VERRA MOBILITY Corp

Previous wording

We are a leading provider of smart mobility technology solutions, principally operating throughout the United States, Australia, Europe and Canada. We make transportation safer, smarter and more connected through our integrated, data-driven solutions, including toll and violations management, title and registration services, automated safety and traffic enforcement and commercial parking management. We bring together vehicles, hardware, software, data and people to solve transportation challenges for customers around the world, including commercial fleet owners such as rental car companies (“RACs”), direct commercial fleet owner-operators (“Direct Fleets”) and fleet management companies (“FMCs”), as well as governments, universities, parking operators, healthcare facilities, transportation hubs and other violation-issuing authorities. Our vision is to continue to develop and use technology and data intelligence to make transportation safer, smarter and more connected globally.

Current wording

We believe we are a leading provider of smart mobility technology solutions, principally operating throughout the United States, Australia, Europe and Canada. We make transportation safer, smarter and more connected through our integrated, data-driven solutions, including toll and violations management, title and registration services, automated safety and traffic enforcement and commercial parking management. We bring together vehicles, hardware, software, data and people to solve transportation challenges for customers around the world, including commercial fleet owners such as rental car companies (“RACs”), direct commercial fleet owner-operators (“Direct Fleets”) and fleet management companies (“FMCs”), as well as governments, universities, parking operators, healthcare facilities, transportation hubs and other violation-issuing authorities. Our vision is to continue to develop and use technology and data intelligence to make transportation safer, smarter and more connected globally.

Previous wording

Increased total revenue by $17.8 million, or 9%, from $191.9 million in the three months ended March 31, 2023 to $209.7 million in the same period in 2024. The increase was mainly due to service revenue resulting from increased travel volume in the Commercial Services segment and the growth from speed and red light programs in the Government Solutions segment.

Current wording

Increased total revenue by $35.8 million, or 9.0%, from $396.4 million in the six months ended June 30, 2023 to $432.2 million in the same period in 2024. The increase was mainly due to service revenue resulting from increased travel volume in the Commercial Services segment and the growth from speed, red light and maintenance programs in the Government Solutions segment.

Previous wording

Generated cash flows from operating activities of $34.3 million and $45.2 million for the three months ended March 31, 2024 and 2023, respectively. Our cash on hand was $149.5 million as of March 31, 2024.

Current wording

Generated cash flows from operating activities of $74.4 million and $107.9 million for the six months ended June 30, 2024 and 2023, respectively. Our cash on hand was $122.0 million as of June 30, 2024.

Previous wording

Continued to focus on debt management and lowering our exposure to higher interest rates, and as a result, we refinanced our debt and reduced our interest rate by 50 basis points and made an early repayment of approximately $2.3 million on our 2021 Term Loan during the three months ended March 31, 2024.

Current wording

Continued to focus on debt management and lowering our exposure to higher interest rates, and as a result, we refinanced our debt and reduced our interest rate by 50 basis points and made early repayments of approximately $4.5 million on our 2021 Term Loan during the six months ended June 30, 2024.

Previous wording

Our Government Solutions segment offers photo enforcement solutions and services to its customers. We provide complete, end-to-end speed, red-light, school bus stop arm and bus lane enforcement solutions, principally within the United States and Canada. Our international operations primarily involve the sale of traffic enforcement products and related maintenance services.

Current wording

Our Government Solutions segment offers photo enforcement solutions and services to its customers. We provide complete, end-to-end speed, red-light, school bus stop arm and bus lane enforcement solutions. Our international operations primarily involve the sale of traffic enforcement products and recurring maintenance services related to the equipment and software.

Previous wording

Our Parking Solutions segment generates service revenue mainly from offering software as a service, subscription fees, professional services and citation processing services related to parking management solutions to its customers.

Current wording

Our Parking Solutions segment generates service revenue mainly from offering software as a service (“SaaS”), subscription fees, professional services and citation processing services related to parking management solutions to its customers.

