Q2 2021 Verra Mobility Corp Earnings Call
Okay.
Please standby.
Good day and welcome to the Verra Mobility Corporation updated call today's conference is being recorded.
At this time like to turn the conference over 2 sides of your Dowdy Vice President Investor Relations. Please go ahead Sir.
Thank you good afternoon, and welcome to Verra mobility of second quarter 2021 earnings call today, we'll be discussing the results announced in our press release issued after the market close with me on the call are David Roberts Verra mobility, as Chief Executive Officer, and Tricia chart of our Chief Financial Officer.
David will begin with prepared remarks, followed by Tricia and then we will open the call up for 2 went on during the call. We'll make statements related to our business that may be considered forward looking including statements concerning our plans to execute on our growth strategy, our ability to maintain existing and acquire new customers and other statement.
Regarding our plans and prospects forward looking statements may often be identified with words such as of we expect we anticipate or upcoming these statements reflect our view only as of today August 9.2021, and should not be considered our views as of any subsequent date, we undertake no.
Obligation to update or revise any forward looking statements forward looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations for a discussion of materials the risks and other important factors that could of.
Our actual results. Please refer to those contained in our annual report on form 10-K slash right.
And quarterly report form on on form 10-Q, which are available on the Investor relations sections of our website at IR Dot verra mobility dot com and on the SEC website at SEC Dot Gov. Finally during the call. We will make we will refer to certain non-GAAP financial measures a reconciliation of GAAP.
To non-GAAP measures is included in our press release issued after the close today located again on our website at IR day, Verra mobility of Dot com and on the SEC's website at SEC Gov, and with that let me turn the call over to David.
Thanks, Sajid and thank you everyone for joining us on the call today.
We delivered very strong results during the second quarter as the positive impact of the vaccine rollout and economies reopening resulted in a sharp rebound in the leisure travel can.
<unk> revenue grew 61% year over year to $129 million with strong flow through as adjusted EBITDA came in at nearly $69 million or 53% of revenue this exceptional.
On performance essentially mirrors, our pre pandemic peak performance in the third quarter of 2019.
With the expected economic recovery occurring faster than we initially anticipated and encouraging business trends of both business segments, we of reintroducing guidance and expect a robust second half of the calendar year 2021 from a growth profitability and free cash flow perspective.
The last 12 months of and uniquely challenging for many businesses. However, our team has done a great job managing through the challenges.
<unk> focus on our strategic objectives, as we continue to execute against our plan our priorities remain.
Strengthening our core offerings and expanding our footprint internationally as we deliver on our vision to be the global leader in Smart transportation.
For the economies reopening in scale of returning we are seeing the benefits of our strategic actions taken last year.
For the first 6 months of 2021, we've delivered revenue of approximately $219 million representing growth of just over 11% compared to the first half of 2020 and 5% over the first half of 2019.
We are also seeing strong operating leverage with the first half of 2021 EBITDA margins of approximately 50% the.
The strength of our core business and the continued adoption of data driven intelligence of integrated travel solutions give us a confidence in our ability to maintain this momentum for the second half of this year and beyond the.
The strength in the quarter was led by our commercial services segment, which benefited from the improved travel demand that is positively impacting the rental car industry.
While overall volumes are still below pre pandemic levels, we delivered segment revenue of roughly $66 million and adjusted EBITDA of nearly $43 million representing segment margin of 64%. The strength was broad based with all key operating metrics exceeding expectations. In addition of positive macro trend.
Like the transitions of cashless tolling continue to provide a powerful tailwind that supports the momentum of our business.
During the pandemic several tolling authorities across the country move to all cashless, which bodes well for the adoption rates of our tolling solutions.
We continue to see demand coming primarily from leisure travelers, which is a trend that we expect to persist through the balance of the year, we anticipate business travel to return as the higher level of our product mix in 2022.
Despite the known industry challenges currently face of other rental car industry. We believe the rocks are effectively re fleeting and being creative to keep up with the leisure travel demand and.
In fact, our title and registration business segment, which represents approximately 7 percentage of the commercial service revenue saw sequential growth of nearly 133%.
