Verra Mobility Corporation

and welcome to the Vero Mobility Corporation fourth quarter 2021 earnings call. My name is Jenny and I will be your conference operator today. Today's conference is being recorded. At this time, I would like to turn the conference over to Mark Zindler, Vice President of Investor Relations. Please go ahead, sir.

Thank you. Good afternoon and welcome to Vero Mobility's fourth quarter 2021 earnings call. Today we'll be discussing the results announced in our press release issued after the market closed. With me on the call are David Roberts, Vera Mobility's Chief Executive Officer, Tricia Cheeto, our Chief Financial Officer, and Craig Conte, our newly appointed incoming Chief Financial Officer. David will begin with prepared remarks, followed by Tricia, and then we'll open up the call for Q&A. During the call, we'll make statements related to our business that may be considered forward-looking, including statements concerning our expected future business and financial performance, our plans to execute on our growth strategy, the benefits of our strategic acquisitions, our ability to maintain existing and acquire new customers, expectations regarding key operational metrics, and other statements regarding our plans and prospects. Forward-looking statements may often be identified with words such as we expect, we anticipate, or upcoming. These statements reflect our view only as of today, April 21st, 2022, and should not be considered our views as of any subsequent date. We undertake no obligation to update or revise any forward-looking statements. Forward-looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations. For a discussion of material risks and other important factors that could affect our actual results, Please refer to those contained in our annual report on Form 10-K, which we are targeting to file tomorrow and will thereafter be made available on the investor relations section of our website at ir.veramobility.com and on the SEC's website at sec.gov. Finally, during today's call, we will refer to certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most directly comparable gap measures included in our earnings release, which can be found on our website at ir.veramobility.com and on the SEC's website at sec.gov. With that, I will turn the call over to David.

