Olympic athletes taking to the slopes in Vancouver have been leaving the tough stuff-finding a parking spot-to Standard Parking Corp., which faces potentially brighter prospects through renewed focus on acquisitions and an improving economy.
The parking lot manager expanded into providing parking, shuttles and related services at special events-including the Super Bowl and the Winter Olympics-through its acquisition last year of Gameday Management Group. It also acquired its Click and Park online-booking technology, which it hopes to greatly expand.
And with a large question mark about its stock behind it-the sale late last year of about half of its outstanding shares by former Chairman John V. Holten to settle debts-Standard could benefit as the economy, and travel, pick up. Mr. Holten had used his shares as collateral for a debt instrument that was ultimately foreclosed upon and the shares transferred as a result. Most of these shares have been sold by those debt holders during a recent secondary offering.
"For the last year, everyone knew a block of stock was coming to the market," said Sidoti analyst David Gold, who holds one of the three buy ratings on the stock. (Two other analysts have neutral ratings). "Now that the stock has been placed, the overhang is gone, and they can operate a little more freely."
Standard doesn\'t own its lots, and about 90% of its revenue is recurring, derived from management contracts where it is paid a set fee. It doesn\'t incur the risk of lower volumes or higher costs-but it also doesn\'t benefit from higher demand.
"They have a pretty \'steady Eddie\' growth strategy," said William Blair analyst Nate Brochmann. "They win a few new contracts every single year, and they do a few small acquisitions."
Mr. Brochmann said with the company no longer distracted by the sale of Holten\'s shares, it will be able to focus on making more acquisitions-one of its important growth drivers-in 2010.
"The business tends to grow in the low double digits organically, and anything we can do on acquisitions is accretive fairly rapidly to the shareholders in terms of EPS," President and Chief Executive James Wilhelm said.
Despite its recession-resistant business model, the company isn\'t without its challenges. Standard does lease some of its lots and that part of the business, though small, is exposed to economic and demand weakness.
Baird analyst Andrea Wirth, who holds one of the neutral ratings on the stock, said she doesn\'t see any catalysts to drive shares in the near term, as the environment is still difficult.
In addition, competition for lot-management contracts can be tough, and the sector is highly fragmented. Standard-one of the largest companies in the industry along with privately held Central Parking and ABM Industries Inc.\'s Ampco System Parking-holds only about 7% of the market share.
But the fragmentation does give Standard acquisition opportunities, and it retains more than 90% of its contracts from year to year.
"They are arguably amongst the best operators in the industry," CSJ Securities analyst Robert Labick said. "They win a lot more contracts than they lose, and given their low market share, there is plenty of room for growth."
Mr. Wilhelm said Standard generally boosts a lot\'s revenue by 10% to 20% after it takes over management, by tightening controls and improving customer service. Analysts say Standard\'s efforts to use new technology and provide additional services like car maintenance give it an advantage over its competitors. It is working to roll out its Click and Park technology in most lots, especially at airports. The systems lets travelers reserve spots ahead of time. |
