Executive Summary

Record first-quarter performance across key measures: adjusted gross profit $63.0M (+8% YoY) and adjusted EBITDA $30.4M (+8% YoY); total services revenue before reimbursed revenue was $222.1M (+2.7% YoY) and sequentially up from $217.2M in Q4 2023 .
Commercial and Aviation both grew: Commercial adjusted gross profit +5% YoY; Aviation adjusted gross profit +17% YoY, aided by recent airport contract wins, high travel volumes, and cross-selling .
Technology a key driver: added 16 standalone Sphere locations in the quarter (86 over LTM), with technology transactions and their contribution to adjusted gross profit nearly doubling YoY; management reiterated the goal of 10% of gross profit from technology by 2025 .
No earnings call and no guidance due to the pending Metropolis acquisition; DOJ “Second Request” extends HSR timeline; management still expects the merger to close in 2024. The primary stock catalyst remains regulatory progress on the deal rather than fundamentals near-term .

What Went Well and What Went Wrong

What Went Well

“Adjusted EBITDA increased 8%, with each measure setting first quarter records,” underpinned by technology-related fees, same-location growth, travel activity, new wins, and high retention .
Commercial division strength: adjusted gross profit rose to $45.1M from $43.1M, supported by double-digit same-location growth in healthcare, commerce and residential, and 6% YoY location growth (3,382 locations) with a 94% retention rate .
Aviation momentum: adjusted gross profit rose to $17.9M from $15.3M (+17% YoY) on airport wins, high travel volumes, and cross-sell; total airports served increased to 169 vs. 159 a year ago .

What Went Wrong

GAAP net income declined YoY to $7.6M ($0.38 diluted EPS) from $8.4M ($0.42) as G&A increased with business development and technology deployment, and interest/other expense remained elevated .
Lease-type contract gross profit (before D&A) fell to $10.2M from $13.0M YoY, partially offsetting management-type contract gains .
No numerical guidance and no Q&A (no earnings call) amid the pending Metropolis acquisition; near-term investor visibility is limited to operational commentary and deal milestones .

Financial Results

Quarterly trend (sequential and YoY context)

Metric	Q3 2023	Q4 2023	Q1 2024
Total services revenue (before reimbursed) ($M)	$228.4	$217.2	$222.1
Total services revenue incl. reimbursed ($M)	$460.7	$454.1	$451.9
Gross profit (GAAP) ($M)	$64.2	$58.1	$59.3
Adjusted gross profit ($M)	$67.7	$62.6	$63.0
Operating income (GAAP) ($M)	$21.0	$11.9	$18.9
Adjusted operating income ($M)	$29.7	$25.5	$25.1
Net income attributable to SP ($M)	$9.2	$1.2	$7.6
Diluted EPS (GAAP)	$0.46	$0.06	$0.38
Adjusted EPS	$0.79	$0.60	$0.61
Adjusted EBITDA ($M)	$34.9	$31.5	$30.4
Cash from operations ($M)	$32.5	$2.3	$14.6
Free cash flow ($M)	$25.2	($2.3)	$8.4

YoY comparison (Q1 2023 vs Q1 2024)

Metric	Q1 2023	Q1 2024
Total services revenue (before reimbursed) ($M)	$216.3	$222.1
Total services revenue incl. reimbursed ($M)	$425.3	$451.9
Gross profit (GAAP) ($M)	$55.1	$59.3
Adjusted gross profit ($M)	$58.4	$63.0
Operating income (GAAP) ($M)	$19.3	$18.9
Adjusted operating income ($M)	$23.7	$25.1
Net income attributable to SP ($M)	$8.4	$7.6
Diluted EPS (GAAP)	$0.42	$0.38
Adjusted EPS	$0.58	$0.61
Adjusted EBITDA ($M)	$28.2	$30.4
Cash from operations ($M)	$7.7	$14.6
Free cash flow ($M)	$0.3	$8.4

Segment breakdown (Q1)

Segment Metric	Q1 2023	Q1 2024
Commercial – Gross Profit (GAAP) ($M)	$41.1	$42.6
Commercial – Adjusted Gross Profit ($M)	$43.1	$45.1
Commercial – Adjusted Operating Income ($M)	$33.2	$34.6
Aviation – Gross Profit (GAAP) ($M)	$14.0	$16.7
Aviation – Adjusted Gross Profit ($M)	$15.3	$17.9
Aviation – Adjusted Operating Income ($M)	$10.3	$12.7

