Standard Parking Corporation Announces Third Quarter 2013 Results

Company Updates 2013 Guidance,
Announces Upcoming Corporate Name Change and Brand Launch;
Merger Integration Maintains Momentum

CHICAGO, Nov. 18, 2013 (GLOBE NEWSWIRE) -- Standard Parking Corporation STAN, a leading national provider of parking management, ground transportation and other ancillary services, today announced its third quarter 2013 results, and issued restated historical operating results for fiscal 2012, the first two quarters of 2013 and other prior periods as a result of the completion of the previously announced accounting review of its Bradley Airport contract. The Company also announced that, as part of its long-term branding strategy, it will change its corporate name to SP Plus Corporation on December 2, 2013, though for the near term it will continue to conduct its parking operations under its Standard Parking and Central Parking brands. The Company also announced that on December 2, 2013 its shares will begin trading under a new ticker symbol, SP.

Financial Summary

¹ Adjusted to eliminate merger and integration related costs, including severance payments, professional fees, divestiture-related costs and amortization of restricted stock units granted in connection with the Company's acquisition of Central Parking through a merger in October 2012 and related tax effects.

² The previously issued consolidated financial statements have been recast in this table to reflect the impact of the final purchase price allocation with respect to the Company's Central Parking acquisition as if the final purchase price allocation was completed at the date of acquisition. The impact of the finalization of the purchase price allocation is reflected in the tables accompanying this release.

³ The previously issued consolidated financial statements have been restated in this table primarily to reflect a change in the manner in which the Company has accounted for deficiency payments under the Company's agreement with the State of Connecticut under which the Company operates the surface parking and 3,500 space parking garage at Bradley International Airport located in the Hartford, Connecticut metropolitan area (the "Bradley Agreement"). Cumulative deficiency payments under the Bradley Agreement, net of reimbursements, previously had been recorded as a receivable by the Company.  Please see the more detailed discussion in the below section entitled "Update Regarding Accounting Review of Bradley Agreement."

⁴ Refer to accompanying financial tables for a reconciliation of this non-GAAP financial measure.

James A. Wilhelm, President and Chief Executive Officer, stated, "We're pleased with another quarter of solid execution. While our underlying business performance exceeded our expectations, gross profit that otherwise would have been in line with second quarter results was adversely impacted on a sequential basis by insurance program fluctuations, volatility at some of our leased locations and fluctuations in the performance of the Bradley Airport contract that now flow through our operating results. Our third quarter results were the result of a continued focus on consistently executing against our strategic initiatives and driving operational efficiencies to strengthen our competitive position.

"As part of our long term branding strategy, we've set December 2, 2013 as the initial brand launch date on which we'll officially change our corporate name to SP Plus Corporation and launch our new brand and website. For the time being, we'll continue to conduct our parking operations under their original brands. Starting in 2014, we anticipate beginning a phased transition of those operations to a new SP+ Parking brand."

Wilhelm concluded, "We have made excellent progress integrating the two businesses since the merger was completed one year ago. Our two organizations have blended seamlessly, and we continue to explore opportunities to leverage our shared expertise across the business and expand our service capabilities to customers to drive long term, profitable growth. Our staged integration continues its smooth execution and remains on track. We began to integrate locations in eight more states into our combined support office systems and processes at the start of the fourth quarter. We expect to continue converting additional states at an orderly pace and to have completed the integration of all locations by the end of 2014."

