Verra Mobility Corporation (NASDAQ: VRRM), a leading provider of smart mobility technology solutions, announced today the financial results for the quarter ended March 31, 2022.
"We are off to a great start for the year, delivering strong growth and profitability. All areas of our business are benefitting from strong macro trends, including a significant increase in travel that is driving our Commercial Services performance," said David Roberts, Chief Executive Officer, Verra Mobility. "I am very pleased with our financial results across all our segments, and we are experiencing solid increases to bookings and our sales pipelines, both of which are leading indicators for future growth. I am also pleased to report our board of directors has approved a $125 million share repurchase program based on our conviction that the repurchase of our shares represents an attractive investment opportunity to redeploy excess capital and enhance long-term shareholder value creation."
First Quarter 2022 Financial Highlights
We report our results of operations based on three operating segments:
First Quarter 2022 Segment Detail
Liquidity: As of March 31, 2022, cash and cash equivalents were $93.4 million and we generated $31.2 million in cash flows from operations for 2022.
Share repurchase program: The Board of Directors has approved a stock repurchase program, which authorizes the Company to repurchase up to $125 million of its Class A common stock over the next twelve months from time to time in open market transactions, accelerated share repurchases or in privately negotiated transactions, each as permitted under applicable rules and regulations. Repurchases may be conducted and may be suspended or terminated at any time without notice. The extent to which the Company repurchases shares of its Class A common stock and the timing of such purchases will depend upon market conditions, the Company's capital position, and other considerations as may be considered by the Company in its sole discretion. Repurchases may also be made pursuant to a trading plan under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so because of self-imposed trading blackout periods or other regulatory restrictions. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities. The repurchase program will be executed consistent with the Company's capital allocation strategy, which will continue to prioritize investments to grow the business.
2022 Full Year Guidance
Any guidance that we provide is subject to change as a variety of factors can affect actual operating results. Certain of the factors that may impact our actual operating results are identified below in the safe harbor language included within Forward-Looking Statements of this press release. In addition, our recent acquisition of T2 Systems includes preliminary allocation of the fair values of assets acquired and liabilities assumed as of the acquisition date. Purchase price allocations are subject to change within the measurement period (up to one year from the acquisition date).
Based on our first-quarter results and our outlook for the remainder of the year, we are expecting to deliver results at the high-end of the guidance range for all revenue measures and Adjusted EBITDA. The guidance originally provided on March 31, 2022 is summarized below:
Service revenue $635 million - $652 million
Product sales $59 million - $63 million
Total revenue $694 million - $715 million
Adjusted EBITDA $312 million - $322 million
Conference Call Details
Date: May 9, 2022
Time: 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time)
U.S. and Canadian Callers Dial-in: 1-800-289-0438
Outside of U.S. and Canada Dial-in: 1-323-794-2423 for international callers with conference ID #2688029
Webcast Information: Available live in the "Investor Relations" section of our website at http://ir.verramobility.com.
An audio replay of the call will also be available until 11:59 p.m. ET on May 23, 2022, by dialing 1-844-512-2921 for the U.S. or Canada and 1-412-317-6671 for international callers and entering passcode #2688029. In addition, an archived webcast will be available in the "News & Events" section of the Investor Relations 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.
As a leading provider of connected mobility systems, Verra Mobility serves the world's largest rental car companies and commercial fleets by managing tolling and violation transactions for millions of vehicles each year through integration and connectivity with hundreds of tolling and issuing authorities. Verra Mobility also fosters the development of safe cities, partnering with law enforcement agencies, transportation departments and school districts mainly across North America operating thousands of speed, red-light, bus lane and school bus stop arm safety cameras, and by offering parking hardware and software solutions. Arizona-based Verra Mobility operates in North America, Australia, Europe and Asia. For more information, visit www.verramobility.com.
