Verra Mobility Corp
NASDAQ:VRRM
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Verra Mobility Corp
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Good day. And welcome to the Verra Mobility Corporation Updated Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Saja Daudi, Vice President, Investor Relations. Please go ahead, sir.
Thank you. Good afternoon, and welcome to Verra Mobility's Second Quarter 2021 Earnings Call. Today, we'll be discussing the results announced in our press release issued after the market closed. With me on the call are David Roberts, Verra Mobility's Chief Executive Officer; and Tricia Chiodo, our Chief Financial Officer. David will begin with prepared remarks followed by Tricia, and then we'll open the call up for Q&A.
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 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, 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 material risks and other important factors that could affect our actual results, please refer to those contained in our annual report on Form 10-K/A and quarterly report on Form 10-Q, which are available on the Investor Relations section of our website at ir.verramobility.com and on the SEC website at sec.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.verramobility.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 leisure travel.
Consolidated 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 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 at both business segments we are 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 have been uniquely challenging for many businesses. However, our team has done a great job managing through the challenges and remaining focused 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. With economies reopening and scale returning, we are seeing the benefits of our strategic actions taken last year.
For the first six months of 2021, we have 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 strength of our core business and the continued adoption of data-driven intelligent and integrated travel solutions give us a confidence in our ability to maintain this momentum for the second half of this year and beyond.
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 a segment margin of 64%. The strength was broad-based with all key operating metrics exceeding expectations.
In addition, positive macro trends like the transition to cashless tolling continue to provide a powerful tailwind that supports the momentum of our business. During the pandemic, several tolling authorities across the country moved 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 a higher level of our product mix in 2022.
Despite the known industry challenges currently faced by the rental car industry, we believe the racks are effectively re-fleeting and being creative to keep up with the leisure travel demand.
In fact, our title and registration business segment, which represents approximately 7% of the commercial service revenue saw a sequential growth of nearly 133%. This robust activity is primarily related to an increase in RAC-related volume with some contributions from FMCs.
We continue to make steady progress in Europe as the pandemic-related shutdowns remain prevalent across the continent. Our strategic objective is to establish ourselves as a first of its kind, fully outsourced pan-European toll management solution provider. We continue to look for opportunities as we build a foundation and expand our footprint there.
Overall, I'm very pleased with our performance this quarter, which demonstrates how quickly we can scale when our customers need us, especially in a 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 school zone speed programs.
Adjusted EBITDA came in at roughly $26 million with healthy margins of 41%. I'm glad to report that we have started receiving payments on the outstanding New York City receivable. Based on the current pace of payments, we expect to make good progress toward collecting this receivable during the second half of this year and Tricia will share additional details about the timing and the impact of our cash flow shortly.
As a reminder, our long standing customer in the New York City Department of Transportation announced the expansion of its schools on speed camera program in 2019. Through 2020, we installed 1,020 cameras. And 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 2021. Thanks in part to 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 Redflex 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 in the early stages of the integration process, we believe the combination with Redflex creates significant cost synergies and 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 US and internationally. The team recently renewed and expanded a large multi-year vehicle-based mobile speed camera program for Australia's transport for New South Wales.
Additionally, in the US, we can now offer unique construction zone speed and railroad crossing programs, which complement our pre-existing offerings. We are very excited about the strategic acquisition and 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 CrossingGuard offering. Our pipeline of opportunities remain strong, and our teams remain engaged with various municipalities and school districts in their respective states.
With schools expected to be back in session in the fall, we anticipate a pickup in the activity for our CrossingGuard program specifically in New York, where we have a potential opportunity of 6,500 cameras.
We plan to install 650 cameras in New York, Washington and Georgia during the second half of 2021. 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 a new $100 million share repurchase program. Our capital allocation strategy has always focused on investing for growth through M&A first and then returning excess cash to shareholders.
However, current valuations, we believe the repurchase of our shares represents an attractive investment opportunity to redeploy excess capital and enhance long-term shareholder value creation.
Overall, we are happy with the progress we made during the first half of calendar 2021. With an improving business outlook for both 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 variant 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'll provide a more detailed overview of the second quarter financial performance, and then we'll open up the call for questions.
