Verra Mobility Corporation (VRRM) Q1 2019 Earnings Report, Transcript and Summary

Greetings, and welcome to the Verra Mobility First Quarter 2019 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Marc Griffin, Investor Relations. Please go ahead.

Thank you. Good afternoon, and welcome to Verra Mobility's First Quarter 2019 Earnings Call. Today, we'll be discussing the results announced in our press release issued after the market close. With me on the call this afternoon is David Roberts, Verra Mobility's Chief Executive Officer; and Tricia Chiodo, Chief Financial Officer of Verra Mobility. They will begin with prepared remarks, and then we'll open up the call for Q&A. During the call, we will make statements related to our business that may be considered forward looking, including statements concerning our financial guidance for the full year of 2019, our plans to execute on our growth strategy, our ability to maintain existing and acquire new customers and other statements regarding our prospects and plans. Forward-looking statements may often be identified with words such as we expect, we anticipate or upcoming. These statements reflect our views only as of today and should not be considered our views as any subsequent date. We undertake no obligation to update or revise these 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 material risks and other important factors that could affect our actual results, please refer to those contained in our annual report filed on 10-K with the SEC and all of our other available filings in the Investor Relations section of our website at ir.verramobility.com and on the SEC's website at sec.gov. Finally, during the course of today's call, we 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 of the market today, which is located again on our website at ir.verramobility.com and on the SEC's website at sec.gov. With that, let me turn the call over to David.

Thank you, Marc, and thank you to everyone joining us on the call today. 2019 is off to a strong start across all of Verra Mobility's lines of business, with our vision of being a global leader in smart transportation. We continue to make strides in both our core business as well as some of our longer-term initiatives, which include the expansion of speed enforcement in New York City and expanding into Europe. As Tricia will discuss in detail later during this call, on a pro forma adjusted basis, our first quarter revenue grew 12% year-over-year to $98.5 million and our pro forma adjusted EBITDA came in at $51.3 million, up 12% year-over-year. As a reminder, in the Commercial Services segment, we focus on products that make tolling, violation processing and title and registration smarter and easier for our customers, which comprised a 64% of revenue for the company. We are the largest provider of toll management to rental car companies and fleet management companies in North America. During the first quarter, the Commercial Services segment on a pro forma adjusted basis grew revenues 22% year-over-year to $62.6 million and reported pro forma adjusted EBITDA of $38 million, up 28% year-over-year. During the quarter, we collaborated with our customers on increasing penetration and adoption of tolling programs through various pricing and operational initiatives. In addition, we continue to see expanded opportunities in our title and registration offering, as more customers are looking to outsource providers around this complex yet critical activity. Finally, a tremendous effort was spent setting up our European operations, negotiating with the European toll authorities and working with potential customers on piloting toll management solutions. We don't have any specific updates at this time but would expect to have more detail as the year progresses. We're very excited about the opportunities for our Commercial segment. With an increase in both the number of toll roads in North America and the ongoing conversion to cashless lanes, we expect 2019 to be a strong year. The remaining 36% of our business comes from our Government Solutions segment. We are a leader in a photo enforcement in North America, including red light, speed and school bus cameras. We have become a trusted vendor for local municipalities and school districts who are serious about increasing road safety in their communities. During the first quarter, on a pro forma adjusted basis, the Government Solutions segment declined 3% year-over-year to $35.9 million and reported pro forma adjusted EBITDA of $13.2 million, down 17% year-over-year. The decline in service revenue was primarily driven by the elimination of the red light camera program in Miami, which occurred in Q1 of 2018. And because this segment has a higher fixed cost component, meaning that a small decline in revenues has a more pronounced effect on the EBITDA line. As the first quarter came to a close, New York State passed a legislation that will increase the number of school zone speed cameras in New York City. We're very excited for the opportunity to expand an important safety program, which we have been an integral part of for over 10 years. The program currently permits speed enforcement -- speed photo enforcement at 140-plus school zones and will soon expand to cover 700-plus school zones in the New York City area. We are working with our counterparts at the New York City Department of Transportation on an initial rollout schedule, and we'll update the investment community as information becomes available. We maintained our consistently high renewal rates again in Q1. During the quarter, we've renewed key customer programs in Tampa and Seattle. And additionally, we won a key new contract in Philadelphia. We're also currently conducting multiple school zone speed pilots in Georgia as a follow-on to the enabling legislation that passed last year. Overall, we continue to execute on our strategic initiatives for 2019 and are very pleased with our traction during the first quarter. As you know, late in 2018, we launched Peasy. Peasy is a nationwide pay-as-you-go consumer mobility platform that currently can be used for tolling and can expand to include other applications such as parking and registration renewal. We are driving adoption of our platform mostly through marketing partnerships and integration with other mobility applications. One of our first platform extensions is through our partnership with Arrive, the leading provider of branded and white-label last-mile mobility solutions. This partnership will extend the Peasy platform to include parking capabilities from Arrive. As this is a new product, adoption has been slower than we had anticipated, and we have reduced the expectation of subscribers in 2019 accordingly. In terms of financial impact, we are not expecting any material contribution this year. Peasy aside, we are still anticipating a very strong year, and as Tricia will mention shortly, are bullish about the company's 2019 financial performance. Our European initiatives are progressing well as we are finalizing the agreement with our first tolling authority located in France, which will allow us to process tolls for our rental car customers throughout France and positions us for a smooth launch for toll processing in Spain and Portugal as well. Additionally, we are working with certain existing U.S. rental car customers that have European operations to finalize terms of the toll processing pilot program to launch this summer. Finally, we hired Mike McMillin as VP of Corporate Development and Strategy to help build out the acquisition parameters through which we can accelerate our leadership in the smart mobility solution space. We are focused on adjacent areas, which allow us to better serve our customers while expanding and solidifying our global scale. Companies that fit best will support our competitive modes while adding smart technologies, which prepares for the future of connected vehicles and autonomous driving. With Mike onboard, we will be better equipped to evaluate strategic acquisition propositions from Verra Mobility. Welcome aboard, Mike. In summary, we reported a solid first quarter and continue to execute on our initiatives, which will drive a strong 2019. With that, let me hand it over to Tricia to walk through the financials in more detail.

