SP Plus Corporation

Good day, and thank you for standing by. Welcome to the Q1 2023 SP Plus Corporation Earnings Conference Call. At this time, all participants are in a 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. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference call over to your speaker for today, Chris Roy, Chief Financial Officer. Please go ahead.

Thank you, Felicia, and good afternoon, everyone. As Felicia just said, I'm Chris Roy, Chief Financial Officer of SP+. Welcome to our conference call following the release of our first quarter 2023 earnings. During the call today, management will make remarks that may be considered forward-looking statements, including statements as to the outlook and expectations for 2023, 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. They 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 measure 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 it over to Mark Bowman, our chairman and chief executive officer.

Hey, thank you, Chris, and good afternoon, everyone. First quarter results represented a strong start to 2023, and we made significant progress in a number of areas that support both our full year guidance as well as our longer term expectations for accelerated growth. In essence, our pivot toward technology-related growth is working. Gross profit increased at a double-digit rate in both our commercial and aviation segments, demonstrating the traction we're gaining across the three strategic objectives we outlined last quarter. And let me recap those for you now. First, we strengthened our leadership position in the first quarter by doing exactly what we said we would do, namely bringing innovative technology solutions and superior operations to existing and new clients. Our commercial segment gross profit increased 14% in the first quarter, underpinned by strong metrics that align with our strategic goals. Notably, same location gross profit in our commercial segment increased considerably in the first quarter, reflecting success in deploying our sphere technology solutions across our existing locations, cross-selling, and adding new services. At the same time, we saw increased business activity across many of our verticals, particularly hospitality, residential, and also the business and commerce vertical, which includes office buildings, retail mixed-use complexes, as well as standalone parking facilities. We maintain a location retention rate of 93%, which we believe is the best in our industry. And we were very successful in bringing on new business, adding 71 net new locations in the commercial segment in the first quarter, and reinforcing our market leadership by differentiating our offerings through technology solutions and superior service levels. Our aviation segment gross profit increased 11% as travel activity continues to increase and consumer behaviors favor the utilization of our services as passengers travel. Namely, we're seeing more travelers are driving to airports rather than utilizing rideshares or taxis, and the average length of stay is longer as international travel is returning. As airports and airlines deal with record levels of travel and strong demand for international travel in the midst of infrastructure improvements, our solutions that optimize parking utilization and rates and improve the traveler experience are more important than ever. The level of proposal activity for parking management solutions and luggage handling services, such as curbside concierge and remote airline check-in services, is stronger than it has been in recent memory. Second, we continue to make progress in our objective of expanding our addressable market and realizing cross-selling synergies. In the first quarter, 42% of the new locations that we added in our commercial segment represented deployments of our standalone sphere technology solutions without any boots on the ground, a clear indication of the appeal of our offerings and how our investments in technology have increased our addressable market. In aviation, our Aeroparker acquisition, which was completed in October of last year, opened up the international market for SP Plus and substantially increased the number of airports at which we perform services. We're working together with Aeroparker on developing joint offerings and have made progress in this area recently that gives us confidence that we'll be able to capture the significant revenue synergies on the horizon. The third objective we spoke about on our last call was to leverage and monetize our technology investments. SP Plus is leading the digital transformation of the parking industry, and our investments in technology have provided us with a clear competitive edge. We processed 4 million transactions in the first quarter of 2023 on SP Plus-enabled technology platforms deployed across airports, on and off street parking locations, event venues, and the like. And that's up more than 20% from the fourth quarter of 2022. And our technology solutions are adaptable to a broad range of operating situations to meet both consumer and client needs. Additionally, technology is poised to double its contribution to gross profit in 2023 compared to 2022. And this puts us on track to achieve our goal for technology solutions to contribute more than 10% of our gross profit by 2025. In summary, we're very pleased with our first quarter performance and our execution on the strategic objectives we laid out a few months ago. Our past and current investments in technology and excellent onsite service levels have enabled us to gain share and to significantly expand our addressable market, two areas that support our expectations for 2023 and beyond. I'll now turn the call back over to Chris for a financial review. Chris?