Verra Mobility Announces Fourth Quarter and Full Year 2019 Financial Results
MESA, Ariz., March 2, 2020 /PRNewswire/ -- Verra Mobility (NASDAQ: VRRM), a leading provider of smart mobility technology solutions, announced today financial results for the quarter and full year ended December 31, 2019.
"We are pleased with our execution throughout the year and ended 2019 on a strong note with a solid quarter. We were able to exceed expectations across our key metrics and showed investors that our diversified product portfolio can support an attractive combination of growth and profitability at scale," said David Roberts, Chief Executive Officer, Verra Mobility. "The strength of our core business and our longer-term smart city initiatives give us confidence in our ability to maintain momentum throughout 2020 and support our vision to be the global leader in smart transportation."
Fourth Quarter 2019 Financial Highlights
-- Revenue: Total revenue for the fourth quarter of 2019 was $112.5
million, up 18.2% compared to $95.1 million for the fourth quarter of
2018. Within total revenue, service revenue was $104.8 million and
product revenue contributed $7.6 million.
-- Net income (loss): Net income for the fourth quarter of 2019 was $9.2
million, or $0.06 per share, based on 163.9 million diluted weighted
average shares outstanding. Net loss for the comparable 2018 period was
$38.0 million, or $0.27 loss per share, based on 140.7 million diluted
weighted average shares outstanding.
-- Adjusted EBITDA: Adjusted EBITDA was $59.6 million for the fourth
quarter of 2019, up 26.0% compared to $47.3 million in the fourth
quarter of 2018.
Full Year 2019 Financial Highlights
-- Revenue: Total revenue for the 2019 year was $448.7 million, up 21.2%
compared to $370.1 million for 2018. The pro forma revenue growth year
over year was 15.4% for the HTA and EPC acquisitions in early 2018.
Within total revenue, service revenue was $416.7 million and product
revenue was $32.0 million.
-- Net income (loss): Net income for 2019 was $33.3 million, or $0.21 per
share, based on 161.5 million diluted weighted average shares
outstanding. For the 2018 year, we had a net loss of $58.4 million, or
$0.67 per share, based on 87.3 million weighted average shares
outstanding.
-- Adjusted EBITDA: Adjusted EBITDA was $241.4 million for full year 2019,
up 22.2% compared to $197.6 million for full year 2018. The pro forma
adjusted EBITDA growth year over year was 15.2% for the HTA and EPC
acquisitions in early 2018.
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.
Fourth Quarter 2019 Segment Detail
-- Commercial Services segment generated total revenue of $68.2 million
growing 16.7% over the same period in 2018. Segment profit was $42.0
million, a 27% increase from $33.2 million in the prior year. Segment
profit margins continue to be strong at 61.6% for 2019 and 56.8% for the
2018 period.
-- Government Solutions segment generated total revenue of $44.3 million
growing 20.7% over the same period in 2018. The growth in this segment
is driven by product sales in the current period which totaled $7.6
million. Segment profit was $17.5 million, a 34% increase from $13.1
million in the prior year. Segment margin was 39.6% in 2019 compared to
35.7% for the prior year period.
Quarterly Conference Call
Verra Mobility will host a conference call and a live webcast to discuss financial results for investors and analysts at 3:00 p.m. Mountain Time (5:00 p.m. Eastern Time) on March 2, 2020. To access the conference call, dial (877) 407-0784 for the United States or Canada and (201) 689-8560 for international callers. 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 9:59 p.m. Mountain Time (11:59 p.m. Eastern Time) on March 16, 2020, by dialing (844) 512-2921 for the United States or Canada and (412) 317-6671 for international callers, and entering passcode #13698123. 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.
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 2020 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 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. These non-GAAP financial measures 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.
