All right, good afternoon, everyone. Let's keep things rolling here. This is Dan Moore, Director of Research at CJS. Our next presentation is from Verra Mobility, and just a quick PSA: thanks for joining, and if we can help follow up with any of the companies that you see or meet with today, please do let us know. Verra Mobility is a leading provider of outsourced tolling management services to the rental car companies, and fleets, traffic safety enforcement for governments and municipalities, as well as parking management tools and services. It's my pleasure to introduce Craig Conti, Chief Financial Officer, and Mark Zindler, Vice President, Investor Relations. We'll start with a brief 10, 15-minute overview and update from the company. Follow that, I'll ask a handful of questions.
As a reminder, if you'd like to ask a question, please feel free to submit it through the portal, and we'll do our best to make sure that it's covered. With that, Craig and Mark, thank you very much for taking the time to be with us today, and the floor is yours.
You bet, Dan. Thanks for having us. I always like doing these, and I'm really excited to share kind of what's going on with the company and look forward to the Q&A at the end. So, really quickly kicking off at the top of the waves, I'm gonna dive into the businesses on the next page here. But for Verra Mobility in totality, if we look at this on a Q3 2025 trailing 12-month basis, we're just shy of $950 million of revenue, just north of $400 million of EBITDA, which is 44% Adjusted EBITDA margin. So that nice margin profile also comes with a healthy cash flow. So, $153 million of free cash flow, which on a conversion basis of Adjusted EBITDA is just shy of 40%. And those numbers have been relatively consistent.
I'm gonna show you that multi-year trend as we get a little bit further. But that's the financial profile of the company. We have about 2,000 employees, a little bit less than that today globally, and we serve over 2,300 customers. The vast majority of those customers are actually in our parking business, which is our smallest business, which is around 2,000 of those customers. And I'll walk you through that here in just a minute. And if you think about the geography of the company, primarily North America, if we do this by revenue, just over 90% here in North America. APAC for us mostly shows up as Australia. That's in our Government Solutions business. That's just over 7% of the company.
We have a European presence in both our Commercial, which is our tolling business, and in our Government Solutions, which is our photo enforcement business. That's all across the continent. At the very top of the waves, that's Verra Mobility. I wanna take a few minutes on the next page here just to give you an overview of kind of what we do, how we do it, and size and position. Let me tell you how I'm gonna do that. I'll go through each of the businesses. Just, I'm gonna give you a brief description of what the business does, because if you read the title of what we call our businesses, not immediately apparent what they do. And then I'm gonna give you what I like to call the size and scale.
I wanna tell you how to think about the markets that we're in, what kind of growth that we have. And my hope is this will give you some good context for how Verra Mobility operates and how we're thinking about growth coming up. So, let's start with Commercial, so Commercial Services on the left. So, Commercial Services were the market leader in toll and violation management for commercial fleets. And let's talk about what that actually means. So, in terms of a description of what we do, we serve as the toll administrator for 95% of the U.S. rental car fleet, as well as a large portion of corporate fleets. And then those corporate fleets are managed by companies, think of Element, Wheels, and Donlen. The tolling support portion of our business of Commercial Services is about 85% of our Commercial Services revenue globally.
The remaining part of the business, we also provide title and registration as well as violation processing and support for these same customers. So, if you think about a fleet or a rental car company, I'll probably call them a RAC as we go forward. They're some of the largest bulk buyers of new vehicles in the country. So, part of running a fleet where you're trying to deploy that asset quickly, it's important that those are titled and registered and available to be deployed very soon after their purchase. So, that's a part of our business. Also, as those fleets are around and running, they will accrue some kind of violation, and that violation needs to be adjudicated. So, we do that service on their behalf as well. Okay? Size and scale.
