |
1,239,599 |
Other comprehensive loss: |
|||
Foreign currency translation adjustment |
(4,439,856) |
- |
- |
Total comprehensive (loss) income |
$ (24,879,969) |
$ (10,943,353) |
$ 1,239,599 |
VERRA MOBILITY CORPORATION AND SUBSIDIARIES |
||||||||
UNAUDITED STATEMENTS OF SEGMENT PROFITABILITY |
||||||||
Successor |
||||||||
For the three months ended September 30, 2018 |
Government Solutions |
Commercial Services |
Corporate and Other |
Total |
||||
Service revenue |
$ 33,231,500 |
$ 71,972,173 |
$ - |
$ 105,203,673 |
||||
Product sales |
2,398,807 |
- |
- |
2,398,807 |
||||
Total revenue |
35,630,307 |
71,972,173 |
- |
107,602,480 |
||||
Cost of service revenue |
648,277 |
1,087,143 |
- |
1,735,420 |
||||
Cost of product sales |
1,375,105 |
- |
- |
1,375,105 |
||||
Operating expenses |
13,850,461 |
13,969,220 |
- |
27,819,681 |
||||
Selling, general and administrative expenses |
7,240,689 |
10,439,986 |
4,006,590 |
21,687,265 |
||||
Other (income) expense, net |
(26,123) |
(2,943,006) |
26,874 |
(2,942,255) |
||||
Segment Profit (Loss) |
$ 12,541,898 |
$ 49,418,830 |
$ (4,033,464) |
$ 57,927,264 |
||||
Segment profit (loss) |
$ 12,541,898 |
$ 49,418,830 |
$ (4,033,464) |
$ 57,927,264 |
||||
Depreciation, amortization, impairment, and (gain) loss on disposal of assets, net |
- |
- |
28,789,672 |
28,789,672 |
||||
Interest expense |
- |
- |
20,312,956 |
20,312,956 |
||||
Loss on extinguishment of debt |
- |
- |
- |
- |
||||
Income (loss) before income taxes |
$ 12,541,898 |
$ 49,418,830 |
$ (53,136,092) |
$ 8,824,636 |
||||
Successor |
||||||||
For the three months ended September 30, 2017 |
Government Solutions |
Commercial Services |
Corporate and Other |
Total |
||||
Service revenue |
$ 32,373,306 |
$ 23,235,387 |
$ - |
$ 55,608,693 |
||||
Product sales |
480,699 |
- |
- |
480,699 |
||||
Total revenue |
$ 32,854,005 |
$ 23,235,387 |
$ - |
$ 56,089,392 |
||||
Cost of service revenue |
641,407 |
196,804 |
- |
838,211 |
||||
Cost of product sales |
284,258 |
- |
- |
284,258 |
||||
Operating expenses |
14,828,550 |
6,874,781 |
- |
21,703,331 |
||||
Selling, general and administrative expenses |
5,522,603 |
5,994,795 |
4,313,152 |
15,830,550 |
||||
Other (income) expense, net |
(26,925) |
(1,049,475) |
2,434 |
(1,073,966) |
||||
Segment Profit (Loss) |
$ 11,604,112 |
$ 11,218,482 |
$ (4,315,586) |
$ 18,507,008 |
||||
Segment profit (loss) |
$ 11,604,112 |
$ 11,218,482 |
$ (4,315,586) |
$ 18,507,008 |
||||
Depreciation, amortization, impairment, and (gain) loss on disposal of assets, net |
- |
- |
14,221,542 |
14,221,542 |
||||
Interest |
- |
- |
8,947,089 |
8,947,089 |
||||
Income (loss) before income taxes |
$ 11,604,112 |
$ 11,218,482 |
$ (27,484,217) |
$ (4,661,623) |
VERRA MOBILITY CORPORATION AND SUBSIDIARIES |
||||||||
UNAUDITED STATEMENTS OF SEGMENT PROFITABILITY |
||||||||
Successor |
||||||||
For the nine months ended September 30, 2018 |
Government Solutions |
Commercial Services |
Corporate and Other |
Total |
||||
Service revenue |
$ 107,063,888 |
$ 164,189,760 |
$ - |
$ 271,253,648 |
||||
Product sales |
3,786,660 |
- |
- |
3,786,660 |
||||
Total revenue |
110,850,548 |
164,189,760 |
- |
275,040,308 |
||||
Cost of service revenue |
2,163,458 |
2,053,986 |
- |
4,217,444 |
||||
