SP+(SP) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's analysis of financial condition and operations Item 1. Financial Statements This section presents SP Plus Corporation's unaudited condensed consolidated financial statements and detailed notes on key accounting areas Condensed Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity at specific dates Condensed Consolidated Balance Sheets (millions) | (millions) | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Assets | | | | Total current assets | $210.4 | $212.2 | | Total noncurrent assets | $932.0 | $939.7 | | Total assets | $1,142.4 | $1,151.9 | | Liabilities | | | | Total current liabilities | $325.9 | $337.4 | | Total noncurrent liabilities | $555.9 | $563.8 | | Total liabilities | $881.8 | $901.2 | | Stockholders' equity | | | | Total stockholders' equity | $260.6 | $250.7 | | Total liabilities and stockholders' equity | $1,142.4 | $1,151.9 | - Total assets decreased by $9.5 million from $1,151.9 million at December 31, 2023, to $1,142.4 million at March 31, 2024 Total liabilities decreased by $19.4 million, while total stockholders' equity increased by $9.9 million[8] Condensed Consolidated Statements of Income This section details the company's revenues, expenses, and net income over specific periods Condensed Consolidated Statements of Income (millions, except per share data) | (millions, except per share data) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Services revenue | $451.9 | $425.3 | | Cost of services | $389.2 | $367.0 | | General and administrative expenses | $34.8 | $30.6 | | Depreciation and amortization | $9.0 | $8.4 | | Operating income | $18.9 | $19.3 | | Interest expense | $7.4 | $6.8 | | Earnings before income taxes | $11.6 | $12.6 | | Income tax expense | $3.1 | $3.3 | | Net income | $8.5 | $9.3 | | Net income attributable to SP Plus Corporation | $7.6 | $8.4 | | Basic Net income per common share | $0.38 | $0.43 | | Diluted Net income per common share | $0.38 | $0.42 | - Total services revenue increased by $26.6 million (6.3%) year-over-year, from $425.3 million in Q1 2023 to $451.9 million in Q1 2024 However, operating income slightly decreased by $0.4 million (2.1%), and net income attributable to SP Plus Corporation decreased by $0.8 million (9.5%) due to higher general and administrative expenses and interest expense[9] Condensed Consolidated Statements of Comprehensive Income This section presents net income and other comprehensive income items, reflecting total non-owner changes in equity Condensed Consolidated Statements of Comprehensive Income (millions) | (millions) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income | $8.5 | $9.3 | | Foreign currency translation (loss) gain | $(0.2) | $0.2 | | Comprehensive income | $8.3 | $9.5 | | Less: Comprehensive income attributable to noncontrolling interests | $0.9 | $0.9 | | Comprehensive income attributable to SP Plus Corporation | $7.4 | $8.6 | - Comprehensive income attributable to SP Plus Corporation decreased from $8.6 million in Q1 2023 to $7.4 million in Q1 2024, primarily due to a foreign currency translation loss in the current period compared to a gain in the prior year[11] Condensed Consolidated Statements of Stockholders' Equity This section details changes in the company's equity, including net income, stock-based compensation, and distributions Condensed Consolidated Statements of Stockholders' Equity (millions, except share data) | (millions, except share data) | Balance at January 1, 2024 | Balance at March 31, 2024 | | :---------------------------- | :------------------------- | :------------------------ | | Total Stockholders' Equity | $250.7 | $260.6 | | Net income | $7.6 | | | Non-cash stock-based compensation | $2.3 | | | Foreign currency translation | $(0.2) | | | Distributions to noncontrolling interests | $(0.7) | | - Total stockholders' equity increased from $250.7 million at January 1, 2024, to $260.6 million at March 31, 2024, driven by net income of $7.6 million and non-cash stock-based compensation of $2.3 million, partially offset by foreign currency translation loss and distributions to noncontrolling interests[13] Condensed Consolidated Statements of Cash Flows This section summarizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (millions) | (millions) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $14.6 | $7.7 | | Net cash used in investing activities | $(5.6) | $(8.8) | | Net cash (used in) provided by financing activities | $(10.2) | $18.7 | | Net (decrease) increase in cash and cash