Standard Parking Corporation, one of the nation's leading providers of parking management, ground transportation and other ancillary services, today announced full year 2009 earnings.
Standard Parking Corporation today announced full year 2009 earnings of $0.90 per share, which reflects a $0.12 per share charge attributable to the tentative settlement of two California labor code violation cases and a $0.07 per share charge for costs incurred in connection with the Company's transfer and secondary offering of its former controlling shareholder's shares. The resulting 2009 adjusted EPS of $1.09 represents a 14% increase over 2008's adjusted EPS of $0.96. The 2008 reported EPS of $1.07 included $0.07 attributable to the gain resulting from the Company's receipt of Hurricane Katrina insurance proceeds and $0.04 benefit due to the timing of the RSU grant in the second half of 2008. The Company generated $17.2 million of free cash flow during 2009, in line with the Company's full-year expectation of $15 million to $20 million.
CommentsJames A. Wilhelm, President and Chief Executive Officer, said, "Given the severe slowdown in the economy that has challenged businesses across the country, we are pleased with the Company's strong operating results during 2009. We once again demonstrated our ability to minimize the negative impacts of economic swings on our financial results while continuing to invest in and implement key marketing programs and operating systems that will enhance future performance.
"While we recognized a charge related to our secondary offering during the fourth quarter, we are delighted by the success of the offering and the opportunity it provides to substantially broaden our shareholder base and increase the liquidity of our stock. We no longer are a controlled company and now have a majority of independent directors, which we believe will enhance our ability to focus on strategic plans that support our continuing growth.
"California has long been an attractive market for us and we expect this to continue to be the case. However, one of the manifestations of the country's economic difficulties has been an increasingly litigious regulatory environment that has affected many well-run companies. Given this environment, we decided to seek settlements of these labor code disputes rather than face extended court battles. Despite the financial cost, we believe the right thing to do is to put these matters behind us."
Fourth Quarter Operating ResultsRevenue for the fourth quarter of 2009, excluding reimbursed management contract expense, decreased by 2% to $73.0 million from $74.7 million in the year earlier period, due to a 9% reduction in revenue at leased locations, which was partially offset by a 5% increase in revenue at managed locations.
Gross profit in the 2009 fourth quarter declined by 20% to $17.7 million from $22.1 million in the year ago quarter. The largest factor contributing to the decline was $2.3 million attributable to the tentative settlement of the two California labor code cases, representing 11% of the year-over-year decline. The remainder of the decline was due primarily to continued weakness in certain areas of the business that are more sensitive to discretionary spending.
General and administrative expense ("G&A") decreased by 15% to $10.3 million from $12.2 million in the fourth quarter of 2008, primarily as a result of the reduction in 2009 of certain compensation expenses. On a sequential basis, fourth quarter 2009 G&A expense decreased by 9% compared with the third quarter even though $0.6 million was incurred in the 2009 fourth quarter in connection with the secondary stock offering.
Fourth quarter 2009 operating income was $6.1 million, compared with $8.4 million in the 2008 fourth quarter. Without the 2009 fourth quarter expenses attributable to the California labor cases and the secondary stock offering, operating income would have grown 7% as compared with the fourth quarter of 2008. Interest expense for the 2009 fourth quarter was $0.6 million less than the fourth quarter of 2008, primarily due to lower interest rates and the use of free cash flow to pay down debt.
Net income attributable to the Company for the 2009 fourth quarter was $3.3 million, or $0.21 per share, versus $4.4 million, or $0.27 per share, for the same period of 2008. The Company's fourth quarter 2009 earnings per share was impacted by $0.10 due to the California labor settlements and by $0.03 for costs incurred in connection with the secondary stock offering. After adjusting for these items, fourth quarter EPS would have been $0.34, an increase of 26% over the fourth quarter of 2008.
The Company generated $6.3 million of free cash flow during the fourth quarter of 2009, relatively unchanged from the $6.7 million generated in the fourth quarter of 2008. A detailed calculation of free cash flow is provided in the tables following this earnings release.
Recent DevelopmentsThe Company has been awarded two three-year contracts with the Metropolitan Washington Airports Authority to manage the operation and maintenance of shuttle bus services at Ronald Reagan Washington National Airport (DCA) and Washington Dulles International Airport (IAD). The Company will operate a fleet of more than 70 buses at two airports, transporting approximately six million passengers and employees annually between terminals, parking lots, garages and, in the case of DCA, the consolidated rental car facility. The Company expects to begin providing services at the airports on April 1, 2010.
The City of Denver, Colorado has chosen Standard Parking to provide parking management services at the Denver Performing Arts Complex, the Cultural Center and the newly constructed Justice Center. Together, these three properties contain over 3,300 parking spaces.
The Company also continues to build and expand its relationship with leading property management and real estate development firms with the award of four new properties by Vornado Realty Trust, Brookfield Properties and CIM Group.
