Verra Mobility Corporation · NASDAQ:VRRM
Verra Mobility — Gores Holdings II — SPAC Merger (July 2018)
42 slides from Verra Mobility's SPAC merger presentation, Jul 24, 2018
Slide 1: Disclaimer
DISCLAIMER Confidentiality The information in this presentation is highly confidential. The distribution of this presentation by an authorized recipient to any other person is unauthorized. Any photocopying, disclosure, reproduction or alteration of the contents of this presentation and any forwardi
Slide 2: Presenters and Senior Leadership
PRESENTERS AND SENIOR LEADERSHIP founder-owned companies to Director, Bank of America 3 VERRA MOBILITY Note: Gores Holdings II is a separate entity from The Gores Group. The Gores Group makes no representations regarding the information contained herein, nor should this information be considered if
Slide 3: Overview of Gores Holdings II and Platinum Equity
OVERVIEW OF GORES HOLDINGS II AND PLATINUM EQUITY • Founded in 1995, headquartered in Beverly Hills with principal offices in New York, Greenwich, Boston, London and Singapore • Success to date on debut SPAC, Gores Holdings, and its acquisition of Hostess Brands (NASDAQ: TWNK) • $13bn in AUM; closed
Slide 4: Strong Competitive Positioning, Attractive Financial Profile and Clear Path for Growth
VERRA MOBILITY BOASTS A STRONG COMPETITIVE POSITIONING, ATTRACTIVE FINANCIAL PROFILE AND CLEAR PATH FOR GROWTH #1 in Tech-Enabled Smart Transportation Solutions for Tolling & Fleet and Safety Automations Competitive Advantage Driven by a Compelling, Multifaceted and Durable Value Proposition to Cust
Slide 5: Agenda
AGENDA I. Business Overview II. Growth Overview III. Projections IV. Transaction Summary 6 VERRA MOBILITY
Slide 6: I. Business Overview
I. Business Overview VERRA MOBILITY
Slide 7: ATS Has Rebranded to Better Align to Its Vision
B U S I N E S S O V E R V I E W ATS HAS REBRANDED TO BETTER ALIGN TO ITS VISION… (1) …TO BE THE GLOBAL LEADER IN SMART MOBILITY SOLUTIONS 8 VERRA MOBILITY (1) Verra Mobility was formed through the combination of ATS, HTA and EPC, a European business. The financial information disclosed in this prese
Slide 8: Leading Provider of Tech-Enabled Smart Transportation Solutions
B U S I N E S S O V E R V I E W LEADING PROVIDER OF TECH-ENABLED SMART TRANSPORTATION SOLUTIONS THAT CUSTOMERS OFFER SAFETY, CONVENIENCE AND VALUE TO ITS Pro Forma Adj. Revenue(1) ($ in millions) $373 $349 $333 $18 $10 2015 2016 2017 Product 2018E Services Pro Forma Adj. EBITDA and Margin (%)(2) ($
Slide 9: Diverse Product Revenue Portfolio with Highly Recurring Service Revenue
B U S I N E S S O V E R V I E W DIVERSE PRODUCT REVENUE PORTFOLIO WITH HIGHLY RECURRING SERVICE red lights, speeding, school Financials 10 VERRA MOBILITY Market Position • #1 in red light • 46% market share • #1 in school bus • 48% market share • #1 in speed • 55% market share • #1 player for rental
Slide 10: Extensive Geographic Reach in the U.S. and Across Europe
B U S I N E S S O V E R V I E W EXTENSIVE GEOGRAPHIC REACH IN THE U.S. AND NOW ACROSS EUROPE WITH THE ACQUISITION OF EURO PARKING COLLECTION “EPC” 11 VERRA MOBILITY Represents coverage of customers European Violations Collection Speed • Representing more than 450 issuing organizations in 15 European
Slide 11: Differentiated Liability Management Tool for RAC and FMCs
B U S I N E S S O V E R V I E W DIFFERENTIATED LIABILITY MANAGEMENT TOOL FOR RAC AND FMC’S Toll Management Violations Title and Registration RAC FMC RAC & FMC RAC & FMC minimizing delinquencies for each violation administrative costs 12 VERRA MOBILITY Description • A transaction fee per initial titl
Slide 12: Empowers Municipalities, School Districts and Law Enforcement
B U S I N E S S O V E R V I E W VERRA MOBILITY EMPOWERS MUNICIPALITIES, SCHOOL DISTRICTS AND LAW ENFORCEMENT AGENCIES TO ENHANCE PUBLIC SAFETY Red Light Speed School Bus Crossing Bus Lane Mobility Large Cities Large Cities / School Districts School Districts Large Cities contracts containing floors
Slide 13: Strengthened Competitive Position and Poised for Growth
B U S I N E S S O V E R V I E W VERRA MOBILITY HAS STRENGTHENED ITS COMPETITIVE POSITION, FINANCIAL PROFILE AND IS POISED FOR SIGNIFICANT GROWTH 1 2 3 4 5 6 14 VERRA MOBILITY Developed New Technological Capabilities In 2018, new solutions launched will include: consumer tolling (aka “Peasy”) (openin
Slide 14: Investment Highlights
