Standard Parking Corporation Reports 20% Increase in First Quarter EPS; Affirms 2010 Guidance

Comments

James A. Wilhelm, President and Chief Executive Officer, said, "We are pleased with the results of our 2010 first quarter. While we do see continued weakness in the economy impacting certain areas of our business, particularly in travel-related areas associated with airport and hotel activity, our underlying management contract portfolio nevertheless remains strong and continues to perform in line with our expectations. We continued to sign new business during the quarter, and our location retention rate, one of our key metrics, increased to 90% from 87% in the last quarter of 2009. Moreover, our location operating profit retention remains strong at 96%.

"I'd like to congratulate our Gameday Management team members on the instrumental role they played in the very successful implementation of their traffic management, parking and ground transportation strategies for the 2010 Super Bowl in Miami and 2010 Winter Olympic Games in Vancouver. These events demanded unrelenting attention to detail that affected hundreds of thousands of spectators and event participants, staff and sponsors. The fact that the transportation operations worked so smoothly at these events was due in large part to the round-the-clock efforts of our personnel.

"It's noteworthy that the technology investments we have made over the past several years despite the economic downturn have begun to have a meaningful impact on the level of the Company's general and administrative expenditures. These improvements in efficiency contributed to a 9% reduction in G&A costs during the first quarter versus last year, and should serve us well in the years ahead.

"Looking further out into 2010, pricing pressure seems to be easing. Our new business pipeline is strong, and we're starting to gain traction from our SP Plus brand, particularly in the municipal and hospital fields, where the clients are beginning to understand the breadth of our expertise beyond traditional parking. While we're not seeing overall same location sales growth due to the slowed economy, we're nevertheless adding locations and focusing on new verticals in maintenance, security and municipal services. As a result, we continue to expect full-year performance to be in line with our original EPS guidance of $1.10 to $1.20."

First Quarter Operating Results

Revenue for the first quarter of 2010, excluding reimbursement of management contract expense, of $73.2 million was essentially flat as compared to $73.0 million in the year ago period. Management contract revenue grew 5%, offsetting a similar decrease in leased location revenue.

Gross profit in the quarter was down by 3% to $19.2 million from $19.7 million a year ago as the economy and the unusually harsh winter storms in February negatively impacted certain leased and reverse management locations, which experienced a $0.7 million decrease in same location gross profit from 2009 to 2010. Other factors contributing to the quarter's gross profit results included $0.4 million in additional expenses to fully resolve a 2009 dispute and $0.2 million of start-up expenses related to the April 1st commencement of ground transportation operations at Reagan National and Dulles International Airports.

General and administrative expense ("G&A") decreased by 9% to $11.6 million from $12.8 million a year ago. First quarter 2009 G&A included $0.7 million of costs related to the sale by the Company's former majority shareholder of its stake in the Company. More importantly from an ongoing perspective, cost efficiencies attributable to the roll-out of the Company's IT initiatives also contributed to the G&A reduction.

As a result, operating income for the 2010 first quarter was $6.1 million, an increase of 14%, or $0.7 million, as compared with the 2009 first quarter. Similarly, pre-tax income increased to $4.7 million from $4.0 million in the year ago quarter. The effective income tax rate was unchanged at 39%, resulting in net income attributable to the Company of $2.8 million for the first quarter of 2010 versus $2.4 million for the same period of 2009.

While earnings per share of $0.18 in the 2010 first quarter represents a 20% increase from the $0.15 reported EPS for the first quarter of 2009, the earnings are flat against 2009 after adjusting for the $0.03 EPS impact on the 2009 first quarter of costs related to the sale by the Company's former majority shareholder of its stake in the Company.

Cash taxes paid during the first quarter of 2010 increased by $0.4 million to $1.0 million from $0.6 million paid in the same period last year. The cash tax rate (cash taxes as a percent of pre-tax income) increased from 15% in the first quarter of 2009 to 22% in the first quarter of 2010.

The Company generated $1.4 million of free cash flow during the first quarter of 2010, as compared with negative $1.5 million in the first quarter of 2009. Favorable working capital movements and lower capital expenditures contributed to the increase in free cash flow. The Company's free cash flow for the twelve months ending in March 2010 was $20.1 million, which was used to pay down total indebtedness by $19.8 million.