Q2 2020 NIC Inc Earnings Call

Good day.

And I see.

Earnings.

Today's conference.

And at this time.

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Good afternoon, and welcome to <unk>, and I see earning call the press release for Nic or anything else, but what is your 30 minutes ago.

Our earnings release is also available on our corporate website at Www Dot dot.

Dot com forward Slash Thermodox relations you may recall are headquartered that eight or nine four or three four fixate and we won't email the information to you.

Joining us on the call today, and I see C O Harry Herington feed costs.

I think chief financial Officer.

Ballerina reading of our cautionary statement regarding forward looking information, our CEO and CFO will do in her prepared remarks.

They will open for questions.

These statements made during this call that do not relate to historical or current that constitute forward looking statements.

These statements often they drop the company's potential financial performance for the 2024 year for future fiscal years.

Net production fix talked at length of contract churn statements relating to the company's business plans objectives and expected operating result.

Statements relating to potential new contract or renewals statements relating to the company's expected effective tax rate.

Statements relating to possible future dividend and share repurchases.

That's really the ongoing impact the cobot 19 pandemic other possible future events.

Being potential acquisition and the assumptions upon which the RV.

Forward looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which may cause actual results could differ materially from the forward looking statements.

These risks include regional or national business, political economic competitive social and market condition, including various termination right at the company in a partner the ability of the company trend new existing contracts in whole or in part and to sign contracts with new federal state and local government.

Before the impact of potential information technology, cyber security or data security breaches are considering.

The company's ability to identify and acquired suitable acquisition candidates.

After successfully integrate any acquired businesses and the impact Kobe 19 pandemic. They have like the band for the company services as well that government agency partner <unk> workforce and the broader economy.

You should not rely on any forward looking statement I got prediction or guarantee about the future.

A detailed discussion of risks and uncertainties that could cause actual results and events could differ materially from such forward. Looking statement is included in the steps entitled risk factors and cautions about forward looking statement.

Companies. Most recent forms 10-K, and subsequent reports filed with RBC.

These filings are available he sees website at www Dot I'd do you see Oh.

Any forward looking statements made during the call, but only at the date of the call except as may be required by applicable law. The company undertakes no obligation to update or revise publicly any forward looking statement. What are the result of new information future about or otherwise.

Now it is my pleasure to turn the call over to Harry Herington, and I see Chief Executive Officer, and chairman of the board.

Thank you Karen and good afternoon, everyone I would like.

Sure County to not exactly sure recently joined our team.

Okay.

And it is important.

She's enhanced marketing and communications.

[noise] that's companies across our country [laughter], what's the ongoing totaling 19 crisis.

Sure.

Right.

Oh boy risen to every challenge [laughter] [laughter] overriding support for state local and state partners.

[laughter] [laughter] [laughter].

[laughter] <unk> partners.

Diligently to continue doing great [laughter] businesses together.

Turning to help mitigate still I'm, sorry, [laughter] over 95 million business, it's interesting to see the central government online [laughter]. That's just don't get me smokers Greenberg Janney.

And the first time here, we responded to be unprecedented and ever changing.

Right.

Rapidly developing digital solutions for our partners.

Since then or even more than ever and healthy <unk> citizens and businesses quickly safely.

Well, we remain cautious as we moved the how does tend to get people. We're pleased with our Companys financial stability and the success you changed much core.

An example out and I see has truly innovative to create institutions.

Actually addressed.

And that is our new work token testing partnerships.

Correct.

I'm excited to announce philosophy through a partnership.

Forged pretty markedly.

Okay.

Well, it's a turnkey understandable.

Testing huge getting [laughter], it's definitely that's was clinical testing logistics drill well leverage comes to go.

[laughter] and [laughter] persistent engagement assessment, especially purposes.

Hello.

Yes leader in providing.

Well the services, it's like efforts for that recovered nicely.

Richard interest Ginny.

