Q1 2020 Earnings Call

[music].

Good afternoon, ladies and gentlemen, thank you for standing by welcome to the higher car Inc. first quarter 2020 earnings conference call.

During today's presentation, all parties will be in listen only mode. Following the presentation. The conference will be open for questions.

If you have the question. Please press the star followed by the one key on your telephone.

If you like to withdraw your question. Please press the pound key.

If you're using speaker equipment sleeves lift the handset before making your selections.

This conference is being recorded today may 14th 2020, and the earnings press release accompanying this conference call was issued at the close of market today.

On our call today is how are your car as CEO, Joe for nursery and CFO Scott Broaching.

Now I'll turn the call over to Joe Denardi.

Great. Thank you operator at this time I'd like to welcome you all to our first quarter 2020 conference call.

It's hard to believe that we were two months into shelter in place orders because of the global pandemic of covert 19. This is Dan and unprecedented period of time, but it appears that we're now returning to some sense of normalcy as individual states and municipalities are beginning to reopen their economies, we trust that Oh.

All of you are safe and we thank you for being on the call today.

Before we get started I'd like to take this opportunity to remind you that during this call we'll be making forward looking statements within the meaning of federal securities laws regarding higher cardiac forward. Looking statements include but are not limited to statements that express the company's intentions beliefs expectations strategies predictions or any other statements.

Relating to its future earnings activities events or conditions. These statements are based on current expectations estimates and projections about the company's business based in part on assumptions made by management.

These statements are subject to known and unknown risks and uncertainties that could cause actual results could differ materially from those projected or implied during this call. In particular those described in our risk factors included and our documents that the company files with the U.S. Securities and Exchange Commission. In addition, such date.

Vince can be affected by risks and uncertainties related to factors beyond the company's control you should not rely on our forward looking statements as predictions of future events. All forward looking statements that we make on this call are based on assumptions and beliefs as of today and we undertake no obligation to update them, except as required by applicable artists.

Crushes today will include non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of GAAP to non-GAAP results will be found in our earnings release, and supplemental materials, which will be furnished with our form 10-Q that will.

We filed with the FCC and will also be found on the Investor relations portion of our website.

Now turning to my comments.

Through the first few months and a half of the first quarter, we were on pace to exceed 6 million in quarterly revenue.

Driving this growth was the ever constant demand from rideshare drivers paired with accelerating commercial supply.

But as the Kobin 19 related shelter in place orders began to be enacted by the state.

Good rentals fell from all time peak as rideshare to consumers and stop using O'brien left in those markets.

We responded to this decline by identifying opportunities in delivery service platforms and by rapidly expanding our emphasis on delivery in late March.

The emphasis on delivery included rebranding, our app and web portals, creating new sales talk scripts retooling messaging retraining supports doubt affirming assurance coverages and focusing marketing spend on delivery because of this effort active rentals had grown consistently since the first week of.

April and as you can see from our press release have now established a clear uptrend, there should give our stakeholders confidence that we're nimble and we can continue to grow in any business environment going forward.

At higher car, we have taken measures to manage our way through this environment in order to protect our employees and help our drivers position themselves and this new environment.

Navigating the uncertainty in the market has been a full time job recently.

But these times will cast improve the value our business model as a platform for people and companies to participate in the rapidly changing transportation industry.

We have seen this crisis accelerate the expansion of our business from predominantly rideshare to now rideshare and delivery services.

The combination of states reopening for rideshare and delivery service platform economics remaining strong has the potential to make our business even bigger than we had anticipated.

Throughout this pandemic, we have done our best to keep you all informed with press releases that gave you updates on our progress and on this call will give an update on the state of the business and provide you with some insight into what we think the future holds.

First our top priority has been the health and safety of our staff and everyone who uses our platform. Although we are considered an essential business. We've implemented work from home to keep our staff safe and to minimize the effects of Covidien our workforce.