Forward-Looking Statements
This press release contains forward-looking statements which address our 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 our 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 2022 financial and operational metrics. Forward-looking statements involve risks and uncertainties and a number of factors could cause actual results to differ materially from those currently anticipated. These factors include, but are not limited to: (1) the disruption to our business and results of operations as a result of the COVID-19 pandemic; (2) customer concentration in our Commercial Services and Government Solutions segments; (3) decreases in the prevalence of automated and other similar methods of photo enforcement, parking solutions or the use of tolling; (4) risks and uncertainties related to our government contracts, including but not limited to administrative hurdles, legislative changes, termination rights, audits and investigations; (5) decreased interest in outsourcing from our customers; (6) our ability to properly perform under our contracts and otherwise satisfy our customers; (7) our ability to compete in a highly competitive and rapidly evolving market; (8) our ability to keep up with technological developments and changing customer preferences; (9) the success of our new products and changes to existing products and services; (10) our ability to successfully integrate our recent or future acquisitions; (11) failures in or breaches of our networks or systems, including as a result of cyber-attacks; and (12) other risks and uncertainties indicated from time to time in documents filed or to be filed with the Securities and Exchange Commission (the "SEC") by Verra Mobility. This press release should be read in conjunction with the information included in our other press releases, reports and other filings with the SEC. Understanding the information contained in these filings is important in order to fully understand our 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"), we also disclose certain non-GAAP financial information in this press release. These financial measures are not recognized measures under GAAP and 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, Free Cash Flow, Adjusted Net Income, Adjusted EPS and Adjusted EBITDA Margin are non-GAAP financial measures as defined by SEC rules. These non-GAAP financial measures may be determined or calculated differently by other companies. As a result, they may not be comparable to similarly titled performance measures presented 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.
We are not providing a quantitative reconciliation of Adjusted EBITDA, which is included in our 2022 financial guidance above, in reliance on the "unreasonable efforts" exception for forward-looking non-GAAP measures set forth in SEC rules because certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated without unreasonable effort and expense. In this regard, we are unable to provide a reconciliation of forward-looking Adjusted EBITDA to GAAP net income (loss), due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. Due to the uncertainty of estimates and assumptions used in preparing forward-looking non-GAAP measures, we caution investors that actual results could differ materially from these non-GAAP financial projections.
We use these non-GAAP financial 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, we also believe that these non-GAAP measures provide 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. These non-GAAP measures have certain limitations as analytical tools and should not be used as substitutes for net income, cash flows from operations, earnings per share or other consolidated income or cash flow data prepared in accordance with GAAP.
EBITDA and Adjusted EBITDA
We define EBITDA as net income (loss) adjusted to exclude interest expense, net, income taxes, depreciation and amortization. Adjusted EBITDA further excludes certain non-cash expenses and other transactions that management believes are not indicative of our ongoing operating performance. EBITDA and Adjusted EBITDA, as defined, exclude some but not all items that affect our cash flow from operating activities.
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 (loss) adjusted to exclude amortization of intangibles and certain non-cash or non-recurring expenses.
Adjusted EPS
We define "Adjusted EPS" as Adjusted Net Income divided by the diluted weighted average shares for the period.
Adjusted EBITDA Margin
We define "Adjusted EBITDA Margin" as Adjusted EBITDA as a percentage of total revenue.
VERRA MOBILITY CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
| ||||||||
