8/13/2020Verra Mobility Loses Money During Virus Scare
Photo ticketing cameras and toll roads drag Verra Mobility into the red.
The largest operator of speed cameras in the United States is losing money in light of the Covid-19 virus panic. American Traffic Solutions (ATS) traditionally has outperformed its money-losing Australian rival, Redflex Traffic Systems. In 2018, ATS decided to diversify operations by merging with toll road giant Highway Toll Administration, with the combined entity going under the new name Verra Mobility. Verra Mobility announced on Friday that its earnings had plunged.
"Some of our largest customers have indicated that their business volumes had fallen nearly 80 percent in April and 60 percent in June," Chief Financial Officer Patricia Chiodo explained on a conference call with investors. "The business segment derives the majority of its revenue from tolling services provided to rental car companies, which has been greatly impacted by stay-at-home orders and reduced travel due to Covid-19."
Overall, the company saw its earnings drop fifty percent over last year, as toll roads can only earn a profit by creating traffic congestion. Verra Mobility is also feeling the impact of the Texas ban on red light cameras, which cost the firm $2.9 million. Verra Mobility began firing its employees to make up for the losses.
"When widespread closures, travel bans and shelter-in-place orders first started, we acted quickly and decisively to prepare our business for the ensuing challenges these orders will have on our business," CEO David Roberts said. "Those measures that we took included the elimination of discretionary spending in non-essential corporate travel, a hiring freeze on all non-essential positions and the elimination of all discretionary capital expenditures. For Q2, we instituted pay cuts for many of our executives as well as cash compensation for our board. Finally, we furloughed approximately thirty percent of our employees for ninety days. After the ninety-day period, the majority of the furloughed employees were formally laid off."
Investors were told the cash flow problems were temporary, as new automated ticketing opportunities would more than make up the difference.
"The Commonwealth of Virginia passed legislation in April that authorizes work zone at school zone speed cameras throughout the state," Roberts said. "We are excited about the opportunities in Virginia and believe the obtainable TAM [total available market] is approximately $50 million."
Verra Mobility's total debt stands at $870 million.