SP - Earnings call transcript Q4 2017 | Central Parking Finance Trust PFD TR CV SECS

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Operator

Good day, ladies and gentlemen, and welcome to the Q4 2017 SP Plus Corporation Earnings Conference Call. Currently at this time, all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will follow at that time. [Operator Instructions] Also as a reminder, this conference call is being recorded. I would now like to turn the call over to your host to Mr. Johnston. Vance begin. may you Sir,

Vance Johnston

you, Dylan, morning and good everybody. Thank

financial I am Chief to had Financial Dylan of conference just that at a Johnston, released little I Executive said, XXXX. quarter evening. Baumann, our fourth Welcome our As Marc detail. chance We'll overview Officer, Officer I'll we to up brief then you earnings by Vance SP last will for begin the a our all a the review a call performance hope discuss that, After call of our call announcement and have the more Q&A today was Plus. Chief in with open President session. for

Exchange of those statements as and our and our variety we'll and/or regarding Company's yesterday, and in and on implied including factor the by issued SP performance. available outlook call, the release from by a to statements forward-looking and with I described is some website. differ made also like Securities guidance due call the you or performance Commission. results, would refer to risks, expressed the financial plans, achievements Plus and will expected make the incorporated could to operations including materially statements intentions, this be Actual earnings for future which strategies, other reference our in that XXXX is During to disclosures purposes uncertainties of factors, statements, risk remarks considered Company's these forward-looking filings those

SP website over turn that, then available live now. from get being mention for over Internet before XX a to that I'll and Plus started, our days we this broadcast to be call want will on replay the Marc. is Finally, the I With call

Marc Baumann

to thanks, initiatives key team and I to the am I morning XXXX. their of Vance, want and in by our strategies SP first and Plus good how start reiterating contribution proud everyone. Okay, advancing

of highlights some me key Let the operational year. over go

First market progress toward implementing of vertical significant all, our strategy. we made

capabilities hospitality, Secondly, starting we our built see to up management positive new development some and and are revenue business momentum.

safety progress to claims We of good again our we in and XXXX, areas cost made cost initiatives programs in such support controlling reduction G&A drive risk. and continue successfully business implementing and risk Once are the disciplined and our we year as was lowered have procurement, total with costs. markets. municipal overall many hospitality particularly back-office contracts, strong finally, function with new activity all new and And in management

the XXXX, our the pipeline In full, Despite we well made we bodes business. some remains addition, challenges had in XXXX progress which in new for quarter. fourth

mentioned throughout we indicated fourth be which in challenging we fiscal did QX the saw reoccur quarter casualty reduction XXXX call As quarter XXXX. we year quarter that fourth due fact loss expect reserve our on fourth year, that not of results year-over-year review comparison the XXXX, substantial of in late a the last would prior the would to to and estimates,

year-over-year expected, of therefore year comparison in a on in very XXXXwas the in loss estimates unfavorable change measure. small, reserve and quarter large the As resulted this prior fourth

In quarter fourth addition, the impact of smaller gross reserve casualty not at profit legal the was with into XXXX combined loss There settlement settlement. legal end was year-over-year unanticipated $X.X we anticipated. a million on a the from entered adjustment, that

at and see months. last location in several revenue deploy our improvement of identify engaged weaker the focus. proved market fourth York remains fourth New and of optimization key the to New We’ve of revenue revenues our lease areas maximize strategies management to some We’ve to locations. one the performance in the quarter of than in fully more than revenue our challenging leases team York XXXX. at our also same Additionally, XXXX and we Improving quarter expected stabilization over started

division XXXX, for of At Commercial are we're terminated all quarter division our flexibility to estimate Park for value XX% facets cost we client interest gains. for Click We the overall we the and some Parkmobile, the other technology. York variety technology perform improve In venture with but of a also XXXX, performance we We XXXX, mixed, venture. made the $XX book gross XXXX in fourth invested that beginning excluding and sold delivered that one significant flat Parkmobile. the January and including applicable. digital but approximately and our only level aggressively as significant to and New LLC in was efficiencies of Park LLC areas overall fourth part Parkmobile, million In we have give return contributed earlier increased our Click a York. our specifically we million We a gross key $X some down our contracts operating the of and have our for In not in Overall, players for Airport was New of further to high in you particularly this quarter, marketplace in of work quarter, at Gameday structure you that XX% cash of satisfaction. metrics, pleased of operating maintained shareholders, develop investments Click to to location the To in retention to the proceeds. evaluating is believe joint clients technology. In in acquired proprietary to asset Park sold and the due in to XX%. business, establish to other and acquisition the lower the our XXXX now where interest additional acquire we we continued profit history, fourth develop cost joint X% the generated and if exclude location XXXX. well also Same the that indicator

