Q1 2020 Earnings Call
Greetings and welcome to the mobility first quarter 2020 financial results Conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator technical assistance. During the conference. Please press star zero and your telephone keypad <unk>.
A reminder, this conference is being recorded and is now my pleasure to introduce your host Mark.
Mr. <unk> you may begin.
[music].
Good afternoon, and welcome to our mobility <unk> first quarter 2020 earnings call.
They will be discussing the results announced in our press release issued after the market close with me on the call. This afternoon as David Roberts from abilities, Chief Executive Officer, and Tricia Cheetah, Chief Financial Officer, they'll begin what prepared remarks, and then we'll open the call for <unk>.
During the call, we'll make statements related short business that maybe considered forward looking including statements concerning our clients execute on our growth strategy, our ability to maintain existing and acquiring new customers 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 views only as of today and should not be considered our views as of any subsequent date.
We undertake no obligation to update or revise these forward looking statements.
Forward looking statements, you're not promises or guarantees of future performance. There are subjected to a variety of risks and uncertainties that could cause actual results to differ materially from our expectation.
For a discussion of material risks and other important factors that could affect our actual results. Please refer to those container annual report on form 10-K in quarterly report on form 10-Q.
Which are available on the Investor Relations section of our website <unk> dot bare mobility dot com and on the Fccs website at <unk> Dot com.
Finally during the course of today's call we refer to certain non-GAAP financial measures reconciliation of GAAP to non-GAAP measures is included in our press release issued after market closed today, which is located on our website at <unk> dot barrel mobility dotcom and on the Fccs website, <unk> dot com with that let me turn the call over to David.
[noise]. Thank you Mark and thank you everyone for joining us on the call today before we dive into our first quarter results I would like to spend some time on the current environment.
As you're all aware the koeppen 19 pandemic continues to create challenges for countries towns businesses and families around the world.
On the impact of global Human health the virus is not spared the global economy.
Markets and businesses around the world are struggling with high levels uncertainty well also struggling with decreases in demand for products and services.
As we navigate this uncertain environment.
We will do our best to remain thoughtful and transparent and sharing as much as we can about what we're seeing in our business.
And finally, our thoughts and prayers got to those families that have been impacted in our gratitude goes out to the dedicated medical staff that are on the front lines, helping fight the virus.
We are pleased with our execution in the first quarter and look forward to sharing those results, which are relatively minor impacts from code at 19 that said before we get into our Q1 results, we want to provide transparency to our customers employees and shareholders on the effects covert 19 is having on our business and how we are addressing it.
And our commercial services segment. The majority of our revenue comes from agreements with the three largest rental car companies. The rental car industry has experienced significant declines in activity given the overall reduction in global travel.
We are highly correlated to travel activity artists and are expecting a material decline in tolling revenue as a result.
For some reason perspective, the rack industry is set to be down 80% for the month of April.
We're expecting a similar impact to our correlated RAC revenue for the entire second quarter and significant compression for the remainder of the year. Moreover, once the travel restrictions are lifted in the economy starts to recover we believe the travel industry will recover more slowly than other parts of the economy, but nonetheless should begin to recover during the year.
As we exit 2020, we will most likely still be below the historically high levels. We saw in 29 team and are not anticipating a return to 2019 volumes until 2021.
Clearly this is a point in time update in our assumptions are made based upon the best available information as the year progresses, we will update with more timely data and analysis.
As we have highlighted in the past we've been working toward the geographical expansion of Iraq tolling product to Europe and believe we had the had built the necessary foundation exiting 2019 that said, we anticipate that our European tolling efforts will be slow due to travel restrictions in Europe, and given our customers on potential customers priorities have shifted to address more immediate business.
Pressures.
Our government solutions segment.
Executes phone enforcement progress for local municipalities in school districts, 40% of what's your on variable photo enforcement contracts, which in turn means that we are anticipating fewer paid citations, which will impact revenue.
As the economy recovers, we expect hate citations to return to normal levels over the course of the year.
Additionally, crossing guard our school bus stop arm camera program is also experiencing a decline in activity, resulting from a variety of school closures nationwide.
We are hopeful this program over same closer to normal activity in the fall assuming schools returned to traditional schedules.
In response to the current a virus and the resulting stay in place orders that are causing material decline in our business. We have implemented a number of cost saving initiatives. You austerity measures included our the elimination of discretionary spending and non essential corporate travel and hiring freeze on all nonessential positions through Q3 of this year.
