Standard Parking Corporation Reports Solid Third Quarter Growth; Reaffirms Guidance

Net income attributable to the Company increased 16% compared with the year ago quarter, to $4.8 million, or $0.30 per share. Earnings per share increased 11% over the third quarter of 2009. The Company also generated $12.7 million of free cash flow in the quarter.

Comments

James A. Wilhelm, President and Chief Executive Officer, said, "We're pleased to see these solid third quarter results. Our ability to deliver such consistent results against the backdrop of a challenging economy is a testament to the soundness of our business model. While we're not anticipating significant short-term improvement in macro-economic conditions, we're confident that as those conditions improve we'll be able to reap the benefits of a full new business pipeline as well as the development of our new SP Plus branded service lines and vertical markets. In addition, we continue to evaluate several acquisition candidates. As we look ahead to 2011, our expectations are for another year of solid growth."

Third Quarter Operating Results

Revenue for the third quarter of 2010, excluding reimbursed management contract expense, increased by $4.6 million from the year-ago period to $79.4 million, primarily due to the addition of new airport and transportation locations and the timing of Gameday events. Paid exits at same location leases increased almost 4% over the third quarter of 2009, with growth across most vertical markets.

Gross profit in the 2010 third quarter increased by 5% to $22.4 million from $21.2 million a year ago, as all of our operating divisions reported solid year over year growth. While approximately half of the increase is attributable to the absence of certain legal-related expenses that occurred in the year ago quarter, strong results from our Airport, Gameday and Canadian operations were solid contributors to the third quarter 2010 gross profit growth.

General and administrative expense ("G&A") increased by 2% to $11.5 million from $11.3 million in the 2009 third quarter. Restoration in 2010 of the Company's performance-based compensation program was partially offset by cost efficiencies realized from the Company's rollout of its technology initiatives and associated process improvements.

As a result, operating income increased by 11% to $9.3 million, as compared with $8.4 million in the year ago quarter. Lower interest rates and lower debt balances resulted in a $0.3 million decrease in year-over-year interest expense for the third quarter.

Net income attributable to the Company for the 2010 third quarter was $4.8 million, or $0.30 per share, as compared with $4.2 million, or $0.27 per share, for the same period of 2009, an increase of 11%.

The Company generated $12.7 million of free cash flow during the third quarter of 2010, as compared with $6.4 million generated in the third quarter of last year. The year-over-year increase was attributable primarily to a reduction in the Company's investment in working capital. Free cash flow was $12.8 million for the first nine months of 2010 and $19.0 million over the last twelve months. The Company continues to expect free cash flow to be in a range of $20 - $25 million for the full year.

Recent Developments

In a competitive bidding process, the City of Tampa selected the Company's SP Plus Municipal Services team to serve as Project Manager in connection with the City's conversion of approximately 1,000 on-street single-space parking meters to multi-space parking meters. In addition, SP Plus Municipal Services will provide day-to-day maintenance of the new units.

Similarly, the City of Naperville, Illinois awarded SP Plus Municipal Services a contract to furnish, install, maintain and provide collection services for multi-space pay stations and a Smart Card vending machine at two commuter rail stations.

At the Shreveport Regional Airport, the Company was asked to take over management of the parking operations from the incumbent operator with just 96 hours notice over a holiday weekend. Despite the short notice, the transition was completed smoothly. Since the Company's assumption of its management duties, the Airport has reported a revenue increase of more than 15%.

SNC-Lavalin, which manages buildings owned by the Canadian government, recently selected the Company to manage the parking operations at three of those properties, located in Standard Parking's new Ottawa and Quebec markets. 

Year-to-Date Results

Revenue for the first nine months of 2010, excluding reimbursed management contract expense, increased by 4% to $228.9 million from $220.8 million in 2009.

Gross profit for the first nine months of 2010 increased by 5% to $64.3 million from $61.0 million for the same period of 2009, as certain legal-related expenses that impacted 2009 did not recur to the same degree in 2010. Various airport and transportation-related contract wins and the Gameday acquisition were significant contributors to the year-over-year increase.

General and administrative expenses for the first nine months of 2010 increased 3% to $35.3 million from $34.4 million a year earlier, reflecting the restoration in 2010 of performance-based compensation bonuses as well as the G&A attributable to the acquired Gameday operations. These year-over-year increases were partially offset by the absence of certain 2009 legal-related expenses that did not recur in 2010 as well as by cost efficiencies the Company is realizing from its investments in technology and process improvements.

As a result, operating income for the first nine months of 2010 increased by 10% to $24.4 million from $22.2 million in the same period of 2009.

Net income attributable to the Company increased by 13% to $12.2 million for the first nine months of 2010 as compared with $10.8 million for the first nine months of last year. On a per share basis, the year-over-year increase was 12% from $0.69 last year to $0.77 in 2010. 

Financial Outlook

The Company reaffirms 2010 earnings per share guidance in the range of $1.05 - $1.10 per share and free cash flow in the range of $20 - $25 million.