8-K
VERRA MOBILITY Corp (VRRM)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 3, 2022
VERRA MOBILITY CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 1-37979 | 81-3563824 |
|---|---|---|
| (State or other jurisdiction <br>of incorporation) | (Commission <br>File Number) | (IRS Employer <br>Identification No.) |
| 1150 N. Alma School Road<br>Mesa, Arizona<br>(Address of principal executive offices) | 85201<br>(Zip Code) | |
| --- | --- |
(480) 443-7000
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| (Title of each class) | (Trading symbol) | (Name of each exchange on which registered) |
|---|---|---|
| Class A common stock, par value $0.0001 per share | VRRM | Nasdaq Capital Market |
| Warrants to purchase Class A Common Stock | VRRMW | OTC Pink Marketplace |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
☐ Emerging growth company
☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 2.02 Results of Operations and Financial Condition.
On August 3, 2022, Verra Mobility Corporation (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2022. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Item 2.02 and Exhibit 99.1 attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
Item 7.01 Regulation FD Disclosure.
The Company will host a conference call and live webcast to discuss its second quarter 2022 financial results on August 3, 2022, at 5:00 p.m. Eastern time. On August 3, 2022, the Company disseminated an earnings presentation to be used in connection with the earnings call. A copy of the earnings presentation is furnished as Exhibit 99.2 to this Current Report on Form 8-K and incorporated into this Item 7.01 by reference. Additionally, an investor presentation that will be used by the Company in presenting to certain existing and potential stockholders of the Company at upcoming investor conferences is attached as Exhibit 99.3 to this Current Report on Form 8-K and incorporated into this Item 7.01 by reference.
The information furnished in this Item 7.01 and Exhibits 99.2 and 99.3 attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as may be expressly set forth by specific reference in such filing.
The Company expressly disclaims any obligation to update or revise any of the information contained in the presentations.
The presentations are available on the Company’s investor relations website located at ir.verramobility.com, although the Company reserves the right to discontinue that availability at any time.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description of Exhibits |
|---|---|
| 99.1 | Press Release, dated August 3, 2022, issued by Verra Mobility Corporation. |
| 99.2 | Q2 2022 Earnings Presentation, dated August 3, 2022, given by Verra Mobility Corporation. |
| 99.3 | Investor Presentation, dated August 3, 2022, given by Verra Mobility Corporation. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: August 3, 2022 | Verra Mobility Corporation | |
|---|---|---|
| By: | /s/ Craig Conti | |
| Name: | Craig Conti | |
| Title: | Chief Financial Officer |
EX-99.1
Exhibit 99.1
Verra Mobility Announces Second Quarter Financial Results
• Total revenue of $187.5 million
• Net income of $29.6 million
• Generated cash flows from operations of $65.1 million
• Held inaugural investor day at which management highlighted its growth strategy, long-term outlook and increased financial guidance for 2022
Mesa, AZ, August 3, 2022 – Verra Mobility Corporation (NASDAQ: VRRM), a leading provider of smart mobility technology solutions, announced today the financial results for the quarter ended June 30, 2022.
“This is an incredibly exciting time for the Company,” said David Roberts, President and CEO, Verra Mobility. “Operationally, our businesses are generating very strong results fueled by favorable secular trends including robust travel demand that is driving improved performance in our Commercial Services business. Moreover, we had the opportunity to communicate our long-term growth strategy, financial outlook and capital allocation priorities at our inaugural investor day, which demonstrates the conviction we have in both the growth strategy and predictability of our business going forward.”
Second Quarter 2022 Financial Highlights
• Revenue: Total revenue for the second quarter of 2022 was $187.5 million, an increase of 46% compared to $128.7 million for the second quarter of 2021. Organic service revenue growth was 26% which was mainly due to increase in travel volume and related tolling activity in the Commercial Services segment, and the organic growth in our Government Solutions segment which was 23%, driven by the school zone speed expansion. The recently acquired Redflex and T2 Systems contributed approximately $29 million to service revenue growth.
• Net income: Net income for the second quarter of 2022 was $29.6 million, or $0.15 per share based on 160.3 million diluted weighted average shares outstanding. Net income for the comparable 2021 period was $4.0 million, or $0.02 per share, based on 166.0 million diluted weighted average shares outstanding.
• Adjusted Earnings Per Share (EPS): Adjusted EPS for the second quarter of 2022 was $0.29 per share compared to $0.10 per share for the second quarter of 2021.
• Adjusted EBITDA: Adjusted EBITDA was $88.8 million for the second quarter of 2022 compared to $68.6 million for the same period last year. Adjusted EBITDA margin was 47% of total revenue for 2022 and 53% for 2021.
We report our results of operations based on three operating segments:
• Commercial Services offers 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 automated safety solutions to municipalities, school districts and government agencies, including services and technology that enable photo enforcement related to speed, red-light, school bus and city bus lane management.
• Parking Solutions provides an integrated suite of parking software and hardware solutions to universities, municipalities, parking operators, healthcare facilities and transportation hubs in the United States and Canada.
Second Quarter 2022 Segment Detail
• The Commercial Services segment generated total revenue of $84.9 million, a 28% increase compared to $66.5 million in the same period in 2021. Segment profit was $56.4 million, a 32% increase from $42.7 million in the prior year. The increases in revenue and profit resulted from increased travel volume and related tolling activity in 2022 compared to the prior period. The segment profit margin was 66% for 2022 and 64% for the same period in 2021.
• The Government Solutions segment generated total revenue of $83.5 million, a 34% increase compared to $62.2 million in the same period in 2021. The increase was mainly due to the inclusion of Redflex operations for the full three-month period compared to only 12 days in the comparable 2021 period, and from organic growth in service revenue in the current period. The segment profit was $29.5 million, a 16% increase from $25.5 million in the prior year. The segment profit margin was 35% for 2022 and 41% for 2021.
• The Parking Solutions segment generated total revenue of $19.1 million with no comparable amounts in the prior year. The segment profit was $2.8 million with a profit margin of 15% for 2022.
First Half of 2022 Financial Highlights
• Revenue: Total revenue for the first half of 2022 was $357.9 million, an increase of 64% compared to $218.5 million for the first half of 2021. Organic service revenue growth was 34% which was mainly due to increase in travel volume and related tolling activity in the Commercial Services segment, and the organic service revenue growth in our Government Solutions segment which was 25%, driven by the school zone speed expansion. The recently acquired Redflex and T2 Systems contributed approximately $60 million to service revenue growth. In addition, product sales increased in 2022 by $9.9 million compared to 2021.
• Net income (loss): Net income for the first half of 2022 was $39.7 million, or $0.23 per share, based on 161.5 million diluted weighted average shares outstanding. Net loss for the comparable 2021 period was $4.9 million, or $0.03 loss per share, based on 162.3 million diluted weighted average shares outstanding.
• Adjusted EBITDA: Adjusted EBITDA was $164.1 million for the first half of 2022, compared to $108.9 million in the first half of 2021. Adjusted EBITDA margin was 46% of total revenue for the first half of 2022 and 50% for 2021.