Thanks, David, and good afternoon, everyone. I'll provide a more detailed overview of our first quarter 2019 financial performance. And then we'll open the call up for questions. As a reminder, most of our commentary today will reflect the company's results for Q1 2018 on a pro forma adjusted basis, meaning that we've adjusted the financial results to include the impact of 2 acquisitions in 2018 as well as carving out transaction costs and other onetime costs from our operating results. Q1 2018 is the final quarter in which we will be presenting pro forma results as the 2 strategic acquisitions were fully included in our reported results starting in the second quarter of that year. We've provided a short investor deck on our website that has a reconciliation from GAAP results to the pro forma adjusted information we'll be discussing today. And if you're looking at our investor deck, on Slide 2, we have our consolidated results for the quarter. Total revenue was $98.5 million for the first quarter and grew $10.5 million or 12% from $88 million for the same period in the prior year. We're very pleased with this solid result as it reflects the strong demand we're seeing for our tolling products. Adjusted EBITDA of $51.3 million increased by $5.6 million or 12% from the pro forma adjusted EBITDA of $45.6 million in the prior year. First quarter adjusted EBITDA margins remained strong at 52%. The company reported net income of $2.8 million in the quarter compared to a net loss of $22.5 million in the same period of the prior year. The net loss in the first quarter of 2018 was largely attributable to transaction expenses and loss on extinguishment of debt that did not recur in 2019. Net income, adjusted to exclude acquisition, amortization and noncash stock compensation for the quarter, was $28.1 million compared to the net loss of $9.1 million in the year-ago period. The company generated $37.4 million in cash flow from operating activities during the first quarter of 2019 compared to using $3.2 million in cash flow from operating activities in the first quarter of 2018. The improvement is directly correlated to the improved net income. We spent $9.2 million on CapEx in Q1 of 2019 compared to $5.9 million in the prior year. Free cash flow, which is cash flows from operations less CapEx, was $28 million for the quarter. As of March 31, we had total debt of $901.2 million and cash on hand of $91.5 million for net debt of $809.7 million, which was 3.8x trailing 12-month adjusted pro forma EBITDA of $215.1 million. On the next slide, we have revenue and adjusted EBITDA by segment. Our Commercial Services segment deliveries tolling, violation processing and title and registration services to rental car companies and fleet management companies in the U.S. and processes violations in Europe. Total revenue for this segment grew 22% to $62.6 million in the first quarter of 2019, up from $51.2 million in the same quarter in the prior year. In the current quarter, we saw increasing number of billable days across our combined rental portfolio and a higher level of tolling activities across our entire product portfolio. We expect that demand for our tolling and products to continue to be strong into the next quarter but would expect the year-over-year growth rate to be lower as we cross over some more difficult comparable periods. Pro forma adjusted EBITDA for the segment of $38 million in the first quarter of 2019 grew $8.2 million or 28% year-over-year from $29.8 million in Q1 of 2018. Adjusted EBITDA margins for Commercial Services was 61%. Our strong EBITDA performance is driven by our continued revenue growth with the impact of well executed integrated -- integration synergies. Government Solutions segment operates red light, speed, school bus stop arm and bus lane photo enforcement programs for municipalities and school districts, offering an end-to-end solution from providing and installing equipment to printing and mailing citations. Total revenue for the segment was $35.9 million in the first quarter and declined approximately $900,000 or 3% from $36.8 million in the first quarter of 2018. Red light programs declined $1.8 million from the comparable period. The decline was primarily attributable to the loss of Miami program, and to a lesser extent, lower volumes on some of our variable rate contracts. These declines were offset by growth in speed and bus lane revenue. Revenue from CrossingGuard, our school bus stop arm program, was flat year-over-year despite the installation of nearly 400 new systems because of a statutory issue in Georgia. As you recall, on our year-end earnings call, there was a change in a Georgia statute, which limited the volume of citations in our CrossingGuard program and impacted revenue for Q4 2018 and Q1 2019. In total, there were 4,604 camera systems installed in March of 2019 compared to 4,252 at March 31 of 2018. Q1 2019 EBITDA of $13.2 million declined $2.6 million from $15.8 million in the same period of the prior year. The decline was primarily the result of reduced revenue. Adjusted EBITDA margins for this business segment were 36.9%. Tax expense for the quarter was $1.3 million representing an effective tax rate of 31.9%. The effective tax rate increase is primarily due to higher nondeductible executive compensation and other requirements to reflect certain deductions when they occur, including the deduction for equity compensation and the reversal of uncertain tax positions, which will benefit future periods. We expect our normalized tax rate to be 26% for the full year. In summary, we continue to execute well, delivering strong top and bottom line results and believe that Verra Mobility remains well positioned to maintain this momentum and operating discipline throughout 2019. As David mentioned, New York City will be expanding their school zone speed program, and we anticipate this will positively impact product revenue in the second half of 2019. We are working with our counterparts in the New York City Department of Transportation on an initial rollout, but don't feel that it's the appropriate time to update our guidance. Our guidance for 2019 remains with revenue in the range of $428 million to $436 million and adjusted EBITDA in the range of $235 million to $240 million. Thank you for taking the time to join us on the call today. And with that, we'd be happy to take questions now.

