Verra Mobility Q1 2023 Earnings Call Transcript

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Provided by Quartr
May 4, 2023

There are 9 speakers on the call.

Operator

Good afternoon, ladies and gentlemen, and welcome to the Verra Mobility First Quarter 2023 Earnings Conference Call. This call is being recorded on Thursday, May 4, 2023. I will now turn the conference I'll turn the call over to Mark Zindler, Vice President, Investor Relations. Please go ahead.

Speaker 1

Thank you. Good afternoon and welcome to Vero Mobility's Q1 2023 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, Vero Mobility's Chief Executive Officer and Craig Conti, our Chief Financial Officer. David will begin with prepared remarks, Followed by Craig, and then we'll open up the call for Q and A.

Speaker 1

During the call, we'll make statements related to our business that may be considered forward looking, including statements concerning our expected future business and financial performance, our plans to execute on our growth strategy, The benefits of our strategic acquisitions, our ability to maintain existing and acquire new customers, Expectations regarding key operational metrics and other statements regarding our plans and prospects. Forward looking statements may often be identified with words such as we expect, we anticipate or upcoming. These statements reflect our view only as of Today, May 4, 2023, and should not be considered our views as of any subsequent date. We undertake no obligation to update or revise 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 material risk and other important factors that could affect our actual results.

Speaker 1

Please refer to those contained in our 2022 Annual Report on Form 10 ks, and on the SEC's website atsec.gov. Finally, during today's call, we'll refer to certain non GAAP financial measures. A reconciliation of these non GAAP measures to the most directly comparable GAAP measure is included in our earnings release, which can be found on our website at ir.veromobility.com and on the SEC's website at sec.gov. With that, I'll turn the call over to David.

Speaker 2

Thank you, Mark, and thanks for everyone for joining the call today. For today's call, I'll start with an overview of our excellent first quarter results and provide an on key business drivers. I'll move on to a discussion of the industry trends that are driving our results and influencing our future views of the business. And I'll close with a recap of our strategic priorities across each of our business segments and share a summary tracking our progress. We delivered exceptional first quarter results highlighted by strong revenue and adjusted EBITDA and solid free cash flow generation.

Speaker 2

We delivered $192,000,000 of revenue in the Q1, representing 13% growth over the prior year quarter. This was primarily driven by strong tolling trends in Commercial Services and increased recurring service revenue in Government Solutions. Adjusted EBITDA of $88,000,000 for the Q1 increased 17% over the prior year and was driven by volume based Operating leverage in both Commercial Services and Government Solutions. As a note, we had a catch up entry in Government that benefited revenue and adjusted EBITDA by about $2,000,000 Craig will provide the details in his remarks. Starting with Commercial Services, I'll provide an overview of the Q1 performance for each of our segments.

Speaker 2

The CS team again delivered Strong performance revenue of approximately $86,000,000 for the quarter represented a 17% increase over the same period last year. The primary factor driving this performance was increased volume. TSA throughput reached 100% of pre pandemic 2019 volume, Driving an increase in adopted rental agreements. We're also experienced strong adoption rates from renters for our all inclusive tolling product offering. I'm pleased to announce that we recently entered into a partnership with Telepass for rental car tolling in Italy.

Speaker 2

This partnership effectively allows Vero Mobility to offer our toll management solutions in Italy for our rental car partners and allows for interoperability across Italy, Spain, France and Portugal by utilizing Telepass's integrations with the tolling authorities in Italy and existing integrations in the other markets. While we do not anticipate current year revenue from the partnership, this is another important milestone in building our European tolling business. Moving to our Government Solutions business, we generated total revenue of $86,000,000 with $83,000,000 being recurring service revenue. Service revenue increased 14% over the Q1 of last year, driven by the transition from product sales to recurring service revenue. Government Solutions margins were about 37% in the Q1 and up about 4.30 basis points over the prior year quarter, primarily due to increased annual recurring revenue that I mentioned.

Speaker 2

T2 Systems delivered revenue of $20,000,000 growth of about 12% over the prior year quarter and adjusted EBITDA of $3,000,000 all of which were directly in line with our expectations. SaaS services and hardware sales were all in line with expectations with the latter benefiting from push of several sales from the 4th quarter due to customer Request an installation timing. With regard to Q1 sales activity in T2, we had a strong booking for a large Tier 1 university in the Mid Atlantic region To extend their T2 solutions to include our parking access and control systems, on the municipal side, Ashland, Kentucky was a great example of a multiple solutions sale That included our permits and enforcement software, T2 pay stations, mobile pay, license plate recognition technology and citation and collection services. Turning to the macro perspective, I'm very pleased with the demand outlook across all of our segments. Despite market sentiment that a U.

