Verra Mobility Announces Second Quarter 2020 Financial Results
MESA, Ariz., Aug. 6, 2020 /PRNewswire/ -- Verra Mobility (NASDAQ: VRRM), a leading provider of smart mobility technology solutions, announced today financial results for the three and six months ended June 30, 2020.
"Verra Mobility reported a solid quarter and we are pleased with our execution given the challenging environment. During one of the most difficult quarters in our history, we still provided robust adjusted EBITDA and positive free cash flow," said David Roberts, Chief Executive Officer, Verra Mobility. "Although the near-term business environment is uncertain, we believe our balanced product portfolio provides stability in these uncertain times, and our longer-term growth initiatives give us confidence in our future as a global leader in smart transportation."
Second Quarter 2020 Financial Highlights
-- Revenue: Total revenue for the second quarter of 2020 was $79.8 million,
down 27.2% compared to $109.6 million for the second quarter of 2019.
Within total revenue, service revenue was $62.8 million and product
sales contributed $17.0 million. The decline was in our service revenue,
due to the significant impact of the novel coronavirus ("COVID-19") on
the rental car industry, which was partially offset by growth in product
sales.
-- Net (loss) income: Net loss for the second quarter of 2020 was $(15.4)
million, or $(0.10) per share, based on 161.7 million diluted weighted
average shares outstanding. Net income for the comparable 2019 period
was $3.6 million, or $0.02 per share, based on 162.0 million diluted
weighted average shares outstanding.
-- Adjusted EBITDA: Adjusted EBITDA was $27.6 million for the second
quarter of 2020, compared to $59.7 million in the same period last year.
First Half of 2020 Financial Highlights
-- Revenue: Total revenue for the first half of 2020 was $196.5 million,
down 5.5% compared to $208.0 million for the first half of 2019. Within
total revenue, service revenue was $162.3 million and product sales
contributed $34.2 million. The decline was in our service revenue, due
to COVID-19's significant negative impact on the rental car industry,
which was partially offset by growth in product sales.
-- Net (loss) income: Net loss for the first half of 2020 was $(8.7)
million, or $(0.05) per share, based on 161.3 million diluted weighted
average shares outstanding. Net income for the comparable 2019 period
was $6.4 million, or $0.04 per share, based on 159.2 million diluted
weighted average shares outstanding.
-- Adjusted EBITDA: Adjusted EBITDA was $82.5 million for the first half of
2020, compared to $110.9 million in the first six months of 2019.
Liquidity: As of June 30, 2020, cash and cash equivalents was $113.2 million. We generated $22.5 million in net cash from operations for the first half of 2020. As of June 30, 2020, we had total debt of $870.2 million, net of cash on hand our net debt was $757.0 million, and a $75 million revolver that is undrawn.
The operating results for the first half of 2020 were impacted by COVID-19, which emerged in late 2019 in China and has since spread throughout the world. COVID-19 has had and continues to have a significant negative impact on the global economy, including the rental car industry due to reduced airline travel and widespread travel restrictions and lockdown orders throughout the world. Refer to the section below entitled, Forward Looking Statements, for further discussion on risks and uncertainties.
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 2020 Segment Detail
-- Commercial Services segment generated total revenue of $27.3 million, a
decrease of 60% compared to the same period in 2019. Segment profit was
$7.2 million, a 84% decrease from $44.1 million in the prior year. The
significant decreases in revenue and profit resulted from COVID-19's
negative impact on the rental car industry discussed above, the full
impact of which is not yet known. Segment profit margin was 26% for 2020
and 65% for the same period in 2019.