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses include payroll and payroll-related costs (including stock-based compensation), real estate lease expense, insurance costs, professional services fees, acquisition costs and general corporate expenses.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses include payroll and payroll-related costs (including stock-based compensation), real estate lease expense, insurance costs, professional services fees and general corporate expenses.

Previous wording

(Gain) Loss on Interest Rate Swap.(Gain) loss on interest rate swap relates to the changes associated with the derivative instrument re-measured to fair value at the end of the reporting period and the related periodic cash receipts or payments.

Current wording

Gain on Interest Rate Swap. Gain on interest rate swap relates to the changes associated with the derivative instrument re-measured to fair value at the end of the reporting period and the related periodic cash receipts or payments.

Previous wording

Service Revenue. Service revenue increased by $18.0 million, or 9.8%, to $202.7 million for the three months ended March 31, 2024 from $184.7 million for the three months ended March 31, 2023, representing 96.7% and 96.2% of total revenue, respectively. The following table depicts service revenue by segment:

Current wording

Service Revenue. Service revenue increased by $16.0 million, or 8.1%, to $212.0 million for the three months ended June 30, 2024 from $196.1 million for the three months ended June 30, 2023, representing 95.3% and 95.9% of total revenue, respectively. The following table depicts service revenue by segment:

Previous wording

Commercial Services service revenue increased by $10.3 million, or 12.0%, from $85.6 million for the three months ended March 31, 2023 to $95.9 million for the three months ended March 31, 2024. The increase was primarily due to increased travel volume and related tolling activity compared to the prior year. The volume of tolls incurred by RAC vehicles contributed to a $5.7 million growth in revenue and an increase in enrolled vehicles as well as higher tolling activity for our FMC customers contributed to a $3.4 million growth in revenue during the three months ended March 31, 2024, compared to the same period in 2023. In addition, there was more revenue generated from processing violations compared to the prior year.

Current wording

Commercial Services service revenue increased by $9.5 million, or 10.1%, from approximately $94.5 million for the three months ended June 30, 2023 to $104.0 million for the three months ended June 30, 2024. The increase was primarily due to increased travel volume and related tolling activity compared to the prior year. The volume of tolls incurred by RAC vehicles contributed to a $5.7 million growth in revenue and an increase in enrolled vehicles as well as higher tolling activity for our FMC customers contributed to a $2.7 million growth in revenue during the three months ended June 30, 2024, compared to the same period in 2023. In addition, there was more revenue generated from processing violations compared to the prior year.

Previous wording

Product Sales. Product sales were $7.0 million and $7.2 million for the three months ended March 31, 2024 and 2023, respectively. Product sales decreased by approximately $0.2 million, which was due to a $1.4 million decrease in product sales in the Parking Solutions segment, offset by a $1.2 million growth in product sales to Government Solutions customers. Customer buying patterns vary greatly from period to period related to product sales.

Current wording

Product Sales. Product sales were $10.4 million and $8.4 million for the three months ended June 30, 2024 and 2023, respectively. Product sales increased by $2.0 million, which was due to a $3.0 million growth in product sales to Government Solutions customers, partially offset by a $1.0 million decrease in product sales in the Parking Solutions segment. Customer buying patterns vary greatly from period to period related to product sales.

Previous wording

Cost of Service Revenue, Excluding Depreciation and Amortization. Cost of service revenue, excluding depreciation and amortization increased slightly from $4.2 million for the three months ended March 31, 2023 to $4.3 million for the three months ended March 31, 2024, mainly due to increased recurring service costs.

Current wording

Cost of Service Revenue, Excluding Depreciation and Amortization. Cost of service revenue, excluding depreciation and amortization increased from $4.3 million for the three months ended June 30, 2023 to $4.6 million for the three months ended June 30, 2024, mainly due to increased recurring service costs.

Previous wording

Cost of Product Sales. Cost of product sales decreased slightly by $0.1 million from $5.4 million in the three months ended March 31, 2023 to $5.3 million in the three months ended March 31, 2024, which was in line with the decrease in product sales discussed above.

