vrrm-8k_20190806.DOCX.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 6, 2019

 

VERRA MOBILITY CORPORATION

(Exact name of registrant as specified in its charter)

 

 

Delaware

1-37979

81-3563824

(State or other jurisdiction
of incorporation)

(Commission
File Number)

(IRS Employer
Identification No.)

 

1150 N. Alma School Road
Mesa, Arizona
(Address of principal executive offices)

85201
(Zip Code)

(480) 443-7000

(Registrant’s telephone number, including area code)

 

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

(Title of each class)

 

(Trading symbol)

 

(Name of each exchange on which registered)

Class A common stock, par value $0.0001 per share

 

VRRM

 

Nasdaq Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

☒   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.

 

 


Item 2.02   Results of Operations and Financial Condition.

On August 6, 2019, Verra Mobility Corporation (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2019.  A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Item 2.02 and Exhibit 99.1 attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

Item 7.01   Regulation FD Disclosure.

The Company will host a conference call and live webcast to discuss its second quarter 2019 financial results on August 6, 2019, at 5 p.m. Eastern time. On August 6, 2019, the Company disseminated an investor presentation to be used in connection with the earnings call. A copy of the investor presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K and incorporated into this Item 7.01 by reference. Additionally, an investor presentation that will be used by the Company in presenting to certain existing and potential stockholders of the Company at upcoming investor conferences is attached as Exhibit 99.3 to this Current Report on Form 8-K and incorporated into this Item 7.01 by reference.

The information furnished in this Item 7.01 and Exhibits 99.2 and 99.3 attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as may be expressly set forth by specific reference in such filing.

The Company expressly disclaims any obligation to update or revise any of the information contained in the investor presentations.

The investor presentations are available on the Company’s investor relations website located at ir.verramobility.com, although the Company reserves the right to discontinue that availability at any time.

Item 9.01   Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit Number

 

Description of Exhibits

 

 

 

 

 

99.1

 

Press Release, dated August 6, 2019, issued by Verra Mobility Corporation.

 

99.2

 

Q2 2019 Earnings Presentation, dated August 6, 2019, given by Verra Mobility Corporation.

 

99.3

 

Investor Presentation, dated August 6, 2019, given by Verra Mobility Corporation.

 

 


2


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated:  August 6, 2019

Verra Mobility Corporation

 

 

 

 

By:

/s/ Patricia Chiodo

 

Name:

Patricia Chiodo

 

Title:

Chief Financial Officer

 

3

vrrm-ex991_6.htm

 

 Exhibit 99.1

 

 

Verra Mobility Announces Second Quarter 2019 Financial Results

 

Total revenue of $109.6 million

Net income of $3.6 million, Adjusted EBITDA of $59.7 million

Generated year-to-date cash flow from operations of $45.8 million

 

Mesa, AZ., - August 6, 2019 – Verra Mobility (NASDAQ: VRRM), a leading provider of smart mobility technology solutions, today announced financial results for the quarter ended June 30, 2019.

 

“Verra Mobility reported another strong quarter, with Q2 exceeding expectations across all key operating metrics. Ongoing growth in billable days and increases in tolling usage are driving our Commercial Services segment, while the expansion of school zone speed in NYC is foundational for our Government Solutions segment” stated David Roberts, Chief Executive Officer of Verra Mobility. “The strength of our core business as well as some of our longer term smart city innovation initiatives give us confidence in our ability to maintain momentum for the remainder of fiscal 2019 and support our vision as a global leader in smart transportation.”

 

 

Second Quarter 2019 Financial Highlights

 

Revenue: Total revenue for the second quarter of 2019 was $109.6 million, up 12% compared to $98.2 million for the second quarter of 2018. Within total revenue, service revenue was $103.1 million and product revenue contributed $6.5 million.

 

Net income (loss): Net income for the second quarter of 2019 was $3.6 million, or $0.02 per share, based on 162.0 million diluted weighted average shares outstanding. During the second quarter of 2018, we had a net loss of $4.8 million, or $0.07 per share, based on 72.5 million weighted average shares outstanding.

 

Adjusted EBITDA: Adjusted EBITDA was $59.7 million for the second quarter of 2019, up 9% compared to $54.6 million in the second quarter of 2018.

 

First Half of 2019 Financial Highlights

 

Revenue: Total revenue for the first half of 2019 was $208.0 million, up 24% compared to $167.4 million for the first half of 2018. Within total revenue, service revenue was $201.1 million and product revenue was $6.9 million.

