Verra Mobility (VRRM) 10 May 222022 Q1 Earnings call transcript

Please stand by. Good day and welcome to the Verra Mobility Corporation, First Quarter 2022 earnings call. Today's conference is being recorded. At this time I would like to turn the conference over to Mr. Mark Zindler. ahead. go Please

close. Mobility's afternoon XXXX Roberts, Good results to for Mobility's the will Conti, we'll David Executive Verra Officer, in with the Thank call. and open and Today Q&A. then prepared remarks, up call our Verra quarter market after and Financial issued call Chief earnings press the me are we'll first Chief on David our you. Craig the release Officer. welcome With begin be announced Craig followed discussing by

acquisitions, During and prospects. our our the and existing expected considered other and statements related on of metrics, call, we customers, our new performance, key will plans acquire strategic operational strategy, our to plan's make statements forward-looking, ability regarding business statements to growth to future concerning our financial benefits our be maintain that and regarding expectations execute business may the including our

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

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

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

release, to the turn of measures sec.gov. will financial which With certain David. I'll ir.verramobility.com we can non-GAAP on GAAP that, website earnings the found included measures. at to call website and to A comparable the these reconciliation our SEC's Finally, directly is over our on at measure during be in today's call, non-GAAP most refer

cash healthy Thank today. development as everyone renewals. general pleased our was healthy by for joining that government to the announcements segments. strong increase you, call the for business business the whole, trends guidance revenue about to further of Mark. range. has commercial of at XX experience our a program terms in I'm the share the end the several turn throughout to its of representing our fundamentals Board both by in first-quarter a repurchased opportunities about flow for increases the quarter. $X.X X% segments. the performance of the it of I'm privately with company the these to we which stock over announced adjusted program seeing EBITDA exciting that performance high remainder but in the negotiated start completion transaction, the on million up share for repurchase business pipelines significant results of The shares August outlook year, Class our influencing and repurchase of $XXX then the great Greg the months. the are stock XXXX, with follows with services year, long A the I'm I'll new in pleased million the to free the performance, stock results including company through program both at authorizes start remarks And financial confidence continue that $XXX strong expect thanks of over program Based which date. very common on commentary U.S. repurchase driven and driven and have a management of next strong travel repurchase across very the growth And bookings to exceptional see each delivered our The to our business term. and we're and the the generate notably Board elaborate to the both of contract of in and and report our results will in contracts generation Directors our his first parking, also to our in we shares. outstanding in We new pleased through approved and Directors a repurchase approximately demonstrates we million and

current investments aspects authorized. opportunity long-term us free creation. organic repurchase growth, plan, capital believe continuous deployment programs the represents to repurchase redeploy and to returns our At shareholders strong provides to like one financial share generation M&A this excess flow all shares invest simultaneously strategic including the with shareholder innovation value of cash we flexibility of via or Our across capital enhance our valuations, attractive just an and providing

that tolls for our was anticipated prior on continue absolutely Moreover, term favorable adoption to Customer the quarter I'll the we to accomplishment Next, advantage XX% with first XXXX Hertz. commercial with it macro the I'm the key segment. and which report our shaping by turn Mobility. growth were terms driven to efforts pre variables achieved services, segments million that XX% an the -pandemic back as renewed consistent quarter This at very in was and Beginning that incredible by revenue of levels Verra $XX over team our a strong and relates our exemplary five-year great excited business detail. quarter, economic in a the is -- over in our accomplishment agreement our materially quarter to a are performance to compared business. and billable partners increase performance our days commercial driving taking year, contract for the trends to approximately first our Hertz full had have team. tremendous increase, more we violations Revenue of team services of last for

by the In first for toll first of signed insights feature as points strong a end toll quarter. key expand Europe contract we a commitment a renewal, will European country's The also new continue services vehicle Hertz demonstrating payment following Hertz is our Hertz the contract the proof pilot tolling with to with partner. the in trusted and This addition partners. for payment provide to expansion cars the with European efforts we joint pilot end rental Spain more

to faster very volume, the municipalities generated be volume general, bookings, Moving business, development, after pace, COVID. government the both for our on encouraging activities of procurement bookings dollar down many increases presumably and In photo our growth. volume, U.S. solutions market sales solid we to seeing We're the all pipeline markets. in to during and a enforcement in indicators appears transaction increasing leading slowed at international

