Core Insights - The new automated photo enforcement contract with the New York City Department of Transportation is expected to have a five-year term with a potential five-year renewal, valued at approximately $963 million [35][36][37] - Annual service revenue is projected to grow from about $135 million in 2024 to between $165 million and $185 million by 2027, with additional product revenue from the city’s equipment purchases expected to add $20 million to $30 million in both 2026 and 2027 [1][36] - The red light camera expansion program is anticipated to generate $30 million in revenue in 2025, with $10 million from product revenue and $20 million from installation services [5][30] Financial Performance - Total revenue for Q3 2025 increased by 16% year-over-year to $262 million, with all business segments meeting or exceeding internal plans [8][20] - Adjusted EPS for Q3 2025 rose by 16% compared to the prior year, driven by operating performance and reduced interest expenses [22][30] - Government Solutions revenue grew by 28% year-over-year, with a 46% increase in revenue from New York City, primarily due to new red light camera installations [10][26] Segment Insights - Government Solutions service revenue increased by 19% year-over-year, while Commercial Services revenue rose by 7% [21][26] - T2 Systems, the Parking Solutions business, saw a 7% revenue increase, driven by a 3% rise in SaaS and services revenue and a 30% increase in product revenue [15][27] - The company anticipates Government Solutions to grow in the low to mid-teens for total revenue in 2025, driven by new camera installations [32][36] Legislative Impact - Recent legislation in California is expected to add an incremental $140 million to the total addressable market, increasing the potential market to approximately $365 million, with the possibility of expanding to $500 million with further legislation [11][12] - The company is actively pursuing contracts in California, including a school bus stop arm program and a speed program in various cities [13][76] Future Outlook - The company expects total consolidated revenue growth to moderate to mid-single digits in 2026, with adjusted EBITDA margins anticipated to decline by 250 to 300 basis points due to the New York City renewal contract [16][39] - The company plans to invest in a new smart mobility platform, Mosaic, which is expected to drive margin expansion and productivity improvements starting in 2027 [41][42] - A $150 million increase in the stock repurchase program has been authorized, bringing the total to $250 million, reflecting confidence in long-term growth [19][44]

Financial Data and Key Metrics Changes - Consolidated revenue growth of 5% in Q4 2024, adjusted EBITDA increased by 12%, and adjusted EPS rose by 38% compared to the prior year [8][30] - Free cash flow for Q4 was $22 million, slightly above expectations, with a net leverage of 2.4x at year-end [8][46] - Reported a net loss of $67 million for Q4, primarily due to a $97 million goodwill impairment charge [33][34] Business Line Data and Key Metrics Changes - Commercial Services revenue and segment profit increased by approximately 4% year-over-year, impacted by a $3 million prior period adjustment related to tolling activity [9][31] - Government Solutions service revenue grew by 5% year-over-year, with a significant increase in segment profit by 44% [10][41] - T2 Parking Solutions revenue declined by about 13% due to lower professional services and one-time hardware sales, with segment profit dropping to $3 million [11][43] Market Data and Key Metrics Changes - TSA passenger volume increased by about 5% in 2024, indicating strong leisure and business travel demand [12] - Cashless toll penetration increased from 67% to about 70% in 2024, with 14 new cashless toll roadways opened [14] - New legislation in 2024 is expected to create a total addressable market of approximately $185 million, with potential expansion to over $300 million [15][16] Company Strategy and Development Direction - The company aims to stabilize the Parking Solutions business in 2025, with expectations of flat revenue and a focus on rejuvenating the sales funnel [23] - Continued investment in capital allocation, with $200 million deployed for share repurchases in 2024 [24] - The company anticipates revenue growth consistent with a long-term outlook of 6% to 8%, albeit at the low end of that range for 2025 [26][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in resilient travel demand and ongoing strength in Commercial Services [27] - The company expects strong sales bookings in Government Solutions to drive solid revenue growth in the foreseeable future [28] - Management remains optimistic about achieving long-term revenue and adjusted EBITDA targets set for 2026 [60] Other Important Information - The company recorded a non-cash impairment of goodwill related to the T2 business to align carrying value with the current environment [21][44] - The company has maintained significant liquidity with an undrawn credit revolver and successfully reduced borrowing costs through debt repricing [46][49] Q&A Session Summary Question: Follow-up on Commercial Services business and travel trends - Management indicated that TSA performance is expected to average 102.5% for 2025, with a seasonal ramp-up anticipated [65][66] Question: Update on Government Services business and contract win rates - Management noted they are winning more than their fair share of contracts and expect revenue to build over the next 12 to 18 months [71][72] Question: Timing for clarity on NYC RFP outcome - Management stated that clarity on the NYC RFP is expected in Q2, dependent on the city's decision-making [81] Question: Confidence in Parking Solutions business turnaround - Management expressed confidence based on market growth and new leadership's execution capabilities [112][113] Question: M&A opportunities and share repurchase strategy - Management confirmed they remain opportunistic on share repurchases, contingent upon the M&A pipeline [116]