At the same time my leadership team is taking action to solidify our business to make sure. We're set to come out of this crisis stronger than before we have sufficient liquidity, we have a highly variable cost structure. We have an agnostic platform that allows our drivers the ability to put it in this crisis and multiple levers.

As to pull to reduce fixed ops burn.

[noise] halfway through the second quarter, our revenue is growing week over week, and we have been able to reduce operating expenses. What has become clear is that regardless of what happens to the economy at a macro level higher cars expansion into food and package delivery has allowed higher to fair better than that 80%.

Right sure decline our TNC partners are seeing in their business for Q2, we expect higher to be down less than 15% quarter over quarter and our commercial partners are beginning to commit to adding meaningful numbers of cars to the platform. This means we'll be back to record high rental days by the end of this call.

<unk> as well.

We continue to see strong demand from drivers seeking vehicles for delivery because delivery services are heavily supplementing rideshare driver income during this slowdown.

We had over 1100, new unique drivers pick up a car in the month of April.

Which when paired with increasing customer retention rates is helping revenue recover in the second quarter.

As we move forward and state start to reopen we believe rideshare driver demand will also start to pick up.

A recent survey by Hoover found that 90% of customers expect to take a ride in the next 90 days, which points to a full recovery and ridership and bodes well for hires business.

This recovery trend combined with a number of states reopening will meet that rideshare, well increase well delivery economics remain strong, creating a perfect tailwind for higher cars business model.

We also received some help from the recently passed cares act in the form of a patent protection program loan for of $2 million.

This loan has predominantly helped us maintain our core employee base, which was the intend to the program.

There has been much discussion over the P.P.P. alone in terms, especially for the larger public companies with access to capital credit lines in excess cash reserves, but we're hopeful that the rules under which we applied remain because this loan has been a key help during this difficult time.

And any of that we're prepared our company to whether the current storm.

Operationally, we moved to dramatically increase our cash runway by reducing fixed and variable costs during the quarter, including I hope to new hiring and the renegotiation of a number of vendor contracts.

Believe Q3, we'll see an even larger reduction in opex as a full extent of the cuts will be realized.

Ultimately this continued growth at reduced expense levels will allow us to get to profitability in 2021.

Well continue to monitor or <unk> and adjust spend accordingly, with an eye toward profitability.

Now turning to cost of sales a big component of cost of sales has become our insurance reserve in physical damage payments since we adopted the fccs suggestion to move these expenses up the income statement.

In Q1 insurance premium paid was approximately 1.4 million and claims payments were approximately 1.6 million.

We are currently renegotiating, our annual auto insurance program and expect to secure a reduction in our national insurance liability premiums.

We are analyzing pricing on a state by state level and I'm excited about state by state pricing because it represents the first staffing getting 20 more granular ZIP code level pricing, which is then the goal of our data collection and insurance program for a long time.

We haven't had the technology to implement this sort of schematic in the past so kudos to our team that has been building out the technology that has now enabling this capability today.

On the claims payment front, we have taken multiple steps to enhance our driver risk underwriting model, including everything from optimizing our background check criteria.

Introducing a telematics SDK interwrap outsourcing the billing and payment of physical damage claims and new fraud investigation tools that were implemented in Q1.

Endorsed scheduled to be implemented in Q2.

All these changes should start to materially decrease the cost of claims going forward and help us improve margins. The plan is to optimize our claims expense relative to active rental growth through a combination of initiatives both on the cost side and expense recovery side.

Over time. These measures should result in a profitable business model with insurance a part of our most important value proposition.

New cars on the platform our sourcing predominantly from existing dealer groups as most new franchise dealers have seen slowdowns from registering and plating cars because of Dnbi closures.

However, we have begun to see a pickup in the partnership discussions with new and existing partners that were dormant for the past eight weeks coming back to life.

We expect to be announcing new partnerships in the coming weeks as fleets and auto dealers are stepping up to make sure they have relationships in our markets as the country reopens.