Cost of product sales |
2,425,132 |
- |
- |
2,425,132 |
||||
Operating expenses |
42,701,929 |
37,598,706 |
- |
80,300,635 |
||||
Selling, general and administrative expenses |
20,585,732 |
42,992,315 |
18,972,814 |
82,550,861 |
||||
Other (income) expense, net |
(88,853) |
(6,911,623) |
(408) |
(7,000,884) |
||||
Segment Profit (Loss) |
$ 43,063,150 |
$ 88,456,376 |
$ (18,972,406) |
$ 112,547,120 |
||||
Segment profit (loss) |
$ 43,063,150 |
$ 88,456,376 |
$ (18,972,406) |
$ 112,547,120 |
||||
Depreciation, amortization, impairment, and (gain) loss on disposal of assets, net |
- |
- |
74,829,641 |
74,829,641 |
||||
Interest expense |
- |
- |
52,538,757 |
52,538,757 |
||||
Loss on extinguishment of debt |
- |
- |
10,151,074 |
10,151,074 |
||||
Income (loss) before income taxes |
$ 43,063,150 |
$ 88,456,376 |
$ (156,491,878) |
$ (24,972,352) |
||||
Successor |
||||||||
For the four months ended September 30, 2017 |
Government Solutions |
Commercial Services |
Corporate and Other |
Total |
||||
Service revenue |
$ 43,746,847 |
$ 30,639,479 |
$ - |
$ 74,386,326 |
||||
Product sales |
688,325 |
- |
- |
688,325 |
||||
Total revenue |
$ 44,435,172 |
$ 30,639,479 |
$ - |
$ 75,074,651 |
||||
Cost of service revenue |
876,729 |
246,480 |
- |
1,123,209 |
||||
Cost of product sales |
471,197 |
- |
- |
471,197 |
||||
Operating expenses |
19,702,233 |
9,065,660 |
- |
28,767,893 |
||||
Selling, general and administrative expenses |
7,244,266 |
7,863,415 |
14,941,462 |
30,049,143 |
||||
Other (income) expense, net |
(33,346) |
(1,304,337) |
2,434 |
(1,335,249) |
||||
Segment Profit (Loss) |
$ 16,174,093 |
$ 14,768,261 |
$ (14,943,896) |
$ 15,998,458 |
||||
Segment profit (loss) |
$ 16,174,093 |
$ 14,768,261 |
$ (14,943,896) |
$ 15,998,458 |
||||
Depreciation, amortization, impairment, and (gain) loss on disposal of assets, net |
- |
- |
19,243,972 |
19,243,972 |
||||
Interest |
- |
- |
11,835,402 |
11,835,402 |
||||
Income (loss) before income taxes |
$ 16,174,093 |
$ 14,768,261 |
$ (46,023,270) |
$ (15,080,916) |
VERRA MOBILITY CORPORATION AND SUBSIDIARIES |
||||||||
UNAUDITED STATEMENTS OF SEGMENT PROFITABILITY |
||||||||
Predecessor |
||||||||
For the five months ended May 31, 2017 |
Government Solutions |
Commercial Services |
Corporate and Other |
Total |
||||
Service revenue |
$ 57,021,850 |
$ 35,509,089 |
$ - |
$ 92,530,939 |
||||
Product sales |
1,340,191 |
- |
- |
1,340,191 |
||||
Total revenue |
58,362,041 |
35,509,089 |
- |
93,871,130 |
||||
Cost of service revenue |
1,174,923 |
194,522 |
- |
1,369,445 |
||||
Cost of product sales |
963,504 |
- |
- |
963,504 |
||||
Operating expenses |
24,702,104 |
11,265,560 |
- |
35,967,664 |
||||
Selling, general and administrative expenses |
9,230,714 |
9,881,849 |
21,771,616 |
40,884,179 |
||||
Other (income) expense, net |
(48,416) |
(1,243,281) |
(2,602) |
(1,294,299) |
||||
Segment Profit (Loss) |
$ 22,339,212 |
$ 15,410,439 |
$ (21,769,014) |
$ 15,980,637 |
||||
Segment profit (loss) |
$ 22,339,212 |
$ 15,410,439 |
$ (21,769,014) |
$ 15,980,637 |
||||
Depreciation, amortization, impairment, and (gain) loss on disposal of assets, net |
- |
- |
12,613,143 |
12,613,143 |
||||
Interest |
- |
- |
875,102 |
875,102 |
||||
Income (loss) before income taxes |