Current wording

Cost of Product Sales. Cost of product sales increased by approximately $1.8 million from $6.0 million in the three months ended June 30, 2023 to $7.8 million in the three months ended June 30, 2024, which was in line with the increase in product sales discussed above.

Previous wording

Operating Expenses. Operating expenses increased by $8.8 million, or 14.2%, from $61.8 million for the three months ended March 31, 2023 to $70.6 million for the three months ended March 31, 2024. The increase in 2024 was primarily attributable to increases of $6.1 million in wages expense and $2.4 million of information technology costs, partially offset by a decrease of $0.6 million in equipment maintenance expenses compared to the prior period. Operating expenses as a percentage of total revenue increased from 32.2% to 33.7% for the three months ended March 31, 2023 and 2024, respectively.

Current wording

Operating Expenses. Operating expenses increased by $9.2 million, or 14.1%, from $65.7 million for the three months ended June 30, 2023 to $74.9 million for the three months ended June 30, 2024. The increase in 2024 was primarily attributable to increases of $5.0 million in wages expense, $1.9 million of information technology costs, and $1.5 million of subcontractor costs compared to the prior period. Operating expenses as a percentage of total revenue increased from 32.1% to 33.7% for the three months ended June 30, 2023 and 2024, respectively.

Previous wording

Change in Fair Value of Private Placement Warrants. We recorded a loss of $14.6 million for the three months ended March 31, 2023 related to the change in fair value of our Private Placement Warrants which were accounted for as liabilities on our condensed consolidated balance sheets. The change in fair value was the result of re-measurement of the liability at the end of the reporting period.

Current wording

Change in Fair Value of Private Placement Warrants. We recorded a loss of $10.9 million for the three months ended June 30, 2023 related to the change in fair value of our Private Placement Warrants which were accounted for as liabilities on our condensed consolidated balance sheets. The change in fair value was the result of re-measurement of the liability at the end of the reporting period or a final re-measurement upon their exercise.

Previous wording

Gain (Loss) on Interest Rate Swap. We recorded a $0.4 million gain during the three months ended March 31, 2024, of which $0.1 million is associated with the derivative instrument re-measured to fair value at the end of the reporting period and $0.3 million related to the monthly cash proceeds on the interest rate swap. We recorded a $2.8 million loss during the three months ended March 31, 2023, of which approximately $1.6 million is associated with the derivative instrument re-measured to fair value at the end of the reporting period and $1.2 million relates to the monthly cash payments made.

Current wording

Gain on Interest Rate Swap. We recorded a gain of less than $(0.1) million during the three months ended June 30, 2024, of which $0.2 million is associated with the derivative instrument re-measured to fair value at the end of the reporting period offset by $(0.3) million related to the monthly cash proceeds on the interest rate swap. We recorded a $(4.8) million gain during the three months ended June 30, 2023, of which approximately $(5.1) million is associated with the derivative instrument re-measured to fair value at the end of the reporting period, offset by $0.3 million related to the monthly cash payments made.

Previous wording

Income Tax Provision. Income tax provision was $9.8 million representing an effective tax rate of 25.2% for the three months ended March 31, 2024 compared to a tax provision of $7.8 million, with an effective tax rate of 63.2% for the same period in 2023. The primary driver for the effective tax rate variance is due to the permanent difference related to the mark-to-market adjustments on the Private Placement Warrants that impacted the rate in the prior year without a comparable impact in the current period.

Current wording

Income Tax Provision. Income tax provision was $13.4 million representing an effective tax rate of 28.1% for the three months ended June 30, 2024 compared to a tax provision of $12.5 million, with an effective tax rate of 39.6% for the same period in 2023. The primary driver for the effective tax rate variance is the permanent difference related to the mark-to-market adjustments on the Private Placement Warrants that impacted the rate in the prior year without a comparable impact in the current period.

Previous wording

Net Income. We had net income of $29.1 million for the three months ended March 31, 2024, as compared to a net income of $4.6 million for the three months ended March 31, 2023. The $24.5 million increase in net income was primarily due to the change in fair value of Private Placement Warrants in the prior year period, decrease in amortization expense and the other statement of operations activity discussed above.