Liquidity: As of June 30, 2022, cash and cash equivalents were $86.4 million and we generated $65.1 million and $96.4 million, respectively, in cash flows from operations for the three and six months ended June 30, 2022.
Share Repurchases:
On May 7, 2022, our Board of Directors authorized a share repurchase program for up to an aggregate amount of $125.0 million of our outstanding shares of Class A Common Stock over the next 12 months from time to time in open market transactions, accelerated share repurchases (“ASR”) or in privately negotiated transactions, each as
permitted under applicable rules and regulations, any of which may use pre-arranged trading plans that are designed to meet the requirements of Rule 10b5-1 of the Securities Exchange Act of 1934 (the “Exchange Act”).
On May 12, 2022, we paid $50.0 million, which represented the aggregate amount authorized for an ASR, and received an initial delivery of 2,739,726 shares of our Class A Common Stock in accordance with an ASR agreement with a third-party financial institution. The final settlement is expected to occur during the third quarter of fiscal year 2022, at which time, a volume-weighted average price calculation over the term of the ASR agreement will be used to determine the final number and the average price of shares repurchased and retired. In addition, we paid $5.2 million and repurchased 336,153 shares of our Class A Common Stock through open market transactions during the second quarter of fiscal year 2022. Our Board of Directors authorized an aggregate purchase amount of $75 million related to the open market repurchases, of which $69.8 million is available for future repurchases as of June 30, 2022. We used existing cash on hand to fund share repurchases in the second quarter of 2022.
Our share repurchases in the future depends on a number of factors, including our financial condition, capital requirements, cash flows, results of operations, future business prospects and other factors our management may deem relevant. The timing, volume and nature of such repurchases are subject to market conditions, applicable securities laws and other factors and may be amended, suspended or discontinued at any time.
2022 Full Year Guidance
Any guidance that we provide is subject to change as a variety of factors can affect actual operating results. Certain of those 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. In addition, our recent acquisition of T2 Systems includes preliminary allocation of the fair values of assets acquired and liabilities assumed as of the acquisition date. Purchase price allocations are subject to change within the measurement period (up to one year from the acquisition date).
Pursuant to the press release issued on July 19, 2022 in conjunction with our investor day, we increased our full-year guidance for total revenue and adjusted EBITDA. The aforementioned new guidance ranges as previously disclosed are summarized below:
Total revenue $720 million - $740 million
Adjusted EBITDA $325 million - $335 million
Conference Call Details
Date: August 3, 2022
Time: 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time)
U.S. and Canadian Callers Dial-in: 1-800-289-0720
Outside of U.S. and Canada Dial-in: 1-323-701-0160 for international callers with conference ID #1070500
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 August 17, 2022, by dialing 1-844-512-2921 for the U.S. or Canada, and 1-412-317-6671 for international callers and entering passcode #1070500. 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. The Company sits at the center of the mobility ecosystem, bringing together vehicles, hardware, software, data and people to enable safe, efficient solutions for customers globally. Verra Mobility’s transportation safety systems and parking management solutions protect lives, improve urban and motorway mobility and support
healthier communities. The Company also solves complex payment, utilization and compliance challenges for fleet owners and rental car companies. Headquartered in Arizona, Verra Mobility operates 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 benefits of our 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 2022 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: (1) the disruption to our business and results of operations as a result of the COVID-19 pandemic; (2) customer concentration in our Commercial Services and Government Solutions segments; (3) decreases in the prevalence of automated and other similar methods of photo enforcement, parking solutions or the use of tolling; (4) risks and uncertainties related to our government contracts, including but not limited to administrative hurdles, legislative changes, termination rights, audits and investigations; (5) decreased interest in outsourcing from our customers; (6) our ability to properly perform under our contracts and otherwise satisfy our customers; (7) our ability to compete in a highly competitive and rapidly evolving market; (8) our ability to keep up with technological developments and changing customer preferences; (9) the success of our new products and changes to existing products and services; (10) our ability to successfully integrate our recent or future acquisitions; (11) failures in or breaches of our networks or systems, including as a result of cyber-attacks; and (12) 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. 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 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 included in our 2022 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 (loss), 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 (loss), 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 (loss) 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 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.
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) | December 31,<br>2021 | ||||
|---|---|---|---|---|---|
| Assets | |||||
| Current assets: | |||||
| Cash and cash equivalents | 86,392 | $ | 101,283 | ||
| Restricted cash | 4,169 | 3,149 | |||
| Accounts receivable (net of allowance for credit losses of 17.1 million and12.1 million at June 30, 2022 and December 31, 2021, respectively) | 172,816 | 160,979 | |||
| Unbilled receivables | 33,830 | 29,109 | |||
| Inventory, net | 16,549 | 12,093 | |||
| Prepaid expenses and other current assets | 34,615 | 41,456 | |||
| Total current assets | 348,371 | 348,069 | |||
| Installation and service parts, net | 15,381 | 13,332 | |||
| Property and equipment, net | 102,755 | 96,066 | |||
| Operating lease assets | 38,146 | 38,862 | |||
| Intangible assets, net | 429,813 | 487,299 | |||
| Goodwill | 832,811 | 838,867 | |||
| Other non-current assets | 12,583 | 14,561 | |||
| Total assets | 1,779,860 | $ | 1,837,056 | ||
| Liabilities and Stockholders' Equity | |||||
| Current liabilities: | |||||
| Accounts payable | 69,107 | $ | 67,556 | ||
| Deferred revenue | 29,743 | 27,141 | |||
| Accrued liabilities | 49,596 | 38,435 | |||
| Tax receivable agreement liability, current portion | 5,107 | 5,107 | |||
| Current portion of long-term debt | 11,952 | 36,952 | |||
| Total current liabilities | 165,505 | 175,191 | |||
| Long-term debt, net of current portion | 1,205,169 | 1,206,802 | |||
| Operating lease liabilities, net of current portion | 34,347 | 34,984 | |||
| Tax receivable agreement liability, net of current portion | 55,650 | 56,615 | |||
| Private placement warrant liabilities | 35,600 | 38,466 | |||
| Asset retirement obligation | 12,045 | 11,824 | |||
| Deferred tax liabilities, net | 21,829 | 47,524 | |||
| Other long-term liabilities | 5,492 | 5,686 | |||
| Total liabilities | 1,535,637 | 1,577,092 | |||
| Commitments and contingencies | |||||
| Stockholders' equity | |||||
| Preferred stock, 0.0001 par value | — | — | |||
| Common stock, 0.0001 par value | 15 | 16 | |||
| Common stock contingent consideration | 36,575 | 36,575 | |||
| Additional paid-in capital | 311,252 | 309,883 | |||
| Accumulated deficit | (90,852 | ) | (81,416 | ) | |
| Accumulated other comprehensive loss | (12,767 | ) | (5,094 | ) | |
| Total stockholders' equity | 244,223 | 259,964 | |||
| Total liabilities and stockholders' equity | 1,779,860 | $ | 1,837,056 |
All values are in US Dollars.
