Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you provide more details on the volatility in the Commercial Services business due to weather and wildfires, and how you expect travel trends to impact quarterly revenues? A: Craig Conti, CFO, explained that TSA passenger volume is a good indicator for the business. The fourth quarter of 2024 closed at about 103% compared to the previous year. For 2025, they expect 102.5% for the year, with a slower start in the first quarter. The first quarter is expected to be down low single digits sequentially, the second quarter up low double digits, the third quarter up high single digits, and the fourth quarter down high single digits, resulting in high single-digit organic growth for Commercial Services.
Q: How are the new contracts from recent legislation impacting the Government Services business, and what are the win rates like? A: David Roberts, CEO, stated that while they don't disclose win rates, they are winning more than their fair share. The revenue from these contracts typically builds over 12 to 18 months. Craig Conti added that they expect low double-digit service revenue growth outside of New York City, with sequential growth each quarter.
Q: What is the status of RFPs for pilot programs in California cities, and when can we expect updates? A: David Roberts mentioned that San Jose has already issued an RFP, which they have responded to. Other cities like Oakland, L.A., and Long Beach are expected to issue RFPs in the next 3 to 6 months.
Q: Given 2025 is an investment year, what is the outlook for margin expansion in 2026 and beyond? A: Craig Conti explained that margin expansion depends on the pace of geographic expansion. For 2025, they expect some margin pressure due to ERP system implementation and costs associated with new geographies. However, they view Government Solutions as a 30% margin business in the long term.
Q: How does the speed camera pipeline compare to two years ago, and what are the expectations for bookings in 2025? A: Craig Conti confirmed that the pipeline remains strong, with significant TAM opportunities. While they can't predict exact bookings, they expect the pipeline to support low double-digit service revenue growth outside of New York City.
Q: What technology investments are being made to stay ahead in camera functionality and customer needs? A: David Roberts stated that they have a dedicated product engineering group working on current customer needs and global trends. They leverage internal teams and partners to enhance camera technologies.
Q: What is the penetration of all-inclusive pricing within the RAC partners, and how popular is it? A: David Roberts noted that all-inclusive pricing is location-driven and varies by airport. Craig Conti added that it is currently offered by two customers and continues to be a popular product with positive feedback.
Q: How confident are you in the flat revenue forecast for New York City, and what are the potential scenarios? A: David Roberts emphasized that they are in an RFP period and will wait for the city's decision. They are cautious about making specific forecasts until the program's expansion is confirmed.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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