With various.

She way from cheers.

Supports both private and public sector clients [laughter], Yale New Haven.

NASCAR lows interest in Kansas.

No well supplied credential clinical professionals, just ask the testing kits, which has changed progress can you get hot spot Leach all units have changed.

Okay.

What's the ability to procure and what Mr. test and open some vaccines.

<unk> results can be quickly as can be provided your individual entered government informants required by state and federal health systems.

Great.

Contact tracing programs.

Okay, and the leader in managing to pursue changed Corporation.

Clients, including the U.S., you're forced her national Guard, Chad like sports in General Motors, Where's the best ranging from smokers to schools.

Thanks, Harvey responsible from logistics and supply instead of your whole testing is such a sprinter vans automobile these insights.

Leveraging our expansion current experience. The trail partnership was one of the just last week right. Two times you know she gets Florida. Fortunately you guys are true solution was also selected as one of only two vendors approach provides nice seems to actually call center and test questions or it's just state agencies local government them yourself.

Educational institutions and large private businesses across state of neutral.

All these opportunities could generate meaningful revenue upside is true preliminary provide financial details you can get spends and they have not been considered archives.

Probably more clarity third quarter results.

I'm very excited about this partnership directly lives within our decision, making essential services. In this case final Cobra 19 testing more accessible persistence cross country.

Turning to our traditional business opportunities I'm also excited to announce the state of Iowa is returning to the Nazis family as our newest stay enterprise.

After a competitive bid process for the state government application RV, we were chosen as a winning better to provide comprise different government services through state.

We previously worked with the state of Art works for 15 years for contract concluded in 2017.

Oh and working with the state consecutive nights you make sure it consolidates its digital services into a unified experience I once.

Yes, we are still in the process.

Contract, we will limit our comments on our.

We are thrilled that doesn't work and to partner again with Hawkeye States extension digital government for many years.

Another important program continued to gain traction is a pandemic unimportant solution and a common wells, Virginia on a last earnings call. We mentioned our team in Virginia began providing a suite of services, it's been able to Commonwealth.

The process and I'm President number.

Unemployment.

Consistent claims.

We contracted with a national call Center lives partner to quickly got hundreds of call center support personnel.

We deployed a mobile friendly solution.

Centric to go platform, Virginia residence, and particularly for Jay economy workers, we placed on trying to <unk>.

We recently delivered enhancements to improve the building for agency personnel to research and result claims which in turn allows for faster claims termination. So there was citizens and needing assistance.

She has received rave reviews from end users and has been instrumental in helping to stay delineates. The front end bottlenecks driven by the unprecedented volume of unemployment claims.

Got it.

It was a critical solution this past quarter familiar NRC into managed services.

90, more than 1.8 million Americans nationwide now you just jumped to go digital services, but now include performing assessments of the need for Cobot 19 test learning about testing sites and navigating unemployment benefits impacting works during the quarter outdoor experienced a 44%.

Increase and unique users we expect usage will continue rise as we introduce even more tensest government services proved up together.

In the quarter and I see also received three state enterprise contract extensions, including two year extension, and Pennsylvania, and Arkansas and a one year extension in South Carolina, we're proud to earn or partners Trust and we'll continue to work hard liver digital government services.

And businesses.

So mergers as you ministers exercise through last six month extension or contract Cabreva Preemployment screening program.

2021 offs, we currently expect DFM CFA judiciary rebid RPC and we're excited about the opportunity continue providing the highest local service to the FM MPS I and the U.S. trucking industry for many years.

Another exciting development is Nic strategic partnership with Pfizer alone cannot see to help our government partners served.

Any other banks population he's going to cash payment solution calls check free play.

[laughter] bikes are agent network and I see gain access to more than 30000 secretary locations across the country, a walk in payments or government services, such as parking tickets.

Okay seems quite a cash payments validated payers remains the fastest ready to mistake and then providers payments.