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
| Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2022 | 2021 | |||||||||
| ( in thousands, except per share data) | |||||||||||
| Service revenue | 174,502 | $ | 116,426 | $ | 335,636 | $ | 206,189 | ||||
| Product sales | 12,985 | 12,231 | 22,236 | 12,326 | |||||||
| Total revenue | 187,487 | 128,657 | 357,872 | 218,515 | |||||||
| Cost of service revenue | 3,713 | 1,332 | 7,492 | 2,212 | |||||||
| Cost of product sales | 8,326 | 6,144 | 14,321 | 6,171 | |||||||
| Operating expenses | 55,196 | 36,434 | 106,259 | 66,926 | |||||||
| Selling, general and administrative expenses | 40,152 | 26,229 | 81,787 | 54,672 | |||||||
| Depreciation, amortization and (gain) loss on disposal of assets, net | 34,939 | 27,012 | 70,846 | 55,277 | |||||||
| Total costs and expenses | 142,326 | 97,151 | 280,705 | 185,258 | |||||||
| Income from operations | 45,161 | 31,506 | 77,167 | 33,257 | |||||||
| Interest expense, net | 14,485 | 11,680 | 28,764 | 20,844 | |||||||
| Change in fair value of private placement warrants | (6,600 | ) | 8,067 | (2,866 | ) | 10,134 | |||||
| Tax receivable agreement liability adjustment | (965 | ) | 1,661 | (965 | ) | 1,661 | |||||
| Loss on extinguishment of debt | — | — | — | 5,334 | |||||||
| Other income, net | (4,039 | ) | (2,798 | ) | (6,905 | ) | (5,811 | ) | |||
| Total other expenses | 2,881 | 18,610 | 18,028 | 32,162 | |||||||
| Income before income taxes | 42,280 | 12,896 | 59,139 | 1,095 | |||||||
| Income tax provision | 12,639 | 8,904 | 19,458 | 6,018 | |||||||
| Net income (loss) | 29,641 | $ | 3,992 | $ | 39,681 | $ | (4,923 | ) | |||
| Other comprehensive (loss) income: | |||||||||||
| Change in foreign currency translation adjustment | (10,381 | ) | 351 | (7,673 | ) | 161 | |||||
| Total comprehensive income (loss) | 19,260 | $ | 4,343 | $ | 32,008 | $ | (4,762 | ) | |||
| Net income (loss) per share: | |||||||||||
| Basic | 0.19 | $ | 0.02 | $ | 0.26 | $ | (0.03 | ) | |||
| Diluted | 0.15 | $ | 0.02 | $ | 0.23 | $ | (0.03 | ) | |||
| Weighted average shares outstanding: | |||||||||||
| Basic | 154,694 | 162,378 | 155,408 | 162,338 | |||||||
| Diluted | 160,344 | 166,028 | 161,507 | 162,338 |
All values are in US Dollars.
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended June 30, | ||||||
|---|---|---|---|---|---|---|
| ($ in thousands) | 2022 | 2021 | ||||
| Cash Flows from Operating Activities: | ||||||
| Net income | $ | 29,641 | $ | 3,992 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 34,540 | 27,013 | ||||
| Amortization of deferred financing costs and discounts | 1,387 | 1,129 | ||||
| Change in fair value of private placement warrants | (6,600 | ) | 8,067 | |||
| Tax receivable agreement liability adjustment | (965 | ) | 1,661 | |||
| Credit loss expense | 3,531 | 1,461 | ||||
| Deferred income taxes | 3,071 | (1,106 | ) | |||
| Stock-based compensation | 4,566 | 3,573 | ||||
| Other | 406 | 124 | ||||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable, net | (4,812 | ) | (16,298 | ) | ||
| Unbilled receivables | 5,347 | (1,239 | ) | |||
| Inventory, net | (1,675 | ) | 1,614 | |||
| Prepaid expenses and other assets | 696 | (2,529 | ) | |||
| Deferred revenue | 2,871 | 2,190 | ||||
| Accounts payable and other current liabilities | 2,188 | (183 | ) | |||
| Other liabilities | (9,064 | ) | (1,004 | ) | ||
| Net cash provided by operating activities | 65,128 | 28,465 | ||||
| Cash Flows from Investing Activities: | ||||||
| Acquisition of business, net of cash and restricted cash acquired | — | (107,004 | ) | |||
| Payment of contingent consideration | (235 | ) | — | |||
| Purchases of installation and service parts and property and equipment | (11,246 | ) | (4,553 | ) | ||
| Cash proceeds from the sale of assets | 47 | 103 | ||||
| Net cash used in investing activities | (11,434 | ) | (111,454 | ) | ||
| Cash Flows from Financing Activities: | ||||||
| Repayment of long-term debt | (2,255 | ) | (15,639 | ) | ||
| Payment of debt issuance costs | (192 | ) | (775 | ) | ||
| Payment of debt extinguishment costs | — | (462 | ) | |||
| Share repurchases and retirement | (55,281 | ) | — | |||
| Proceeds from exercise of stock options | 66 | 87 | ||||
| Payment of employee tax withholding related to RSUs vesting | (203 | ) | (96 | ) | ||
| Net cash used in financing activities | (57,865 | ) | (16,885 | ) | ||
| Effect of exchange rate changes on cash and cash equivalents | (2,661 | ) | (45 | ) | ||
| Net decrease in cash, cash equivalents and restricted cash | (6,832 | ) | (99,919 | ) | ||
| Cash, cash equivalents and restricted cash - beginning of period | 97,393 | 250,424 | ||||
| Cash, cash equivalents and restricted cash - end of period | $ | 90,561 | $ | 150,505 |
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended June 30, | ||||||
|---|---|---|---|---|---|---|
| ($ in thousands) | 2022 | 2021 | ||||
| Cash Flows from Operating Activities: | ||||||
| Net income (loss) | $ | 39,681 | $ | (4,923 | ) | |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 70,215 | 55,227 | ||||
| Amortization of deferred financing costs and discounts | 2,693 | 2,722 | ||||
| Change in fair value of private placement warrants | (2,866 | ) | 10,134 | |||
| Tax receivable agreement liability adjustment | (965 | ) | 1,661 | |||
| Loss on extinguishment of debt | — | 5,334 | ||||
| Credit loss expense | 7,036 | 3,863 | ||||
| Deferred income taxes | (15,700 | ) | (825 | ) | ||
| Stock-based compensation | 9,012 | 6,481 | ||||