Speaker 2

S. Session remains quite possible, we have not seen any evidence that travel demand is waning. The major U. S. Airlines are all reporting strong bookings through the 2nd quarter And the outlook from our rental car partners remains strong as well.

Speaker 2

In fact, while leisure travel appears to have returned to pre COVID levels, there is still more opportunity for business travel. According to a recent survey by Deloitte, corporate travel spend in the U. S. And Europe is projected to be about 60% of twenty nineteen levels in the first half of twenty twenty three And rise to about 70% by the end of the year. The report projects full recovery of business travel by late 2024 or early 2025.

Speaker 2

A second macro trend is the continued push for safer roads and communities, which drives the need for investments in automated safety enforcement. The latest National Highway Traffic Safety data from earlier this year estimated just a 0.2% decrease in U. S. Traffic fatalities in 2022, so there's still much work to do to address this trend. In addition, U.

Speaker 2

S. Traffic volumes are increasing according to the Federal Highway Administration. U. S. Travel on all roads and streets increased by 2%, which equates to 4,500,000,000 additional vehicle miles for February 2023 As compared with the same month last year, the need for road safety technology remains strong as evidenced by recent legislative activity in the states of Florida, Colorado and Washington, which I'll address later in my remarks.

Speaker 2

Lastly, we provided our top 3 strategic priorities for each business during our Q4 call. On Slide 5 of our earnings overview presentation, you'll see a summary of each of these on each of these priorities. While several are ongoing and difficult to quantify on a quarterly basis, we're tracking well against each of our priorities and I'll hit a few highlights here. In Commercial Services, we are earnestly working toward renewing our agreement with Enterprise regarding adjacent expansion opportunities. We continue Well in the fleet management space with FMC revenue growing 13% over the same period last year.

Speaker 2

We ultimately see FMC growing to a comparable growth rate The overall Commercial Services business in Government Solutions, we're seeing positive momentum on photo enforcement legislation in several states, including Florida, Colorado and Washington with the state of Washington recently signed into law. Florida is evaluating school zone speed and Colorado is looking at both expanding current programs and authorizing new photo enforcement use cases. All of these states represent attractive opportunities for future growth And we'll keep the market apprised as new details emerge. In addition, the investments we're making in our software platform and related projects are tracking toward our plan From both the timing and budget perspective, we expect to complete these initiatives in the Q2 of 2024, no change from our initial expectations. And finally, in T2 Systems, all priorities remain on track.

Speaker 2

Our bookings in our core business are in line with our annual plan, and we expect continued growth In summary, our operating results and trends are all positive. Business fundamentals are durable and our outlook has not Craig, I'll turn it over to you to guide us through the financial results and the current year outlook.

Speaker 3

Thanks, David. Good afternoon, and thanks to everyone for joining us on the call. I'll start out today by providing an overview of our Q1 results followed by our 2023 financial guidance, And I'll conclude with a brief discussion on capital allocation. Let's turn to slide 7, which outlines revenue and adjusted EBITDA performance for the consolidated business. Total revenue increased approximately 13% year over year to about $192,000,000 for the quarter, driven by strong operating performance across the company.

Speaker 3

Excluding domestic government solutions product sales in the Q1 of last year, we grew 15% year over year. Recurring service revenue grew 15% over the prior year quarter, driven by strong travel demand in the expansion of the New York City School Zone Speed Program. At a segment level, Commercial Services revenue grew 17% year over year. Government Solutions Service revenue Increased by about 14% over the prior year and T2 system service revenue grew 10% over the Q1 of last year. Product revenue was $7,000,000 for the quarter, about $4,000,000 of this total was from T2 Systems, while $3,000,000 was from international product sales within Government Solutions.