The elimination of all discretionary capital expenditures in April approximately 30% of our employees were furloughed for 90 days, primarily those employees, whose work flows were correlated to the decrease in volume of our customers.
Finally, I infer going my entire Sally for Q2 and salaries for employees at the level of Vice President of Bob as well as cash compensation for order reduced for the same period [noise].
On the positive side, while our business is facing extreme challenges like most of the global economy. We continue to believe we adult day highly resilient business that has incredible upside.
Expansion of the schools on speed program in New York City is tracking slightly ahead of schedule as we're continuing to install cameras at the same pace. Since 2019 at this time, we're not expecting any bottlenecks in the process and are not anticipating a slowdown in camera installations.
Most important aspect of these program to safety and recent reports have highlighted that even though traffic volumes of drop in New York City people are able to speed through the empty streets, which has increased the number of violations issue.
Finally, I would like to highlight that we ended the quarter with $113.6 million a cash on the balance sheet and we have not had to tap any of our lines of credit our current model, which includes the implementation of the cost saving initiatives outlined previously shows this remaining cash flow positive for the year.
Now moving onto our Q1 results, which Tricia will discuss in detail later during this call first quarter revenue grew 19% year over year to $116.7 million and our adjusted EBITDA came in at $54.9 million up 7% year over year.
The commercial services segment declined 2% year over year to $61.2 million in reported adjusted EBITDA of $33.6 million down 12% year over year. This decline reflects the impact of coping 19 on our business during the second half of March.
In Europe, we recently completed the integration with rental car and are currently executing test in preparing for an early summer pilot launch depending on how cobot 19 progresses in conjunction with the corresponding travel restrictions as we had highlighted in the past geographical expansion of Iraq tolling product to Europe will be a meaningful growth driver of all of our current commercial segments the segment.
In the future.
The next phase of our expansion, including other proof of concept pilots and back office integration or on hold as rental car companies reassess their investment priorities.
Our government solutions segment grew revenues, 55% year over year to $55.5 million and reported adjusted EBITDA up $21.2 million up 61% year over year growth in the government solutions segment. This quarter was primarily driven by the expansion of the schools B program in New York City, which included additional product revenue.
Service revenue associated with newly installed cameras.
Our work with the New York City Department of transportation to expand the number of schools on speed enforcement areas continues on pace and we're excited to be able to bring this important public safety initiatives to fruition, even during these challenging times.
Installed 218 cameras in the first quarter, an average of 73 per month. Additionally, we installed 19 bustling camera systems.
During the quarter, we renewed two large an important photo enforcement programs.
With the city of Chicago in Washington, D.C., as well assigned new customers, such as Morningside, Maryland for schools on speed.
Last quarter, we announced two Georgia schools on speed contracts, Carol and Spalding counties and we're pleased to announce an implementation has begun for roughly 40 cameras across both of those counties.
Overall, we believe there are many more opportunities in Georgia, which we will pursue once school district districts open back up.
On March 17th we withdrew our full year 2020 guidance due to the uncertainty surrounding the global outbreak of the Koeppen 19 virus, it's duration and overall business impact.
That uncertainty remains and we will not be issuing full year guidance at this time clearly our business is impacted by global travel restrictions in school closures. We will continue to monitor these measures closely for positive changes the point toward a recovery.
In summary, we executed well in the first quarter and implement strong countermeasures to ensure a barrel mobility is long term strengthen these challenging times and beyond.
While it remains uncertain, how long could 19 or impact on our customers in our business will persist we are confident and the resilience of our employees in our ability to manage through these turbulent times.
We look forward to updating all of our stakeholders from our employees and customers to our shareholders on a continued progress as the stay at home policies and ultimately are ultimately relax and our business begins to return to normal without let me hand, it over to Tricia to walk through the financials in more detail.
Thanks, David and good afternoon, everyone well provide a more detailed overview of our first quarter financial performance and then open up the call for questions. We've provided a short earnings deck on our website that has reconciliations of GAAP to non-GAAP results that we may be discussing today, if you're following along in the earnings deck I'm on slide two which outlines.
Revenue and adjusted EBITDA performance by business segment, let's start with the commercial services segment, which delivers tolling violation processing entitling registration surfaces to rental car companies and fleet management companies in the U.S. and process is violations in Europe total revenue for this segment declined 2% to 61.2 million.
