Verra Mobility (VRRM) 2 Mar 212020 Q4 Earnings call transcript

Greetings, and welcome to Verra Mobility Fourth Quarter 2020 Earnings Call. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to Marc Griffin, Investor Relations. Thank you.

begin. may You

the is afternoon, and this Good discussing to for Mobility's issued Financial Executive we'll Chief Roberts, Verra Verra results They me Thank XXXX and open and Earnings Q&A. then will begin up on Officer; afternoon Quarter after release Mobility's Tricia press call and Year-End in be close. the Call. Fourth David With call announced you. remarks, the our Chiodo, welcome market Officer. Today, the Chief with we'll prepared

regarding During our strategy, the plans considered statements related maintain and call, we our growth will statements acquire our ability our make forward-looking, plans business statements to and and to concerning our customers existing be prospects. that on to execute may new including other

often views identified anticipate no We any only as undertake such as may these forward-looking These reflect not statements should as update obligation our and statements. to words be be our expect, statements with considered of of views or upcoming. revise or date. Forward-looking subsequent today

are not promises a materially performance to our differ subject and results statements of actual of guarantees expectations. risks the are that variety and uncertainties from future to could or cause Forward-looking

and other important Investor Relations actual website a of risks contained the is on the that form website which on available ir.verramobility.com, material SEC's For please on could of affect annual discussion website our refer our factors and at results, in those to Form sec.gov. at XX-K, our

again, at the and press our we to after that, ir.verramobility.com market to the the measures financial A GAAP call measures. me today's turn issued With during non-GAAP is over today, at David. SEC's Finally, which website non-GAAP the our in reconciliation of will website let located, closed refer certain sec.gov. call, on to course included of release

Marc, to on and today. thank everyone call you, you us the joining Thank

the economy. will our the we that beginning broad process vaccination in And are XXXX. on beginning, all to effect throughout global persistent, with remains feel are business decline in you its subside see a aware, the effect As pandemic confident but we its

associated we While future have global that are this quite with about experienced event, the lies difficulties optimistic ahead. we

pleased are ended our note challenging solid high on a with we year, XXXX a and quarter. with execution this We throughout

detail performance Our during in demonstrated which very Government robust segment quarter remained showed margin we we a fourth Commercial XXXX EBITDA Solutions more flow in Services had receivable levels improvement generated in our Moreover, continued despite issue, strength our will later. strong, accounts and an free segment. cash strong and our discuss

year-over-year in our Our $XXX.X quarter million, revenue down EBITDA and XX% to adjusted million, came year-over-year. declined fourth at $XX.X XX%

declined in revenue at our to XXXX, down XX% and came $XXX.X EBITDA For adjusted year-over-year. million million, $XXX.X year-over-year XX%

our results. I'll Now move segment to on

Commercial for $XX.X XXXX. Services segment of $XX.X EBITDA of QX Our million million adjusted reported and revenues

revenue month-over-month see to quarter. the continue We throughout increases

said, the of seeing, to car Commercial largest optimistic As And while traction are the volume. late pressure is is we That segment portion in by many strong. revenue in with rental anticipate travel-related in are our management trend that still companies a line fleet Services segment XXXX, shared remained widely until a the this reminder, highly we correlated we customers ongoing to business industries. view

the to our we to work an we U.S. platform, signed we our the during on for is, our extend recovery extension as X challenged market continuing the and our regards with beyond In Enterprise, value are strength continue to are preparing car efforts the contract. partners' by quarter. a As rental highlighted current relationship offerings, the continuing to to customers' optimizing of

slower the chains largest Canadian management the the by lack another decision-making COVID-XX. On market the partners our European been of for car to solutions. customer. large help has resources impacted with of the and U.S. a been retail side, severely and tolling including accelerate result fleet of Like contracts, one a implementation this of the management subsidiary rental number fleet U.S., has a The we banking our renewed with of

We companies Europe. be are continue that program we in to active happy additionally, car large with as the throughout to detail with -- France making we are and rental And A many have more continuing progress providing is matures. look Rent forward Car to dialogues the

the with European As business origins a that service continue customers product. the of EPC, reminder, of acquisition to our started we and with

Danish violations we vehicles. process During of multiyear registered the transport authority quarter, foreign the agreement a signed with to