The Commercial business is about $400 million globally. This is a high single-digit organic grower over the long term, and 90% of the revenue is coming from the U.S. Nearly all of the revenue in Commercial is recurring in nature. The margins in the business are in the mid-60s, and they're stable to increasing as the business scales, as this business scales really, really well with increasing volume. When you think about margin accretion in Commercial Services, think more volume leverage than actually price. Growth is driven primarily by GDP-like travel growth, increasing penetration of cashless roads and new toll road adds, as well as segment-wide growth initiatives. We'll talk about what some of those are as we get a little further. That's the Commercial business. For Government Solutions, we're the industry leader in automated traffic enforcement for cities and school districts.
So, again, what does the business do? The Government Solutions business, by far, is our most global business. 85% of the revenue is coming from the U.S., and the remainder, as I mentioned earlier, is largely in the U.K., Australia, and in New Zealand. We're the industry leader in camera and service offerings for red light, bus lane, work zone, speed, and we're rapidly scaling our school bus stop arm solutions domestically. So, we do both the photo enforcement, the photo aspect of that, and the enforcement aspect and the adjudication of those violations if and when they do occur. We have been in this business as Verra Mobility for a long time. We are the industry pioneer in the United States.
We installed our first red light enforcement camera in Phoenix, Arizona, which is approximately two miles from where our headquarters still is today, in 1987. So, again, size and scale. The Government Solutions business is a $400 million high single-digit organic grower. Margins are currently in the high 20s. About 90% of that revenue is recurring or reoccurring in nature, with about 10% being episodic product sales. We have about 9,000 cameras installed globally. Our largest and longest-standing customer is New York City, which just renewed their contract officially for five years at a value of nearly $1 billion. And how near we are to $1 billion? Their renewal amount was $998 million. Growth is driven by the adoption of new photo enforcement technology modalities by municipalities.
Some recent examples include the adoption of speed enforcement in both Florida and California, as well as expansions in some of our existing municipalities, such as California red light. The last 24 months in this business has really been the strongest in terms of demand growth in the U.S. since the advent of the technology, and that's really because the increase in demand for purpose-built photo enforcement, which is things like school zone and work zone, have really gained traction across the spectrum. Verra has maintained a 70% share of this market over term and continues to enjoy that market share as of today. Over the same 24-month period, we've added approximately $500 million of SAM, or serviceable market, which has been opened domestically with California speed and red light comprising 50%, and in the remainder, covering 14 additional states that now were not previously customers of Verra Mobility.
The market growth in Verra's continued market share position bodes well for the long-term future growth of this business. Let's close out with Parking Solutions, so this is the leading end-to-end parking provider of parking management solutions in North America, so in terms, again, of business description, Parking Solutions, or T2, as we call it internally, and I may refer to it today during our presentation here, derives about two-thirds of its revenue from the university market, with the remainder from small and medium municipalities. T2 supplies SaaS and hardware solutions that manage access and enforcement for garage, lot, and on-street parking, and also provides a full customer-facing suite of services to support that infrastructure, and as I mentioned earlier, about 2,000 individual customers in this business.
Finally, on size and scale, this business is about an $80 million, a little bit more than that, mid-single-digit organic grower over time, with margins in the high teens. About 50% of the revenue in this segment is SaaS, 25% is recurring service, and 25% is episodic hardware sales. The business grows through the addition of new university customers, a market in which there is currently 50% white space with no parking provider consolidated at all, and through the addition of new municipalities with recent wins, including L.A. Beaches and West Hollywood. So, all three of our business, we're very differentiated in our offering, and we have pretty good growth prospects as we go forward. Let's move ahead just one slide. I wanna talk a little bit about, I just mentioned the long-term organic growth targets for each of these businesses.
I wanted to kinda say, how did we get there, and then what is the upside from that level? If I think about how do you maintain high single digit in Commercial Services, starting out with grow the core, these are things like GDP, travel-type growth, the cashless roads conversions, and we'll talk about that a little bit, I think, in the Q&A. There's additions of toll roads in the United States every year. Every time if you have a large fleet, whether it's a owned by a rental company or a corporate fleet, less so, as there's more toll roads, obviously, you're running more tolls. That's a tailwind to Verra Mobility. There's white space in the fleet area here. Not while we're relatively penetrated in rental cars, not necessarily the case for fleets.