 

Net income (loss): Net income for the first half of 2019 was $6.4 million, or $0.04 per share, based on 159.2 million diluted weighted average shares outstanding. During the first half of 2018, we had a net loss of $27.0 million, or $0.40 per share, based on 67.5 million weighted average shares outstanding.

 

Adjusted EBITDA: Adjusted EBITDA was $110.9 million for the first half of 2019, up 26% compared to $88.4 million in the first half of 2018.

 

1

 


 

The Company reports its results of operations based on two operating segments:

Commercial Services delivers market-leading automated toll and violations management and title and registration solutions to rental car companies, fleet management companies and other large fleet owners.

Government Solutions delivers market-leading automated safety solutions to municipalities and school districts, including services and technology that enable photo enforcement related to red-light, speed, school bus, and city bus lanes.  

 

Second Quarter 2019 Segment Detail

 

Commercial Services segment generated total revenue of $68.1 million growing 13.9% over the same period in the prior year, and segment profit of $44.1 million growing 20.2% over the prior year. Segment profit margins continue to be strong at 64.8% for 2019 and 61.4% for the prior year period.

 

Government Solutions segment generated total revenue of $41.5 million growing 8.0% over the same period in the prior year. The growth in this segment is driven by product sales in the current period which totaled $6.5 million. Segment profit of $15.5 million expanded slightly from $14.7 million in the prior year.  Segment margin was 37.5% in 2019 compared to 38.2% for the prior year period.

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 August 6, 2019. To access the conference call, dial (877) 407-0784 for the United States or Canada and (201) 689-8560 for international callers with conference ID #13692643. 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 8:59 p.m. Pacific Time (11:59 p.m. Eastern Time) on August 20, 2019, by dialing (844) 512-2921 for the United States or Canada and (412) 317-6671 for international callers, and entering passcode #13692643. In addition, an archived webcast will be available in the “News & Events” section of the Investor Relations page of the Company’s website at http://ir.verramobility.com.

About Verra Mobility

Verra Mobility is committed to developing and using the latest in technology and data intelligence to help make transportation safer and easier. As a global company, Verra Mobility sits at the center of the mobility ecosystem – one that brings together vehicles, devices, information, and people to solve complex challenges faced by our customers and the constituencies they serve.

Verra Mobility serves the world’s largest commercial fleets and rental car companies to manage tolling transactions and violations for millions of vehicles. As a leading provider of connected systems, Verra Mobility processes millions of transactions each year through connectivity with more than 50 individual tolling authorities and more than 400 issuing authorities. Verra Mobility also fosters the development of safe cities, partnering with law enforcement agencies, transportation departments and school districts across North America operating thousands of red-light, speed, bus lane and school bus stop arm safety cameras. Arizona-based Verra Mobility operates in more than 15 countries. For more information, visit www.verramobility.com.

2

 


 

Forward-Looking Statements

This press release contains forward-looking statements which address the Company’s expected future business and financial performance, and may contain words such as “goal,” “target,” “future,” “estimate,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “project,” “may,” “should,” “will” or similar expressions. Examples of forward-looking statements include, among others, statements regarding the benefits of the Company’s strategic acquisitions, changes in the market for our products and services, expected operating results, such as revenue growth, expansion plans and opportunities, and earnings guidance related to 2019 financial and operational metrics. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those currently anticipated. Risks and uncertainties that may affect future results include those that are described from time to time in the Company’s filings with the Securities and Exchange Commission (“SEC”), which are available on the Company’s Investor Relations website, http://ir.verramobility.com, and on the SEC website, www.sec.gov. These forward-looking statements represent the judgment of the Company, as of the date of this release, and Verra Mobility disclaims any intent or obligation to update forward-looking statements. This press release should be read in conjunction with the information included in the Company’s other press releases, reports and other filings with the SEC. Understanding the information contained in these filings is important in order to fully understand the Company’s reported financial results and our business outlook for future periods.

Non-GAAP Financial Measures

In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company also discloses certain non-GAAP financial information in this press release. These financial measures are not recognized measures under GAAP and 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 and Adjusted EPS are non-GAAP financial measures as defined by SEC rules. This non-GAAP financial information may be determined or calculated differently by other companies. Reconciliations of these non-GAAP measurements to the most directly comparable GAAP financial measurements have been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliations.