Sellers in the first quarter of 2020 from $62.6 million and the same quarter of the prior year This business.
Right. The majority of its revenue from tolling services provided to rental car companies. We saw growth in this segment for January and February and in year over year declines of approximately 12% for the month of March due to reduced demand resulted from stayed home orders and travel restrictions will talk more about current revenue trends later in the call.
Adjusted EBITDA for the corridor, that's $33.6 million declined $4.4 million or 12% year over year from $38 million into one of 2019. The profitability of this segment was impacted by bad debt, which increased by $3.3 million year over year do premiere.
Really to the company's implementation of Cecil a new accounting standard for credit loss.
Even with the declines in revenue and impact of new accounting standards. The adjusted EBITDA margin of the commercial services showed considerable strength at 55%.
Moving to our government solutions segment, which operate started enforcement programs from municipalities in school districts with end to end solution. Their total revenue was $55.5 million in the first quarter and grew 55% year over year from $35.9 million in the first quarter of 2019.
Total revenue was comprised of service revenue the monthly fees generated from the operation a photo enforcement programs and product revenue, which result from selling and installing camera system service revenue for the quarter was $38.3 million and grew 8% year over year from $35.5 million in the first quarter of 2019.
We continue to show strength in our speed portfolio, which grew $5.9 million speed will be our largest service line by the end of 2020.
Red light declined by $2.7 million during the same period due to the loss of certain Texas program.
Product revenue of $17.2 million for the quarter was up from $391000 for the same period last year. The increase was primarily driven by the installation of those 218 schools on speed cameras for New York City.
Adjusted EBITDA of $21.2 million increased $7.9 million or 61% from $13.2 million for the same period in the prior year adjusted EBITDA margins for this business.
Grew to 38% up from 636.9 in the prior year. The large increase in product sales is benefiting both the top and bottom line of this business segment.
Turning to the next slide we show our consolidated results for the quarter become combined results of the business segments. We just discussed generated total revenue of $116.7 million for the first quarter and grew $18.3 million or 19% from $98.5 million for the same prior year period.
We're proud to post the strong growth numbers and these very uncertain times.
Adjusted EBITDA of $54.9 million increased by $3.6 million or 7% from adjusted EBITDA of $51.3 million in the prior year first quarter adjusted EBITDA margins were 47% a decline from 52.1% margin reported in the first quarter of 2019.
Our adjusted EBITDA growth was muted in light of the strong revenue performance. If you recall in our last earnings call. We anticipated 2020 to be a year of growth and in investment back in the business facing an abrupt turn in the economic conditions, we halted investment a cut discretionary spend it spending furloughed nearly 200 employees and.
Cut executive pay the impact of these changes will be realized in Q2 and the back half of 2020.
The company reported net income of $6.7 million in the quarter compared to $2.8 million and the same period or the prior year EPS for the current quarter was four cents per share compared to two cents per share for the same period of 2019.
Tax expense for the quarter was $3.2 million, representing an effective tax rate of 32.5%. The increase in the effective tax rate was driven by reserves against European hitting all else.
I want to spend some time discussing our liquidity position the company generated $14.8 million and cash flow from operating activities. During the first quarter of 2020 compared to generate $37.4 million and the same period of the prior year. The change resulted from increased a are due to high high volume of camera installation.
The reduction in liabilities as we made payments in the quarter certain expenses that had been accrued throughout 2019, we spent $8.1 million in capex for the first quarter of 2020 compared to $9.2 million in the prior year, and we repaid $22 million of debt.
These activities brought our cash flow on here on to $113.6 million.
As of March 31st we had debt at $872 million and its netted against the cash on hand, it was $758 million, which was 3.1 times trailing 12 month adjusted EBITDA of $245 million.
Earlier in Q1, we repriced, our firstly lien term loan lowering the interest rate from LIBOR, plus 375 to LIBOR plus 325. This change is expected to lower cash interest by $4.5 million annually. The credit facility has a maturity in 2025 and its covenant lite affording us a lot of flexibility, including an accordion.
Feature we also have a 75 million dollar a b that al if that is currently undrawn. We believe that we have sufficient liquidity from operations on cash on hand to run the business for the next 12 months and beyond.
As David highlighted we withdrew our full year 2020 guidance in March due to the uncertainty around rounding global outbreak of covered 19 virus, it's duration and overall business impact that uncertainty remains and we will not be issuing full year guidance. At this time that being said, we want to discuss the trends of the business experienced.