-- Government Solutions segment generated total revenue of $52.5 million
growing 27% over the same period in 2019. The growth in this segment is
driven by product sales in the current period which totaled $17.0
million. Segment profit was $20.3 million, a 31% increase from $15.5
million in the prior year. Segment margin was 39% in 2020 compared to
38% 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 August 6, 2020. To access the conference call, dial (866) 548-4713 for the U.S. or Canada and (323) 794-2093 for international callers with conference ID #7743142. 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 August 20, 2020, by dialing (844) 512-2921 for the U.S. or Canada and (412) 317-6671 for international callers, and entering passcode #7743142. 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. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward looking statements. 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) the impact of the COVID-19 pandemic on our revenues from key customers in the rental car industry and from photo enforcement programs; (3) customer concentration in our Commercial Services and Government Solutions segments; (4) decreases in the prevalence of automated photo enforcement or the use of tolling; (5) risks and uncertainties related to our government contracts, including but not limited to legislative changes, termination rights, audits and investigations; (6) decreased interest in outsourcing from our customers; (7) our ability to properly perform under our contracts and otherwise satisfy our customers; (8) our ability to compete in a highly competitive and rapidly evolving market; (9) our ability to keep up with technological developments and changing customer preferences; (10) the success of our new products and changes to existing products and services; (11) our ability to successfully integrate our recent or future acquisitions; (12) failures in or breaches of our networks or systems, including as a result of cyber-attacks; and (13) 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. The forward-looking statements herein 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 June December
data)
30,
31,
2020 2019
---
Assets
Current assets:
Cash and cash equivalents $
113,239 $
131,513
Restricted cash 711 917
Accounts receivable (net of
allowance for credit loss 125,252 93,514
of $12.9 million at June 30, 2020)
Unbilled receivables 12,532 20,003
Prepaid expenses and other current
assets 18,964 26,491
Total current assets 270,698 272,438
Installation and service parts, net 8,672 8,841
Property and equipment, net 73,604 72,266
Operating lease assets 30,933 32,177
Intangible assets, net 386,363 434,443
Goodwill 581,615 584,150
Other non-current assets 3,237 3,111
Total assets $
1,355,122 $
1,407,426
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable $
36,346 $
50,825
Accrued liabilities 19,570 25,277
Current portion of long-term debt 9,104 28,779
Total current liabilities 65,020 104,881
Long-term debt, net of current
portion and deferred financing
costs 834,317 837,686
Operating lease liabilities, net of
current portion 29,240 30,130
Payable to related party pursuant
to tax receivable agreement 65,620 61,174
Asset retirement obligation 6,237 6,309
Deferred tax liabilities, net 22,691 25,716
Other long-term liabilities 247 2,183
Total liabilities 1,023,372 1,068,079
Commitments and contingencies
Stockholders' equity
Preferred stock, $.0001 par value
Common stock, $.0001 par value 16 16
Common stock contingent
consideration 36,575 54,862
Additional paid-in capital 391,240 367,266
Accumulated deficit (89,629) (80,220)
Accumulated other comprehensive
loss (6,452) (2,577)
Total stockholders' equity 331,750 339,347
Total liabilities and stockholders'
equity $
1,355,122 $
1,407,426
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE (LOSS) INCOME
(
Unaudited)
Three Months Ended June Six Months Ended June
30,
30,
(In thousands, except per share data) 2020 2019 2020 2019
---
Service revenue $
62,815 $
103,057 $
162,312 $
201,127
Product sales 16,994 6,518 34,210 6,909
Total revenue 79,809 109,575 196,522 208,036
Cost of service revenue 1,013 1,613 2,232 3,002
Cost of product sales 9,060 2,918 17,750 3,194
Operating expenses 26,699 31,795 58,958 61,133
Selling, general and administrative expenses 20,821 20,865 46,707 41,416
Depreciation, amortization and (gain) loss on disposal of assets, net 29,166 28,850 58,412 57,791
Impairment of property and equipment 5,898 5,898
Total costs and expenses 86,759 91,939 184,059 172,434
(Loss) income from operations (6,950) 17,636 12,463 35,602
Interest expense, net 9,539 15,656 21,990 31,689
Loss from tax receivable agreement adjustment 4,446 4,446
Other income, net (1,523) (3,345) (4,448) (5,552)
Total other expenses 12,462 12,311 21,988 26,137
(Loss) income before income tax (benefit) provision (19,412) 5,325 (9,525) 9,465
Income tax (benefit) provision (4,024) 1,734 (810) 3,054
Net (loss) income $
(15,388) $
3,591 $
(8,715) $
6,411
Other comprehensive loss:
Change in foreign currency translation adjustment (508) (1,396) (3,875) (72)
Total comprehensive (loss) income $
(15,896) $