Vice team Government Before proven abilities I the I experience believe of segment, the Steve person Services deep perfect the our Steve's the and Commercial to want Executive take President Services. move on We segment our and level. technology welcome make next as Mobility Solutions to that Commercial to Verra to him to Lalla leadership

Government speed by zone million Solutions the the Growth improvements New of solid York year-over-year. segment QX expansion primarily be revenues City. Our of Government adjusted million school and of segment program Solutions $XX.X reported to continues $XX both XXXX, driven EBITDA for in the in

We the discuss XXX of are a final the cameras. moment issue of related the to our that to pleased contracts. we fulfilled the we cameras wanted for City I received have with installation New to York XXX outstanding report take receivables order to

XXXX. on City X installations concluded enforcement XXXX York the grounding we to electrical installation, any XXXX, and which purchase, on second but York disclosed red-light the XXXX, emergency Transportation. bus legacy contract City were late those and of sites, with camera did for holding contract delays cameras; them: that some enforcement meet we the we issues wire, mobile-speed may have requirements depth is have to During In of of in we fixed-speed an operations system the of one New expanded program the the camera to we that legacy is related speed and the payment. photo the with administrative under These and operation began those at are conduit our contracts not worked We experiencing they the to maintenance of we completed. of of color time have for lane, that installation various contributed understood Department the contract buried a programs, contract Transportation Department issues address the XXXX payments and up the New agreed effectiveness impact overall not remediate or in receiving issues is the the photo substantially to did

issue As practices, noted remediated. in installation in that of this is our year the of is January the York company's conduit to XX-K, the matters we being New learned related past City depth that including investigating

with the sheet remains under continue interim, be and customers flow. to on in perform paid will will are will Orlando high receivable. contracts. it investigation that while be Furthermore, outstanding City and for those and accounts Transportation we we New work We In our with rates on York renewed in expect fully San We unclear, discuss of renewal timing to cooperating effects believe contracts our the the in the resolved. its consistently we And Department Antonio. key detail cash Tricia QX. during quarter, more maintained the the balance

renewals, arm school York addition with additional partnership the to earlier stop to State solution buses. of a enforcement our we this announced automated for New CrossingGuard, month, photo In X deploy in counties

and with a many New approximately the school cover total of We in buses. X,XXX are contracted X potential with to pleased York, on have individual to signed have school districts counties

The and Redflex combination enable will pending of safety expanded technology products resources, of years, an reach. and strategy, be of with the result part and important services our global we and the road growth excited strategic and Over Redflex increased Verra have Mobility we would about Holdings. voiced were global that transaction acquisitions in capabilities leading delivery will and enhanced and scale, mergers

team a this excited very caliber are bring organization. to into the of We

Additionally, term, in this for important Redflex's a accurate foundation In geographic but late and provide May transaction guidance of capabilities will thoughts our thoughtfully offer year. and summary, in with markets. from still us the close forward. qualitative complement therefore, new some the forecast on anticipate is technology We we our challenging, services going can to refrain the global offering will constructed business and we and near some

car levels to early late in industries cause The XXXX in to We is anticipate these by a Services expect increase possibly both 'XX, and Commercial continue correlated see recovery our levels, But of should we segment revenue. purposes. air a and business in rental for to tolling pre-COVID volume related 'XX. to reduction slow as service decreases, return personal and the return travel revenue this our primary for

associated environment the allow we protocols Additionally, remains school school are schools more for school until variable impact rate zone our programs physically then, challenged, bus seeing but with and vaccines that more revenue speed. but open ongoing learning, COVID we anticipate and in-person as

detail. more to walk to our in in We portfolio hand let through uncertain me the these future. that, over With stability and growth to provides Tricia times financials believe the product in it continue for balanced

