SP Plus (SP) Misses Q4 EPS by 5c; Offers FY20 EPS Mid-Point Guidance Below Consensus

SP Plus (NASDAQ: SP) reported Q4 EPS of $0.55, $0.05 worse than the analyst estimate of $0.60. Revenue for the quarter came in at $231.9 million versus the consensus estimate of $235.41 million.

G Marc Baumann, Chief Executive Officer, stated, “Fourth quarter operating results represented a strong finish to an excellent year for SP+. We’ve successfully integrated the Bags acquisition, which we see as transformational in terms of the long-term growth opportunities. Additionally, our team executed well on key business development initiatives, including building out our national accounts and group purchasing organization relationships, and leveraging our position in key high potential verticals.

“In 2019, Bags continued to benefit from first-mover advantage in the nascent Remote Airline Check-In (RAC) market, establishing its remote check-in services for passengers traveling on major airlines, most recently at Boston’s Logan International Airport. Similarly, we achieved early success in our cross-selling initiatives, notably winning business for Bags’ RAC services at Louis Armstrong New Orleans International Airport and Portland International Airport, and for SP+ Transportation Services at Orlando International Airport.

“Reported and adjusted earnings per diluted share for full-year 2019 came in at or above the high end of our guidance range and free cash flow outpaced our guidance thanks to our strong operating performance coupled with working capital improvements. Strong free cash flow was used to return value to stockholders in the form of repurchases totaling $48 million during 2019.”

GUIDANCE:

SP Plus sees FY2020 EPS of $2.95-$3.05, versus the consensus of $3.04.

Mr. Baumann commented, “Looking ahead to 2020, we expect SP+ to continue to benefit from the positive momentum that drove significant growth in 2019. We have a leading position in a business with significant expansion opportunities, our ongoing investments in technology solutions serve as competitive differentiators, and there is substantial runway ahead to further capitalize on growth synergies associated with our December 2018 acquisition of Bags.

“We expect 2020 gross profit growth to be in-line with our long-term targets of 3%-4%, and similar to our 2019 organic gross profit growth. GAAP earnings per diluted share for full-year 2020 is expected to be in the range of $2.44 to $2.54 and adjusted earnings per diluted share is expected to range from $2.95 to $3.05, which represents approximately 13% and 10% year-on-year growth, respectively, at the midpoints. Full-year cash provided by operating activities and free cash flow is expected to be in the range of $77 to $88 million and $65 to $70 million, respectively, equivalent to 9% and 12% year-on-year growth at the midpoints. Additional assumptions and reconciliations of non-GAAP measures to the nearest GAAP measures are presented in the tables accompanying this release.”

Mr. Baumann concluded, “Our 2020 capital allocation strategy will be similar to that of 2019, prioritizing investments in organic growth projects and potential acquisitions, complemented by opportunistic share repurchases.”

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

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