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SP

SP Plus Corp (SP)·Q2 2023 Earnings Summary

Executive Summary

  • Q2 2023 delivered double-digit year-over-year gross profit growth, with GAAP gross profit up 11% to $62.2M and adjusted gross profit up 12% to $66.0M, driven by strength in Commercial and Aviation segments .
  • Technology solutions continued to mix up, with management stating full-year technology contribution is on track to double 2022 levels as a percentage of gross profit; Sphere deployments represented 36% of year-to-date new Commercial locations .
  • 2023 guidance was reaffirmed across all metrics (Adjusted EBITDA $125–$135M; Adjusted EPS $2.70–$3.20), underscoring confidence in sustained growth trajectory .
  • Consensus estimates via S&P Global were unavailable; therefore, beats/misses vs Street cannot be assessed (consensus not retrievable).

What Went Well and What Went Wrong

What Went Well

  • Commercial segment delivered high single-digit gross profit growth, adding 55 net new locations and reaching a 94% trailing 12-month retention rate; management cites strong demand across healthcare, municipal, and large venue verticals and momentum in technology-led wins .
  • Aviation segment gross profit increased at a double-digit rate, benefitting from both organic growth and acquisitions, and cross-selling additional services across airport locations .
  • Technology mix and contract mix (more management-fee contracts) continue to underpin tight correlation between revenue and gross profit, supporting margin quality and growth durability .

What Went Wrong

  • Elevated G&A as SP invests in business development and technology; adjusted G&A rose to $30.6M in Q2 from $26.3M a year ago, pressuring near-term EPS despite operating momentum .
  • GAAP diluted EPS of $0.62 fell year-over-year from $0.72, reflecting higher interest expense and increased depreciation/amortization tied to growth investments and acquisitions .
  • Cash flow from operations and free cash flow were lower year-to-date versus 2022 given the prior-year benefit of a $20.5M tax refund; YTD cash from operations $21.0M vs $35.7M and FCF $8.3M vs $25.5M .

Financial Results

MetricQ4 2022Q1 2023Q2 2023
Total services revenue ($USD Millions)$418.3 $425.3 $442.2
Gross profit (GAAP) ($USD Millions)$48.6 $55.1 $62.2
Adjusted gross profit ($USD Millions)$57.0 $58.4 $66.0
Operating income (GAAP) ($USD Millions)$13.4 $19.3 $25.3
Adjusted EBITDA ($USD Millions)$27.6 $28.2 $34.4
Net income attributable to SP ($USD Millions)$4.8 $8.4 $12.3
Diluted EPS (GAAP) ($)$0.24 $0.42 $0.62
Adjusted EPS ($)$0.56 $0.58 $0.78
Margin MetricQ4 2022Q1 2023Q2 2023
Gross profit margin % (GAAP)11.6% (48.6/418.3) 12.9% (55.1/425.3) 14.1% (62.2/442.2)
Operating margin % (GAAP)3.2% (13.4/418.3) 4.5% (19.3/425.3) 5.7% (25.3/442.2)
Adjusted EBITDA margin %6.6% (27.6/418.3) 6.6% (28.2/425.3) 7.8% (34.4/442.2)

Segment breakdown (Gross Profit):

Segment MetricQ4 2022Q1 2023Q2 2023
Commercial gross profit (GAAP, $M)$36.0 $41.1 $47.0
Commercial adjusted gross profit ($M)$42.0 $43.1 $49.3
Aviation gross profit (GAAP, $M)$12.6 $14.0 $15.2
Aviation adjusted gross profit ($M)$15.0 $15.3 $16.7

Selected KPIs:

KPIQ4 2022Q1 2023Q2 2023
Net new Commercial locations (quarter)Not disclosed +71 +55
Trailing 12-month location retentionNot disclosed 93% 94%
Total Commercial segment facilities3,130 3,201 3,256
Airports served (Total)158 159 160
Cash from operations (YTD, $M)N/A$7.7 $21.0
Free cash flow (YTD, $M)N/A$0.3 $8.3

