Verra Mobility (VRRM) 29 Feb 242023 Q4 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the Verra Mobility Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] This call is being recorded on Thursday, February 29, 2024.

And I would now like to turn the conference over to Mr. Mark Zindler, Vice President of Investor Relations. Thank you. ahead. go Please

closed, afternoon, XXXX Good results to Mobility's the the Verra in which earnings Thank available is Call. and Today, Quarter on market after issued Earnings press Relations the with we'll Fourth our with our presentation, section you. Mobility's by Investor release welcome Financial along be ir.verramobility.com. announced and Craig Officer; and at website the Officer. our open call Executive will me on up followed call for our Chief Chief prepared are then we'll of Q&A. With David Craig, David begin discussing Roberts, remarks, Verra the Conti,

statements a These Management do SEC future not performance statements. materially future those Verra involve statements due any trends projected in during of the release We press forward-looking results guarantees forward-looking risks refer in Mobility's may to anticipated and update that our are obligation and the Actual statements undertake forward-looking described for complete call such future factors. statement predict. performance make variety caution regarding to difficult are anticipated filings. our earnings are and disclosure. may We to the of differ not of future events, to Please company. uncertainties the that forward-looking from factors you

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

over to With David. that, call I'll turn the

today. us for Mark, Thank everyone, you, and joining thanks,

influence mobility July key a Investor long-term closing priorities outlined foundation upon build our I'll XXXX. that fourth a the several shaping high-level trends discussion market quarter will outlook that of smart XXXX our then Day first for move that For today's in the with results on discussion plan our provide operating to call, our we I'm and strategic before of the are key on to strong at drivers. and going

fourth $XX the our highlighted revenue quarter ahead and and Services of forecast million EBITDA. fourth segment. We onetime and adjusted Fourth exceeded remarks. of U.S. was million quarter, was an primarily EBITDA strong revenue robust charge, by will in trends expectations tolling in delivered for fantastic the quarter driven by travel results slightly approximate Commercial despite of elaborate Adjusted his million for noncash our which Craig on our $X $XXX

aligned operating are results strong with across Our trends segments. macro our X

U.S. major seeing least suggest strong demand First, demand the airlines consumers from commentary both XXXX. in our travel we're RAC and the of first businesses, half through Recent by partners the particularly at and strong continued

XXXX the macro in the a lawmakers safer municipality We as have safety record is roads management safety customers for the opportunities automated software-enabled that across parking and create complexity use efficacy our year parking second to university passage investments enforcement which solutions. solutions of lastly, for new automated communities, the need the fatalities. trend automated traffic safety in push surrounding and the And globe recognize experienced The for reducing continued enforcement. drives legislation in with

up the to on million continued Now $XX outstanding The of and and growth quarter quarter travel trends in domestic over strong prior revenue RAC investments. commercial our moving basis the business the XX% the margins XXX due performance to -- points driven FMC over and XX% adjusted results grew tolling team about services year last by operations. strong were EBITDA year delivered of durable in Fourth strength and year management prior year unit our business. fleet

and acquired Form in PlusPass, our arrangement you'll XX-K, and litigation which we be resolved X-K the release into earnings and quarter assets between an which this resulting entered with finally during As the fully XXXX. certain made accrued a all payment will of matter XXXX, we the parties XX, disclosed PlusPass. we and discussed and million and in We see business from at to for first December $XX.X pursuant disputes

fundamentals. and year to of pricing agreements, back increased durable in XXX% prior trend increased about XX% car a business volume and XXXX rental to of due longer TSA revenue the XXX% all-inclusive volume. XXXX of of rentals. about over tolling quarter plans was year Full Transitioning adopted RAC the the XXXX volume adoption increases

in quarter, year-on-year incredibly revenue growth $XX driven efforts. tolling delivered over of and outstanding enrollment our XX% of by representing million Additionally, proud new from FMC our FMC the and growth existing double-digit year growth vehicles business of primarily business team's I'm XXXX, The generated prior customers. accomplishment. execution

