SP Plus Corporation Announces Second Quarter and Year-to-Date 2015 Results

CHICAGO, Aug. 5, 2015 (GLOBE NEWSWIRE) -- SP Plus Corporation (Nasdaq:SP), a leading national provider of parking, ground transportation and related products and services to commercial, institutional and municipal clients throughout North America, today announced its results for the second quarter and first six months of 2015.

G Marc Baumann, President and Chief Executive Officer, stated, "We are pleased with our solid second quarter results, especially considering our strong performance in the second quarter of last year that benefitted from the release of pent-up demand created during last year's unusually severe winter weather. As a result, we believe year-to-date results are more indicative of the Company's performance and are pleased with our strong growth in both gross profit and EBITDA.

"We continue to be encouraged by the positive momentum we are seeing in our level of new business activity. Through June of this year, we wrote more new business than ever before and our new business pipeline remains robust.

"Looking forward, we remain focused on driving EBITDA growth by improving performance at existing locations, adding new business and aggressively pursuing cost reduction initiatives. We are encouraged by our progress and have high confidence in the initiatives and strategies we're implementing across SP+ to drive growth and create value for both our customers and our shareholders."

⁽¹⁾ Adjusted to eliminate non-routine items including, but not limited to, restructuring, merger and integration costs, non-routine asset sales or dispositions, changes in valuation allowances for deferred tax assets, and ongoing costs related to non-routine structural and other repairs at legacy Central Parking lease locations. Results have also been adjusted for the impact of the completed Parkmobile investment transaction and other contemplated transaction costs. Please refer to the accompanying financial tables for a reconciliation of these adjusted items.

⁽²⁾ Adjusted free cash flow excludes cash used for non-routine structural and other repairs at legacy Central Parking lease locations.

⁽³⁾ Refer to accompanying financial tables for a reconciliation of non-GAAP financial measures.

Second Quarter Operating Results

Reported gross profit in the second quarter of 2015 was $46.4 million, compared to $47.9 million in the second quarter of 2014, a decrease of $1.5 million or 3%. On an adjusted basis, which excludes non-routine structural and other repair costs in both years, last year's gross profit from the Click and Park transaction engine, and a 2015 gain on the sale of an investment in a joint venture, second quarter 2015 adjusted gross profit was down $0.2 million as compared to last year. Strong new business activity and continued favorable changes in casualty loss reserve estimates for prior years as well as a reduction in health benefit costs contributed to the second quarter 2015 results.

Second quarter 2015 reported general and administrative (G&A) expenses were $24.7 million, including $0.4 million of restructuring, merger and integration related costs, as compared to reported G&A of $25.0 million in the second quarter of 2014, which included $0.5 million of restructuring, merger and integration related costs and $0.5 million for costs related to supporting the Click & Park operation, the Parkmobile transaction and other contemplated transactions. On an adjusted basis, second quarter 2015 G&A expenses were $24.4 million, up $0.4 million from the second quarter of 2014, also on an adjusted basis. A $1.0 million increase in costs related to the Company's performance-based compensation and long-term incentive plans contributed to the year-over-year increase.

Resulting adjusted EBITDA was $22.9 million for the second quarter of 2015, as compared with $23.3 million on the same basis for the second quarter of 2014.

Reported earnings per share for the second quarter of 2015 was $0.43, which included a $0.20 per share benefit from the reversal of valuation allowances for deferred tax assets, as compared to reported earnings per share of $0.24 for the second quarter of 2014. Adjusted earnings per share was $0.29 for the second quarter of 2015, up a penny as compared with adjusted earnings per share for the second quarter of 2014. 

Recent Developments

Recent contract awards and new business activity include the following:

• The City of San Mateo, California recently awarded SP+ Municipal Services a multi-year consulting agreement to help the City with its downtown parking and transportation planning and related decisions. The scope of the consulting assignment covers numerous areas, including acquisition of new parking equipment with state-of-the-art technology, parking website design, creation of a new on-line parking permit program, upgrading of parking enforcement systems, implementation of centralized downtown valet programs, new digital graphics, facility maintenance and interactive marketing. The City also renewed a multi-year operating agreement with SP+ for the continued oversight of its on-street and off-street parking meter program.
   