 

 


3

 


 

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

($ in thousands except per share data)

 

June 30,

2019

 

 

December 31,

2018

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

92,247

 

 

$

65,048

 

Restricted cash

 

 

1,743

 

 

 

2,033

 

Accounts receivable, net

 

 

106,261

 

 

 

87,511

 

Unbilled receivables

 

 

13,571

 

 

 

12,956

 

Prepaid expenses and other current assets

 

 

21,646

 

 

 

17,600

 

Total current assets

 

 

235,468

 

 

 

185,148

 

Installation and service parts, net

 

 

10,028

 

 

 

9,282

 

Property and equipment, net

 

 

65,907

 

 

 

69,243

 

Intangible assets, net

 

 

468,213

 

 

 

514,542

 

Goodwill

 

 

564,638

 

 

 

564,723

 

Other non-current assets

 

 

2,197

 

 

 

1,845

 

Total assets

 

$

1,346,451

 

 

$

1,344,783

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

49,318

 

 

$

45,188

 

Accrued liabilities

 

 

20,295

 

 

 

14,444

 

Current portion of long-term debt

 

 

9,104

 

 

 

9,104

 

Total current liabilities

 

 

78,717

 

 

 

68,736

 

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

 

 

859,133

 

 

 

860,249

 

Other long-term liabilities

 

 

3,764

 

 

 

3,369

 

Payable related to tax receivable agreement

 

 

66,097

 

 

 

69,996

 

Asset retirement obligation

 

 

6,873

 

 

 

6,750

 

Deferred tax liabilities

 

 

22,039

 

 

 

33,627

 

Total liabilities

 

 

1,036,623

 

 

 

1,042,727

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

 

Preferred stock, $.0001 par value

 

 

 

 

 

 

Common stock, $.0001 par value

 

 

16

 

 

 

16

 

Common stock contingent consideration

 

 

54,862

 

 

 

73,150

 

Additional paid-in capital

 

 

367,995

 

 

 

348,017

 

Accumulated deficit

 

 

(107,152

)

 

 

(113,306

)

Accumulated other comprehensive loss

 

 

(5,893

)

 

 

(5,821

)

Total stockholders' equity

 

 

309,828

 

 

 

302,056

 

Total liabilities and stockholders' equity

 

$

1,346,451

 

 

$

1,344,783

 

 


4

 


 

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(In thousands, except per share data)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Service revenue

 

$

103,057

 

 

$

97,044

 

 

$

201,127

 

 

$

166,050

 

Product sales

 

 

6,518

 

 

 

1,153

 

 

 

6,909

 

 

 

1,388

 

Total revenue

 

 

109,575

 

 

 

98,197

 

 

 

208,036

 

 

 

167,438

 

Cost of service revenue

 

 

1,613

 

 

 

1,651

 

 

 

3,002

 

 

 

2,482

 

Cost of product sales

 

 

2,918

 

 

 

878

 

 

 

3,194

 

 

 

1,050

 

Operating expenses

 

 

31,795

 

 

 

28,800

 

 

 

61,133

 

 

 

52,481

 

Selling, general and administrative expenses

 

 

20,865

 

 

 

27,588

 

 

 

41,416

 

 

 

60,864

 

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

 

 

28,850

 

 

 

27,496

 

 

 

57,791

 

 

 

46,040

 

Impairment of property and equipment

 

 

5,898

 

 

 

 

 

 

5,898

 

 

 

 

Total costs and expenses

 

 

91,939

 

 

 

86,413

 

 

 

172,434

 

 

 

162,917

 

Income from operations

 

 

17,636

 

 

 

11,784

 

 

 

35,602

 

 

 

4,521

 

Interest expense, net

 

 

15,656

 

 

 

19,579

 

 

 

31,689

 

 

 

32,226

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

10,151

 

Other income, net

 

 

(3,345

)

 

 

(2,766

)

 

 

(5,552

)

 

 

(4,059

)

Total other expenses

 

 

12,311

 

 

 

16,813

 

 

 

26,137

 

 

 

38,318

 

Income (loss) before income tax provision (benefit)

 

 

5,325

 

 

 

(5,029

)

 

 

9,465

 

 

 

(33,797

)

Income tax provision (benefit)

 

 

1,734

 

 

 

(234

)

 

 

3,054

 

 

 

(6,844

)

Net income (loss)

 

$

3,591

 

 

$

(4,795

)

 

$

6,411

 

 

$

(26,953

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(1,396

)

 

 

(3,712

)

 

 

(72

)

 

 