FMC as I've single expect tougher to we revenue discussed high ahead, in of to mid- to XXXX. a previously, digits, result growth primarily slow comps as Looking

program of I'm also We're of XXXX. in in strong market a tolling the of support quarter excited partner cashless and pleased the to fourth Italy tolling the rollout report launch Hertz Italy, trends. growing in with our their to

well secular our or year Orange Washington, positively in tolling XX% County, Cashless roads trends the penetration continue this past U.S. -- these year, drivers, and toll including toll XXXX in area; business toll impact business. continued to all-electronic completed the conversion cashless Lastly, roads this Colorado; D.C. roads Denver, California. metropolitan were new to and underpinning approximately X and reached as

strong positioned in transition segment the is plan high grower, vehicle a as all-inclusive to durable opportunity. and and connected look nascent toll continued tolling single-digit CS cashless by roads, expansion in driven forward, pricing trends, attractive we travel but new As growth a

growth XX% the from noncash investments existing mentioned implementing photo that the of total XX% demand and The making year Moving City, by of their expand I on EBITDA for reflects recurring quarter, service drove to cities prior programs. Recurring the to program customers' To expansion business. this road efforts outside York Government Solutions. was customers and last improve to strong to a which Government existing same service driven revenue in platform compared to due year. new a we're growth revenue, grew standpoint, point, enforcement the our adjusted safety. New earlier profitability we period Solutions over the From XX% revenue due revenue to declined charge

legislation The State the forward, Looking million and management. and Washington addition new enforcement It bus to for cases legislation million law zone about years in school legislation TAM The also signed quarter. and few and including automated speed fourth the speed new enables within new California, next the Pennsylvania use Florida, select expansion, passed in $XX into cases school management highway legislation of which allows. estimate existing $XXX Connecticut, in and safety. expands if stop-arm growing to legislation cities, in Colorado, extends use passage a at speed resulted zone potentially new this the we currently work management significant annually approximately in

second by early the had now may in the forward, have new as steps into several half see procurement RFPs in California, have the programs are the we're the focused year. second Moving up. next legislation, success State, And existing and procurement procurements. continuing quarter In the we of process. In on Florida, we enabled ramping Colorado expanding Washington and in we won new processes

in side attractive New award business several of Additionally, experiencing provinces the efforts in are Canada. we expansion awards new our activity in in as business, in across expansion Zealand the as well international

we hard of for In city's the position New working the this contract. to the are uncertain, the come ourselves timing but is automated City, we The successful enforcement a RFP forward. moves are for York awaiting of RFP outcome. to renewal as More issuance process

basis on positioned Now the the is and GS of our retention at net improving currently looking stepping mid-single-digit as rates. back the grower picture, existing portfolio, big

states, continue optimism, We traffic and are operating enabling to make to environment safer in demonstrate favorable mobility easier. to use safety and cases a various very and confidence automate

and over prior in total year software EBITDA quarter, services Systems. on revenue growth. increased was reflects year-over-year and revenue. SaaS in of revenue line Fourth $X Moving services driven strength the to our XX% with million Adjusted TX quarter by expectations

expect revenue to single growing and transactional long of at to on high growth moderate We opportunities. to we focus over and by continue introduction the see term, the digits a driven XXXX. digits, mid-single pricing TX in the SaaS QX's But strength rate

particularly solutions. software move likely pay of a market smaller from transitions as away become hardware, mobile Additionally, towards percentage hardware the to continues stations, and will revenue and

capital to allocation. sheet and the balance Turning

of a X.Xx full nearly in traded year am fifth our being the I a the net of over lowered adjusted we course company. publicly of back leverage XXXX, year we've turn fully XXXX, at leased pleased Over the course to report ending EBITDA.

we for $XXX In over million share of million. addition, of in XXXX, a reported, course purchased as previously November, Board our Directors of new program we repurchase shares authorized and the $XXX

volume TSA Solutions, benefited airline resulting expansion all-time from Overall, highly setting year highs experienced Verra And passenger favorable in XXXX in a was at Government to $XXX EPS. long-term levels. and addressable in XXX% history, adjusted up Mobility's record the We environment, with new of total traffic, of legislative XXXX revenue, XXXX adjusted EBITDA a million. we in market record

