Business Context and Reporting Period
This Form 8-K Current Report was filed by Verra Mobility Corporation on March 15, 2021. The filing primarily discloses a planned private offering of senior notes and a proposed amendment to the company's existing credit facility. The report also includes unaudited non-GAAP financial data for the years ended December 31, 2020, and 2019.
Key Financial Metrics
The filing provides a reconciliation of Net cash provided from operating activities to Free Cash Flow (non-GAAP) for the years 2020 and 2019. It also discloses the outstanding balance of the company's Term B-1 Loans as of December 31, 2020.
| ($ in thousands) | 2020 | 2019 |
|---|---|---|
| Net cash provided by operating activities | $46,909 | $133,802 |
| Purchases of installation and service parts and property and equipment | $(24,260) | $(29,685) |
| Free cash flow | $22,649 | $104,117 |
Debt Position: As of December 31, 2020, the outstanding balance of Term B-1 Loans under the Credit Facility was $865.6 million.
Note: The filing does not provide specific values for revenue, net profit, or GAAP margins for the reporting period.
Material Changes and Corporate Actions
- Private Note Offering: The company announced an intent to privately offer $350 million aggregate principal amount of senior notes due 2029. These notes are to be offered to qualified institutional buyers and non-U.S. persons.
- Credit Facility Amendment: The company expects to amend and restate its First Lien Term Loan Credit Agreement. Key expected changes include:
- Extending the maturity date to 2028.
- Accounting for a reduction in principal related to the new note offering.
- Modifying certain restrictive covenants.
- Cash Flow Decline: Free cash flow decreased significantly from $104.1 million in 2019 to $22.6 million in 2020, driven primarily by a drop in operating cash flow from $133.8 million to $46.9 million.
Guidance, Outlook, and Risks
The filing contains forward-looking statements regarding the future operating results and financial position of the company. Management expects the credit facility amendment to be executed, subject to market conditions. The company explicitly states that it cannot guarantee that future results will be achieved and undertakes no obligation to update these statements.
Risks and Contingencies:
- The success of the private note offering is subject to market and other conditions.
- Forward-looking statements are subject to risks described in the company's Annual Report on Form 10-K for the year ended December 31, 2020.
- The non-GAAP measure of Free Cash Flow may not be comparable to similarly titled measures of other companies.
Investor Verification Checklist
- Verify the final terms and closing status of the $350 million senior notes offering.
- Confirm the execution of the amendment and restatement agreement for the Credit Facility, specifically the new 2028 maturity date.
- Review the full Form 10-K for the year ended December 31, 2020, to understand the drivers behind the significant decline in operating cash flow.
- Assess the impact of the new debt issuance on the company's leverage ratios and liquidity position.