($ in thousands except per share data) | March 31, | December 31, | ||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 93,377 | $ | 101,283 | ||||
Restricted cash | 4,016 | 3,149 | ||||||
Accounts receivable (net of allowance for credit losses of $14.3 million and | 171,906 | 160,979 | ||||||
Unbilled receivables | 39,484 | 29,109 | ||||||
Inventory, net | 15,451 | 12,093 | ||||||
Prepaid expenses and other current assets | 38,745 | 41,456 | ||||||
Total current assets | 362,979 | 348,069 | ||||||
Installation and service parts, net | 15,491 | 13,332 | ||||||
Property and equipment, net | 99,351 | 96,066 | ||||||
Operating lease assets | 39,944 | 38,862 | ||||||
Intangible assets, net | 460,083 | 487,299 | ||||||
Goodwill | 837,910 | 838,867 | ||||||
Other non-current assets | 8,727 | 14,561 | ||||||
Total assets | $ | 1,824,485 | $ | 1,837,056 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 63,049 | $ | 67,556 | ||||
Deferred revenue | 27,369 | 27,141 | ||||||
Accrued liabilities | 46,668 | 38,435 | ||||||
Payable to related party pursuant to tax receivable agreement, current portion | 5,107 | 5,107 | ||||||
Current portion of long-term debt | 11,952 | 36,952 | ||||||
Total current liabilities | 154,145 | 175,191 | ||||||
Long-term debt, net of current portion | 1,206,276 | 1,206,802 | ||||||
Operating lease liabilities, net of current portion | 35,850 | 34,984 | ||||||
Payable to related party pursuant to tax receivable agreement, net of current portion | 56,615 | 56,615 | ||||||
Private placement warrant liabilities | 42,200 | 38,466 | ||||||
Asset retirement obligation | 12,032 | 11,824 | ||||||
Deferred tax liabilities, net | 28,286 | 47,524 | ||||||
Other long-term liabilities | 13,266 | 5,686 | ||||||
Total liabilities | 1,548,670 | 1,577,092 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity | ||||||||
Preferred stock, $0.0001 par value | — | — | ||||||
Common stock, $0.0001 par value | 16 | 16 | ||||||
Common stock contingent consideration | 36,575 | 36,575 | ||||||
Additional paid-in capital | 312,986 | 309,883 | ||||||
Accumulated deficit | (71,376) | (81,416) | ||||||
Accumulated other comprehensive loss | (2,386) | (5,094) | ||||||
Total stockholders' equity | 275,815 | 259,964 | ||||||
Total liabilities and stockholders' equity | $ | 1,824,485 | $ | 1,837,056 | ||||
VERRA MOBILITY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
($ in thousands, except per share data) | 2022 | 2021 | ||||||
Service revenue | $ | 161,134 | $ | 89,763 | ||||
Product sales | 9,251 | 95 | ||||||
Total revenue | 170,385 | 89,858 | ||||||
Cost of service revenue | 3,779 | 880 | ||||||
Cost of product sales | 5,995 | 27 | ||||||
Operating expenses | 51,063 | 30,492 | ||||||
Selling, general and administrative expenses | 41,635 | 28,443 | ||||||
Depreciation, amortization and (gain) loss on disposal of assets, net | 35,907 | 28,265 | ||||||
Total costs and expenses | 138,379 | 88,107 | ||||||
Income from operations | 32,006 | 1,751 | ||||||
Interest expense, net | 14,279 | 9,164 | ||||||
Change in fair value of private placement warrants | 3,734 | 2,067 | ||||||
Loss on extinguishment of debt | — | 5,334 | ||||||
Other income, net | (2,866) | (3,013) | ||||||
Total other expenses | 15,147 | 13,552 | ||||||
Income (loss) before income taxes | 16,859 | (11,801) | ||||||
Income tax provision (benefit) | 6,819 | (2,886) | ||||||
Net income (loss) | $ | 10,040 | $ | (8,915) | ||||
Other comprehensive income (loss): | ||||||||
Change in foreign currency translation adjustment | 2,708 | (190) | ||||||
Total comprehensive income (loss) | $ | 12,748 | $ | (9,105) | ||||
Net income (loss) per share: | ||||||||
Basic | $ | 0.06 | $ | (0.05) | ||||
Diluted | $ | 0.06 | $ | (0.05) | ||||
Weighted average shares outstanding: | ||||||||
Basic | 156,130 | 162,297 | ||||||
Diluted | 160,749 | 162,297 | ||||||
VERRA MOBILITY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
($ in thousands) | 2022 | 2021 | ||||||
Cash Flows from Operating Activities: | ||||||||
Net income (loss) | $ | 10,040 | $ | (8,915) | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 35,675 | 28,214 | ||||||
Amortization of deferred financing costs and discounts | 1,306 | 1,593 | ||||||
Change in fair value of private placement warrants | 3,734 | 2,067 | ||||||
Loss on extinguishment of debt | — | 5,334 | ||||||
Credit loss expense | 3,505 | 2,402 | ||||||
Deferred income taxes | (18,771) | 281 | ||||||
Stock-based compensation | 4,446 | 2,908 | ||||||
Other | 354 | 133 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | (14,300) | (26,672) | ||||||
Unbilled receivables | (10,265) | (859) | ||||||
Inventory, net | (5,722) | (691) | ||||||
