Financial Data and Key Metrics Changes - Total revenue for the quarter increased by 6% year-over-year to $223 million, driven by outperformance across all business segments [6][16] - Adjusted EPS rose by 11% compared to the prior year, reflecting strong operating performance and share repurchases [6][18] - Consolidated adjusted EBITDA for the quarter was $95 million, an increase of approximately 3% year-over-year [17][18] - Net income for the quarter was $32 million, with an effective tax rate of 28% [17][18] Business Segment Data and Key Metrics Changes - Commercial Services revenue grew by 6% year-over-year, with RAC tolling revenue also increasing by 6% [19][20] - Government Solutions service revenue increased by 4% year-over-year, with total revenue growing by 8% due to product sales [20][21] - T2 Systems generated revenue of $20 million, with product revenue up 13% compared to the previous year [21][22] Market Data and Key Metrics Changes - TSA travel volume increased by 1% year-over-year, with expectations of a modest deceleration in travel volumes in the second half of 2025 [11][14] - The company noted a broader pullback in consumer confidence impacting travel demand, with potential implications for discretionary spending [11][14] Company Strategy and Development Direction - The company is focused on maintaining its position as a trusted technology provider for New York City's automated enforcement safety programs, with ongoing contract negotiations [7][8] - The Government Solutions segment is expected to benefit from a strong pipeline of photo enforcement programs, with a total addressable market (TAM) expansion anticipated [12][13] - The company is cautiously optimistic about its outlook while closely monitoring the economic environment and travel demand [29] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertain economic environment and its potential impact on travel demand, suggesting a possible trend towards the lower end of guidance ranges [14][24] - The company reaffirmed its full-year 2025 financial guidance, factoring in variability in travel demand [24][25] - Management expressed confidence in the Government Solutions and T2 segments, indicating they are largely unaffected by economic sensitivity [14][26] Other Important Information - The company reported a net debt balance of $935 million, with a net leverage ratio of 2.3 times [22] - The ongoing ERP implementation is on schedule and on budget, with most processes now live [28] Q&A Session Summary Question: When is the expectation for the New York City contract to be finalized? - Management expects the contract to be finalized in the next sixty to ninety days [33] Question: Can you provide updates on the attractive pipeline for Q2 and city-level RFPs in California? - The company is ahead of its internal pipeline plan and is awaiting updates on RFPs submitted for San Jose and Oakland [35][36] Question: Are you seeing real-time revenue slow in Travel and Commercial Services? - Management indicated a slight decline in travel demand but emphasized that it is not material at this time [40][41] Question: How exposed is the company to international travel versus domestic travel? - The company primarily focuses on domestic travel, particularly in states where tolling activity is concentrated [75][76] Question: What are the initial steps being taken in T2 to improve that business? - Management noted small growth in T2, attributing it to improved commercial leadership and execution [73] Question: How does a potential recession influence long-term leverage targets? - Management stated that they would reassess leverage targets based on the macroeconomic environment, maintaining a target of three times net leverage [60]