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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
First Half of 2020 Financial Highlights
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:
Second Quarter 2020 Segment Detail
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 CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited) | ||||||||
($ in thousands except per share data) | June 30, 2020 | December 31, 2019 | ||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 113,239 | $ | 131,513 | ||||
Restricted cash | 711 | 917 | ||||||
Accounts receivable (net of allowance for credit lossof $12.9 million at June 30, 2020) | 125,252 | 93,514 | ||||||
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 CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME(Unaudited) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 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 CORPORATIONCONDENSED 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 CORPORATIONADJUSTED 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 FlowWe define "Free Cash Flow" as cash flow from operations less capital expenditures.
Adjusted Net IncomeWe define "Adjusted Net Income" as net (loss) income adjusted to exclude amortization of intangibles and certain non-cash or non-recurring expenses.
Adjusted EPSWe define "Adjusted EPS" as Adjusted Net Income divided by the diluted weighted average shares for the period.
Investor Relations ContactMarc P. GriffinICR, Inc., for Verra Mobility 646-277-1290IR@verramobility.com
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SOURCE Verra Mobility