This robust activity is primarily related to an increase in rack related volume with some contributions from fmc's.
We continue to make steady progress in Europe as the pandemic related shutdowns remain prevalent across the continent are strategic strategic except the objective is to establish ourselves as of first of its kind of fully outsourced Pan European toll management solution provider. We continue to look for opportunities as we build the foundation and expand our footprint there.
Overall, I'm very pleased with our performance this quarter, which demonstrates how quickly we can scale on our customers need us, especially in the fluid demand environment. Our execution. This quarter is a testament to the resilience of our business model strong customer relationships and disciplined execution.
Our government solutions business also delivered exceptional results driven by the benefits of the New York City School Zone speed program and increased driving patterns revenue for the second quarter came in at $62 million representing year over year growth of 18%.
Sequentially service revenue grew just over 13% and product revenue grew by approximately $12 million, representing new camera installs for the New York City schools and school zone speed programs.
Adjusted EBITDA came in at roughly $26 million with healthy margins of 41%.
I'm glad to report that we've started receiving payments on the outstanding New York City receivable based on the current pace of payments, we expect to make good progress for collecting this receivable during the second half of the sheer and Tricia will share additional details about the timing and the impact of our cash flow shortly.
As a reminder of long standing customer of the New York City Department of Transportation announced the expansion of its schools on speed camera program in 2019.
Through 2020, we installed 1020 cameras in earlier this year. They further expanded the program by an additional 720 cameras, which we are currently deploying during the second quarter. We installed 158 cameras and are on target to install a majority of the remaining cameras during the second half of 2020.1.
Thanks in parts of the rapid growth of the New York City program, our speed portfolio now represents roughly 39% of the government solutions revenue.
During the quarter. We also closed the Red Flex acquisition and the integration efforts are off to a great start we have established a new leadership team and are in the midst of aligning the business unit priorities and goals.
While still on the early stages of the integration process. We believe the combination with red flags create significant cost synergies of new revenue opportunities, while providing an enhanced technology portfolio to our customers.
From a revenue perspective Redflex operates in some unique channels, which will create opportunities for us in the U S and internationally the.
<unk> recently renewed and expanded of large multi year vehicle based mobile speed camera program for Australia is transport for New South Wales. Additionally, in the U S. We can now offer unique constructions on speed and railroad crossing programs, which come which complement our preexisting offerings. We are very excited about the strategic acquisition expected to accelerate our international strategy.
As we realign our teams our focus remains on the Greenfield opportunities, we are pursuing in Georgia, and Virginia as well as our crossing guard offering our pipeline of opportunities remains strong and our teams remain engaged with various municipalities and school districts in their respective states.
The school is expected to be back in session in the fall we anticipated pickup on the activity for a crossing guard program, specifically in New York or we have a potential opportunity for <unk> 6500 cameras.
We plan to install 650 cameras in New York, Washington, and Georgia during the second half of 'twenty 'twenty..1. Additionally, we maintained consistently high renewal rates during the quarter, including key customers in Arizona, Georgia, Florida and Washington.
Finally, we announced today that our board approved the new $100 million share repurchase program. Our capital allocation strategy has always focus on investing for growth for M&A first and then returning excess cash to shareholders. However, current value of valuations. We believe the repurchase of our shares represents an attractive investment opportunity to redeploy excess capital.
<unk> long term shareholder value creation.
Overall, we are happy with the progress we made during the first half with calendar 2021, with an improving business outlook for both of our segments. We are poised for a strong second half of the year as such we are reintroducing guidance that reflects growth and profitability well ahead of our expectations from earlier in the year.
We remain cognizant of the fact that the new Covid Varian could create new uncertainties and are monitoring the situation closely for any anticipated impacts with that let me hand, it over to Tricia to walk through the financials and the business outlook in more detail.
Thanks, David and good afternoon, everyone I will provide a more detailed overview of the second quarter.
And then we'll open up the call for questions. We've provided a short earnings deck on our website that provides some insight for the quarter. It has reconciliations from GAAP to non-GAAP results is here for <unk>.