Speaker 3

From a total profit standpoint, consolidated adjusted EBITDA of $88,000,000 increased by approximately 17% over last year. The core business defined as excluding one time domestic government solutions product sales generated adjusted EBITDA of approximately 18% As David mentioned in his remarks, we had a catch up entry that benefited revenue and adjusted EBITDA The underlying activity was operational in nature and hence was not adjusted out of our reported revenue or adjusted EBITDA. We recognized approximately $2,000,000 in Government Solutions revenue for photo enforcement contract activity For a prior period resulting from a contract amendment in the Q1 of 2023. Since the expenses associated with this program had already been accrued, The approximate $2,000,000 of revenue flowed through in its entirety to adjusted EBITDA and income before taxes. Moving on to Slide 8, we generated about $351,000,000 of adjusted EBITDA on approximately $763,000,000 of revenue on a trailing 12 month basis, representing a 46% adjusted EBITDA margin.

Speaker 3

Over the same period, we've generated About $177,000,000 of free cash flow for a 50% conversion rate of adjusted EBITDA, representing $1.13 of free cash flow per share. Next, I'll turn to Commercial Services on Page 9, where we delivered revenue of about $86,000,000 in the first quarter, Increasing 17% year over year. Rental car tolling revenue increased 18% over the same period last You are driven by robust travel volume and increased product adoption. Additionally, our FMC business grew 13% versus Q1 of 2022 As our growth initiatives are beginning to take hold. 1st quarter adjusted EBITDA in Commercial Services was $54,000,000 representing 15% year over year growth.

Speaker 3

Adjusted EBITDA margins of about 63% reflected normal seasonality and were down Slightly compared to the Q1 of last year, due primarily to growth investments. Let's turn to Slide 10 and we'll discuss the results of the Government Solutions Driven primarily by New York City's photo enforcement expansion efforts, service revenue increased by $10,000,000 or 14% Over the same period last year to $83,000,000 for the quarter. With New York City School Zone now fully implemented, Product revenue of nearly $3,000,000 was driven by international programs. Adjusted EBITDA was $31,000,000 for the quarter, Representing margins of 37%, an increase of about 4.30 basis points compared to the prior year, driven by the catch up entry I previously discussed, The transition from product sales to annual recurring revenue and a reduction in bad debt expense due to improvements in cash collections. Let's turn to Slide 11 and we'll take a look at the results of T2 Systems, which is our parking solutions business segment.

Speaker 3

Revenue of $20,000,000 and adjusted EBITDA of approximately $3,000,000 were in line with expectations for the quarter, which included the push out of product sales in the Q4 due to customer requested installation timing. Software, service and hardware sales were all consistent with As we discussed last quarter, we made a number of process improvements around building and strengthening the quality of the pipeline and improving the forecasting process, and we're very pleased with the progress the business has made. Okay, let's turn to slide 12 and take a look at reported income and leverage. We reported net income of approximately $5,000,000 for the quarter, including a tax provision of $8,000,000 Representing an effective tax rate of 63%. As a reminder, our tax rate is heavily impacted by permanent differences related to mark to market adjustments for our Private placement warrants.

Speaker 3

Adjusted EPS, which excludes amortization, stock based compensation and other non recurring items, was $0.26 per share for the current quarter compared to $0.22 per share in the Q1 of 2022. On the right hand side of the page, you can see that we ended the Q1 with a net debt balance of about $1,100,000,000 Resulting in net leverage of 3.2 times for the Q1. This is down from 3.8 times net leverage in Q1 of 2022. During the Q1, we paid down approximately $65,000,000 of term loan debt, bringing the gross debt balance at quarter end down to about 1,200,000,000 Of which approximately $820,000,000 is floating rate debt. In addition, we have also paid down an incremental $10,000,000 Our floating debt during the Q2 of 2023.

Speaker 3

In total, on a year to date basis, we have Paid down approximately $75,000,000 of our floating rate term loan debt as of today's call. As we discussed in our Q4 earnings call, we entered into an interest rate swap agreement to hedge approximately $675,000,000 notional Our floating rate debt with a float for fixed rate swap, representing about 82% of the floating rate debt. As a reminder, The floating rate portion of our SOFR plus 3 25 basis point term loan B is fixed at a rate of 5.2% For 3 years with a monthly option to cancel beginning in December 2023 that we can execute in the event that interest rates move in our favor. Moving on to cash, we generated approximately $45,000,000 in cash flow from operating activities, resulting in $27,000,000 of free cash flow for the quarter. Finally, let's turn to slide 13 and have a look at total year 2023 guidance, which will remain unchanged from our discussion last quarter With our slightly elevated 1Q performance being offset by moderate investment cost increases in the back half of the year.