• SP+ University Services was awarded a contract to provide customer service and cashiering for the Duke University and Duke University Hospital campus in Durham, North Carolina. The multi-year contract encompasses five parking garages comprising approximately 2,500 parking spaces. SP+ University Services provides a variety of related services at many premier higher education campuses and university hospitals, including Emory University, New York Presbyterian Hospital and Harvard Medical School, among others.
   
• SP+ Event Logistics was awarded a contract to provide assorted event logistics services for FIFA Women's World Cup Canada 2015 events held during June 2015 in Ottawa, Ontario. The Company's duties, among other things, included management of 52 shuttle buses that transported more than 20,000 spectators, media and event officials over the course of nine soccer matches. The event operation encompassed coordination of parking and transportation to and from two large satellite parking locations and the TD Place Stadium soccer venue, containing more than 2,500 parking spaces collectively.
   
• The Special Olympics World Games 2015 organizing committee in Los Angeles turned to SP+ GAMEDAY after the start to the event's transportation program. Originally contracted as a consultant before the start of the event, SP+ took over management of the operation two days after the event began. SP+ promptly brought in over 100 staff to deliver a successful program to the athletes, media, honored guests, and families in attendance of the 14-day event.
   
• USA Parking was selected to provide parking valet services at the new AC Marriott South Beach Miami. The Company commenced its duties under that contract when the hotel opened on June 3, 2015.
   
• GWL Realty Advisors awarded a commercial sweeping contract for a portfolio of 23 parking facilities located in Toronto, Canada to SP+ Facility Maintenance, which recently began offering an array of maintenance services in the Toronto market. The maintenance award expands the scope of the Company's relationship with this client, for whom the Company also provides parking management services.
   
• MVP REIT selected SP+ Parking to provide its parking management services at the CW parking location in Milwaukee's Central Business District. The Company has now received contracts to manage the parking operations at twelve MVP REIT properties since October 2014. The properties, comprised of a variety of commercial, office and mixed-use buildings, are located in eight cities across the U.S., including Boston, Cincinnati, Fort Lauderdale, Fort Worth, Kansas City, Memphis, Milwaukee and St. Louis.

Year-to-Date Operating Results

Reported gross profit for the first half of 2015 was $87.6 million, compared to $83.2 million for the same period of 2014, an increase of $4.4 million or 5%. On an adjusted basis, which excludes non-routine structural and other repair costs in both years, last year's gross profit from the Click and Park transaction engine as well as a 2015 gain on the sale of an investment in a joint venture, adjusted gross profit for the first half of 2015 was up $6.1 million or 7% over the same period last year.

Reported G&A expenses for the first half of 2015 were $50.4 million, which included $1.9 million of restructuring, merger and integration related costs as compared to reported G&A of $51.1 million in the first half of 2014 that included $2.0 million of restructuring, merger and integration related costs and $0.9 million for costs related to supporting the Click & Park operation, the Parkmobile transaction and other contemplated transactions. On an adjusted basis, G&A for the first half of 2015 was up $0.4 million over the same period of 2014. A $2.7 million increase in costs related to the Company's performance-based compensation and long-term incentive plans contributed to the year-over-year increase.

Resulting adjusted EBITDA was $39.6 million for the first half of 2015, as compared with $33.7 million on the same basis for the first half of 2014.

Reported earnings per share for the first half of 2015 was $0.49, which included a $0.20 per share benefit from the reversal of valuation allowances for deferred tax assets, as compared to reported earnings per share of $0.43 for the first half of 2014, which included a $0.28 per share benefit from the reversal of valuation allowances for deferred tax assets. Adjusted earnings per share, which excludes restructuring, merger and integration related costs, the impact of asset sales and dispositions, non-routine structural repairs, and non-routine tax adjustments, was $0.43 for the first half of 2015, an increase of $0.20 per share over adjusted earnings per share of $0.23 for the first half of 2014.

During the first six months of 2015, the Company generated adjusted free cash flow of $5.5 million, which was lower than the $14.3 million generated during the first half of 2014 but was consistent with the Company's expectations. Based on the current outlook for the remainder of the year, the Company continues to expect to generate full-year free cash flow in line with its previous guidance.