Following along on the earnings deck I'm on slide 2 which outlines the revenue and adjusted EBITDA performance for commercial services segment.
This business segment offers tolling violation processing and title and registration services to rental car companies and fleet management companies in the U S and in Europe.
Processes violations and provides the consumer and <unk> services, our commercial services segment delivered revenue of $66.5 million, an increase of $39.2 million over the same quarter in the prior year, just short of the $68 million generated in Q2 of 2019.
A sharp recovery in leisure traveler travel drove the strong performance of the U S rental car volume improved throughout the quarter and we continue to see positive trends in driving pattern. There is more available days prevent some of the green that more total usage and higher total fees than in previous years. These trends have improved revenue without the full recovery.
The parental volume we continue to believe that business travel will return in 2022, albeit at a lower level and anticipate that rental volumes to continue to improve during the second half of the year.
Adjusted EBITDA for the quarter of $42.8 million increased from $7.3 million year over year, and adjusted EBIT margin of 64% the strong very strong flow through as a function of our strategic actions taken last year and we are ramping up some cost to capture revenue cycle is that rich.
<unk> and we would expect margins to be slightly lower in the next few quarter.
Turning to the next slide you see the results of the government solutions business. This segment operates photo enforcement programs for <unk>.
Counties municipalities and school districts, our government solutions business delivered revenue of $62.2 million on the second quarter, improving $9.6 million year over year. As a reminder of the total revenue for the segment is comprised of service revenue. That's the monthly fee that we generate for the operation of photo enforcement programs and product revenue from selling and Instyle.
The camera system.
I think it's important that we talk about these 2 segments sources of revenue separately. The service revenue in the first the service revenue in the first quarter with nearly $50 million, which grew $14.4 million for 45 per cent year over year service revenue growth is driven by the expansion of the school zone speed program, which increased by 62.
3% over the same quarter in the prior year the growth on our speed portfolio is primarily related to the New York City School zone speed expansion, where we installed 720 cameras throughout 2020 for which we're now receiving service revenue. In addition, an increase in traffic volumes contributed toward our growth this quarter as the number.
The of revenue generating cameras increased by approximately 50% the growth in the segment was broad based on all of our business lines experienced double digit year over year growth.
Also note that in the quarter, we reflect 12 days of contribution from Redflex.
Product revenue of $12.2 million declined $4.8 million or 28% from $17 million for the same period last year.
We installed 158 cameras related to the New York City schools on speed program this quarter compared to 195 on the same quarter of the prior year as David mentioned, we expect to install the majority of the cameras for the New York City program at an accelerated pace during the second half of 2021, although we don't anticipate.
The paid any supply chain constraints over the near term we are working very closely with our suppliers and monitoring the upstream build part while we are targeting to install of the balance of the cameras on the current calendar year. We are modeling for approximately 25 cameras in the first quarter of 2022.
Adjusted EBITDA of $25.8 million increased $5.5 million from the prior year quarter adjusted EBIT margin for this business for 41, 5% up 38, 7% in the in the prior year quarter.
Separately with higher product revenue expected for the balance of the year, we anticipate that margins for the segment to remain strong for the rest of the year as for.
David mentioned, we are making good progress on the integration efforts with Red Flex based on early are earlier identified items.
We've achieved synergies of approximately $4.3 million on a run rate basis. This is roughly half. The previously stated range of $8 million to $10 million, while it's still early in the process. Our teams are working diligently to identify additional opportunities.
Streamline the business as we have stated in the past Red flex as much lower adjusted EBITDA margin profile relative to our government solutions business.
Which runs between 35 and 38.
The percent margins in a normal cycle over time, we expect to move their north American business, which currently represents about 40% of their total revenues in line with the government solutions business unit through a combination of process improvements and disciplined execution.
Turning to the next slide we show the consolidated results for the quarter the.
Combined results of the business as we just discussed generated total revenue of $128.7 million for the second quarter, an increase of $48.8 million for the same period in the prior year. This represents a new second quarter record for the company, which is phenomenal given where we were this time last year our per.
<unk> in the quarter highlights the resilience of our business model and the hard work of our team.