| Other | 760 | 257 | ||||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable, net | (19,112 | ) | (42,970 | ) | ||
| Unbilled receivables | (4,918 | ) | (2,098 | ) | ||
| Inventory, net | (7,397 | ) | 923 | |||
| Prepaid expenses and other assets | 8,931 | (2,100 | ) | |||
| Deferred revenue | 2,917 | 2,146 | ||||
| Accounts payable and other current liabilities | 1,711 | 2,191 | ||||
| Other liabilities | 4,377 | (545 | ) | |||
| Net cash provided by operating activities | 96,375 | 37,478 | ||||
| Cash Flows from Investing Activities: | ||||||
| Acquisition of business, net of cash and restricted cash acquired | — | (107,004 | ) | |||
| Payment of contingent consideration | (647 | ) | — | |||
| Purchases of installation and service parts and property and equipment | (22,724 | ) | (8,257 | ) | ||
| Cash proceeds from the sale of assets | 72 | 159 | ||||
| Net cash used in investing activities | (23,299 | ) | (115,102 | ) | ||
| Cash Flows from Financing Activities: | ||||||
| Repayment on the revolver | (25,000 | ) | — | |||
| Borrowings of long-term debt | — | 996,750 | ||||
| Repayment of long-term debt | (4,510 | ) | (881,281 | ) | ||
| Payment of debt issuance costs | (246 | ) | (6,507 | ) | ||
| Payment of debt extinguishment costs | — | (1,066 | ) | |||
| Share repurchases and retirement | (55,281 | ) | — | |||
| Proceeds from exercise of stock options | 159 | 87 | ||||
| Payment of employee tax withholding related to RSUs vesting | (1,639 | ) | (953 | ) | ||
| Net cash (used in) provided by financing activities | (86,517 | ) | 107,030 | |||
| Effect of exchange rate changes on cash and cash equivalents | (430 | ) | 207 | |||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (13,871 | ) | 29,613 | |||
| Cash, cash equivalents and restricted cash - beginning of period | 104,432 | 120,892 | ||||
| Cash, cash equivalents and restricted cash - end of period | $ | 90,561 | $ | 150,505 |
VERRA MOBILITY CORPORATION
ADJUSTED EBITDA RECONCILIATION (Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2022 | 2021 | 2022 | 2021 | |||||||
| Net income (loss) | $ | 29,641 | $ | 3,992 | $ | 39,681 | $ | (4,923 | ) | ||
| Interest expense, net | 14,485 | 11,680 | 28,764 | 20,844 | |||||||
| Income tax provision | 12,639 | 8,904 | 19,458 | 6,018 | |||||||
| Depreciation and amortization | 34,540 | 27,013 | 70,215 | 55,227 | |||||||
| EBITDA | 91,305 | 51,589 | 158,118 | 77,166 | |||||||
| Transaction and other related expenses (i) | 273 | 3,306 | 489 | 7,432 | |||||||
| Transformation expenses | 180 | 362 | 266 | 694 | |||||||
| Change in fair value of private placement warrants (ii) | (6,600 | ) | 8,067 | (2,866 | ) | 10,134 | |||||
| Tax receivable agreement liability adjustment (iii) | (965 | ) | 1,661 | (965 | ) | 1,661 | |||||
| Loss on extinguishment of debt (iv) | — | — | — | 5,334 | |||||||
| Stock-based compensation (v) | 4,566 | 3,573 | 9,012 | 6,481 | |||||||
| Adjusted EBITDA | $ | 88,759 | $ | 68,558 | $ | 164,054 | $ | 108,902 |
(i) Transaction and other related expenses incurred in the three and six months ended June 30, 2021 primarily relate to costs for the acquisition of Redflex Holdings Limited and certain costs for the debt offering of senior unsecured notes and refinancing the first lien term loan during the period.
(ii) This consists of adjustments to the private placement warrants liability from the re-measurement to fair value at the end of each reporting period.
(iii) The TRA liability adjustment in 2022 is arising from lower estimated state tax rates due to changes in apportionment, whereas in 2021 it is arising from higher estimated state tax rates due to changes in statutory rates.
(iv) The loss on extinguishment of debt in 2021 consists of a $4.0 million write-off of pre-existing deferred financing costs and discounts and $1.3 million of lender and third-party costs associated with the issuance of the 2021 first lien term loan.
(v) Stock-based compensation represents the non-cash charge related to the issuance of awards under the Verra Mobility Corporation 2018 Equity Incentive Plan.
FREE CASH FLOW (Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||
| Net cash provided by operating activities | $ | 65,128 | $ | 28,465 | $ | 96,375 | $ | 37,478 | ||||
| Purchases of installation and service parts and property and equipment | (11,246 | ) | (4,553 | ) | (22,724 | ) | (8,257 | ) | ||||
| Free cash flow | $ | 53,882 | $ | 23,912 | $ | 73,651 | $ | 29,221 |
ADJUSTED EPS (Unaudited)
| Three Months Ended June 30, | ||||||
|---|---|---|---|---|---|---|
| (In thousands, except per share data) | 2022 | 2021 | ||||
| Net income | $ | 29,641 | $ | 3,992 | ||
| Amortization of intangibles | 27,175 | 21,242 | ||||
| Transaction and other related expenses | 273 | 3,306 | ||||
| Transformation expenses | 180 | 362 | ||||
| Change in fair value of private placement warrants | (6,600 | ) | 8,067 | |||
| Tax receivable agreement liability adjustment | (965 | ) | 1,661 | |||
| Stock-based compensation | 4,566 | 3,573 | ||||
| Total adjustments before income tax effect | 24,629 | 38,211 | ||||
| Income tax effect on adjustments | (7,362 | ) | (26,383 | ) | ||
| Total adjustments after income tax effect | 17,267 | 11,828 | ||||
| Adjusted Net Income | $ | 46,908 | $ | 15,820 | ||
| Adjusted EPS | $ | 0.29 | $ | 0.10 | ||
| Diluted weighted average shares outstanding | 160,344 | 166,028 |
The Adjusted Net Income and Adjusted EPS for the six months ended June 30, 2022 and 2021 were not presented as they were not meaningful due to the disproportionate effective tax rate for the six months ended June 30, 2021, as previously disclosed.