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
($ in thousands except per share December December
data)
31, 31,
2019 2018
---
Assets
Current assets:
Cash and cash equivalents $
131,513 $
65,048
Restricted cash 917 2,033
Accounts receivable, net 93,514 87,511
Unbilled receivables 20,003 12,956
Prepaid expenses and other current
assets 26,491 17,600
Total current assets 272,438 185,148
Installation and service parts,
net 8,841 9,282
Property and equipment, net 72,266 69,243
Operating lease assets 32,177
Intangible assets, net 434,443 514,542
Goodwill 584,150 564,723
Other non-current assets 3,111 1,845
Total assets $
1,407,426 $
1,344,783
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable $
50,825 $
45,188
Accrued liabilities 25,277 14,444
Current portion of long-term debt 28,779 9,104
Total current liabilities 104,881 68,736
Long-term debt, net of current
portion and deferred financing
costs 837,686 860,249
Operating lease liabilities, net
of current portion 30,130
Other long-term liabilities 2,183 3,369
Payable to related party pursuant
to tax receivable agreement 61,174 69,996
Asset retirement obligation 6,309 6,750
Deferred tax liabilities 25,716 33,627
Total liabilities 1,068,079 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 367,266 348,017
Accumulated deficit (80,220) (113,306)
Accumulated other comprehensive
loss (2,577) (5,821)
Total stockholders' equity 339,347 302,056
Total liabilities and
stockholders' equity $
1,407,426 $
1,344,783
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three Months Ended December 31, Year Ended December 31,
(In thousands, except per share
data) 2019 2018 2019 2018
---
Service revenue $
104,839 $
93,823 $
416,723 $
365,076
Product sales 7,622 1,283 32,014 5,070
Total revenue 112,461 95,106 448,737 370,146
Cost of service revenue 1,171 1,571 5,561 5,788
Cost of product sales 3,487 1,022 13,919 3,447
Operating expenses 31,542 28,582 125,640 108,883
Selling, general and
administrative expenses 22,784 53,518 85,493 136,069
Depreciation, amortization and
(gain) loss on disposal of
assets, net 29,283 28,523 115,771 103,353
Impairment of property and
equipment 5,898
Total costs and expenses 88,267 113,216 352,282 357,540
Income (loss) from operations 24,194 (18,110) 96,455 12,606
Interest expense, net 14,108 17,012 60,729 69,550
Loss on extinguishment of debt 16,335 26,486
Other income, net (2,919) (1,794) (11,198) (8,795)
Total other expenses 11,189 31,553 49,531 87,241
Income (loss) before income tax
provision (benefit) 13,005 (49,663) 46,924 (74,635)
Income tax provision (benefit) 3,825 (11,709) 13,581 (16,241)
Net income (loss) $
9,180 $
(37,954) $
33,343 $
(58,394)
Other comprehensive income (loss):
Change in foreign currency
translation adjustment 4,980 (1,381) 3,244 (5,821)
Total comprehensive income (loss) $
14,160 $
(39,335) $
36,587 $
(64,215)
Net income (loss) per share:
Basic $
0.06 $
(0.27) $
0.21 $
(0.67)
Diluted $
0.06 $
(0.27) $
0.21 $
(0.67)
Weighted average shares used in
per share calculation:
Basic outstanding 159,009 140,691 157,890 87,320
Diluted outstanding 163,910 140,691 161,522 87,320
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Year Ended December 31,
($ in thousands) 2019 2018
---
Cash Flows from Operating Activities:
Net income (loss) $
33,343 $
(58,394)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 115,566 103,346
Amortization of deferred financing
costs and discounts 6,641 9,168
Impairment of property and equipment 5,898
Bad debt expense 8,100 6,025
Deferred income taxes (10,894) (24,435)
Stock-based compensation 10,012 2,272
Loss on extinguishment of debt 26,486