We provided a short earnings deck on our website that provides some insight to the quarter and has reconciliations from GAAP to non-GAAP results. If you're following along in the earnings deck, I'm on slide two, 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 US. And in Europe, processes violations and provides consumer and rack tolling 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 travel drove strong performance as the US rental car volumes improved throughout the quarter. And we continue to see positive trends in driving patterns.
There is more billable days for rental agreement, more toll usage and higher toll fees than in previous years. These trends have improved revenue without the full recovery of rental volumes. 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 EBITDA margins of 64%. This strong - this very strong flow through as a function of our strategic actions taken last year. We are ramping up some costs to capture revenue cycle as it returns, and we would expect margins to be slightly lower in the next two quarters.
Turning to the next slide. You see the results of the Government Solutions business. This segment operates photo enforcement programs for counties, municipalities and school districts. Our Government Solutions business delivered revenue of $62.2 million in the second quarter, improving $9.6 million year-over-year.
As a reminder, the total revenue for this 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 installing camera systems.
And I think it's important that we talk about these two segments sources of revenue separately. The service revenue in the first quarter was nearly $50 million, which grew $14.4 million or 40.5% 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 in our speed portfolio is primarily related to the New York City school zone of 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 of revenue generating cameras increased by approximately 50%. The growth in the segment was broad based. All of our business lines experienced double-digit year-over-year growth. Also note that in the quarter, we reflect 12 days of contributions 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 school zone speed program this quarter compared to 195 in 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 any supply chain constraints over the near term, we are working very closely with our suppliers and monitoring the upstream build parts. While we are targeting to install the balance of the cameras in 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 EBITDA margins for this business were 41.5%, up 38.7% in the prior year quarter. Separately, with higher product revenue expected for the balance of the year, we anticipate that margins for this segment to remain strong for the rest of the year.
As David mentioned, we are making good progress on the integration efforts with Redflex. Based on 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 to streamline the business.
As we have stated in the past, Redflex has much lower adjusted EBITDA margin profile relative to our Government Solutions business, which runs between 35% and 38% 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 businesses 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 performance 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 margins of 53% - were at 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 company reported net income of $4 million in the quarter compared to a loss of $23.7 million in the same period in the prior year. Adjusted EPS, which excludes amortization and stock-based compensation and other non-cash items was $0.10 per share for the current quarter compared to $0.07 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 was -- the effective tax rate was primarily higher due to permanent differences related to market-to-market adjustments on our private placement warrants.
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 non-cash expenses.
We've talked a lot about the outstanding balance of outstanding receivable with New York. At the end of June, the city of New York Department of Transportation owed us $127 million, representing approximately 59% of our net accounts receivable.
Although the balance is slightly larger than at the end of Q1, the momentum is moving in the right direction. We billed New York City, $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 just 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 30, we had debt of $1 billion net of $147.3 million of cash on hand. Our net debt was $854.5 million, which was 4.1x trailing 12 months adjusted EBITDA of $208.3 million. Given an improving in 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 capital to our shareholders in the form of the first ever share repurchase program by the company up to $100 million.
As a returns-focused company, we felt investing in our stock would unlock significant shareholder value. We will strategically execute this program, which we expect to complete over the next 12 months, and have ample liquidity to continue to pursue strategic acquisitions.
In summary, the favorable macro trends and the disciplined execution of our teams position us well for a strong second half of 2021. As such, we are reintroducing guidance. For the full year 2021, we are expecting total revenue in the range of $510 million to $530 million, which includes contributions from Redflex 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 million to $60 million, and we expect adjusted EBITDA to be in the range of $240 million to $245 million or adjusted EBITDA margins of 47% based on the midpoint of our guidance.
We continue to believe that their 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. [Operator Instructions] We'll take our first question today from Nik Cremo with Credit Suisse.
Thank you for taking my question. And congrats on the strong results, including Redflex. First, can you share what the guidance implies for Redflex revenue and EBITDA contributions in the back half?
And then as my follow-up, we noticed that commercial services revenue was growing faster than the rental car days at the RAC. And I was wondering if you could just explain the factors that drove that differential? Thank you.
Yes. Sure. No problem at all. We're thinking about the Redflex revenue in the back half of the year being - just call it right around $35 million and the overall contribution to that 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. It'd be somewhere around like the $4 million range to be - what it would be. So call it, roughly 10% on a flow-through for those dollars.