$ 22,339,212 |
$ 15,410,439 |
$ (35,257,259) |
$ 2,492,392 |
VERRA MOBILITY CORPORATION AND SUBSIDIARIES |
|||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||
Successor |
Predecessor |
||
Nine months |
Four months |
Five months |
|
ended |
ended |
ended |
|
September 30, 2018 |
September 30, 2017 |
May 31, 2017 |
|
Cash flows from operating activities: |
|||
Net (loss) income |
$ (20,440,113) |
$ (10,943,353) |
$ 1,239,599 |
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: |
|||
Depreciation and amortization |
74,838,445 |
19,256,429 |
12,574,006 |
Amortization of deferred financing costs and discount |
6,932,724 |
948,846 |
143,241 |
Loss on extinguishment of debt |
10,151,074 |
- |
- |
Accretion expense |
292,580 |
87,193 |
106,404 |
(Gain) loss on disposal of assets |
(8,804) |
(12,457) |
39,137 |
Installation and service parts obsolescence and maintenance expense |
431,834 |
165,096 |
177,124 |
Bad debt expense |
4,355,700 |
2,185,435 |
2,181,957 |
Deferred income taxes |
(16,514,331) |
(4,482,852) |
(3,326,978) |
Changes in operating assets and liabilities: |
0 |
||
Accounts receivable, net |
(10,703,263) |
(13,467,878) |
6,107,664 |
Unbilled receivables |
(7,744,334) |
(1,974,786) |
1,945,493 |
Prepaid expense and other current assets |
3,750,798 |
(8,632,290) |
(1,581,750) |
Deposits and other non-current assets |
(1,304,686) |
421,916 |
322,260 |
Restricted cash |
57,019 |
(619,742) |
215,478 |
Accounts payable and accrued liabilities |
1,651,391 |
2,429,653 |
22,413,747 |
Other liabilities |
364,926 |
(78,008) |
(508,181) |
Net cash provided by (used in) operating activities |
46,110,960 |
(14,716,798) |
42,049,201 |
Cash flows from investing activities |
|||
Purchases of installation and service parts and property and equipment |
(19,919,129) |
(10,872,392) |
(8,952,667) |
Proceeds from damaged property and equipment |
296,264 |
66,750 |
41,909 |
Cash proceeds from the sale of assets |
5,154 |
9,975 |
124,694 |
Acquisition of business, net of cash acquired |
(525,361,663) |
(539,082,979) |
- |
Net cash used in investing activities |
(544,979,374) |
(549,878,646) |
(8,786,064) |
Cash flows from financing activities: |
|||
Borrowings on revolver |
468,306 |
13,000,000 |
40,752,179 |
Repayments on revolver |
(468,306) |
- |
(68,213,359) |
Predecessor payment of debt issuance costs |
- |
- |
(30,000) |
Borrowings of long-term debt |
- |
444,250,000 |
- |
Payment of debt issuance costs |
(30,351,948) |
(15,783,188) |
- |
Repayments of long-term debt |
(452,575,000) |
(812,500) |
- |
Borrowings of long-term debt |
1,033,800,000 |
- |
- |
Payment of debt extinguishment costs |
(8,186,961) |
- |
- |
Cash received pursuant to the Merger |
- |
129,026,399 |
- |
Net cash provided by (used in) financing activities |
542,686,091 |
569,680,711 |
(27,491,180) |
Effect of exchange rate changes on cash and cash equivalents |
(594,009) |
- |
- |
Net increase in cash and cash equivalents |
43,223,668 |
5,085,267 |
5,771,957 |
Cash and cash equivalents-Beginning of period |
8,724,945 |
- |
2,900,970 |
Cash and cash equivalents-End of period |
$ 51,948,613 |
$ 5,085,267 |
$ 8,672,927 |
Supplemental disclosure of cash flow information: |
|||
Cash paid (refunded) for income taxes, net |