It is important to note that as covert was emerging our industry was already experiencing large disruptions with many of our major direct competitors.

These competitors have disappeared due to high cost structure business models that leverage high cost rentals and unwieldy car lease ownership models.

The auto industry is by enlarge a high cost structure industry with a need to fund inventory and pursue large transactions that outside of home purchases are some of the largest purchases at family can make.

For this reason large economic dislocations can have an existential consequences for companies like Hertz fair and Avis.

We're currently seeing this play out in the market today.

At the same time this has created opportunities for auto dealers and Oems to take advantage of these opportunities and set up for the future of transportation as a service.

That future will continue to see consumers rideshare drivers and delivery drivers seeking to rent rather than on their cars off convenient service oriented low cost platforms like higher car, our low cost flexible platform allows a turnkey solution to market participants to gave flexibility and convenience.

As to participate in this market.

This is part of our long term plan for our company and part of our strategy that will expand our company to integrate our services and platform into the dealer software platforms for both used and new cars.

This will position us for the long term as a mobility as a service company and will allow many participants in the market to integrate into the car sharing a mobility market as it grows in changes.

With that I'd now like to turn the call over to Scott Roce, Our Chief Financial Officer to walk you through some key financial details from the quarter Scott.

Thank you Joe.

After reaching an all time high of more than 20000 weekly rental days during the first full week of March.

We saw a dip of approximately 30% over the next month to approximately 14000 weekly rental days due to shelter in place rules.

As we diversified our business into other gig economy service providers like food and grocery delivery through late Q1 in early Q2, we started to rebound the first full week of April.

We have now seen an uptrend from our floor in early April and pass back over 17000 weekly rental days for this past week ending May 10.

So we are now halfway back to the peak of 20000 weekly rental days, we reached in early March.

With the improvements to our expense structure, we had been working on during the first half the year.

Even for us should be approximately 30000 weekly rental days and as Joe mentioned, we hope to soon be back over 20000 weekly rental basis.

For the three months ended March 31st 2020, net revenue increased 65% to $5.8 million when compared to $3.5 million for the equivalent period last year.

[noise] up 20% sequentially from $4.5 million in the prior quarter.

This revenue increase in the first quarter was primarily driven by increases in net rental days, which grew 16% to over 229000 days in the first quarter.

From a 197000 days in the fourth quarter.

Cost of sales increase for the quarter ended March 31st 2020 to 3.6 million from 2 million to prior year.

And includes approximately 1.5 million in claims formerly in operating expenses as well that additional insurance reserves due to higher rental days in the quarter.

As we discussed on our last call we have been working with the FCC as they asked us to consider classifying insurance claims payments into the cost of goods sold above the gross profit line.

Versus the 28 key classification of insurance claims payments into general and administrative operating expense on our income statement.

This has recently become an industry standard within our transportation peer group.

For companies like lift Hooper and hurts.

This changes EBITDA neutral and has no impact on previously reported earnings as we are moving the expense from below the gross profit line to above it.

Reducing both gross profit in operating expense equally.

Gross profit for the first quarter ending March 31st 2020 was $2.2 million up from $1.5 million in the year ago period, ending March 31st 2019.

Gross profit margin was 38% for the first quarter.

Down from 43% in a year ago quarter, ending March 31st 2019.

But consistent with the prior quarter ending December 30, Onest 20, not you.

On a going forward basis as a result of improvements to driver verification insurance and merchant processing, we expect our gross profit margin to range between 40 and 50%.

Operating expense increased to $6.3 million for the three months ended March 31st 2020.

3.2 million in the same period the prior year.

This was primarily due to increased marketing and sales expenses as well as general administrative expenses to support higher levels of revenue.

$800000 of this total in the first quarter was due to non cash stock based compensation expenses approximately half of which was onetime in nature. So cash operating expense for the quarter was approximately $5.5 million and we're working to reduce this to under 5 million.