equivalents | $(1.3) | $17.4 | | Cash and cash equivalents at end of period | $17.8 | $29.8 | - Net cash provided by operating activities increased by $6.9 million to $14.6 million in Q1 2024 compared to Q1 2023 Net cash used in investing activities decreased by $3.2 million However, net cash used in financing activities was $10.2 million in Q1 2024, a significant shift from $18.7 million provided in Q1 2023, leading to an overall decrease in cash and cash equivalents[15] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of significant accounting policies and financial statement items 1. Significant Accounting Policies and Practices This section outlines the company's core business, merger details, consolidation principles, and accounting standards - SP Plus Corporation is a mobility solutions provider integrating technology with operations management, serving aviation, commercial, hospitality, and institutional clients in North America and Europe The company primarily operates through contractual agreements with property owners rather than owning facilities[17] - The company entered into a Merger Agreement on October 4, 2023, to be acquired by Metropolis Technologies, Inc. for approximately $1.5 billion ($54.00 per share in cash) Stockholders approved the transaction on February 9, 2024, with closing expected in 2024, subject to regulatory approvals Merger-related expenses of $2.7 million were incurred in Q1 2024[18][90][91] - The company consolidates wholly-owned subsidiaries and Variable Interest Entities (VIEs) where it is the primary beneficiary As of March 31, 2024, assets related to consolidated VIEs were $53.0 million, and liabilities were $45.3 million[21] - The allowance for doubtful accounts decreased from $2.6 million at December 31, 2023, to $1.4 million at March 31, 2024[23] - The company has equity investments in 6 unconsolidated entities (30-50% ownership) accounted for under the equity method, with equity earnings of $0.5 million in Q1 2024, down from $0.7 million in Q1 2023[27] - New accounting pronouncements, ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Tax Disclosures), are effective for fiscal years beginning after December 15, 2023, and December 15, 2024, respectively The company is currently assessing their impact[37][38][39] 2. Acquisitions This section details the acquisition of Roker Inc., including its financial impact and fair value allocation - On July 25, 2023, SP Plus Corporation acquired certain assets of Roker Inc., a US-based provider of integrated parking solutions, for approximately $3.1 million This acquisition enhances the company's frictionless technology solutions[40][41][92][93] - Roker contributed $0.1 million in services revenue and $0.2 million in losses before income taxes during the three months ended March 31, 2024, primarily due to amortization of acquired intangible assets[42] Roker Acquisition Fair Values (millions): | Asset/Liability | Amount (millions) | | :---------------------- | :---------------- | | Other intangible assets | $2.3 | | Goodwill | $1.0 | | Accounts payable | $(0.2) | | Net cash paid | $3.1 | 3. Leases This section provides details on the company's lease assets, liabilities, costs, and related cash flows Lease Assets and Liabilities (millions): | Category | March 31, 2024 (millions) | December 31, 2023 (millions) | | :----------------------- | :------------------------ | :--------------------------- | | Total leased assets | $200.2 | $204.0 | | Total lease liabilities | $231.6 | $238.3 | Net Lease Cost (millions): | Component | Three Months Ended March 31, 2024 (millions) | Three Months Ended March 31, 2023 (millions) | | :------------------------ | :--------------------------------------- | :--------------------------------------- | | Operating lease cost | $35.4 | $36.9 | | Finance lease cost | $2.2 | $1.9 | | Total Net lease cost | $37.6 | $38.8 | - The weighted-average remaining lease term for operating leases is 5.0 years with a discount rate of 5.6%, while for finance leases it is 4.0 years with a discount rate of 6.5%[47] Cash Flow Information Related to Leases (millions): | Item | Three Months Ended March 31, 2024 (millions) | Three Months Ended March 31, 2023 (millions) | | :------------------------------------------ | :--------------------------------------- | :--------------------------------------- | | Operating cash outflows related to operating leases | $20.5 | $20.8 | | Financing cash outflows related to finance leases | $1.9 | $1.9 | | Leased assets obtained for new operating lease liabilities | $5.0 | $7.8 | | Leased assets obtained for new finance lease liabilities | $5.0 | $1.7 | 4. Revenue This section explains the company's revenue recognition policies, remaining performance obligations, and contract balances - The company recognizes revenue from management type contracts (fixed/performance-based fees, e-commerce, subscription) and lease type contracts (gross receipts, e-commerce, convenience fees) Management type contracts do not include gross customer collections, which belong to property owners[51][52] Remaining Performance Obligations (millions): | Year | Amount (millions) | | :---------------- | :---------------- | | 2024 | $58.6 | | 2025 | $51.1 | | 2026 | $37.6 | | 2027 | $23.1 | | 2028 | $10.1 | | 2029 and thereafter | $13.2 | | Total | $193.7 | Contract Balances (millions): | Item | March 31, 2024 (millions) | December 31, 2023 (millions) | | :---------------- | :------------------------ | :--------------------------- | | Accounts receivable | $180.7 | $181.9 | | Contract assets | $0.3 | $1.2 | | Contract liabilities | $(9.4) | $(17.5) | - Cost of contracts expense, recorded as a reduction to Services revenue – management type contracts, was $0.2 million for both Q1 2024 and Q1 2023[58] 5. Legal and Other Commitments and Contingencies This section addresses the company's involvement in legal claims and litigation, assessing potential financial impacts - The company is involved in various claims and litigation in the normal course of business, including labor, contracts, and personal injury While outcomes are uncertain, the company believes these will not have a material adverse effect on its financial position, results of operations, or cash flows[61][155] 6. Other Intangible Assets, net This section details the company's other intangible assets, their weighted average lives, and amortization expense Other Intangible Assets, Net (millions): | Intangible Asset | Weighted Average Life (Years) | March 31, 2024 Net (millions) | December 31, 2023 Net (millions) | | :----------------------- | :---------------------------- | :---------------------------- | :------------------------------- | | Management contract rights | 5.4 | $21.7 | $23.0 | | Proprietary know how | 6.0 | $17.0 | $17.9 | | Customer relationships | 7.4 | $15.6 | $16.2 | | Trade names and trademarks | 12.5 | $1.7 | $1.8 | | Covenant not to compete | 3.7 | $0.7 | $0.8 | | Total | 6.3 | $56.7 | $59.7 | - Amortization expense for other intangible assets was $2.9 million in Q1 2024, slightly down from $3.0 million in Q1 2023[62] 7. Goodwill This section presents the carrying amounts of goodwill by segment and explains changes due to foreign currency translation Goodwill Carrying Amounts (millions): | Segment | December 31, 2023 Total (millions) | March 31, 2024 Total (millions) | | :---------- | :------------------------------- | :---------------------------- | | Commercial | $388.1 | $388.0 | | Aviation | $156.5 | $156.4 | | Total | $544.6 | $544.4 | - Goodwill decreased slightly by $0.2 million from December 31, 2023, to March 31, 2024, primarily due to foreign currency translation adjustments[63] 8. Borrowing Arrangements This section outlines the company's long-term debt, credit facilities, interest rates, and compliance with covenants Long-Term Borrowings (millions): | Item | March 31, 2024 (millions) | December 31, 2023 (millions) | | :------------------------------------ | :------------------------ | :--------------------------- | | Senior Credit Facility, net | $323.8 | $328.6 | | Other borrowings (incl. finance leases) | $28.1 | $25.2 | | Deferred financing costs | $(1.5) | $(1.7) | | Total obligations | $350.4 | $352.1 | | Less: Current portion | $(18.5) | $(16.5) | | Total long-term borrowings, excluding current portion | $331.9 | $335.6 | - The Senior Credit Facility allows aggregate borrowings of $600.0 million, including a $400.0 million revolving credit facility and a $200.0 million term loan, maturing April 21, 2027 As of March 31, 2024, $324.6 million was borrowed against it, and the company was in compliance with debt covenants[67][68] - The weighted average interest rate on the Senior Credit Facility increased to 6.7% in Q1 2024 from 6.3% in Q1 2023 The rate on all outstanding borrowings (excluding letters of credit) increased to 7.2% from 6.7% over the same period[69] - Subordinated Convertible Debentures, acquired in 2012, mature on April 1, 2028, with an approximate redemption value of $1.1 million as of March 31, 2024[70] 9. Stock Repurchase Program This section details the company's