Adjusted EBITDA of $68.6 million increased by $41 million from the prior year quarter first quarter.
Sorry second quarter, adjusted EBITDA margin of $53, 53%. This represents service EBITDA flow through of nearly 84%, reflecting the impact of the strategic actions taken last year and operating leverage that exists in our model the.
The company reported net income of $4 million in the quarter compared to the loss of $23.7 million on the same period in the prior year, adjusted EPS, which excludes the amortization.
And stock based compensation and other noncash items was <unk> 10 per share for the current quarter compared to <unk> <unk> per share for the second quarter of 2020.
The tax provision for the quarter was $9 million, representing an effective tax rate of 69%.
The effective tax rate change with the effective tax rate was primarily higher due to permanent differences related to market of market adjustments on our private placement warrants.
The company generated $37.5 million in cash flow from operating activities during the quarter compared to $22.5 million for the same period in the prior year. The change resulted from improvements in net working capital and the impact of noncash expenses.
We've talked a lot about the outstanding balance of the outstanding receivable with New York at the end of June of the city of New York Department of Transportation orders of $127 million, representing approximately 59% of our net accounts receivable, although the balance of slightly larger than at the end of Q1 and the momentum is moving in the right direction.
The New York City of $34 million in the quarter for products and services and collected $28 million on aged receivables. We received an additional $29.5 million in July bringing the balance on our 2 large contracts to $97 million at the date of this call based on the current pace of payments we anticipate.
Being current on the outstanding receivables by the end of the calendar year, which would put us at a very strong cash position.
As of June 30th we had debt of $1 billion net of $147.3 million of cash on hand, our net debt was $854.5 million, which was 4.1 times trailing 12 months adjusted EBITDA of $208.3 million.
Given an improving and EBITDA scenario, we expect to Delever quickly and expect our leverage ratio to be around 2.9 times by the end of the calendar year.
Finally, our very strong anticipated cash position led to the decision by the board to return excess cash.
Capital to our shareholders in the form of the first ever share repurchase program by the company up to a $100 million as a returns.
<unk> focused company, we felt investing on our stock will unlock significant shareholder value, we will strategically execute this program, which we expect to complete over the next 12 months and have ample of liquidity to continue to pursue strategic acquisition and.
In summary of the favorable macro trends on the disciplined execution of our of our teams position us well for a strong second half of 2021 as such we of reintroducing guidance for the full year 2021, we are expecting total revenue on the range of $510 million to $530 million.
Which includes contributions from Red flecks and represents growth of 10% to 18% over the pre pandemic results of 2019.
Included in that growth, we expect product sales to be in the range of $55 to $6 million to $60 million.
And we expect adjusted to be EBITDA to be in the range of $240 million to $245 million or adjusted EBITDA margin at 47% based on the midpoint of our guidance.
We continue to believe that there of mobility remains well positioned for the long term and has an operating discipline to manage through the current volatility in.
Our business and capture growth as demand returns to the underlying industries we serve.
And with that I'll open up the lines for questions.
Thank you if you'd like to ask a question. Please signal by pressing star 1 on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off July with no true equipment again press star 1 to ask the question from a pause for a moment to allow everyone an opportunity just low for questions.
Yes.
My first question.
Okay.
Yeah.
Yeah.
We will take our first question of day for Nick <unk> with credit Suisse.
Thank you for taking my question and congrats on the strong results in closing Redflex.
First can you share what the guidance implies for Red Flex revenue and EBITDA contributions in the back half and then as my follow up we noticed the commercial services revenue was growing faster than the rental car days of the Rex and I was wondering if you could just explain the factors that drove that differential. Thank you.
Yes, or no no problem at all we're thinking about the <unk> revenue in the back half of the year of being just call it right around $35 million and the overall of the overall contribution to that from from an EBITDA perspective, Let me see if I've got that number here in front of me.
Actually I don't have that number on the page.
Uh huh.
It would be it would be somewhere somewhere around like the $4 million range would be what it would be.
So call it roughly 10% on of flow through for those dollars.
Okay, great. Thank you.