Speaker 3

Based on our Q1 results and our outlook for the remainder of the year, we're reaffirming all of the following guidance ranges: 6% to 8% revenue growth in constant currency, margin expansion of about 50 basis points, adjusted EPS of $1 to $1.10 per share and free cash flow of $135,000,000 to $155,000,000 In terms of cadence for the rest of the year, we continue to anticipate revenue and adjusted EBITDA to increase sequentially In the second and third quarters, however, as we experienced in 2022, we expect a stronger second quarter with slower sequential growth in the 3rd quarter Due to travel demand shifting forward in the year. Consistent with historical trends, we would then expect a modest reduction to revenue and adjusted EBITDA in the 4th Relative to Commercial Services' 1st quarter performance, TSA volume at 100% of 2019 levels And other KPIs in commercial services exceeded our expectations. In our guidance, we assume TSA throughput levels to be in the 97 to 98% range of 2019 volume for the remainder of the year. We'll be monitoring TSA volume and forward travel bookings data from the airlines, We currently continue to anticipate strong travel demand for the remainder of the year.

Speaker 3

Our guidance also contemplates increased operating and G and A costs in commercial services for various growth initiatives as well as increased operating costs in government solutions For increased staffing to support the platform investments previously discussed. Finally, based on our free cash flow estimate, Which implies a conversion rate of about 40% of adjusted EBITDA, we expect to reduce net leverage to approximately 3 times by year end 2023, which contemplates a balanced approach to debt pay down and share repurchases, all in line with what we discussed last quarter. This concludes our prepared remarks. Thank you for your time and attention today. At this time, I'd like to invite Julie to open the line for any questions.

Speaker 3

Julie, over to you.

Operator

Your first question comes from Daniel Moe Moore from CJS Securities. Please go ahead.

Speaker 4

Thanks, David and Craig for taking questions and all the color. Good afternoon. Start with the guide. Obviously, it's a very strong quarter above our expectations and I believe And sounds like TSA back to pre pandemic levels. So just maybe Talk about your thoughts on holding the guidance at this stage of the year versus potentially raising it and how much conservatism may be in there?

Speaker 4

Yes. Sure. Thanks.

Speaker 3

Sure. Yes. Thanks for the question, Dan. Thanks for being on the call. So as we think about this one from the revenue side, you're right.

Speaker 3

The TSA throughput came to 100% for the Q1 of 2019. And as I talked about in the prepared remarks, we're modeled in the high 90s For the balance of the year, I just we want to see this play out for another quarter. We don't have any reason to believe it's going to be any different right now, but I want to get another quarter under our belt. I think at this level to see if we would go ahead and raise, that's one piece. I think the second piece, Dan, on the revenue side is the GS business that Favorable $2,000,000 catch up that we had in the GS business was one time non recurring.

Speaker 3

That's another thing I'd throw out there. And then if I take those revenue comments and slow them down to EBITDA and EPS, I think the only other thing I'd add is that we're making those investments on the CS GS side of the house. So in CS, those are product investments about running faster in our core markets, especially in the fleet business, which as you heard was up 13% In the Q1 and then its continued cost, we had some delayed hiring and some of the work that we're going to do in GS on the platform of the future. So as I add all those things up, I still think I'm in the same spot for the year, but if travel continues strong, we'd certainly relook at it in another quarter or so.

Speaker 4

Makes perfect sense. And then maybe one follow-up related. Despite that increased investment, SG and A Continues to tick lower as a percentage of revenue, obviously aided a little bit by The $2,000,000 that you talked about, but is that Q1 level kind of Sustainable and what's kind of a realistic goal if we look out over the next 3 to 5 years embedded in your long term plan? Thanks again.

Speaker 3

Yes, sure. I think it was a little artificially depressed here in the Q1. So the first thing, if we just take it down to EBITDA That probably would be the easiest way to do it. So we did get a benefit obviously from that catch up entry. I don't know if you caught it in the prepared remarks, but that was 100% flow through, because we'd already accrued the cost for that back in 2022.

Speaker 3

So when you look at the margin, you're going to see A steep jump in GS and then for the overall business. So if I think about total margins for the company, I still think we're going to accrete about a half a point Year over year, I still think we're on that trajectory. If you look at just operating and SG and A costs as a percent of revenue, more specifically to your question, Those costs that especially in the GS business, what we did see is the delay on some of the hiring on that just due to other priorities in the business and of course Repeated headcount availability

Speaker 5

and some

Speaker 3

of the skills that we're trying to hire. So I do expect that cost to go north in the second quarter and in the back half of the year And expect it to look a lot like the total year that we discussed with you last time, Hal.