Next, communities corporate the and Responsibility and report we vision helps the place technology in world strategy. values, responsibility work. operating our which and system and recently of that how published to which live our our I'm the and Corporate safer We being supporting pleased committed we form purpose, Report, customers make inaugural citizens corporate that our are good better to our core outlines and believe foundation a

in to our turn Now XXXX. I will priorities top strategic

VMOS, we efficiency a the pillars: of fulfilling growth, Verra standard are years, build Over workplace the have strategic X talent or robust core future; the X engaging of VMOS business system At past Verra and business outcomes; and the experience. and drives System, Mobility create Mobility development. Operating the heart that implemented drive

model capitalize Slide for As on these we on leverage superior to X each you'll of execution pillars, focusing poised Best investments are key financial pillars, recent the opportunities; Through plan; accretive creation for expanded operating XXXX, pursuit efficiencies; Work. value annual see making all XXXX adoption; of TAMs we on: Verra expansion execution of portfolio objectives X, our long-term Place drive to deliver Mobility accelerating established of stakeholders. and our to and in a strategic

down numerous increased from and in new as focused tailwinds, including more on strong the adoption while our opportunities. pricing models, layer to In services, capitalizing simultaneously secular X. for all-inclusive key we and are we X, a business on transition cashless focus tolling, roads toll of detail Next, core our a expansion I'll of growing where priorities and commercial benefit X drill Slide segments, on each described

core Our violations; continued European while laying and and top priorities include: next-generation tolling investing on capitalize to connected foundation fleet opportunities. management in the the segment and growth; in business enforcement execute expansion vehicle

and In an enforcement, City position XXXX Zealand; investments New for Florida, ourselves where our XXXX to our we to strategic top automated Colorado, enhance York New awards advantages. Government software share Canada retain contract expanding our to of market priorities and renewal; our win in platform addressable in new are: benefit California, Solutions, from and Washington, contract leverage the

And transactional where segment in finally, following municipality the high-margin the for in Systems, our top strategy core focus and our continued as products profitability priorities: to on priorities efforts enhance as enforcement to as TX platform significant permits focused runway software well XXXX. university in growth These further positioning. penetrate we launch new successfully the business; on to to our growing execute are our is and our focus growth; our investments continue drive strategic segment, revenue in and have we

business in forward updates progress our said is great and I've our a As I with look execute XXXX. this on future, plan bright we a as sharing to previously,

XXXX us to and through Craig, over our guidance. financial I'll turn guide results it you to

thinking David. out year afternoon, overview today by fourth I'll joining a Good by of detailed for of thanks Thanks, everyone the our results, an and about start quarter full overview providing XXXX followed we're call. on us XXXX. how and to

TX quarter, City strong the growth service X, over segment revenue Slide the about Government XX% Total revenue which of of XX% last services travel recurring grew the business for to in million Government Recurring which measures York recurring grew the were the the company. the of the Solutions, the quarter. service product million strong revenue XX% year-over-year. At XX% business. outlines increased XX% service by driven key Systems' of the prior service while revenue prior was million and year. Solutions grew Product majority and New and SaaS across outside CS TX by over revenue GS demand services from Systems, for was over quarter, by $XXX year quarter, $X revenue million level, quarter fourth the $X and year-over-year the revenue year from turn growth Let's commercial fourth consolidated business approximately the financial for to increased $X sales. international was about this for revenue driven

EBITDA by total year. profit X% standpoint, $XX last increased over a of consolidated From adjusted million approximately

million $X business took David we obsolescence, mentioned, As driven largely for noncash supply inventory the chain by in GS optimization. charge a

EBITDA XX%, Excluding this consolidated margins of adjusted QX have year-over-year which have and XXXX. would consistent charge, is been would XX% growth with been about

excludes net reported for including our to to the income discussed share We pursuant $X.XX accrual XX-K. was for including the in nonrecurring in which million items, which quarter amortization, the the is PlusPass EPS, quarter stock-based in $X.XX other legal per more compared compensation and per of $X of detail legal million the $XX.X fourth quarter XXXX. settlement, current our settlement, share PlusPass Adjusted

second the The our the $X of in inventory compared million increased third pretax the primary GS the of warrants year. shares count year from and reduction earn-out was driver to share resulting and in the this for prior and segment quarter the issuance write-down the exercise

mentioned or earn-out remaining leased the earlier, fully company with warrants David As is shares. no back,