XXXX Thanks, non-GAAP and results. I'll questions. then quarter earnings detailed some our a David, the full website of We our and deck for good short afternoon, a call financial performance, our GAAP more provide provides reconciliations open to to quarter and on we'll everyone. year provided and from overview insight that up the fourth

of million sale the rates reduced you XXXX. in full the from We'll the of to year $XXX.X adjusted detail call. revenue XXX the increase was revenue on offset XXXX. lower in XX.X% measures prior or further $XX the tolling can company's speed The in an a rental in the photo Within in both loss control of $XXX.X certain customers. Adjusted of declined our revenue by these or change XX.X%. a discuss If XXXX of in Growth you're where year-over-year service loss revenue sales resulting program I'm to million sales demand and offset full see EBITDA year helped for in installation in maintain million of million and service revenue, due well-executed in along EBITDA million X, declined demand, Total on lower year. of million from margin million from in decline following school million revenue segment our $XX.X in citation earnings deck, declines and and enforcement streams robust cost XXX portion $XXX.X XX.X% total $XX.X with zone results $XX.X Slide product variable of compared products car product XXXX. cameras that was $XXX.X Texas for

free to when the even of sink started margins proud to the to that times. in Verra reality discipline flow. Mobility we've are done million maintain cash in, do, of once said and best-in-class have free what positive we were again, generating structure in we XXXX. March, we in we We COVID-XX flow be that In would And said early $XX.X cash going the worst

in position. financial we discussed call, accounts Department in York of earlier New receivable XX.X% the New large this With represent our on due, outline year-end. did to product the borrowing headwind. at represents they $XX and this The for XX% increased expected our I it's the in receivable million is year, driven $XX account number of part limiting of outstanding in much outstanding $XX had to that's we our a million base, revolver and the to receivables balance XXXX didn't total wanted sales. impact we be past our -- anticipate higher at year-end. Transportation eligible inclusion this the Because balance to not Now AR York approximately borrowing on million of million, nearly earlier revenue, David available but $XX.X

has With into let's the accounts balance York our upcoming expect partner, clear great and dive always New reporting quarters. do deeper a in units. to been we a said, that receivable

which EBITDA segment. X, along deck, Slide adjusted for Services you're and Commercial on revenue If following the outlines in performance earnings our I'm

and providing As and tolling, management title segment Services violation and you car large fleet recall, processing services. rental serves registration Commercial companies

demand the service from had million declined very and Despite decisive segment ties for reporting this close nearly to industry revenue decline on EBITDA year patterns, impact robust COVID year. to $XXX.X We of travel $XXX.X in its to year revenue, margins challenging to for and Full of adjusted XXXX. the a headwinds and actions a rental XXXX. impact a car OpEx on million by $XX The usage XX%. was XXXX year due million in and travel this $XX.X in significant Given the fleets. expenses adjusted demand driving million EBITDA to $XX.X full of extent, our early reducing strong large lesser the at in million SG&A took XXXX, remained due

of fourth For in $XX.X XXXX prior the to quarter, $XX.X revenue in million XX% from the same the year. quarter service the quarter million declined

XX.X%. X And still $XX.X Although impact revenue million. quarter the industries XX% were we've margins of we quarters on trough, $XX second seen revenue for COVID QX improvement over million adjusted EBITDA the we experiencing or the growing of are adjusted underlying sequential of EBITDA serve, quarter the with

slide. next the to Turning

You revenue, net million the XXXX COVID $XX.X service Product from increase clients year enforcement and due the fee for York systems. effect from full by to end-to-end reduction generate operation business in million selling the XXXX. of year year full XXXX. a up the million districts programs, XX% New Service results This the in with to operates segment. rate $XXX.X the New that's of Texas due This offset grew municipalities that product installation solution. of million, revenue, of the loss and York programs Government full revenue increase by the the the from by the revenue school revenue year the reduction $XX.X of comprised was Total for photo zone and can programs school in XXXX. large from $XXX.X for see we for to zone This year of the Solutions $XX.X in million growth an segment full and enforcement growth year from $XXX.X City full install was revenue resulting Government Solutions for to certain is was monthly of an speed the the full school camera or million, of results programs expansion. order which driven million cameras. was for speed $XX photo from revenue variable

the for impact speed total driven quarter expansion of $XX.X grew million, revenue the and by fourth quarter same COVID-XX, halted which school revenue XXXX. increased bus the zone million programs $XX over quarter, of year. growth the from The of the prior all fourth million quarter the the the which fourth For clients. quarter in $X.X $XX.X segment revenue and million Service in The service is up growth program, volumes variable our year-over-year offset stop from for arm million XXXX. virtually our $XX.X in was for reduced was XX% was revenue school our by from of fourth

