Verra Mobility Announces Fourth Quarter and Full Year 2018 Financial Results
MESA, Ariz., March 18, 2019 /PRNewswire/ -- Verra Mobility Corporation (NASDAQ: VRRM) (the "Company" or "Verra Mobility") a leading provider of smart mobility technology solutions, today announced financial results for the fourth quarter and full year ended December 31, 2018.
Total revenue for the fourth quarter increased to $95.1 million compared to $63.2 million for fourth quarter of 2017. Total revenue for the full year 2018 increased to $370.1 million compared to $232.1 million for full year 2017.
"We are pleased with our execution during the fourth quarter and fiscal year 2018; this was an outstanding and transformative year for the Company. We closed two highly strategic acquisitions and became a publicly traded company through the SPAC transaction with Gores Holdings II," said David Roberts, Chief Executive Officer of Verra Mobility. "I could not be prouder of the team and the hard work that was accomplished to make this transformation seamless."
The Company reports its results of operations based on two operating segments: Commercial Services and Government Solutions. Commercial Services delivers market-leading automated toll and violations management and title and registration solutions to rental car companies, fleet management companies and other large fleet owners. Government Solutions delivers market-leading automated safety solutions to municipalities and school districts, including services and technology that enable photo enforcement via road safety camera programs related to red light, speed, school bus, and city bus lanes.
Fourth Quarter 2018 Financial Highlights
-- Revenues of $95.1 million
-- Net loss of $38.0 million
-- Adjusted EBITDA of $47.3 million, representing 49.7% of total revenue
-- Commercial Services segment generated total revenue of $58.4 million and
segment profit of $33.2 million
-- Government Solutions segment generated total revenue of $36.7 million
and segment profit of $13.1 million
-- Cash flow used in consolidated operations was $94,000
The Company recorded certain out-of-period adjustments which reduced revenue in the fourth quarter of 2018, in the aggregate amount of $4.2 million pertaining to prior 2018 quarters. These adjustments, had they been recorded in the period they originated, would have decreased revenue, as a percentage of quarterly revenue, as follows: Q1: -1.4%, Q2: -0.9%, Q3: -2.2% and Q4: +4.4%. The overall impact of these adjustments are immaterial to the Company's consolidated financial statements.
Full Year 2018 Financial Highlights
-- Revenues of $370.1 million
-- Net Loss of $58.4 million
-- Adjusted EBITDA of $197.6 million, representing 53.4% of total revenue
-- Commercial Services segment generated total revenue of $222.6 million
and segment profit of $121.6 million
-- Government Solutions segment generated total revenue of $147.5 million
and segment profit of $56.1 million
-- Cash flow from operations was $46.0 million
Quarterly Conference Call
Verra Mobility will host a conference call and live webcast to discuss financial results for investors and analysts at 5:00 a.m. Pacific Time (8:00 a.m. Eastern Time) on March 19, 2019. To access the conference call, dial (800) 263-0877 for the U.S. or Canada or (646) 828-8143 with conference ID # 3538970. The webcast will be available live on the Investors section of the company website at www.verramobility.com. An audio replay of the call will also be available to investors by phone beginning at approximately 8:00 a.m. Pacific Time on March 19, 2019, until 8:59 p.m. Pacific Time on April 2, 2019, by dialing (844) 512-2921 for the U.S. or Canada or (412) 317-6671 for international callers, and entering passcode #3538970. In addition, an archived webcast will be available on the Investors section of the company website at www.verramobility.com.
Forward-Looking Statements
This press release contains forward-looking statements which address The Company's expected future business and financial performance, and often contain words such as "goal," "target," "future," "estimate," "expect," "anticipate," "intend," "plan," "believe," "seek," "project," "may," "should," or "will" and similar expressions. Examples of forward-looking statements include, among others, statements regarding the benefits of the Company's strategic acquisitions; changes in the market for our products and services; expected operating results, such as revenue growth; expansion plans and opportunities; and earnings guidance related to 2018 financial and operational metrics. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those currently anticipated. Risks and uncertainties that may affect future results include those that are described from time to time in the Company's filings with the Securities and Exchange Commission ("SEC"), which are available on the Company's Investor Relations website, http://ir.verramobility.com, and on the SEC website, www.sec.gov. These forward-looking statements represent the judgment of the Company, as of the date of this release, and Verra Mobility disclaims any intent or obligation to update forward-looking statements. This press release should be read in conjunction with the information included in the Company's other press releases, reports and other filings with the SEC. Understanding the information contained in these filings is important in order to fully understand the Company's reported financial results and our business outlook for future periods.