In April to provide you some context for how our business could trend throughout Q2 keep in mind that these numbers are mid quarter on reflect our internal results based on information at this time.
We previously mentioned that some of the rental car companies. We served had indicated business declines of approximately 80% and April our Q2 in April our commit commercial services segment. So revenue declines of 64% over the same month in 2019.
Total revenue for the government solutions segment in April grew by 49% over the same month in the prior year service revenue was relatively flat I'm showing growth in our speed portfolio offset by losses in the Red Light program and crossing guard, but product revenue continued to be strong as David mentioned, we continue to execute on our exists.
In order of 720 camera systems 'cause it 19 has not impacted our supply chain or installation cycle and as of today. We've installed an additional 17 systems in Q2, bringing our full year total to 290.
During this time, we like most companies are focused on liquidity and I'm pleased to report that our cash on hand has increased from $113.6 million at March 31st to nearly $127 million as of today.
In summary, we continue to believed there and mobility remains well positioned for the long term and has operating discipline to manage through the current volatility in our business with that said well open up the call for questions [noise].
[noise]. Thank you.
We will now be conducting a question answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone willing to keep your line is another question Q <unk>.
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One moment, please while we now poll for questions.
Our first question comes from Ashish Sabadra with Deutsche Bank. Please proceed with your question.
Oh, Thanks for taking my question and thanks for the color on those trends well my question on the commercial so looks like the commercial revenue growth or decline of 64 has been trending even better than direct volumes. I was wondering if you could give any color on what's driving that that's like you better performance as a penetration pricing and any other color that you can.
For white around.
Option of new product, including Youre on let me get gold product. Thanks.
Yes, so I think as she's she's what we're seeing is that we are seeing declines within our told products. Although a little less then within what the rental car companies had said so call it 70% or so were 75%, but we didn't see similar declines in our violation business either in the U.S.
Or in Europe, and and so that sort of shoring up to some extent the overall rather than new at least in the month of April we do believe that does that violation business, we'll see declines, but we think it all experienced later in the quarter.
That's helpful. Then any color on penetration or any color on a new product and a new.
Pickup for new products, including your unlimited building product.
No because when you when you look at the fact that the rental car companies are down by 80%, there's not a lot that that our product initiatives are going to do in order to to increase that well. We are seeing is that there's continued to be totally within the FMC business. That's a smaller business for us, but but we are continuing to.
See that the but the other fleets that we served outside of rocks, which are generally service vehicles. So think sales vehicles or service repair vehicles are out there on the road and continuing to toll. So we're seeing a little bit of benefit from that as well, but there theres not going to be a lot of mix shift within Iraq totaling that's going to cause any sort of a silver lining there.
Okay. That's helpful and then on the New York City side, I think that 70 cameras per month, that's a good trend there and it's even higher than I believe you already from the Executional 60 cameras for him on is that the new run rate that we should think about going forward. Thanks.
No I would I would keep it at the original we were able to get ahead of a couple of things, but just given everything that's going on we would continue to anticipate the same but we do anticipate it to continue to operate at the same pace, yeah, and that's a 60, which has the six to 60 and you know we said that we think we instead, we installed 72 cameras in Q2 to date that's through today.
60 of them. We're in April in 12 of them. We're in May. So you can kind of that 60 is the right range.
Okay. That's helpful and maybe your final question for me on the cost saving measures again, thanks for all the color on that front I was just wondering is it possible for you to quantify the the benefit from the cost saving measures on a monthly basis. Thanks.
No. We don't have we don't have that number broken out for you Ashish, but you know you can say that Weve you know.
From our from our financial things Weve furloughed, some 30% of our employees the word or 200 people and taken other measures a lot of the things that we're doing to sort of turn off expenses are really shutting down that investment cycle that we had started earlier in this year.
That's very helpful. Thanks, and congrats again on a pretty strong first quarter. Thank you.
Thanks this year.
Thank you.
Our next question comes from Stephen Wall with Morgan Stanley. Please proceed with your question.
Great. Thanks for taking my question and I Hope you guys are safe and healthy.
Maybe just to start out I think she's was sort of touching on the cost savings piece, but if we could talk to the trends I know you guys walk through commercial down I think it had 64% through April and the rental cars down 80 government, you're seeing sort of decline over time, but could you walk through how you're thinking about the incremental and decremental margins on that I know, David you mentioned sort of being cash.