KPIs

KPI	Q1 2023	Q1 2024
Total Commercial locations	3,201	3,382
Aviation – Airports served (Total)	159	169
Location retention rate	—	94%
Sphere standalone locations added (quarter)	—	16
Sphere standalone locations (LTM total)	—	86

Notes: “—” indicates not disclosed in the referenced document for that prior period.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
All financial guidance	FY 2023 onward	Company suspended 2023 guidance and long-term target metrics amid pending transaction (Q3 2023)	No guidance provided; no earnings call due to pending Metropolis acquisition (Q1 2024)	Maintained suspension

Earnings Call Themes & Trends

Note: The company did not host an earnings call for Q3 2023, Q4 2023, or Q1 2024 due to the pending acquisition; themes below derive from press releases.

Topic	Previous Mentions (Q3 2023 and Q4 2023)	Current Period (Q1 2024)	Trend
Technology/Sphere adoption	Increasing penetration; technology solutions driving accelerated growth; 120 new standalone deployments in 2023	16 new standalone Sphere locations in Q1; 86 over LTM; tech transactions and gross profit contribution nearly doubled YoY; goal 10% of gross profit via tech by 2025	Improving
Demand/travel volumes	Robust back-to-office and travel; strong commercial vertical performance; aviation benefited from travel and acquisitions	Continued strength; commercial same-location growth in healthcare, commerce, residential; aviation helped by high travel volumes and new airport wins	Stable to improving
Metropolis acquisition / regulatory	Deal announced Oct-2023; guidance suspended; will not host calls	DOJ “Second Request” extends HSR timeline; stockholders approved merger; closing still expected in 2024; no earnings call	Ongoing regulatory review
Location growth/retention	10th and 11th consecutive quarters of net location growth; 94% retention	6% YoY location growth to 3,382; retention 94%	Stable high retention
Aviation cross-sell/wins	New airport contracts (e.g., Eppley), cross-sell of AeroParker and Bags services	Double-digit gross profit growth; cross-selling continues	Improving

Management Commentary

“Gross profit increased 8% year-over-year... and adjusted EBITDA increased 8%, with each measure setting first quarter records for SP+. Our strategy remains firmly on track as we continue to deliver innovative technology solutions and superior operations...” — Marc Baumann, Chairman & CEO .
“Commercial division... particular strength in healthcare, commerce and residential, each posting double-digit same location year-over-year growth... 3,382 commercial locations, representing 6% year-over-year growth... 94% location retention rate.” .
“Aviation division had another strong quarter, achieving double-digit gross profit growth... reflecting the benefit from recent airport contract wins, high travel volumes and cross-selling of additional services.” .
“We added 16 standalone Sphere locations during the first quarter... total of 86 over the last twelve months... total technology transactions and their contribution to adjusted gross profit each set a quarterly record, both nearly doubling year-over-year.” .

Q&A Highlights

No Q&A — the company did not host an earnings call due to the pending acquisition by Metropolis Technologies, Inc. .

Estimates Context

Wall Street consensus estimates (S&P Global) were unavailable via our SPGI mapping for SP this quarter; therefore, we cannot present vs-consensus comparisons. We will update if/when S&P Global mapping becomes available [GetEstimates error].

Key Takeaways for Investors

Fundamentals remain solid: SP delivered record first-quarter adjusted gross profit and adjusted EBITDA, with sequential and YoY revenue growth before reimbursed revenue, and improved cash generation versus Q1 2023 .
Technology flywheel is accelerating: Sphere deployments and tech-driven transactions are scaling, with management targeting 10% of gross profit from technology by 2025 — a potential structural margin driver over time .
Balanced segment contribution: Commercial momentum across multiple verticals coupled with Aviation contract wins and travel volumes provides diversified growth support .
Near-term stock driver is the Metropolis deal process: DOJ Second Request under HSR extends timing uncertainty; management still expects 2024 closing. Trading likely anchored to deal spread/regulatory milestones rather than near-term beats/misses .
Expense discipline remains an area to watch: G&A rose YoY on growth investments; lease-type gross profit declined YoY. Monitoring mix, cost inflation, and interest expense is prudent .
With no guidance and no call, focus on operational KPIs: location growth/retention, Sphere expansions, aviation wins, and free cash flow trajectory should frame the fundamental narrative until post-transaction clarity .

Citations:

SP Plus Corp (SP)·Q1 2024 Earnings Summary