Non-GAAP Financial Information
In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company also discloses certain non-GAAP financial information in this press release. These financial measures are not recognized measures under GAAP and they are not intended to be and should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. EBITDA, adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures as defined by SEC rules. This non-GAAP financial information may be determined or calculated differently by other companies. Reconciliations of these non-GAAP measurements to the most directly comparable GAAP financial measurements have been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation.
About Verra Mobility
Verra Mobility is committed to developing and using the latest in technology and data intelligence to help make transportation safer and easier. As a global company, Verra Mobility sits at the center of the mobility ecosystem - one that brings together vehicles, devices, information, and people to solve the most complex challenges faced by our customers and the constituencies they serve.
Verra Mobility serves the world's largest commercial fleets and rental car companies to manage tolling transactions and violations for millions of vehicles. A leading provider of connected systems, Verra Mobility processes millions of transactions each year through connectivity with more than 50 individual tolling authorities and more than 400 issuing authorities. Verra Mobility also fosters the development of safe cities, partnering with law enforcement agencies, transportation departments and school districts across North America operating thousands of red-light, speed, bus lane and school bus stop arm safety cameras. For more information, visit www.verramobility.com.
Investor Contact
Marc P. Griffin
ICR, Inc., for Verra Mobility
646-277-1290
IR@verramobility.com
VERRA MOBILITY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2018 2017
Assets
Current assets:
Cash and cash equivalents $
65,048,194 $
8,724,945
Restricted cash 2,033,186 1,784,665
Accounts receivable, net 87,510,691 60,180,536
Unbilled receivables 12,955,507 4,802,074
Prepaid expenses and other current
assets 17,600,270 15,788,912
Total current assets 185,147,848 91,281,132
Installation and service parts,
net 9,282,064 9,066,913
Property and equipment, net 69,242,811 65,370,696
Intangible assets, net 514,541,531 203,749,221
Goodwill 564,723,498 294,414,522
Other non-current assets 1,845,443 982,731
Total assets $
1,344,783,195 $
664,865,215
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable $
45,188,357 $
20,158,977
Accrued liabilities 14,443,967 10,086,622
Current portion of long-term debt 9,103,518 3,250,000
Total current liabilities 68,735,842 33,495,599
Long-term debt, net of current
portion and deferred financing
costs 860,249,164 425,439,034
Other long-term liabilities 3,368,710 2,689,145
Payable related to tax receivable
agreement 69,996,334
Asset retirement obligation 6,749,822 6,373,125
Deferred tax liabilities 33,627,191 49,603,691
Total Liabilities 1,042,727,063 517,600,594
Commitments and Contingencies
Stockholders' equity
Preferred stock, $.0001 par value,
1,000,000 shares authorized with
no
shares issued and
outstanding as of December 31,
2018 and 2017
Common stock, $.0001 par value,
260,000,000 shares authorized
with
156,056,642 and
60,483,804 shares issued and
outstanding as of
December 31, 2018 and 2017,
