Imperial Parking Corporation Announces Third Quarter Earnings
VANCOUVER, British Columbia--Nov. 13, 2002-- Imperial Parking Corporation ("Impark") (AMEX:IPK) today reported revenues of $28.6 million (excluding reimbursement of management contract expenses of $7.5 million- see footnote 1 below) for the quarter ended September 30, 2002, a 13.5% increase over revenues of $25.2 million (excluding reimbursement of management contract expenses of $7.3 million) for the quarter ended September 30, 2001. The Company reported net income of $0.7 million, or $0.38 per diluted share, for the third quarter, compared to net income of $0.3 million, or $0.15 per diluted share, in the prior year period. However, as Impark adopted SFAS No. 142 (see footnote 2 below) effective January 1, 2002, the Company no longer amortizes goodwill. As a result, there was no goodwill amortization in the third quarter ended September 30, 2002, compared to goodwill amortization of $0.6 million in the prior year period. If the Company had adopted SFAS No. 142 effective January 1, 2001, net income would have been $0.8 million, or $0.44 per diluted share, in the prior year period.The Company's increased revenues this quarter are primarily attributable to new long-term leases. Of the $3.4 million increase this quarter, U.S. operations contributed $3.3 million and Canadian operations contributed $0.1 million. Most of the U.S. growth was generated by new long-term leases in the Company's target expansion markets.
The Company's operating income was $1.5 million for the third quarter, a 195.2% increase over operating income of $0.5 million in the prior year period. However, assuming the adoption of SFAS No. 142 effective January 1, 2001, operating income would have been $1.0 million in the prior year period. The increase in operating income is attributable to (a) an increase in gross margins of $0.5 million; (b) a decrease of $0.6 million in goodwill amortization due to adoption of SFAS No. 142; and, (c) an increase in general and administrative expenses of $(0.1) million.
The Company reported cash net income (see footnote 3 below) of $1.4 million, or $0.76 per diluted share, for the quarter, compared to cash net income of $1.2 million, or $0.60 per diluted share, in the prior year period. Impark reported EBITDA (see footnote 3 below) of $2.1 million for the quarter, compared to $1.7 million in the prior year period.
Commenting on Impark's third quarter, Charles Huntzinger, the Company's Chief Executive Officer and President, stated, "While Impark's operations continue to be adversely affected by the weak U.S. and Canadian economies, we have found opportunities to grow the Company's operations in both the U.S. and Canada. This quarter, we increased our revenues 13.5% over the prior years' quarter and added new parking facilities, bringing our total operations to 1,631 facilities. We continue to find good opportunities to expand within our targeted U.S. markets and again this quarter, U.S. revenues represented over 50% of the Company's total revenues. An excellent example of our growth strategy may be found in our New York City operation where we commenced January 2001 with one location, now have 29 locations, have achieved profitability, and is key to our long-term growth in the United States."
Mr. Huntzinger continued, "Last quarter we reported a concern about a potential baseball strike or work stoppage and the significant impact it might have on our results. Not only were we pleased that the settlement between the major league players and owners avoided any significant adverse effects on our San Francisco Giants stadium operations, having the Giants reach the World Series should positively impact our results in the fourth quarter."
Mr. Huntzinger also stated, "We continue to experience the adverse effects of the weak economy, especially at our leased locations. Typically, new leased locations will commence with low profit margins in the initial years but will exhibit increasing profitability as the leases mature. In this economy, however, we have many leases that are experiencing a slower maturing process that we had initially anticipated. Nevertheless, we continue to believe that our new leased locations represent a significant source for new income growth as the U.S. economy strengthens."
The table below compares the profitability of leased locations, grouped by the year operations at the location commenced, for the nine months ending September 30, 2002 and for the year ended December 31, 2001.
Nine Months Ended
September 30,
2002
Number (In thousands of dollars, Year Ended
of Locations except coverage) December 31,
2001
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As of As of
September December Gross
30, 2002 31, 2001 Revenue Margin Coverage Coverage
Year opened
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Before 1998 308 324 $ 20,829 $ 3,686 1.22 1.24
1998 53 55 5,675 485 1.09 1.10
1999 26 28 1,877 311 1.20 1.22
2000 52 53 11,265 1,754 1.18 1.10
2001 92 99 18,433 444 1.02 1.01
2002 38 n/a 2,433 (61) 0.98 n/a
----------------------------------------------------------------------
569 559 $ 60,512 $ 6,619 1.12 1.14
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Coverage is calculated by dividing Revenue by the difference of Revenue less Gross Margin.