Positive for the year, but sounds like that should move in a straight line, but quarter to date, you're up so could you just walk us through that you see that moving directionally over the course of the year.
Yes, I mean, so you could you can surmise that the incremental detrimental margins within this business are fairly high that you know the commercial services business unit had margins last year of 63% across the entire year, but if you look at the peak season that they had and Q3 of 2019 the margins for six.
The 6% because that top line increased and seasonal revenue flows directly should the bottom line. So there's very little natural caused that comes out of the business as volumes either grow our strength, which is why it was so important for us to take sort of decisive actions to change the structure of the business early on as we saw the bid.
[laughter] falling off in Q2.
That's helpful and maybe just switching gears towards.
Some of the activity side you guys are talking about in terms of winning new contracts that are there any.
Disruptions, whether it's in government solutions, obviously ought to governments.
States have shut down you know unnecessary.
Action.
The governor level are you seeing any disruptions there in terms of getting new contracts awarded or even being a dialogue for though is there anything on the your upside in terms of your expansion plans you just talked through anything you're seeing there.
Yeah, I mean, I think in general what you're seeing with government entities as well, it's what the racks in Europe as a general sort of slowness because of there's still a reasonable level of uncertainty as to what's going to happen by win and each state obviously that we operate and has a different mandate as to how it's going to open back up certainly.
I think that we're actually quite bullish on the opportunities related to photo enforcement going forward because one of the opportunity to keep police officers out of harm's way in sort of personal interaction related to traffic enforcement is one of the things we've always.
A spouse is a benefit of our of our technology and we think that that's only going to get stronger and we would still anticipate Europe happening because of it does generate revenue. It's a program that doesn't exist today, we're still we're still actually planning on a June launch for but I mean, it tend to June launch for our.
Bench rental car company, because they still want to get that operation moving but again all of these companies are in its such a dynamic decision, making environment. We don't want to put anything too hard on the ground because they certainly can move just given the other priorities that they have related to the battling the virus directly.
That's super helpful. I appreciate the comments on Europe, I get to squeeze a quick one and I know you guys kept and actually added to the M&A slide that you've previously included just curious your updated thoughts I know your cash has been rising quarter to date and certainly you guys feel like you're in a good liquidity position with valuations behind potentially more rational around the smart kind of takes.
On today's anything you guys are and what are your updated thoughts on that.
Yeah, I mean, I think we are clearly are we as M&A has always been very important to our overall strategy. We would take that it is more so now and we will continue to look for opportunities given your I think one is I think there's going to be a lot of opportunities on the buy side as we go into the back.
Cap and the year, I think but part and parcel to that I think that financing has to loosen up and right now financing or at least in a more traditional sense as it's still a little tight on the credit markets, but I suspect that that will start to loosen up and we will clearly we I guess, what I would say is we have in no way slowed or stopped our does.
Hi are to continue to do deals and we would like to continue to be very aggressive on that front because I agree with you that valuations have come back into more reasonable frame of mind and they were four or five months ago.
Great I appreciate it thanks.
Yeah sure. Thanks.
Thank you.
Next question comes from Ryan carry with Bank of America. Please proceed with your question.
Good afternoon hope you're all well. Thank you for taking my question I. Appreciate all the color on the trends you see in April in Raleigh realize how difficult to know with any certainty from your perspective does it feel like the worst is now behind you and trends are stabilizing working things and can you get worse before they get better.
I don't know that they'll get worse I feel like it's more of we're probably bouncing around the bar them a bit and ice it feels like.
I don't know that we're big believers in the Oh V shaped recovery I suspect we might be at the bottom a little longer given the you know one if you listen to our rental car partners announcements publicly if you listen to the airline publicly there's sort of anticipating a pretty slower a muted recovery efforts.
Traveled toward the back half of your so we would be directly attached to that but we do believe that overall, we're probably you know April is probably good indicator. The question is how long will April repeat itself is you know TBD, but we think at least a couple more months.
Got it Okay. I was hoping you can discuss just the broader implications on your business in the event to the bankruptcy from what are your larger rental car customers I don't think about impact to rental car days in the event one of those customers does it go under the is it fair to assume those rental car days would be soaked up by a competitor I'm just trying to go.
In a sense of how that yeah, I think both out of your business would be impacted any industry as well. Thank you. Yeah I think the best way to think about it is if you looked at the end of 2019 that the the two publicly held ones had really good years and solid growth inside their businesses because.