Thank you, Mark, and thanks, everyone, for joining us today. As Mark mentioned, Tricia will lead today's discussion on our financial results, but I'll take a moment to introduce everyone to Craig Conkey, Veramobility's newly appointed Executive Vice President and incoming Chief Financial Officer. Craig brings over 20 years of corporate financial management and leadership experience at global publicly traded companies. He previously served as the Executive Vice President and CFO of Century Aluminum Company, a global producer of primary aluminum. And prior to Century Aluminum, Craig served in senior financial leadership positions with ITW and GE. I'm sure many of you will be getting to know Craig over the coming weeks and months, so please join me in welcoming him to Durr Mobility. For the agenda for today's call, I'll start with the key highlights and trends that are driving our results. I'll also provide a status update on the integration efforts with RedFlex and T2 Systems, and then I'll conclude my remarks with a discussion on recent wins in our business development pipeline. We closed out 2021 with a very strong fourth quarter as our combined businesses continued to perform well. We're pleased with the consistent execution from our teams globally, and we believe this momentum will serve as a platform for acceleration in 2022. Our results in the fourth quarter were primarily driven by the ongoing school zone speed expansion in New York City and the strong recovery in travel in the U.S., which has had a positive impact on our rental car tolling business. As Tricia will discuss in more detail later, we exceeded the high end of our full-year guidance range for total revenue and adjusted EBITDA, delivering 40% top-line growth, of which 28% is organic growth. Moving to our recent strategic initiatives, the fourth quarter was a strong affirmation of our strategy to drive core business results, diversify the business, and redeploy capital to strategic and expansive M&A opportunities. On December 7th, we closed our acquisition of T2 Systems, a leading provider of end-to-end parking management solutions in North America, to universities and a growing presence among municipalities and healthcare providers. As we highlighted last quarter, T2 also provides us with a strong position in the rapidly growing curbside management market. T2's existing market segments, North American municipalities, universities, and healthcare providers represent up to a $4 billion market according to the 2020 market estimate. Cities are faced with unprecedented competition at the curb with rideshare services, delivery vehicles, and food trucks competing for the same valuable real estate for parking. An effective curb management solution combines a parking program with an enforcement solution. T2's SAS offering for parking management coupled with our existing photo enforcement solution should enable us to help customers solve curbside challenges such as defining parking areas and dynamic rates, enforcing parking rules, and handling payments in the future. While this market is still in its early stages, we expect that VeriMobility's government solution segment in combination with T2 Systems will be well positioned to provide a holistic solution to our city and municipality customers, enabling us to expand our solutions portfolio. We're thrilled to have T2 as a part of the Vera Mobility family, and their team has been hard at work delivering strong results in the fourth quarter. They secured 11 new logo municipal customers for their citation and enforcement software offering, and they continue to expand the university and healthcare customer base. Moving on to government solutions, in the fourth quarter, revenue for government solutions grew 77% year-over-year to $92 million, and adjusted EBITDA was $34 million, representing 63% year-over-year growth. Our success in the quarter was driven by the continued expansion of the New York City School Zone Speed Program, for which we installed 312 fixed-speed cameras, bringing our total for the full year to 695. The remaining 25 were installed in January, which fulfilled the 720-camera commitment. I'd like to also acknowledge our announcement in early February that we officially received a second three-year renewal option of our 2014 Legacy Photo Enforcement Contract with New York City. As we stated in the press release, the renewal includes an additional 100 red light cameras and 150 bus lane cameras, and it covers the maintenance of the speed cameras installed under the 2019 emergency contract. In February, we also received a notice to proceed from New York City on the remaining 240 school zone speed cameras under the emergency contract, which we anticipate will be installed in 2022 and will generate approximately $11 million in annual recurring revenue once installed. We continue our integration efforts with Redflex and have adopted cohesive ways of working to pursue the synergy targets we identified as a part of the acquisition. We've achieved about 5 million in synergy to date and believe there are 3 to 7 million yet to be realized. However, the timeline to achieve those will be longer than we had originally anticipated. Furthermore, from a revenue perspective, we are beginning to see the strategic impact in the market with recent wins like Denver, our first major city that we bid on as a collective organization and won in the first quarter of 2022. This win shows the collective power and experience of the combined organization to win key customers like Denver from incumbent competitors. As we announced on March 23rd with the addition of John Baldwin, our newly appointed EVP of Government Solutions, we will continue to pursue additional revenue and cost synergies to deliver the full benefit of the acquisition to our stockholders. Overall, I'm very pleased with the health of the business development pipeline along with the quantity and the quality of the bids being submitted. Our pipeline, combined with other positive trends in the industry, creates a promising competitive landscape. One prominent example is the transportation bill that was recently enacted in Washington State to be effective this July, which expands the use of automated speed enforcement and extends the sunset period for other photo enforcement through 2025. We're well positioned to capitalize on this expansion given our market position in the state with 21 existing customers. This is exciting news and a prime example of the momentum focus on traffic safety that we're poised to execute on. And lastly, I'm pleased to report a new government solutions contract win in the Netherlands in which Verimobility through Redflex International is a part of a consortium with DXC Technology. It's one of three vendors selected to supply, operate, and support fixed systems for speed and red light enforcement. The contract has an initial term of up to six years for the supply and installation of cameras, followed by an additional term of up to eight years for the camera maintenance. We expect to start getting revenue in the first quarter of 2023. In the fourth quarter, commercial services revenue grew 48% year-over-year to $71 million, and our adjusted EBITDA was $44 million, which was up 74% year-over-year. Success for this segment was driven by the continued strong travel recovery in the U.S., which has led to increased toll usage. While fleet levels among our RAC customers haven't fully returned to pre-pandemic levels, we are seeing increased adoption of our product, consumers opting for longer rental agreements resulting in more billable days and increased toll rates, all of which are driving our strong revenue performance. Next, I'll provide a brief update on our European expansion efforts. The tolling program we launched in Ireland with Enterprise continues to provide beneficial information about the tolling market in Europe. We've exceeded the saturation rate in our service level agreement, and we have more than 2,000 vehicles equipped with transponders. Overall, 2021 was a great year for Bear Mobility, and more than three months in, 2022 is already shaping up to be another exciting year for us. As previously announced, Tricia is retiring, and therefore, this will be her last earnings call as the CFO of Bear Mobility. We are deeply grateful for her leadership and services over the past six years and wish her all the best in her new adventures. With our form 10K expected to be filed tomorrow, Craig Conti will take over immediately, and Tricia will provide advisory services over a 90-day transition period. As we noted in the press release announcing Craig's appointment, we have scheduled our inaugural investor day for July 19th, which will allow Craig and John the time needed to get up to speed and fully participate in this exciting event. The conference will be held at the NASDAQ Market Site Building in Times Square starting at 1 p.m. Eastern, and we look forward to sharing more details as the July 19 date approaches. Now I'll turn it over to Tricia to guide us through our financial results.