Verra Mobility(VRRM) - 2025 Q2 - Quarterly Results

Verra Mobility Q2 2025 Earnings Release This section details Verra Mobility's Q2 2025 financial performance, segment results, liquidity, corporate actions, and full-year guidance Second Quarter 2025 Financial Highlights Verra Mobility reported strong Q2 2025 results with a 6% increase in total revenue to $236.0 million and a 12.8% rise in net income to $38.6 million. The performance was driven by growth in both the Government Solutions and Commercial Services segments, leading the company to reaffirm its full-year 2025 guidance despite caution around stabilizing travel demand Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $236.0M | $222.4M | +6% | | Net Income | $38.6M | $34.2M | +12.8% | | Diluted EPS | $0.24 | $0.20 | +20% | | Adjusted EBITDA | $105.3M | $102.2M | +3% | | Adjusted EPS | $0.34 | $0.31 | +9.7% | | Net Cash from Operations | $75.1M | $40.0M | +87.7% | - Revenue growth was primarily driven by a 7% increase in the Government Solutions segment and a 5% increase in the Commercial Services segment[6] - The increase in net income was mainly attributed to higher income from operations and a decrease in interest expense compared to the prior year[6] - Management reaffirmed the full-year 2025 financial guidance but expressed caution that a modest decline in travel volume could lead to results trending toward the lower end of the guided ranges[3] Segment Performance The Government Solutions segment led growth with a 10% revenue increase to $107.1 million, driven by program expansions. The Commercial Services segment grew 5% to $109.1 million from increased product adoption and tolling activity. The Parking Solutions segment saw a 4% revenue decline to $19.9 million due to lower one-time product sales Q2 2025 Segment Revenue and Profit | Segment | Revenue (Q2 2025) | Revenue (Q2 2024) | % Change | Segment Profit (Q2 2025) | Segment Profit (Q2 2024) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Commercial Services | $109.1M | $104.0M | +5% | $72.0M | $69.5M | +4% | | Government Solutions | $107.1M | $97.7M | +10% | $30.1M | $29.9M | +1% | | Parking Solutions | $19.9M | $20.7M | -4% | $3.2M | $2.8M | +14% | - Government Solutions growth was driven by the expansion of bus lane, school bus stop arm, speed, and red-light enforcement programs[11] - Commercial Services growth resulted from increased product adoption, tolling activity, and European operations[11] Liquidity and Cash Flow As of June 30, 2025, the company held $147.7 million in cash and cash equivalents. Net cash from operations significantly increased to $75.1 million for the quarter, driving Free Cash Flow up to $40.3 million. Net Debt was reduced to $893.4 million, improving the Net Leverage ratio to 2.2x from 2.4x at the end of 2024 Liquidity and Debt Position (as of June 30, 2025) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $147.7M | $77.6M | | Net Debt | $893.4M | $968.0M | | Net Leverage | 2.2x | 2.4x | Q2 Cash Flow Performance | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operations | $75.1M | $40.0M | | Free Cash Flow | $40.3M | $26.0M | - The substantial increase in cash from operations was primarily due to improved working capital management[11] Corporate Developments During the quarter, Verra Mobility increased its Revolving Credit Agreement commitment to $125 million, completed an accelerated share repurchase, and authorized a new $100 million share repurchase program. The company also entered into a lease for a new corporate headquarters in Mesa, Arizona - On May 15, 2025, the company amended its Revolving Credit Agreement, increasing the commitment from $75.0 million to $125.0 million[12] - The company completed an accelerated share repurchase (ASR) on March 3, 2025, receiving a total of 4,507,892 shares. The prior repurchase program ended on April 30, 2025[13] - On May 17, 2025, the Board of Directors authorized a new share repurchase program for up to $100.0 million of Class A Common Stock, valid until November 2026[14] - A lease agreement for a new corporate headquarters in Mesa, Arizona was signed on May 29, 2025, with relocation expected in early 2026[15] 2025 Full Year Guidance Verra Mobility reaffirmed its full-year 2025 guidance, projecting total revenue between $925 million and $935 million and Adjusted EBITDA of $410 million to $420 million. Key underlying assumptions include an effective tax rate of 28.5% to 29.5% and capital expenditures of approximately $110 million Full Year 2025 Financial Guidance | Metric | Guidance Range | | :--- | :--- | | Total Revenue | $925M - $935M | | Adjusted EBITDA | $410M - $420M | | Adjusted EPS | $1.30 - $1.35 | | Free Cash Flow | $175M - $185M | - Key assumptions for the 2025 guidance include: - Weighted average diluted share count of ~163 million - Effective tax rate of 28.5% to 29.5% - Depreciation and amortization of ~$110 million - Capital expenditures of ~$110 million[21] Financial Statements This section presents Verra Mobility's condensed consolidated balance sheets, statements of operations, and cash flows for the reported periods Condensed Consolidated Balance Sheets As of June 30, 2025, total assets stood at $1.70 billion, up from $1.61 billion at year-end 2024. The increase was driven by a significant rise in cash and cash equivalents to $147.7 million. Total liabilities remained stable at $1.34 billion, while total stockholders' equity increased to $352.1 million from $265.1 million Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $147,651 | $77,560 | | Total current assets | $475,135 | $393,999 | | Total assets | $1,695,432 | $1,614,489 | | Long-term debt, net | $1,031,430 | $1,034,211 | | Total liabilities | $1,343,330 | $1,349,364 | | Total stockholders' equity | $352,102 | $265,125 | Condensed Consolidated Statements of Operations For the second quarter of 2025, total revenue increased 6% year-over-year to $236.0 million. Income from operations grew modestly to $63.2 million, and with lower interest expense, net income rose 12.8% to $38.6 million, resulting in a diluted EPS of $0.24 Q2 Statement of Operations Highlights (in thousands) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total revenue | $236,025 | $222,426 | | Income from operations | $63,194 | $61,169 | | Interest expense, net | $16,572 | $18,845 | | Net income | $38,575 | $34,223 | | Diluted EPS | $0.24 | $0.20 | Condensed Consolidated Statements of Cash Flows For the three months ended June 30, 2025, net cash provided by operating activities more than doubled to $75.1 million from $40.0 million in the prior-year period. Net cash used in investing activities increased to $34.8 million due to higher equipment purchases, while financing activities used a minimal $2.2 million Q2 Statement of Cash Flows Highlights (in thousands) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $75,148 | $40,036 | | Net cash used in investing activities | ($34,800) | ($13,740) | | Net cash used in financing activities | ($2,186) | ($54,636) | | Net increase (decrease) in cash | $39,394 | ($27,830) | Non-GAAP Financial Measures and Reconciliations This section provides reconciliations of GAAP to non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Net Debt, and Net Leverage Reconciliation of Net Income to Adjusted EBITDA Adjusted EBITDA for Q2 2025 was $105.3 million, a 3% increase from $102.2 million in Q2 2024. The reconciliation from net income includes adjustments for interest, taxes, D&A, and other items like stock-based compensation. The Adjusted EBITDA margin was 45% for the quarter, compared to 46% in the prior year Net Income to Adjusted EBITDA Reconciliation (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income | $38,575 | $34,223 | | Interest expense, net | $16,572 | $18,845 | | Income tax provision | $14,027 | $13,369 | | Depreciation and amortization | $29,155 | $27,465 | | EBITDA | $98,329 | $93,902 | | Stock-based compensation & other | $7,000 | $8,249 | | Adjusted EBITDA | $105,321 | $102,151 | Reconciliation of Net Income to Adjusted Net Income and Adjusted EPS Adjusted Net Income for Q2 2025 was $55.2 million, up from $51.9 million in Q2 2024. After adjusting for items like amortization of intangibles and stock-based compensation, the Adjusted EPS was $0.34 per share, compared to $0.31 in the prior-year period Adjusted Net Income and Adjusted EPS Calculation (in thousands, except per share data) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income | $38,575 | $34,223 | | Total adjustments after tax effect | $16,598 | $17,683 | | Adjusted Net Income | $55,173 | $51,906 | | Diluted weighted average shares | 161,543 | 168,615 | | Adjusted EPS | $0.34 | $0.31 | Reconciliation of Net Debt and Net Leverage As of June 30, 2025, Net Debt was calculated at $893.4 million, a decrease from $968.0 million at the end of 2024. This reduction, combined with a higher trailing twelve months Adjusted EBITDA of $407.4 million, resulted in an improved Net Leverage ratio of 2.2x Net Debt and Net Leverage Calculation (in thousands) | Line Item | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total long-term debt, net | $1,031,430 | $1,034,211 | | Less: Cash and cash equivalents | ($147,651) | ($77,560) | | Net Debt | $893,408 | $968,008 | | Trailing twelve months adjusted EBITDA | $407,446 | $401,614 | | Net Leverage | 2.2x | 2.4x |