stock repurchase authorizations, shares repurchased, and remaining available amounts - The company has two active stock repurchase programs authorized by the Board in May 2022 and February 2023, each for up to $60.0 million As of March 31, 2024, $0.2 million remained available under the May 2022 program, and no shares have been repurchased under the February 2023 program[71][72] - Due to the Merger Agreement, the company is restricted from repurchasing its common stock starting October 4, 2023 No shares were repurchased in Q1 2024, compared to 285,700 shares for $10.4 million in Q1 2023[72][73] Stock Repurchase Program Summary (millions): | Item | March 31, 2024 (millions) | | :-------------------------------- | :------------------------ | | Total authorized repurchase amount | $120.0 | | Total value of shares repurchased | $59.8 | | Total remaining authorized repurchase amount | $60.2 | 10. Stock-Based Compensation This section describes the company's RSU and PSU grants, related compensation expense, and unrecognized amounts - The company granted 158,343 Restricted Stock Units (RSUs) in Q1 2024, up from 126,931 in Q1 2023 RSU-related compensation expense was $1.4 million in Q1 2024, compared to $1.1 million in Q1 2023[74] - As of March 31, 2024, there was $12.6 million of unrecognized RSU expense (weighted average remaining period of 2.3 years) and $4.2 million of unrecognized Performance Share Unit (PSU) expense (weighted average remaining period of 1.4 years)[74][77] - PSU-related compensation expense was $0.9 million in Q1 2024, down from $1.1 million in Q1 2023 Additional future PSU expenses of $4.2 million (2023 PSUs) and $1.9 million (2022 PSUs) could be recognized if maximum performance targets are achieved[77] 11. Net Income per Common Share This section presents basic and diluted net income per common share, reflecting net income attributable to the corporation Net Income Per Common Share: | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net income attributable to SP Plus Corporation (millions) | $7.6 | $8.4 | | Basic weighted average common shares outstanding | 19,803,578 | 19,701,426 | | Diluted weighted average common shares outstanding | 19,992,969 | 19,867,300 | | Basic Net income per common share | $0.38 | $0.43 | | Diluted Net income per common share | $0.38 | $0.42 | - Basic and diluted net income per common share decreased from $0.43 and $0.42 in Q1 2023 to $0.38 for both in Q1 2024, reflecting the decrease in net income attributable to SP Plus Corporation[79] 12. Comprehensive Loss This section details other comprehensive income items, primarily foreign currency translation adjustments, and their impact Other Comprehensive (Loss) Income (millions): | Item | Three Months Ended March 31, 2024 (millions) | Three Months Ended March 31, 2023 (millions) | | :-------------------------- | :--------------------------------------- | :--------------------------------------- | | Foreign currency translation | $(0.2) | $0.2 | | Total other comprehensive (loss) income | $(0.2) | $0.2 | - Accumulated other comprehensive loss increased from $(1.3) million at December 31, 2023, to $(1.5) million at March 31, 2024, primarily due to foreign currency translation adjustments[80] 13. Segment Information This section provides financial data for the Commercial and Aviation segments, including revenue and operating income - The company operates in two reportable segments: Commercial and Aviation The Chief Operating Decision Maker (CEO) assesses performance based on operating income[81][82][83] Services Revenue by Segment (millions): | Segment | Three Months Ended March 31, 2024 (millions) | Three Months Ended March 31, 2023 (millions) | | :-------------------------- | :--------------------------------------- | :--------------------------------------- | | Commercial | $147.9 | $144.4 | | Aviation | $74.2 | $71.9 | | Reimbursed management type contract revenue | $229.8 | $209.0 | | Total services revenue | $451.9 | $425.3 | Operating Income (Loss) by Segment (millions): | Segment | Three Months Ended March 31, 2024 (millions) | Three Months Ended March 31, 2023 (millions) | | :---------- | :--------------------------------------- | :--------------------------------------- | | Commercial | $32.4 | $31.2 | | Aviation | $11.2 | $8.6 | | Other | $(24.7) | $(20.5) | | Total operating income | $18.9 | $19.3 | - Commercial segment operating income increased by $1.2 million (3.8%), and Aviation segment operating income increased by $2.6 million (30.2%) year-over-year The 'Other' segment, which