How we can further make sure we can get to that high single digit growth is expanding into adjacencies, is a great example, would be the EU expansion, that we're currently continuing to ramp. We've been working on this for several years. That gets you to high single digits. How do you grow this business beyond that? When you look at some of the emerging opportunities, things like telematics, right, where Verra Mobility already has a good relationship with the rental car and fleet owners, how do you bring a new product to those owners? Telematics is an example. Also, in- vehicle tolling, we've done some press releases on that. Hopefully, you've seen those. So, that's Commercial. If I go to Government, you know, growing the core, this is all about opening those new cities.
I talked about 14 new states in the last 18 months, doubling down on products like school bus, which is, when you think about photo enforcement, it's really hard to argue that protecting kids is a bad idea. So, we continue to see school bus being a large grower for us. And we talk about the adjacencies. This is getting into bus lane and work zone, which are a little less core to photo enforcement historically, but are becoming more core as we go forward. And then, if you talk about what is available to grow from there, you talk about things like a smart city platform, which is, how does traffic get from one side of the city to the other? How do we need to change enforcement, changing commuting habits? And other things like noise pollution, right?
This is a big issue, and Don't Block the Box of making sure that folks can get through the intersection correctly. There's a bunch of other stuff that we do in small pockets today, or very small pockets that could be rolled out wide. So, that's why we feel comfortable about our growth here. And then, finally, in parking, you know, how do we grow that core? Your ground game and growing universities and municipalities, selling more of what's on the truck today, scaling things and adjacencies such as airports. Very small market for us today has the ability to be larger. And how do you take that and potentially even push that forward? This is through things around monetizing the curb.
When you're in a major metropolitan area, you may see the curb being used for a package delivery, a school bus stop, and also an Uber point of entry and exit. That's a monetization opportunity for the city, and you need the technology that Verra Mobility can bring in terms of how do you adjudicate that, and how do you actually capture that event happening? We're uniquely positioned to solve that for cities. That's how I think about the growth rubric of each of the companies and how I feel that there is upside even to the growth rubric that we've communicated externally in the past. Really quickly on the team, we have an experienced team. David is our CEO. He's actually in Washington, D.C. today, or he would have been with us.
He's in a meeting with the U.S. Transportation Secretary, Sean Duffy, talking about safe roads initiatives, which is, if you're an investor, are about to be exactly where you want him to be. So, I'm happy that he's there. He's been with the company since before we were a public company, about 12 years. I've been here going on four. And the top row here is our operating leadership, all deep expertise in global companies. On the bottom is our shared service. Again, average tenure there, pushing over five years. So, very proud of our team and who represents us. Since I'm the CFO, I'm gonna talk to you about how... give you some financials here, but I'm gonna keep them relatively quick. So, the one thing I wanna show here is the progression of our revenue.
So, if we go back to, you know, pre-COVID or early COVID days, we have a total revenue CAGR of about 15%, that service CAGR of about 17%, again, getting to that just shy of $950 million TTM total revenue number for the third quarter of 2025. What I skipped on the first page I wanna hit here, 94% of service revenue. So, if you look at that $943 million, 94% of the revenue in Verra Mobility is either recurring or reoccurring in nature. And I think that's important when you talk about the staying power of the business and how it continues to be an earnings compounder, through multiple years. On the right-hand side, 12% CAGR and Adjusted EBITDA. We've kept those margins in the mid-40s. They will step back a little bit in 2026 as we onboard a new New York City contract.
I think that's a temporary state of affairs, not permanent, and as I think about cash flow, as a percentage of Adjusted EBITDA, in the high 30s, approaching 40%. The reason why that's a little lower than in previous years, while still, I would argue an enviable level, is that our Government Solutions business is growing faster than Commercial, and we lead with our balance sheet in that business. One more slide I wanna cover, and then I'm gonna turn it over to Dan. Mark, let's go to the balance sheet. One thing I wanna talk about for Verra is where we sit from a leverage standpoint. We closed the third quarter levered about two times, and we just did a refi of our floating debt.