The Company elected not to submit a proposal to retain its management of 47 Chicago locations for a single client after determining that its continued management of those locations under the new terms was not financially viable. Accordingly, the Company ceased its management of those locations in the fourth quarter of 2009.
Full-Year ResultsRevenue for the full year 2009, excluding reimbursed management contract expense, decreased by 2% to $293.8 million from $300.1 million in 2008, driven by lower leased location revenue that was partially offset by increased revenue at managed locations.
Gross profit for 2009 decreased by 13% to $78.8 million from $90.8 million in 2008. Four percentage points of the year-over-year decline was due to the tentative settlement of the California labor cases as well as other 2009 legal-related items. Another five percentage points of the decline was due to the Company's having benefitted in 2008 from the receipt of Hurricane Katrina settlement proceeds, changes in insurance loss reserve estimates relating to prior years, a 2008 insurance dividend, and a gain from the sale of certain assets in 2008. The remaining four percentage points of the gross profit decline is largely attributable to the continuing negative impact of the sluggish economy and its affect on areas of the business that remain more sensitive to discretionary spending.
General and administrative expense in 2009 decreased 6% to $44.7 million from $47.6 million a year earlier. Steps taken to reduce certain compensation expenses were partially offset by expenses related to: (1) the transfer of shares by the Company's former majority shareholder and subsequent secondary offering of those shares; (2) certain other legal-related expenses in 2009; and (3) six additional months of costs related to the July 2008 restricted stock unit grant to senior management. Adjusting for these three items, G&A expense for 2009 would have decreased by 14% compared with 2008.
As a result of the foregoing, operating income for 2009 decreased by 24% to $28.2 million from $37.1 million in 2008. Operating income would have increased by 10% compared with 2008 after adjusting for the above-mentioned insurance and legal items, the impact of the timing of the RSU grant, the gain on the sale of certain contract rights and the costs attributable to the former majority shareholder's transfer of his stake in the Company and subsequent secondary stock offering.
Net income attributable to the Company in 2009 decreased by 26% to $14.1 million as compared with $19.0 million in 2008. On a per share basis, the year-over-year decrease was 16% because of fewer shares outstanding due to share repurchases by the Company. Reported 2009 earnings per share of $0.90 reflects the $0.12 per share impact of the California labor settlements and $0.07 per share due to the cost incurred in connection with the former majority shareholder's transfer of its stake in the Company and the subsequent secondary offering of those shares. The Company's EPS guidance range of $1.05 - $1.11 excluded all costs associated with the controlling shareholder's transfer of shares and subsequent secondary stock offering. Adjusting the 2009 results for those same items, as well as for the $0.12 attributable to the California labor settlements, the Company would have generated EPS of $1.09, within its previously disclosed guidance range.
The Company generated $17.2 million of free cash flow during 2009, in line with its $15 to $20 million previous guidance.
2010 OutlookThe Company believes that the geographic and vertical market diversity of its contract portfolio, as well as its predominately fixed-fee management contract structure, positions it for continued growth in 2010. The Company also continues to be optimistic about the opportunities resulting from its recent Gameday and Click and Parksm acquisition. The Company will continue its disciplined approach to evaluating opportunities for strategic acquisitions.
2010 earnings per share is expected to be in the range of $1.10 to $1.20, an increase of up to 33% on reported 2009 earnings per share of $0.90 and 10% on adjusted earnings per share of $1.09 (adjusted by $0.12 for the California settlements and $0.07 for the activities relating to the transfer of shares from Company's former shareholder and the subsequent sale of those shares in a secondary offering).
This guidance assumes approximately 15.7 million diluted shares remain outstanding and the restoration of certain compensation-related expenses that were eliminated in 2009. The guidance does not include the impact of any acquisitions that might be completed in 2010.
Due to continuing limitations on the use in any single year of operating loss carryforwards, the anticipated growth in pre-tax income is expected to result in a 2010 cash tax rate in the range of 25% - 30% as compared with 13% in 2009. As a result, cash taxes are expected to increase by approximately $5 million to $6 million, which will reduce free cash flow. Nevertheless, 2010 free cash flow is expected to increase to between $20 million and $25 million, from $17.2 million in 2009.
Conference CallThe Company's earnings conference call will be held at 10:00 am (CT) on Thursday, March 11, 2010, and will be available live and in replay to all analysts/investors through a webcast service. To listen to the live call, individuals are directed to the Company's investor relations page at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call and can be accessed for 30 days after the call.
Standard Parking is a leading national provider of parking facility management, ground transportation and other ancillary services. The Company, with approximately 12,000 employees, manages approximately 2,100 facilities, containing over one million parking spaces in approximately 335 cities across the United States and four Canadian provinces, including parking-related and shuttle bus operations serving more than 60 airports.