MESA, Ariz., May 2, 2024 /PRNewswire/ -- Verra Mobility Corporation (NASDAQ: VRRM), a leading provider of smart mobility technology solutions, announced today the financial results for the first quarter ended March 31, 2024.
"Our first quarter results provided a very strong start to 2024," said David Roberts, President and CEO, Verra Mobility. "Driven in large part by the successful implementation of the Verra Mobility Operating System, or vmOS, our execution efforts delivered robust revenue, earnings and free cash flow generation. Moreover, our results reflect the underlying momentum enabled by robust secular growth drivers in the smart mobility market. As a result of our strong financial performance this quarter, we are increasing our guidance for the year."
First Quarter 2024 Financial Highlights
We report our results of operations based on three operating segments:
First Quarter 2024 Segment Detail
Liquidity: As of March 31, 2024, cash and cash equivalents were $149.5 million, and we generated $34.3 million in cash flows from operations for 2024.
2021 Term Loan Refinancing
In February 2024, we entered into a Third Amendment to refinance the 2021 Term Loan. In connection with the amendment, the interest rate was reduced by 0.50% to SOFR plus 2.75% from SOFR plus 3.25% with the SOFR floor unchanged at 0.00%. The credit spread adjustment, ranging from 0.11448% to 0.71513%, was eliminated. In addition, the 2021 Term Loan no longer contains a provision for principal repayments which were previously required to be paid in quarterly installments. During the three months ended March 31, 2024, we made an early repayment of approximately $2.3 million on the 2021 Term Loan and as a result, the total principal outstanding was $702.3 million as of March 31, 2024.
Legal Proceedings
On November 2, 2020, PlusPass, Inc. ("PlusPass") commenced an action in the United States District Court, Central District of California, against Verra Mobility, The Gores Group LLC, Platinum Equity LLC, and ATS Processing Services, Inc., alleging civil violations of Section 7 of the Clayton Antitrust Act of 1914 and Sections 1 and 2 of the Sherman Act. In February 2024, we entered into a confidential business arrangement to acquire certain assets from PlusPass and fully and finally resolve all litigation and disputes between the parties. We accrued $31.5 million for this matter at December 31, 2023, which was presented within selling, general and administrative expenses in the condensed consolidated statements of operations for the year ended December 31, 2023, and payment was made during the three months ended March 31, 2024.
2024 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.
Based on our first quarter results and our outlook for the remainder of the year, we are expecting to deliver results as follows:
Previous Guidance | Updated Guidance | |
Total Revenue | $865 million to $880 million | Upper-end of range |
Adjusted EBITDA | $395 million to $405 million | Upper-end of range |
Adjusted EPS | $1.15 to $1.20 | Upper-end of range |
Adjusted Free Cash Flow | $155 million to $165 million | $155 million to $165 million |
Conference Call Details
Date: May 2, 2024
Time: 5:00 p.m. Eastern Time
U.S. and Canadian Callers Dial-in: 1-800-717-1738
Outside of U.S. and Canada Dial-in: 1-646-307-1865 for international callers
Request a return call: Available by clicking on the following link and requesting a return call: callme.viavid.com
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 16, 2024, by dialing 1-844-512-2921 for the U.S. or Canada, and 1-412-317-6671 for international callers and entering passcode 1163577. 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 a leading provider of smart mobility technology solutions that make transportation safer, smarter and more connected. We sit at the center of the mobility ecosystem, bringing together vehicles, hardware, software, data and people to enable safe, efficient solutions for customers globally. Our transportation safety systems and parking management solutions protect lives, improve urban and motorway mobility and support healthier communities. We also solve complex payment, utilization and compliance challenges for fleet owners and rental car companies. We are headquartered in Arizona, and operate in North America, Europe, Asia and Australia. For more information, please 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 changes and trends in the market for our products and services, expected operating results, such as revenue growth, expansion plans and opportunities, and earnings guidance related to 2024 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, customer concentration in our Commercial Services and Government Solutions segments; risks and uncertainties related to our government contracts, including legislative changes, termination rights, delays in payments, audits and investigations; decreases in the prevalence or political acceptance of, or an increase in governmental restrictions regarding, automated and other similar methods of photo enforcement, parking solutions or the use of tolling; our ability to successfully implement our acquisition strategy or integrate acquisitions; failure in or breaches of our networks or systems, including as a result of cyber-attacks; risks and uncertainties related to our international operations; our failure to acquire necessary intellectual property or adequately protect our intellectual property; our ability to manage our substantial level of indebtedness; our reliance on specialized third-party providers; and other risks and uncertainties indicated from time to time in documents we filed or will file with the Securities and Exchange Commission (the "SEC"). In addition, no assurance can be given that any plan, initiative, projection, goal, commitment, expectation, or prospect set forth in this release can or will be achieved. 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.