includes operational support and shared infrastructure costs, saw its operating loss increase by $4.2 million (20.5%)[85] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance and condition for the three months ended March 31, 2024, compared to the same period in 2023, covering the proposed merger, acquisitions, business model, trends, and detailed analysis of consolidated and segment-level results, liquidity, and cash flows Overview This section provides a high-level summary of the company's proposed merger, recent acquisitions, and core business model - The company is in the process of a proposed merger with Metropolis Technologies, Inc., an all-cash transaction valued at approximately $1.5 billion ($54.00 per share) Merger-related expenses of $2.7 million were incurred in Q1 2024[90][91] - The acquisition of Roker Inc. in July 2023 for $3.1 million aims to enhance the company's frictionless technology solutions and is included in the Commercial segment[92][93] - SP Plus Corporation delivers mobility solutions through technology integration and operations management, primarily via management type and lease type contracts with property owners in North America and Europe[94][95][96] General Business Trends This section discusses key market trends influencing the company's business and client relationships - The company believes clients increasingly recognize the value of technology-driven mobility solutions and outsourcing services for profit generation and customer experience differentiation[98] - The Commercial segment maintained a high client retention rate of approximately 94% for the twelve months ended March 31, 2024, up from 93% in the prior year, driven by a focus on customer service and technology solutions[98] Commercial Segment Facilities This section provides a breakdown of the number of facilities operated within the Commercial segment by contract type Commercial Segment Facilities: | Type | March 31, 2024 | December 31, 2023 | March 31, 2023 | | :------------------------ | :------------- | :---------------- | :------------- | | Managed facilities | 2,986 | 2,979 | 2,787 | | Leased facilities | 396 | 405 | 414 | | Total Commercial segment facilities | 3,382 | 3,384 | 3,201 | - As of March 31, 2024, 88% of Commercial segment locations were under management type contracts and 12% under lease type contracts[96] Aviation Segment - Airports Served This section details the number of airports served by the Aviation segment across different regions Aviation Segment - Airports Served: | Region | March 31, 2024 | December 31, 2023 | March 31, 2023 | | :------------ | :------------- | :---------------- | :------------- | | North America | 102 | 101 | 101 | | Europe | 67 | 58 | 58 | | Total Airports | 169 | 159 | 159 | - The Aviation segment expanded its presence, serving 169 airports as of March 31, 2024, an increase from 159 airports at March 31, 2023, primarily driven by growth in Europe[100] Revenue This section describes the company's revenue streams and recognition policies for different contract types - Revenue is recognized from management type contracts (management fees, e-commerce, subscription, ancillary services) and lease type contracts (gross receipts, e-commerce, convenience fees) Reimbursed management type contract revenue covers direct operating expenses[101][103][104][105] - Management type contract revenues do not include gross customer collections, as these belong to the property owners[101] Cost of Services (Exclusive of Depreciation and Amortization) This section explains the nature of costs associated with the company's service contracts - Costs for management type contracts are generally the client's responsibility, except for 'reverse' management contracts and certain other aviation/ancillary services Lease type contracts include contractual rents/fees and most operating expenses[106][107] - Reimbursed management type contract expense consists of directly reimbursed costs incurred on behalf of a client[108] General and Administrative Expenses This section outlines the components of the company's general and administrative expenses - General and administrative expenses include salaries, wages, incentive compensation, stock-based compensation, payroll taxes, insurance, travel, office expenses, and acquisition-related expenses[110] Depreciation and Amortization This section describes the company's policies for depreciating tangible assets and amortizing intangible assets - Depreciation is calculated using a straight-line method over the estimated useful