$XX cash relative expected of largely delivered quarter, January, and conversion in but The trends. were which CapEx accounts in free receivable of by in we million $X was driven million shifted quarterly driving quarterly early annual $XX for the primary timing. December, to about rate, our which full recent XX% our of factors flow meeting to year We run collect performance rate, million below resulted our guidance incremental to

collections generated that million to capital, balances. fourth by payable comparing When working of the source and period, $XX higher than XXXX, of normal, quarter driven in accounts we increased higher about a

to million free historical $XX subject an to in flow business. return Moving CS approximate cash our expect rate, to I run forward, seasonality

a to Slide for margin. generated of adjusted revenue million EBITDA Turning XX% adjusted $XXX We XX. million representing EBITDA approximately full $XXX about of on year, the

flow we million EBITDA, Additionally, year adjusted of representing cash flow for full $XXX XXXX. per of about free free $X.XX share conversion or cash XX% of generated a

RAC $XX by XX. robust rental XX% delivered Slide $XX increased XX% revenue million Moving million about same or to on last of tolling Commercial $XX driven in or period We fourth volume. year-over-year. demand Services increasing the about year, million increased travel quarter, the and over revenue

continue about FMC million or business our as Additionally, growth XX% our intended produce results. year-over-year to the $X grew initiatives

year, growth. Services in the our Adjusted of largely were adjusted quarter over strength margins XXX driven was a representing fourth Commercial tolling last and Fourth initiatives. point million, EBITDA of EBITDA basis by in about continued $XX increase growth year-over-year XX% the of XX%, quarter RAC execution

in $XXX the basis driven of XXX volume-based million leverage. a last a year, of revenue, full EBITDA growth about of For over Services over generated operating point Adjusted XX% Commercial year the year. margins $XXX million improvement prior XX%, resulted by

international or the driven for XX% by $X revenue over Let's our million of for primarily Driven we'll and largest by period by programs. increased last internationally Government business. the million New $X to at -- XX, $XX the was by service about City, same year the revenue customer, results take of Slide primarily a Solutions to turn York the growth outside and million was driven quarter. quarter was look Product

$XX quarter, XX%. write-down to reduction representing is inventory of the previously The and development million platform spending on discussed obsolescence due versus for year margins increased in the Adjusted and EBITDA I prior investments $X the margins business was efforts. million

with the the effectively for EBITDA revenue, prior For a over $XXX million XXXX. the generated X% $XXX year, flat total full of adjusted was Government And year, Solutions increase year. million

results line for TX $X Solutions to and were Slide turn of of the adjusted of segment. XX Revenue of is million take and our quarter. EBITDA million with view a the which business expectations Parking $XX in Let's Systems, approximately

and is million with quarter. consistent increased This XX% to $X historical trends. over Software for prior increase year and revenue increased the sequential seasonal product the quarter services sales

revenue TX million X% EBITDA and the year, full of growth over For million. $XX last $XX year approximately or delivered adjusted of

Okay.

take turn the a at XX and and look discuss leverage. Slide Let's to balance closer sheet

during as X.Xx As revolver. well in cash we cash of $XXX year at quarter $XXX million reduced net you of second which of the balance were floating Through approximately and a can we of primary of XXXX. year-end net liquidity approximately resulting our and paid credit ended million, loan with The yielded leverage the proceeds warrants, with flow in strong million term down significant undrawn debt. the free drivers see, year-end, exercise the as leverage rate third $XXX debt of

at monthly XX% balance floating current about of million, stands B float years with is debt X.X% that that December interest of began more of our a With $X.X of XXXX at fixes instrument the X our option with have a gross to swap. portion year-end in rate of total execute approximately move debt billion, This Our of a we at million a can notional $XXX favor. SOFR in about rate hedge debt. that hedged $XXX rates we fixed rate Term which Loan cancel for in for our hedging floating approximately the event

the completed to subsequent fourth quarter, addition, $XXX B. In Loan a of repricing Term of our million successful end we the

about point achieved materially XX and The savings, this average total remaining yields cost $XX million fees, of to our the eliminated in point was adjustment On the cash our transaction basis of debt spread reduction the in stack, credit over oversubscribed, debt. weighted XX X%. coupon also debt offering about and we historical to basis currently. Our life lowers a of rate a net

while that no our period our findings. these perspective, correct path as It a result The already our or in XXXX. closing and year-end as disclosed well is past with second compressed was control and independent will IT deficiencies a important several a identified and and detailed line results these in thorough on from for our new excellent, to engagement our will to note regarding been has audit, remediate update marks In controlled have firm. We've gaps, a quarter XX-K, weakness you accounting gaps we there you fourth partnership weakness to and time The were current this first material under financial of Deloitte our we XXXX, which progress. executed. our aggregate errors material note regularly general

a XXXX, Now let's which on discussion for will another turn for company. be the to XX Slide year expect strong we