$1 per quarter.

Payroll is our largest single expense item and was originally budgeted approximately $10 million for 2020.

With a hiring freeze we put in place in March as well as some staff reductions. We currently expect to reduce that by approximately 25% and save $2.5 million in 2020 expenses.

Our adjusted net loss increased to $4.1 billion or 25 cents per share for the three months ended March 31st 2020.

From $1.7 million or 14 cents per share in the same period the prior year.

But decreased from $5.1 million for 37 cents per share sequentially from the prior quarter ending December 31st 29 key.

Adjusted EBITDA was $3.2 million after the noncash items mentioned earlier or 20 cents per share.

Improving from $4.6 million or 30 cents per share the prior year.

Cash totaled $7.8 million on March 30, Onest 2020, an increase of $1.5 million from $6.3 million on March 31st 29 key.

We received a 2 million dollar PTP loan from our primary banking partner JP Morgan Chase, which was originated on April 13 Twentytwenty.

Cash is currently higher than it was on March 31st and it's still in excess of $8 million today.

We are using the proceeds of the loan as intended for maintenance to payroll for less than 100 employees.

We expect to spend more to be 75% of the loan proceeds from mid April through mid June on payroll expenses and so it is unlikely that this loan will ultimately be forgiven.

Now I'd like to turn the call back to Joe to wrap up.

Great. Thank you Scott so in summary, despite an unprecedented environment, we're positioning ourselves to continue to grow rapidly and this growth is fueled by macro tailwinds pushing individuals 12 towards a new future and it's not just mobility, but also last mile delivery.

Sorry for goods and services.

We see higher car perfectly positioned to enable drivers Oems auto dealers and fleet operators access to the transportation as a service opportunity and for all to earn revenues from participating rather than disrupting the traditional players.

Feedback from our OEM and dealership initiatives has been positive. So we're doubling down on efforts to build scaling capacity into the platform to accommodate our vehicle suppliers.

Driver demand continues to be robust and providing consistent value add experience for our driver customers has been a key focus.

To conclude I believe a higher car continues to push toward a positive inflection point, which will be a bit slower now to do due to coded, but we continue to move in a positive direction and I look forward to continued operational execution and shareholder value creation over the long term.

With that I'll turn it over to the operator operator.

Thank you Sir we will now begin the question and answer session. As a reminder, if you'd have a question. Please press the star followed by the one key on your telephone.

If you would like to withdraw your question press the pound Keith.

And if you're using speaker equipment, you will need to lift the handset before making your selection.

Please standby, while we compiled the Q and a roster.

Okay.

And our first question comes from the line of Mark Argento with Lake Street capital.

Joe is Scott.

So the quarter to spread environment.

You talked a little bit I know you <unk>, you mentioned that you're starting to see a bounce back in terms of utilization.

Yes, absolutely.

The market you're exposed to already back open in particular, Georgia.

I think Texas as well, maybe you could talk to what do you kind of what are you seeing as these states come back online.

Got a behavior you see in in terms of isn't a quick snapped back to take a little while the bill maybe anything anecdotally there that would be great.

Yes, thanks, Marc good to hear from me.

Georgia is a great test case, because you. They recently started to reopen the state was at approximately three weeks ago or so.

Pre co vaid.

California in Georgia used to kind of compete on our side for that number one spot in terms of active rentals on the platform, but with Georgia Open and California is still under the shelter in place orders in Georgia is really the clear front runner right now rental days and George are only off about.

6% or so from the peak versus the broader national average of approximately 15% so.

That points to a V shaped recovery in our business is stay start to reopen.

And do you think I know you had mentioned in her prepared remarks 1100 news.

Drivers I believe in April.

So as unemployment and a lot of people want to work in service economy jobs.

Shut down.

Yeah, I think that you're starting to see shift for these people are migrating into into onto the platform.

Get access to vehicles to drive in general.

[music].