And I think on the lower right-hand corner is a good representation of where we sit. We have no maturities until 2029, and our float doesn't mature out until 2032. So, we're really proud of that. Closing the quarter with $200 million in total cash and having an undrawn credit facility with total liquidity, topping $400 million again for two times net leverage, maybe a little bit underleveraged for the company. One thing we talk about is our target leverage is about three times net. Doesn't mean we're gonna lever up to do something to get to three times net. Perfectly happy to run it two times. But we've been in and around that level for about a year, and we're happy to stay there unless something else presents itself. Dan, that's what I wanted to share today.
I think it'd be great we can open it up for some Q&A. I think you had some thoughts, and let's chat through it.
Perfect, Craig. That was great. I appreciate that very much. We'll start with the New York City contract. You gave great detail on the last call about your expectations. So, I refer, you know, folks to that without, you know, rehashing, you know, all of the numbers, but just talk globally what it does for Verra over the next three to five years. In your conversations with investors, you know, since then, what's most misunderstood from your perspective?
Yeah. Okay. Maybe I'll start with the second one first. And I think what might be misunderstood about the, maybe it has to do with how I communicated it, which is probably the case.
The New York City contract, while it is going to have a step back in margins for 2026, is still at a creative margin to the Government Solutions business. So, in other words, New York City is a very, very good contract before and after renewal for Verra Mobility. Because the margins of the consolidated company are stepping back has to do with some of the uniqueness of how the contract rolled out. But it is an excellent contract, and we're really, really happy to have it. So, let me talk about the growth in Government Solutions overall. Then I think, Dan, if it makes sense, I'll talk a little bit about how New York City came to be, what's going on with the margins, and how we get it back. Does that sound about right?
Sounds good.
Great.
Sounds good.
Okay. So, when I think about Government Solutions, if you back up to our Investor Day in 2022, we talked about this being a mid-single digit grower. You know, I think we're a high single digit grower today. The expansion and the adoption of this technology, within existing states that we already had photo enforcement and the adoption of states that had no photo enforcement at all has really been enormous in the last three years. So, I feel very comfortable calling this a high single digit organic grower. When I think about New York City in totality, New York City is gonna be a, as I mentioned, a $1 billion contract with an option to renew for five additional years, which would, you know, ostensibly be another $1 billion.
I think what's important about this. I spent a lot of time on the Q3 call talking about what the margin impact to the company was gonna be. Let me tell you how this unfolded, all right? This billion-dollar contract, I'll talk about it in terms of EBITDA dollars for a second. We've already established that this is a premium contract to the rest of Government Solutions before and after the renewal. Let's just talk about it in isolation. The way to think about the renewal is there are some gives and some gets in the contract, again, at the EBITDA dollar level. One of the gives is we took down the monthly charge for the cameras. That was a little bit of a price give back to the customer.
And that simply was aligning with where the market is today. We had a contract that was written in a different market. We aligned that today. So, if you think about that from a profit dollar standpoint, that was negative compared to the old contract for Verra Mobility. But on the flip side, there were some gets. One of those gets was there's a thousand camera expansion. So, New York City, again, is going to buy the cameras as well as start running service on those cameras. So, that is a get. That's incremental EBITDA dollars into the company. Another get is we're gonna be doing new things in New York that we had in the past. An example is speed on green, where historically a red light camera was only a red light camera. Some of those cameras will be red light cameras and speed cameras.
That's an additional billable service, so a get, if you will, in profit for Verra Mobility, and the final get is the delta between things that we did under the old contract, call it at cost, that we will do now at margin. And the largest example is relocation of cameras. New York City is gonna have on the order of 3,000 cameras, a little more when they're done. And you can imagine that those cameras don't all stay in the same spot, and it's Verra Mobility's responsibility to move them, well, that could either be done at cost or at margin. Putting them at margin in the new contract, again, was additional EBITDA dollars into the company.
