SP Plus Corporation

Good day, and thank you for standing by. Welcome to the Q3 2022 SP Plus Corporation Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your speaker today, Chris Roy, Chief Financial Officer of SP Plus. Please go ahead.

Thank you, Rivka, and good afternoon, everyone. As Rivka just said, I'm Chris Roy, Chief Financial Officer of SP Plus. Welcome to our conference call following the release of our third quarter 2022 earnings. During the call today, management will make remarks that may be considered forward looking statements, including statements as to the impact of COVID-19, outlook and expectations for 2022, and statements regarding the company's strategies, plans, intentions, future operations, and expected financial performance. Actual results, performance, and achievements could differ materially from those expressed or implied due to a variety of risks, uncertainties, or other factors including those described in the company's earnings release issued earlier this afternoon, which is incorporated by reference for purposes of this call and available on the SP Plus website and the risk factors in the company's annual report on Form 10-K and quarterly reports on Form 10-Q and other filings with the SEC. In addition, management will discuss non-GAAP financial information during the call. Management believes the presentation of non-GAAP results provides investors with useful supplemental information concerning the company's ongoing operations and is an appropriate way to evaluate the company's performance. The non-GAAP results are provided for informational purposes only. A full reconciliation of non-GAAP financial measures to comparable GAAP financial measures were presented in the tables accompanying the earnings release. To the extent other non-GAAP financial measures are discussed on the call, reconciliations to comparable GAAP measures will be posted under the Regulation G tab in the Investor Relations section of the SP Plus website. Please note this call is being broadcast live over the internet and is being recorded. A replay will be available on the SP Plus website shortly after the end of the call and will be available for 30 days from today. I will now turn the call over to Mark Baumann, our chairman and chief executive officer. Mark.

Hey, thank you, Chris. And thank you everyone for joining us this afternoon to discuss our third quarter results. I'm pleased to report that the third quarter of 2022 was another strong quarter across our business with both our commercial and aviation segments posting double digit year on year growth and adjusted gross profit. This is driven by strong same store location performance as well as new business. Adjusted gross profit was essentially back to the comparable quarter of 2019, which was a record for SP+. The third quarter also marked the completion of SP's financial recovery, which reflects strategic actions we took together with improved business conditions. In addition, although we're essentially back to pre-pandemic financial performance overall, demand in some of our verticals continues to lag where it was in 2019, which provides us with additional runway in 2023. These results underscore two years of hard work by our team to not only improve our financial performance, but also increase our market share and further expand the total addressable market for our products and services. Consistent with our year-to-date performance, we're reaffirming our guidance for the full year, which exceeds pre-pandemic 2019 at the top end of the range. Our commercial segment gross profit increased 13% year over year as we continue to see strong growth in a number of verticals, particularly commercial, municipal, and large venues, and momentum continues to build as the pace of return to office increases in many of our larger metropolitan markets. Over the last 12 months, we've added 95 new locations in the commercial segment on a net basis, and location retention has remained at 91%. In aviation, adjusted gross profit was up 31% year-over-year as we continued to benefit from both new winds and expansion of services, as well as increasing demand for travel. This has been a strong year for new contract winds in our aviation segment, and in addition to new locations, we've been able to sell in additional products and services at existing locations. Our aviation business is still in recovery mode, and we still see significant additional upside as travel trends continue to improve and demand increases for our services that reduce friction and ease congestion. Our technology offerings continue to be a key business driver. To that end, we're very pleased to have completed an acquisition that demonstrates the successful execution of our strategy to further enhance and complement our industry-leading technology capabilities, expand our addressable market, and accelerate growth. Last month, we announced the acquisition of KMP Associates, including its global e-commerce platform. KMP's industry-leading SaaS platform is currently deployed at 70 airports in the U.S. and Europe and over 400 commercial parking locations in Europe as they continue to expand their footprint. Operating under the AeroParker and MetroParker brands, KMP delivers online booking for parking and other travel services, dynamic pricing, and e-commerce capabilities, which are all designed to reduce congestion, enable frictionless transactions, and provide a first-class consumer experience. In addition, KMP also provides comprehensive digital marketing capabilities through its award-winning digital marketing agency, KMP Digitata. While a small acquisition from a financial perspective, bringing together the two businesses gives us the ability to leverage our respective relationships and expertise to bring innovative technology solutions to airports, and commercial parking operations both within and outside of North America. In addition to expanding our addressable market, we believe the acquisition of KMP will serve as a growth platform for us, providing the innovative solutions that clients and consumers demand. We believe this acquisition is a great strategic fit for us as it integrates seamlessly with Sphere. Technology has been a key differentiator for SP Plus in the marketplace, an important factor in our successful business development efforts. In addition, this acquisition expands our presence outside of North America and reinforces our leadership position in the digital transformation of our industry, which is developing in sync with the growing trends in smart city technology. Before I turn the call over to Chris, I'd like to acknowledge today's uncertain economic outlook with potential recession on the horizon. Historically, our business model has been recession-resistant through past down cycles, and now that management contracts represent 85% of our commercial segment, we believe that resilience is further enhanced. Additionally, our technology offerings, which we've expanded with the recent acquisition, is not just a differentiator but a profit driver for our clients, which is increasingly important in more challenging economic environments. And we're continuing to make investments in business development and other resources to better position us to take advantage of our expanded addressable market. Thus, while we're monitoring the economic landscape closely, we believe our management contracts provide a strong visibility and cash flow, and we're comfortable with our outlook for continued growth in 2023. Now I'm going to turn the call back over to Chris for a financial review.