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SP

SP Plus Corp (SP)·Q4 2023 Earnings Summary

Executive Summary

  • Q4 2023 capped a record year: gross profit up 20% year-over-year to $58.1M; adjusted gross profit up 10% to $62.6M; adjusted EBITDA up 14% to $31.5M, reflecting strong demand, new contract wins, and high location retention. Bolded surprises: Record 2023 gross profit, double-digit adjusted EBITDA growth .
  • EPS quality mixed: GAAP diluted EPS fell to $0.06 (from $0.24) on higher G&A and interest expense; adjusted EPS rose to $0.60 (from $0.56) on operational momentum and technology penetration .
  • Commercial and Aviation segments posted double-digit FY gross profit growth; Commercial locations ended at 3,384 (+8% YoY) and retention held at 94%. Sphere technology gained traction, including 120 standalone deployments at non-SP+ sites, expanding addressable market .
  • No earnings call and guidance remained suspended due to pending merger with Metropolis Technologies and DOJ Second Request; stock narrative likely focused on regulatory timeline and integration positioning as a catalyst .

What Went Well and What Went Wrong

What Went Well

  • Record performance: “Fourth quarter results capped a record year for SP+ in 2023. Full-year reported gross profit increased 15%, adjusted gross profit increased 13% and adjusted EBITDA increased 10%” .
  • Commercial momentum: 11th consecutive quarter of net location growth; retention 94%; strong demand across office, hospitality, municipal, and healthcare verticals (Q3) .
  • Technology penetration rising: Sphere offerings gained traction; 120 new standalone deployments at sites not using SP+ services, expanding market reach .

What Went Wrong

  • EPS under GAAP declined: GAAP diluted EPS fell to $0.06 in Q4 (vs $0.24), impacted by higher G&A and interest expense; adjusted G&A increased due to tech investments and growth initiatives .
  • Cash flow pressure in Q4: Operating cash flow was $2.3M and free cash flow was -$2.3M, versus $17.7M and $12.0M in Q4 2022; FY FCF down to $31.2M (from $68.6M) partly due to acquisition/restructuring cash use and prior-year tax refund benefit .
  • Visibility limited: No Q4 earnings call, and guidance remained suspended amid the DOJ Second Request review of the pending Metropolis merger, adding timeline uncertainty .

Financial Results

MetricQ2 2023Q3 2023Q4 2023
Total services revenue (before reimbursed mgmt. revenue) ($MM)$221.3 $228.4 $217.2
Gross profit (GAAP) ($MM)$62.2 $64.2 $58.1
Adjusted gross profit ($MM)$66.0 $67.7 $62.6
G&A expenses (GAAP) ($MM)$31.8 $37.6 $40.4
Adjusted G&A ($MM)$30.6 $32.0 $30.2
Operating income (GAAP) ($MM)$25.3 $21.0 $11.9
Adjusted operating income ($MM)$29.6 $29.7 $25.5
Net income attributable to SP ($MM)$12.3 $9.2 $1.2
Diluted EPS (GAAP)$0.62 $0.46 $0.06
Adjusted diluted EPS$0.78 $0.79 $0.60
Adjusted EBITDA ($MM)$34.4 $34.9 $31.5
Net cash provided by operating activities ($MM)$13.3 $32.5 $2.3
Free cash flow ($MM)$8.0 $25.2 ($2.3)

Segment breakdown:

Segment MetricQ2 2023Q3 2023Q4 2023
Commercial gross profit (GAAP) ($MM)$47.0 $47.3 $43.0
Commercial adjusted gross profit ($MM)$49.3 $49.4 $45.6
Aviation gross profit (GAAP) ($MM)$15.2 $16.9 $15.1
Aviation adjusted gross profit ($MM)$16.7 $18.3 $17.0

KPIs:

KPIQ2 2023Q3 2023Q4 2023
Commercial segment facilities (total)3,256 3,364 3,384
Airports served (total)160 159 159
Location retention rate (%)94% 94% 94%
Net new locations added (quarter)55 108 n/a
Sphere standalone deployments (2023)n/an/a120