(3,712

)

Total comprehensive income (loss)

 

$

2,195

 

 

$

(8,507

)

 

$

6,339

 

 

$

(30,665

)

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

157,846

 

 

 

72,484

 

 

 

156,956

 

 

 

67,520

 

Basic earnings (loss) per share

 

$

0.02

 

 

$

(0.07

)

 

$

0.04

 

 

$

(0.40

)

Diluted weighted average shares outstanding

 

 

161,977

 

 

 

72,484

 

 

 

159,223

 

 

 

67,520

 

Diluted earnings (loss) per share

 

$

0.02

 

 

$

(0.07

)

 

$

0.04

 

 

$

(0.40

)

 


5

 


 

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Six Months Ended June 30,

 

($ in thousands)

 

2019

 

 

2018

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

6,411

 

 

$

(26,953

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

57,804

 

 

 

46,047

 

Amortization of deferred financing costs and discounts

 

 

3,589

 

 

 

4,215

 

Impairment of property and equipment

 

 

5,898

 

 

 

 

Bad debt expense

 

 

2,736

 

 

 

2,437

 

Deferred income taxes

 

 

(11,568

)

 

 

(10,949

)

Stock-based compensation

 

 

4,955

 

 

 

 

Loss on extinguishment of debt

 

 

 

 

 

10,151

 

Installation and service parts expense

 

 

643

 

 

 

244

 

Accretion expense

 

 

183

 

 

 

194

 

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

 

 

(13

)

 

 

(7

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(21,433

)

 

 

(3,490

)

Unbilled receivables

 

 

(616

)

 

 

(8,017

)

Prepaid expense and other current assets

 

 

(3,848

)

 

 

(428

)

Other assets

 

 

(351

)

 

 

(715

)

Accounts payable and accrued liabilities

 

 

5,224

 

 

 

(467

)

Other liabilities

 

 

(3,833

)

 

 

272

 

Net cash provided by operating activities

 

 

45,781

 

 

 

12,534

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Acquisition of businesses, net of cash and restricted cash acquired

 

 

 

 

 

(525,362

)

Purchases of installation and service parts and property and equipment

 

 

(14,192

)

 

 

(11,109

)

Cash proceeds from the sale of assets and insurance recoveries

 

 

14

 

 

 

3

 

Net cash used in investing activities

 

 

(14,178

)

 

 

(536,468

)

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

 

 

(4,552

)

 

 

(450,475

)

Payment of debt issuance costs

 

 

(152

)

 

 

(29,512

)

Payment of debt extinguishment costs

 

 

 

 

 

(8,187

)

Net cash (used in) provided by financing activities

 

 

(4,704

)

 

 

545,626

 

Effect of exchange rate changes on cash and cash equivalents

 

 

10

 

 

 

(507

)

Net increase in cash, cash equivalents and restricted cash

 

 

26,909

 

 

 

21,185

 

Cash, cash equivalents and restricted cash - beginning of period

 

 

67,081

 

 

 

10,509

 

Cash, cash equivalents and restricted cash - end of period

 

$

93,990

 

 

$

31,694

 

 


6

 


 

VERRA MOBILITY CORPORATION

QUARTERLY RESULTS AND ADJUSTED EBITDA RECONCILIATION

(Unaudited)

 

 

Q2 2018

 

 

Q2 2019

 

($ in thousands)

 

As Reported

 

 

As Reported

 

Service revenue

 

$

97,044

 

 

$

103,057

 

Product sales

 

 

1,153

 

 

 

6,518

 

Total revenue

 

 

98,197

 

 

 

109,575

 

Cost of service revenue

 

 

1,651

 

 

 

1,613

 

Cost of product sales

 

 

878

 

 

 

2,918

 

Operating expenses

 

 

28,800

 

 

 

31,795

 

Selling, general and administrative expenses

 

 

27,588

 

 

 

20,865

 

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

 

 

27,496

 

 

 

28,850

 

Impairment of property and equipment

 

 

 

 

 

5,898

 

Total costs and expenses

 

 

86,413

 

 

 

91,939

 

Income from operations

 

 

11,784

 

 

 

17,636

 

Interest expense, net

 

 

19,579

 

 

 

15,656

 

Loss on extinguishment of debt

 

 

 

 

 

 

Other income, net

 

 

(2,766

)

 

 

(3,345

)

Total other expenses

 

 

16,813

 

 

 

12,311

 

(Loss) income before income tax (benefit) provision

 

