UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from ___________ to ___________.
Commission File Number:
(Exact name of registrant as specified in its charter)
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Incorporation) |
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Identification No.) |
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(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
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(Name of Each Exchange on Which Registered) |
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act:
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). YES ☐ NO
As of August 2, 2024, there were
VERRA MOBILITY CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2024
TABLE OF CONTENTS
2
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of federal securities laws. All statements contained in this Report other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, products, services, and technology offerings, market conditions, growth and trends, expansion plans and opportunities, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “potentially,” “preliminary,” “likely” and similar expressions, and the negative of these expressions, are intended to identify forward-looking statements.
The future events and trends discussed in this Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Factors that could cause actual results to differ include the risks and uncertainties described in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023 (our “Annual Report”), which highlight, among other risks:
You should not rely on forward-looking statements as predictions of future events. We operate in a very competitive and rapidly changing environment and new risks emerge from time to time. The forward-looking statements in this Report represent our views as of the date hereof. We undertake no obligation to update any of these forward-looking statements for any reason or to conform these statements to actual results or revised expectations.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports, are available free of charge on our website, verramobility.com, under the heading “Investors” immediately after they are filed with, or furnished to, the SEC. We use our investor relations website, ir.verramobility.com, as a means of disclosing information, which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our investor relations website, in addition to following our press releases, SEC filings, public conference calls, webcasts, and social media. Information contained on or accessible through, including any reports available on, our website is not a part of, and is not incorporated by reference into, this Report or any other report or document we file with the SEC. Any reference to our website in this Report is intended to be an inactive textual reference only.
Unless the context indicates otherwise, the terms “Verra Mobility,” the “Company,” “we,” “us,” and “our” as used in this Report refer to Verra Mobility Corporation, a Delaware corporation, and its subsidiaries taken as a whole.
3
Part I—Financial Information
Item 1. Financial Statements
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share data) |
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June 30, |
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December 31, |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Accounts receivable (net of allowance for credit losses of $ |
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Unbilled receivables |
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Inventory |
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Prepaid expenses and other current assets |
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Total current assets |
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Installation and service parts, net |
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Property and equipment, net |
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Operating lease assets |
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Intangible assets, net |
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Goodwill |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders' Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Deferred revenue |
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Accrued liabilities |
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Tax receivable agreement liability, current portion |
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Current portion of long-term debt |
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Total current liabilities |
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Long-term debt, net of current portion |
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Operating lease liabilities, net of current portion |
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Tax receivable agreement liability, net of current portion |
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Asset retirement obligations |
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Deferred tax liabilities, net |
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Other long-term liabilities |
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Total liabilities |
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Stockholders' equity |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Accumulated other comprehensive loss |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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See accompanying Notes to the Condensed Consolidated Financial Statements.
4
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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(In thousands, except per share data) |
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2024 |
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2023 |
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2024 |
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2023 |
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Service revenue |
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$ |
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$ |
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$ |
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$ |
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Product sales |
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Total revenue |
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Cost of service revenue, excluding depreciation and amortization |
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Cost of product sales |
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Operating expenses |
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Selling, general and administrative expenses |
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Depreciation, amortization and (gain) loss on disposal of assets, net |
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Total costs and expenses |
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Income from operations |
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Interest expense, net |
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Change in fair value of private placement warrants |
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Gain on interest rate swap |
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Loss on extinguishment of debt |
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Other income, net |
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( |
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( |
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Total other expenses |
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Income before income taxes |
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Income tax provision |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss): |
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Change in foreign currency translation adjustment |
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( |
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Total comprehensive income |
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$ |
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$ |
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$ |
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$ |
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Net income per share: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted average shares outstanding: |
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Basic |
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Diluted |
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See accompanying Notes to the Condensed Consolidated Financial Statements.