Update Regarding Accounting Review of Bradley Agreement

The Company has completed its previously announced accounting review of its Bradley Agreement. The review was isolated to this one agreement, which has been in place for the last 13 years and centered around the application of technical accounting principles to various aspects of the agreement.  At the inception of the Bradley Agreement in March 2000, the Company determined, after consultation with and concurrence by Ernst & Young, LLP, that any deficiency payments under the Bradley Agreement should be accounted for as a receivable on the Company's consolidated balance sheet. Based in part on its ongoing consultation with and concurrence by Ernst & Young, LLP throughout the entire contract period to date, the Company believed this to be the proper accounting treatment, and consistently maintained such treatment over the past thirteen years. The Company believed that it would, and continues to believe that it will, ultimately recover the deficiency payments; however, after consultation with and concurrence by Ernst & Young, LLP, the Company now has concluded that the deficiency payments should not have been recognized as a receivable, but rather should have been, and should continue to be, recorded as cost of parking services in the reporting periods in which such payments were made, and that the repayments to the Company of any deficiency payment should have been, and should continue to be, recognized as reimbursements of such cost of parking services in the reporting periods in which such payments were received. This change in accounting does not impact the economics of the Bradley Agreement, including related cash flows as disclosed in the Company's quarterly reports, but may cause increased fluctuations in the Company's future quarterly results of operations. The impact of the restatement on the Company's operating results for the periods presented in this release is reflected in the tables accompanying this release. For further information, see the Company's Current Report on Form 8-K, Quarterly Report on Form 10-Q for the period ended September 30, 2013 and amendments to prior reports filed by the Company contemporaneously with this release.  

Third Quarter Operating Results

Gross profit in the third quarter of 2013 was $40.1 million, compared to second quarter 2013 gross profit of $46.0 million, a decrease of 13%. The decrease in sequential quarter gross profit was primarily attributable to the timing of a health insurance dividend that was recorded in the second quarter of 2013, an unfavorable swing in insurance reserve estimates related to prior years, volatility at some of the Company's leased locations and an unfavorable sequential quarter fluctuation in deficiency payments at Bradley Airport as a result of a large repayment to the Company in the second quarter and a large payment by the Company in the third quarter. The $18.7 million year-over-year increase in gross profit was primarily attributable to the addition of Central Parking operations.

Third quarter 2013 general and administrative (G&A) expenses were $20.5 million, including $1.9 million of merger and integration related costs, as compared to $26.9 million in the second quarter of 2013, which included $3.1 million of merger and integration related costs. The sequential quarter decrease of $5.2 million in adjusted G&A, excluding merger and integration related costs, was due primarily to decreases in compensation related costs. Adjusted G&A as a percentage of gross profit improved to 46.4% in the 2013 third quarter as compared to 51.6% in the 2013 second quarter.  

Income before income taxes for the third quarter of 2013 was $6.9 million. On a year-over-year basis, excluding the impact of the amortization of merger-related intangible assets of $3.8 million for the third quarter of 2013, adjusted income before income taxes would have increased 62% over the same period of 2012.

The Company generated negative free cash flow of $1.0 million during the third quarter of 2013 and negative $4.0 million for the first nine months of 2013. Free cash flow has been impacted by higher than normal receivables outstanding from some of our large airport clients, and though the Company fully expects to collect on all outstanding balances, the timing of those collections is expected to result in lower than expected free cash flow for 2013. In addition, the Company has paid out approximately $5 million more than expected for merger and integration related costs and capital investments.

Recent Developments

AXS Digital, LLC (AEG Worldwide's ticketing platform) and Standard Parking Corporation executed a multi-year agreement to use the Company's Click and Park^® online reservation and payment engine to provide online parking reservation and routing services for parking facilities surrounding AEG venues across the United States. Initially, 21 venues throughout the United States will begin using Click and Park's patented travel demand management system.

Porter Airlines awarded SP Plus^® Airport Services a contract to implement shuttle bus operations between Billy Bishop Toronto City Airport and off-site parking locations. As part of its services, the Company will implement its Click and Park^® online reservation system to process pre-paid parking reservations for Porter Airlines passengers. This agreement represents the first direct contract between SP Plus^® Airport Services and a commercial airline.

Xerox State and Local Solutions, Inc., a contractor to the Texas Department of Transportation, awarded Standard Parking a multi-year subcontract to provide certain Toll Operations and Courtesy Patrol services for a portion of the Texas toll road system serving Austin, TX. The contract includes the remote monitoring of seven toll plazas, coordination of maintenance functions for those toll plazas, and the operation of Courtesy Patrols that provide roadside assistance to stranded or disabled motorists.