lives of assets Intangible assets with finite lives are amortized over their remaining estimated useful lives[111] Operating Income This section defines operating income as a key performance metric for management's decision-making - Operating income is the key metric used by the Chief Operating Decision Maker (CEO) for making decisions, assessing performance, and allocating resources to the Commercial and Aviation operating segments[112][113] Segments This section describes the services and clients served by the company's Commercial and Aviation operating segments - The Commercial segment provides services in healthcare, municipalities, government, hospitality, commercial real estate, residential, retail, colleges, and ancillary mobility solutions The Aviation segment focuses on airports, airlines, and hospitality clients with baggage and parking services, including ancillary ground transportation and check-in services[114][115] - The 'Other' segment includes costs for operational support teams and shared infrastructure (finance, IT, HR, legal, etc.)[115] Analysis of Results of Operations This section provides a detailed analysis of the company's consolidated and segment-level financial performance Consolidated Financial Highlights (millions): | Item | March 31, 2024 (millions) | March 31, 2023 (millions) | Variance Amount (millions) | Variance % | | :------------------------------------------ | :------------------------ | :------------------------ | :----------------------- | :--------- | | Services revenue | $451.9 | $425.3 | $26.6 | 6.3% | | Cost of services (exclusive of D&A) | $389.2 | $367.0 | $22.2 | 6.0% | | General and administrative expenses | $34.8 | $30.6 | $4.2 | 13.7% | | Depreciation and amortization | $9.0 | $8.4 | $0.6 | 7.1% | | Operating income | $18.9 | $19.3 | $(0.4) | (2.1)% | | Interest expense | $7.4 | $6.8 | $0.6 | 8.8% | | Income tax expense | $3.1 | $3.3 | $(0.2) | (6.1)% | | Net income | $8.5 | $9.3 | $(0.8) | (8.6)% | - Consolidated services revenue increased by $26.6 million (6.3%), driven by new management type contracts, volume-based contracts, and conversions, partially offset by a decrease in lease type contracts due to conversions and terminations[118][119] - General and administrative expenses increased by $4.2 million (13.7%), primarily due to higher acquisition-related, restructuring, and other costs ($3.0 million in Q1 2024 vs. $1.3 million in Q1 2023) and investments in growth initiatives[120] Commercial Segment Performance (millions): | Item | March 31, 2024 (millions) | March 31, 2023 (millions) | Variance Amount (millions) | Variance % | | :-------------------------- | :------------------------ | :------------------------ | :----------------------- | :--------- | | Total services revenue | $147.9 | $144.4 | $3.5 | 2.4% | | Total gross profit | $42.6 | $41.1 | $1.5 | 3.6% | | Operating income | $32.4 | $31.2 | $1.2 | 3.8% | Key Changes: * Management type contracts gross profit increased by $4.7 million (15.0%) due to increased activity and new business * Lease type contracts gross profit decreased by $2.9 million (24.8%) due to terminations, lower cost concessions, and conversions Aviation Segment Performance (millions): | Item | March 31, 2024 (millions) | March 31, 2023 (millions) | Variance Amount (millions) | Variance % | | :-------------------------- | :------------------------ | :------------------------ | :----------------------- | :--------- | | Total services revenue | $74.2 | $71.9 | $2.3 | 3.2% | | Total gross profit | $16.7 | $14.0 | $2.7 | 19.3% | | Operating income | $11.2 | $8.6 | $2.6 | 30.2% | Key Changes: * Management type contracts gross profit increased by $2.5 million (17.9%) due to new business and increased activity * Lease type contracts gross profit increased slightly by $0.1 million (7.7%) due to increased transient revenue, despite lower cost concessions and terminations - Operating expenses in the 'Other' segment increased by $4.2 million (20.5%) to $24.7 million, primarily due to higher acquisition-related, restructuring, and other costs ($2.6 million in Q1 2024 vs. $0.7 million in Q1 2023) and investments in business development and technology[131] Analysis of Financial Condition This section assesses the company's liquidity, capital resources, and cash flow performance - As of March 31, 2024, the company had $17.8 million in cash and cash equivalents and $232.1 million in borrowing availability under its Senior Credit Facility, which is believed to be sufficient to meet obligations and debt covenants for the next