Yes. Good question I mean, we're certainly seeing an influx of drivers onto all delivery platforms.

Yes, Hooper each business was up 89% in the month of April So there's a significant growth there, we recently announced partnerships with the city of L.A. at Atlanta.

With that of a unique link.

To our website placed on their cities electronic jobs boards I think a percentage of 1100, new unique drivers certainly came from that pool of unemployed workers.

So we're monitoring the flow of lead traffic from those sites.

Because I think it'll be a good proxy for us to use to definitively answer that question.

Yeah. We're also pursuing some partnerships with seasonal workers and furloughed workers and hopefully we'll be announcing those partnerships in the coming weeks as well.

So.

There's certainly we're doing our part to help in this environment and the situation.

That's helpful. And then last one for me I know historically getting access to cars.

Growth.

This environment, it's not sure absolutely correct.

Taking any more vehicles.

Bankruptcy.

I have to assume there's a glut.

There potentially available.

You guys taken advantage of that and.

Okay.

Yes.

And hopefully continue to accelerate the daily average.

Average utilization.

Yes.

Yes.

So.

What we're seeing I guess, what's interesting and I kind of mentioned this in the prepared remarks, a little bit is that we're starting to see traditional rental car companies and peer to peer fleet managers coming onto our site as well yeah rental car guys are getting crush right now in this market.

You mentioned hurts, but but avis and some of the peer to peer car sharing sites for leisure as well and so.

Yeah, the rental car players specifically are looking for opportunities to get their inventory utilized.

So we're providing a bridge for them to be able to do that so I'm, hoping will also be able to announce some of those rental partnerships relatively soon as well.

Great. Thanks, guys.

Thanks Mark.

Thank you.

Our next question comes from the line of Mike Grondahl with Northland Securities.

Yeah. Thank you guys.

Anything else to call out on the competitive environment.

It sounds like that has changed.

Radically since last fall.

When you say you're competing with today.

Good good question, Mike and not good to hear your voice again, the you know right now there isn't a lot of competition out there.

Yes Fair has fair has disappeared from the market hurts us having their travels avis is out there are renting cars as well, but there aren't a lot of competitors right now and so we are we're really taking advantage here of being able to capture market share from.

From both sides of the platform well from the driver side, where are you starting to see a lot of delivery drivers come on but also from the supply side and that's.

A lot of the dealerships are coming on a lot of the rental car companies are coming on as well as the the peer to peer side as well I mean, we're capturing a lot of market share from kind of those traditional rideshare for leisure platforms, because the vacation and leisure market has been absolutely crushed and so from a from a lot of that.

Peer to peer owners that were predominantly on those sides have started listing on our platform and because we're driving utilization in this economic environment. So.

Yeah, its greenfields right now for us.

Oh, that's good.

In terms of.

Well that you've made the last two months give or take a little bit.

To delivery food grocery package.

Do you have any rough estimate of youre cars being for that.

You have rough rough estimates out there and they will be a chance to bring in Scott here, but in terms of in terms of what we're seeing it was there was always overlap in the driver base. We always had drivers that were predominantly driving for ride sharing but in a in the surveys that we had done in the past.

Something like anywhere between 15 and 30% of those drivers were also driving for some form of delivery.

Yeah, we have we can't specifically track that but through some of the through some of the surveys that we've done recently, we're seeing a larger percentage of those drivers driving for the delivery services and it's not that they're not driving franchise as well. It's just there supplementing their income.

On the supplementing the income wall Rideshare is down.

But as I mentioned that Georgia is a great example, or test case, where and actually seeing Georgia bounce back.

Yeah, I think I'd just add to that Joe I think we we had just done a survey. This earlier this week in the Atlanta market in particular and.

Reached out to a number of our drivers and basically what we're seeing in that market was that more than 50% of their activity was actually for delivery versus ride sharing so it's not a precise number but it definitely gives us an indication that a significant amount of the activity out there right now.