Investor Relations Contact
Mark Zindler
mark.zindler@verramobility.com
Earnings Overview Verra Mobility Q2 2022 Earnings Presentation For the Quarter Ended June 30, 2022 Exhibit 99.2
FORWARD-LOOKING STATEMENTS This presentation includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “forecast,” “intend,” “seek,” “target,” “anticipate,” “believe,” “expect,” “estimate,” “plan,” “outlook,” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Such forward-looking statements include projected financial information. Such forward-looking statements with respect to revenues, earnings, performance, strategies, prospects and other aspects of the business of Verra Mobility Corporation and its subsidiaries (collectively, “Verra Mobility” or the “Company”) are based on current expectations and judgements of the Company as of the date of this release. The Company disclaims any intent or obligation to update forward-looking statements hereafter. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including but not limited to (1) the impacts on our operations and business resulting from our delayed 2021 Form 10-K filing (2) the disruption to our business and results of operations as a result of the COVID-19 pandemic; (3) the impact of the COVID-19 pandemic on our revenues from key customers in the rental car industry and from photo enforcement programs; (4) customer concentration in our Commercial Services and Government Solutions segments; (5) decreases in the prevalence of automated photo enforcement or the use of tolling; (6) risks and uncertainties related to our government contracts, including but not limited to administrative hurdles, legislative changes, termination rights, audits and investigations; (7) decreased interest in outsourcing from our customers; (8) our ability to properly perform under our contracts and otherwise satisfy our customers; (9) our ability to compete in a highly competitive and rapidly evolving market; (10) our ability to keep up with technological developments and changing customer preferences; (11) the success of our new products and changes to existing products and services; (12) our ability to successfully integrate our recent or future acquisitions; (13) failures in or breaches of our networks or systems, including as a result of cyber-attacks; and (14) 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. These risks, uncertainties and other factors are further described under "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in the documents filed with the SEC from time to time. You are cautioned not to place undue reliance upon any forward-looking statements, including the projections, which speak only as of the date made. Verra Mobility does not undertake any commitment to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. Non-GAAP Financial Information This presentation uses certain non-GAAP financial information, including earnings before interest, taxes, depreciation and amortization (“EBITDA”) and adjusted EBITDA, which further excludes certain non-cash expenses and other transactions that management believes are not indicative of Verra Mobility’s ongoing operating performance. Verra Mobility believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Verra Mobility’s financial condition and results of operations. 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. A reconciliation of Verra Mobility’s non-GAAP financial information to GAAP financial information is provided in the Appendix hereto and in Verra Mobility’s Form 8-K, filed with the SEC, with the earnings press release for the period indicated.
Providing mission critical operational services to solve the complex challenges of our customers Key Highlights Attractive macro trends driving strong growth in Commercial Services Q2 2022 results represent 25% revenue growth over Q2 2019 Strong top-line performance across all business segments Commercial Services – 28% Y-o-Y growth Government Solutions – 50% Y-o-Y service revenue growth; 23% of which is organic growth Parking Solutions – delivering results in line with expectations and poised for low double-digit growth for the year Commercial Partnerships Several new partnerships announced in our Commercial Services segment to drive core business growth, European expansion and long-term emerging opportunities Financial Guidance Increased total revenue and adjusted EBITDA guidance prior to July 19 investor day Share Repurchase Program Board of directors has approved a stock repurchase program, which authorizes the Company to repurchase up to $125 million of its shares over the next twelve months $55 million committed in Q2 2022 ($50 million via ASR and $5 million via open market transactions) Q2 2022 Total Revenue $187 million Q2 2022 Adjusted EBITDA 1 $89 million 1 Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures, see the appendix. Q2 2022 Free Cash Flow $54 million Financial Highlights Executive Summary
Verra Mobility Consolidated Results Total Revenue & YoY Growth Adjusted EBITDA & Margin % Q2 Service Revenue Growth ($ in Millions) 2019 2021 2022 Total Service Revenue $103 $116 $175 Less Redflex ($3) ($17) Less: Parking Solutions ($15) Organic Srvc Revenue $103 $113 $142 Organic Growth over 2021 26% Organic Growth over 2019 38% (23%) 19% (27%) Revenue Mix by Business Segment
Results by Segment – Commercial Services Total Revenue & YoY Growth Adjusted EBITDA & Margin % Robust travel demand and strong secular trends driving strong revenue growth & profitability 55% 52% 66% 70% 64% 27% 49% 61%
Results by Segment – Government Solutions Total Revenue & YoY Growth Adjusted EBITDA & Margin % Revenue growth fueled by NYC School Zone Speed expansion
Results by Segment – Parking Solutions NA 1 18% Total Revenue ($M) Adjusted EBITDA & Margins ($M) 1 Closed T2 Systems acquisition on December 7, 2021; profitability positively impacted by stub reporting period Parking Solutions (T2 Systems) financial results in-line with deal thesis; poised for LDD growth and margin expansion for FY 2022 16% 1 1 Product Revenue Service Revenue $19 $18 $7
Strong Adjusted EPS and De-levering performance Adjusted EPS Net Debt & Leverage Demonstrated post-pandemic earnings power and De-levering
2022 Updated Financial Outlook Increasing 2022 full-year guidance as the business continues to deliver Total Revenue ($M) +2.1% Adjusted EBITDA ($M) +2.5% Strong secular trends driving service revenue growth…travel demand remained robust through the 1st half of 2022 Product revenue expected roughly in line with previous guidance Adjusted EBITDA margins reflect full year results of recent acquisitions (Redflex and T2 Systems)
10 Appendix