2013 Full-Year Outlook

Based on results from the first nine months of 2013, the Company reaffirms its 2013 full-year adjusted earnings per share guidance in the range of $0.75 to $0.85, excluding both merger and integration costs and professional and related fees incurred in connection with the restatement, and in the range of $0.60 - $0.70, excluding only the professional and related fees incurred in connection with the restatement. The change in accounting for deficiency payments under the Bradley Agreement is not expected to have a material impact on full year 2013 earnings per share before professional and related fees incurred in connection with the restatement. The Company is not yet able to estimate the total amount of professional and related fees it will incur in connection with the restatement.

The Company also reduced its full-year 2013 free cash flow expectation by $10 million, to approximately $20 million. As noted in the Third Quarter Operating Results section, free cash flow has been impacted by the combination of higher than normal receivables outstanding from some of the Company's large airport clients and approximately $5 million in additional merger and integration related costs and capital investments.

Conference Call

The Company's quarterly earnings conference call will be held at 10:00 a.m. (Central Time) on November 19, 2013 and will be available live and in replay to all analysts and investors through a webcast service. To listen to the live call, individuals are directed to the Company's Investor Relations page at ir.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.

About Standard Parking

Standard Parking is a leading national provider of parking facility management, ground transportation and other ancillary services. The Company has approximately 23,000 employees and manages approximately 4,300 facilities with more than 2.1 million parking spaces in hundreds of cities across North America. The operations include parking-related and shuttle bus operations serving 75 airports. USA Parking System, a Company subsidiary, is one of the premier valet operators in the nation, with more four and five diamond luxury properties, including hotels and resorts, than any other valet competitor.

More information about Standard Parking is available at www.standardparking.com. You should not construe the information on that website to be a part of this release. Standard Parking's annual reports filed on Form 10-K, as amended, its quarterly reports on Form 10-Q, as amended, and its current reports on Form 8-K are available on the Internet at www.sec.gov and can also be accessed through the Investor Relations section of the Company's website.

Cautionary Note Regarding Forward-Looking Statements

This release and the attached tables contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including the statements under the caption " 2013 Full-Year Outlook" and other statements regarding expectations, beliefs, plans, intentions and strategies of the Company. The Company has tried to identify these statements by using words such as "expect," "anticipate," "believe," "could," "should," "estimate," "expect," "intend," "may," "plan," "guidance," "will," "are to be" and similar terms and phrases, but such words, terms and phrases are not the exclusive means of identifying such statements. These forward-looking statements are made based on management's expectations and beliefs concerning future events affecting the Company and are subject to uncertainties and factors relating to operations and the business environment, all of which are difficult to predict and many of which are beyond management's control. Actual results, performance and achievements could differ materially from those expressed in, or implied by, these forward-looking statements due to a variety of risks, uncertainties and other factors, including, but not limited to, the following: risks related to the Company's restatement of its historical financial statements discussed in this release (including, without limitation, the time, costs and expenses associated with the restatement, potential inquiries from the SEC and/or Nasdaq, the potential material adverse effect on the price of the Company's common stock and possible stockholder lawsuits); the Company's ability to integrate Central Parking into the business of the Company successfully and the amount of time and expense spent and incurred in connection with the integration; the risk that the economic benefits, cost savings and other synergies that the Company anticipates as a result of the Central Parking merger are not fully realized or take longer to realize than expected; the Company's substantially increased indebtedness incurred in connection with the Central Parking merger, which may reduce available cash flow, increase vulnerability to adverse economic conditions, and limit flexibility in planning for, or reacting to, changes in or challenges related to the Company's business; unanticipated Central Parking merger and integration expenses; the loss of customers, clients or strategic alliances as a result of the Central Parking merger; the impact of the divestitures of management contracts and leases required by the agreement entered into by the Company with the Department of Justice in connection with the Central Parking merger; other losses, or renewals on less favorable terms, of management contracts and leases; adverse litigation judgments or settlements; adverse economic impact to the Company in areas damaged by Hurricane Sandy; changes in general economic and business conditions or demographic trends; the effect on the Company's strategy and operations due to changes to the Board of Directors that occurred upon the completion of the merger; the impact of public and private regulations; financial difficulties or bankruptcy of major clients; intense competition; insurance losses that are worse than expected or adverse events not covered by insurance; labor disputes; extraordinary events affecting parking at facilities that the Company manages, including emergency safety measures, military or terrorist attacks, cyber terrorism and natural disasters; the risk that state and municipal government clients sell or enter into long-term leases of parking-related assets to competitors or clients of our competitors; uncertainty in the credit markets; availability, terms and deployment of capital; the Company's ability to obtain performance bonds on acceptable terms; and the impact of Federal health care reform.