And then what was your other question I apologize the revenue is growing faster than the risks Oh, yes. So the revenue is growing faster than the underlying rental car volume really by the fact that we've got these leisure travelers that are driving and the patterns that we're seeing in their driving behavior of really driving revenue results on profitability for us. So.
We're taking the longer rental agreements in that time period, they're running more tolls, which creates more billable administration fees.
The higher total usage and the actual tolls that are running are our higher dollar value as well. So all of those things are allowing us to recover nicely and as David said some of the other businesses. Our <unk> business did it had a very nice quarter as well.
Yes.
Okay, great that makes sense. Thank you.
Yes.
Next we'll hear from Daniel Moore with CGS Securities.
Good afternoon, David interest thanks for taking the questions.
Hey, Dan start with just the trajectory of cadence of the.
The guidance implies.
Roughly flat EBITDA for the remainder of the year compared to fiscal Q2 wondering what the monthly cadence of profitability was kind of for the quarter on into July and whether the momentum is building that could maybe cause that to be conservative.
Oh I definitely think that there is momentum that's building as we as we went out through this quarter and you know we've held true with what we said that Q2 would be better than Q1 on the back half would be better than the first half on that that's still going to hold true true you should think about Q3 as being the peak of the commercial services.
Revenue, but then it should taper off as we move into Q4.
There is not so much with the government solutions business, where we expect service revenue to continue to grow sequentially throughout Q3, and then into Q4 as well.
Perfect and then you alluded to to these factors in the prepared remarks, but the the implied margin guide of about 47% of little lower sequentially, obviously, an incredibly difficult comp is it <unk>.
<unk> flex is it increased investment spend mix. If you just had the kind of rank order of those.
Relative impacts on the margin.
The implied margin guidance any color would be great. Thanks.
Yeah, I think some of it is the range is red flex in and of itself is its coming on board, it's going to take us a little while to wrangle of that.
I think there is continued investment we havent pulled back our investment that we're having debt, we're putting into Europe and the European rock tolling.
So thats still there and then I think probably the other factor is that we have been we have been running extremely lean.
Not willing to add cost ahead of our revenue cycle and then clearly we saw really nice revenue cycle hit us in Q2.
And you'd say that hey, we need we need to be prepared you can you can scramble for a quarter you can't scramble for for 3 of them.
You would need to be prepared in order to pull that revenue back in as as it as it returns.
Yes.
Perfect last is just a housekeeping stuff tax rate, how do we think about it for the remainder of the year and beyond in debt.
Debt leverage ratio you quoted below 3 times at year end I assume that's prior to additional share repurchases or is that inclusive.
No. So that's prior to so that would be so so prior to any share buyback, we would expect that our yearend cash position would be about $300 million and given where the mid point of our EBITDA that we just guided she would be about 243, so that would get us up to about a 2.9 times leverage.
On on the.
So that was the leverage question what was the other just tax rate going forward.
Total quarter obviously.
No my favorite topic Dan.
So tax rate. So this is what's happening with our tax rate.
We have certain items that are large flowing through our financial statements that actually have a zero impact of permanent differences from a tax perspective, mainly any adjustments that we have the the TRA or anything that we market and mark market to market adjust for the private placement warrants. So so that's the reason that you get to the 69% cash.
Right because with a low net income number of large add backs on the on the on the non non tax deductible items. It really drives up that rate, but if you were going to think about sort of the our annual effective tax rate what should it be over a longer period of time, it should be closer to like the 34%, which is still high but.
Really what that reflects is about a 21% federal tax rate and then call it like the <unk>.
For rocket working on like a 10, 10 or 12 or 14% on the on the low.
I should say, it's 10% on the state and then we've got some permanent items in there.
What's happening with that is as we shift more of our revenue into New York City and they have increasingly higher state tax rates, it's driving up that annual rate that we would expect over time, so long answer but on an annualized basis. We should expect that this would normalize closer to a 34% rate in the wild swings we're seeing in each each individual.
Quarter.
Very helpful. Congrats on the momentum I appreciate it.
Yep. Thanks.
Well now hear from Dave Koning with Baird.
Oh, Yeah, Hey, guys. Thanks, great job.