We outlook representing Day $XXX over $XXX to range growth approximately Investor XXXX. our the revenue to X% of of with the at million, long-term July expect in XXXX, million we in shared consistent X% total

million an to range basis about X% over This adjusted EBITDA year-over-year. about of $XXX of adjusted margin EBITDA the of represents representing XX% approximately or expect XXXX. We million, in $XXX growth midpoint expansion the margin points at XX

In Commercial increased Services, driven product and TSA adoption. we by growth, expect high single-digit revenue volume

In a addition, revenue-generating CS growth overall we lowest quarter rate is trends, FMC line are revenue season quarter, a third second business. quarters, historical sequential increases a the to in -- decline expecting Consistent be revenue by with followed increased the followed with our by at followed driving first quarter forecast comes then fourth by the in and close. the a summer to as in sequential

segment As a reminder, all revenue in service is revenue. this

Solutions end and customers expected of growth revenue driven camera total fiscal high Government expansion awarded the by existing with new in mid-single-digit the customers of is installations generate to XXXX. year

expect to segment We levels. in GS comparable be revenue XXXX annual the product to

I previously a As increase on shortly. we support long-term growth, which CapEx discussed, to planned will we in GS are elaborate anticipating

product growth. driven mobile in growth, offset the sales revenue on by total growth is deliver growth and in to revenue as Solutions a by -- expected this reduction SaaS in revenue transitions strong temporary demand industry and Parking solutions. in a onetime The revenue Lastly, reduction services reduction software focus temporary is mid-single-digit to

high growth as parking term, and return transactional As David over we revenue SaaS growth we the our long to execute expect strategies. mentioned, single-digit to

will of to million, are is to cash be to The on free about million incremental revenue-generating to free vast adjusted as range spend paid conversion XXXX. a was non-GAAP per be company of to the software after-tax rate excludes in representing and CapEx. long-term cash conversion plan of spent XXXX share. platform which in Adjusted winning enhance XXXX flow will the in EPS of flow adjusted to our in cash consolidate below For guiding million year. and $XX CapEx the legal Government and to XX% $XXX settlement, our range rate a XX% Solutions $XXX million of accrued due majority the $XX $X.XX EBITDA. free in an PlusPass expected flow guidance $X.XX be XXXX is whole, the contingent procurements Adjusted our The to we a cameras for during

$X We also spending upgrade CapEx ERP current our in about million anticipate corporate system. to

flow expect on the based free adjusted XXXX. we assumptions supporting year-end capital guidance leverage our excluding found and by Slide flow Lastly, adjusted allocation on to can Other cash reduce EPS key free outlook about EBITDA and to XX. Xx cash investments, net adjusted and be

outlook. operating generated we and I'm year deliver tailwinds, growth throughout strong We're and our summary, and with strong end attractive fourth full results, continue the secular drive our we're believe ability right In in markets quarter I to in expansion company. investments to confident on making to the XXXX margin and

This the Thank time you, for you Over questions. attention open like to concludes Ina. I'd Ina to and invite our any to this today. for your remarks. line prepared time, At

your [Operator from Keith from comes the Housum Research. of Instructions] first Northcoast line And question

David, Obviously, movements legislation great you year or guys year as for cameras. last was enforcement positive out, traffic a pointed

wins point next announced more are us or year? I significant you win. perhaps week, guys little wins big you about Davie a there any of us other Town think excited to But get that last the bit to,

RFP I I Keith, X Yes. here to it, sign a that are of going There to are X things probably, ones I'd be to great think next, in mean is come. large Davie the several months. call

very, positioned of potential customers of are as very in terms some current doing a the be will RFPs new of these some our as well customers. -- well We lot

these a things take that a legislation, remember little -- they the to activate. take to post while tend So thing to

X are going again like sometimes be really next that out, not press even X to on, are we're things to here but ones heard in different much that. that probably you've Now we deals in smaller about some bid months. releases coming excited the may and Those the

few it. in Board past was the over I movement noticed And Great. here of Directors the then some there weeks. Appreciate