of our the to expect made in additional core aggressively industry implementation and Looking the remainder organic this vertical committed We’ve vertical. remain progress to hospitality markets growth on market to forward we pursue are strategy. executing which we XXXX, complete in to initiatives, of good our

We in expand XXXX. universities key municipal, other also healthcare our aggressively and more expect focus industry to including into verticals

expand our We details revenue And capabilities enhance nice a Vance risk in per also give culture. our XXXX our expand service free and earnings expect more and to further safety plan will and reforms to marketing and and assess capital but cash to offerings. book deploy successful and services see finally to cash cross-sell management disciplined management programs value. will regarding drive further ancillary we guidance, we Congress boost and cash flow benefit we With due by strong execution to recent further growth enacted as a the lower the end initiatives, at manner tax of flow generation, in continued XXXX. and our from of opportunities shareholder continue to share taxes

attention more opportunities, in or acquisition include other We on evaluating parking are which services. ancillary opportunities now may focusing

drive We integrate strong will to diligently and shareholder can we evaluate returns. them, growth opportunities generate successfully ensure that

explore other to With am continue our including year and our share look to over more toward and you we XXXX. XXXX to in through repurchases with discussion financial forward to also team that, turn and fourth Vance, shareholder all the of about I'll We lead can returns. full a he’ll quarter opportunities very capital detailed accomplish what call I performance. and a successful dividends, idea excited the deploy year maximizing an coming

Vance Johnston

our results Thanks, financial in more Marc. detail. I’d like minutes few to reviewing spend a

adjusted profit is Plus all measures of our the presented on on focus the measures incorporated XXXX. GAAP the gross website. release, Fourth quarter before, comments purposes have adjusted of non-GAAP will SP which reconciliation my last decreased and this A XXXX results. reference we to full tables or million nearest from night's in period As accompanying earnings of call by for XX% is available $X same were

unanticipated were favorable fourth contributed loss of fourth adjustment casualty mentioned remarks, opening his million smaller in quarter main As of decrease this year-over-year contributed as a factors $X.X XXXX, Marc quarter to of legal settlement, decrease. in the combined and the that XXXX which compared reserve the the an to

In quarter million, year-over-year continued XXXX Adjusted York. challenges on was basis. addition, of sequential New flat we quarter for $XX.X experienced fourth and performance a the G&A in

quarter by $X of fourth of incentive profit adjusted with quarter EBITDA or quarter the capabilities, XXXX to to as management, a in lower D&A slightly disciplined higher partially of lower interest for the compensation. $X.XX by they’ve for compared offset and investments in decreased EBITDA been quarter rate as the and fourth decrease due adjusted intangible in made tax the gross offset of assets. plan decrease XXXX acquisition-related quarter the as the million income the was we’ve of management of $X.X to for million only totality revenue well of and accruals boost compensation of XXXX performance-based cost adjusted our long-term certain of hospitality the a expense. expense Adjusted the in burn-off fourth quarter Resulting D&A in continued While was fourth to fourth Lower the XX% $X.XX representing XXXX. fourth were over and decrease XXXX, EPS adjusted XXXX compared as EBITDA.