will schools $X.X same XX% prior or fourth of quarter million revenue As Product return year. the learning, XXX $XX.X of business Solutions of very XX%. the margins million million same adjusted in We the $XX.X $X.X for EBITDA of program. million performance increased and this steady of installed of to at from revenues times. We're quarter. to the or $X.X very EBITDA remained period in the year, prior this for $X.X million XX.X% return in-person in cameras Adjusted difficult increased proud the the the these period Government from business million during

for of to of income just turn results you the business the Tax slide, next tax net X,XXX%. we for If compared you company the same expense can million was rate effective to see quarter million of in representing quarter $X.X The the that combined a $X.X quarter of prior loss discussed. segments over an the the of $X year. million, reported the

and during prior expense, flow, our $XX $XX.X time $XXX.X by compensation rate. unusually disallowed effective high cash year. from the liquidity net accounts year. was The a million and generated net full million the such XXXX, several increased year in same pretax the year. full to The the tax $X.X $X in is million million activities impacted permanent This from a of further For income lobbying in increase receivable, as The spend a the million. reduction period I tax of the Book million compares the to was income resulted income company large low, Free want over which an drive and executive the therefore, million operating change some $XX.X of flow activities year-end balance the defined with was year, related City position. to of full was at in million. directly cash provided the impact loss differences, flow TRA discussing and XXX%, operating during for net quarter rate cash and our taking as CapEx, is issues discussed to less $X.X York the cash $XXX.X by New earlier. expense, the

As net we on $XXX.X total million, of of of hand. cash debt December XX, had

$XXX.X XX-month $XXX.X X.Xx was debt million. EBITDA million, Our which trailing is of

$XX.X on doesn't revolver. and lien available XXXX, mature had the first we million until Our

look are returns COVID to the As encouraged the optimistic that to progress form of of are country future, we and the normal. vaccine we some by

continued COVID's provide difficult guidance for to school surrounding the makes impact travel uncertainty it full year. However, on and reopening

without we've of $X to However, $X installation about of for that specific from for that that range couple to said quarters million. York, New think the similar should XXXX the the in last order product revenue million you XXXX

that QX. XXXX to return seasonal previous service below revenue slightly believe trends, We be also should and will QX

We cross we of year-over-year the we throughout are strong first showed needed relationships trough to the you word, margins. remained a a As In the customer with us summary, as beginning pandemic best-in-class cost quarter, we balance and strong produced in we if positive, at single free pleased with We And discipline the be move pandemic. the declines should resilient. over describe it of performance would in a XXXX. return beyond flow growth cutting cash to entered and revenue sheet. the the

believe term call to and I'll to our in open the with for remains growth and industries an has Verra the questions. as to the continue well And that, positioned up capture serve. long the demand We we volatility for underlying operating returns manage business that through current discipline Mobility

[Operator Instructions].

with Our Credit Suisse. first question is Forsythe from Justin

to cross-sell might I some We the fruits just have we be impacts instance, Again, zone expect the they some work similarities and about know being the Can for that into Meaning, little that red-light ones have. your new there dig the ones a solutions similar railroad wanted existing work you as programs that cetera. to maybe of speed, variety different a have you perhaps bit know or in a et of talk their of you opportunity. being to bit you clients? ones, Redflex see loose-hanging first as far would zone goes? what crossing, to little are

Yes.

-- more it's than opportunity think based more the of geographic- think I product-based. necessarily

that And solutions. so mean technology different I in of countries use by outside types U.S., what different they the

in an Australia, of between is you in X fixed That's as that point-to-point So Australia speed, here. that kind a points. go in use offer called they locations, how which X fast tracks it solution different there example, is product a and don't offer X the which they we cameras

And our to kind for of how a being balance so take accelerate things their have with about as company of inside think there's the look sort we effectively, not and opportunities -- the of us sheet certainly, areas going that to some can credit, -- capabilities synergy they and we we they U.S., And there's in of U.S. scale historically. a two, for they larger with and have be opportunities globally product in to those larger been are some plenty have outside

relatively being opportunities is And would then But probably growth opportunity some those least look so focus, for of of say I anticipate we'll in both probably level clearly, what to is we of at prioritized. across initially. equation. that higher is synergy of terms continue international the the and And would the diversification, sides

that's you as mentioned, No, you it. think you to time terms in some achieve of when be the stuff, you give expansion fruits, and/or by? a line to the when might as Got expect you of of loose-hanging to that guess deal these able from might say, achieve the international late May, kind is closes, I in can there let's helpful. And super whenever relative