Jason information for Nazis payment platform.

Although the first half of 2020 has brought unique challenges for our country.

Proud of how Nic has responded to our government partners and I mean credibly excited as we continue to expand our opportunities where that I'm. Please to turn the call or the Nic Chief Finance officer, Steve jobs. It.

Thank you Harry.

Second quarter of 2020, we earned 20 cents per share compared to 21 cents the prior year quarter.

Earnings per share in the prior year quarter was higher by one cents due to the release of tax reserves, resulting from the completion of an IRS. Examples of our 2016 federal income tax return, which resulted in no changes to our previously filed richer.

Well, it's a core results for the quarter same state enterprise revenues grew 4% year over year.

We had a very weak start to the quarter as the nations full mitigation response to the band pandemic chipped in towards the later after March.

Extending through the month April and part of May.

This caused unprecedented revenue declines in key revenue segments.

Adding driver history Records and several interactive government services in our state enterprise businesses.

Well the federal three employment screening program.

Creation dot Gov, and certain payment processing related services in our software and services businesses.

On a monthly basis.

Total same state revenues were down 10% in April quite possibly the worst month in our company's history from a year over year same state grow standpoint.

However, we are covered decently in may with total same state revenues up a modest 4%.

We saw a significant reduction in June with same state revenues up and I topping 20% with improvements in several key revenue growth trends as brick and mortar government offices complying stay at home orders began to slowly open.

Deadline extensions branded by Dsvs to renew auto registrations and driver's licenses began to expire and the country, including our National Parks started to open back up for business quite rapidly.

While it's difficult to quantify we believe a good portion of the rebound we saw in June.

A catch up of deferred revenues from the softness we experienced in March April may.

In addition.

Pandemic and the need to socially distance pushed more businesses and citizens online interact with government digitally instead of in line and government offices.

Yes, I'll break down the major components of same state enterprise revenue growth quarter, including monthly revenue trends.

Thanks, Dave transaction based driver history records or DHR revenues were down 12% for the quarter on a monthly basis same state DHR revenues were down in unprecedented 15% in April in 16% in may, but only down 5% June what we saw the country and the broader economy.

Moving back up.

This trend line is certainly heading into right direction and while our current forecast for the year has DHR revenue softness most pronounced in the second quarter.

Currently anticipate continued weakness in DHL volumes compared to historical levels.

At least the remainder dear.

This service is more closely aligned with broader U.S. economic conditions in certain industries as we discussed extensively last quarter.

Next same stay transaction based interactive government says is for I guess revenues rose, 5% for the quarter driven by revenues from the new bottling and registration system in Wisconsin, which launched in the second half of last year.

Hi, or D.N.V. related revenues for auto registrations and driver's license services across several states as more citizens migrated online to conduct piece transactions as result of couldn't pandemic.

And a particularly strong quarter for outdoor recreation revenues, which grew by nearly 40% as people since the great outdoors in gross to hunt fish and socially distance.

Offsetting these bright spots for the quarter, where revenue declines from over an extended payment processing and tax filings as several states granite extensions to pay various taxes.

In addition to revenue declines from data access services used for hiring and background checks such as limited criminal history or record searches.

Vital records, such as person tickets and online leased supports.

On a monthly basis for the quarter I guess revenue growth was a tale of two extremes.

Same state Digest revenues were down 14% in April as a nation was locked down and full mitigation response to the pandemic.

In May same state by Gs revenues recovered nicely up a respectable 8%.

Then in June same C.G.S. revenues rebounded sharply running a phenomenal 25% nearly every major category advice, yes revenues see sizable increases.

As we stated last quarter many of our idea services are not discretionary we believe a significant portion of fiveg as transactions will still occur this year, but of course will be deferred to future periods. Due to recent government office closures and extensions of deadlines for certain GMP related registrations and tax filings, resulting.

For the pandemic.

Again.