 

(5,029

)

 

 

5,325

 

Income tax (benefit) provision

 

 

(234

)

 

 

1,734

 

Net (loss) income

 

$

(4,795

)

 

$

3,591

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Reconciliation

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(4,795

)

 

$

3,591

 

Interest expense, net

 

 

19,579

 

 

 

15,656

 

Income tax (benefit) provision

 

 

(234

)

 

 

1,734

 

Depreciation and amortization

 

 

27,496

 

 

 

28,865

 

EBITDA

 

 

42,046

 

 

 

49,846

 

Transaction and other related expenses (i)

 

 

5,816

 

 

 

1,135

 

Transformation expenses (ii)

 

 

5,393

 

 

 

 

Impairment of property and equipment (iii)

 

 

 

 

 

5,898

 

Sponsor fees and expenses (iv)

 

 

1,343

 

 

 

 

Stock-based compensation (v)

 

 

 

 

 

2,812

 

Adjusted EBITDA

 

$

54,598

 

 

$

59,691

 

Adjusted EBITDA Margin

 

 

55.6

%

 

 

54.5

%

 

 

(i)

In Q2 2018, costs incurred related to the EPC acquisition, primarily consisting of acquisition services expenses to Platinum Equity Advisors, LLC, professional fees and other expenses. In Q2 2019, costs related to secondary offering expenses incurred by us.

 

(ii)

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

 

(iii)

This represents an impairment charge on fixed assets.

 

(iv)

Sponsor management fees paid to Platinum Equity Advisors, LLC.

 

(v)

Non-cash stock based compensation.

 

 


7

 


 

VERRA MOBILITY CORPORATION

CALCULATION OF PRO FORMA INFORMATION AND ADJUSTED EBITDA RECONCILIATION

(Unaudited)

 

 

Year-to-Date

 

 

 

 

 

 

 

 

 

Year-to-Date

 

 

Year-to-Date

 

 

 

Q2 2018

 

 

Pro Forma

 

 

Q2 2018

 

 

Q2 2019

 

($ in thousands)

 

As Reported

 

 

HTA

 

EPC

 

 

Consolidated

 

 

As Reported

 

Service revenue

 

$

166,050

 

 

$

15,828

 

$

2,954

 

 

$

184,832

 

 

$

201,127

 

Product sales

 

 

1,388

 

 

 

 

 

 

 

 

1,388

 

 

 

6,909

 

Total revenue

 

 

167,438

 

 

 

15,828

 

 

2,954

 

 

 

186,220

 

 

 

208,036

 

Cost of service revenue

 

 

2,482

 

 

 

 

 

361

 

 

 

2,843

 

 

 

3,002

 

Cost of product sales

 

 

1,050

 

 

 

 

 

 

 

 

1,050

 

 

 

3,194

 

Operating expenses

 

 

52,481

 

 

 

4,362

 

 

810

 

 

 

57,653

 

 

 

61,133

 

Selling, general and administrative expenses

 

 

60,864

 

 

 

12,270

 

 

610

 

 

 

73,744

 

 

 

41,416

 

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

 

 

46,040

 

 

 

398

 

 

27

 

 

 

46,465

 

 

 

57,791

 

Impairment of property and equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

5,898

 

Total costs and expenses

 

 

162,917

 

 

 

17,030

 

 

1,808

 

 

 

181,755

 

 

 

172,434

 

Income (loss) from operations

 

 

4,521

 

 

 

(1,202

)

 

1,146

 

 

 

4,465

 

 

 

35,602

 

Interest expense, net

 

 

32,226

 

 

 

33

 

 

 

 

 

32,259

 

 

 

31,689

 

Loss on extinguishment of debt

 

 

10,151

 

 

 

 

 

 

 

 

10,151

 

 

 

 

Other income, net

 

 

(4,059

)

 

 

 

 

(6

)

 

 

(4,065

)

 

 

(5,552

)

Total other expenses (income)

 

 

38,318

 

 

 

33

 

 

(6

)

 

 

38,345

 

 

 

26,137

 

(Loss) income before income tax (benefit) provision

 

 

(33,797

)

 

 

(1,235

)

 

1,152

 

 

 

(33,880

)

 

 

9,465

 

Income tax (benefit) provision

 

 

(6,844

)

 

 

10

 

 

238

 

 

 

(6,596

)

 

 

3,054

 

Net (loss) income

 

$

(26,953

)

 

$

(1,245

)