[Operator Instructions] Your first question comes from the line of Daniel Moore with CJS Securities.

So starting with Commercial Services revenue growth obviously reaccelerated nicely in the quarter. Can you give us a sense for contribution from Europe? And then more generally, you provided some nice color, but additional breakdown on volume of transactions versus pricing, any other factors, which may have impacted the year-over-year compares, be it weather or others. Just a general a little bit more color on the acceleration of the business. And Tricia, I think you said, obviously, tough to sustain that type of growth in Q2, but maybe any more detail around what you're seeing there would be great.

I mean -- I guess, I think broadly, so maybe the -- we won't get into the transaction. But I think what you can see, if you look at North American tolling, is that our customers have had a good quarter as well. There's an increased volume from them in terms of the number of rental agreements that they're seeing. They report each of those in their own financial statements. In addition to that, we are seeing a nice adoption of the tolling program as a percentage of those RAs. So we're seeing overall -- if their growth is -- if we remain constant, but they grow, we grow as well. In addition, continuing growth of toll roads as well as the conversion of cashless continues to be a bit of a tailwind in the overall volume story for the Commercial, or they're maybe more specifically rental car tolling.

And in relation to your question on Europe, the European expansion that we're undertaking has not started to produce revenue yet, and we don't expect it to bring its revenue until the back half of the year. So that's not a portion of this growth. So this growth is sort of that new expansion that we have in Europe. To your question earlier about whether this is really price or volume, the majority of this is really around volume. It's the number of billable days, and it's also the number of tolling activities that we have. The indication of the more difficult comparable quarter as we crossed over to Q2 of 2018 is really to do with the change in margin share of one single contract that we had. So that would be the only component of this that would be price.