So a good portion of the rebound we sell in June was a catch up of revenues differed from March April and May, but admittedly tiny in this rebound the sooner and its magnitude was greater than we previously projected given how quickly after the nationwide lockdown.

Good States began to open back up for business.

We do not use this level of growth as a new normal going forward and we have incorporated more modest growth projections into our forecast for the rest of year, which I'll touch on at the moment when I discuss our guidance.

This is despite the slow ideas growth trends, we're seeing through the first three weeks of July.

And in part by the expiration of extended tax filing deadlines.

And continued strength from DMG related services for auto registration and driver's license services among others.

Moving on same state revenues from development services increased a 130% or more than $3.2 million from the prior year quarter, driven mainly by pandemic unemployment services, we have they provide a common wallet, Virginia as Harry just discussed.

Currently expects advisory services for the remainder of the year and possibly beyond depending on the duration as verity of the pandemic and the related impact on the level unemployment claims Virginia.

One last area I wanted to touch on before I move on to software and services revenues is our ongoing efforts on the outdoor recreation fraud in Pennsylvania in Illinois.

For the quarter, we incurred about $600000 a state enterprise costs to implement our outdoor recreation platform in Pennsylvania, and Illinois compared to $700000 in the prior year quarter.

Earlier this year, when we announced our 2020 guidance, we expect to launch the Pennsylvania around the midpoint of this year, However, we announced last quarter and because of the lack of state resources. During the call. The 19th endemic state requested we move the launch date to September.

For similar reasons to state has again or questions or to delay the launch has given us reasonable assurances that January 2021.

We'll be a for lunch day.

Thus, we will not recognize any corresponding revenue in 2020 versus our previous estimate of approximately $600000.

However, because the adjustments we've made to our project timeline and development resources, we expect to mitigate much of the operating income impact for the remainder of the year.

Moving on software and services revenues declined $900000 or 5% from the prior quarter driven mainly by a decline in volume from the federal pre employment screening program.

We spoke at length last quarter about PSP and our expectation that the revenue softness from the service would be most pronounced in the second quarter two the impact of the pandemic trucking industry.

I will not cover any of that ground again on on this call other than to say PSP revenues for the quarter came in right, where we expected down nearly 27%.

On a monthly basis.

PSP revenues were down 28% in April 35% in May and 16% in June when we saw the trucking industry start to slowly improve as the broader economy started to open back up.

Through the first three weeks of July PST revenues were down 12%.

While the trend line for PSP is improving we currently anticipate revenues to decline by 10% to 15% on a year over year basis in the second half of 2020, given the ongoing effects of the pandemic the broader economy and the trucking industry.

Yes, I'll cover recreation Dot Gov, which was a pleasant surprise for the quarter compared to our expectations just a few months ago.

Sure It last quarter that we saw a year over year downturn in recreation Dot Gov revenues of over 20% in the month of March a national parks and campgrounds began to close in order to eliminate crowds and enforce social distancing.

This trend continued in April this revenues down 64%.

But then slowly but surely we saw the National Park started to reopen in May fall in the lead in several states.

Which helped stemmed the revenue decline and resulted in flat revenue growth so much.

In June any more national parks insights reopened and experienced an influx of visitors seeking a safe place to experienced a great outdoors and vacation for the summer driving a 94% increase in revenues for the month.

Well, we don't expect the state spectacular leveled roads continue the second half a year, we are hopeful the national parks insights remain open assays destinations during the endemic and that recreation Dot Gov revenues have a shot at approaching levels. We saw the second as last year.

For the quarter, Richard Recreation Dot Gov revenues were up an impressive 15% from the prior year quarter.

One last housekeeping items, the software and services businesses.

Revenue from our Exco prescription drug monitoring business and licensing solutions business, which we acquired in May of last year contributed a combined to $900000 in revenue during the quarter compared to $400000 the prior quarter.

Moving on the operating expenses.