Additional Information
We periodically provide information for investors on our corporate website, www.verramobility.com, and our investor relations website, ir.verramobility.com.
We intend to use our website as a means of disclosing material non-public information and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our website, in addition to following our press releases, SEC filings and public conference calls and webcasts.
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 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, Adjusted EPS, or Adjusted Free Cash Flow which are included in our 2024 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 as well as Adjusted EPS to net income per share, 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 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 Free Cash Flow
We define Adjusted Free Cash Flow as Free Cash Flow which further excludes certain one-time and non-recurring items (for example, the PlusPass legal settlement expense).
Adjusted Net Income
We define "Adjusted Net Income" as net 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.
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 | $ | 149,520 | $ | 136,309 | ||||
Restricted cash | 3,708 | 3,413 | ||||||
Accounts receivable (net of allowance for credit losses of $20.6 million and | 181,961 | 197,824 | ||||||
Unbilled receivables | 43,323 | 37,065 | ||||||
Inventory | 17,298 | 17,966 | ||||||
Prepaid expenses and other current assets | 42,772 | 46,961 | ||||||
Total current assets | 438,582 | 439,538 | ||||||
Installation and service parts, net | 21,844 | 22,895 | ||||||
Property and equipment, net | 126,975 | 123,248 | ||||||
Operating lease assets | 31,599 | 33,523 | ||||||
Intangible assets, net | 283,412 | 301,025 | ||||||
Goodwill | 834,591 | 835,835 | ||||||
Other non-current assets | 32,855 | 33,919 | ||||||
Total assets | $ | 1,769,858 | $ | 1,789,983 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 75,573 | $ | 78,749 | ||||
Deferred revenue | 24,707 | 28,788 | ||||||
Accrued liabilities | 54,067 | 93,119 | ||||||
Tax receivable agreement liability, current portion | 5,098 | 5,098 | ||||||
Current portion of long-term debt | — | 9,019 | ||||||
Total current liabilities | 159,445 | 214,773 | ||||||
Long-term debt, net of current portion | 1,037,700 | 1,029,113 | ||||||
Operating lease liabilities, net of current portion | 27,702 | 29,124 | ||||||
Tax receivable agreement liability, net of current portion | 48,369 | 48,369 | ||||||
Asset retirement obligations | 14,980 | 14,580 | ||||||
Deferred tax liabilities, net | 17,536 | 18,360 | ||||||
Other long-term liabilities | 15,131 | 14,197 | ||||||
Total liabilities | 1,320,863 | 1,368,516 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity | ||||||||
Preferred stock, $0.0001 par value | — | — | ||||||
Common stock, $0.0001 par value | 17 | 17 | ||||||
Additional paid-in capital | 557,363 | 557,513 | ||||||
Accumulated deficit | (94,949) | (125,887) | ||||||
Accumulated other comprehensive loss | (13,436) | (10,176) | ||||||
Total stockholders' equity | 448,995 | 421,467 | ||||||
Total liabilities and stockholders' equity | $ | 1,769,858 | $ | 1,789,983 | ||||
VERRA MOBILITY CORPORATION | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
AND COMPREHENSIVE INCOME | ||||||||
(Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
(In thousands, except per share data) | 2024 | 2023 | ||||||
Service revenue | $ | 202,721 | $ | 184,698 | ||||
Product sales | 7,009 | 7,205 | ||||||
Total revenue | 209,730 | 191,903 | ||||||