Perfect. Helpful. And then switching gears, maybe looking out a little bit, but certainly, New York City looks like congestion pricing is likely to move forward over the next couple of years. You mentioned some other new opportunities. Just maybe talk about the level of dialogue you're seeing with different cities and maybe frame that relative to 12 months ago?

Yes, I think there is obviously -- look, I think the reality is that if you look at New York, they're a trendsetter. So I mean, we really won't speak directly to the level of conversation that we're having with New York. But I would just say, and I think I've said previously that we see congestion pricing as a unique opportunity for us, that we are well situated for it, given our knowledge of all of the components that make a successful congestion pricing program work. We -- those are all contained within Verra Mobility. So we think that we have an opportunity there. I would then say if you look and sort of follow the news related to that, Dan, which I know that you do over the week in Washington, D.C. had an article where they're going to consider the congestion pricing, Philadelphia is going to consider it. There's other cities that are going to be quickly following suit related to congestion pricing, which broadly is a tolling program that has some unique enforcement and customer interactions that go with it, but it's effectively a tolling program. So we think that we're well situated, and we'll clearly be thinking strategically on how we can best perform related to those types of opportunities not only in the United States but around the world.

Perfect. The last one, and then I'll jump back in the queue. But in terms of -- it sounds like you're going to start to see some revenue at least certainly on the product side in the second half of the year with the expansion of New York City opportunity for safety zone enforcement. And yet, obviously, I guess, I feel like you should leave the guide untouched for now at least from a top line perspective. Maybe just frame, if you could, magnitude of the opportunity to some -- and what that might imply for the higher end of the range of your guidance from a revenue perspective?

Yes, in our -- just for clarity, we did already guide in 2019 that we were going to have more product sales. And that's because we did anticipate [indiscernible] school zone speed for New York City. We did not expand -- we did not anticipate this magnitude of expansion for New York City. So if you want to think about comparabilities, last year, we had about $5 million worth of revenue in product sales. Our guidance includes double that this year, so about $10 million. And we were thinking that was right around this 75 to 100 cameras that might be installed in that year. And right now, the city is looking to expand to close to 300 in their first expansion tranche that they would do. The reason that we have reluctance in order to update guidance is that we don't have a timing of when that's going to impact. So -- and obviously, the longer that the timing delays before we actually get the go-ahead to start installing can really impact the total revenue for the year. But when we get that information, we'll certainly let you guys know.

Our next question comes from the line of Ashish Sabadra with Deutsche Bank.

Congrats on the solid quarter. My question on the New York City, the safety -- school safety enforcement as well. As we think about the opportunity not just for this year, but just as we think about expansion in 600 schools, can you help us frame how many cameras, and is there any way you can think about how big that opportunity is? And then as we think about the rest of the U.S., as you started gaining more traction, a follow-up there would be the addressable market.

Sure. I guess, the best way to think about New York City would almost be like a TAM if you were to say -- as they think about school zones, they want to get to around 700 total. And most of those, if not all of those, would require 2 cameras per school zone is the best way to think about the total size of the opportunity. Again, the sequencing and the timing and the role of that is where the real TBD is. And we're just really trying to be a good partner to the city as to how they think about because they do -- they have to do a lot of work on these programs as well. So they have to build out an organization to support in effect a fourfold, fivefold increase in the total size of the program. So that's why we're not as -- we don't have much data to share at the current time. What I would say is that as I mentioned in my opening comments, Ashish, that we are now starting to see some traction in the state of Georgia, which was opened up for school zone speed legislation earlier last year in the March time frame and the fact that it's now been a year, it's very not atypical to a brand new program for a local government. So we are anticipating to start to see the fruits of our labor there in the back half of the year. And I would say that -- and we've calculated the total TAM there, meaning every school zone in the major metropolitan area of Georgia was around $50 million. Clearly, that's the most aggressive view of that, but still it's a great opportunity for us to get into a state that's really embraced photo enforcement as part of their overall road safety programs. And then I think what you'll see is other states and other cities start to ask questions about how they can think about it. You saw that Philadelphia has an expansion in their program. So there'll be more. Right now, the primary ones clearly are New York City and Georgia are the most clear and present to us.