Prepaid expenses and other assets | 8,235 | 429 | ||||||
Deferred revenue | 46 | (44) | ||||||
Accounts payable and other current liabilities | (477) | 2,374 | ||||||
Other liabilities | 13,441 | 459 | ||||||
Net cash provided by operating activities | 31,247 | 9,013 | ||||||
Cash Flows from Investing Activities: | ||||||||
Payment of contingent consideration | (412) | — | ||||||
Purchases of installation and service parts and property and equipment | (11,478) | (3,704) | ||||||
Cash proceeds from the sale of assets | 25 | 56 | ||||||
Net cash used in investing activities | (11,865) | (3,648) | ||||||
Cash Flows from Financing Activities: | ||||||||
Repayment on the revolver | (25,000) | — | ||||||
Borrowings of long-term debt | — | 996,750 | ||||||
Repayment of long-term debt | (2,255) | (865,642) | ||||||
Payment of debt issuance costs | (54) | (5,732) | ||||||
Payment of debt extinguishment costs | — | (604) | ||||||
Proceeds from the exercise of stock options | 93 | — | ||||||
Payment of employee tax withholding related to RSUs vesting | (1,436) | (857) | ||||||
Net cash (used in) provided by financing activities | (28,652) | 123,915 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 2,231 | 252 | ||||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (7,039) | 129,532 | ||||||
Cash, cash equivalents and restricted cash - beginning of period | 104,432 | 120,892 | ||||||
Cash, cash equivalents and restricted cash - end of period | $ | 97,393 | $ | 250,424 | ||||
VERRA MOBILITY CORPORATION ADJUSTED EBITDA RECONCILIATION (Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
($ in thousands) | 2022 | 2021 | ||||||
Net income (loss) | $ | 10,040 | $ | (8,915) | ||||
Interest expense, net | 14,279 | 9,164 | ||||||
Income tax provision (benefit) | 6,819 | (2,886) | ||||||
Depreciation and amortization | 35,675 | 28,214 | ||||||
EBITDA | 66,813 | 25,577 | ||||||
Transaction and other related expenses (i) | 216 | 4,126 | ||||||
Transformation expenses (ii) | 86 | 332 | ||||||
Change in fair value of private placement warrants (iii) | 3,734 | 2,067 | ||||||
Loss on extinguishment of debt (iv) | — | 5,334 | ||||||
Stock-based compensation (v) | 4,446 | 2,908 | ||||||
Adjusted EBITDA | $ | 75,295 | $ | 40,344 | ||||
(i) | Transaction and other related expenses incurred in 2021 primarily relate to costs for the acquisition of Redflex Holdings Limited and certain costs for the debt offering of senior unsecured notes and refinancing the first lien term loan during the period. |
(ii) | Transformation expenses in 2021 consist of severance and other employee separation costs related to exit activities initiated during the period. |
(iii) | This consists of adjustments to the private placement warrants liability from the re-measurement to fair value at the end of each reporting period. |
(iv) | The loss on extinguishment of debt in 2021 consists of a $4.0 million write-off of pre-existing deferred financing costs and discounts and $1.3 million of lender and third-party costs associated with the issuance of the 2021 first lien term loan. |
(v) | Stock-based compensation represents the non-cash charge related to the issuance of awards under the Verra Mobility Corporation 2018 Equity Incentive Plan. |
FREE CASH FLOW (Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
($ in thousands) | 2022 | 2021 | ||||||
Net cash provided by operating activities | $ | 31,247 | $ | 9,013 | ||||
Purchases of installation and service parts and property and equipment | (11,478) | (3,704) | ||||||
Free cash flow | $ | 19,769 | $ | 5,309 | ||||
ADJUSTED EPS (Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
(In thousands, except per share data) | 2022 | 2021 | ||||||
Net income (loss) | $ | 10,040 | $ | (8,915) | ||||
Amortization of intangibles | 27,331 | 22,719 | ||||||
Transaction and other related expenses | 216 | 4,126 | ||||||
Transformation expenses | 86 | 332 | ||||||
Change in fair value of private placement warrants | 3,734 | 2,067 | ||||||
Loss on extinguishment of debt | — | 5,334 | ||||||
Stock-based compensation | 4,446 | 2,908 | ||||||
Total adjustments before income tax effect | 35,813 | 37,486 | ||||||
Income tax effect on adjustments | (14,485) | (9,167) | ||||||
Total adjustments after income tax effect | 21,328 | 28,319 | ||||||
Adjusted Net Income | $ | 31,368 | $ | 19,404 | ||||
Adjusted EPS | $ | 0.20 | $ | 0.12 | ||||
Diluted weighted average shares outstanding | 160,749 | 162,297 | ||||||
Investor Relations Contact
Mark Zindler
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| Last Trade: | US$23.44 |
| Daily Change: | -0.28 -1.18 |
| Daily Volume: | 700,644 |
| Market Cap: | US$3.900B |
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