Verra Mobility Quarterly Results 2020 - 2022 Unaudited ($ in millions) Full Year 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Full Year 2021 Q1 2022 Q2 2022 Service revenue $336.3 $89.8 $116.4 $141.8 $144.8 $492.8 $161.1 $174.5 Product sales 57.3 0.1 12.2 20.3 25.1 57.7 9.3 13.0 Total revenue $393.6 $89.9 $128.7 $162.1 $170.0 $550.6 $170.4 $187.5 Cost of service revenue 4.0 0.9 1.3 1.4 1.7 5.3 3.8 3.7 Cost of product sales 29.6 0.0 6.1 9.4 14.2 29.8 6.0 8.3 Operating expenses 115.7 30.5 36.4 48.3 48.1 163.4 51.1 55.2 Selling, general and administrative expenses 89.7 28.4 26.2 31.6 37.2 123.4 41.6 40.2 Depreciation, amort, and (gain) loss on disposal of assets, net 116.8 28.3 27.0 29.5 32.0 116.8 35.9 34.9 Total costs and expenses $355.8 $88.1 $97.2 $120.2 $133.2 $438.7 $138.4 $142.3 Income (loss) from operations 37.8 1.8 31.5 41.9 36.7 111.9 32.0 45.2 Interest expense, net 40.9 9.2 11.7 11.6 12.5 44.9 14.3 14.5 Change in fair value of private placement warrants 1.1 2.1 8.1 (5.1) 2.5 7.6 3.7 (6.6) Tax receivable agreement adj 6.9 - 1.7 - (2.7) (1.0) - (1.0) Loss on extinguishment of debt - 5.3 - - - 5.3 - - Other (income) expense, net (11.9) (3.0) (2.8) (3.5) (3.6) (12.9) (2.9) (4.0) Total other expense $37.0 $13.6 $18.6 $3.1 $8.7 $44.0 $15.1 $2.9 Income (loss) before income taxes 0.9 (11.8) 12.9 38.8 28.0 67.9 16.9 42.3 Income tax provision (benefit) 5.4 (2.9) 8.9 11.5 8.9 26.5 6.8 12.6 Net (loss) income ($4.6) ($8.9) $4.0 $27.3 $19.1 $41.4 $10.0 $29.6 Bridge to adj. EBITDA Net (loss) income ($4.6) ($8.9) $4.0 $27.3 $19.1 $41.4 $10.0 $29.6 Interest expense, net 40.9 9.2 11.7 11.6 12.5 44.9 14.3 14.5 Income tax provision (benefit) 5.4 (2.9) 8.9 11.5 8.9 26.5 6.8 12.6 Depreciation and amortization 116.6 28.2 27.0 29.5 32.0 116.8 35.7 34.5 EBITDA $158.3 $25.6 $51.6 $80.0 $72.5 $229.6 $66.8 $91.3 Transaction and other related 1.9 4.1 3.3 2.7 3.8 14.0 0.2 0.3 Transformation expense 1.1 0.3 0.4 0.8 0.2 1.7 0.1 0.2 Loss on extinguishment of debt – 5.3 - - - 5.3 - - TRA adjustment 6.9 – 1.7 - (2.7) (1.0) - (1.0) Change in fair value of private placement warrants 1.1 2.1 8.1 (5.1) 2.5 7.6 3.7 (6.6) Stock-based compensation 12.6 2.9 3.6 3.7 3.6 13.8 4.4 4.6 Adjusted EBITDA $181.8 $40.3 $68.6 $82.1 $80.0 $270.9 $75.3 $88.8
Verra Mobility Quarterly Results Segment Results of Operations Unaudited ($ in millions) Full Year 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Full Year 2021 Q1 2022 Q2 2022 Total Revenue Commercial Services $180.9 $45.7 $66.5 $77.3 $71.5 $260.9 $73.5 $84.9 Segment Adj EBITDA Commercial Services $97.2 $22.6 $42.8 $51.3 $43.8 $160.4 $46.6 $56.5 Unaudited ($ in millions) Full Year 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Full Year 2021 Q1 2022 Q2 2022 Total Revenue Government Solutions $212.7 $44.2 $62.2 $84.8 $92.0 $283.2 $78.8 $83.5 Segment Adj EBITDA Government Solutions $84.7 $17.8 $25.8 $30.7 $33.6 $107.9 $25.5 $29.2 Unaudited ($ in millions) Full Year 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Full Year 2021 Q1 2022 Q2 2022 Total Revenue Parking Solutions $0.0 $0.0 $0.0 $0.0 $6.5 $6.5 $18.1 $19.1 Segment Adj EBITDA Parking Solutions $0.0 $0.0 $0.0 $0.0 $2.6 $2.6 $3.2 $3.0 Commercial Services Government Solutions Parking Solutions
Verra Mobility Adj. Net Income and Adj. Diluted EPS Reconciliations (in $MM, except per share data) Q3 2021 Q4 2021 Q1 2022 Q2 2022 Net Income $ 27.3 $ 19.1 $ 10.0 $ 29.6 Amortization of intangibles 22.9 23.1 27.3 27.2 Transaction and other related expenses 2.7 3.8 0.2 0.3 Transformation expenses 0.8 0.2 0.1 0.2 Change in fair value of private placement warrants (5.1) 2.5 3.7 (6.6) Tax receivable agreement liability adjustment - (2.7) - (1.0) Loss on extinguishment of debt - - - - Stock-based compensation 3.7 3.6 4.4 4.6 Total adjustments before income tax effect 25.0 30.6 35.8 24.6 Income tax effects on adjustments (7.4) (9.8) (14.5) (7.4) Total adjustments after income tax effect 17.6 20.8 21.3 17.3 Adjusted Net Income $ 44.9 $ 39.9 $ 31.4 $ 46.9 Adjusted EPS $ 0.27 $ 0.25 $0.20 $ 0.29 Diluted weighted average shares outstanding 165,431 159,965 160,749 160,344
Thank You http://ir.verramobility.com/
Verra Mobility Q2 2022 Investor Presentation For the Quarter Ended June 30, 2022 Investor Overview Exhibit 99.3
Forward-looking Statements This presentation includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “forecast,” “intend,” “seek,” “target,” “anticipate,” “believe,” “expect,” “estimate,” “plan,” “outlook,” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Such forward-looking statements include projected financial information. Such forward-looking statements with respect to revenues, earnings, performance, strategies, prospects and other aspects of the business of Verra Mobility Corporation and its subsidiaries (collectively, “Verra Mobility” or the “Company”) are based on current expectations and judgements of the Company as of the date of this release. The Company disclaims any intent or obligation to update forward-looking statements hereafter. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including but not limited to (1) the impacts on our operations and business resulting from our delayed 2021 Form 10-K filing (2) the disruption to our business and results of operations as a result of the COVID-19 pandemic; (3) the impact of the COVID-19 pandemic on our revenues from key customers in the rental car industry and from photo enforcement programs; (4) customer concentration in our Commercial Services and Government Solutions segments; (5) decreases in the prevalence of automated photo enforcement or the use of tolling; (6) risks and uncertainties related to our government contracts, including but not limited to administrative hurdles, legislative changes, termination rights, audits and investigations; (7) decreased interest in outsourcing from our customers; (8) our ability to properly perform under our contracts and otherwise satisfy our customers; (9) our ability to compete in a highly competitive and rapidly evolving market; (10) our ability to keep up with technological developments and changing customer preferences; (11) the success of our new products and changes to existing products and services; (12) our ability to successfully integrate our recent or future acquisitions; (13) failures in or breaches of our networks or systems, including as a result of cyber-attacks; and (14) 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. These risks, uncertainties and other factors are further described under "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in the documents filed with the SEC from time to time. You are cautioned not to place undue reliance upon any forward-looking statements, including the projections, which speak only as of the date made. Verra Mobility does not undertake any commitment to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. Use of Non-GAAP Financial Measures This presentation includes non-GAAP financial measures, including earnings before interest, taxes, depreciation and amortization (“EBITDA”), Free Cash Flow and Free Cash Flow Conversion. Free Cash Flow is defined as cash flows from operating activities minus capital expenditures, and Free Cash Flow Conversion is defined as Free Cash Flow divided by Adjusted EBITDA. 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 elsewhere in this presentation. Verra Mobility uses these non-GAAP financial metrics to measure its performance from period to period both at the consolidated level as well as within its operating segments, to evaluate and fund incentive compensation programs and to compare its results to those of its competitors. In addition, the Company also believes that these non-GAAP measures provide useful information to investors regarding financial and business trends related to the Company’s 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 the Company’s 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.
