SP+(US:SP)2023-05-07 06:13Financial Data and Key Metrics Changes - First quarter 2023 adjusted earnings per share were $0.58, down from $0.60 in the same quarter last year, primarily due to higher interest rates and increased depreciation and amortization from capital investments [9] - Free cash flow for Q1 2023 was $300,000, significantly lower than $23.8 million in Q1 2022, which benefited from a federal income tax refund of $20.5 million [9] - The company expects full-year 2023 adjusted gross profit to range from $240 million to $260 million, representing an 11% increase from 2022 at the midpoint [10] Business Line Data and Key Metrics Changes - The Aviation segment gross profit increased by 11% as travel activity rose, with more travelers driving to airports rather than using rideshares or taxis [12] - Adjusted gross profit for Q1 2023, excluding certain costs, increased by 14% year-over-year to $58.4 million, driven by growth at same locations and new business wins [23] - The Commercial segment added 120 new locations, with 42% of these being deployments of stand-alone Sphere technology solutions without on-site management [119][129] Market Data and Key Metrics Changes - The company processed 4 million transactions in Q1 2023 on SP Plus enabled technology platforms, up more than 20% from Q4 2022 [13] - The level of proposal activity for parking management solutions and luggage handling services is stronger than in recent memory, indicating robust market demand [118] Company Strategy and Development Direction - The company is focused on leveraging technology to drive growth, with expectations for gross profit growth in the high single digits beyond 2023 [18][32] - Investments in technology are expected to double their contribution to gross profit in 2023 compared to 2022, aiming for over 10% contribution by 2025 [121] - The AeroParker acquisition has opened up international markets and increased the number of airports serviced, enhancing the company's competitive edge [119][125] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year guidance and noted a shift towards less seasonality in gross profit, with expectations for stronger performance in the second half of the year [15][70] - The company anticipates continued strong demand in the office building sector as hybrid work models become the norm, driving demand for parking services [96][106] Other Important Information - The company maintains a location retention rate of 93%, considered the best in the industry, and added 71 net new locations in the Commercial segment in Q1 [129] - Adjusted G&A expenses for Q1 2023 were $29.3 million, up from $24.4 million in Q1 2022, reflecting investments to support accelerated growth [122] Q&A Session Summary Question: Update on location count for gateless and gated solutions - Management did not provide a specific breakout between gated and gateless solutions but confirmed the addition of 120 new locations in the Commercial segment [3] Question: Expectations for gross profit contribution and seasonality - Management expects gross profit to improve sequentially throughout the year, indicating a shift from traditional seasonal trends [26][70] Question: Success with AeroParker acquisition - Early success has been noted with AeroParker, with several airports adopting the technology, indicating strong demand for the solution [28][125] Question: Insights on new business wins and market trends - Management expressed optimism about new business wins, particularly in retail, mixed-use, and hospitality sectors, and noted a strong pipeline for future growth [34][92] Question: Acquisition appetite and competitive dynamics - The company remains open to acquisitions, particularly in technology, and is evaluating opportunities in the marketplace [91][94]