Within the total of 569 leased locations operating at September 30, 2002, 71 of these locations incurred a combined loss of $1.4 million in 2002. Of these 71 locations, 19 were opened in 2002 and incurred an aggregate loss of $0.3 million.
For the nine months ended September 30, 2002, the Company reported revenues (excluding reimbursement of management contract expenses) of $81.7 million representing a 24.6% increase over revenues (excluding reimbursement of management contract expenses) of $65.6 million for the nine months ended September 30, 2001. The Company reported net income of $1.8 million, or $0.95 per diluted share, for the nine months ended September 30, 2002, compared to earnings of $0.9 million, or $0.46 per diluted share, in the prior year period. Also, the Company reported operating income of $3.8 million for the nine months ended September 30, 2002, representing a 159.3% increase over operating income of $1.5 million in the prior year period.
As Impark adopted SFAS No. 142 (see footnote 2 below) effective January 1, 2002, the Company no longer amortizes goodwill. As a result, there was no goodwill amortization in the first nine months ended September 30, 2002, compared to goodwill amortization of $1.7 million in the prior year period. If the Company had adopted SFAS No. 142 effective January 1, 2001, net income would have been $1.8 million, or $0.95 per diluted share, for the first nine months of 2002 compared to net income of $2.5 million, or $1.36 per diluted share, in the prior year period. Also, if the Company had adopted SFAS No. 142 effective January 1, 2001, operating income would have been $3.8 million for the nine months ended September 30, 2002 compared to operating income of $3.1 million in the prior year period.
The Company reported cash net income of $3.5 million, or $1.81 per diluted share, for the nine months ended September 30, 2002 compared to a cash net income of $3.9 million, or $2.09 per diluted share, in the prior year period. Impark reported EBITDA of $5.5 million for the nine months ended September 30, 2002, representing a 13.2% increase over EBITDA of $4.9 million in the prior year period.
During the first nine months, cash and cash equivalents increased by $2.3 million from $11.0 million at December 31, 2001 to $13.3 million. Cash flow from operations was $7.7 million compared to $9.7 million in the prior year period. The higher cash flow from operations last year was due to the release of Restricted Cash in the amount of $2.7 million. In addition to the cash and cash equivalents of $13.3 million, the Company has approximately $15.3 million available under its Credit Facility with HSBC Bank Canada.
The Company announced that effective no later than January 1, 2003 it will change the method of recording employee stock compensation expense. Whereas Impark historically recorded these expenses based on the intrinsic value of options, the Company will begin recording employee stock compensation expense using the Black-Scholes option pricing model to determine the fair value of options in accordance with SFAS No. 123. We believe this method presents stock option compensation on a basis more widely understood by investors.
(1) In 2002, the Company adopted for all periods EITF 01-14, the new accounting pronouncement that requires the reimbursement of expenses by its management contract clients to be recorded as both a revenue and an expense. This is an accounting change that has no impact on operating income, net income, EBITDA, cash net income or the related per share amounts. This accounting change results only in the reclassification of expenses reimbursed under management contracts to be included as both revenue and expense, whereas previously these amounts were netted against those expenses in Direct Costs.
(2) Effective January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets", which requires goodwill and intangible assets with indefinite lives be tested for impairment annually rather than amortized over time. The Company has completed the initial review of the carrying value of goodwill and no adjustment was required on adoption. Also, as a result of this new standard, Impark no longer amortizes goodwill.
(3) Cash net income is defined as net earnings (loss) plus non-cash stock compensation expenses, goodwill amortization, and deferred income taxes. EBITDA is defined as net earnings (loss) before interest, taxes, depreciation and amortization. Cash net income, cash income per diluted share and EBITDA are not measures that have established meanings under GAAP and should not be considered as a substitute for measures of performance prepared in accordance with GAAP. The Company's method of computing cash net income, cash net income per diluted share and EBITDA has been made on a consistent basis and may not be comparable to similarly titled measures reported by other companies. The Company has reported the non-GAAP measures EBITDA and Cash Net Income since going public in March 2000. Impark has decided to minimize the non-GAAP presentation of its financial results and as a result will follow the trend of many corporations of reducing or eliminating non-GAAP disclosure. Accordingly, Impark will no longer present EBITDA or Cash Net Income effective January 1, 2003. The Company will continue to report these statistics for the fourth quarter and in its Annual Report.
