Verra Mobility Corporation

and welcome to the Vera Mobility third quarter 2022 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mark Zindler, Vice President, Investor Relations. Please go ahead, sir.

Thank you. Good afternoon and welcome to Vera Mobility's third 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, Vera Mobility's Chief Executive Officer, and Craig Conti, 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, November 2, 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 and our Form 10-Qs for the first and second quarters of 2022, which are available on the Investor Letter 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 for everyone for joining the call today. Before I discuss our results, I'd like to take a minute to acknowledge our employees, customers, and vendors in Florida. The impacts of Hurricane Ian were significant, and I hope that you and your loved ones are safe and moving towards a level of normalcy during these challenging times. For today's call, I'm going to focus primarily on our third quarter results. But first, I'd like to start with a brief discussion to contextualize these results. by looking at the trends driving the two broader smart mobility markets in which we operate. We delivered an outstanding quarter highlighted by strong revenue and adjusted EBITDA growth and solid pre-cash flow generation. These results are underpinned by two key macro trends across our operating segments, continued travel demand by consumers and businesses, and strong and growing interest in automated enforcement for road safety. To better understand the significance of these macro trends, I'll take a minute to discuss the two broader markets that we serve, connected fleet solutions and urban mobility. We provided a thorough discussion of these markets at our investor day in July, and it's important to understand how our business units support these markets. The connected fleet end markets consist of technology solutions to improve process efficiency and optimize vehicle asset utilization. Our commercial services business unit serves customers in the connected fleet market with three primary solutions, tolling management, violations management, and title and registration services. We expect this $7 billion market to grow to $27 billion by 2030, driven by growing vehicle fleet sizes, increasing complexity of services, and new use cases focused on vehicle connectivity. Our government solutions and parking solutions business units reside in the broader urban mobility market, which is primarily focused on safety, sustainability, and increasing efficiency for use of existing infrastructure in cities of all sizes. This is an $18 billion market that industry analysts expect to double over the next 10 years, driven by road safety initiatives and growing city populations necessitating congestion and parking solutions. With that as a background, I'll move on to our results. We had an outstanding third quarter highlighted by strong revenue and growth and margins and solid free cash flow generation. The factors influencing our performance are largely unchanged from recent quarters. Starting with commercial services, the team again delivered strong performance, revenue of approximately $86 million for the quarter, represented in an 11% increase over the same period last year, and compared to pre-pandemic levels, we also achieved 11% growth over the third quarter of 2019. The key drivers have been consistent throughout the year. Travel demand remains strong despite rising inflation and fuel prices. As we have discussed previously, TSA throughput has been tracking upward throughout 2022. First quarter 2022 was a little less than 85% of 2019 levels. Second quarter was approximately 90% of 2019. And third quarter came in slightly above 90% of 2019. Revenue is far exceeding 2019 due to the growth in cashless tolling and increased number of toll roads in the U.S. and the longer duration of rentals, which drives more billable days and increased toll margin revenue. Moving to our government solutions business, we generated a total of $90 million representing growth of 6% over the same period last year. In addition, we all but completed the 265 camera install commitment for New York City. I'd like to thank both our customer and the bare mobility operations teams for making this happen. It's a testament to your dedication and steadfast results in rich lives by making mobility safer and easier. I'm also pleased to report that we were awarded a pilot project for a 12 month automated work zone speed enforcement program in Connecticut. The revenue contribution from the pilot program is not material, but serves as a potential stepping stone for permanent legislation and future long term full scale works on speed programs in Connecticut. Moreover, we recently executed a contract modification with New York City for the transition to 24 by 7 camera operations, and we expect these changes in operations to contribute to 2023 revenue growth. Finally, T2 Systems delivered $22 million of revenue for the quarter, in line with our internal expectations and on track to deliver double-digit growth over full year 21 results. In summary, Q3 was another strong quarter of growth and free cash flow generation. The secular trends driving our performance are durable, and we continue to experience strong operating momentum in each of our business segments. Now, I'll turn it over to Greg to guide us through our financial results.