$ 856,815 |
$ 9,162,890 |
$ (211,030) |
Cash paid for interest |
45,238,245 |
10,529,236 |
836,236 |
Supplemental non-cash investing and financing activities: |
|||
Capital contribution received in Parent common stock and subsequently exchanged in acquisition of business |
$ 117,555,632 |
$ - |
$ - |
Payable to seller in connection with business acquisition |
11,337,113 |
- |
- |
VERRA MOBILITY CORPORATION AND SUBSIDIARIES |
||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY |
||||||
Accumulated |
||||||
Retained |
Other |
Total |
||||
Common Stock |
Additional |
Earnings |
Comprehensive |
Stockholders' |
||
Shares |
Amount |
Paid-in-Capital |
(accumulated deficit) |
Loss |
Equity |
|
Balance as of December 31, 2017 |
100 |
$ 1 |
$ 129,026,398 |
$ 18,238,222 |
$ - |
$ 147,264,621 |
Net loss |
- |
- |
- |
(20,440,113) |
- |
(20,440,113) |
Foreign currency translation adjustment |
- |
- |
- |
- |
(4,439,856) |
(4,439,856) |
Capital contributions received in Parent common stock |
- |
- |
117,555,632 |
- |
- |
117,555,632 |
Balance as of September 30, 2018 |
100 |
$ 1 |
$ 246,582,030 |
$ (2,201,891) |
$ (4,439,856) |
$ 239,940,284 |
VERRA MOBILITY CORPORATION AND SUBSIDIARIES |
|||||||||||
ADJUSTED EBITDA RECEONCILIATION |
|||||||||||
Successor |
Successor |
Successor |
Successor |
Predecessor |
|||||||
For the Three 2018 |
For the Three |
For the Nine |
For the Four |
For the Five |
|||||||
($ in thousands) |
|||||||||||
Net income (loss) |
$ 6,513 |
$ (3,347) |
$ (20,440) |
$ (10,943) |
$ 1,240 |
||||||
Interest expense |
20,313 |
8,947 |
52,539 |
11,835 |
875 |
||||||
Income tax provision expense (benefit) |
2,312 |
(1,314) |
(4,532) |
(4,138) |
1,253 |
||||||
Depreciation and amortization |
28,792 |
14,234 |
74,838 |
19,256 |
12,574 |
||||||
EBITDA |
57,930 |
18,520 |
102,405 |
16,011 |
15,942 |
||||||
Transaction and other related expenses(i) |
1,669 |
21 |
25,589 |
10,055 |
21,772 |
||||||
Transformation expenses(ii) |
905 |
2,462 |
8,039 |
2,462 |
- |
||||||
Loss on extinguishment of debt(iii) |
- |
- |
10,151 |
- |
- |
||||||
Sponsor Fees and expenses(iv) |
1,433 |
1,829 |
4,133 |
2,424 |
- |
||||||
Non-cash amortization of contract inducement (v) |
- |
- |
- |
- |
277 |
||||||
Adjusted EBITDA |
$ 61,936 |
$ 22,833 |
$ 150,316 |
$ 30,953 |
$ 37,991 |
||||||
Adjusted EBITDA Margin % |
57.6% |
40.7% |
54.7% |
41.2% |
40.5% |
||||||
(i) |
Adjustments to add back deal fees incurred in relation to the Platinum's acquisition of ATS in May 2017 and Verra's acquisitions of HTA and EPC in March and April 2018, respectively. Consists primarily of acquisition services to advisors, professional fees and other expenses |
||||||||||
(ii) |
One-time costs including costs for 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 and lender and third-party costs to issue the new debt |
||||||||||
(iv) |
Sponsor management fees paid to Platinum |
||||||||||
(v) |
Adjustment for amortization of a tolling contract with a major RAC |
BASIS of Presentation
On
Pursuant to the 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
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 tax (if applicable), 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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