For a detailed discussion of factors that could affect the Company's future operating results, please see the Company's filings with the Securities and Exchange Commission, including the disclosures under "Risk Factors" in those filings. Except as expressly required by the federal securities laws, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, changed circumstances or future events or for any other reason.

Use of Non-GAAP Financial Measures

To supplement its consolidated financial statements presented in accordance with GAAP, the Company considers certain financial measures that are not prepared in accordance with GAAP, including G&A excluding merger and integration related costs (also referred to as adjusted G&A), income before income taxes excluding merger and integration related costs (also referred to as adjusted income before income taxes), net income excluding merger and integration related costs (also referred to as adjusted net income), net income per share excluding merger and integration related costs (also referred to as adjusted EPS), EBITDA and EBITDA excluding merger and integration related costs (also referred to as adjusted EBITDA), and free cash flow. The Company uses these non-GAAP financial measures, in addition to GAAP financial measures, to evaluate its operating and financial performance and to compare such performance to that of prior periods and to the performance of its competitors. Additionally, the Company uses these non-GAAP financial measures in making operational and financial decisions and in the Company's budgeting and planning process.The Company believes that providing these non-GAAP financial measures to investors helps investors evaluate the Company's operating performance, profitability and business trends in a way that is consistent with how management evaluates such performance and consistent with guidance previously provided by the Company. Adjusted G&A, EBITDA and adjusted EBITDA, adjusted income before income taxes, adjusted net income and adjusted EPS, and free cash flow should not be considered as alternatives to, or more meaningful indicators of the Company's operating performance or liquidity than, G&A, income before income taxes, net income, EPS or net cash provided by operating activities, as determined in accordance with GAAP. In addition, the Company's calculation of such non-GAAP measures may not be comparable to similarly titled measures of another company.

Adjusted G&A and adjusted income before income taxes are non-GAAP financial measures of G&A expenses and income before income taxes, respectively, excluding merger and integration related costs.  The Company believes these financial measures provide useful information regarding the underlying operating performance of the Company and improve comparability of financial results. Adjusted net income and adjusted EPS are non-GAAP financial measures of net income and EPS excluding merger and integration related costs.  In providing EPS guidance, the Company also excludes from adjusted EPS the professional and related fees incurred in connection with the restatement of its financial statements discussed in this release, and the Company also presents adjusted EPS excluding only such professional and related fees. The Company believes its presentation of these financial measures improves comparability of financial results.

EBITDA is a non-GAAP financial measure that represents GAAP net income attributable to the Company before (i) interest expense net of interest income, (ii) provision for income taxes, and (iii) depreciation and amortization.  Adjusted EBITDA further adjusts EBITDA by excluding merger and integration related costs.

The Company defines free cash flow as net cash from operating activities, less cash used for investing activities (exclusive of acquisitions), less distribution to noncontrolling interest, plus the effect of exchange rate changes on cash and cash equivalents. The Company believes that the presentation of free cash flow provides useful information regarding its recurring cash provided by operating activities after certain expenditures. It also demonstrates the Company's ability to execute its financial strategy. The Company's presentation of free cash flow has material limitations. The Company's free cash flow does not represent its cash flow available for discretionary expenditures because it excludes certain expenditures that are required or to which the Company has committed, such as debt service requirements. The Company's definition of free cash flow may not be comparable to similarly-titled measures presented by other companies.

For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, see the accompanying tables to this release.