B U S I N E S S O V E R V I E W INVESTMENT HIGHLIGHTS 1 Market leader with highly differentiated and proprietary platforms 2 Sustainable competitive advantage in the marketplace 3 Contracted recurring revenue business model 4 Strong revenue growth and robust margins 5 Experienced management team wit
Slide 15: Market Leader with Differentiated and Proprietary Platforms
B U S I N E S S O V E R V I E W 1 MARKET LEADER WITH HIGHLY DIFFERENTIATED AND PROPRIETARY PLATFORMS #1 RAC & FMC Toll Transaction Processing #1 Red Light Safety #1 Speed Safety #1 School Bus Safety 16 VERRA MOBILITY Automating Smarter Transportation Automating Safer Transportation …supported by the
Slide 16: Sustainable Competitive Advantage in the Marketplace
B U S I N E S S O V E R V I E W 2 SUSTAINABLE COMPETITIVE ADVANTAGE IN THE MARKETPLACE Superior scale • Manages more than 6mm vehicles for the largest rental car and fleet management companies Processes more than ~165 million toll transactions annually Have 4,000 cameras installed across 200 jurisdi
Slide 17: Contracted Recurring Revenue Business Model
B U S I N E S S O V E R V I E W 3 CONTRACTED RECURRING REVENUE BUSINESS MODEL • • • • • Large installed base provides recurring revenue Multiple year contracts with core customers High retention rate of 97% of cameras for Safety Automations Approximately 80% of revenue is contracted through 2020 and
Slide 18: Strong Revenue Growth and Robust Margins
B U S I N E S S O V E R V I E W 4 STRONG REVENUE GROWTH AND ROBUST MARGINS Strong Pro Forma Adj. Revenue Growth ($ in millions) • The Company has grown services revenue at near double digits the past few years $349 $333 • Expectation is for continued high single digit growth • With a stronger produc
Slide 19: Experienced Management Team with a Track Record of Success
B U S I N E S S O V E R V I E W 5 EXPERIENCED MANAGEMENT TEAM WITH A TRACK RECORD OF SUCCESS • Holds a BTECHND degree in Business Management growth companies relationships • Held service and business management roles at Equity Methods, PricewaterhouseCoopers 20 VERRA MOBILITY Liz Caracciolo, EVP, Go
Slide 20: II. Growth Overview
II. Growth Overview VERRA MOBILITY
Slide 21: Multiple Levers for Sustained Growth
G R O W T H O V E R V I E W VERRA MOBILITY HAS MULTIPLE LEVERS FOR SUSTAINED GROWTH 1 • An increasing number of toll roads and migration to cashless tolling driving the need for smart technology • Increased focus on traffic safety for drivers, pedestrians, bicyclists and law enforcement 2 • Leveragi
Slide 22: Industry Tailwinds – Tolling Segment
G R O W T H O V E R V I E W 1 BENEFIT FROM STRONG INDUSTRY TAILWINDS – TOLLING SEGMENT Number of trips per year on tolled roads ($ in billions) However, in 2015, tolls collected in cash dropped to 18% $13.8 tolling 2010 2015 23 VERRA MOBILITY Source: IBTTA, Federal Highway Administration, HNTB Corpo
Slide 23: Industry Tailwinds – Safety Segment
G R O W T H O V E R V I E W 1 BENEFIT FROM STRONG INDUSTRY TAILWINDS – SAFETY SEGMENT Camera retention rate in 2017 and • Vehicle miles traveled, distracted driving & speed limits are increasing nationally Vision Zero adoption across most major U.S. cities is driving capital investment to make meani
Slide 24: Leverage Platform into New End-Markets
G R O W T H O V E R V I E W 2 LEVERAGE PLATFORM INTO NEW END-MARKETS • Opportunities include ride-sharing company-owned cars / fleets • OTR companies are typically independently managed with violation management typically performed in-house and Title and Registration handled by small third parties R
Slide 25: Expand Platform with New Products
G R O W T H O V E R V I E W 3 EXPAND PLATFORM WITH NEW PRODUCTS Peasy Verra Mobility Street Safe • Allows consumers to benefit from tolling coverage across most of the nation’s toll roads • A handheld speeding camera that enables officers to cite speeders directly from a handheld device Increases bo
Slide 26: Expand Globally
G R O W T H O V E R V I E W 4 EXPAND GLOBALLY Footprint • Founded in 1988 with operations in London and Budapest • 450 customers and only 38 employees • Servicing customers in their contact center in 18 languages and 13 currencies • Connected to 30 Vehicle Licensing Authorities (VLAs) and issuing to
Slide 27: Pursue Accretive Acquisitions Across Existing and New Markets