For the quarter total operating expenses, excluding depreciation and amortization increased only 1% or approximately $1 million from the prior year quarter. As we have been hyper focused on monitoring independently as possible implications to all aspects of our business.

Taking aggressive actions to mitigate potential adverse consequences and buffer potential revenue declines, including stringent companywide cost controls to identified non essential expenses.

Steve Enterprise cost for the quarter were up only 2% as higher cost in Virginia, mainly for call Center subcontractors to support pandemic unemployment services were partially offset by a $1.8 million decrease your credit card merchant processing fees associated with lower eyes, yes payment.

Processing revenues in certain states, resulting mainly from the Pandemics, most notably in New Jersey in Indiana.

[noise] contributed to a slight uptick in the state enterprise gross profit margin for the quarter to 41% compared to 40% the prior quarter.

Software and services costs decreased 2%, mainly due to lower merchant processing costs for certain payment processing services.

The decline in the software and services gross profit margins for the quarter to 34%.

From 37% prior year quarter was mainly attributable to the decline in higher margin federal PSP revenues.

Selling and administrative costs were flat for the quarter, while enterprise technology and product support costs were up approximately 7% compared to the prior year quarter, but on a sequential basis were flat compared to the first quarter 2020.

Depreciation and amortization expense increased by approximately $300000 or 11% from the prior year quarter, mainly due to intangible asset amortization from the Rx of asset acquisition and I see licensing solutions acquisition.

Finally operating income for the quarter increased 4%.

Resulting in an operating income margin of 20% up from 19% prior quarter.

Sure.

This on a quarterly results we are no interest in the quarter.

Parents, you $600000 in the second quarter of 29 team and $400000 in the first quarter 2020.

Due mainly to a decrease in interest earned on our investable cash balance following the seller reserves emergency cuts the federal funds rate dated March 2020 in response to the code in 19 that Devon when the sad when the fed lowered rates to essentially zero as a result, we do not expect recognize any.

Interest income for the remainder of the years.

I have one other housekeeping item before I turn before I turn to our guidance.

As we previously announced after a competitive bid processing the state of Florida Department of financial services announced its intent to award US a contract for statewide payment processing services that January. Unfortunately, the award remains under protest by one of the bidders and we have not yet received ruling from the stage. We currently expect the.

They could issue, it's really any day now.

Only our longstanding policy policy, we will not disclose any financial specifics about this opportunity until after we have signed contracts.

Turning now to our guidance.

We continue to evaluate the impact over 19 may potentially have on our business for the rest of year, but the goal being directionally accurate conservatism in the guidance standpoint, given what we know today about the pandemic and taking into consideration you keep revenue trends, we've recently seen in our business.

For full year 2020, we.

Continue to expected to come in near the low end of our previously issued guidance for total revenues, which was $308.5 million near the low end of our previously issued adjusted EBITDA guidance.

Was $88.5 million in near the low end of our previously issued EPS guidance 76 cents.

The only change in our guidance from last quarter is that we currently expect capital expenditures to range from $5 million to $6 million year down about a million dollars from our previous guidance.

Well as internal use software development costs are expected to range from $9 million to $10 million unchanged from our previous guidance.

Sure include my prepared remarks today, despite some significant headwinds in certain key revenue segments, resulting mainly from the pandemic I was quite pleased with our financial results and the resiliency of our business in the second quarter.

Furthermore, as CFO, then I see I take great comfort in our financial strength and flexibility during these uncertain times, including our consistent cash flow debt free balance sheet and significant cash surplus.

I'm also optimistic our value proposition and business model will resonate with government IP decision makers in these tough economic times when the revenues declining and they are looking for creative and proven just real government solutions to help alleviate the constraints.

I said before and I will say it again this is our time to shut in our industry and we certainly did just that this past quarter.

That I will turn the call back over to Harry Thank you, Steve I share, Steve optimism and conviction excuse financially strong.