2,195 $
(12,590) $
6,339
Net (loss) income per share:
Basic $
(0.10) $
0.02 $
(0.05) $
0.04
Diluted $
(0.10) $
0.02 $
(0.05) $
0.04
Weighted average shares used in per share calculation:
Basic outstanding 161,710 157,846 161,317 156,956
Diluted outstanding 161,710 161,977 161,317 159,223
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June
30,
($ in thousands) 2020 2019
---
Cash Flows from Operating
Activities:
Net (loss) income $
(8,715) $
6,411
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities:
Depreciation and amortization 58,409 57,804
Amortization of deferred financing
costs and discounts 2,106 3,589
Impairment of property and equipment 5,898
Loss from tax receivable agreement
adjustment 4,446
Credit loss expense 10,723 2,736
Deferred income taxes (2,496) (11,568)
Stock-based compensation 6,039 4,955
Installation and service parts
expense 559 643
Accretion expense 129 183
Loss (gain) on disposal of assets 3 (13)
Changes in operating assets and
liabilities:
Accounts receivable, net (43,183) (21,433)
Unbilled receivables 7,476 (616)
Prepaid expenses and other current
assets 7,979 (4,199)
Accounts payable and accrued
liabilities (17,863) 5,224
Other liabilities (3,069) (3,833)
Net cash provided by operating
activities 22,543 45,781
Cash Flows from Investing
Activities:
Purchases of installation and
service parts and property and
equipment (14,301) (14,192)
Cash proceeds from the sale of
assets 49 14
Net cash used in investing
activities (14,252) (14,178)
Cash Flows from Financing
Activities:
Repayment of long-term debt (24,227) (4,552)
Payment of debt issuance costs (922) (152)
Payment of employee tax withholding
related to RSU vesting (352)
Net cash used in financing
activities (25,501) (4,704)
Effect of exchange rate changes on
cash and cash equivalents (1,270) 10
Net (decrease) increase in cash,
cash equivalents and restricted
cash (18,480) 26,909
Cash, cash equivalents and
restricted cash -beginning of
period 132,430 67,081
Cash, cash equivalents and
restricted cash -end of period $
113,950 $
93,990
VERRA MOBILITY CORPORATION
ADJUSTED EBITDA RECONCILIATION (Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands) 2020 2019 2020 2019
---
Net (loss) income $
(15,388) $
3,591 $
(8,715) $
6,411
Interest expense, net 9,539 15,656 21,990 31,689
Income tax (benefit)
provision (4,024) 1,734 (810) 3,054
Depreciation and
amortization 29,159 28,865 58,409 57,804
EBITDA 19,286 49,846 70,874 98,958
Transaction and other
related expenses (i) 80 1,135 603 1,135
Transformation expenses
(ii) 515 515
Impairment of property and
equipment (iii) 5,898 5,898
Loss from tax receivable
agreement adjustment (iv) 4,446 4,446
Stock-based compensation
(v) 3,271 2,812 6,039 4,955
Adjusted EBITDA $
27,598 $
59,691 $
82,477 $
110,946
(i) Transaction and other related
expenses incurred in the six months
ended June 30, 2020 primarily relate
to costs associated with our
Pagatelia acquisition and certain
costs for refinancing our debt
during the period.
(ii) Transformation expenses consist of
severance and other employee
separation costs related to exit
activities initiated during the
three and six months ended June 30,
2020.
(iii) This represents an impairment charge
on fixed assets that were used and
held in our operations.
(iv) We recorded a $4.4 million charge for
the three and six months ended June
30, 2020 which reflects the impact
of an increase to our deferred tax
rate arising from higher estimated
state tax rates due to a change in
apportionment.
(v) Stock-based compensation represents
the non-cash charge related to the
issuance of awards under the Verra
Mobility Corporation 2018 Equity
Incentive Plan.
FREE CASH FLOW (Unaudited)
Six Months Ended June 30,
($ in thousands) 2020 2019
---
Net cash
provided by
operating
activities $
22,543 $
45,781
Purchases of
installation
and service
parts and
property and
equipment (14,301) (14,192)
Free cash flow $
8,242 $
31,589
ADJUSTED EPS (Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
(In thousands, except per share data) 2020 2019 2020 2019
Net (loss) income $
(15,388) $
3,591 $
(8,715) $
6,411
Amortization of intangibles 23,531 23,131 47,060 46,261
Transaction and other related expenses 80 1,135 603 1,135
Transformation expenses 515 515
Impairment of property and equipment 5,898 5,898
Loss from tax receivable agreement adjustment 4,446 4,446
Stock-based compensation 3,271 2,812 6,039 4,955
Total adjustments after income tax effect 31,843 32,976 58,663 58,249
Income tax effect on adjustments (6,601) (10,738) (4,989) (18,796)
Total adjustments after income tax effect 25,242 22,238 53,674 39,453
Adjusted Net Income $
9,854 $
25,829 $
44,959 $
45,864
Adjusted EPS $
0.06 $
0.16 $
0.28 $
0.29
Diluted weighted average shares outstanding 161,710 161,977 161,317 159,223
EBITDA and Adjusted EBITDA
We define EBITDA as net (loss) income 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, 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 (loss) 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 (loss) income 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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SOURCE Verra Mobility