Current wording

Net Income. We had net income of $34.2 million for the three months ended June 30, 2024, as compared to a net income of $19.1 million for the three months ended June 30, 2023. The $15.1 million increase in net income was primarily due to the change in fair value of Private Placement Warrants expense in the prior year period, decrease in interest expense and the other statement of operations activity discussed above.

Previous wording

Government Solutions service revenue increased by $7.1 million to $90.3 million for the three months ended March 31, 2024 compared to $83.2 million in the same period in 2023. The increase was primarily driven by the expansion of speed programs which contributed $3.5 million and red light programs which contributed $2.4 million to the service revenue growth compared to the prior year. The remaining increase is attributable to expansions across school bus stop-arm and bus lane programs.

Current wording

Government Solutions service revenue increased by $13.5 million, or 8%, from $168.2 million for the six months ended June 30, 2023, to $181.7 million for the six months ended June 30, 2024. The increase was primarily driven by the expansion of speed, red light and maintenance programs which contributed approximately $9.5 million to the service revenue growth compared to the prior year. The remaining increase is attributable to expansions across school bus stop-arm and bus lane programs.

Previous wording

Parking Solutions service revenue grew by $0.7 million to $16.6 million for the three months ended March 31, 2024, from $15.8 million for the three months ended March 31, 2023. The growth was primarily due to increased revenue from software as a service product offerings, citation processing services and professional services related to parking management solutions.

Current wording

Parking Solutions service revenue grew by $0.7 million, from $32.4 million for the six months ended June 30, 2023 to $33.1 million for the six months ended June 30, 2024. The growth was primarily due to increased revenue from SaaS product offerings, partially offset by a decrease in professional services related to parking management solutions.

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased to $48.2 million for the three months ended March 31, 2024 compared to $40.0 million for the same period in 2023. This is primarily due to a $3.6 million increase in credit loss expense, $2.3 million in higher wages expense, and overall increases in stock-based compensation expense, marketing and other general expenses compared to prior year. Selling, general and administrative expenses as a percentage of total revenue increased from 20.9% to 23.0% for the three months ended March 31, 2023 and 2024, respectively. The following table presents selling, general and administrative expenses by segment:

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased to $94.5 million for the six months ended June 30, 2024 compared to $83.2 million for the same period in 2023. This is primarily due to a $4.3 million increase in credit loss expense, $4.4 million in higher wages expense and overall increases in stock-based compensation expense, marketing and other general expenses, partially offset by a decrease in professional services costs compared to the prior year. Selling, general and administrative expenses as a percentage of total revenue increased from 21.0% to 21.9% for the six months ended June 30, 2023 and 2024, respectively. The following table presents selling, general and administrative expenses by segment:

Previous wording

Depreciation, Amortization and (Gain) Loss on Disposal of Assets, Net. Depreciation, amortization and (gain) loss on disposal of assets, net, decreased by approximately $3.3 million to $27.0 million for the three months ended March 31, 2024 from $30.3 million for the same period in 2023. This was mainly due to certain non-compete, trademark and developed technology intangible assets being fully amortized in the three months ended March 31, 2024 as compared to the prior year. This decrease was partially offset by an increase in depreciation expense in the 2024 period.

Current wording

Depreciation, Amortization and (Gain) Loss on Disposal of Assets, Net. Depreciation, amortization and (gain) loss on disposal of assets, net, decreased by $4.9 million to $54.5 million for the six months ended June 30, 2024 from $59.4 million for the same period in 2023. This was mainly due to certain non-compete, trademark and developed technology intangible assets being fully amortized in the six months ended June 30, 2024 as compared to the prior year. This decrease was partially offset by an increase in depreciation expense in the 2024 period.

Previous wording

Interest Expense, Net. Interest expense, net decreased by $3.1 million from $22.7 million for the three months ended March 31, 2023 to $19.6 million for the same period in 2024. This was primarily attributable to voluntary principal prepayments made during 2023 which lowered the outstanding debt balance in 2024 coupled with a 50 basis-point reduction in the interest rate from refinancing our debt on February 8, 2024. See “Liquidity and Capital Resources.”