photo the XX XX million top customer, month metro with valued renewed a term. at approximately major enforcement renewal Tier-X we $X contract contracts First, over the

million at estimated we Additionally, we automotive work won both contracts, speed details. of to enforcement for revenue do annual contract zone new further not have currently contracts $X disclose permission

multi-agency are for mobile enhance of competitive pipeline. Verra efforts Wales. Redflex experience South demonstrating matter and significant solid our large wins speed including on programs, expertise variety position their Mobility work expertise enforcement in have New programs team matter a However, Tender experience notably how our and and subject programs, statewide operating wide these our positioned through for with with mobile zone This well subject in

the Furthermore, in of we're expected key U.S. to of of latter, which expansion markets In the we to roughly million Netherlands,as for win several in $X and is a all announced million deliver and product addition, the the revenue expected are wins half to had in commence the quarter $X awards legislative we awards around recurring booked to the total deliver several solutions announced in as are annual well which $X expected of about second Washington XXXX. additive revenue so important in international revenue. million team. State, government recurring These previously great

safety a customer activity five-years, road rates TX the in market include and in TX than renewal newly business segment up from market portfolio multi-space excited acquisition segment QX, and been for factors made X,XXX on has to Systems results full the managing as possible years the commentary than segment, started background, the formed over to provide to map has XXXX. focused innovation. station by portfolio university expanded their TX Thanks Solutions enforcement of in add for was December the TX very on solution are an business the municipal I'll customers, to for our some to quarter and us and with logo helping community We're company municipal the new more and segment. Systems user business Critical space. three Parking meters, perspective, of for drive acquisition customers. Next the permit TX They solutions last acquisition in which current a business XX targeted active portfolio parking have more to in a for diversified portfolio Systems the university solution the

quarter TX or both perspective. completed better and as had Moving performing the is be financial financial development operational will onto strong of business the our from in results, at well performance terms as slightly a expectations a deal, than

are they project We were university a growing and portfolio. the our Logo which municipalities the XX enforcement of renewals healthy the which several for TX New closed saw is and million was of with in which space market about book $X for bookings pipeline permits plan, at customers, an increases in XX $X their and large sales excess valued million, over new to quarter. solution, the area

support not management drive the in as the the vision material foundation of with new government build cross-selling to they XX will While a our long-term and business these area. solutions near-term, will Logo opportunities revenue ultimately serve business customers curbside

conclude, leaders Bolden stepped business. our roles immediately onboard. the I meaningful positive and two have XXth, Craig welcome be John Mobility. It's York. Market Craig, great into have and I Site have Investor NASDAQ the in will July met want the John to and you Day them impacts Before of making Verra are New at to presenting These on already again to their Many at to Tuesday,

will executive our to So be a our allocation with views strategy. the will about of John great to and opportunity members opportunity great the outlook share along on a others, all leadership It this and meet capital the financial We're team. event. really strategy excited be long-term it

details provided website. section Investor are our in Additional events, the Relations of

Now financial over Craig guide to our to I'll it turn us results. through

operating year-over-year respectively. factors. several increased to period about year XXXX Services XX% over $XX quarter $XXX revenue which attributable over million service Solutions Thanks, guidance. same also consolidated grew call. provide million of to of a our Adjusted discussion TX EBITDA Commercial adjusted afternoon, quarter, same approximately the of and was strong Product growth us Systems last overview Total organic everyone revenue our results. reasons of increased the I'll company driven service by EBITDA million the was growth. This Systems and and in million in Government on TX financial business. XX% by Slide start growth. increased revenue performance the for the contributed Redflex was million by approximately to David. over about last to Redflex revenue and X, million I'd was $X followed of results, $XX XX and from revenue for year like performance revenue inclusion Redflex and by revenue. joining which which across thanks XX% which the XX% the XX% Service for revenue XX% XX% TX the for XXXX year quarter on $X.X first grew outlines was Good year-over-year, of Systems. an for organic of prior of as and the

of on about in particularly in driven services year-over-year. Slide demand million, improvement travel, was the for U.S. we The X, cars. commercial demand in and by million revenue XX% $XX for delivered resulting to $XX increase rental or increased Moving increase the

experience and significant companies to the in demand in of David As the the car first of a rental last relative both XXXX first quarter increase quarter quarter mentioned, fourth year.