Outlook

Based on results of the first half of 2015, the Company continues to expect its full-year adjusted EPS and adjusted EBITDA to be toward the higher end of the guidance range of $0.93 to $1.03 for adjusted EPS and $83 million to $87 million for adjusted EBITDA. Adjusted EBITDA and adjusted earnings per share will continue to exclude non-routine items, including but not limited to restructuring, merger and integration costs, asset sales, changes in valuation allowances for deferred tax assets, and ongoing costs related to non-routine structural and other repairs. Free cash flow, adjusted for non-routine structural and other repairs, is still expected to be in the range of $30 million to $36 million.

Conference Call

The Company's quarterly earnings conference call will be held at 10:00 a.m. (Central Time) on August 6, 2015, and will be available live and in replay to all analysts and investors through a webcast service. To listen to the live call, individuals are directed to the Company's Investor Relations page at http://ir.spplus.com at least 15 minutes early to register and download and install any necessary audio software. For those who cannot listen to the live broadcast, replays will be available shortly after the call on the SP Plus website and can be accessed for 30 days after the call.

About SP+

SP+ provides professional parking, ground transportation, facility maintenance, security and event logistics services to property owners and managers in all markets of the real estate industry. The Company has more than 23,000 employees. Its SP+ Parking, Standard Parking and Central Parking brands operate approximately 4,000 parking facilities with approximately 2.1 million parking spaces in hundreds of cities across North America, including parking-related and shuttle bus operations serving more than 75 airports. USA Parking System, a wholly owned subsidiary, is one of the premier valet operators in the nation with more four and five diamond luxury properties, including hotels and resorts, than any other valet competitor. The Company's ground transportation division transports over 41 million passengers each year; its facility maintenance division operates in dozens of U.S. cities; and its security subsidiary provides licensed security services in six states. The Company also provides a wide range of event logistics services. For more information, visit www.spplus.com.

You should not construe the information on that website to be a part of this release. SP Plus Corporation's annual reports filed on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on Form 8-K are available on the Internet at www.sec.gov and can also be accessed through the Investor Relations section of the Company's website.

Cautionary Note Regarding Forward-Looking Statements

This release and the attached tables contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including the statements under the caption "Outlook," and other statements regarding expectations, beliefs, plans, intentions and strategies of the Company. The Company has tried to identify these statements by using words such as "expect," "anticipate," "believe," "could," "should," "estimate," "intend," "may," "plan," "guidance," "will," "are to be" and similar terms and phrases, but such words, terms and phrases are not the exclusive means of identifying such statements. These forward-looking statements are made based on management's expectations and beliefs concerning future events affecting the Company and are subject to uncertainties and factors relating to operations and the business environment, all of which are difficult to predict and many of which are beyond management's control. Actual results, performance and achievements could differ materially from those expressed in, or implied by, these forward-looking statements due to a variety of risks, uncertainties and other factors, including, but not limited to, the following: costs of non-routine structural and other repairs incurred by the Company under leases acquired in the Central Merger; adverse litigation judgments or settlements, including a dispute with Central's former stockholders; intense competition; risks associated with management contracts and leases; information technology disruption, cyber attacks, cyber terrorism and security breaches; breach of credit facility terms, which may restrict borrowing, require penalty payments or accelerate payment of the Company's substantial indebtedness; the impact of public and private regulations; deterioration of general economic and business conditions or changes in demographic trends; financial difficulties or bankruptcy of major clients; insurance losses that are worse than expected or adverse events not covered by insurance; labor disputes; negative or unexpected tax events; risks associated with joint ventures; extraordinary events affecting parking at facilities that the Company manages, including emergency safety measures, military or terrorist attacks, and natural disasters; adverse weather conditions that reduce gross profit; the risk that state and municipal government clients sell or enter into long-term leases of parking-related assets to competitors or clients of our competitors; availability, terms and deployment of capital; the Company's ability to obtain performance bonds on acceptable terms; and the impact of Federal health care reform.