Has shifted to delivery side.

Well, there and that's helpful.

I would add one more point in terms of economics, which I think we've made this point in the past switches driver behavior is really driven by the economics of the gig economy. So when ride sharing is paying now that's where those drivers are driving when delivery is paying that's where they are driving so yes. We.

I have anecdotal evidence right now showing that delivery is actually paying better than rideshare economics pre cobot. Yes. For example in some markets were seeing Instacart earnings from drivers fine upwards of $3000 gross per week.

First is $1700.

For a full time rideshare driver in Los Angeles pre Covance. So.

I think that.

I think that that's probably driving a lot of it as red share starts to come back and state start to reopen if you're going to see more drivers China transition seamlessly right into rideshare part of the beauty of the platform. The agnostic nature of the platform NAF, we're providing the tools for those drivers to earn its up to the driver to choose.

Which platform he wants to use.

Got it didn't just lastly, you kind of mentioned.

Partnerships and those of.

Picked up a little bit or at least your discussions.

When I think of the.

Via Liberal pool of partnerships I.

I think of the OEM.

Very dealer groups the team sees.

But it but it sounds like.

Maybe rental car companies.

And even sort of leisure rental car companies or maybe to newer bucket is is there any other bucket of partnerships that we should be thinking about.

Well so the way the way I bucket. These partnerships is driver driver side partnerships and owner said partnerships.

On a on the driver side of things you that the partnerships with the local community job boards. It appears to little early to to say there effective but it does appear that those partnerships are bearing fruit for us in terms of higher conversion rates et cetera.

From driver leads into driving a vehicle.

On the on the owners side, Yeah, I would bucketed into kind of our commercial our commercial.

Activities now so we have over 400 commercial accounts now and the bulk of that growth is being seen in the in the five core geos that we have.

A commercial cars right now represent over 80% of available and rented inventory on the platform.

And those partners are starting to commit to adding meaningful size there.

Because this environment is great for this type of business right be dealers can buy inventory from auction at bargain price is right. Now so we have the dealers going out and buying hundreds of cars warehousing them on their lots and simply because they know the value of those cars will hold in the long run so in that in that.

Time period of the long runway called the longer on what better use case, then to throw them onto our platform and get them cash flowing in the short term. So the primary use cases still is still the commercial the dealership.

Avenue, but then you have these other avenues that are starting to or other channels that are starting to come online specifically in rental.

Rental and then larger peer to peer fleet owners, who.

Our moving those cars from traditional leisure rideshare platforms over to over to higher car.

Sounds good okay. Thank you guys.

Thank you and as a reminder, ladies and gentlemen, if you have a question. Please press star one on your telephone once again, if you have a question. Please press star one.

And our next question comes from the line of Jack vendor Art with Maxim Group.

Hey, guys. Thanks for taking my question.

So this strong revenue result for one Q and rental days beginning to accelerate these are all good things to see.

Kevin tougher question I have for you is on the operating expense line.

Opex was much higher for this quarter the night than I was expecting especially GNS and then I'm. Just wondering if this type of elevated level is expected to continue in the near term or just your thoughts on where you see GNS and then spend trending into Q and then for the remainder of this year.

Yeah, maybe I'll take that one Jack and could you hear from you.

As we as we talk a little bit on the call I want to point out that there was kind of a significant amount of non cash items.

In the quarter some of it was a onetime and some of it was kind of regular.

Employee stock based compensation. So when you adjust for that the cash if you will operating expense was about 5.5 million for the quarter and as we talked about we're.

Trying to reduce those numbers pretty aggressively going forward. So we're going to see some of that here in the second quarter and then I think it's Joe mentioned in his.

Back to see even more.

In the third quarter. So that's attacking kind of the the fixed costs that are in Opex and then also.

In the cost of goods sold line, we have a couple of items on the insurance the merchant processing side of things that are that are variable in nature. So we've already seen a pretty dramatic reduction in knows as the days have come down over the last.