Imperial Parking Corporation, headquartered in Vancouver, B.C., Canada is the largest parking operator in Canada and is one of the four largest in North America. Impark currently operates more than 1,630 parking locations and over 300,000 parking spaces in Canada and the United States.
This press release contains projections and other forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. These projections and statements reflect the Company's current views with respect to future events and financial performance. No assurance can be given, however, that these events will occur or that these projections will be achieved and actual results could differ materially from those projected, as a result of certain factors. A discussion of these factors is included in the Company's filings with the Securities and Exchange Commission.
Imperial Parking Corporation
Consolidated Statements of Operations (Unaudited)
(In thousands of U.S. dollars, except earnings per share)
Three months ended Nine months ended
September 30 September 30
--------------------------------------
2002 2001 2002 2001
---- ---- ---- ----
Revenues
Parking and management
contract $ 28,615 $ 25,211 $ 81,741 $ 65,577
Reimbursement of management
contract expenses 7,528 7,259 22,791 20,573
-------- -------- -------- --------
Total Revenues 36,143 32,470 104,532 86,150
-------- -------- -------- --------
Direct costs
Cost of parking and management
Contracts 22,583 19,664 64,323 50,093
Reimbursed management contract
Expenses 7,528 7,259 22,791 20,573
-------- -------- -------- --------
Total Direct Costs 30,111 26,923 87,114 70,666
-------- -------- -------- --------
Gross margin 6,032 5,547 17,418 15,484
Other operating expenses
General and administrative 3,962 3,839 11,833 10,510
Depreciation and amortization 600 1,176 1,733 3,407
Equity share in limited liability
company losses 9 37 84 114
-------- -------- -------- --------
Total other operating expenses 4,571 5,052 13,650 14,031
-------- -------- -------- --------
Operating income 1,461 495 3,768 1,453
Other income (expense) 136 (3) 74 301
-------- -------- -------- --------
Earnings before income taxes 1,597 492 3,842 1,754
Income tax expense 871 200 2,018 902
-------- -------- -------- --------
Net income $ 726 $ 292 $ 1,824 $ 852
-------- -------- -------- --------
-------- -------- -------- --------
Basic earnings per share $ 0.40 $ 0.16 $ 1.00 $ 0.47
-------- -------- -------- --------
-------- -------- -------- --------
Diluted earnings per share $ 0.38 $ 0.15 $ 0.95 $ 0.46
-------- -------- -------- --------
-------- -------- -------- --------
Imperial Parking Corporation
Consolidated Balance Sheets
(In thousands of U.S. dollars)
September 30, December 31,
------------ -----------
2002 2001
---- ----
ASSETS (unaudited)
Current assets
--------------
Cash $ 13,303 $ 10,991
Accounts receivable 6,177 6,875
Current portion of recoverable
development costs 811 880
Inventory 765 781
Deposits and prepaid expenses 1,666 1,135
Deferred income taxes 1,797 2,412
---------- ----------
Total current assets 24,519 23,074
Recoverable development costs 2,585 3,940
Fixed assets 14,202 14,661
Management and lease agreements 891 336
Other assets 4,154 2,975
Goodwill 45,009 44,259
---------- ----------
Total Assets $ 91,360 $ 89,245
---------- ----------
---------- ----------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities
-------------------
Management accounts payable $ 7,880 $ 7,288
Trade accounts payable and other
accrued liabilities 3,836 5,007
Payable to employees and former
employees 2,477 1,936
Sales tax payable 1,932 1,367
Bank indebtedness 3,503 3,900
Current portion of other long-term
liabilities 1,204 1,204
Deferred revenue 1,843 2,081
---------- ----------
Total current liabilities 22,675 22,783
Other long-term liabilities 4,114 4,921
Deferred income taxes 3,926 3,280
---------- ----------
Total liabilities 30,715 30,984
Stockholders' equity
--------------------
Common stock, $.01 par
value, 10,000,000 shares
authorized
1,821,889 shares issued and
outstanding 18 18
Additional paid-in capital 60,726 60,718
Retained earnings 4,007 2,183