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted gross profit ($MM)FY 2023$240–$260 Guidance suspended (Q3 onwards) Suspended
Adjusted EBITDA ($MM)FY 2023$125–$135 Guidance suspended (Q3 onwards) Suspended
Adjusted net income ($MM)FY 2023$54–$64 Guidance suspended (Q3 onwards) Suspended
Adjusted EPSFY 2023$2.70–$3.20 Guidance suspended (Q3 onwards) Suspended
Free cash flow ($MM)FY 2023$60–$70 Guidance suspended (Q3 onwards) Suspended

Note: SP+ did not host an earnings call for Q4 2023 due to the pending merger and customary practices; no new guidance was provided .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2023)Previous Mentions (Q3 2023)Current Period (Q4 2023)Trend
Technology initiatives (Sphere, acquisitions)Sphere contributions rising; technology services on track to double 2022 mix; Roker asset acquisition to enhance offerings Continued traction; strong demand from gaming; online reservations and remote airline check-in expansions Increased penetration driving accelerated growth; 120 standalone Sphere deployments Improving
Demand/back-to-office/travel volumesFavorable activity in commercial/retail/travel; double-digit segment growth Robust market conditions; back-to-office and high travel volumes High travel volumes and recent airport wins supported Aviation growth Stable to improving
Regulatory/legal (Metropolis merger)N/A (pre-announcement)Acquisition announced Oct 5; pending close in 2024 Stockholders approved; DOJ Second Request extends HSR waiting period; expected close in 2024 Uncertain timeline
Segment wins (Commercial/Aviation)Commercial: high single-digit GP growth; Aviation: double-digit with cross-sell Commercial: broad vertical strength; Aviation: airport contract wins (Eppley Omaha; AeroParker rollouts) Both segments delivered double-digit FY GP growth Strong execution

Management Commentary

  • “Fourth quarter results capped a record year for SP+ in 2023. Full-year reported gross profit increased 15%, adjusted gross profit increased 13% and adjusted EBITDA increased 10%...” — Marc Baumann, CEO .
  • “We ended 2023 with 3,384 commercial locations… 11 consecutive quarters of net location growth, while maintaining a high location retention rate of 94%.” .
  • “Continuing success of our Sphere technology offerings… enabled us to add 120 new standalone deployments at locations not currently utilizing any SP+ services.” .
  • Recognition: Named one of America’s Greatest Workplaces for Diversity (2024) and included in Forbes’ small-cap success list (second year) .

Q&A Highlights

  • No Q4 earnings conference call was hosted due to the pending acquisition by Metropolis Technologies and customary practice during such transactions .
  • Guidance remained suspended since Q3; the company reiterated expectations to close the merger in 2024, subject to DOJ Second Request completion under HSR .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2023 EPS and revenue was unavailable due to missing CIQ mapping for SP. As a result, estimate-vs-actual comparisons cannot be presented at this time. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Execution remains strong: double-digit adjusted GP and EBITDA growth in Q4; FY momentum across Commercial and Aviation segments supported by technology-driven wins .
  • Mix shift to technology enhances margin durability over time; 120 Sphere standalone deployments expand the TAM and cross-sell potential .
  • GAAP profitability compressed near term (EPS down; G&A up) as SP+ invests in technology and growth initiatives; adjusted metrics show resilient core performance .
  • Cash generation decelerated in Q4; FY FCF decline reflects acquisition/restructuring cash use and prior-year tax refund comparison base—monitor normalization post-transaction .
  • Merger path is the key narrative: stockholder approval completed; DOJ Second Request extends timing—deal closure timing is the primary near-term catalyst .
  • Near-term trading: expect headlines on regulatory milestones and integration plans to drive volatility; limited financial guidance and absence of calls may reduce transparency .
  • Medium-term thesis: continued location growth and technology penetration position SP+ to leverage secular mobility trends and airport volume strength once transaction uncertainties clear .