of volumes of below the million customer billable commercial leading Adjusted XX%. cashless levels, car -pandemic for remain rates, services toll EBITDA rental days all trends adoption pre was to margin $XX quarter are and percentage increasing. the While overall tolls, an

quarter million revenue first Service $XX mentioned efforts, results of Speed City $XX driven or the the million revenue which first Government Organic was Business. of was quarter. by or Turning programs by York service the the XX% $XX primarily approximately School $XX year-over-year. XX%, the primarily to New for million revenue to photo we'll million, enforcement X which for expansion growth, Driven Redflex increased by was earlier. review $XX expansion million Zone grew Solutions excluding Slide

to Parking we've approximately the year-over-year X, In addition, outlined adjusted grew EBITDA XX% performance million quarter. for $XX the Solutions our for newly Slide segment. On created

over $XX closed As David expectations the of quarter. revenue mentioned, TX $X with December adjusted our for of slightly of EBITDA XXXX, represents Systems, was the million this million aligned acquisition which and in directly

that drive the and guidance the for we sequential double-digit typically I low and expect and While EBITDA adjusted the year to mentioned through we the growth revenue year. results segment the of growth TX provide anticipate for balance level, total don't top-line bottom-line at

the addition, to quarter generate public pre not their in allocation than In to lower approximately the fees that current stock-based and low million, of compared million loss quarter quarter corporate quarter to net business net million reported provision company for for audit due tax Insurance, we company $X.X non-recurring The an amortization TX effective margins same period EPS, prior $X.XX first to $X The Modestly would as was of per-share per excludes per D&O of compared in as other in cost items, $X.XX acquisition. range. the expect our XXXX. Adjusted representing costs including the have other which share non-cash $XX -acquisition and the a the about rate in XX% in-stocks the XXXX. was to and incurred results tax for of income XX%. of compensation, well

is permanent related private by adjustments differences warrants. impacted to reminder, for our tax a our As mark-to-market placement rate

demonstrate confident scale continue earnings we'll as we Moving business. and to growth forward, power solid I'm drive the

Moving timing accounts capital was working generation increases quarter generated receivable $XX flow for management, services the the for million of City decrease a quarter. volume-driven back-end quarter-end. resulted activities the from of services. the of and compared to was a purely We first in is which million cash commercial the higher the the year-end cash end strong growth the working operating $XX receivables approximately for capital see million in to expect second third to at in quarters, we this in balance A in issue the the growth balances $XX for leveling Also This New importance, consequently, The first operations quarter. and in and balance weighted, use off sequential York attributable with believe quarter, at flow commercial cash to XXXX. and fourth at quarter. slight from in was

further less April. than of million Additionally, the end of as the balances decreased $XX to

first times you'll leverage of quarter As $XX debt X, Slide low the on total $X.X in quarter. cash net the declining a we to balance Resulting with a and about ended X.X for balance million billion.

the the generate our David mentioned, $XXX free previously we As strong detailed to earlier. the program authorized of we year expect repurchase million by as over Board cash share underscored flow balance as by of Directors

Next, be I'll move XXXX which can X. onto our found on Slide guidance,

the outlook the revenue During out end of call in our range we're the the XXst, these $XXX year. the results deliver raise reiterated of macro of to second our remainder $XXX expectations $XX performance at the The of guidance we'll April the sales and the exceeded our and and the most planning. likely services we $XXX high help EBITDA our range our trends EBITDA. with our that the significantly If million continue in of million fourth-quarter million. Total $XXX entering expecting trends million consistently to revenue drive in to on in adjusted million earnings follows. performs Based quarter, range business adjusted of Product year, now the assuming rest commercial for for both $XX as in the range in million. results first-quarter guidance to

of adjusted continue quarter, consistent Additionally, with second which followed third historical increase fourth modest we a seasonal sequentially in the trends. and the by EBITDA quarters, reduction is in to and anticipate revenue to all

stock conversion EBITDA approximately the rate of we the XX% EBITDA, assumption times adjusted expected the adjusted program discussed our and year-end at result cash we to -- today. of reduce of will on This leverage least free the end repurchase XXXX. expect stock based guidance net achieve high that to flow Finally, by X.X pur includes

material to continuous XX-K. committed weaknesses open brief and of we items a address Before such seriously moment we're improvement our culture We for around the very take to controls. a to take Q&A, I'd the call these discussed in like

an the sooner. a path organization We necessary weaknesses year-end, remediate and to all around viable material potentially are as by steps taking

We attention. thank And throughout that, year. to you the for like And provide updates questions. your will I'd to open the continue with line for

our [Operator will Moore question you. And from with Instructions] Thank Daniel Securities. first come CJS

you, for Thank you. Craig you, taking questions. all David. Thank the Thank color the and

Let me start with the guidance.