Guidance Changes

MetricPeriodPrevious Guidance (Q1 2023)Current Guidance (Q2 2023)Change
Gross Profit (Reported)FY 2023$225–$245M $225–$245M Maintained
Adjusted Gross ProfitFY 2023$240–$260M $240–$260M Maintained
Adjusted EBITDAFY 2023$125–$135M $125–$135M Maintained
Net Income (GAAP)FY 2023$43–$53M $43–$53M Maintained
Adjusted Net IncomeFY 2023$54–$64M $54–$64M Maintained
GAAP EPSFY 2023$2.15–$2.65 $2.15–$2.65 Maintained
Adjusted EPSFY 2023$2.70–$3.20 $2.70–$3.20 Maintained
Free Cash FlowFY 2023$60–$70M $60–$70M Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2022 and Q1 2023)Current Period (Q2 2023)Trend
Technology solutions adoption (Sphere, AeroParker)Accelerated deployments; acquisitions of AeroParker and Divrt; processing 1M digital transactions/month; aim for >10% of gross profit by 2025 Tech contribution is on track to double 2022 levels in 2023 as % of gross profit; 36% of new Commercial locations were standalone Sphere deployments Strengthening
Commercial demand across verticalsStrength in business/commercial, hospitality, residential; net new location growth continues High single-digit gross profit growth; net +55 locations; strong traction in healthcare, municipal, large events Broadening
Aviation growth and cross-sellGross profit up 25% in Q4; portfolio expansion to 158 airports with acquisitions Double-digit gross profit growth; cross-selling additional services across airports; airports served up to 160 Continuing expansion
G&A investments to support growthElevated adjusted G&A to fund BD and tech initiatives Adjusted G&A up to $30.6M (vs $26.3M YoY) for growth initiatives Persisting investment
Capital allocation (repurchases)New $60M buyback authorization (Board) No change disclosed in Q2 release; focus on growth + tech investments Stable
Macro/travel recoveryTravel activity rising; aviation momentum Management cites rising commercial, retail, travel activity supporting record first-half gross profit/EBITDA Supportive backdrop

Management Commentary

  • “Second quarter results again demonstrated how well aligned our solutions and services are with emerging trends in market demand. The artful combination of people and technology is yielding strong returns, differentiating SP+ in the marketplace and underpinning a record pace of new business wins.” — Marc Baumann, CEO .
  • “Technology solutions continued to increase in the second quarter and the full-year contribution is on track to double 2022 levels, as a percentage of gross profit… Of the year-to-date new locations added in our Commercial segment, 36% represented standalone Sphere technology deployments.” .
  • “Based on our year-to-date performance and current visibility, we are pleased to re-affirm our guidance for significant growth in 2023, and remain confident in our positive longer-term outlook.” .

Q&A Highlights

  • The Q2 2023 earnings call was scheduled and webcast; however, the full transcript could not be retrieved due to a database inconsistency. As a result, Q&A specifics and any on-call guidance clarifications are unavailable for inclusion in this recap .

Estimates Context

  • Wall Street consensus estimates via S&P Global for Q2 2023 EPS, revenue, and EBITDA were unavailable due to a data mapping issue; therefore, we cannot present beats/misses versus consensus for the quarter. If needed, we will update this section once S&P Global mappings are available and values can be retrieved (consensus not retrievable).

Key Takeaways for Investors

  • Growth quality improving: Revenue scaling while GAAP gross profit margin expanded to 14.1%, and operating margin rose to 5.7%, showcasing operating leverage as technology and management-fee contracts mix up .
  • Technology flywheel gaining momentum: Sphere deployments constitute a significant share of new wins, expanding addressable market and enhancing profitability potential; full-year tech contribution expected to double versus 2022 .
  • Segment breadth: Both Commercial and Aviation posted strong gross profit growth, with continued net new contract wins and cross-sell across airport locations .
  • Investment mode: Elevated adjusted G&A reflects deliberate spending to support growth; near-term EPS dilution is a trade-off for long-term technology-led margin accretion .
  • Cash flow normalization: YTD cash flow compares to a 2022 period boosted by a $20.5M tax refund; underlying operations remain solid with reaffirmed FCF guidance of $60–$70M for FY 2023 .
  • Guidance confidence: Reaffirmed ranges across gross profit, EBITDA, EPS, and FCF suggest visibility and execution remain intact; watch for incremental updates from technology acquisitions (e.g., Roker assets) .
  • Near-term trading lens: Without consensus comparisons, narrative catalysts center on technology adoption rate, new business pace, and margin progression; any incremental disclosure on estimates or call commentary could influence the stock upon availability .