Current wording

Interest Expense, Net. Interest expense, net decreased by $7.0 million from approximately $45.5 million for the six months ended June 30, 2023 to $38.5 million for the same period in 2024. This was primarily attributable to voluntary principal prepayments made during 2023 and 2024 which lowered the outstanding debt balance in 2024 coupled with a 50 basis-point reduction in the interest rate from refinancing our debt on February 8, 2024. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in Part I, Item 2.

Previous wording

Loss on Extinguishment of Debt. We recorded a $0.6 million loss on extinguishment of debt during the three months ended March 31, 2024 related to the write-off of pre-existing deferred financing costs and discounts in connection with the refinancing of the 2021 Term Loan in February 2024. We recorded a $1.3 million loss on extinguishment of debt during the three months ended March 31, 2023 related to the write-off of pre-existing deferred financing costs and discounts in connection with the early repayments of $62.5 million on the 2021 Term Loan.

Current wording

Loss on Extinguishment of Debt. We recorded a $0.6 million loss on extinguishment of debt during the six months ended June 30, 2024 related to the write-off of pre-existing deferred financing costs and discounts in connection with the refinancing of the 2021 Term Loan in February 2024. We recorded a $1.6 million loss on extinguishment of debt during the six months ended June 30, 2023 related to the write-off of pre-existing deferred financing costs and discounts in connection with the early repayments of $72.5 million on the 2021 Term Loan.

Previous wording

Other Income, Net. Other income, net was approximately $4.5 million for the three months ended March 31, 2024 compared to $3.8 million for the three months ended March 31, 2023. The increase of $0.7 million is primarily attributable to volume rebates earned from total spend on purchasing cards from increased tolling and travel activity.

Current wording

Other Income, Net. Other income, net was approximately $9.7 million for the six months ended June 30, 2024 compared to $8.3 million for the six months ended June 30, 2023. The increase of $1.4 million is primarily attributable to volume rebates earned from total spend on purchasing cards from increased tolling and travel activity.

Previous wording

We have incurred significant long-term debt as a result of acquisitions completed in prior years. Should we pursue strategic acquisitions, we may need to raise additional capital, which may be in the form of additional long-term debt, borrowing on our Revolver, or equity financings, all of which may not be available to us on favorable terms or at all.

Current wording

We have incurred significant long-term debt as a result of acquisitions completed in prior years. Should we pursue strategic acquisitions, we may need to raise additional capital, which may be in the form of additional long-term debt, borrowings on our Revolver, or equity financings, all of which may not be available to us on favorable terms or at all.

Previous wording

We have the ability to borrow under our Revolver to meet obligations as they come due. As of March 31, 2024, we had $74.6 million available for borrowing, net of letters of credit, under our Revolver. Our cash on hand was $149.5 million as of March 31, 2024.

Current wording

We have the ability to borrow under our Revolver to meet obligations as they come due. As of June 30, 2024, we had $74.6 million available for borrowing, net of letters of credit, under our Revolver. Our cash on hand was $122.0 million as of June 30, 2024.

Previous wording

We made early repayments of $2.3 million and $62.5 million on our 2021 Term Loan during the three months ended March 31, 2024 and 2023, respectively. In addition, we entered into a third amendment to the 2021 Term Loan (the “Third Amendment”) to refinance the entire outstanding amount under the 2021 Term Loan and reduce the interest rate and eliminate the credit spread adjustment.

Current wording

We made early repayments of approximately $2.3 million and $4.5 million on our 2021 Term Loan during the three and six months ended June 30, 2024. In addition, we entered into a third amendment to the 2021 Term Loan (the “Third Amendment”) in February 2024 to refinance the entire outstanding amount under the 2021 Term Loan and reduce the interest rate and eliminate the credit spread adjustment. As of June 30, 2024, the total principal outstanding on the 2021 Term Loan was $700.1 million.