twelve months[133][146] - Total indebtedness decreased by $1.7 million to $350.4 million as of March 31, 2024, from $352.1 million at December 31, 2023 This includes $322.3 million under the Senior Credit Facility and $28.1 million in other debt, primarily finance lease obligations[135][140] - Net cash provided by operating activities increased by $6.9 million to $14.6 million in Q1 2024, mainly due to the timing of incentive compensation payments Net cash used in investing activities decreased by $3.2 million due to lower noncontrolling interest buyouts and property/equipment purchases[143][144] - Net cash used in financing activities was $10.2 million in Q1 2024, a shift from $18.7 million provided in Q1 2023 This was primarily due to debt repayments and contingent consideration payments, contrasting with borrowings and stock repurchases in the prior year[145] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section states that there have been no material changes in the company's primary risk exposures or management of market risks since the disclosures in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 - No material changes in primary risk exposures or market risk management have occurred since the December 31, 2023, Annual Report on Form 10-K[147] Item 4. Controls and Procedures This section details the evaluation of the company's disclosure controls and procedures and internal control over financial reporting Management concluded that disclosure controls and procedures were effective as of March 31, 2024, and reported no significant changes in internal control over financial reporting during the quarter - Management, including the CEO, CFO, and Corporate Controller, concluded that the company's disclosure controls and procedures were effective as of March 31, 2024[148][150] - There were no significant changes in internal control over financial reporting during the quarter ended March 31, 2024, that materially affected or are reasonably likely to materially affect the company's internal controls[151] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits Item 1. Legal Proceedings The company is subject to various claims and litigation in the normal course of business, including labor, contracts, and personal injury While the outcomes are uncertain, the company believes these will not have a material adverse effect on its financial position, results of operations, or cash flows Accruals are made for probable and reasonably estimable losses - The company faces claims and litigation in the normal course of business, but believes the final outcomes will not materially adversely affect its financial position, results of operations, or cash flows[155] - Accruals are recorded when a loss is probable and reasonably estimable; otherwise, reasonably possible losses are disclosed if material and estimable[156] Item 1A. Risk Factors This section advises investors to consider the risk factors discussed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and subsequent SEC filings It states that no material changes to these risk factors have occurred - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023, have occurred[157] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable, indicating no unregistered equity sales or use of proceeds to report for the period Item 3. Defaults Upon Senior Securities This item is not applicable, indicating no defaults upon senior securities to report for the period Item 4. Mine Safety Disclosures This item is not applicable, indicating no mine safety disclosures to report for the period Item 5. Other Information This item is not applicable, indicating no other information to report for the period Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certificates of amendment, bylaws, Section 302 and 906 certifications, and Inline XBRL documents - The exhibits include Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation, Amendment to Fourth Amended and Restated Bylaws, Section 302 Certifications for CEO, CFO, and Corporate Controller, Section 906 Certification, and Inline XBRL documents[164] Signatures This section contains the required signatures for the Form 10-Q, including those of G Marc Baumann (Chairman and CEO), Kristopher H. Roy (Chief Financial Officer), and Gary T. Roberts (Senior Vice President, Corporate Controller and Assistant Treasurer), all dated May 2, 2024 - The report is signed by G Marc Baumann (Chairman and CEO), Kristopher H. Roy (CFO), and Gary T. Roberts (SVP, Corporate Controller and Assistant Treasurer) on May 2, 2024[167]