Tricia funny. is looking at me

but was to going X I seems say weeks, think... So to she

say. not to going We're

I a the to -- to been going it's I really to global We've competitive us given of some team weeks. Yes, say an a It's for length think doing generally. complex not time going via take it's -- No have this sort look, clean a figure nature, arm's we're process out. obviously look, mean, X organization.

first year. that of little I longer. we will the lot revenue may at we a in a But get our So diversification probably synergizing XX energy to would bit anticipate as as growth, well take products place. the first certainly, of think months of right where opportunity the look can in and I accelerate that would terms And the key in real another right costs we're a and identifying the areas one as where be going talent a focus lot

the take think technology I And end longer. will

a probably you'll because So sort will until little I synergy full in of longer. cycle the don't think see the XX-month that impact technology take

had it. saw, quick. might, also if real helpful. But or recently, of kind I may I trends. despite there it Avis guess, more, super Got We one and as guess seemed No, comps And mentioned. report they I improving cited bit rate heard I if and with tough in some you coupled coming just you wouldn't exiting the could mean -- be little incremental through if you as some Feb, up, mind exit QX, lockdowns. parsing Jan a if obviously,

Commercial in business was how of going it early that QX. think into kind I improvement a the kind of continual fared segment and

Yes.

That's as sort we'll below my see pandemic move I And seasonal what of you service cycle. of think year-over-year going we into QX. trough move that crossing raw-dollar of by that slightly trend kind that Because from what time, I the of this then normal forward. on the into you're as growth over might or quarter pattern QX. be think is QX, in So just forward-looking move we'll a statement revenue, we see a XXXX, will to par just actually we be said the first

And to those frame, that that see growth it's really us start at beyond what are. you'll see numbers then time difficult for to So time.

the be we'd As we of of to give to we said end that the out little earnings didn't get But probably closer I further view the we've to where we'll going Commercial think QX those return Services segment XXXX able the be. we bit XXXX. levels call, numbers think to for until do a as into we're

is Ashish next question with Deutsche Bank. Sabadra from Our

are they're contract. for calling X there extended things? for had quick Ashish. York you the like potential Is [indiscernible] any to question City I receivables? contract New Or the outstanding is a just before here different This on for paid be the

to next mean we're the year. these I view over I sort our February And of is optimistic through Yes. next the tighten outstanding currently going issues contract think goes wouldn't couple months. expect of I so.

be don't And so the their would step process. in I next that think

about And could then way a pursue after scale similar it. the other that are cities different New there York? in think the Are opportunities follow-on to that to states you that and or maybe of

of terms New City? In York

Yes.

No. are to enforcement -- across a is globe. very They Vision are commitment They their purple-speckled photo a of as candidly, unicorn that unparalleled part perspective. the really from their Zero it's

they related Given higher, have be that's no, a to they outlier at a certainly just and scale an you much look would when commitment so full deployment.

Now as you potential certainly of acquisition look that reasons like-minded have Redflex technologies. scale size photo excited safety even the that and and a is U.S. cities other New outside the the City. about to would the is they U.S. be still there that very for one have we're that the as of enforcement and level the of not commitment then, road York resources, nearly using But higher outside

is Our Baird. David next question from Koning with

job. Yes. Guys, nice

Do -- the segment. And monthly months trends wondering, the the you the trends was of X have those revenue year, year? by so gave throughout you last the I for

Yes.

for do So the the continue last the were of We flat. Commercial months in they quarters Services know segment, that to more trend. sort X

had an didn't we report overall QX individual we growth from improvement QX from improve months. So QX, perspective, all but to the and consecutive