Previous wording

On October 30, 2023, our Board of Directors authorized a new share repurchase program for up to an aggregate amount of $100.0 million of our outstanding shares of Class A Common Stock over an 18-month period in open market, ASR or privately negotiated transactions. The level at which we repurchase depends on a number of factors, including our financial condition, capital requirements, cash flows, results of operations, future business prospects and other factors our management may deem relevant. The timing, volume and nature of repurchases are subject to market conditions, applicable securities laws and other factors and may be amended, suspended or discontinued at any time. We have not yet repurchased shares under this repurchase program.

Current wording

In October 2023, our Board of Directors authorized a new share repurchase program for up to an aggregate amount of $100.0 million of our outstanding shares of Class A Common Stock over an 18-month period in open market, ASR or privately negotiated transactions. The level at which we repurchase depends on a number of factors, including our financial condition, capital requirements, cash flows, results of operations, future business prospects and other factors our management may deem relevant. The timing, volume and nature of repurchases are subject to market conditions, applicable securities laws and other factors and may be amended, suspended or discontinued at any time. On June 6, 2024, the Company entered into a share repurchase agreement with a stockholder, pursuant to which the Company repurchased, directly from the stockholder, 2.0 million shares of the Company’s Class A Common Stock for an aggregate purchase price of $51.5 million. The repurchased shares were subsequently retired. As of June 30, 2024, $48.5 million remains available under the share repurchase program. Refer to Note 10, Stockholders' Equity, in Part I, Item 1, Financial Statements for additional information on our share repurchases.

Previous wording

Cash provided by operating activities decreased by approximately $10.9 million from $45.2 million for the three months ended March 31, 2023 to $34.3 million for the three months ended March 31, 2024. Net income year over year increased by approximately $24.5 million, from $4.6 million in 2023 to $29.1 million in 2024. The aggregate adjustments to reconcile net income to net cash provided by operating activities decreased $11.4 million mainly due to the change in fair value of private placement warrants and lower amortization expense, partially offset by increased credit loss expense and changes in deferred income taxes year over year. The aggregate changes in operating assets and liabilities decreased by $24.1 million in 2024 compared to the prior year primarily due to payments for a legal settlement and other current liabilities that were previously accrued for, offset by a decrease in accounts receivables.

Current wording

Cash provided by operating activities decreased by approximately $33.5 million from $107.9 million for the six months ended June 30, 2023 to $74.4 million for the six months ended June 30, 2024. Net income year over year increased by approximately $39.7 million, from $23.7 million in 2023 to $63.4 million in 2024. The aggregate adjustments to reconcile net income to net cash provided by operating activities decreased $14.8 million mainly due to the change in fair value of private placement warrants and decreased amortization, which were partially offset by increases in credit loss expense, stock based compensation and change in deferred income taxes. The aggregate changes in operating assets and liabilities decreased by $58.4 million in 2024 compared to the prior year primarily due to payments for a legal settlement and other current liabilities that were previously accrued for, decrease in deferred revenue and increases in prepaid and other current assets.

Previous wording

Cash used in investing activities was $13.9 million and $19.6 million for the three months ended March 31, 2024 and 2023, respectively. There was a $4.1 million decrease in cash used for purchases of installation and service parts and property and equipment compared to the prior year.

Current wording

Cash used in investing activities was $27.7 million and $31.5 million for the six months ended June 30, 2024 and 2023, respectively. The decrease in cash used was primarily driven by approximately $0.6 million of cash received from the interest rate swap in 2024 compared to $1.6 million of cash paid in the prior year, and a $1.8 million decrease in cash used for purchases of installation and service parts and property and equipment compared to the prior year.

Previous wording

Cash used in financing activities was $6.3 million and $66.6 million for the three months ended March 31, 2024 and 2023, respectively. The cash used in 2024 was mainly due to $4.6 million of payments for employee withholding taxes related to RSUs and PSUs vesting and an early repayment of $2.3 million on our 2021 Term Loan. The cash used in 2023 was mainly due to the early repayments totaling $62.5 million on our 2021 Term Loan and $2.5 million of payments for employee withholding taxes related to RSUs and PSUs vesting.