Speaker 4

Makes sense. Okay. I'll jump back with any follow ups. Thanks.

Speaker 2

Sure. Thanks, Dan.

Operator

Your next question comes from Faiza Arwaei from Deutsche Bank. Please go ahead.

Speaker 6

Yes, hi. Thank you. I would love a little bit more color on the TelePass partnership that you mentioned in your prepared remarks. And I I think I heard you say that there's no current revenue anticipated, but give us a sense sort of dimensionalize the partnership for us a little bit. Mode.

Speaker 6

Any further color on that would be helpful.

Speaker 2

Yes. I mean, this really just goes back to The original thesis of going to Europe was, hey, could we replicate the value proposition that we have for commercial fleets here in the U. S. Related to access to toll roads? For the most part in Europe, you're doing that in a country by country basis.

Speaker 2

The partnership with Telepass would actually it's sort of allowing us To accelerate our access to the group of countries that I listed in my prepared remarks, and so we'll anticipate that we can hopefully to kind of accelerate our value to those countries. Some of that is going to be obviously working with our customers in those countries. And then as we've spoken about the conversion to cashless will need to come alongside that to really get Full benefit of it, but Telepass is a major, major player in the toll it's probably the major player in Europe related to tolling. So We're super excited to be on the radar and have a partnership like this.

Speaker 6

Got it. Thank you. And then just secondly, You were just talking about certain investments across both segments. I'm curious with respect to your Are these would you characterize these as really discretionary expenses where maybe To the extent revenue comes in better than what you're forecasting, you may end up investing more. And if it's a bit lower, you can pull back on some of the spending.

Speaker 6

So give us a sense of how you're Thinking of the investments of CR?

Speaker 3

Yes, sure, Faiza. I think I know where you're going with that one. The investments that we have in the business right now, we're going to make pretty much, regardless of the environment, unless of course we saw something So I don't know that I'm waiting on revenue, to make these investments. I think what we've seen in the GS space is just simply timing. I think, well, We have the same investment that we expected coming into the year with, just the pacing of that investment is going to be weighted towards the back 3 quarters versus the Q1.

Speaker 3

When I think about on the CS side, this is after we've seen the efficacy of the early efforts And this is primarily in the fleet business and rounding out some additional tools that will help us capture the small and mid market players In the space as well as putting in the right commercial talent, as we've seen the early efficacy of those, we're doubling down on those efforts for future growth.

Speaker 6

Understood. Thank you.

Operator

Your next question comes from James Faucette from Morgan Stanley, please go ahead.

Speaker 7

Hey, guys. This is Jeff Goldstein on for James. I wanted to touch on the legislative opportunities. And maybe just touching on Washington specifically where you said, it was recently signed into law there. So how should we think about the timing of you getting on the ground and Potentially seeing a financial impact from that.

Speaker 7

And then maybe also talk us through the potential timing around recent events in Florida and Colorado as well.

Speaker 2

Yes, I mean Washington basically becomes another state that has all three use cases related for We've been working in Washington for some time now, they have all 3. So that would actually be, I would anticipate time to revenue there shorter, meaning we could probably Depending on RFP timing and things like that, that would be a this year type of thing, in terms of pipeline. Relative to places like Florida, While there's been really, really positive activity, it hasn't been signed yet. So we'll wait obviously until that's finalized. Those things typically take a few months relative to making sure that all the eyes are dotted, so to speak, both legislatively as well in terms of policy, in In terms of how they roll it out, so I would anticipate discussions with customers this year, I would anticipate revenue for those next year.

Speaker 7

Got it. Okay. And then can you talk about the shift to the all inclusive fee structure within commercial? What are you doing there? How many customers on that type of fee structure?

Speaker 7

What type of lift do you see to revenue when you get customers on that

Speaker 2

Yes. I mean, first of all, this is our it's a program that we've developed on behalf of customers and for the market. It's just a really favorable customer experience because it allows you to predetermine your usage of tolls as well as to have that on your bill when you turn in your vehicle. So So from that standpoint, traditionally had always been a product that was mostly at the sort of off airport type brands, but now Many of our customers are bringing that online to their airport brands or the mainline brands. And so overall, it's a much better experience for Customers are the renters, and therefore, our customers are really pleased with it as well.

