Verra Mobility Corporation

Good day and welcome to the VeriMobility second quarter 2022 earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Mark Zindler, Vice President, Investor Relations. Please go ahead, sir.

Thank you. Good afternoon and welcome to VeriMobility's second quarter 2022 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, VeriMobility's Chief Executive Officer, and Craig Conte, our Chief Financial Officer. David will begin with prepared remarks, followed by Craig, 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, August 3, 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 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 and our Form 10-Q for the first quarter of 2022. which are 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'll refer to certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is 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'll turn the call over to David.

Thank you, Mark, and thanks, everyone, for joining us today. We've had a very busy and productive second quarter as well as the first few weeks of the third quarter, including our recent Investor Day. I'll spend a few minutes recapping these events and then turn to the trends that are influencing our strong results in each of our business segments. I'll begin with a brief recap of our Investor Day on July 19th. First, we announced an increase to our guidance for total revenue and adjusted EBITDA based upon our performance to date and outlook for the remainder of the year. Following that announcement, we had what we believe was a successful, well-attended investor day in which we articulated our long-term growth strategies, provided a deep dive into each of our business segments, discussed our M&A criteria, and concluded with our long-term financial outlook and capital allocation priorities. The event also provided the opportunity to communicate our long-term vision of operating in the broader connected fleet solutions and urban mobility markets, and how these emerging opportunities provide upside to the long-term outlook provided by Craig in his presentation. My goal was to leave investors and analysts with one key message. VeriMobility is a great business with a bright future, and our results and outlook validate that message. If you weren't able to attend Investor Day in person or virtually, I encourage you to review the presentation materials and webcast replay available on our investor relations website. Prior to Investor Day, we announced several key developments in commercial services. As you'll recall, when we announced first quarter earnings, we signed a five-year contract extension with Hertz for our U.S. operations and also signed a contract with Hertz Spain for a new European tolling pilot. Moreover, immediately leading up to Investor Day, we announced several new partnerships we expect will contribute to core business growth, European expansion, and long-term emerging opportunities. While these partnerships will not lead to significant revenue generation in the near term, they are the building blocks to drive the future of our connected fleet solutions portfolio over the long term. Now, moving on to our results, we had an outstanding second quarter highlighted by strong revenue growth and free cash flow generation. Commercial services delivered exceptional top line and bottom line results driven by continued strong demand for travel in the U.S. In addition, government solutions continued to drive strong year-over-year growth fueled by the New York City school zone speed camera implementation, and T2 systems delivered results in line with our field thesis. Going into a little more detail, beginning with commercial services, the team again delivered a strong quarter. Taking full advantage of the surge in travel demand across the U.S., revenue of approximately $85 million for the quarter represented a 28% increase over the same period last year. And compared to pre-pandemic levels, we achieved 25% growth over the second quarter of 2019. As we noted during our investor day presentation, we achieved these results despite the fact that rental car fleet volumes and TSA traveler throughput is below 2019 levels. This is predominantly due to increase in cashless tolling and customer adoption across the U.S. Moving to our government solutions business, we generated total revenue of $84 million, representing growth of 34% over last year. In addition, the 265-camera install commitment for New York City remains on track through the first half of the year. We've installed 121 cameras and plan to complete the remainder of the installation by the end of the third quarter, barring any supply chain risks, which we do not currently anticipate. Finally, T2 Systems delivered $19 million of revenue for the quarter directly in line with the deal model, and they remain on track to deliver full-year results in line with our internal expectations. Q2 was another strong quarter of growth in free cash flow generation. We are excited to build on the momentum of our investor day and continue to drive extraordinary results across the portfolio. Now I'll turn it over to Craig to guide us through our financial results.