Accumulated other comprehensive loss
Foreign currency translation
adjustment (4,106) (4,658)
---------- ----------
Total stockholders' equity 60,645 58,261
---------- ----------
Total Liabilities and stockholders'
equity $ 91,360 $ 89,245
---------- ----------
---------- ----------
Imperial Parking Corporation
Consolidated Statements of Cash Flow
(unaudited)
(In thousands of U.S. dollars)
Nine months ended September 30
------------------------------
2002 2001
---- ----
Cash flows from operations
Net income $ 1,824 $ 852
Adjustments to reconcile net income to
cash provided by operating activities
Depreciation and amortization of
management and lease agreements 1,733 1,742
Amortization of goodwill - 1,665
Recovery of recoverable development costs 461 806
Equity share of limited liability company
losses 84 114
Stock-based compensation (56) 516
Non-cash interest expense 91 77
Deferred income taxes 1,710 829
Changes in non-cash working capital
items, excluding acquisitions
Restricted cash - 2,688
Accounts receivable 1,061 (164)
Inventory 18 (19)
Deposits and prepaid expenses (540) (325)
Management accounts payable 572 1,311
Trade accounts payable and other accrued
liabilities (136) (312)
Payable to employees and former employees 533 (429)
Sales tax payable 559 193
Deferred revenue (241) 195
------------------------------------------------------------------
Net cash provided by operating activities 7,673 9,739
------------------------------------------------------------------
Cash flow from investing activities
Purchase of fixed assets (1,015) (1,794)
Increase in recoverable development costs (1,491) (185)
Increase in other assets (63) (502)
Acquisition of management and lease agreements(766) -
Additional consideration on acquisition
of parking business (1,836) (4,564)
------------------------------------------------------------------
Net cash used in investing activities (5,171) (7,045)
------------------------------------------------------------------
Cash flow from financing activities
Purchase of common shares - (543)
Options exercised 64 61
Change in bank indebtedness (397) 3,900
Change in other liabilities 163 (53)
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Net cash used in financing activities (170) 3,365
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Effect of exchange rate changes on cash
& cash equivalents (20) (438)
------------------------------------------------------------------
Increase in cash and cash equivalents 2,312 5,621
Cash and cash equivalents, beginning
of period 10,991 5,615
------------------------------------------------------------------
Cash and cash equivalents, end of period $ 13,303 $ 11,236
------------------------------------------------------------------
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Imperial Parking Corporation
Other Information (Unaudited)
(In thousands of U.S. dollars)
Three months Nine months
ended ended
September 30 September 30
------------ ------------
2002 2001 2002 2001
---- ---- ---- ----
NET INCOME $ 726 $ 292 $1,824 $ 852
Amortization of goodwill (1) - 552 - 1,665
------- ------ ------ ------
Net income (pro forma) $ 726 844 1,824 2,517
Non-cash stock compensation (80) 127 (56) 516
Deferred income taxes 795 184 1,710 829
------- ------ ------ ------
CASH NET INCOME (2) $1,441 $1,155 $3,478 $3,862
------- ------ ------ ------
------- ------ ------ ------
CASH NET INCOME PER DILUTED SHARE (2) $ 0.76 $ 0.60 $ 1.81 $ 2.09
------- ------ ------ ------
------- ------ ------ ------
Weighted average number of shares
outstanding (diluted basis) 1,900 1,911 1,917 1,852
------- ------ ------ ------
------- ------ ------ ------
NET INCOME (pro forma) $ 726 $ 844 $1,824 $2,517
Depreciation and amortization of
management and lease agreements 600 624 1,733 1,742
Interest expense (income) (136) 3 (74) (301)
Income tax expense 871 200 2,018 902
------- ------ ------ ------
EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION (EBITDA)
(2) $2,061 $1,671 $5,501 $4,860
------- ------ ------ ------
------- ------ ------ ------
(1) See footnote 2 of press release
(2) See footnote 3 of press release