SP Plus (SP) Tops Q3 EPS by 3c, Revenues Beat; Lowers FY18 FCF Outlook

SP Plus (NASDAQ: SP) reported Q3 EPS of $0.64, $0.03 better than the analyst estimate of $0.61. Revenue for the quarter came in at $362.1 million versus the consensus estimate of $200.19 million.

G Marc Baumann, President and Chief Executive Officer, stated, “We continue to generate solid bottom-line results, however, gross profit growth in the third quarter was less than we expected. Fluctuations in the timing and magnitude of changes in prior-year casualty loss reserve estimates worked against us this quarter. The Airport Division continued to show solid growth but growth was softer than expected in the Commercial Division. While we have successfully generated strong same location gross profit growth in the Commercial Division, new business did not completely backfill a higher than expected level of contract terminations. Driving new business growth remains a key focus and we’re making progress on a number of initiatives.”

Mr. Baumann continued, “We remain pleased with the execution of our other key strategic initiatives, including implementing our vertical market strategy, expanding our revenue management and marketing capabilities, deploying technology solutions, and reducing the total cost of risk. In addition, we continue to be successful in maintaining tight cost controls. Finally, we recently announced our intent to acquire Bags, a leading provider of baggage services to airline, airport, hospitality and other industries. We are very excited about this acquisition and believe it will enable strong cross-selling and other revenue synergy opportunities, diversify our business and drive shareholder value.”

GUIDANCE:

Due to unplanned acquisition-related costs, the Company does not expect to achieve its previously provided guidance on reported net income, reported EPS, and reported EBITDA. The Company reaffirms, however, its previously provided full-year 2018 guidance on the corresponding adjusted measures (adjusted net income, adjusted EPS, and adjusted EBITDA). The Company now expects net cash from operating activities to be in the range of $65 million to $75 million and free cash flow to be in the range of $50 million to $60 million. The post-acquisition results of Bags are not expected to have a material impact on 2018 and were not contemplated in any of the guidance measures for 2018.

For earnings history and earnings-related data on SP Plus (SP) click here.

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