$

914

 

 

$

(27,284

)

 

$

6,411

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(26,953

)

 

$

(1,245

)

$

914

 

 

$

(27,284

)

 

$

6,411

 

Interest expense, net

 

 

32,226

 

 

 

33

 

 

 

 

 

32,259

 

 

 

31,689

 

Income tax (benefit) provision

 

 

(6,844

)

 

 

10

 

 

238

 

 

 

(6,596

)

 

 

3,054

 

Depreciation and amortization

 

 

46,047

 

 

 

398

 

 

27

 

 

 

46,472

 

 

 

57,804

 

EBITDA

 

 

44,476

 

 

 

(804

)

 

1,179

 

 

 

44,851

 

 

 

98,958

 

Transaction and other related expenses (i)

 

 

23,920

 

 

 

11,467

 

 

 

 

 

35,387

 

 

 

1,135

 

Transformation expenses (ii)

 

 

7,133

 

 

 

 

 

 

 

 

7,133

 

 

 

 

Impairment of property and equipment (iii)

 

 

 

 

 

 

 

 

 

 

 

 

 

5,898

 

Loss on extinguishment of debt (iv)

 

 

10,151

 

 

 

 

 

 

 

 

10,151

 

 

 

 

Sponsor fees and expenses (v)

 

 

2,700

 

 

 

 

 

 

 

 

2,700

 

 

 

 

Stock-based compensation (vi)

 

 

 

 

 

 

 

 

 

 

 

 

 

4,955

 

Adjusted EBITDA

 

$

88,380

 

 

$

10,663

 

$

1,179

 

 

$

100,222

 

 

$

110,946

 

Adjusted EBITDA Margin

 

 

52.8

%

 

 

67.4

%

 

39.9

%

 

 

53.8

%

 

 

53.3

%

 

 

(i)

For the first half of 2018, these represent adjustments to add back deal fees incurred in relation to the Company’s acquisition by Greenlight Acquisition Corporation in May 2017 and our acquisitions of HTA and EPC. It primarily consists of acquisition services to Platinum Equity Advisors, LLC, professional fees and other expenses.

 

(ii)

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

 

(iii)

This represents an impairment charge on fixed assets.

 

(iv)

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

 

(v)

Sponsor management fees paid to Platinum Equity Advisors, LLC.

 

(vi)

Non-cash stock based compensation.


8

 


 

VERRA MOBILITY CORPORATION

 

 

FREE CASH FLOW

(Unaudited)

 

Six Months Ended June 30,

 

($ in thousands)

 

2019

 

 

2018

 

Net cash provided by operating activities

 

$

45,781

 

 

$

12,534

 

Purchases of installation and service parts and property and equipment

 

 

(14,192

)

 

 

(11,109

)

Free cash flow

 

$

31,589

 

 

$

1,425

 

 

 

 

ADJUSTED EPS

(Unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(In thousands, except per share data)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income (loss)

 

$

3,591

 

 

$

(4,795

)

 

$

6,411

 

 

$

(26,953

)

Amortization of intangibles

 

 

23,130

 

 

 

22,188

 

 

 

46,261

 

 

 

34,534

 

Impairment of property and equipment

 

 

5,898

 

 

 

 

 

 

5,898

 

 

 

 

Stock-based compensation

 

 

2,812

 

 

 

 

 

 

4,955

 

 

 

 

Adjusted Net Income

 

$

35,431

 

 

$

17,393

 

 

$

63,525

 

 

$

7,581

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares - basic

 

 

157,846

 

 

 

72,484

 

 

 

156,956

 

 

 

67,520

 

Adjusted net income per common share - basic

 

$

0.22

 

 

$

0.24

 

 

$

0.40

 

 

$

0.11

 

Weighted average shares - diluted

 

 

161,977

 

 

 

72,484

 

 

 

159,223

 

 

 

67,520

 

Adjusted net income per common share - diluted

 

$

0.22

 

 

$

0.24

 

 

$

0.40

 

 

$

0.11

 

 


9

 


 

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, including loss on extinguishment of debt and other transactions that management believes are not indicative of our business. Because EBITDA and Adjusted EBITDA, as defined, exclude some but not all items that affect our cash flow from operating activities, they may not be comparable to similarly titled performance measures presented by other companies. EBITDA and Adjusted EBITDA margins are calculated as EBITDA and Adjusted EBITDA, respectively, divided by total 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

We define “Adjusted Net Income as net income (lo