G R O W T H O V E R V I E W 5 PURSUE ACCRETIVE MARKETS ACQUISITIONS ACROSS EXISTING AND NEW Growth Potential Synergies End-market Development Connected Car Customer Relationships Technology Cash Flow Management has identified 34 potential acquisition opportunities 28 VERRA MOBILITY Management has a
Slide 28: III. Projections
III. Projections VERRA MOBILITY
Slide 29: Consistent High-Margin Revenue Growth with Significant FCF Generation
P R O J E C T I O N S VERRA MOBILITY HAS DEMONSTRATED CONSISTENT HIGH-MARGIN REVENUE GROWTH WITH SIGNIFICANT FCF GENERATION ($ in millions) Transaction processing-based business model with high recurring revenue of 97% and 97% cameras retained upon renewal % Services Growth 10% 10% 7% 10% 10% $452 $
Slide 30: Well Positioned for Organic Growth in Existing and New Categories
P R O J E C T I O N S VERRA MOBILITY IS WELL POSITIONED FOR ORGANIC GROWTH IN EXISTING AND NEW CATEGORIES BOTH INTERNATIONALLY DOMESTICALLY AND (Consumer Tolling) Opportunities Growth 31 VERRA MOBILITY Verra Mobility Projected Organic Growth 2018E – 2020E Product Key Revenue Drivers Tolling & Fleet
Slide 31: IV. Transaction Summary
IV. Transaction Summary VERRA MOBILITY
Slide 32: Transaction Terms
T R A N S A C T I O N S U M M A R Y TRANSACTION TERMS Pro Forma enterprise value of $2,404 million (11.0x 2018E Adj EBITDA) Pro Forma 2018E net debt / 2018E Adj EBITDA of 3.9x(1) Existing Verra Mobility shareholders to be paid $642 million cash consideration(3) and issued 65.2 million roll-over shar
Slide 33: Best-in-Class Growth, Margin and Free Cash Flow Characteristics
T R A N S A C T I O N S U M M A R Y VERRA MOBILITY HAS BEST-IN-CLASS CASH FLOW CHARACTERISTICS GROWTH, MARGIN AND FREE Revenue EBITDA Revenue CAGR EBITDA CAGR EBITDA Average = 9.4% Revenue Average = 7.3% EBITDA Average = 9.6% Revenue Average = 7.0% Average = 40.5% Average = 32.7% Average = 36.0% Ave
Slide 34: Unique and Attractive Investment Opportunity at a Compelling Valuation
T R A N S A C T I O N S U M M A R Y VERRA MOBILITY REPRESENTS A UNIQUE AND ATTRACTIVE INVESTMENT OPPORTUNITY AT A COMPELLING VALUATION Average = 16.1x Average = 16.2x Average = 14.8x Average = 17.8x Average = 21.9x Average = 19.5x Average = 18.3x Average = 16.8x Recurring Revenue Transaction Process
Slide 35: Transaction Summary: Valuation Multiples
TRANSACTION SUMMARY VERRA MOBILITY REPRESENTS A UNIQUE AND ATTRACTIVE INVESTMENT OPPORTUNITY AT A COMPELLING VALUATION TEV / 2018E EBITDA TEV / 2019E EBITDA A ALT, i roe? Gieiic omer GB famm fen, Td cis Web ann? Ree fgg, GD fem seer TEE Ais. TEV / 2018E Free Cash Flow” TEV / 2019E Free Cash Flow 49K
Slide 36: Adj. Revenue Reconciliation
A P P E N D I X ADJ. REVENUE RECONCILIATION Amortization of contract incentive payment. Amount stepped down in 2017 due to purchase accounting adjustments following Platinum’s purchase. This is a non-recurring adjustment and is not expected going forward A• B• Pre-acquisition results for Sunshine in
Slide 37: Adj. EBITDA Pre-EPC Reconciliation – Verra Mobility, Pre-HTA
A P P E N D I X ADJ. EBITDA PRE-EPC RECONCILIATION – VERRA MOBILITY, PRE-HTA AND Adjustment to add back deal fees incurred in relation to Platinum’s acquisition of ATS in May 2017, as well as the acquisition of HTA. Includes acquisition services to advisors, professional fees and other expenses A• B
Slide 38: Adj. EBITDA Reconciliation – HTA
A P P E N D I X ADJ. EBITDA RECONCILIATION – HTA A• Seller expenses related to legal, M&A, travel, entertainment and non-business activities B• Add-back for the cash-to-GAAP adjustment for a $6 million incentive payment to a RAC in 4Q 2017. Should be capitalized, but flows through to the P&L in the
Slide 39: Adj. EBITDA Reconciliation – EPC
A P P E N D I X ADJ. EBITDA RECONCILIATION – EPC Non-recurring discretionary employee and transaction bonuses related to a change in control event A• B• Legal fees associated with the appointment of additional directors to the Company's board. This expense is non-recurring in nature C• EBITDA fees p
Slide 40: Combination of Verra Mobility & HTA Expected to Deliver Synergies
A P P E N D I X COMBINATION OF VERRA MOBILITY & HTA IS EXPECTED TO DELIVER SYNERGIES OF $8M – $12M EBITDA IN 2018 ($18mm – $21mm RUN-RATE) (1) Marketing at over-the-counter (OTC) customer locations is currently in effect for Verra Mobility and will now be expanded to HTA customers with limited to no
Slide 41: Verra Mobility
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Slide 42: Verra Mobility
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