This model and expertise will enable us.

New business opportunities, where we continued to help our government partners certain needs their citizens and businesses.

Now I will open the call for questions.

And if you would like to ask your question. Please signal.

Our wine on your telephone keypad.

You are using a speakerphone. Please make sure that your mute function is.

Your signals from sharpening.

Again, our one question.

Well take our first question from Gary Prestopino from Barrington Research.

Hi, good afternoon, everyone.

Oh, Hi, Gary.

Couple of questions here.

With this impact Hello.

Your ship that you have.

Could you.

Give us an idea of what the revenue models, there and how your paid.

Gary This is Terry tour health something I'm very excited about however, this is something we just rolled out we just announced today, we're not ready to speak to the financials on that yet it's too premature we will be speaking better demands on earnings call.

Okay, I'm, sorry, Gary Gill.

Yeah, we only color that I would add there is that we were doing this will not be transaction based opportunity it'll be more of a traditional services type opportunity, but we'll leave it at that for now.

Okay, and then in terms of leveraging Gov to go.

Within the partnership could you maybe give us a little more.

Detailed on just how citizen would you got to go to get to this world the testing.

A proposal.

Absolutely.

Based on when you consider this whats you know when you go into first determine whether you need a test you more <unk> and you to answer some questions as to you know temperature been exposed thing, but cats and that would walk you through to do you need to get a test from that standpoint, it would schedule and I'm quite straight where you can get passing them with Tencent appointment for you and then.

Hi, good progress from there. So it is you know the base this opportunity.

Okay.

And that that in those various states.

He goes all incorporating the website correct. So that's what that would give you the individual lead into to get to where they could be well for this possible testing.

Absolutely and its websites mobile and we'd like to thank you benefited technology agnostic. However, we need to get that information for those end users, especially during this pandemic.

Okay, and then just last question.

Iowa.

Refresh our memory on my memory was that take it in house by Iowa or was that awarded to another company.

Well I know that when you will know your memory is correct. You remember it's clear that was at the end of a contract they did not renew contracts and it was taken in house I'm about three years ago and as they evaluate it came back out and were excited to be back in Ireland.

Okay. Thank you.

Thank you that Gary.

And our next question will come from.

From Sidoti and company.

Hi, good afternoon guys.

Thanks for taking my question I.

Congrats on the Iowa offered by the way Oh, So just a couple of quick questions from me in terms of obviously on how you mentioned the contract was taken in house and 26 70 can you give me a sense for what maybe what's the level of the revenue or the earnings from that gone through.

Correct.

In 2017, when it when you guys were still going to work.

Yes, it's Mike I'll take that one.

I guess, what I would say is that if the revenue is probably not representative.

Have a typical Nic enterprise day, besides of Iowa in fact, it with our smallest whether these days.

As a marginally profitable.

Contract for US, we're really only had one at the time revenue generating service.

That that provided the majority of the revenue under the contract that was DHR revenues. So it was it was very much a.

Financial outlier in terms of size revenue per capita and just about every other financial metric that you could possibly imagine.

We're very excited be back they have a new see out they have new.

Individuals that are so excited about what we can bring and that's.

One of the.

Primary points with Iowa is the energy that we are seeing there, especially during this pandemics for the energy, where we can get them with our solutions to make a difference.

Got it okay.

In terms of is that the change and maybe the government decision maker is that what prompted them prompted this contract win or was it looks like you know your technology advancements and you know your your work and additional services will give you give sense for that.

Absolutely its combination of both your part of yeah. When you're on your promote the solutions that we're bringing into our other partners throughout the country and that has always had worked very well known in the digital government industry and what's the value. We bring from there and then you have a change their administrators ever change of key personnel and they start seeing what you've done and other state.

And then our national sell things are phenomenal job as new people come in.