Speaker 2

So we would anticipate further penetration in that as more toll roads open And more brands decide to adopt it.

Speaker 7

That's helpful. Thank you.

Operator

Your next question comes from Keith Housum from Northcoast Research. Please go ahead.

Speaker 5

Good afternoon, guys. Just Elaborating a little further on the prior question. Dean, I still remember the past discussions regarding the all inclusive pricing that perhaps will have a negative impact on margins. Can Can you perhaps talk a little bit about the development of that product further? And do you still expect to see that upon adoption?

Speaker 2

I'm not sure where the negative impact on margin came from, Keith.

Speaker 5

Okay. Maybe I'll add that.

Speaker 2

Yes. No, it's a overall, it's a great product for customers as well as for us. The adoption is being increased because our customers are being Seeing how it works well in different regions and so they're rolling it out more. Again, it's really at their discretion, not ours.

Speaker 5

Got you. Okay. Appreciate that. Craig, a little bit more on the guidance. I can appreciate the wanting to be a little bit more conservative.

Speaker 5

But can you give us a little bit of idea perhaps if you if the If we come in at 100% of TSA travel versus 97%, 98%, what's the incremental difference in terms of revenue for CS?

Speaker 3

I think it's hard to equate those 2. I hate to go to 1% gets us this, Keith, as I think you well know. And It's not quite that prescriptive, but if I took it forward and I said, let's say, I see The tolling and violations performance in the Q1 that I saw in the balance of the year now in our original plan, our original guidance, We assumed a little lower than $97,000,000 to $98,000,000 for the Q1. So I don't think you'd quite be able to see what you saw for the Q1 bring it through to the back half. But it would be $5,000,000 approaching $10,000,000 potentially if you were at that 100%.

Speaker 3

And I think what's important about that is that assumes that it's at the exact same mix that we saw and there's kind of nothing else going on And the portfolio then moves the other way. So it's not enough to bring it up, I would say, a factor of tens of 1,000,000 of dollars. But to the degree that we stay at exactly 100%, which by the way Keith that is where we closed the quarter. So from 1 to 3.31 that TSA throughput was Exactly 100%. As I drag that forward to the end of April, it's still at exactly that 100%.

Speaker 3

So if we were to stay at exactly that level, We could potentially see some upside of the Commercial Service Business.

Speaker 5

Great. Thank you. Appreciate it. Sure.

Operator

Your next question comes from Louis DiPalma from William Blair. Please go ahead.

Speaker 8

David, Craig and Mark, good afternoon.

Speaker 5

Good afternoon. Good afternoon.

Speaker 8

Was The impact from the New York City speed camera program shift from 16 hours to 24 hours, was that in line with The prior expectations that you set?

Speaker 3

It is. So if you go back and Think about total New York City revenue, we said that'd be down somewhere around $5,000,000 to $10,000,000 total year on year the way it Today, that's still what I see today. So, and the reason that it's down year over year, Louis, was because we have The difference of having product sales in 2022 is that shifted to ARR here in 2023, the timing of those things, which was offset Partially by the 20 fourseven, which went into place at the tail end of last year. So that's a slightly longer answer to your simple question. Yes, it is in and yes, it is as expected.

Speaker 8

Great. Thanks, Craig. And in general, were speed camera Net adds during the quarter strong even though that New York City contract has

Speaker 2

Completed. You mean outside are you just requesting outside of New York, you mean?

Speaker 8

Yes. Yes.

Speaker 2

Yes. I mean, I think everything was in line with plan.

Speaker 8

Great. And another one, switching To the commercial division, there's been a lot of initiatives for the different racks to Onboard electric vehicles, has that served as a benefit for your onboarding and title and registration businesses?

Speaker 2

It does. In as much as the fact that they're electric doesn't matter as much as if they're in board, they're sort of inflating new vehicles, which does impact Our ability both from a title and violations perspective and from a title and registration perspective. So yes, that's any time they're adding vehicles, that's good for us.

Speaker 8

Great. That's it for me. Thanks, everyone.

Speaker 5

Thanks, Louie.

Operator

There are no further questions at this time. This concludes today's conference call. You may now disconnect. Thank you.

Speaker 5

Thank you.

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