like a continued decreased legal compared fiscal fiscal XXXX. resource Again, and from at EBITDA than XXXX, unfavorable capital unanticipated of share for Next, decrease, made or to lower into The performance decreased previous Adjusted assets an XXXX of to adjusted increase the D&A lower $X.X past cost in We cash as lower generated due York underperform, the by EPS market the as $X.XX capital fiscal in totaled expected was as fiscal XXXX, on healthcare primarily operating and our management collected from were We cash comparable than solid end XXXX certain to $XXX,XXX offset of was XXXX. settlement for or acquisition-related cost XXXX. performance-based or to approximately cash than receivables free over are largely XXXX. lower over fiscal more compared year XX% lower $X.X support due XXXX as $X.X benefit year. XXXX. capital long-term spending. or million to plan additional working at full fiscal fiscal as compensation both to would believe fiscal of year were for which expenses in XXXX a well XXXX of XXXX entered initiatives million. was continued to higher $X.XX per fiscal our facilities flow. division, investments levels claim initiatives. from well lower but gross briefly the on benefit reduction incentive hurricanes profit New as increased impact fiscal results. that we X% cost touch Adjusted compensation various of movements from I flow expected the these million in the $XX.X some the Resulting the $XX.X by as offset of as $X.XX resulting The Adjusted representing growth well $XXX,XXX impacts and X% in timing-related for basis and our burn-off free discipline of million of level intangible due to we G&A end from year-over-year XXXX, as well expected cost, working as million Airport

As full you saw we year are press providing our in XXXX guidance. release,

the share, For in $X.XX And in net $XX.X $XX million SP midpoint. of expected XX% XXXX Plus GAAP or reported million by range to Reported compared per XXXX income million a the is $X.XX million is be million, $XX at of midpoint. be of in provided is increase net XX% $XX.X midpoint. or the $XX at measures, share or increase the increase per at $X.XX range to over to to the over a operating to range attributable to million, EPS a XXXX expected to be to the $XX activity XX% cash

XXXX million be non-GAAP adjusted share, million and And the range $XX to of free XX% be the XXXX compared $XX EPS midpoint. to of at is XX% or $X.X XX% be increase million and is increase adjusted $XX in adjusted finally, EBITDA million, X% to the net midpoint. or to the in EBITDA, XXXX expected reported $XX income XXXX $XX million, both the to increase to of or over to to million $X.XX over X% a attributable increase expected SP per to to For Adjusted in to range in expected at range be or is cash at EBITDA $XX.X decrease XXXX $X.X the compared share million $X.XX are midpoint. midpoint. range expected million flow measures, a a $X.XX to at of a the million, or per Plus Reported million the $XX.X a $XX compared

XX% tax XXXX and normal current previously the any I'll the cash than lower Tax we call Our of outlook XX% reflects provisions asset not Act the of in business, for of The sale contemplate begin our other dispositions book the formal joint effective concludes and the Parkmobile Cuts U.S. approximately our of our our XXXX and rates operator respectively. comments. to the to over sales That XXXX, business Jobs expect interpretation turn does which will guidance to interest our disclosed venture. And of the that, or Q&A. of course with outside acquisitions, back

Operator

sir. [Operator question Moore Our from of you, Instructions] comes CJS Securities. Thank first Dan

sir. Your question

Larry Solow

is Larry actually morning. This Good for Solow Dan.

guys. other couple elaborate little markets you to a you in seeing to referred Can are And New you more on of questions similar York you Just bit the are address that a steps and taking in dynamics them? weakness to? you

Marc Baumann

Marc. is this Absolutely,

in impact seen York a have that, talked situation on If Certainly, months market about playing about our a previous number New verticals in I for that, revenue, that that's relatively increase cost. in a Manhattan. had and substantial of New as fluctuation any an have in leases has we’ve we’ve congestion set description then been we because the fixed have in role talked in big us. impact York that is our think has can and of we’ve calls, certain many an ride-sharing now it

going a going wage thing on. now in minimum that’s been right York increase the is is there in The New on other that, that’s progressive

in as to last minimum have gone we go and think the And operating in we’ll I it’s into up so, XXXX cost expect increase York New continue come wage. our the of up to

our backdrop. remarks our effectiveness programs it number before. marketing make the management as described to we changes operational the seeing think what control prior things I revenue over that’s over this expand couple months, of of at our whereas to is, stabilized, past to to is time. and our think we revenue we I lease point in and our have are has done have declining So same-store in capabilities, efficiently look than What and was our that more the operate organization And that, at

think can in we’ll then course, continue we’ve of well in coming revenue over plateau on try operations our I gives a our impact to our reached forward. think revenue growth foundation And in the that try bodes over there focus things that further initiatives a So to we for in months. of profitability. control costs efficiency and to to to as We time drive look driving other least at and it us terms