If you take those, that one give and those three gets, and you add them together, we actually had an EBITDA dollar accretive contract on this renewal, actually with quite a bit of money. Now you would say, well, how did the margin step back? That comes to the final piece. The final piece of procurement had to do with minority and women-owned businesses. Minority and women-owned businesses, per New York City, 30% of the contract value needed to be spent with minority and women-owned business contractors in the city of New York.
The way to think about that is that's work that Verra Mobility used to do on our own that now needs to be sent to a third party to be able to adhere to the contract. That's approximately a $20 million-$25 million a year investment on Verra Mobility's part. That's what is causing our margin to go down from 25% to 26%. I expect the margins for the company to step back, as I said in the third quarter, 250 to 300 basis points. To secure arguably the best contract in photo enforcement globally, we had to make an investment. We're happy to do that. But I don't think, if we look at Government Solutions, that that's a permanent state of affairs.
I expect to accrete starting in 2027 out to 2030, a point to a point and a half of margin per year from our Mosaic project. Our Mosaic project takes five legacy systems, brings them down to three, and has a material reduction in the cost it takes to run our business. Think of these systems as the ERP for running photo enforcement in the United States. I'm going from five down to three, potentially even down to two, and I have a lot less support cost to do that. So, even though our margin stepped back from 25% to 26%, I expect photo enforcement margins to be in the high 20s, scraping 30% by 2028, and that's what I think the right fighting weight for this business is.
Excellent, and in the prepared remarks, you mentioned, you know, a couple of nickels shy of $1 billion.
Now that it is signed, are there any changes that are substantial? A, and B, how do we think about kind of the net cash flow associated with that $1 billion over, you know, the five-year period?
Yeah. I think the only thing that's changed when we announced it, the first time that we were close to signing it, it was $963 million, and now it's $998 million. So, it went up a little bit. But no, no material changes. In fact, the only, that that's an immaterial amount per year, Dan, that I would say is favorable to the company. When I think about cash, the cash really depends on how fast the other side of Government Solutions grows, which is the non-New York City side. And if we go back to third quarter, I had kicked out some forecasts for that as we go forward.
We talked about high single digits going into 2026, probably low double digits going into 2027. And then I had it stepping back a little bit in 2028. And the reason for that step back in 2028 is 'cause I don't yet have visibility to what that would be. So, I had to regress to historical mean. But if I think about that, Dan, if to the degree that our, our non-New York City business continues to grow at high single digits, low double digits, that could put a little pressure on the cash because we lead with our balance sheet. But if I, if I, if I roll it back up to the total company, Dan, I still think that 40-low 40% cash conversion of Adjusted EBITDA, even with the growth that we have forecasted today, is about the right number.
So, I would look at the cash coming out of Verra Mobility to be similar to what we've seen in the past and potentially even a little greater.
Great. Okay. And circling back to Commercial Services, you know, in the old baseball analogy, what inning are we in regarding those longer-term secular trends, which take us above GDP plus, you know, total, you know, in terms of number of toll roads, cash to cashless?
Yeah.
A nd if you wanna throw in Europe in there, you know, feel free.
Sure. Well, that's a very different set of innings for all three of those, Dan. Let me start with the one that's probably in the highest inning, right? And if we have non-Americans on the call, it's a very American analogy, Dan. Maybe we shouldn't use that one.
So, it's, you know, emerging, mature or saturated, something like that, right? So, if we think about the penetration of cashless tolling in the United States of America, so this means what percentage of toll roads are fully cashless? And why that matters, if you're new to the story, is, if you, let's use your own personal journey. If you rent a car and you're going on a toll road and there's an option to pull over on that toll road and pay with your credit card or put cash in it, that's probably what you're gonna do because it's not your car. However, if you're on a toll road and you're in a rental car and there's no option to pull over, you either don't go on the toll road or you drive under it and see what happens, right?