Current wording

Cash (used in) provided by financing activities was $(60.9) million and $27.9 million for the six months ended June 30, 2024 and 2023, respectively. The cash used in 2024 was mainly due to $51.5 million paid for share repurchases, $5.7 million of payments for employee tax withholding related to RSUs and PSUs vesting and early repayments of $4.5 million on our 2021 Term Loan. The cash provided in 2023 was mainly due to the $105.8 million proceeds from the exercise of warrants issued in connection with the IPO, partially offset by early repayments totaling $72.5 million on our 2021 Term Loan.

Previous wording

In February 2024, VM Consolidated entered into the Third Amendment to refinance the 2021 Term Loan (the “Refinancing Transaction”). Pursuant to the Third Amendment, the interest rate was reduced by 50 basis points to SOFR + 2.75% from SOFR + 3.25% with the SOFR floor unchanged at 0.00%. The credit spread adjustment, ranging from 0.11448% to 0.71513%, was eliminated, which resulted in a total savings of 61.5 basis points. In addition, the 2021 Term Loan no longer contains a provision for principal repayments which were previously required to be paid in quarterly installments. During the three months ended March 31, 2024, we made an early repayment of approximately $2.3 million on the 2021 Term Loan and as a result, the total principal outstanding was $702.3 million as of March 31, 2024.

Current wording

In February 2024, VM Consolidated entered into the Third Amendment to refinance the 2021 Term Loan (the “Refinancing Transaction”). Pursuant to the Third Amendment, the interest rate was reduced by 50 basis points to SOFR + 2.75% from SOFR + 3.25% with the SOFR floor unchanged at 0.00%. The credit spread adjustment, ranging from 0.11448% to 0.71513%, was eliminated, which resulted in a total savings of 61.5 basis points. In addition, the 2021 Term Loan no longer contains a provision for principal repayments which were previously required to be paid in quarterly installments. During the six months ended June 30, 2024, we made early repayments of approximately $4.5 million on the 2021 Term Loan and as a result, the total principal outstanding was $700.1 million as of June 30, 2024.

Previous wording

We evaluated the Refinancing Transaction on a lender-by-lender basis and accounted accordingly for debt extinguishment costs and debt modification costs (for the portion of the transaction that did not meet the accounting criteria for debt extinguishment). We recorded a $0.6 million loss on extinguishment of debt during the three months ended March 31, 2024 related to the write-off of pre-existing deferred financing costs and discounts in connection with the Refinancing Transaction. We recorded a $1.3 million loss on extinguishment of debt during the three months ended March 31, 2023 related to the write-off of pre-existing deferred financing costs and discounts in connection with the early repayments of $62.5 million on the 2021 Term Loan.

Current wording

We evaluated the Refinancing Transaction on a lender-by-lender basis and accounted accordingly for debt extinguishment costs and debt modification costs (for the portion of the transaction that did not meet the accounting criteria for debt extinguishment). We recorded a $0.6 million loss on extinguishment of debt during the six months ended June 30, 2024 related to the write-off of pre-existing deferred financing costs and discounts in connection with the Refinancing Transaction.

Previous wording

We recorded interest expense, including amortization of deferred financing costs and discounts, of $19.6 million and $22.7 million for the three months ended March 31, 2024 and 2023, respectively.

Current wording

We recorded interest expense, including amortization of deferred financing costs and discounts, of $18.8 million and $22.8 million for the three months ended June 30, 2024 and 2023, respectively, and $38.5 million and $45.5 million for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

See Note 2, Significant Accounting Policies, in Part I, Item 1, Financial Statements, for additional information on the interest rate swap entered into in December 2022 to hedge our exposure against rising interest rates.

Current wording

See Note 2, Significant Accounting Policies, in Part I, Item 1, Financial Statements, for additional information on the interest rate swap entered into in December 2022 to hedge our exposure against higher interest rates.