Standard Parking Corporation, one of the nation's leading providers of parking management, ground transportation and other ancillary services, today announced 2010 second quarter results.
Net income attributable to the Company increased 7% compared to the year ago quarter, to $4.5 million, or $0.28 per share. Earnings per share increased 4% over the second quarter of 2009.
CommentsJames A. Wilhelm, President and Chief Executive Officer, said, "We're pleased with the results of our 2010 second quarter. We're encouraged by what appears to be gradual improvement in our business, as evidenced by growth in our same location gross profit for the first time in over a year despite continuing weakness in the general economy. The institutional marketplace appears to be strong, and our new business pipeline is full. Our location retention rate, one of our key metrics, remains relatively steady at 89%, and our location operating profit retention remains strong at 97%.
"We're continuing to keep a watchful eye on the travel-related areas of our business, which often are the slowest to recover from an economic downturn. While our airport and hotel operations did display growth in same location second quarter gross profit, based on current trends in those industries we expect continuing softness in these areas for the remainder of the year.
"We're pleased that our underlying G&A grew by just 3% excluding the impact of our restoration in 2010 of the performance bonus program that was eliminated in 2009.
"We think our second quarter results are representative of the performance of our core business, as this year's second quarter was free of the noise that adversely impacted 2009. While we're delighted with this quarter and the fact that certain indicators seem to be pointing in a positive direction, we remain cautious given the continuing uncertainty about where the economy overall is headed generally and the expected continuing softness in the travel-related industries for the rest of the year.
"We are updating our outlook for the year by adjusting our full year earnings per share guidance to a range of $1.05 - $1.10. We're making this change for several reasons. First, we project that we will incur more legal expenses than originally expected over the remainder of the year to close out a few lingering prior year legal matters that haven't resolved themselves as quickly as anticipated. In addition, we're expecting a significant reduction in the scope of services at one of our upcoming Gameday events, and we're being affected by a change in expectations as to currency exchange rates from our growing Canadian business. For free cash flow, we're still expecting to generate from $20 - $25 million.
"Long term, we remain confident that our core business performance, our ongoing investment in technology and resources and the increasing traction that we're gaining with our expanded service offerings, all bode well for strengthening our position as an industry leader as the economy recovers."
Second Quarter ResultsRevenue for the second quarter, excluding reimbursement of management contract expense, of $76.2 million increased 4% over the same period last year. Management contract revenue grew 13%, offsetting a 4% decrease in revenue at leased locations.
Gross profit in the quarter increased by 13% to $22.7 million from $20.1 million a year ago as legal-related expenses that adversely impacted the second quarter of 2009 were much less of a factor in this year's second quarter. Growth at same locations, along with the addition of new airport and transportation contracts at Atlanta-Hartsfield, Reagan and Dulles airports and the acquisition of the Gameday Management Group, were key contributors to the year-over-year growth in gross profit.
General and administrative expense ("G&A") increased by 18% to $12.2 million from $10.3 million a year ago. Fifteen percentage points of this increase, however, was attributable to the Company's restoration in 2010 of its performance-based compensation programs, as compared to the 2009 second quarter, in which the Company decided to eliminate its 2009 bonuses and thus completely reversed its year-to-date accrual.
As a result, operating income for the second quarter was $9.0 million, an increase of 7% as compared with the 2009 second quarter. Pre-tax income increased 9% to $7.6 million. Net income attributable to the Company was $4.5 million for the second quarter, an increase of 7% as compared with $4.2 million for the same period of 2009. On a per-share basis, second quarter earnings grew 4%, to $0.28 from $0.27 in the year-ago quarter as a result of a 2% increase in the Company's weighted average outstanding share count due to the exercise of stock options.
Cash taxes paid during the second quarter of 2010 increased by $0.8 million to $2.0 million from $1.2 million paid in the same period last year. The cash tax rate (cash taxes as a percent of pre-tax income) increased from 17% in the second quarter of 2009 to 27% in the second quarter of 2010 due to limitations on the Company's use of NOLs in any single year.
The Company did not generate any free cash flow (negative $1.4 million) during the 2010 second quarter, as compared with $6.0 million of free cash flow generated in the second quarter of 2009. The year-on-year difference is attributable to increases in accounts receivable balances at several large airports. These receivable balances, which have been reduced significantly since the end of the second quarter, are expected to revert to normal levels by the end of 2010. As a result, the Company is reiterating its free cash flow guidance of $20 million to $25 million for the year. The Company's free cash flow for the twelve months ended June 2010 was $12.7 million, which was used to pay down total indebtedness.
Recent DevelopmentsDuring the second quarter, the Company began parking management operations at the garage serving the Chicago Loop's Block 37 development. The Block 37 re-development encompasses an entire city block and includes an office tower, a 285,000 square feet retail center and a planned luxury residential and hotel complex.
The Company also was awarded the parking management contract at Greenwich Hospital, a member of the Yale New Haven Health System. The Company will manage approximately 1,000 parking spaces and valet operations at two garages and several surface lots serving staff, employees, patients and visitors. The Company's operations are expected to commence in August.
Year-to-Date ResultsRevenue for the first six months of 2010, excluding reimbursed management contract expense, increased by 2% to $149.4 million from $146.0 million in the first half of 2009.
Gross profit for the first half of 2010 increased by 5% to $41.9 million from $39.8 million in the year-ago period as legal-related expenses that impacted 2009 did not recur to the same degree in 2010. Large new airport contracts and the Gameday acquisition also contributed to the year-over-year growth.
General and administrative expenses for the first half of 2010 increased by 3% to $23.8 million from $23.1 million a year earlier. The 2010 first half results reflect the restoration of performance-based compensation bonuses that were eliminated in 2009 and the addition of Gameday G&A, which were partially offset by the absence of certain 2009 legal-related expenses that did not recur in 2010 and cost efficiencies the Company is realizing from the rollout of its IT initiatives.
As a result of the foregoing, operating income for the first half of 2010 increased by 9% to $15.1 million from $13.8 million in the first half of 2009.
Net income attributable to the Company increased by 11% to $7.4 million for the first six months of 2010 as compared with $6.6 million for the first six months last year. On a per share basis, earnings were $0.46 in the first half of 2010 as compared with $0.42 in the first half of 2009, an increase of 10%.
2010 Full-Year OutlookThe Company is updating its full year earnings per share guidance to a range of $1.05 - $1.10, and is reiterating its free cash flow guidance of $20 - $25 million.
Conference CallThe Company's quarterly earnings conference call will be held at 10:00 a.m. (Central Time) on Thursday, August 5, 2010 and will be available live and in replay to all analyst/investors through a webcast service. To listen to the live call, individuals are directed to the Company's investor relations page at www.standardparking.com at least 15 minutes early to register, 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 Standard Parking website 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 2,200 facilities, containing over 1.2 million parking spaces in approximately 340 cities across the United States and four Canadian provinces, including parking-related and shuttle bus operations serving more than 60 airports.