Verra Mobility(US:VRRM)2022-05-09 21:07Revenue Growth - Total revenue increased by $80.5 million, or 89.6%, from $89.9 million in Q1 2021 to $170.4 million in Q1 2022, with Redflex and T2 Systems contributing approximately $37 million to this growth [134]. - Service revenue rose by $71.4 million, or 79.5%, to $161.1 million in Q1 2022, representing 94.6% of total revenue [146]. - Government Solutions service revenue increased by $29.1 million, or 66.1%, to $73.2 million in Q1 2022, with the Redflex acquisition contributing approximately $17 million [149]. - Commercial Services service revenue grew by $27.8 million, or 60.8%, to $73.5 million in Q1 2022, driven by increased travel demand in the RAC industry [148]. - Parking Solutions service revenue of $14.4 million was generated from the T2 Systems acquisition, with no revenue in the comparable period [150]. - Product sales surged to $9.3 million in Q1 2022 from $0.1 million in Q1 2021, primarily due to acquisitions, contributing $6.0 million [151]. Profitability - Net income for Q1 2022 was $10.0 million, compared to a net loss of $8.9 million in Q1 2021, marking a turnaround of $18.9 million [146]. - Net income for Q1 2022 was $10.0 million, a $19.0 million increase compared to a net loss of $(8.9) million in Q1 2021, driven by increases in service revenue and product sales [159]. Cash Flow - Cash flows from operations were $31.2 million in Q1 2022, compared to $9.0 million in Q1 2021 [134]. - Cash provided by operating activities increased by $22.2 million, from $9.0 million in Q1 2021 to $31.2 million in Q1 2022 [167]. - The company had cash on hand of $93.4 million as of March 31, 2022 [134]. Operating Expenses - Operating expenses increased by $20.6 million, or 67.5%, to $51.1 million in Q1 2022, reflecting growth in service offerings and acquisitions [146]. - Operating expenses increased by $20.6 million, or 67.5%, from $30.5 million in Q1 2021 to $51.1 million in Q1 2022, with operating expenses as a percentage of total revenue decreasing from 33.9% to 30.0% [154]. - Selling, general and administrative expenses rose to $41.6 million in Q1 2022 from $28.4 million in Q1 2021, representing an increase of 46.4% and a decrease in percentage of total revenue from 31.7% to 24.4% [155]. - Total operating expenses before stock-based compensation were $50.8 million in Q1 2022, up from $30.3 million in Q1 2021, marking a 67.8% increase [154]. Debt and Interest - Interest expense, net increased by $5.1 million to $14.3 million in Q1 2022, attributed to an average outstanding debt of $1.2 billion compared to $875 million in Q1 2021 [156]. - Interest expense for the three months ended March 31, 2022, was $14.3 million, compared to $9.2 million for the same period in 2021 [183]. - The 2021 Term Loan has an outstanding balance of $892.9 million as of March 31, 2022, with an interest rate of 3.6% [190]. - Each 1% movement in interest rates will result in an approximately $8.9 million change in annual interest expense based on the March 31, 2022 balance [190]. - The company has not engaged in any hedging activities during the three months ended March 31, 2022, and does not expect to do so in the near future [191]. Tax and Compliance - The effective tax rate for Q1 2022 was 40.4%, with an income tax provision of $6.8 million, compared to an income tax benefit of $(2.9) million in Q1 2021 [158]. - The company was in compliance with all debt covenants as of March 31, 2022, despite a technical default due to a late filing of the Annual Report [182]. Capital and Financing - The company authorized a share repurchase program for up to $125 million of its Class A common stock over the next twelve months [164]. - Cash used in investing activities was $11.9 million in Q1 2022, compared to $3.6 million in Q1 2021, primarily due to increased capital purchases related to acquisitions [168]. - The company had $68.8 million available for borrowing under its Revolver as of March 31, 2022 [163]. - The Revolving Credit Agreement has a commitment of up to $75 million, with $25.0 million in outstanding borrowings as of December 31, 2021, fully repaid in January 2022 [179]. - The 2021 Term Loan requires mandatory prepayments based on excess cash flows, with prepayment percentages of 50% for a net leverage ratio greater than 3.70:1.00, 25% for between 3.70:1.00 and 3.20:1.00, and 0% for less than 3.20:1.00 [175]. - Interest on the Senior Notes is fixed at 5.50% per annum, with redemption prices starting at 102.750% in 2024 and decreasing to 100.000% in 2026 and thereafter [176]. - A loss on extinguishment of debt of $5.3 million was recognized during the three months ended March 31, 2021, due to refinancing transactions [177]. - As of March 31, 2022, the outstanding PPP loan amount was $2.9 million, included in the current portion of long-term debt, with forgiveness still pending [178].