Okay, great. Thank you.
And then what was your other question? I apologize?
Why the revenue is growing faster than rents?
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 are really driving revenue results and profitability for us.
So they're taking longer rental agreements in that time period. They're running more tolls, which creates more billable administration fees, the higher toll usage and the actual tools that they're running are 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 T&R business had a very nice quarter as well.
Okay, great. That makes sense. Thank you.
Yes.
Next, we'll hear from Daniel Moore with CJS Securities.
Good afternoon, David and Tricia. Thanks for taking the questions.
Hey, Dan.
Let me start with just the trajectory and cadence. 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 and into July? And whether momentum is building that could maybe cause that to be conservative?
I definitely think that there's momentum that's building as we went out through this quarter. And we've held true with what we've said that Q2 would be better than Q1 and the back half would be better than the first half and that's still going to hold 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. Whereas 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 these factors in the prepared remarks, but the implied margin guide of about 47%, a little lower sequentially, obviously, an incredibly difficult comp.
Is it Redflex? Is it increased investment spend mix? If you just had to kind of rank order those relative impacts on the margin, implied margin guide? Any color would be great? Thanks.
Yes. I think some of it is Redflex in and of itself as it's coming on board. It's going to take us a little while to wrangle that, I think there is continued investment. We haven't pulled back our investment that we're having that we're putting into Europe and the European rack tolling. So that's still there.
And then I think probably the other factor is that we have been running extremely lean and not willing to add cost ahead of a revenue cycle. And then clearly, we saw a really nice revenue cycle hit us in Q2.
And you'd say that, hey, we need to be prepared. You can scramble for a quarter, you can't scramble for three of them. We would need to be prepared in order to pull that revenue back in as it returns.
Perfect. Last is just the housekeeping stuff. Tax rate, how do we think about it for the remainder of the year and beyond? And that leverage ratio you quoted below three 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 prior to any share buyback, we would expect that our yearend cash position would be about $300 million. And given where the midpoint of our EBITDA that we just guided to would be about $243 million. So that would get us to about a 2.9 times leverage.
On the - so that was a leverage question, what was the other?
Just tax rate. Going forward. It's been an unusual quarter, obviously…
Not 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 or permanent differences from a tax perspective.
Mainly any adjustments that we have to the TRA are anything we market to market adjust for the private placement warrants. So that's the reason that you get to the 69% tax rate because with a low net income number, large add-backs on the non-tax deductible items, it really drives up that rate.
But if you were going to think about sort of your annual effective tax rate, what should it be over a longer period of time? It should be closer to like this 34%, which is still high. But really, what that reflects is about a 21% federal tax rate and then call it like the - we're working on like a 10% or 12%, 14% on the - well, I should say, it's 10% on the state and then we've got some permanent items in there.
What's happening with that 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.
It's a long answer. But on an annualized basis, we should expect that this would normalize closer to a 34% rate than the wild swings we're seeing in each individual quarter.
Very helpful. Congrats on the momentum. Appreciate it. Thanks.
Yes.
We'll now hear from Dave Koning with Baird.
Yes. 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. Usually, Q3 is well above like 10% plus above Q2.
And I know there were some kind of one-off stuff like some of the registrations seem like incredibly strong. But why wouldn't it be up at least somewhat sequentially in Q3?
Yes. We do expect it to be updated. So sorry, we expected. So what we've said is Q2 was stronger than Q1 and the back half would be stronger than the first half for that revenue. So we do think it's going to be an uptick and that Q3 will be the peak.
What we don't - I don't know that you're going to see 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 it - there was just a lot of activity in Q2. Is that fair to say?
That's fair to say.
Yes. Okay. And then I guess my follow-up question, just in government. I look through some of the stuff. It looks like - kind of ironically Redflex, if you look at pro forma information, it looked like it actually grew 38%. In your Government ex New York also grew about 38%.
Is there any reason for Redflex or core Verra ex New York, let's 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 Verra Mobility business, along with the Redflex business should be growing at about the same rate. I think what you're looking at is you're looking at the pro forma table that is done on a GAAP basis, which basically says that you disconnect the balance sheet and the P&L from when they're - the point in time when they're brought in.