respectively 15,606 6,048
Common stock contingent
consideration 73,150,000
Additional paid-in capital 348,017,132 129,020,351
Retained earnings (accumulated
deficit) (113,306,294) 18,238,222
Accumulated other comprehensive
loss (5,820,312)
Total stockholders' equity 302,056,132 147,264,621
Total liabilities and
stockholders' equity $
1,344,783,195 $
664,865,215
VERRA MOBILITY CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
Three months ended
December 31, December 31,
Unaudited 2018 2017
Service revenue $
93,822,287 $
61,268,951
Product sales 1,283,125 1,895,085
Total revenue 95,105,412 63,164,036
Cost of service revenue 1,570,255 812,854
Cost of product sales 1,021,797 1,118,821
Operating expenses 28,582,987 21,703,161
Selling, general and
administrative expenses 53,517,772 14,832,998
Depreciation, amortization,
impairment, and
(gain) loss on disposal of
assets, net 28,523,027 13,868,581
Total costs and expenses 113,215,838 52,336,415
Income from operations (18,110,426) 10,827,621
Interest expense 17,011,457 9,022,518
Loss on extinguishment of debt 16,335,105
Other income (expense), net (1,793,712) (837,012)
Total other expense 31,552,850 8,185,506
Income (loss) before income
taxes (49,663,276) 2,642,115)
Income tax provision (benefit) (11,708,873) (26,539,460)
Net income $(37,954,403) $(29,181,575)
VERRA MOBILITY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
Successor
Predecessor
Period from Period From
Year Ended June 1, 2017 to January 1, 2017 to Year Ended
December 31, December 31, May 31, December 31,
2018 2017 2017 2016
Service revenue $
365,075,935 $
135,655,277 $
92,530,939 $
212,514,712
Product sales 5,069,785 2,583,410 1,340,191 18,234,874
Total revenue 370,145,720 138,238,687 93,871,130 230,749,586
Cost of service revenue 5,787,699 1,936,063 1,369,445 2,638,070
Cost of product sales 3,446,929 1,590,018 963,504 9,505,473
Operating expenses 108,883,622 50,471,055 35,967,664 83,762,399
Selling , general and administrative
expenses 136,068,633 44,882,140 40,884,179 53,033,871
Depreciation, amortization, impairment
and
(gain) loss on
disposal of assets, net 103,352,668 33,112,553 12,613,143 33,916,936
Total costs and expenses 357,539,551 131,991,829 91,797,935 182,856,749
Income from operations 12,606,169 6,246,858 2,073,195 47,892,837
Interest expense 69,550,214 20,857,920 875,102 2,706,499
Loss on extinguishment of debt 26,486,179
Other income, net (8,794,596) (2,172,261) (1,294,299) (2,470,776)
Total other expense (income) 87,241,797 18,685,659 (419,197) 235,723
(Loss) income before income tax
(benefit)
provision (74,635,628) (12,438,801) 2,492,392 47,657,114
Income tax (benefit) provision (16,241,112) (30,677,023) 1,252,793 18,661,030
Net (loss) income $
(58,394,516) $
18,238,222 $
1,239,599 $
28,996,084
Other comprehensive income (loss):
Foreign currency translation
adjustment (5,820,312)
Change in interest rate swap
valuation, net of taxes 50,255
Total comprehensive (loss) income $
(64,214,828) $
18,238,222 $
1,239,599 $
29,046,339
Earnings (loss) per share:
Basic weighted average shares
outstanding 87,320,072 60,483,804
Basic earnings (loss) per share $
(0.67) $
0.30 (1) (1)
Diluted weighted average shares
outstanding 87,320,072 60,483,804
Diluted earnings (loss) per share $
(0.67) $
0.30 (1) (1)
(1) Basis and diluted earnings (loss)
per share for the Predecessor
Period are not presented due to
lack of comparability with the
Successor Period.