Verra Mobility At-a-Glance 1 Based on historical financials 2 Based on company analysis 3 Represents Free Cash Flow divided by Adj. EBITDA for TTM 2Q22 TTM 2Q22 Key Metrics Total Revenue1 $690M Re-occurring Revenue2 90% Adj EBITDA1 $326M Adj. EBITDA Margin 47% Free Cash Flow1 $213M FCF/AEBITDA Conversion3 65% ~1,500 Employees Globally ~2,400 Customers Served Globally Commercial Services #1 Provider of toll management to rental car companies (“RAC”) and fleet management companies (“FMC”) in North America Government Solutions #1 Provider of road safety cameras in the world, partnering with ~300 jurisdictions and school districts Parking Solutions (T2 Systems) #1 Provider of parking solutions to large universities in North America, serving ~2,000 customers with end-to-end solutions 1 2 3 4 Market-leading financial profile across a range of attractive markets
Business Segment Commercial Services (~42%1) Government Solutions (~46%1) Parking Solutions (~12%1) Market leader in toll and violation management for commercial fleets Industry leader in automated traffic enforcement for cities and school districts Leading technology provider of end-to-end parking management solutions in North America L/T Core Revenue Growth HSD MSD HSD Historical Key Financials Srvc Revenue CAGR 2018-2Q22 TTM 10% TTM Adj. EBITDA Margin 65% Srvc Revenue CAGR 2018-2Q22 TTM 22% TTM Adj. EBITDA Margin 35% Cumulative Revenue Post-closing 2 $44M Cumulative Adj. EBITDA Margin post-closing 2 20% Core Products and Solutions Toll Services Violation Processing Title & Registration Speed Safety Transit Bus Lane Enforce School Bus Stop-Arm Safety Red-Light Safety SaaS Services Hardware Positioned for Continued Growth & Profitability 1 Based on expected FY 2022 results. 2 Cumulative results as of 2021 closing date - December 7th, 2021 High quality businesses with market leadership positions & differentiated solutions
Key End Markets Verra Mobility Value Proposition Verra Mobility Business Segments Key Benefits to Customers Urban Mobility Traffic Management Parking & Curbside Management Road Usage Charging Solutions that enable government agencies to maximize new revenue sources and achieve safety and sustainability targets while increasing efficiency for use of existing infrastructure Government Solutions Parking Solutions Reduce congestion and carbon emissions Increase traffic flow and safety Maximize revenue and driver compliance Connected Fleet Solutions Fleet Administration Telematics Vehicle Payments Tech-enabled solutions for fleets (e.g., rental), increasing efficiency of processes (e.g., payments, registration) and optimizing asset utilization (e.g., location tracking) Commercial Services Maximize fleet utilization Simplify payments Enhance driver safety and compliance Large, Growing and Attractive Markets Business segments well-positioned to expand into attractive market adjacencies
Commercial Services Leading Fleet Mobility Solutions Provider Strategic Advantages Strategic moat based on large scale and deep integrations with our customers and key partners Proprietary cloud applications and processes that automate workflows and reduce complexity Well-positioned to deploy software defined solutions in the emerging connected vehicle ecosystem Growth Playbook Global Expansion US Europe Grow Core Business Organic Growth HSD L/T TAM $7B Sales by Geography Commercial Services Segment Sales by Solution 10% CAGR +10% CAGR Violations Tolling Title & Registration and Other Segment Revenue ($M) Adj. EBITDA ($M) *2020 & 2021 COVID-19 impacted Market position creates platform for long-term growth in attractive markets Emerging Opportunities
Government Solutions Leading Global Provider Poised for L/T Growth 1) Includes revenue and adjusted EBITDA contributions from acquisition of Redflex Holdings effective June 17, 2021 7 Strategic Advantages Long-term relationships with state and local governments Complete solutions reduce risk and time to deploy Capacity to scale to meet evolving customer needs Market-leading technologies Growth Playbook Expansion Opportunities Core Business Growth Adjacent Opportunities North America Rest of World Organic Growth MSD L/T TAM $11B Sales by Geography Government Solutions Segment 1 Sales Breakdown Product Service Segment Revenue ($M) Adj. EBITDA ($M) Diverse portfolio with high recurring service revenue +18% Organic CAGR +24% CAGR Redflex
T2 Systems Leading Parking Solutions Partner Strategic Advantages #1 market position in large universities Diversified product portfolio that scales and provides end-to-end solutions Well-positioned for market growth driven by urbanization Growth Playbook Capitalize On Emerging Opportunities Grow Core Business Open New Market Segments Services Hardware Adj. EBITDA $9M Total Revenue $44M Sales Breakdown 2 Q2 2022 Cumulative Financial Results post-closing 3 Years of Experience 28 Renewal Rate 98% Customers Across North America 2,000+ Annual Parking Commerce Processed $2.5B Strong foundation, relationships and portfolio to enable long-term growth NA TAM1 $4B SaaS 1 Represents North American Total Addressable Market 2 Based on YTD actual revenue breakdown 2022 3 Cumulative results as of 2021 closing date - December 7th, 2021
1 Strengthen Core Market Positions Similar market, similar products Leverage “best of both” to optimize the combined business Key Value Driver: Cost synergies 2 Accelerate Growth in Adjacent Markets Enter new customer segment or geography Add to product portfolio for existing customers Key Value Driver: Cost & revenue synergies 3 Expand into Emerging Opportunities in Connected Fleets and Urban Mobility Selectively enter new markets where VRRM’s customer relationships, products, or capabilities can be leveraged Key Value Driver: Stand-alone value, revenue synergies M&A Supports Verra Mobility’s Growth Strategy Strong track record of executing M&A in each growth area
M&A Framework – A Repeatable Formula for Returns on M&A Delivering shareholder value through disciplined M&A Strategic Fit Integration Focus Price Discipline Market Strong growth potential High barriers to entry Company Market leadership Revenue durability and predictability (e.g., recurring) History of growth and cash flow Value-Add Opportunities Significant cost and revenue synergy opportunities Integration Strategy Full integration for cost synergies Selective integration for revenue synergies Execution Drive accountability and ownership Short-term synergy targets Long-term ROIC targets Culture Cultural fit Returns Returns > cost of capital1 ROIC focus Cash Flow Cash-flow focused, discounted-cash-flow modeling (DCF) Cost synergies define upper limit to deal price Margin of safety Upside for shareholder value creation 1. The cost of capital referenced here refers to the cost of capital associated with the acquisition target