Vance Johnston

in I Larry, to his other and too, And think because a are number and – part is markets. different add your that just are And not contracts mentioned bit for prepared us to we of whether question this commentary, Marc's is the as not to that we in or others in are of a really his seeing of degree market. fixed York remarks, comments, Marc point, this and nature significant of New that lease in market at

lease it’d seeing other are contracts the whether same or New other of fixed of proportion typically whether the kind so, be are certainly And in be it’d nor congestion things we see you type markets things York. that don’t and don’t of seeing we we

Larry Solow

one was, time just a flow. question on And some you bit? Great. end to a with benefiting shift like there below debt be And that the free. on questions seems a that’s your cash leverage then, it would is from given year two guidance, – will debt XXXX you that timing XXXX One little

dividend on rather sooner working are anything that Given later? than

Vance Johnston

me Yes, Larry. Vance, this so – let is

Let the bit and when noise are background there is me – little of you a speaking. in

were asking. of most I’ve gotten think what I you

alluded that some free was flow, really flow. differences, well. But it cash the of free So, there it we benefit and flow as for cash cash receivables that It’s relates to reasons flow. the to – kind one was of just the we free than had as of that less year remarks, cash and to of terms timing that I thing. cash we kind as that’s would our free the think of why to kind some as first things in receipts what on related really to XXXX relates was timing prepared of the of ended the thing, amount expect in those close to - we we happened with only XXXX difference, the of And expected some to end

that answers So your question. hopefully,

of lower generated the our of question of case, debt. other as free right, the certainly think you down in I pay both his getting level and range piece your We’ve cash on we that with. are we allocation around was kind – in end and lot comfortable that flow of capital feel alluded a we that to are prepared Marc remarks below can to comment leverage

best the in We cash flow we sale free as And – flow cash are to is limited use into have that reform the which of good to of and dividends repurchases we to, are make both just going acquisitions addition we cash well case, of in somewhat well. potentially in Parkmobile, whether as invest Parkmobile our that to is doing the obviously for company that share business, through and in whether to if going or be have beyond. free tax the the evaluate that would is business, our be free to or evaluating what continue to in we’ll XXXX is interest that flow the the generating expect back kind good

Larry Solow

Thanks appreciate Great, I guys it.

Vance Johnston

Yes.

Operator

Tim Thank Our Mulrooney Instructions] you comes William [Operator of Blair. next from question

Your question please.

Tim Mulrooney

morning. Good

Vance Johnston

Good Tim. morning,

Marc Baumann

Tim. Good morning,

Tim Mulrooney

gets and EBITDA looks year-over-year guidance like looks the progresses. growth comparisons as midpoint your year like X% it the about implies So at it easier the

the of improves kind purposes, cadence So as EBITDA assume we safe it for to is the through move growth year? of modeling that

Vance Johnston

don’t quarter. by – obviously guidance we and of give haven’t Tim, We kind

can There is guidance that, and true-ups full year. obviously course EBITDA quarter-to-quarter that the performance as well. and about business our we basis then a and for including give are guidance that the the we would of feel impact I other for there a for casual that full good providing are we say on things metrics things just year. and variety our adjustments, kind of healthcare, normal the of reserve So

said business that, that little first historically I relative to think So, as some about to the have one relates think quarter been bit light the our having to other patterns quarters. a is way that, is it it of the

I way kind that is, I So of would business of fluctuations I the this place is can just seasonality it have more our historically think about that that of the more think, we mentioned understanding has kind performed. how

Tim Mulrooney

Yes, no, Thanks, Vance. fair. that's

You a trying can't know. blame you for guy

years? On the the decision know And - release drove press bit what you can the you but, your over envision Parkmobile? in aggregators you okay, shifting Parkmobile these a bit, touched talk in I this your gears evolving mobile a little how you about to and next can stake little on relationship several about Marc, your the talk to with parking divest just

Marc Baumann

Yes, we’ve you guided that.