And I guess my first question I think you said that you expect commercial services revenue to be down sequentially. In Q3, and Q4, you usually Q3 is well above like 10% plus above Q2, and I know there were some kind of 1 off stuff like some of the registration seem like incredibly strong, but why why wouldn't.
Be up at least somewhat sequentially in Q3 net.
We do expect it to be updates of sorry, we.
Expected. The what we've said is Q2 was stronger than Q1 in the back half would be stronger than the first half for the that revenue. So we do think it's going to be an uptick and the Q3 will be the peak, what we don't I don't know that youre going to see this this 10% growth on a quarter over quarter basis.
Just because we're still not sure where travel patterns are going but we do expect that Q3 would be the peak and then it would taper back down in Q4.
I think you did 98% of Q2.19 don't necessarily expect 98% to recur just because some of the there was just a lot of activity in Q2 is that fair to say.
That's fair to say.
Okay, and then I guess my follow up question Youre seeing government I looked through some of the stuff it looks like kind of ironically red flags. If you looked at pro forma information it looks like it actually grew 38%.
In Europe government accident. Europe also grew about 38 per cent is there any reason for red flux or core of era of ex New York lets say to grow much differently than each other or should we expect over time for both of those do a lot of the same things and could probably grow about the same.
So we think that the core of our mobility business along with the right of flex business should be growing at about the same rate I think what you are looking at as Youre looking at the pro forma table that it's done on a GAAP basis.
Which which basically says that you disconnect of the balance sheet and the P&L from when they're at the point in time when they are brought in so it assumes that the transaction was what's happened in January of this year, we should see that the longer term growth rates of both of those businesses outside of New York should still be in this you know.
Mid single digit type growth and not at that 38%.
That you just quoted you have that definitely makes sense gotcha. Thank you.
Yes.
Next we'll hear from James Fawcett with Morgan Stanley.
Thank you very much on.
I wanted to ask just a couple of incremental questions first of all on the Red Flex can you just repeat again kind of what you were thinking in terms of synergies timing and realization.
Guess, maybe how that compares right now versus what you had originally said I know you've stated in the prepared remarks, but I kind of missed it.
Yes sure. We originally said that we were going to do between 8 and $10 million in synergies.
We have achieved.
For <unk> 3 million of those already but the.
That being said, we did get our quick wins first of I think the rest of them are going to take longer and youll see those play out over the next.
Call it 3 to 4 quarters without with a longer tail for the product type type savings that we expected.
So really what we achieved real quickly was on.
For the cancellation of public company cost from their side.
They they were already working on some some lease transactions on changing facilities that the materialized really quickly.
And then we were able to close a lot of job openings that we had because of the combined work force was able to fill those very nicely.
So that gave us some really quick wins early on and on the next 1 will be a little a little harder to achieve but we wanted to get some some good wins out of the gate.
Oh good good.
The job grabbing those quick ones and then as far as the rollout of new cameras in New York It sounds like you're trying to keep.
Or expect that maybe there will be couple of dozen that will spill into next year, what's the kind of the puts and takes around those and how could they come in and start to be productive more quickly versus what could happen that it could cause some additional cameras just slip into next year.
Yes, I think thats, mostly just we're putting in a reasonable buffer just given that as we get to the back half of the year, we tend to run into weather conditions and holidays has tended to slow things down so.
We're just trying to be conservative in that view.
The team is kind of running all out as it is we've staffed appropriately to get up to 80 cameras of months, So I think thats going to be the pace.
If we get lucky with some good weather then we should fields of advanced some of those earlier in the year, but the the estimate is around what our traditional view of installing in the northeast tells us.
Got it and then the last thing for me is you mentioned with the introduction of of buyback.
Buyback yet.
Authorization, you still think you have plenty of flexibility to do acquisitions or strategic moves like that.
Is there anything in the pipeline or that you are actively looking at or just trying to get a sense of how active and.
Debt you could be looking at acquisitions, what the potential there is in and I guess, how youre thinking about what seem to be particularly elevated valuation range is for potential deals right now.