So it assumes that the transaction was 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 mid single digit type growth and not at that 38% that you just quoted.
Yes, that definitely makes sense. Got you. Thank you.
Yes.
Next, we hear from James Faucette with Morgan Stanley.
Thanks very much. Wanted to ask just a couple of incremental questions. First on Redflex, can you just repeat again kind of what you were thinking in terms of synergies, timing and realization? And I guess maybe how that compares right now versus what you had originally said? I know you stated in the prepared remarks, but I kind of missed it.
Yes, sure. We originally said that we were going to do between $8 million and $10 million in synergies. We've achieved $4.3 million of those already. But that being said, we did get our quick wins first.
I think the rest of them are going to take longer, and you'll see those play out over the next call it, three to four quarters with a longer tail for the product type savings that we expected.
So really, what we achieved real quickly was the cancellation of public company costs from their side. They were already working on some lease transactions and changing facilities that materialized really quickly. And then we were able to close a lot of job openings that we had because the combined workforce was able to fill those very nicely.
So that gave us some really quick wins early on. And the next ones will be a little harder to achieve, but we wanted to get some good wins out of the gate.
Good, good. Yes, good 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 a 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 could cause some additional cameras to slip into next year?
Yes. I think that's 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 that - and holidays that tend 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 a month.
So I think that's going to be the pace. And if we get lucky with some good weather, then we should be able to advance some of those earlier in the year, but the estimate is around what our traditional view of installing in the Northeast tells us.
Got it. And then last thing for me is you mentioned with the introduction of buyback authorization that you still think you have plenty of flexibility to do acquisitions or strategic moves like that. Is there anything in the pipeline that you're actively looking at?
Or just trying to get a sense of how active and - that you could be looking at acquisitions, what the potential there is? And I guess, how you're thinking about what seemed to be particularly elevated valuation ranges for potential deals right now?
Yes. I mean, I think that's - your last point is part of the reason why we felt that we would do one of the reasons 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 three 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 at 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 place for us.
Great. Thanks a lot.
Yes.
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 Redflex acquisition, does Verra plan on staying in all the geographies that Redflex was doing business? And do you plan on keeping all of Redflex's 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 and where we see growth, obviously, places like Europe and Australia or some of those. And then, again, to the extent that 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.
And part of, obviously, the calculus was that in the US, they had some products that we didn't leverage here. And that they had access to. So we're 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've said, the exciting part of it is, one, 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 a like company in some regard.
I think the most - the other exciting thing is the international opportunity. We've always been silent internationally within photo enforcement. And so the ability to have products and services and people that have knowledge and skill and relationships and customers, that's really exciting to us as well.
I think what we've learned is that, I think on the margin, most of what we would have expected is exactly what we got, which is, hey, there's going to be some great opportunities to grow as well as some synergy. It's a similar business in a lot of regards.
But just like any other acquisition, there are things that are going to be different. But I would say, at least at this point, both the pace and the outcomes are heading in a trajectory that we would say are quite positive.
Okay, great. Thanks. And congrats again.
Yes. Thank you.
And our final question will come from Louie DiPalma with William Blair.
David and Tricia, good afternoon.
Hey, Louie.
Last quarter, your 10-Q indicated that over 1,000 cameras were temporarily inactive because of the pandemic. Are those cameras coming back online? And do you have an approximate number on how many of those are temporarily inactive?
Yes. So the majority of those cameras would have been related to CrossingGuard, where many of the school bus programs were 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.
Yes, because during this time frame, we actually maintained almost 6,000 active cameras, 5,966 during the three months ended this time frame. So a lot of those cameras that were inactive have gone back to work, especially with the return of schools.
I think what you're seeing is also at least across the summer. And we 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 will take a while to cycle through the citation time frame.
Thanks, Tricia. 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 a very similar situation, which is we're close to a couple of pilots, in Ireland and another country. And so because we didn't have those signs just yet, we didn't talk about them on this particular call, but all of those are moving forward. The team is preparing to launch those. So hopefully, we'll have some positive news on that sometime within the quarter.
Sounds good. Thanks, David and Tricia.
Yes. Thanks, Louie.
Yes. And I think that's the last question.
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.