Sarah me think understand little kind Raj rolled I brings the you Board. off. guess joined to are I Board a doing. I know help guys what more Farrell of Raj the complements what bit and

and success going Yes. She in outstanding she's Sarah. thank be first, Board mean, was the investor, I wish I to what really, got an her doing. of to greatest Member

as Raj, we've a which -- model we've and toward moving you For of know, the Danahers like of been for company time, the shareholders. businesses we Fortives the grades of world, by deployment and we portfolio connected a have means is great And strategy likes the some the to business long for our M&A a create common our business of capital -- system. one value

background, as that insight expertise a leading as as and continue Danaher, worked to how can M&A just DuPont, real about brings our with level like into in places Raj, grow of in a we at at Fortive, we his high particular, well think as business.

and so he's are see future, bring we to part M&A the going think of a we as we a our excited certainly lot because table. So to him have to

about can squeeze the more I If excited in other more maybe Europe. can perhaps what's there. the -- us a you happening is you any win to it. slow roll. know that I appreciate might I But I developments guess tolling is Italy just again one announcement Hertz guys European a you in Great. any nice for point here. get Obviously,

a yet. probably sense even in vehicle Yes. yet. is actually don't installed I They the we point of haven't Italy don't I mean a think have transponders I excitement. --

going the and to mentioned, is environment. be. But that very were relationship a our Italy barrier-based all as and starting of we a is places to Italy on Telepass. sort what plus we'll sense France So with And like transition, make hinges of cashless they're volume going into -- this get

a is this have specific midyear acceleration something you insights by any things think good harbinger of come. some what insight. just yet, more have we'll that I don't to but suspect does Currently I give So to to on

question And Alwy your line Bank. from comes of Deutsche next Faiza from the

that's sounds for just And have type So you made. just up the thinking might of on refresh fit what company. like actually first, that I Could should M&A M&A, terms to It flexibility pick focus Verra that a in how some the in comments big we with on certainly, wanted expect now. Mobility. about the you're businesses of us you you

what of the there. sort is Just vision

And course. of question. thanks Yes, the for

So I core our grew we mean, first business -- the as look said, at and we've always in foremost, we businesses.

win serve be and we our can going businesses that have we We're looking customers then from attach there. at looking M&A to an that opportunities. So perspective, to adjacent

a competitor whether we to expansion, platforms. buying similar sometimes a a then So that's customer, geographic look that's And that's similar for potentially. product sometimes

-- of we reality always is the it those flow be cash either X. could we ultimately, So But buyer. we've are as said, a are

-- We or taking bets rather. on activities risks noncash not are flow businesses, generating or

as urban segments. see to I connected as you One would vehicle mobility. them so go X And as we say well would you that these back Investor Day, sort was articulated of

a category, rather, of we look X broad exciting can or all the markets in where and there. that's really so And categories within

for so continue significantly that can to from what to about to super But a has and year, maintain bring discipline this up want of what doing the a work can last we're activity we're end the picked Certainly, have so excited to we the think us in. to understand in team best going businesses very portfolio. markets us. about that that's of how tail great the we year a strict So market we add we lot operate to are

past highest But that in environment operating to shares Mobility-specific changed framework think the to be adding a I unchanged, be the right? opening again, is So seen on against past. comment. in really has debt, XXXX our to different just allocation the say paying to going portfolio. back that we're that that's is shareholders think, the recent to down I the I capital up, and than that out in seems buying I'd we've just don't only thing yield next a environment add to potentially the the door have we've dollar about And that And that would Verra right? talked that, Faiza, that's in

to about mentioned wanted revenue, of York including government the talk RFPs, the City then And New RFP. services, Understood. you the some

in like if cadence curious the you the talked... And about bit the maybe context you charge if a give there? just guide? about So quarterly can mid-single-digit more expecting And talk what you're embedded us of growth I what's on this that throw one, just can just

sure. Yes,

start first So the with let one. me

it -- to this, repeat So sure got think make Faiza, going here. to I and I'm I've straight

high the do will services one about I So of specifically, we -- growth these what's for I the the warrants think this and into I guide And solutions? mid-single-digit bifurcate is And if that level on you, very first I embedded end but it's guide detail. tell government what product, this think digits. of don't in mid-single

the high I growth services okay? digit to Solutions, the for look Government and look I think either direction, high combine could end at rest year expect revenue service in So while is be flat like on rate be quarter of exit going business, the I are something in get to a given single the X those for the the products -- very overall of fourth that probably of mid-single you together, if of the end best. low the I at that. bit little It the digit, at when

be if So up. to down, anything, down rate. do best, bringing which the growth products the flat speeding it's slowing expect I business those But not at overall is certainly is

the So one. was that first

go to one I'll your on stay third Government next. And Solutions, I'll

come we we easiest The of on and is the that $X about here had chain So call without appropriate was. a inventory we've on go who's used to for as attempt right? to as optimization. supplier have the way accounting we've noncash our happened mentioning open be inventory some to to it once a to competitor, that. going back So million adjustment a think this here in of had across did in years And this names make charge usable and supply the isn't the global stocks XXXX. be that for really And was half