Yeah, I mean, I think that's your last point as part of the reason why we thought that we would do 1 of the reasons of the share repurchase made a lot of sense.
And which is the reason our board approved it I think we're also being very consistent with what we've always said is that when we would always go M&A first but when we couldn't find deals that met all of our financial and strategic criteria that we would return capital to shareholders. So we're really this is kind of a song that we've been playing since we went public we just never had the opportunity to do a share repurchase.
And then part 3 of that is what we've always said is we would look for adjacent markets and so we do maintain a very robust pipeline we.
Our goal is to always be on offense in that area, but.
To your point there are a lot of things that are for sale of valuations that we may not be quite as interested in today, but over time or even maybe in the back half of this year those valuations might come back down to a more reasonable.
<unk> for us.
Great. Thanks, a lot.
Yeah.
Our next question will come from Trevor Bowers with Northcoast research.
Hi, guys congrats on the quarter and thanks for taking my question.
With the Red flag for acquisition does the Euro plan on staying in all of the geographies that Red Flex is doing business and do you plan on keeping all of Red flexes products and solutions.
Yes, I mean, I think we're going to be staying in the places that make the most sense to us from a revenue perspective on where we see growth, obviously places like Europe and Australia.
Some of those.
And then again to the extent of the products are going to be contributing positive growth from a revenue perspective and doing so profitably. We would want to continue to leverage those on part of obviously the calculus was that in the U S. They had some products that we didn't leverage here and there.
They had access to so well we were hoping to get synergy both from the cost side and some on the revenue side as well.
Okay, Great and then maybe a quick follow up what excites you. The most about the acquisition and maybe what are some lessons that you've learned about the business since the acquisition closed.
Well I think what we said the <unk>.
And part of it is 1 of I think it's a great deal for shareholders because of the synergy that we've identified we think we can return some really positive returns for shareholders and the strategic fit is obviously quite clear when you look at.
Being able to buy of like company in some regard.
I think the most of the other exciting thing is the international opportunity, we've always been silent of internationally within photo enforcement and so the ability to have products and services and people that have knowledge and skill on relationships and customers, that's really exciting to us as well.
I think what we've learned is the I think on the margin most of what we would've expected is exactly what we thought which is hey, there's going to be some great opportunities to grow as well as some synergy.
It's a similar business on a lot of regards but just like any other acquisition. There are things that are going to be different and but I would say at least at this point both of the pace and the outcomes are heading in a trajectory that we would say are quite positive.
Okay great.
And congrats again.
Thank you.
And our final question will come from Louie Dipalma with William Blair.
Yes.
David and Tricia and good afternoon.
Hey, Louie.
Last quarter. Your 10-Q indicated that over 1000 cameras were temporarily inactive because of the pandemic are those cameras coming back on line and do you have.
An approximate number on how many of those are temporarily inactive.
Yes, so the <unk>.
Majority of those cameras would have been related to crossing guard, where many of the school bus programs, we're not running during the year and we would expect that those would be coming back online for the quarter.
I'm trying to see let's see.
Yeah, because during this timeframe, we actually maintained almost 6000 active cameras 5966.
During the 3 months ended this timeframe. So a lot of those cameras that were enacted have gone back to work, especially.
Especially with the return of school.
What youre seeing is also our or at least across the summer and we're still we're seeing those come back online we may not see revenue from those until we get into the later half of the year, just because it'll take a while the cycle through the citation timeframe.
Thanks, Trisha and David are there any updates on the progress of your European pilots for the rental car tolling rollouts in the different countries.
Yes, we're still as of the quarter close we are in very similar situation, which is we're close to a couple of pilots.
In the in Ireland in another country and so because we didn't have those signs just yeah. We didn't talk about them on this particular call, but all of those are moving forward. The team is for.
Pairing 2 of plants. There. So hopefully we will have some positive news on the sometime within the quarter.
Yeah.
Sounds good thanks.
Thanks, David interest yet, yes, thanks Louise.
Yes.
Okay and that's.
Yeah.
Okay.
I guess that was the last question and that will conclude the question and answer session and today's call. We thank you for your participation you may now disconnect.
Thank you. Thank you.
Okay.
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