'XX. up just commercial QX, You've that on The compression if in growth just guidance about the you're a significantly so couple just in I'm versus that but this your touched for likely comments, you mentioned, or being of was or last end a on as wondering of would of you're even range anything services, the seeing high year. indicate if QX the the deceleration. for that cause remainder would a lower there's conservative XX%

and the let a here, little you question. candid, a for be we're you but great Thank completely to It's question why. me being bit tell conservative

back higher those accelerate fuel us be still look to guidance the actually piece one, in first and driving to advent the of we the is going could impact what season. of dip did summer quarter start, saw and forward, driving at look how raised the about a In the if of want sense half a QX the the sharp think costs So take to We're potentially the is, quarter at the bet we this to summer see market quarter, the very a that April we into first we want beginning at in in season, of I Omicron we see the on another just population and when days of the first through which played out the second see through see into look rolled a could we data in billable see continue that now way make couple want revenue and things. you velocity QX. Number and for to order here. at acceleration stock

continue do short So believe to we see the see quarter couple trends we I that of would the we here, of in the another for the to if continue first saw raise balance year. we exiting answer, if guidance the months

more at year you Talk the maybe you growth to expect I would next TX Parking that talked Thanks. side. you of two services to frame growth, getting business kind and Solutions, cadence that Perfect. double-digit the time when then expect the about think you achieve just And least overtime? about or some one acquired over on what

I a -- double-digit growth to quarter do in can our tell and one XXXX. grows in And thing where you from we the see we the sequentially that out came being landed this fourth largest the being the perspective, with lowest quarter script hopefully and XQ XXXX comments, we expect quarter. put that in we the versus business

quarter, So pretty even make I bought as I second the and actuals that TX. come a facts than stronger you see pipeline the is for business, especially think thought think the the third sense. little we so good we're through, when And David gave in trend the in more those quarter some we business will that shape on

Perfect. back I'll Thanks. with follow-ups. any jump

Thank you.

Thank you.

next Northcoast Research. Housum with from will Our come Keith question

Good morning, sorry. good guys afternoon, -- actually,

question Just there. on following up last

through TX, In revenue in bookings pipeline for terms and of walk the of could terms for those. recognition the the us you

turn revenue future expect year You in in to the this that years? carry-on the or

Great Right. question.

mistaken like next year. think bookings of script into said I balance the at the number, give going today. convert of XX% I'm if then by so will a turn to when in within look revenue something and million, and we that we booked end the the quarter not That's we to when So bookings, $X

sales of it or next we about goes pipeline that call actual bookings into within So year, booking, XX from think convert that quarters a the number will days. the three the that way an pipeline in number that it, about

of believe terms looks it going us Great. that year New is the can should don't the rolled in I much on XXXX. contract, give York appreciate that bit color. of out, what rest we City first little XXX a the additional have in expect of And It cadence I to think then I the be a done like that? the was in of quarter, was we

piece bad will Yes. -- materially and be the will part done XXX The of it largest Sure. be in of in majority speed as a in of year. the fourth this be the I'd a largest will installs, the third it quarter third today fixed end then in we quarter of quarter. say QX, here by XQ, and the installed the this see the no

I will just queue. Craig, Great. in Thanks, back

Thank you.

you. Thank

to like James question on at Again, would to reminder, if would a -- signal signal Morgan please Stanley. this comes Faucette Instructions] [Operator telephone. is questions Instructions] As if you that with [Operator your with next questions, from with touchstone you time. We our like

is this Hi Maryland for James.

TX, the cities of leverage for to you've existing your back opportunity the curious I I'm got that TX's to relationships think to government the magnitude within Going what's is revenues accelerate the so on mentioned and timeline ability opportunity?