VERRA MOBILITY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Successor
Predecessor
Period from Period From
Year Ended June 1, 2017 to January 1, 2017 to Year Ended
December 31, December 31, May 31, December 31,
2018 2017 2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $
(58,394,516) $
18,238,222 $
1,239,599 $
28,996,084
Adjustments to reconcile net (loss) income to
net cash provided by
operating
activities:
Depreciation and amortization 103,346,438 33,151,063 12,574,006 33,814,562
Loss on extinguishment of debt 26,486,179
Deferred financing cost amortization 9,167,979 1,981,476 143,241 475,596
Accretion expense 396,374 153,542 106,404 185,021
Write-downs of installation and service
parts and (gain) loss on
disposal
of assets 6,230 (38,510) 39,137 102,374
Installation and service parts expense 1,238,512 565,198 177,124 1,382,686
Bad debt expense 6,024,939 3,441,004 2,181,957 7,881,872
Deferred income taxes (24,434,693) (31,083,621) (3,326,978) (3,204,635)
Stock-based compensation 2,271,874 (618,911)
Changes in operating assets and liabilities:
Accounts receivable, net (23,721,307) (17,152,616) 6,107,664 (17,409,068)
Unbilled receivables (6,123,612) (362,336) 1,945,493 (2,655,961)
Prepaid expense and other current assets 2,959,758 4,202,237 (1,581,750) (2,584,650)
Other assets (845,281) 139,856 322,260 294,181
Accounts payable and accrued liabilities 7,125,305 (4,846,446) 22,413,747 (703,321)
Other Liabilities 512,648 (77,736) (508,181) (2,114,649)
Net cash provided by operating activities 46,016,827 8,311,333 41,833,723 43,841,181
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business, net of cash and
restricted cash acquired (536,698,777) (537,853,861) (21,232,989)
Purchases of installation and service parts
and property and
equipment (26,576,364) (15,873,607) (8,952,667) (14,825,371)
Cash proceeds from the sale of assets and
insurance recoveries 418,238 191,788 166,603 1,007,478
Net cash provided by (used in) investing
activities (562,856,903) (553,535,680) (8,786,064) (35,050,882)
CASH FLOWS FROM FINANCING ACTIVITIES:
Successor borrowings on revolver 468,306 18,530,956
Successor repayment on revolver (468,306) (18,530,956)
Successor borrowings of long-term debt 1,103,800,000 444,250,000
Successor repayment of long-term debt (654,850,879) (1,625,000)
Successor payment of debt issuance costs (31,752,670) (15,917,442)
Payment of debt extinguishment costs (12,186,961)
Capitalization from Merger with Gores
Holdings II 803,293,629
Payment of underwriting and transaction costs (24,023,524)
Predecessor borrowings on note payable 40,752,179 187,920,609
Predecessor repayments on note payable (68,213,359) (147,521,410)
Predecessor payments of debt issue costs (30,000) (332,500)
Capital contribution from Greenlight 169,258,843
Successor distribution to selling
shareholders (779,270,105)
Proceeds from issuance of common stock 129,026,399
Payment of cash dividend (47,107,808)
Net cash provided by (used in) by financing
activities 574,268,333 555,733,957 (27,491,180) (7,041,109)
Effect of exchange rate changes on cash and
cash equivalents (856,487)
Net increase in cash, cash equivalents and
restricted cash 56,571,770 10,509,610 5,556,479 1,749,190
Cash, cash equivalents and restricted cash -
beginning of period 10,509,610 4,345,567 2,596,377
Cash, cash equivalents and restricted cash -
end of period $
67,081,380 $
10,509,610 $
9,902,046 $
4,345,567
VERRA MOBILITY CORPORATION AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION
Successor Successor Successor Successor
Predecessor
For the Three For the Three For the Year Period from Period from For the Year
Months Months Ended June 1, 2017 to January 1, 2017 Ended
Ended Ended December 31, December 31, to May 31, December 31,
December 31, December 31,
($ in thousands) 2018 2017 2018 2017 2017 2016
Net income (loss) $
(37,954) $
29,182 $
(58,395) $
18,238 $
1,240 $
28,996
Interest expense 17,011 9,023 69,550 20,858 875 2,706
Income tax provision expense (benefit) (11,709) (26,539) (16,241) (30,677) 1,253 18,661
Depreciation and amortization 28,508 13,895 103,346 33,151 12,574 33,815
EBITDA (4,144) 25,559 98,260 41,570 15,942 84,178
Transaction and other related expenses
(i) 30,855 135 56,443 10,190 21,772 1,154
Transformation expenses (ii) 727 1,451 8,766 3,913
Loss on extinguishment of debt (iii) 16,335 26,486
Sponsor Fees and expenses (iv) 1,250 1,804 5,383 4,228
Non-cash amortization of contract
inducement (v) 277 1,784
Stock-based compensation (vi) 2,272 2,272
Adjusted EBITDA $
47,295 $
28,950 $
197,610 $
59,901 $
37,991 $
87,116
(i) Adjustments to add back deal fees
incurred in relation to the ATS
Merger (as defined below), Verra
Mobility's acquisition of Highway
Toll Administration, LLC and Euro
Parking Collection plc in March and
April 2018, respectively and the
Business Combination with Gores
Holdings II, Inc. in October 2018.