So nonrecurring $X that's noncash. million

overall is final cadence the the the then And for piece company.

go set to it Mobility. So Verra let's GS, take back aside, total

look out, something Verra If like it's how quarter, for you XXXX this. the Mobility going and at to fourth sequentially actuals, take to quarter pace to that's going by look were

XXXX, the the go single second digits. quarter I come to fourth digits. incrementally third The quarter quarter from high expect grow again of sequentially digits. quarter digits down And then I expect be expect to second the the back to mid-single first first single quarter of I low I quarter XXXX expect to now to mid-single again up be down.

probably So for pre-COVID. CS little same on in trend difference we a seeing year in is driving than we that season the I call. The it's a company ago would we're earlier the talked second the business say, about, that did the summer start quarter the

that's high there into the from and to on quarter the growth So then second the why single-digit down fourth.

in Perfect. clarify are Solutions And course through we then just accelerate to of quickly, should expecting to -- year? the growth service Government revenue expect sort you of the

the Not rate comment really. I half in growth for exit really. saw it's was the rate My that year, be total Not at expect the we XXXX. of the going the back year to

across it's, but It's little bit me. I I even bit a it X the to little variable, quarters. the front probably in So year, a skewed have back say, would relatively of

line question Moore from your Securities. of CJS And Daniel the from next comes

you shift obviously, Services, of kind out, cashless drivers talk growth TSA about between what Comm kind Maybe toll volumes of to that drivers now in pre-pandemic. fully roads, term? with the David, the the laid driven, expectation embedded high in recovered Starting biggest near the to are miles this relative rank-order there for single-digit year the -- just

this that Dan, shot So is I'll one. take yes, at a Craig.

I in the in single-digit only that cashless growth XX% tailwinds here that And roads, the So than it we're toll past, were those there more if end roads of in Roughly coming roads, high secular tailwinds. penetration do secular from we at is at half of more toll are want buckets. to break would growth X XXXX. down XXXX,

So all-inclusive to product through certainly then, more the of go additional And of the and Hertz there. ABG. penetration course,

bucket. of So out digit, of is high the single of in again, high TSA half XX% in it digit is about growth. that that About single

high XXXX versus about XXXX That's single from our the growth year We to FMCs. be XX% of and X%. in digit expect that Europe is to a growth remaining X.X% in then And that as in the growth total initiatives. growth growth

in cause out kind timing? an Solutions. Pennsylvania, the mentioned $XXX on just remarks? What potential prepared could to TAM. million of back Any to said $XX that you legislation you think, would additional increase are initial the be Perfect. Very going And then enabling I helpful. You color Government to you frame million called time in that And looking what at? your opportunities

Yes.

Sorry, all Dan, that last across all states the slightly year. legislation combined did might sort have been of we that -- the XX the It word choice. that -- was that's

Got it.

Yes.

Meaning RFPs governor legislation and think year, the do signed by gets the we that is to nuances last then it's each start regardless, then are going. but start for to did that along, about the So -- some about year. sort timing of a the adapted there's ones state, passed off usually, -- you'll and way

So some and half as I about as more that wins, start we'll back QX. maybe to what even of year, see early in QX probably discussion think the is this

we interest EPS But that's your then Perfect. and I about if just right Craig? think the guide, missed it, gave to that post is if And it, expense embedded -- refinancing you in the 'XX way in plug apologize. I X%, the

original Probably, the and be $XX of delta The number, going to I'm cash and head, amortization give you million, can is The if is P&L yes, be the top The is expense calculate but about discount. the to between going cash you it. $XX Dan. P&L number issue thinking number million. the of I'll my the

EPS, fit going that will into should adjusted to And your XX, P&L So the cash out be X%. expense XX. XX on

your next comes the question from And of Louie Blair. from Instructions] [Operator line DiPalma William