Educate and that's why you saw a return to Virginia. It returned to Iowa, you know that I'm, not saying about government yards, we have enough to go back and show the value given in the past or more importantly, the value we can bring from into future and I always like Jeff we once we need.

Got it Gartner and Harry maybe a you touched on this a little bit and that was your development services in Virginia that was a you know pretty sizable compared to what do you know I have expected.

What I had expected maybe some others too could you give me a sense for like why that was maybe a little on the higher end.

I will pick up about 60, instead of end to add in Virginia was a great solution, where we have the waiver of solid general manager there that as the Virginia was I'm trying to resolve the issue when they're happy with unemployment and it would you know we're in the now we're having conversations with different agencies very aware of what's going on it became parts instead they were happening.

Weve reached out to them and we showed them. Yeah. This is something we can assist us and we walk through where our suggestions were and some of the technology. We can bring to bear with a partnership with someone else and we can healthier they embrace that and I would say was a great opportunity.

As far as more significant than we anticipated, we really didn't offer walking into as far as the volume until we got there, but my time are ready to sign that statement of work, we knew what what it was and the size and very excited about that opportunity.

Yes.

Just like I really don't have anything to add there we really didnt.

Last last quarter that was unclear in terms of.

Central financial opportunity there we knew was there, but I think we took a little bit more conservative approach and wait and see how things pan out during the quarter.

So certainly.

Not really nice opportunity there and hopefully one that will be able to help continue to help to state the rest here.

Wonderful. Thank you guys congrats on a grid water.

Thank you very much basis.

Yes.

And our next question will come from Peter Heckmann with D.A. Davidson. Please.

Please go ahead.

Thank you good afternoon, everyone.

Hey.

Hey, I'm on the.

If I serve deal interesting it few questions there is that nationwide.

Or is it just in your portal they and then could you talk about the timing on the roll out there.

Yes, I will start there and yeah and this is an opportunity within the state. So once we have a contract I mean that is where we're focused right now there's opportunities outside of Puerto Rico and enterprise now outside of those states as we move into additional payment services, we have different contracts or go outside of those.

And they will be remember levered set as well so I'm very excited about this when you think about it and especially in the pandemic. When you think front those that you can't get into government office might not have credit for himself as you're going to see this is a great alternatives.

Got it got it okay, and so you have to go to that each portal state and haven't have agreed to use it so that might cause the roll out to be over a period time or or is it something that you just go live with and that in aftermarket.

No within each of our contracts, whether they like I said, a portal state or whether it is one of our other payment contracts well have to go to that agency that department anytime were collect spends a mentor when frequent funds that as long as usually regulators would go back. So that's our ports, how we're doing it but we're working hard on this and find starts working hard on this is all about just you know it's yeah.

They are both both partners are out there communicating about your best Yeah, we're expectancy great trend I'm traction.

Got it got it and then.

The housing that fairly unprecedented.

Situation with the pandemic any impact on miles driven.

But would you expect.

To see any rebound.

In DHR or just.

More like we just assume a more normal pattern next year.

Pete I guess, what I would say is that in the in the second half of the year.

We do forecasts that.

On a year over year basis, you know, we will still see some weakness in the second half of the year No doubt, we do hope to see an improvement that is a moderation in the decline that we saw here in the second quarter and we've been seeing that the trend line from from.

April the May to June through the first three weeks of July improve which is which is a good thing, but I don't think we would expect to return to more normal levels until sometime hopefully in 2021 looking through the dark crystal ball quite frankly.

Got it got it okay.

All right now that that's great I think thats all it every day.

Alright. Thanks.

[music].

And with no further questions I'll conclude today's question and answer session I now like to turn the call back to Mr. Harrington for any additional or closing remarks.

Thank you Savannah, and thanks to everyone, who joined US. This afternoon I sincerely hope with each of you stay safe and healthy I'll speak with you next quarter.

And this concludes today's conference. Thank you for your participation and you may now disconnect.

[music].

Oh.

Hmm.