Americans are driving less because of the coronavirus. That's hurting red-light camera revenue.
- Redfex, a company that operates red-light cameras in the US and Canada, says revenues are down as people drive less.
- In Pennsylvania, road construction has been halted amid the coronavirus pandemic, further hurting Redfex's revenue.
- For everyone else, though, less driving is fantastic news.
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As Americans stay home to help slow the spread of the coronavirus, they're driving fewer miles.
That's great news for everyone: Air pollution is falling, crashes are down, and there's no blood-pressure inducing congestion.
Well, almost everyone. For the companies that operate drivers' most-hated devices - red light cameras - it's causing a headache.
Redflex, an Australian company that operates "traffic safety programs" in roughly 100 US and Canadian cities, warned that less traffic and suspended construction amid the pandemic will be a stress on its balance sheet.
"Approximately 15% of group revenue is dependent on volume-based contracts," the companysaid in a regulatory filingMonday first spotted by The Wall Street Journal, hinting at its business line that includes enforcement cameras. "We anticipate our revenue from these contracts will be impacted broadly in line with the reduction in traffic volumes as well as the duration of the disruption."
Shares of Redflex, which trade in Australia, are down 46% since the beginning of the year.
On a call with investors Monday, Redflex CEO Mark Talbot warned that further travel restrictions could delay new installations and therefore impact revenues.
"So far, there have been no terminations to contracts," he said, according to a transcript compiled by Sentieo. "We are, of course, undertaking cost initiatives where possible to mitigate the impact of reductions or risk of delay. In addition, the Board and executive team will be taking a reduction in compensation effective April 1 for the duration of the disruption."