Installation and service parts
expense 1,166 1,238
Accretion expense 350 396
Write-downs of installation and
service parts and loss on disposal
of assets 205 7
Changes in operating assets and
liabilities:
Accounts receivable, net (12,662) (23,721)
Unbilled receivables (6,428) (6,124)
Prepaid expenses and other current
assets (7,150) 2,115
Accounts payable and accrued
liabilities (8,194) 7,125
Other liabilities (2,151) 513
Net cash provided by operating
activities 133,802 46,017
Cash Flows from Investing Activities:
Acquisition of businesses, net of
cash and restricted cash acquired (25,519) (536,699)
Purchases of installation and service
parts and property and equipment (29,685) (26,576)
Cash proceeds from the sale of assets 231 418
Net cash used in investing activities (54,973) (562,857)
Cash Flows from Financing Activities:
Borrowings on revolver 468
Repayment on revolver (468)
Borrowings of long-term debt 1,103,800
Repayment of long-term debt (9,104) (654,851)
Payment of debt issuance costs (426) (31,753)
Payment of debt extinguishment costs (12,187)
Payment of employee tax withholding
related to RSU vesting (4,990)
Capitalization from merger with Gores
Holdings 803,294
Payment of underwriting and
transaction costs (24,024)
Capital contribution from Greenlight 169,259
Distribution to selling shareholders (779,270)
Net cash (used in) provided by
financing activities (14,520) 574,268
Effect of exchange rate changes on
cash and cash equivalents 1,040 (856)
Net increase in cash, cash
equivalents and restricted cash 65,349 56,572
Cash, cash equivalents and restricted
cash -beginning of period 67,081 10,509
Cash, cash equivalents and restricted
cash -end of period $
132,430 $
67,081
VERRA MOBILITY CORPORATION
QUARTERLY RESULTS AND ADJUSTED EBITDA RECONCILIATION
(Unaudited)
Q4 2019 Q4 2018
($ in thousands) As Reported As Reported
---
Service revenue $
104,839 $
93,823
Product sales 7,622 1,283
Total revenue 112,461 95,106
Cost of service revenue 1,171 1,571
Cost of product sales 3,487 1,022
Operating expenses 31,542 28,582
Selling, general and administrative
expenses 22,784 53,518
Depreciation, amortization and (gain)
loss on disposal of assets, net 29,283 28,523
Total costs and expenses 88,267 113,216
Income (loss) from operations 24,194 (18,110)
Interest expense, net 14,108 17,012
Loss on extinguishment of debt 16,335
Other income, net (2,919) (1,794)
Total other expenses 11,189 31,553
Income (loss) before income tax
provision (benefit) 13,005 (49,663)
Income tax provision (benefit) 3,825 (11,709)
Net income (loss) $
9,180 $
(37,954)
Adjusted EBITDA Reconciliation
---
Net income (loss) $
9,180 $
(37,954)
Interest expense, net 14,108 17,012
Income tax provision (benefit) 3,825 (11,709)
Depreciation and amortization 29,065 28,507
EBITDA 56,178 (4,144)
Transaction and other related
expenses (i) 946 30,854
Transformation expenses (ii) 727
Loss on extinguishment of debt (iii) 16,335
Sponsor fees and expenses (iv) 1,250
Stock-based compensation (v) 2,586 2,272
TRA liability adjustment (vi) (106)
Adjusted EBITDA $
59,604 $
47,294
Adjusted EBITDA Margin 53.0 49.7
% %
(i) In Q4 2019, costs incurred related
primarily to the Pagatelia
acquisition. In Q4 2018, costs
incurred related to the business
combination with Gores Holdings II,
Inc in October 2018.
(ii) One-time costs related to
optimizing the expense structure
and defining our growth strategy.
(iii) This 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 Advisors, LLC.
(v) Non-cash stock based compensation.
(vi) This represents an adjustment to the
TRA liability during full year 2019
based upon changes to taxable
income and tax rates.