Month. The asked so those are the things that we're really doing to attack that and reduce that burn going forward.

Okay. That's helpful. So if I heard that correctly, though that would imply that you'd expect opex to in Q2 to certainly be reduced from Q1 levels.

Yeah, Yeah, that's a fair statement and again its I think you need to look at what's the that cash.

Math is being paid in the quarter and then certainly we're working hard to reduce that I think.

You know when you when you look at it from a weekly revenue perspective, you know if we can get annual Opex under 5 million a quarter or 20 million year, it's just going to lower that breakeven point for us. So we're really focused on achieving that.

Okay, Great and that's a nice segue into my next question kind of related to just projected outlook. Joe you mentioned your target to reach profitability in 2021 and then.

Scott I believe you mentioned in your prepared remarks that will assume the average weekly rental days of about 30000 rental days per week. So.

I can likely back into what that implied revenue level is a.

Can you talk on maybe what you expect from a gross margin level, what what's embedded there as well as the opex portion what kind of levels.

Of those expense items are embedded in that.

Joe and then you feel seat feel free to fill in any blanks, but you know as we talked about there are a couple of items in the cost of sales that we think we're going to be able to reduce pretty dramatically.

So our expectation is that on a going forward basis gross profit margin is going to be.

In the 40% to 50% range. So we're working hard to do that men.

As business starts to come back and dealers open up they'll also be additional opportunities for incremental revenue, that's very high margin to to support that growth so that.

That's the key in terms of where we see GP on a going forward basis, and then yeah from a revenue perspective.

We peaked at a little over 20000 weekly rental days the first week in March and you know we're about halfway back there as we stand now kind of mid may.

So our expectation is if we cross back to over 20000 rental days than that increase.

About 50% on the rental days to a weekly rate of 30000 that should be breakeven for us and again the faster weekend reduce any non essential opex.

The quicker we can get to breakeven, but if you do the math on that Jack 30000, a weekly rental days at.

In average net number of $25 a day is going to get you to $750000 a week.

And that would get you to kind of a 38 40 million dollar breakeven net revenue number.

Okay, Great and then just one more for me.

I wasn't sure maybe I missed it but last quarter you guys.

We're talking about utilization levels.

Sure typically around it but we are on the mid 80% levels.

Commercial customers, having a higher utilization.

Last quarter, I think they dipped to about 70% or so at the time in the last earnings call.

As that that specifically that utilization level is that began to rebound.

Yes.

Jack one going back to that last question I would just add on the and the GP line. There just to look at this holistically the biggest the biggest.

Expensing in cost of sales as the insurance piece and so I was looking I was looking for.

Anecdotal than the market and I ran a kras geico a great geico is going to be offer a 15% reductions on all.

Payment premiums for customers that's over I think give back of about $2.5 billion because of the reduced driving due to cold. It. So I think thats, a clear indicator of last accidents or less drivers on the road due to shelter in place.

So that's going to really translate into a lower cost of insurance as well. So just wanted to make that point.

Going back to utilization.

With utilization, yes utilization was down.

It was down because we had done that call kind of in mid April so is it the major coded effect.

Reduction in utilization of the vehicles on our site had already had bottomed at that point and then we're also we are starting to trend.

And so utilization has started to track up.

Over the past three or four weeks, so actually more than five or six weeks.

I don't have the specific utilization in hand, right now, but it's certainly tracked up as we've started to see more active rentals and increasing rental days on the site.

Okay fantastic and thanks for that added color with Geico, it's great anecdotal point, that's it from me guys. Thank you.

Thank you I'll now turn the call back over to CEO, Joe for NRT for closing remarks.

Great. Thank you, everyone and stay safe out there and we will speak to you next quarter. Thank you.

Ladies and gentlemen, this concludes todays conference call. Thank you for participating and you may now disconnect [noise].

[music].