–Year-over-Year Increases Across Key Metrics Driven By Organic and Acquisition Growth–
–Long-term Strategic Growth Initiatives Gaining Traction–CHICAGO, Oct. 30, 2019 (GLOBE NEWSWIRE) — SP Plus Corporation (Nasdaq:SP), a leading provider of technology-driven mobility solutions for aviation, commercial, hospitality and institutional clients throughout North America, today announced its third quarter 2019 results.Third Quarter / Nine Month CommentaryG Marc Baumann, Chief Executive Officer, stated, “We produced significant year-over-year increases across key metrics in the third quarter. Gross profit increased 30% in the third quarter, driven by organic gross profit growth of 9% and the contribution from last December’s Bags acquisition. Adjusted EBITDA increased 23% in the third quarter, despite higher G&A costs mostly due to increased accruals for performance-based compensation.  Strong third quarter results drove year-to-date gross profit growth of 28% and Adjusted EBITDA growth of 26%.“Positive third quarter and nine-month year-over-year comparisons represented broad-based growth across key verticals and geographies. Our results continue to reflect the Company’s execution on strategic initiatives to drive long-term growth through our focus on high value verticals, cross-sell opportunities resulting from the Bags acquisition, and the ongoing development of national accounts. Strong brand recognition, advanced technology tools, and superior customer service are enabling SP+ to sell-in additional services that help existing clients alleviate congestion and optimize the end-consumer experience while also improving their bottom line results. In the third quarter, we were named a preferred provider to a large commercial real estate firm that manages over 4.6 billion square feet of commercial real estate.  We continue active discussions with national hospitality interests and large healthcare systems to gain preferred provider status with them.“The Bags acquisition performed in-line with third-quarter expectations. As North America’s only TSA-approved multi-airline remote check-in provider, Bags is in a unique position to penetrate this untapped market, and the combination of Bags and SP+ enables us to capture significant cross-sell opportunities. While these revenue synergies tend to have longer sales cycles, we are pleased with the progress made to date, including some recent wins, and we believe that our efforts will contribute to gross profit growth in 2020.”Financial Summary
⁽¹⁾ Refer to the disclosure regarding use of non-GAAP financial measures and the accompanying financial tables for a reconciliation of all non-GAAP financial measures to U.S. GAAP.⁽²⁾ Adjusted gross profit, adjusted general and administrative expenses, adjusted net income attributable to SP Plus, adjusted earnings per share attributable to SP Plus (“adjusted EPS”), and adjusted earnings before interest, income taxes, depreciation and amortization (“adjusted EBITDA”) are all non-GAAP financial measures that exclude, for the periods presented, (a) restructuring, acquisition and integration costs, including costs incurred to evaluate potential acquisitions, (b) the amortization of acquired intangible assets, (c) the net loss or gains and the financial results related to sold businesses, (d) the equity in income or losses from investment in unconsolidated entities, and (e) non-routine tax items.  Please refer to the accompanying financial tables for a reconciliation of these adjusted measures to U.S. GAAP.Third Quarter Operating ResultsReported and adjusted gross profit in the third quarter increased 30% in 2019 to $58.7 million, up from $45.0 million in the same quarter of 2018.  The year-over-year increase in reported and adjusted gross profit was due to the acquisition of Bags in the fourth quarter of 2018, organic growth of 9% that was driven by strong year-over-year growth from existing business (i.e., same operating locations), and new business added during this period that significantly outpaced the impact of contract terminations.Reported general and administrative (“G&A”) expenses for the third quarter of 2019 were $26.0 million compared to $18.7 million in the same period of 2018, an increase of $7.3 million or 39%.  Adjusted G&A expenses for the third quarter of 2019 were $26.0 million, an increase of $7.9 million or 43% from the same quarter of 2018.  Adjusted G&A was higher than last year due primarily to the acquisition of Bags in the fourth quarter of 2018, as well as higher compensation and benefit costs, including costs related to the Company’s performance-based compensation programs.Reported net income attributable to SP Plus and reported earnings per share were $14.2 million and $0.64 per share, respectively, in the third quarter of 2019 as compared to $13.5 million and $0.60 per share, respectively, in the same period of 2018.  Adjusted earnings per share increased $0.08 per share, or 12%, to $0.77 for the third quarter of 2019 from $0.69 for the third quarter of 2018, primarily driven by the addition of the Bags business, which was partially offset by higher interest expense on debt used to fund the acquisition and higher depreciation and amortization costs related to capital leases.  In addition, lower weighted average shares outstanding for the quarter due to share repurchases benefitted earnings per share by $0.02.  Adjusted earnings per share for both periods excludes amortization of all recognized intangible assets from completed acquisitions. EBITDA and adjusted EBITDA increased by 26% and 23%, respectively, over the third quarter of 2018 due to the above-identified factors that affected reported and adjusted gross profit and reported and adjusted G&A.Year-to-Date Operating ResultsReported and adjusted gross profit in the first nine months of 2019 increased 28% to $173.8 million, as compared to $135.6 million in the same period of 2018.  The year-over-year increase in reported and adjusted gross profit was due to the fourth quarter 2018 acquisition of Bags as well as strong organic growth of 6%. Reported general and administrative (“G&A”) expenses for the first nine months of 2019 were $80.8 million as compared to $63.3 million in the same period of 2018, an increase of $17.5 million, or 28%.  Adjusted G&A expenses for the first nine months of 2019 were $79.5 million, an increase of $19.6 million, or 33%, from the same period of 2018.  Adjusted G&A was higher than last year due primarily to the acquisition of Bags in the fourth quarter of 2018, higher compensation and benefit costs, as well as the non-recurrence of a $1.7 million cost recovery received from a vendor partner that reduced G&A in the second quarter of 2018.Reported net income attributable to SP Plus and reported earnings per share were $40.0 million and $1.78 per share, respectively, in the first nine months of 2019 as compared to $44.1 million and $1.95 per share, respectively, in the same period of 2018, with $0.33 per share of the decrease attributable to the net gain from the first quarter 2018 sale of a joint venture interest.  