Cost of service revenue, excluding depreciation and amortization | 4,305 | 4,230 | ||||||
Cost of product sales | 5,286 | 5,383 | ||||||
Operating expenses | 70,640 | 61,843 | ||||||
Selling, general and administrative expenses | 48,171 | 40,013 | ||||||
Depreciation, amortization and (gain) loss on disposal of assets, net | 26,975 | 30,333 | ||||||
Total costs and expenses | 155,377 | 141,802 | ||||||
Income from operations | 54,353 | 50,101 | ||||||
Interest expense, net | 19,635 | 22,687 | ||||||
Change in fair value of private placement warrants | — | 14,601 | ||||||
(Gain) loss on interest rate swap | (396) | 2,798 | ||||||
Loss on extinguishment of debt | 595 | 1,349 | ||||||
Other income, net | (4,453) | (3,756) | ||||||
Total other expenses | 15,381 | 37,679 | ||||||
Income before income taxes | 38,972 | 12,422 | ||||||
Income tax provision | 9,823 | 7,845 | ||||||
Net income | $ | 29,149 | $ | 4,577 | ||||
Other comprehensive loss: | ||||||||
Change in foreign currency translation adjustment | (3,260) | (90) | ||||||
Total comprehensive income | $ | 25,889 | $ | 4,487 | ||||
Net income per share: | ||||||||
Basic | $ | 0.18 | $ | 0.03 | ||||
Diluted | $ | 0.17 | $ | 0.03 | ||||
Weighted average shares outstanding: | ||||||||
Basic | 166,241 | 149,165 | ||||||
Diluted | 168,726 | 153,129 | ||||||
VERRA MOBILITY CORPORATION | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
($ in thousands) | 2024 | 2023 | ||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 29,149 | $ | 4,577 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 26,886 | 30,309 | ||||||
Amortization of deferred financing costs and discounts | 1,361 | 1,277 | ||||||
Change in fair value of private placement warrants | — | 14,601 | ||||||
(Gain) loss on interest rate swap | (102) | 1,552 | ||||||
Loss on extinguishment of debt | 595 | 1,349 | ||||||
Credit loss expense | 5,247 | 1,697 | ||||||
Deferred income taxes | 696 | (2,249) | ||||||
Stock-based compensation | 5,558 | 3,378 | ||||||
Other | 319 | 8 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 10,223 | (16,222) | ||||||
Unbilled receivables | (6,501) | (3,464) | ||||||
Inventory | 479 | 180 | ||||||
Prepaid expenses and other assets | 5,565 | 6,232 | ||||||
Deferred revenue | (3,831) | 95 | ||||||
Accounts payable and other current liabilities | (40,783) | (4,291) | ||||||
Other liabilities | (529) | 6,188 | ||||||
Net cash provided by operating activities | 34,332 | 45,217 | ||||||
Cash Flows from Investing Activities: | ||||||||
Cash received (payments) for interest rate swap | 294 | (1,246) | ||||||
Purchases of installation and service parts and property and equipment | (14,279) | (18,372) | ||||||
Cash proceeds from the sale of assets | 48 | 34 | ||||||
Net cash used in investing activities | (13,937) | (19,584) | ||||||
Cash Flows from Financing Activities: | ||||||||
Repayment of long-term debt | (2,255) | (64,755) | ||||||
Payment of debt issuance costs | (107) | (44) | ||||||
Proceeds from the exercise of stock options | 689 | 699 | ||||||
Payment of employee tax withholding related to RSUs and PSUs vesting | (4,608) | (2,526) | ||||||
Net cash used in financing activities | (6,281) | (66,626) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (608) | (305) | ||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 13,506 | (41,298) | ||||||
Cash, cash equivalents and restricted cash - beginning of period | 139,722 | 109,115 | ||||||
Cash, cash equivalents and restricted cash - end of period | $ | 153,228 | $ | 67,817 | ||||
VERRA MOBILITY CORPORATION | ||||||||