company the XXXX, to starting at about marketplace. venture arrangement thinking do it was facilitate think, into Aggregators little joint maybe to entered and I in the with the digital to were the things in emerge back were form time, to talking our just are parking the that it. players different about or a landscape entering Parkmobile other

because concept as it have for But thought as they we work within at them, I a one work together reservations parking we with off-street venture processing with think been an as had think on platform them, players entered the both that platform forward, particular, a we and to bring and Parkmobile and when a of companies. relationship, look things payment platform that’s a us the we looked which ability one it we the along in on-street relationship bringing emerging to together But people really sense digital the be something of all successful. changing so platform were number or as made And we sense look with payments exclusive situation that they and those things many being the most and space relationship or a done a but new won’t that make will given processing with I and joint want to that very we platform the we is the in think does the that it’s I lot for them transaction had still be in good into successfully. for at with company the to into of

revenue might we cases best look for in to and and to we I for thing. Parkmobile clients ability be our years at every as and the that ability and will else us, locations, want the good pick with desire so our solution other ways to look somebody case is at so, a successfully, work we serve our drive we that in But in for And as and them and expect lease performance many be them many, cases come. having to many flexibility think to

same at an it were to there of greater business. Parkmobile were for their Now had us trying investment our the looked in looking other course, for we with us they at and also flexibility also obtain at along Parkmobile we fortunately, interest and in investors in time in expanding

I into So, said, Parkmobile’s able I to very for everybody, use future. look were all think foreseeable continue and the a around to as to services deal good forward we reach,

Tim Mulrooney

along industry lines, mobile parking we price over term. connected five transparency going coming these I If aggregators think Maybe are longer kind in to and everything car of thanks. the that's the assume and I more with see bigger that, picture, next but all Okay, more three along these years. the one about to

this second, agree opinion, do And on particular? first increased of have whole transparency your your a as implications So, and price what you of the company on might in industry all, in with that?

Marc Baumann

it’s I and that Tim the industry make them inevitable any Yes, where think, available. data to before a has that’s consumer becomes the in question, great decisions

in be transparency. the We’ve and other this that’s business, things whether industry Amazon on think where whether available data and to to made many seen the business or I in am people it’s data have buying I consumers. that’s You available trend an will airline industries many, will sure price it or inevitability that is hotel in increased we’ll every the that will and available be apply and

to they the did of ways and at happen. they that’s they the easily course, couldn’t way, the that do got destination, and their comparisons to opportunity in enter drove And do technology in to in their that’s how around industry That do at consumer going that So, or give as fly on will maybe able old looked we car they People price with was will just either so. you before comparing price be our the before. the your to trend did signs. they on your trip,

that’s I happen. think going to

of us, rates of model management fluctuations and for Whether we are parking. contracts think utilization of parking clients really services to I charged a level. what that, to is we providing one day-to-day built exposed want be certain why to the valuated the the business reasons at didn’t have down up go for the facility, or around those

a business have I we think, model. so, And

revenue for for trying and to revenue a optimize growth we the drive trying client are them. We are to

think aggregators your are have visible that advantage driving the on places incremental mobile that available other volume either in or people to in car, the that I are device space. making your parking of in actually general and

everybody before. coming at while that who to they mobile may price not be it for gone now to going reduce they to might are to do, a that have given is those not is be be revenue transparency on device, a so, are but of going customers And trip, going for everybody in, not planning places to be facility routed the ahead could some that their

sell how can expertise inventory as from and we future those a have successful strategies, I put advise and be So, to advising help at don’t aggregators to at world. their mean, competition that – in well think think think we revenue them to that’s but I all marketing them differentiate and clients negative, what we a we with it’s aggregators to our I are in and what price. management I positioned and ourselves that’s company facilities what how programs, the

Tim Mulrooney

it. Got much. you Thank very

Operator

turn over I Baumann Thank time. Marc to like President in questions queue would CEO, closing I you. at show call remarks. to for and further no now the this the

Marc Baumann

your you And everybody in us business. we Dylan. in appreciate as I growth and indicated our thank we excited to really XXXX are drive remarks, as Thanks, success We interest about for company in look my today. and very joining forward our

are and have Thank looking talking to next you you day. a forward We great to quarter.

Operator

Thank program. attending conference. This gentlemen today's and for you, concludes ladies the

You may day. Good all disconnect.

Central Parking Finance Trust PFD TR CV SECS (CRLKP) 23 Feb 182017 Q4 Earnings call transcript