VERRA MOBILITY CORPORATION
CALCULATION OF PRO FORMA INFORMATION AND ADJUSTED EBITDA RECONCILIATION
(Unaudited)
Pro Forma
Year-to-Date Year-to-Date Year-to-Date
2019 2018 2018
($ in thousands) As Reported As Reported HTA EPC Combined
---
Service revenue $
416,723 $
365,076 $
15,828 $
2,954 $
383,858
Product sales 32,014 5,070 5,070
Total revenue 448,737 370,146 15,828 2,954 388,928
Cost of service revenue 5,561 5,788 361 6,149
Cost of product sales 13,919 3,447 3,447
Operating expenses 125,640 108,883 4,362 810 114,055
Selling, general and administrative
expenses 85,493 136,069 12,270 610 148,949
Depreciation, amortization and (gain)
loss on disposal of assets, net 115,771 103,353 398 27 103,778
Impairment of property and equipment 5,898
Total costs and expenses 352,282 357,540 17,030 1,808 376,378
Income (loss) from operations 96,455 12,606 (1,202) 1,146 12,550
Interest expense, net 60,729 69,550 33 69,583
Loss on extinguishment of debt 26,486 26,486
Other income, net (11,198) (8,795) (6) (8,801)
Total other expenses (income) 49,531 87,241 33 (6) 87,268
Income (loss) before income tax
provision (benefit) 46,924 (74,635) (1,235) 1,152 (74,718)
Income tax provision (benefit) 13,581 (16,241) 10 238 (15,993)
Net income (loss) $
33,343 $
(58,394) $
(1,245) $
914 $
(58,725)
Adjusted EBITDA Reconciliation
---
Net income (loss) $
33,343 $
(58,394) $
(1,245) $
914 $
(58,725)
Interest expense, net 60,729 69,550 33 69,583
Income tax provision (benefit) 13,581 (16,241) 10 238 (15,993)
Depreciation and amortization 115,566 103,346 398 27 103,771
EBITDA 223,219 98,261 (804) 1,179 98,636
Transaction and other related
expenses (i) 2,368 56,443 11,467 67,910
Transformation expenses (ii) 8,765 8,765
Impairment of property and equipment
(iii) 5,898
Loss on extinguishment of debt (iv) 26,486 26,486
Sponsor fees and expenses (v) 5,383 5,383
Stock-based compensation (vi) 10,012 2,272 2,272
TRA liability adjustment (vii) (106)
Adjusted EBITDA $
241,391 $
197,610 $
10,663 $
1,179 $
209,452
Adjusted EBITDA Margin 53.8 53.4 67.4 39.9 53.9
% % % % %
(i) For full year 2019, these related to
secondary offering costs incurred
by us for PE Greenlight Holdings,
LLC and transaction expenses for
the Pagatelia acquisition. For full
year 2018, these represent
adjustments to add back deal fees
incurred in relation to the
Company's acquisition by Greenlight
Acquisition Corporation in May
2017, our acquisitions of HTA and
EPC, and the business combination
with Gores Holdings II, Inc. in
October 2018. 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 that were used and
held in our operations.
(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.
(vii) This represents an adjustment to the
TRA liability during the 2019 year
based upon changes to taxable
income and tax rates.
VERRA MOBILITY CORPORATION
FREE CASH FLOW
(Unaudited)
Year Ended December 31,
($ in thousands) 2019 2018
---
Net cash provided by
operating activities $
133,802 $
46,017
Purchases of
installation and
service parts and
property and equipment (29,685) (26,576)
Free cash flow $
104,117 $
19,441
ADJUSTED EPS
(Unaudited)
Q4 Q4 Year-to-Date Year-to-Date
(In thousands, except per share data) 2019 2018 2019 2018
---
Net income (loss) $
9,180 $
(37,954) $
33,343 $
(58,394)
Amortization of intangibles 23,404 23,129 92,797 80,797
Transaction and other related
expenses 946 30,854 2,368 56,443
Transformation expenses 727 8,765
Impairment of property and equipment 5,898
Loss on extinguishment of debt 16,335 26,486
Sponsor fees and expenses 1,250 5,383
Stock-based compensation 2,586 2,272 10,012 2,272
TRA liability adjustment (106) (106)
Total adjustments 26,830 74,567 110,969 180,146
Income tax effect on adjustments (7,891) (17,581) (32,117) (39,201)
Total adjustments after income tax
effect 18,939 56,986 78,852 140,945
Adjusted Net Income $
28,119 $
19,032 $
112,195 $
82,551
Adjusted EPS $
0.17 $
0.14 $
0.69 $
0.95
Diluted weighted average shares
outstanding 163,910 140,691 161,522 87,320
Acquisitions and Mergers
We acquired Pagatelia on October 31, 2019, which provides consumer tolling and parking solutions in Europe.
We acquired HTA on March 1, 2018 which strengthened our position in the tolling market and EPC on April 6, 2018 which provides a platform for expansion into Europe.
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) adjusted to exclude interest expense, net, 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 ongoing operating performance. EBITDA and Adjusted EBITDA, as defined, exclude some but not all items that affect our cash flow from operating activities, as a result, 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 revenue 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 (loss), 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 (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.
Investor Relations Contact
Marc P. Griffin
ICR, Inc., for Verra Mobility
646-277-1290
IR@verramobility.com
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