5
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
For the Three and Six Months Ended June 30, 2024 |
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Common |
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Common |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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(In thousands) |
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Shares |
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Amount |
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Consideration |
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Capital |
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Deficit |
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Loss |
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Equity |
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Balance as of December 31, 2023 |
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$ |
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$ |
— |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Share repurchases and retirement |
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( |
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— |
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— |
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( |
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— |
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— |
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Vesting of restricted stock units ("RSUs") and performance share units ("PSUs") |
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— |
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— |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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— |
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Payment of employee tax withholding related to RSUs and PSUs vesting |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive loss, net of tax |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balance as of March 31, 2024 |
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— |
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( |
) |
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( |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Share repurchases and retirement |
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( |
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( |
) |
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— |
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( |
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( |
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— |
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( |
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Vesting of RSUs and PSUs |
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— |
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— |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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— |
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Payment of employee tax withholding related to RSUs and PSUs vesting |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive income, net of tax |
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— |
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— |
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— |
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— |
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— |
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Balance as of June 30, 2024 |
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$ |
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$ |
— |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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For the Three and Six Months Ended June 30, 2023 |
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Balance as of December 31, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Vesting of RSUs and PSUs |
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— |
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— |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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— |
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Payment of employee tax withholding related to RSUs and PSUs vesting |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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Exercise of warrants |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive loss, net of tax |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance as of March 31, 2023 |
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( |
) |
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( |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Earn-out shares issued to PE Greenlight Holdings, LLC |
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— |
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( |
) |
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— |
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— |
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— |
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Vesting of RSUs |
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— |
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— |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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— |
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Payment of employee tax withholding related to RSUs vesting |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
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Exercise of warrants |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive income, net of tax |
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— |
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— |
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— |
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— |
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— |
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Balance as of June 30, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
See accompanying Notes to the Condensed Consolidated Financial Statements.
6
VERRA MOBILITY CORPORATION
condensed consolidated Statements of Cash Flows
(Unaudited)
|
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Six Months Ended June 30, |
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($ in thousands) |
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2024 |
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2023 |
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Cash Flows from Operating Activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
|
|
|
|
|
|
||
Amortization of deferred financing costs and discounts |
|
|
|
|
|
|
||
Change in fair value of private placement warrants |
|
|
|
|
|
|
||
Change in fair value of interest rate swap |
|
|
|
|
|
( |
) |
|
Loss on extinguishment of debt |
|
|
|
|
|
|
||
Credit loss expense |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
( |
) |
|
|
( |
) |
Stock-based compensation |
|
|
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|
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||
Other |
|
|
|
|
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||
Changes in operating assets and liabilities: |
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|
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|
|
|
||
Accounts receivable |
|
|
( |
) |
|
|
( |
) |
Unbilled receivables |
|
|
( |
) |
|
|
( |
) |
Inventory |
|
|
|
|
|
( |
) |
|
Prepaid expenses and other assets |
|
|
( |
) |
|
|
|
|
Deferred revenue |
|
|
( |
) |
|
|
|
|
Accounts payable and other current liabilities |
|
|
( |
) |
|
|
|
|
Other liabilities |
|
|
( |
) |
|
|
|
|
Net cash provided by operating activities |
|
|
|
|
|
|
||
Cash Flows from Investing Activities: |
|
|
|
|
|
|
||
Cash receipts (payments) for interest rate swap |
|
|
|
|
|
( |
) |
|
Purchases of installation and service parts and property and equipment |
|
|
( |
) |
|
|
( |
) |
Cash proceeds from the sale of assets |
|
|
|
|
|
|
||
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash Flows from Financing Activities: |
|
|
|
|
|
|
||
Repayment of long-term debt |
|
|
( |
) |
|
|
( |
) |
Payment of debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Proceeds from the exercise of warrants |
|
|
|
|
|
|
||
Share repurchases and retirement |
|
|
( |
) |
|
|
|
|
Proceeds from the exercise of stock options |
|
|
|
|
|
|
||
Payment of employee tax withholding related to RSUs and PSUs vesting |
|
|
( |
) |
|
|
( |
) |
Net cash (used in) provided by financing activities |
|
|
( |
) |
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
( |
) |
|
|
|
|
Net (decrease) increase in cash, cash equivalents and restricted cash |
|
|
( |
) |
|
|
|
|
Cash, cash equivalents and restricted cash - beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash - end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Reconciliation of cash, cash equivalents, and restricted cash |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Total cash, cash equivalents and restricted cash |
|
$ |
|
|
$ |
|
See accompanying Notes to the Condensed Consolidated Financial Statements.