That's great. And then just for our clarification purposes, can you just talk about how you make the revenue stream on these cameras? Are there upfront installation fees or installation revenue as well as ongoing processing revenues? Any color that you can provide on those fronts.

Yes, and that's exactly the way that it works, Ashish. So there would be New York City is unique in that they buy their product. So they would buy the camera and the related installation. So that's where you would see that product revenue jumping up from where it was last year going forward. And then you can think about those cameras that once they're installed is we have a service contract in order to maintain the cameras, process those citations and do the image crop and the transaction processing associated with it. And we get -- so if you wanted to think about -- I don't want to talk about a customer-specific revenue, but I can tell you that, that speed portfolio across all of our customers generate per camera at about $3,800 per month is what they're generating right now. So that's -- so you would say that once the cameras are up and installed, it wouldn't be that specific revenue, but that's what the product portfolio is producing right now per camera per month.

That's great. And then just on the Commercial, obviously pretty good acceleration there. But as you think about the increased toll and the shift to cashless tolling as well as increased penetration at your customer, how should we think about the opportunity over the near term, like not just 2019, but over the next 3 years?

We've always said that eventually there will be an effective tapering of the growth over time. And we think that tolling in North America would be somewhere in the 6% to 8% longer-term view. Clearly right now, we are the RAC -- that we will exceed that for this year as the RAC businesses are doing well and our business is doing well within them. But I'm -- if you follow the tolling side, there is more tolling being considered right now than I remember. There is 3 new toll roads that are being considered by the Florida legislature. There's some up in Connecticut. There's going to continue to be an increase of that, given the infrastructure deficit that we do have. So we feel very positive about that number, which is also why we did the deal in Europe was to expand that capability into Europe that has effectively -- it's a bit more greenfield and should grow at a higher level once it gets going.

[Operator Instructions] Our next question comes from the line of Louie Dipalma with William Blair.

I was wondering, have you fully already achieved the synergies associated with HTA on the cost and revenue side?

No, we haven't. So we started integrating HTA -- we acquired them in March of 2018 and got a lot of our synergies underway in the back half of 2018. So we do believe that overall, we'll have about $10 million benefited from synergies in 2019. But what you'll see, as we cross over the back half of the year, we'll get into more difficult comps as far as those will smooth out. And the synergies are really related. We did a complete org structure in June of last year. We did a more refined org structure in December or I should say fourth quarter of last year. So we'll see those synergies play out across that time period because of the year-over-year benefit of the run rate.

And regarding Europe, is everything proceeding according to your internal time line in terms of the different country rollouts and the partnerships with the tolling authorities?

Yes, I think overall, it's probably a little bit slower, which wouldn't be surprising, given the fact that this is new to the world. I would say that it's definitely not due to the lack of desire or the openness of either working with the toll authorities or the customers. It's such a new program for them, they have to go through their own hoops to figure out how to support it. It's not something that they've done before. But we clearly have line of sight to both customers as toll authorities that want to be part of it. So it's probably moving a little bit slower, but nothing that would be something to be overly concerned about.

Okay. And in the prepared remarks, did you mention that you're working with multiple of the big 3 U.S. RACs? Or you just only plan on trialing with one for calendar 2019?

Yes, I think we're in conversations, but we haven't disclosed either who or how many, because we're also speaking to European RACs as well.

Our next question comes from the line of Brian Hogan with William Blair.

And also on the New York City speed camera rollout, you have 140 cameras today and up to 750 from what I've seen from them overall. But I guess, my question is, are they going to RFP it? Or are you going to have the entire 750? What is -- what can you share from that front from a contract perspective?

Yes, I mean, whether or not the city determines to do an RFP, they -- that's going to be -- that's their decision. What I would say is that there is a change request that was publicly out on the New York City site for an increase to the current year for an expansion of 225 cameras for the year relative to our plans. So there was a change request. It's out on their site. It was approved and we're moving forward with it. So I guess, what I would say is where -- we stand ready to serve our customers and continue to run, manage and expand the program that we've solely done by ourselves for the last decade.

All right. Helpful. On the Peasy, why do you think the adoption has been slower than anticipated? And two, I think you anticipated run rate exiting 2020 was somewhere between like $13 million and $15 million of revenues. Are you still expecting that? Or is that not the case and it's going to be offset by something else. I'm just kind of curious on your Peasy product.