They were operating very very well and they were at a just a well to the new mobility Coburn 19 caught them you know just like caught everybody else.
But there was still a fair amount of volume associated with both both public plus the private rental car companies that are out there in the case a bankruptcy we would assume that they would continue to operate and that our program would be essential to their programs because they have to have the ability to pay tolls for their rental car or the for their customers. So that's part one.
To it as a revenue generating a piece of business for them that something that you wouldn't anticipate that they would want to keep going so in the a in a reasonable case you would just say we would continue to operate albeit under the context of bankruptcy in the worst case scenario you would anticipate that does the rental car days are gonna get filled by one of the other two.
One or both of the other two excuse me.
Makes sense, thanks for taking my questions, Yes right.
Thank you.
Our next question comes from Daniel Moore with CJS. Yes. Please proceed with your question.
Thank you good afternoon, and thanks to the color again, David and Trish.
Probably 40% of of our overall revenue stream coming in from variable type clients.
And that includes ancillary revenue associated with it that that revenue can be impacted by a couple of things. It can be impacted by the total number of citations issues. So if those are going down you would expect revenue would go down approximately 30 days later it can also be in influenced by generally we get paid based on paid vacation. So.
As payment rates go down, meaning the number of people, who actually pay their tickets go down that can impact us as well what we are seeing is that some of these municipalities are extending the timeframe for which they can allow their citizens to get paid they understand the economic conditions that their citizens are under it you know so it may not be that this revenue was lost.
Somewhat delayed within the within that cycle, but through the end of March and going into April we had seen some decline, but but not dramatic declines and those in those statistics.
Very helpful. And then Trish just maybe elaborate on that the the uptick in bad debt relative to the implementation of Cecil if you'd explain to previously and I missed it I apologize but.
Maybe a little color it and any impact that that might have in Q2 of the rest of year.
Yes, so so the implementation of C., so which is the new accounting standard associated with credit loss requires us to think a little differently about how we reserve the or create bad debt reserves.
So there are actually reserved at the time that the revenue is generated rather than a specific identification of items later on in in making that change in Q1 of this year. It impacted the commercial services business I think by about it I think at $3.3 million that increase in bad debt 3 million as it was related to see so.
And then there was probably another couple of hundred thousand the impacted on the government solution side of the business, we would anticipate that you'd have slightly higher bad debt as we moved through the year, because we will use the expected percentages of of bad debt for the rest of this year and we did consider that we would have rising bad debt in.
Relation to on the customers not being able to pay because of the economic conditions due to covert 19, so we sort of baked a lot of that into Q1. So you might have slightly higher bad debt as we move out throughout the year, but not to the extent that you saw on this quarter.
They're not not even necessarily has a similar percentage of revenue going forward you took no because a chunk of that go in Q1, essentially we did got it.
Okay.
And then this is housekeeping, but the 200 employees for load where they furloughed as of April one or will you get sort of a partial quarter benefit there.
And most of them more furloughed, we did to set the furloughs so call. It like call. It 130 people in April and another another 70 early in May.
Got it.
I think that's it for me thanks for the color I'm, Good luck and I appreciate it.
Yes. Thanks. Thanks.
Thank you.
Last question comes from David Koning with Baird. Please proceed with your question.
Hey, guys. Thank you and I guess, yeah first of all just on the ticket business.
Do you.
You do municipalities basically just have kind of a set number of tickets. So no matter, how much driving or school buses or on the road or not on the road, they're going to get their revenue no matter, what and so you end up basically being pretty insulated by that or are they pretty sensitive to to traffic declines that you know.
They aren't willing to like change their standards I don't know they.
Yeah, they only get whatever the the cameras take so there's no if theres less being taken then they will have less revenue a there's no guarantee for them no. Yeah said the systems are designed to reduce speed enough there working effectively they should have fewer citations.
After their installed in the you know in the year after their installed and they did when they were first installed so.
So so they don't change from 10 miles an hour over the speed limit to take a picture to five miles an hour over just to get to get more revenue.
No.
[music].
[laughter].
Okay, no that's not something that they normally do they take this very seriously and they're they're looking after their citizens safety.
Okay. It looks like he has dropped off the line at this time.
Okay.
Are there any other questions.
There are currently no further questions at this time.
Okay all right.
You can wrap it up and thank you so much you.
Alright, ladies and gentlemen, thank you for your participation. This concludes the end of the telecasts you may now disconnect. Your lines at this time have a great thing.