ADJUSTED EBITDA RECONCILIATION (Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
($ in thousands) | 2024 | 2023 | ||||||
Net income | $ | 29,149 | $ | 4,577 | ||||
Interest expense, net | 19,635 | 22,687 | ||||||
Income tax provision | 9,823 | 7,845 | ||||||
Depreciation and amortization | 26,886 | 30,309 | ||||||
EBITDA | 85,493 | 65,418 | ||||||
Transaction and other related expenses | 1,528 | 268 | ||||||
Transformation expenses | — | 59 | ||||||
Change in fair value of private placement warrants (i) | — | 14,601 | ||||||
(Gain) loss on interest rate swap (ii) | (396) | 2,798 | ||||||
Loss on extinguishment of debt (iii) | 595 | 1,349 | ||||||
Stock-based compensation (iv) | 5,558 | 3,378 | ||||||
Adjusted EBITDA | $ | 92,778 | $ | 87,871 | ||||
(i) | This related to adjustments to the private placement warrants liability from the re-measurement to fair value at the end of the reporting period. |
(ii) | Gain) loss on interest rate swap is associated with the derivative instrument re-measured to fair value at the end of the reporting period offset by the related monthly cash receipts/payments. |
(iii) | Loss on extinguishment of debt consists of the write-off of pre-existing original issue discounts and deferred financing costs associated with the refinancing of our debt for the three months ended March 31, 2024 and the early repayment of debt for the three months ended March 31, 2023. |
(iv) | Stock-based compensation represents the non-cash charge related to the issuance of awards under the Verra Mobility Corporation 2018 Equity Incentive Plan. |
ADJUSTED FREE CASH FLOW (Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
($ in thousands) | 2024 | 2023 | ||||||
Net cash provided by operating activities | $ | 34,332 | $ | 45,217 | ||||
Purchases of installation and service parts and property and equipment | (14,279) | (18,372) | ||||||
Free Cash Flow | 20,053 | 26,845 | ||||||
Legal settlement | 31,500 | — | ||||||
Income tax effect on adjustment (1) | (9,450) | — | ||||||
Adjusted Free Cash Flow | $ | 42,103 | $ | 26,845 | ||||
(1) | The annual estimated effective tax rate to calculate the income tax effect on the legal settlement adjustment is 30.0%. |
ADJUSTED EPS (Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
(In thousands, except per share data) | 2024 | 2023 | ||||||
Net income | $ | 29,149 | $ | 4,577 | ||||
Amortization of intangibles | 16,745 | 21,967 | ||||||
Transaction and other related expenses | 1,528 | 268 | ||||||
Transformation expenses | — | 59 | ||||||
Change in fair value of private placement warrants | — | 14,601 | ||||||
Change in fair value of interest rate swap | (102) | 1,552 | ||||||
Loss on extinguishment of debt | 595 | 1,349 | ||||||
Stock-based compensation | 5,558 | 3,378 | ||||||
Total adjustments before income tax effect | 24,324 | 43,174 | ||||||
Income tax effect on adjustments | (7,119) | (7,958) | ||||||
Total adjustments after income tax effect | 17,205 | 35,216 | ||||||
Adjusted Net Income | $ | 46,354 | $ | 39,793 | ||||
Adjusted EPS | $ | 0.27 | $ | 0.26 | ||||
Diluted weighted average shares outstanding | 168,726 | 153,129 | ||||||
Annual estimated effective income tax rate (1) | 30 | % | 31 | % | ||||
(1) | The annual estimated effective tax rate used above excludes discrete items as they do not impact taxable income. This rate differs from the period-to-date effective tax rate used on our condensed consolidated statements of operations which includes the discrete items. |
Investor Relations Contact
Mark Zindler
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