$690 $551 Core Businesses Drive Strong Free Cash Flow Conversion and Consistent Organic Growth Total Revenue CAGR 19% 13% Organic 53% 54% 46% 47% Adj EBITDA CAGR 15%2 49% Redflex & T2 Systems Core Total Revenue ($M) Adjusted EBITDA & Margins ($M) Re-occurring Revenue1 90% Free Cash Flow % Adj. EBITDA 43% 13% 62% 65% 43%3 1 Based on company estimates and calculated on a TTM basis through 2Q 2022 2 Adjusted EBITDA CAGR includes the impact of Redflex and T2 Systems acquisitions 3 Adjusted for impact of SPAC merger transaction costs and one-time business transformation expenses Results in over $400 million of free cash flow generated during this period 3
Strong, Flexible Balance Sheet + Robust Cash Flow 2 0 2 1 I N V E S T O R D A Y – © B U I L D E R S F I R S T S O U R C E Capital Summary & Financial Highlights ($M) Net Leverage Improvement ($M) 1 Term Loan Debt has a 2028 Maturity; priced at LIBOR + 325 bps; $9 million mandatory debt amortization. Fixed Rate debt priced at 5.500% and due 2029. Consistent cash generation enables rapid de-levering & no debt maturities until 2028 Weighted Avg. Debt Maturity of ~7 Years1 ($M) June 30, 2022 Cash & Cash Equivalents $86 Debt $1,243 Shareholder’s Equity $244 Available Credit (Revolving Credit Facility) $69 Cash & Cash Equivalents $86 Total Available Liquidity $155
M&A Capex Share Buybacks 1 Demonstrated History of Disciplined Capital Allocation 2017 – 2021 PF Capital Deployment1 ($M) Capital Allocation Snapshot ($M) Demonstrated ability to allocate capital across multiple accretive opportunities 1 Pro Forma for $125 million authorized May 2022 ~$1.5B Capital Deployed Organic Investment Revenue generating capital expenditures (e.g., cameras) Proprietary software development Minimal maintenance capital Strategic M&A Approximately $1.2B invested last 5 years Augment scale and enter new market segments / geographies Share Buybacks1 $225 million returned/authorized in the past 4 quarters Repurchases to offset Platinum exit, enhanced by opportunistic buys 1 2 3
2022 Updated Financial Outlook Increasing 2022 full-year guidance as the business continues to deliver Total Revenue ($M) +2.1% Adjusted EBITDA ($M) +2.5% Strong secular trends driving service revenue growth…travel demand remained robust through the 1st half of 2022 Product revenue expected roughly in line with previous guidance Adjusted EBITDA margins reflect full year results of recent acquisitions (Redflex and T2 Systems)
15 Appendix
Verra Mobility Quarterly Results 2020 - 2022 Unaudited ($ in millions) Full Year 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Full Year 2021 Q1 2022 Q2 2022 Service revenue $336.3 $89.8 $116.4 $141.8 $144.8 $492.8 $161.1 $174.5 Product sales 57.3 0.1 12.2 20.3 25.1 57.7 9.3 13.0 Total revenue $393.6 $89.9 $128.7 $162.1 $170.0 $550.6 $170.4 $187.5 Cost of service revenue 4.0 0.9 1.3 1.4 1.7 5.3 3.8 3.7 Cost of product sales 29.6 0.0 6.1 9.4 14.2 29.8 6.0 8.3 Operating expenses 115.7 30.5 36.4 48.3 48.1 163.4 51.1 55.2 Selling, general and administrative expenses 89.7 28.4 26.2 31.6 37.2 123.4 41.6 40.2 Depreciation, amort, and (gain) loss on disposal of assets, net 116.8 28.3 27.0 29.5 32.0 116.8 35.9 34.9 Total costs and expenses $355.8 $88.1 $97.2 $120.2 $133.2 $438.7 $138.4 $142.3 Income (loss) from operations 37.8 1.8 31.5 41.9 36.7 111.9 32.0 45.2 Interest expense, net 40.9 9.2 11.7 11.6 12.5 44.9 14.3 14.5 Change in fair value of private placement warrants 1.1 2.1 8.1 (5.1) 2.5 7.6 3.7 (6.6) Tax receivable agreement adj 6.9 - 1.7 - (2.7) (1.0) - (1.0) Loss on extinguishment of debt - 5.3 - - - 5.3 - - Other (income) expense, net (11.9) (3.0) (2.8) (3.5) (3.6) (12.9) (2.9) (4.0) Total other expense $37.0 $13.6 $18.6 $3.1 $8.7 $44.0 $15.1 $2.9 Income (loss) before income taxes 0.9 (11.8) 12.9 38.8 28.0 67.9 16.9 42.3 Income tax provision (benefit) 5.4 (2.9) 8.9 11.5 8.9 26.5 6.8 12.6 Net (loss) income ($4.6) ($8.9) $4.0 $27.3 $19.1 $41.4 $10.0 $29.6 Bridge to adj. EBITDA Net (loss) income ($4.6) ($8.9) $4.0 $27.3 $19.1 $41.4 $10.0 $29.6 Interest expense, net 40.9 9.2 11.7 11.6 12.5 44.9 14.3 14.5 Income tax provision (benefit) 5.4 (2.9) 8.9 11.5 8.9 26.5 6.8 12.6 Depreciation and amortization 116.6 28.2 27.0 29.5 32.0 116.8 35.7 34.5 EBITDA $158.3 $25.6 $51.6 $80.0 $72.5 $229.6 $66.8 $91.3 Transaction and other related 1.9 4.1 3.3 2.7 3.8 14.0 0.2 0.3 Transformation expense 1.1 0.3 0.4 0.8 0.2 1.7 0.1 0.2 Loss on extinguishment of debt – 5.3 - - - 5.3 - - TRA adjustment 6.9 – 1.7 - (2.7) (1.0) - (1.0) Change in fair value of private placement warrants 1.1 2.1 8.1 (5.1) 2.5 7.6 3.7 (6.6) Stock-based compensation 12.6 2.9 3.6 3.7 3.6 13.8 4.4 4.6 Adjusted EBITDA $181.8 $40.3 $68.6 $82.1 $80.0 $270.9 $75.3 $88.8 Confidential & Proprietary
Verra Mobility Quarterly Results Segment Results of Operations Unaudited ($ in millions) Full Year 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Full Year 2021 Q1 2022 Q2 2022 Total Revenue Commercial Services $180.9 $45.7 $66.5 $77.3 $71.5 $260.9 $73.5 $84.9 Segment Adj EBITDA Commercial Services $97.2 $22.6 $42.8 $51.3 $43.8 $160.4 $46.6 $56.5 Unaudited ($ in millions) Full Year 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Full Year 2021 Q1 2022 Q2 2022 Total Revenue Government Solutions $212.7 $44.2 $62.2 $84.8 $92.0 $283.2 $78.8 $83.5 Segment Adj EBITDA Government Solutions $84.7 $17.8 $25.8 $30.7 $33.6 $107.9 $25.5 $29.2 Unaudited ($ in millions) Full Year 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Full Year 2021 Q1 2022 Q2 2022 Total Revenue Parking Solutions $0.0 $0.0 $0.0 $0.0 $6.5 $6.5 $18.1 $19.1 Segment Adj EBITDA Parking Solutions $0.0 $0.0 $0.0 $0.0 $2.6 $2.6 $3.2 $3.0 Commercial Services Government Solutions Parking Solutions Confidential & Proprietary
Verra Mobility Free Cash Flow Reconciliation, incl. % of Adj. EBITDA ($MM) 2018 2019 2020 2021 TTM 2Q22 Adjusted EBITDA $ 198 $ 241 $ 182 $ 271 $ 326 Net cash provided by operating activities $ 46 $ 134 $ 47 $ 193 $ 252 Transaction and other related expenses 57 - - - - Transformation expenses 9 - - - - Adjusted Net cash provided by operating activities 1 $ 112 $ 134 $ 47 $ 193 $ 252 Purchases of installation and service parts and property and equipment (27) (30) (24) (25) (39) Free Cash Flow $ 85 $ 104 $ 23 $ 168 $ 213 Free Cash Flow Conversion % 43% 43% 13% 62% 65% 1 Adjusted for impact of SPAC merger transaction costs and one-time business transformation expenses
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