So, the drive under it and see what happens, that, that's you're automatically opted. We've thought of that. You automatically get opted into the Verra Mobility program. And the reason why that's important is as there's more cashless toll roads, the opt-in in our program goes up substantially. So, I think about 70% in the low to mid 70% penetration of total toll roads in the United States are fully cashless. So, that would say, you know, 25%- 30% left to go. If I were to equate that to an inning, I would say we're probably in the seventh, maybe the bottom of the seventh, getting into the top of the eighth. But those innings are very, very long, Dan.
And I think on the other side, when we talk about the, how many toll roads are there, we add toll roads in the United States every single year. I think we've averaged somewhere in the range of 10- 20 toll roads, call that three to 500 mi of roads a year. So, even as we look at that cashless penetration number being in the high 70s, the denominator is gonna continue to grow. So, that's why those innings are relatively long. And then when we think about Europe, so penetration in Europe, so for those who don't know, we do kind of the same thing in Europe that we do in the United States. We transact it a little bit differently, but we do the tolling for a lot of the rental car companies there.
The penetration of cashless roads is much, much lower. I don't have a specific number, but I wouldn't be surprised if it's less than 25%. To the degree that that has room to run, absolutely it does, Dan. The million-dollar question there is when. All I can say is we've seen some movement in France and Italy, but certainly nowhere near what we've seen in the United States.
Got it. Then just talk about. I know you've said it on recent calls, but update folks on the most recent or the upcoming contract renewals that we've got. We have timing. I know there's one big one that you're in process right now. That's right. Probably not much you can say, but expectations, you know, around timing and when the other two are coming up.
Yeah, sure. So, for our RAC customers, these typically renew within three to five year cycles. This is the way it's historically gone. We're in the throes of negotiation, if you will. It's probably too dramatic, but with Avis Budget Group, ABG, we expect resolution on that sometime in the first half of this year. These typically run long, simply because we've got a program that works. And when the RAC gets to it, they get to it. So we expect resolution on that here. I would say in relatively short order. The next two that are up are both in 2027. In the summer of 2027 will be Hertz. That's year five of their five-year contract. And in the fall of 2027 will be Enterprise, which will be, I believe, the third or maybe even the fourth year. I think the third year of their contract.
You know, one of the things on this.
Yeah, go ahead.
Yeah, I was gonna say one other thing on this, Dan, is we all three of these companies have been customers of Verra Mobility for 10 years at least, going back significantly further than that with a few of them. We've renewed these at three or four times on average. Usually the way that these work is that the contract, the contractual terms are materially the same coming out as they were going in. There's always a flip in a bit between buckets depending on what the customer wants to and send more than something else, but they tend to be on the rounds relatively similar. Dan, what were you gonna ask?
Nope, that's fine. Helpful.
and then just, you know, in terms of TSA, what we've seen is as we kind of close the books on 2025 and so far in 2026 and expectations for just, you know, how what you're hearing from the deltas of the world and others as it relates to, you know, H1 and into 2026 for sure.
Yeah, sure. So, overall travel, we close the year up about 0.5%, 2025 over 2024. What I think is most indicative of that is where we close the fourth quarter. So, fourth quarter was up about a full point over last year, and you know, as I said on the third quarter call, Dan, that's what I'm looking at bringing into 2026. Let's look at the last 90-day trend. If that still looks like it feels right, that's probably what we're gonna do.
If anything, Delta did report earnings the day before. I think it was yesterday, not the day before yesterday. But what I gleaned from that, as I'm sure a lot of you did, was a relatively bullish view on travel and a relatively bullish view on the economy. So, to the degree that we're probably gonna think about a 1% travel growth, it could be a little better. Year to date, it's only 14 days in the books. We're a little over 2%. So, you know, the one thing I would put it in stark contrast to, Dan, and for everyone else is at this point last year, if you remember, the airlines were actually coming out and suspending guidance because they weren't sure what was gonna happen with travel demand given, you know, inflationary concerns.
It seems like we're in a very different position than we were when we were just one year ago. I guess we'll have to see how that plays out together.
Understood. One from the investors listening in and just thinking about, you know, long-term shift to the potential for driverless cars, specifically, you know, Waymo driverless taxis. How do you think about potential impacts, you know, both positive and negative, over the longer term?