XX-K, Okay. better. way million. a $XXX to just works one the about understand the toll In about transactions Got thing, you. were talked little And business you the

in violations So that was down XX%. little were almost like or commercial down traffic something more a XX% maybe

how we in toll to wondering even of impacted just violations? about different is should transactions compared traffic care about? it terms what the I'm So it was anything And COVID

tolls What seeing especially the agreement that what number that, the as using up, the it rental frame, per is mean is rental relates dollar those are of tolls customers dollar toll they're No. volume to pandemic seeing seen number are way down. up, we've those of that our because the aggregate what of the that helpful. you're value in don't margins is that's on are time is transactions. the I toll I value that agreements not but rental car said transactions, know the just necessarily we're we've in those of

correct a of sort information, number. a extrapolate although revenue it that to So that to directionally gives bit takes little you

Daniel from is CJS question next Our Moore Securities. with

we deviation, start, recover think the sort the we algo? over should I of to or margins EBITDA say, good incremental Commercial just as about XX-plus in longer-term months? wanted Tricia, Any next, Services, bad from how

Yes.

where probably to I into see And we think Even there's to going service to see is what were is sort an because as we from though for going compression cross a to margin going of in revenue lot where XXXX. into product to not flattish fruition of there revenue don't be in things QX, we in was didn't your it, call to is we've a product of, over some order have then it hand you're reinstated you're in And that QX, reasons do come installation. going that. couple QX. be

increases, those financial statements our to all things into going that, So that for accruals XXXX. merit are in our of be bonuses, think back our about

about like obviously, what the time we QX or year closer. into more the little QX. we some of as should vision give we And back roll So into I those might as look can you you think half a then detail probably and compression into into as margin get get frames,

assume, sorry Appreciate color haven't significantly the you Okay. statement, And balance, all topic, it The to accounts very one to on based much quarters. so in Fair in to a dead QX. mentioned done that more clearing this receivable on and date coming with horse. beat we

question, around Just but tough expectations? a I appreciate... commentary color and any know it's timing

going but I what difficult this to is predict, Yes. think is it is to happen. No,

continuing perform for We and York, so. New are to to work we will continue do

balance grow probably well receivable into continue expect would that, to would QX. we So that

go. So -- can and if they then we'll see

to going that XX next unlikely. get So days likelihood the it's is up the cleared in

that at know will into we it extend least QX. So

Instructions]. [Operator

next is Northcoast question Housum with Research. from Keith Our

clarification Just York, of if may. point one more New I on

right? winning any can contracts Correct? You compete, seller, still usual, way business of as -- a precluded not until getting that. from future in guys You are still doing you're is as the you nothing

That's right. exactly correct. Yes. That's

I months than holding tolling terms then us in perhaps And X a like better feared it's the sounds lot think business, Okay. it up ago. of lot of a

So companies the good or adoption it has rate like rental the your car within that Is assessment? over improved rate sounds a significantly year. penetration past

has number really Not is seen aggregate, it's in on of total number know our No. that we've the agreements the the has product based have rental But the -- changed that's that changed billable of those agreements based improved of what I versus on that has total necessarily. it adoption rental is not agreements. don't rate, days number of rental number happened significantly. What which overall is in

a we're So more those rental also higher-value moved and each tolls function and getting more we necessarily to away because fee, What not also are it's of a admin adoption adoption an from there's on agreements. it's airport step seeing issue. But little has locations little that is off-airports, we're down. tolls getting and more tolling

renting more shift have the down into versus stepping may people whereas So because been budget time. brands They're a of from be just over leisure That higher-quality may brand. corporate. travelers,

COVID I pre-COVID, to XXXX, was squeeze that's go happened. course, year, it. No, a lot I Verra need back in its helpful. more systems talking we throughout had update about one to Last here. Mobility appreciate and If of the of

initiatives? the should on a back until with on it of are was is Or year? of the the How you those still about this forward that So lot acquisition some guys burner Is that burner. back moving we put think Redflex done?

No.

sort more meaning last of stretched time. a them of forward. little We're a of some did we've We serially, longer We actually probably year. them moving are them out period doing definitely over bit

weren't leaving aside. Just to make we anything sure that

our out, So year. that would systems what a this we do continue we'll few items to most critical related knocked prioritized to performance have those the consider within of and we and

does conference. conclude This today's

You your this thank and may participation. your lines time, you disconnect at for

you. Thank

you. Thank