Yes, I mean -- so the first part of your question is why it's a little bit slower. I mean, part of it is, it is a new-to-the-world product at least en masse. So we've always known that: one, we wanted to go through channel partners, which has been our -- that's been our strategy since day 1 as we're more of behind the scenes and we want to leverage channel partners to redistribute products. And while we have a very active pipeline of companies we've spoken to from -- and we've landed a few, as you know, with either GasBuddy and now Arrive, they just -- it's a new-to-the-world product. It takes some level of time for them to understand the value and how it can benefit their users as well. So that's been a little bit slow. Two is, we needed to build out functionality that would allow us to test different pricing mechanisms. And so that's something that we're going to begin to do, to really pilot other ways to create incentives for people to adopt the program. So that's underway as we speak. And then thirdly, to your question is, I don't think we would anticipate that $13 million to $15 million run rate but to your -- last part of your 3B of your question is, I think that we would find other ways to cover that through other aspects of the business. And we still think that there is a unique opportunity for Peasy to be a unique platform. We're very excited about the Arrive partnership that we'll have functionality that it really goes to the vision of a singular mobility platform that allows people to use frequently these driver-related services that are frequent, so tolling being one, integrating parking into it, and then over time, looking for other services that make sense that we either build, borrow or partner with or buy. That's -- we're really excited to see the results of that as we launch that functionality over the summer.

Sure. On the Commercial business, I guess, I'm trying to ask, are you seeing increased penetration? Is that the primary driver? I know you've articulated some of that transaction days. And I guess, I'm asking that because Avis, I think they reported transaction days in United States being down 1% in their first quarter. So I was just thinking, are you seeing increased penetration as driving that or...

Yes, there's definitely a higher usage rate. If you look at even with the shift to usage day, the usage has actually remained actually quite high relative to our initial expectations. And you'll also look at Hertz that was -- actually had a really good quarter as well, which is growing. So -- and Enterprise while not public, I think they had a strong quarter as well by what we can tell. So I think generally, it's a bit of both. But the volume certainly is much higher right now to Tricia's point, which is where we're seeing the culmination of slight growth within the RACs as well as a slight increase in adoption plus the increase of cashless tolls. And the new toll roads are kind of coming together nicely in the first quarter of the year.

[Operator Instructions] Our next question is a follow-up from Daniel Moore with CJS Securities.

Just maybe a modeling question or 2. SG&A, if we look at Q1, is that a reasonable run rate to build off of? Do you have incremental public company and/or other expenses that we should think about as we build the remainder of the year?

I think it's a pretty good run rate for us. We've already started processes for stocks integration, other items like that in Q1. So I would think that, that's probably a pretty solid run rate.

Got it. And then cash generation obviously was very strong. Just maybe talk a little bit about working capital, in particular timing of payables expectations over the next couple of quarters. And if you did say that, I apologize, but just CapEx expectations for the year?

Yes, our CapEx expectations for the year should be right around $28 million -- ranging between $25 million and $28 million. There was a big chunk of CapEx that was spent in the first quarter associated with -- a lot of times, we have to buy equipment for customer sites prior to installation. And so that's the reason that CapEx was larger in Q1 as we prep for those installations later in the year. As far as working capital goes, I don't anticipate big swings within working capital coming up. One of the things that we did have in working capital that would not be sure to repeat would be that we had a customer who put down a large deposit for title and registration services -- some of our large customers because we do pay the title and registration on their behalf. They pay those monies to us in advance. So that was actually creating a working capital fluctuation that we don't anticipate will repeat itself in the next quarter.

Very helpful. And leads to last one from me specifically on that title and registration. Sounds like that piece of the business has actually picked back up. Maybe just talk about where you're seeing the growth from RACs versus fleet management companies? Is it expansion of existing customers? Any color there.

Actually, it's timing. So title and registration was actually up by $1.2 million roughly, I don't know if that's the exact number, on a quarter-over-quarter basis between this year and prior year. And the majority of that is associated with the timing of the -- of when the registrations are due. So think about it if you've got registrations that are due in the end of March or at the end of a month or, let's say, the end of December. And in some years, our billing cycle may bleed over into the other time periods, and it creates volatility in a quarter-over-quarter situation. We do -- we don't anticipate that the growth in title and registration for the quarter will remain for the rest of the year. So you can think of title and reg as being about a 12% grower on the top line, 10% to 12%.

Ladies and gentlemen, we have reached the end of the question-and-answer session. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.