Yeah, sure. They still need tolls, right? If they're gonna be going through toll roads, so that's one there. I think the second thing is, on the photo enforcement side, you tend to think if the car is programmed and set correctly, it shouldn't violate any of those laws.
Well, that's not necessarily. We have seen some violations, but on the roads, what happens in that world? I think a couple of things. I think number one is that the average hold life of a car in the United States is 12 years. So I don't see that being a material part of the traffic anytime in the near future. I think the other thing to think about is, on the opportunity side, certainly for Verra Mobility, how do the AVs actually behave within a city? Where can they go? Where can they not? How do you make sure a bunch of cars don't pile up somewhere where you can't actually communicate with the driver to move the vehicle?
Verra Mobility, given our footprint in most of the major cities and most of the major intersections too in the United States and a good swath of the United States, it's an opportunity for us to play as part of that ecosystem. So, the way I look at it today, is it's another vehicle using the same infrastructure that vehicles do today. When I think about if the entire country 30 years from now, we're running only autonomous, would there be a photo enforcement business? I'm not sure that there would be, but would there be a role for the photo enforcement historical provider to be able to play in that autonomous vehicle ecosystem? I would say certainly there is. And we're exploring that very actively today.
That's really helpful.
One or two more, just from, you know, other opportunities within Commercial Services, just talk briefly about the competitive dynamics and fleet management. And, you know, if you see much in terms of opportunity, you still see that as a significant opportunity in terms of increased penetration, outside of the core RAC business.
Yeah. Look, I like that business and I still think it's a good one for us to be in. It gives us a lot of opportunity to touch a lot of the market that we don't with rental cars. I think, and I've said this for a long time, Dan, I think that this business is probably a low to mid single digit grower.
It's been a little bit of Pollyanna on that because it's grown fantastically over the last four years, which has really been the utilization on the fleet side, not so much what we've done commercially. So I think we saw some churn in 2025. I think the business will flatten out a bit in 2026. But as I look going forward on this, this is a great opportunity. Our value proposition here is absolutely unquestionable. And I look for this to be a part of the business again, growing low to mid single digits, out into the future.
All right. I'll tell you what, we're at about 30 seconds to a minute. So, this has been really helpful. I'll throw one more out and you can, you know, tie it in with any closing remarks.
But net leverage you mentioned, you know, balance sheet very comfortable, debt stack very comfortable. How are you prioritizing, you know, additional M&A versus reducing leverage and/or perhaps being more aggressive and opportunistic in returning cash to shareholders, particularly where the stock is, you know, sits today relative to that, you know, three to five year outlook? And any closing remarks would be great.
Yeah. Okay. Look, we differentiate, what we try to differentiate ourselves by being a world-class capital allocator. And simply how we do that is I can prepay my debt without penalty. I know what my tax rate is. Net of those is one return. Intrinsic value of the company, which I keep a live view on versus the screen is one return.
And then the third one would be any inorganic acquisition discounted back at our WACC is a third return. We're not a dividend company. So, when I compare those three, simply I choose the one with the highest percentage. As I think about where we sit today, and that, that's what we've done. One of the slides I didn't get to in our deck, please flip through it, show us how we've allocated capital over the last five years. And, all three of those levers have been used materially at different times. As I think about where we sit today, we kicked out the largest authorization in the history of the company in the third quarter for $250 million on buybacks. I used some strong language saying I wasn't gonna let dust collect on that.
I think the other thing is when we gave our preview for 2026, we talked about that we would need to utilize the majority of that $250 to hit that EPS number. So, that'll give you an idea of kind of where we're trending here in 2026. And again, capital allocation and being world-class at that is important to us. I really wanna thank you, Dan, for inviting us today. We've had some great meetings. I know we've got some coming up, later today. Really appreciate the ability to share our story with you and reach out to Mark or myself if you have any questions. We'd love to be helpful. Thanks a lot, Dan.
Thank you. Pass it along to David as well, and we'll talk to you very soon.
Thank you.