Adjusted earnings per share increased by $0.28 per share, or 15%, to $2.17 for the first nine months of 2019 from $1.89 for the first nine months of 2018, primarily driven by the results of the acquired Bags business and strong organic growth, which was partially offset by higher interest expense on debt used to fund the acquisition and higher depreciation and amortization costs related to capital leases.  Lower weighted average shares outstanding for the year-to-date period due to share repurchases benefitted earnings per share by $0.03.  Reported and adjusted EBITDA increased 30% and 26%, respectively, over the first nine months of 2018 due to the above-identified factors that affected reported and adjusted gross profit and reported and adjusted G&A.Net cash from operations of $54.8 million was generated during the first nine months of 2019 and free cash flow was $44.3 million, as compared to $35.6 million net cash from operations and free cash flow of $29.1 million generated in the first nine months of 2018.  2019 OutlookMr. Baumann stated, “Year-to-date results set the stage for significant growth for SP+ for full year 2019. Importantly, this performance has reflected a positive mix of organic and acquisition growth, thanks to the successful implementation of business development strategies and the addition of Bags, which has considerable runway to expand its core operations.“We are pleased to reaffirm our full-year 2019 guidance for net income, EPS, EBITDA and free cash flow, noting our first nine month results position us to achieve the upper end of the previously provided ranges. In line with our balanced capital allocation strategy, we repurchased $18.7 million of common stock during the third quarter and an additional $6.3 million subsequent to the end of the quarter (through October 29^th), for a total of $38.6 million repurchased since the start of 2019. We will continue to repurchase shares opportunistically under the $34 million remaining on our repurchase authorization. “SP+’s value propositions are resonating with clients across our key verticals, which underpins our confidence heading into 2020”, Mr. Baumann concluded.Conference CallThe Company’s quarterly earnings conference call will be held at 8:00 a.m. (Central Time) on October 31, 2019 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+ facilitates the efficient movement of people, vehicles and personal belongings with the goal of enhancing the consumer experience while improving bottom line results for our clients. The Company provides professional parking management, ground transportation, remote baggage check-in and handling, facility maintenance, security, event logistics, and other technology-driven mobility solutions to aviation, commercial, hospitality, healthcare and government clients across North America. For more information visit www.spplus.com.   You should not construe the information on those websites 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 SP Plus website.Cautionary Note Regarding Forward-Looking StatementsFor 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.Stock Repurchase ProgramsThe Company’s stock purchase programs do not obligate the Company to acquire any particular dollar amount or number of shares or to acquire shares on any particular timetable, and the programs may be suspended at any time at the Company’s discretion.  The Company will make any repurchases of shares on the open market, which may include repurchases pursuant to Rule 10b5-1 trading plans, at times and prices considered appropriate, from time to time at the discretion of the Company, and subject to its assessment of alternative uses of capital, stock trading price, general market conditions and applicable regulatory and legal factors.Use of Non-GAAP Financial MeasuresTo supplement its consolidated financial statements presented in accordance with U.S. GAAP, the Company considers certain financial measures that are not prepared in accordance with U.S. GAAP.  Certain non-GAAP measures, such as adjusted gross profit, adjusted general and administrative expenses (adjusted G&A), adjusted net income attributable to SP Plus (adjusted net income), adjusted net income per share attributable to SP Plus (adjusted EPS), and adjusted EBITDA exclude items that management does not consider indicative of its core performance.  Such adjustments include, among other things: (i) restructuring, acquisition and integration related costs, including costs incurred to evaluate acquisitions; (ii) non-routine settlements; (iii) the amortization of acquired intangible assets; (iv) the impact of non-routine asset sales or dispositions; (v) the net loss or gains and the financial results related to sold businesses; (vi) the equity in income or losses from investment in unconsolidated entities; and (vii) non-routine tax items. Pre-tax adjustments are tax affected at a statutory tax rate of 26% for 2018 and 27% for 2019, for adjusted net income and adjusted EPS purposes.The Company defines EBITDA, a non-GAAP financial measure, as U.S 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 sale of a business or contribution of a business to an unconsolidated entity, and (v) equity in the gains or losses from investment in unconsolidated entities. Adjusted EBITDA excludes items that management does not consider indicative of its core performance, as defined per above. The Company believes that the presentation of EBITDA and adjusted EBITDA provide useful information regarding the Company’s operating performance and are useful measures to facilitate comparisons to our historical and future operating results. The Company’s definition of EBITDA and adjusted EBITDA may not be comparable to similarly titled measures presented by other companies.The Company defines free cash flow as net cash from operating activities, less cash used for investing activities (exclusive of cash used for acquisitions and net after-tax cash proceeds from the sale of businesses or joint venture related assets), less distribution to non-controlling interest, plus the effect of exchange rate changes on cash and cash equivalents. The Company believes that the presentation of free cash flow provides useful information regarding its ability to generate cash flow from business operations after funding capital expenditures, that can be used to, among other things, repay debt, fund strategic acquisitions, and return value to shareholders. The Company’s definition of free cash flow may not be comparable to similarly titled measures presented by other companies.The Company uses these non-GAAP financial measures, in addition to U.S. 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, adjusted EPS, EBITDA and adjusted EBITDA, free cash flow and organic gross profit should not be considered in isolation of, or 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 U.S. GAAP. In addition, the Company’s calculation of these non-GAAP measures 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 U.S. GAAP financial measures, see the accompanying tables to this release.
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