Consists primarily of acquisition
services to advisors, professional
fees and other expenses.
(ii) One-time costs including costs of
strategy consultants, procurement
optimization and IT optimization
(iii) Costs incurred to refinance the
Company's credit facility and term
loans. Includes prepayment
penalties, the write-off of
deferred financing costs, lender
fees and third-party costs to issue
the new debt.
(iv) Sponsor management fees paid to
Platinum Equity.
(v) Adjustments for amortization of a
tolling contract with a major RAC.
(vi) Non-cash stock based compensation.
Basis of Presentation
On May 31, 2017, the Company was acquired by Greenlight Acquisition Corporation ("Acquirer") pursuant to the Agreement and Plan of Merger, dated April 15, 2017 by and among the Company, Greenlight Merger Corporation, a wholly-owned subsidiary of Acquirer ("Merger Sub"), and Acquirer whereby the Company merged with and into Merger Sub with the former surviving (the "ATS Merger"). Acquirer is ultimately owned by certain private equity investment vehicles sponsored by Platinum Equity, LLC.
Pursuant to the ATS Merger, a new basis of accounting at fair value was established in accordance with U.S. GAAP under Accounting Standards Codification ("ASC") Topic 805, Business Combinations. The new stepped-up basis was pushed down by Acquirer to the Company. The consolidated financial statements and footnotes contained herein are presented in distinct periods to indicate the application of two different bases of accounting between the periods presented. The period from January 1, 2017 to May 31, 2017 has been labeled "Predecessor" and has been prepared using the historical basis of accounting of the Predecessor. The periods from June 1, 2017 to September 30, 2017 and from January 1, 2018 to September 30, 2018 have been labeled "Successor." The accompanying condensed consolidated statements of operations, cash flows and certain footnotes include a black line division separating the Predecessor Period from the Successor Period. As a result of purchase accounting, the pre-ATS Merger and post-ATS Merger condensed consolidated statements of operations and cash flows are not comparable.
Segment profit (loss) is based on revenues and income (loss) from operations before depreciation, amortization, impairment and gain (loss) on disposal of assets and after other income, net. Depreciation, amortization, impairment and gain (loss) on disposal of assets, interest expense, loss on extinguishment of debt and income taxes are not indicative of operating performance, and, as a result are not included in the operating and reportable segments. Other income, net consists primarily of credit card rebates earned on the prepayment of tolls and therefore included in Segment profit (loss). There are no significant non-cash items reported in Segment profit (loss).
EBITDA and adjusted EBITDA
EBITDA is defined as net income, net of interest expense, income taxes, depreciation and amortization. Adjusted EBITDA further excludes certain non-cash expenses, loss on extinguishment of debt and other transactions that management believes are not indicative of our business. Because EBITDA and adjusted EBITDA, as defined, exclude some but not all items that affect our cash flow from operating activities, they may not be comparable to similarly titled performance measures presented by other companies. EBITDA and adjusted EBITDA margins are calculated as EBITDA and adjusted EBITDA, respectively, divided by total revenues expressed as a percentage.
We present EBITDA and adjusted EBITDA because we believe they provide useful information regarding our ability to meet our future debt payment requirements, capital expenditures and working capital requirements and an overall evaluation of our financial condition. EBITDA and adjusted EBITDA have certain limitations as analytical tools and should not be used as substitutes for net income, cash flows from operations, or other consolidated income or cash flow data prepared in accordance with GAAP.
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SOURCE Verra Mobility Corporation