7
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
|
|
Six Months Ended June 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Supplemental cash flow information: |
|
|
|
|
|
|
||
Interest paid |
|
$ |
|
|
$ |
|
||
Income taxes paid, net of refunds |
|
|
|
|
|
|
||
Supplemental non-cash investing and financing activities: |
|
|
|
|
|
|
||
Purchases of installation and service parts and property and equipment in accounts payable and accrued liabilities at period-end |
|
|
|
|
|
|
||
Accrued excise tax payable on net share repurchases |
|
|
|
|
|
|
||
Earn-out shares issued to PE Greenlight Holdings, LLC |
|
|
|
|
|
|
||
Proceeds receivable from the exercise of warrants at period-end |
|
|
|
|
|
|
||
Increase in additional paid-in capital due to exercise of private placement warrants |
|
|
|
|
|
|
See accompanying Notes to the Condensed Consolidated Financial Statements.
8
VERRA MOBILITY CORPORATION
Notes to the CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Description of Business
Verra Mobility Corporation (collectively with its subsidiaries, the “Company” or “Verra Mobility”) offers integrated technology solutions and services to its customers who are located throughout the world, primarily within the United States, Australia, Canada and Europe. The Company is organized into
The Commercial Services segment offers automated toll and violations management and title and registration solutions to rental car companies (“RACs”), direct commercial fleet owner-operators (“Direct Fleets”) and fleet management companies (“FMCs”) and other large fleet owners in North America. Through its established relationships with individual tolling authorities throughout the United States, the segment provides an automated and outsourced administrative solution for its customers while also providing a value-added convenience for vehicle drivers and benefits to tolling and issuing authorities. The toll and violations management solutions help ensure timely payment of tolls and violations incurred by the customers’ vehicles and perform timely transfers of liability on the customers’ behalf, and driver billing and collections, as applicable. It also manages regional toll transponder installation and vehicle association—a critical and highly complex process for RAC, Direct Fleet and FMC customers—to ensure that the transponders (and corresponding toll transactions) are associated with the correct vehicle. In Europe, the Commercial Services segment provides violations processing through Euro Parking Collection plc and consumer tolling services through Pagatelia S.L.U.
The Government Solutions segment offers photo enforcement solutions and services to its customers which include complete, end-to-end speed, red-light, school bus stop arm and bus lane enforcement solutions. These programs are designed to reduce traffic violations and resulting collisions, injuries and fatalities. The Company implements and administers traffic safety programs for municipalities, counties, school districts and law enforcement agencies of all sizes. The international operations for this segment primarily involve the sale of traffic enforcement products and recurring maintenance services related to the equipment and software.
The Parking Solutions segment offers an integrated suite of parking software, transaction processing and hardware solutions to its customers, which include universities, municipalities, healthcare facilities and commercial parking operators. This segment develops specialized hardware and parking management software that provides a platform for the issuance of parking permits, enforcement, gateless vehicle counting, event parking and citation services. It also produces and markets its proprietary software as a service to its customers throughout the United States and Canada.
2. Significant Accounting Policies
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the unaudited condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.
Use of Estimates
The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. There have been no material changes in the Company's significant accounting policies from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023.
9
Management believes that its estimates and assumptions are reasonable in the circumstances; however, actual results could differ materially from those estimates.
Concentration of Credit Risk
Significant customers are those which represent more than
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
City of New York Department of Transportation |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
The City of New York Department of Transportation (“NYCDOT”) represented
Significant customer revenues generated through the Company’s Commercial Services partners as a percent of total revenue are presented below:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Hertz Corporation |
|
|