Or implementation? the directly For Italy a a Hertz for commercial with starting service? Hertz is there tolling Italy David, was trial

it they've I They're decided, wasn't -- probably would I that do pilot, going commercial will already decide, start to to a but Mike, bet. start a trial a suspect with they then they'll implementation. almost

Okay. forward provide your And in trials an any those Great. implementation. other commercial status is of that And able are trials on there to you move the potential Europe? to update

of them some actually have. mean I Yes.

a base have Ireland we a starting mean had most tolling big continue not I Spain, nor we But of a to see in is I there. some broader and we're have think obviously to country But very traction not work very opportunity. -- big them Ireland. in

what want want we and we more the -- to that I France get So say ones Italy are would is to really get.

that's This kind cashless, going be to to pace sign Italy As It's it. starting of a they opportunity. tolling move for great our in is to hard bigger things come. to

So understanding to. earlier that we I as on lead question, -- probably a of might where that's the mentioned midyear

the is mentioned countries cashless the penetration one Great. ago States now you your on showed of X XX%, that's how up you any do slide years instance, in like your is have look tolling there? penetrations these think that like penetration and think, And in I United like, I slides, in from, is Analyst the when Day, different XX% at on in the you're targeting? for like what And different you but Europe what the estimate Italy,

that the penetration right? Yes, Louie, U.S., U.S. is that's market,

low, France Italy are and they're Louie. -- very

very Yes, X%. less mean low. than maybe I

Yes.

For France, less than X%.

Yes.

for services Europe what so is And become need attractive providers it And like the to implement? low? implementation be still commercial for to to to rental car like if I does like like successful get is guess, penetration Italy, possible car to for tolling penetration the the rental Hertz

environment work over in consumers. to pull work I can and we Yes. -- a they cash still value we still an still in the they provide where mean can

can where my of still Rome, they're think know opportunity this and guessing. of if If is don't me suspect -- won't of depends top difference. head. -- I it a thinking about it. as overall, Italy really the But make good that then then kind that off outside the it's it where of are it's I they're a if structure lanes, where of on toll the much cashless elsewhere, be they're I

I to markers I percent you valuable year, last the that think to cash-based So launching are go things be. that France problem what key And it in Italy give that's a I most that ought our notion way to The more. fact does to say is means are But little convert could don't cashless. started to can there. that or the have a some tolling bit the percentage for starting Hertz them a hey, those is solve of,

it but the that be our I something the in So be in material think, again, in to it's of years, be to midyear going will able not we'll progress. terms update,

Great. question. One more

share? Florida, like general, Verra expect associated XX% You and like think to Pennsylvania. legislation does suppliers -- side, California the one competitive is the on a its activity become roughly And all seen across of In how, mentioned have competitor. of you with to camera in government maintain systems you your like trying increased market I new like general, like

rally with cause in a California, certainly that smaller may to the we and we they competitive, clearly. we here, the to other the well we anticipate as which maintain in well anticipate, position market, especially mean and Yes, so growth will. -- there's to I to going opportunity certainly would to would win you positioned are try in we try our do. cities be where not are and but very in larger their but Florida, certainly very in -- I some, mandates, companies ourself mean,

Koning question next from Baird. from your line of Dave comes And the

margin across to XX maybe you calls about Or I here. a Yes, expansion takes job. consistent segment? and my Is nice be pretty what that maybe the guess first Guidance margins. expansion, through for Nice be by bps walk of by going question. can is would puts segment which

will the it be general, In across consistent segments. Yes.

I to bit TX, that; a are with will GS close points end think be that. to on CS of that; the grow and ceiling. anticipated segments higher little about But a than all XX basis the lower bit being really

you. Got Yes.

maybe acquire included thing. in did PlusPass in Maybe it, much to et how paid small. them. the from release how And it's I revenue then But other February. that noticed through, you you're for mean I just from that press assume the one the you maybe pretty it it, come cetera. And might going much might that stuff revenue guess from how through acquisition? going come you you're that some I And I assets walk much Okay. could

like not not IP-related any But Well, of all it, we we that a a part it's as the settlement. part can't acquired asset. a customer of mostly It's negotiated it's as of part -- assets it.

assets. Those are pre-revenue

that's Yes, right.

say that. We can

[Operator you at Ladies questions are thank time. ends That for further There all participating. and question-and-answer no our Instructions] this session. gentlemen,

You disconnect. may all

you. Thank

you. Thank