Yeah. relationships Good question. with part we thesis of market. in and That's municipalities larger generally is the the that have TX certainly smaller played has

bit of takes So market little a time to that activate.

year. I those process what the what cross-selling some already of pipeline that I start more call things of suspect is, see I back towards significant to development. the the would in and closing would anticipate would half of So you ones size would of we're

M&A then after of just maybe guys about recent thinking how some what Thank And on you're you acquisition? [Indiscernible] Okay. of and your looking you. update deals at kind

Yeah.

we've I -- think pretty been in to active always we're going obviously, market. the

I of set fleets, their connected into help relevant they're that to the are that of continue think safety -- in continue to cities continuing at for smart We there's vehicle to then is bolster one terms commercial look And drive the more across business community. in of to would only fleet can mobility. look not to today going technologies, that -- We've the look plays we our and next ecosystem anything future.

we capital. stock of to and so. broader So repurchase we those as we're can do that part going always pipeline categories, think is the something to two active continue of our will the -- a Obviously, but now is I are do and

do stock the to a have only year the strategy, deals able close this opportunity deployment the about still We not feel itself. capital so to if presents ability plan. broad-based repurchase confident we're size We of

Okay. Thank you.

And come Daniel with question Securities. our next Moore CJS will from

Thank five-year Hertz you provides obviously see concerned, a lot great visibility. as of ton agreement a far again, to of as a

be back the we I Just contracts perspective. overall the what a to Is going that of essentially in that's growth nail to five-year But frame you go market norm know trying kind Do to change a longer-term more time bit terms and narrow that over down forward? renewals, mentioned from growth that does do no was bit revenue think down you or a or expect little of fleet ball? I growth that importantly, Just there imply? further. -- little Thanks. crystal that

full as just the and contracts, But related for to think comment maximize the don't our unique know other car their vehicles so obviously obviously volume rental look of strategies that any comes are of was in as some willing really our a fleets solidification on know, are they our to to of can down use just the way it's buying the has each was the to it is overall they always get as to them the they've would to that length will goal five-year types is two indicated having fleet partner. the companies how that I of And they fleets of if terms the point contracts you could rental I I performing. makes a relationships, indicated you that the of contracts sense larger to Dan, that that that for well fulfill. Hertz includes and obviously, the of both back speak us get materially businesses they extent as and everything great been does to doing at I the the a do. the up same length say as that know, any but to to already But what companies. that car

helpful. that's again. No, Thanks Perfect.

And our Northcoast will Housum from come with next Research. question Keith

rate. been provide grip Thank on approximate has rate that you, you just take the can talked can color second more? guys. customers what's the guys business of a numbers can the terms the or David, in rail at on quarter I throw take you color railcar a little if think percentages in the past. higher been have know you we get I been about Any the than bit a

Yeah. take know I rate seeing is the if given that what me trend. like ever we're guess don't customer so, rented trend term are give before the not color a on car is I -- with, trend. colliding The that the and you vehicles will, or think specific you the if than it's I being out longer good XXXX, let anything rental. is that we've by I what can what for that a a

tolls more renting tolls. there's as that -- about for them and in longer they have still more rent rent but it's to opportunity regardless, that, Sorry the areas

that that anticipate year, the get with this court done to but the have of only some our the not been better demand, balancing right year calendar. to So clearly seems -- and and customers rest sense a I be training I next we load now would the of we'll on trend the of it going that, lot certainly think through a rate stuff as has we've strong. also holding obviously, into programs, increase at and changing more take advertising of

very drivers combination, rental but duration is uptake. major the longer it's of to pinpoint the the there's So which of one clearly, a one, difficult

on, appears targeted make for And year the terms cadence at EBITDA, is as it. of investments looking that assumption? goes I in the adjusted the year guidance our of as the of that rest some appreciate just correct hiring of the it. Got will then on the it a the you increase guys impact

Yeah, that's correct.

you. Thank Great. Okay.

Thank Yes. you.

to question-and-answer for over That the remarks. now conclude you any you. closing I'll back or the Thank conference additional does session. hand

you you. for much. thank help. support, your calling out to please to we're questions, Thank thanks Well, if We happy company, and very And appreciate the in. have reach any you

participation. your conference. an does you thank Have Well, day. today's And that you. We conclude for did thank excellent