For a detailed discussion of factors that could affect the Company's future operating results, please see the Company's filings with the Securities and Exchange Commission, including the disclosures under "Risk Factors" in those filings. Except as expressly required by the federal securities laws, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, changed circumstances or future events or for any other reason.

Use of Non-GAAP Financial Measures

To supplement its consolidated financial statements presented in accordance with GAAP, the Company considers certain financial measures that are not prepared in accordance with GAAP, including gross profit plus costs incurred related to non-routine structural and other repairs at legacy Central Parking leases and less gross profit related to asset sales or dispositions (also referred to as adjusted gross profit); general and administrative expenses less restructuring, merger and integration related costs, costs related to asset sales or dispositions, and costs incurred related to the Parkmobile and other contemplated transactions (also referred to as adjusted G&A); net income and net income per share attributable to SP Plus plus costs incurred related to non-routine structural and other repairs at legacy Central Parking leases, restructuring, merger and integration related costs, net income related to asset sales or dispositions, costs incurred related to the Parkmobile and other contemplated transactions, and costs incurred in connection with the amendment to the senior credit agreement and eliminating the reversal of valuation allowances for deferred tax assets (also referred to as adjusted net income attributable to SP Plus and adjusted EPS); EBITDA and EBITDA plus costs incurred related to non-routine structural and other repairs at legacy Central Parking leases, restructuring, merger and integration related costs, and costs incurred related to the Parkmobile and other contemplated transactions less EBITDA related to asset sales or dispositions (also referred to as adjusted EBITDA); and free cash flow and free cash flow plus cash used for non-routine structural and other repairs at legacy Central Parking leases (also referred to as adjusted free cash flow). 

The Company uses these non-GAAP financial measures, in addition to GAAP financial measures, to evaluate its operating and financial performance and to compare such performance to that of prior periods and to the performance of its competitors. Additionally, the Company uses these non-GAAP financial measures in making operational and financial decisions and in the Company's budgeting and planning process.The Company believes that providing these non-GAAP financial measures to investors helps investors evaluate the Company's operating performance, profitability and business trends in a way that is consistent with how management evaluates such performance and consistent with guidance previously provided by the Company. Adjusted gross profit, adjusted G&A, adjusted net income attributable to SP Plus, adjusted EPS, EBITDA and adjusted EBITDA, and free cash flow and adjusted free cash flow should not be considered as alternatives to, or more meaningful indicators of the Company's operating performance or liquidity than, gross profit, G&A, net income, EPS or net cash provided by operating activities, as determined in accordance with GAAP. In addition, the Company's calculation of such non-GAAP measures may not be comparable to similarly titled measures of another company.

EBITDA is a non-GAAP financial measure that represents GAAP net income attributable to the Company before (i) interest expense net of interest income, (ii) provision for income taxes, (iii) depreciation and amortization, (iv) gain on contribution of a business to an unconsolidated entity, and (v) equity in the gains or losses from investment in an unconsolidated entity. Adjusted EBITDA further adjusts EBITDA by adding costs incurred related to non-routine structural and other repairs at legacy Central Parking leases, restructuring, merger and integration related costs and costs incurred related to the Parkmobile and other contemplated transactions and subtracting gross profit and G&A related to asset sales or dispositions.

The Company defines free cash flow as net cash from operating activities, less cash used for investing activities (exclusive of acquisitions), less distribution to noncontrolling interest, plus the effect of exchange rate changes on cash and cash equivalents. Adjusted free cash flow also excludes the cash used for non-routine structural and other repairs at legacy Central Parking leases. The Company believes that the presentation of free cash flow and adjusted free cash flow provides useful information regarding its recurring cash provided by operating activities after certain expenditures. It also demonstrates the Company's ability to execute its financial strategy. The Company's presentations of free cash flow and adjusted free cash flow have material limitations. The Company's free cash flow and adjusted free cash flow do not represent its cash flow available for discretionary expenditures because it excludes certain expenditures that are required or to which the Company has committed, such as debt service requirements. The Company's definition of free cash flow and adjusted free cash flow may not be comparable to similarly titled measures presented by other companies.

For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, see the accompanying tables to this release.